EXHIBT 10.1
EXECUTION VERSION
$36,375,000
CREDIT AGREEMENT
among
CADIZ INC.
and
CADIZ REAL ESTATE LLC,
as Borrowers,
The Several Lenders from Time to Time Parties Hereto,
and
PELOTON PARTNERS LLP,
as Administrative Agent
Dated as of June 26, 2006
TABLE OF CONTENTS
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Page
SECTION 1. DEFINITIONS 1
1.1 Defined Terms. . . . . . . . . . . . . . . . . . . . .1
1.2 Other Definitional Provisions. . . . . . . . . . . . .9
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS 10
2.1 Term Commitments. . . . . . . . . . . . . . . . . . .10
2.2 Repayment of Loans. . . . . . . . . . . . . . . . . .10
2.3 Optional Prepayments. . . . . . . . . . . . . . . . .10
2.4 Interest Rates and Payment Dates. . . . . . . . . . .11
2.5 Computation of Interest and Fees. . . . . . . . . . .11
2.6 [Intentionally Omitted] . . . . . . . . . . . . . . .11
2.7 Conversion Shares. . . . . . . . . . . . . . . . . . 11
2.8 Change of Control Elections. . . . . . . . . . . . . 13
2.9 Exchange Cap. . . . . . . . . . . . . . . . . . . . .13
SECTION 3. REPRESENTATIONS AND WARRANTIES 14
3.1 No Change. . . . . . . . . . . . . . . . . . . . . . 14
3.2 Existence; Compliance with Law. . . . . . . . . . . .14
3.3 Power; Authorization; Enforceable Obligations. . . . 14
3.4 No Legal Bar. . . . . . . . . . . . . . . . . . . . .14
3.5 Litigation. . . . . . . . . . . . . . . . . . . . . .15
3.6 No Default. . . . . . . . . . . . . . . . . . . . . .15
3.7 Ownership of Property; Liens. . . . . . . . . . . . .15
3.8 Intellectual Property. . . . . . . . . . . . . . . . 15
3.9 Taxes. . . . . . . . . . . . . . . . . . . . . . . . 15
3.10 ERISA. . . . . . . . . . . . . . . . . . . . . . . . 15
3.11 Investment Company Act; Other Regulations. . . . . . 16
3.12 Subsidiaries. . . . . . . . . . . . . . . . . . . . .16
3.13 Use of Proceeds. . . . . . . . . . . . . . . . . . . 16
3.14 Environmental Matters. . . . . . . . . . . . . . . . 16
3.15 Accuracy of Information, etc. . . . . . . . . . . . .17
3.16 Security Documents. . . . . . . . . . . . . . . . . .17
3.17 Solvency. . . . . . . . . . . . . . . . . . . . . . .17
3.18 Regulation H. . . . . . . . . . . . . . . . . . . . .18
3.19 Labor Matters. . . . . . . . . . . . . . . . . . . . 18
SECTION 4. CONDITIONS PRECEDENT 18
4.1 Conditions to Extension of Credit. . . . . . . . . . 18
SECTION 5. AFFIRMATIVE COVENANTS 19
5.1 Financial Statements. . . . . . . . . . . . . . . . .20
5.2 Certificates; Other Information. . . . . . . . . . . 20
5.3 Payment of Obligations. . . . . . . . . . . . . . . .21
5.4 Maintenance of Existence; Compliance. . . . . . . . .21
5.5 Maintenance of Property; Insurance. . . . . . . . . .21
5.6 Inspection of Property; Books and Records;
Discussions. . . . . . . . . . . . . . . . . . . . . 21
5.7 Notices. . . . . . . . . . . . . . . . . . . . . . . 21
5.8 Environmental Laws. . . . . . . . . . . . . . . . . .22
5.9 Additional Collateral, etc. . . . . . . . . . . . . .22
5.10 CRE Amendment. . . . . . . . . . . . . . . . . . . . 23
SECTION 6. negative covenants 23
6.1 Indebtedness. . . . . . . . . . . . . . . . . . . . .23
6.2 Liens. . . . . . . . . . . . . . . . . . . . . . . . 23
6.3 Fundamental Changes. . . . . . . . . . . . . . . . . 24
6.4 Disposition of Property. . . . . . . . . . . . . . . 24
6.5 Restricted Payments. . . . . . . . . . . . . . . . . 24
6.6 Investments. . . . . . . . . . . . . . . . . . . . . 25
6.7 Transactions with Affiliates. . . . . . . . . . . . .25
6.8 Sales and Leasebacks. . . . . . . . . . . . . . . . .25
6.9 Swap Agreements. . . . . . . . . . . . . . . . . . . 25
6.10 Changes in Fiscal Periods. . . . . . . . . . . . . . 25
6.11 Negative Pledge Clauses. . . . . . . . . . . . . . . 25
6.12 Clauses Restricting Subsidiary Distributions. . . . .26
6.13 Lines of Business. . . . . . . . . . . . . . . . . . 26
6.14 Amendments to Organizational Documents and Incentive
Plans. . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 7. EVENTS OF DEFAULT 26
SECTION 8. THE AGENT 28
8.1 Appointment. . . . . . . . . . . . . . . . . . . . . 28
8.2 Delegation of Duties. . . . . . . . . . . . . . . . .28
8.3 Exculpatory Provisions. . . . . . . . . . . . . . . .28
8.4 Reliance by Agent. . . . . . . . . . . . . . . . . . 29
8.5 Notice of Default. . . . . . . . . . . . . . . . . . 29
8.6 Non-Reliance on Agent and Other Lenders. . . . . . . 29
8.7 Indemnification. . . . . . . . . . . . . . . . . . . 30
8.8 Agent in Its Individual Capacity. . . . . . . . . . .30
8.9 Successor Agent. . . . . . . . . . . . . . . . . . . 30
SECTION 9. MISCELLANEOUS 30
9.1 Amendments and Waivers. . . . . . . . . . . . . . . .30
9.2 Notices. . . . . . . . . . . . . . . . . . . . . . . 32
9.3 No Waiver; Cumulative Remedies. . . . . . . . . . . .32
9.4 Survival of Representations and Warranties. . . . . .33
9.5 Payment of Expenses and Taxes; Indemnification. . . .33
9.6 Successors and Assigns; Assignments and
Participations. . . . . . . . . . . . . . . . . . . .33
9.7 Surety Waivers. . . . . . . . . . . . . . . . . . . .34
9.8 Counterparts. . . . . . . . . . . . . . . . . . . . .35
9.9 Severability. . . . . . . . . . . . . . . . . . . . .35
9.10 Integration. . . . . . . . . . . . . . . . . . . . . 35
9.11 GOVERNING LAW. . . . . . . . . . . . . . . . . . . . 35
9.12 Submission To Jurisdiction; Waivers. . . . . . . . . 35
9.13 Acknowledgements. . . . . . . . . . . . . . . . . . .36
9.14 Confidentiality. . . . . . . . . . . . . . . . . . . 36
9.15 WAIVERS OF JURY TRIAL. . . . . . . . . . . . . . . . 36
SCHEDULES:
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1.1A Loan Commitments
1.1B Mortgaged Property
3.12 Subsidiaries
3.16(a) UCC Filing Jurisdictions
3.16(b) Mortgage Filing Jurisdictions
EXHIBITS:
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A Form of Security Agreement
B Form of Compliance Certificate
C Form of Closing Certificate
D Form of Mortgage
E Form of Assignment and Assumption
F Form of Legal Opinion of Stephan, Oringher, Xxxxxxx,
Xxxxxxxx & Xxxxxx, P.C.
G Form of Registration Rights Agreement
H Form of Purchaser's Certificate
I Form of Amendment to CRE Limited Liability Company Agreement
CREDIT AGREEMENT (this "AGREEMENT"), dated as of June
26, 2006, among Cadiz Inc., a Delaware corporation ("CADIZ"), and
Cadiz Real Estate LLC, a Delaware limited liability company
("CRE"; together with Cadiz, the "BORROWER" or "BORROWERS" ), the
lenders from time to time party hereto ("LENDERS") and Peloton
Partners LLP, as administrative agent (the "AGENT").
The parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 DEFINED TERMS
As used in this Agreement, the terms listed in this
Section 1.1 shall have the respective meanings set forth in this
Section 1.1.
"ACCRETED LOAN VALUE": as of the date of
determination, the outstanding principal amount of the applicable
Loan, Plus all accreted interest added to such Loan as of the
calendar day immediately prior to such date of determination.
"ADJUSTED CONVERSION SHARE AMOUNT": ALV / ACP, where
(i) ALV is the Accreted Loan Value and (ii) ACP is (a) the
Adjusted Tranche A Conversion Price with respect to the Tranche A
Term Loan and (b) the Adjusted Tranche B Conversion Price with
respect to the Tranche B Term Loan.
"ADJUSTED PARITY AMOUNT": With respect to any Loans to
be tendered by a Lender upon a Change of Control, the amount
obtained by the following formula: ACR x PCS, where (i) ACR is
the "Adjusted Conversion Share Amount" and (ii) PCS is the
average closing price on NASDAQ for each share of Cadiz common
stock (ISIN Code US1275372076) for the five (5) Business Days
immediately prior to the date such Loans were tendered.
"ADJUSTED TRANCHE A CONVERSION PRICE": with respect to
the Tranche A Conversion Price, the price obtained by the
following formula: Reference Price x [1+ (Tranche A Premium x
(J/JT))], where (i) Tranche A Premium equals 10%; (ii) J is the
number of days between the Closing Date (excluded) and the date
of the Change of Control (included); and (iii) JT is the number
of days between the Closing Date (excluded) and the Maturity Date
(included). However, in no event shall the Adjusted Tranche A
Conversion Price be less than the Reference Price. By way of
example only, if a Change of Control occurs with 365 days left to
the Maturity Date of the Tranche A Term Loan and the Reference
Price is $16.50 per share, then: J/JT would equal .80 (i.e.,
1460/1825). Tranche A Premium x (J/JT) would equal (.1 x 0.8) or
0.08, so that 1 + (Tranche A Premium x (J/JT)) would equal 1.08;
and the Adjusted Tranche A Conversion Price would equal $16.50 x
1.08, or $17.82.
"ADJUSTED TRANCHE B CONVERSION PRICE": with respect to
the Tranche B Conversion Price, the price obtained by the
following formula: Reference Price x [1+ (Tranche B Premium x
(J/JT))], where (i) Tranche B Premium equals 40%; (ii) J is the
number of days between the Closing Date (excluded) and the date
of the Change of Control (included); and (iii) JT is the number
of days between the Closing Date (excluded) and the Maturity Date
(included). However, in no event shall the Adjusted Tranche B
Conversion Price be less than the Reference Price. By way of
example only, if a Change of Control occurs with 365 days left to
the Maturity Date of the Tranche B Term Loan and the Reference
Price is $16.50 per share, then: J/JT would equal .80 (i.e.
1460/1825). Tranche B Premium x (J/JT) would equal (.4 x 0.8) or
0.32, so that 1 + (Tranche B Premium x (J/JT)) would equal 1.32;
and the Adjusted Tranche B Conversion Price would equal $16.50 x
1.32, or $21.78.
"AFFILIATE": as to any Person, any other Person that,
directly or indirectly, is in control of, is controlled by, or is
under common control with, such Person. For purposes of this
definition, "control" of a Person means the power, directly or
indirectly, either to (a) vote 20% or more of the securities
having
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ordinary voting power for the election of directors (or
persons performing similar functions) of such Person or (b)
direct or cause the direction of the management and policies of
such Person, whether by contract or otherwise.
"AGENT": as defined in the preamble hereto.
"AGGREGATE EXPOSURE": at any time, an amount equal to
the sum of the aggregate then unpaid principal amount of the
Lender's Loans.
"AGREEMENT": as defined in the preamble hereto.
"ASSIGNEE": as defined in Section 9.6(a).
"ASSIGNMENT AND ASSUMPTION": an Assignment and
Assumption, substantially in the form of EXHIBIT E.
"BOARD": the Board of Governors of the Federal Reserve
System of the United States (or any successor).
"BORROWER": as defined in the preamble hereto.
"BUSINESS": as defined in Section 3.14(b).
"BUSINESS DAY": a day other than a Saturday, Sunday or
other day on which commercial banks in New York City and Los
Angeles are authorized or required by law to close.
"CAPITAL LEASE OBLIGATIONS": as to any Person, the
obligations of such Person to pay rent or other amounts under any
lease of (or other arrangement conveying the right to use) real
or personal property, or a combination thereof, which obligations
are required to be classified and accounted for as capital leases
on a balance sheet of such Person under GAAP and, for the
purposes of this Agreement, the amount of such obligations at any
time shall be the capitalized amount thereof at such time
determined in accordance with GAAP.
"CAPITAL STOCK": any and all shares, interests,
participations or other equivalents (however designated) of
capital stock of a corporation, any and all equivalent ownership
interests in a Person (other than a corporation) and any and all
warrants, rights or options to purchase any of the foregoing.
"CASH EQUIVALENTS": (a) securities issued or directly
and fully guaranteed or insured by the United States or any
agency or instrumentality thereof (provided that the full faith
and credit of the United States is pledged in support thereof)
having maturities of not more than twelve (12) months from the
date of acquisition, (b) Dollar-denominated time deposits and
certificates of deposit of (i) any Lender, (ii) any domestic
commercial bank of recognized standing having capital and surplus
in excess of $500 million or (iii) any bank whose short-term
commercial paper rating from S&P is at least A-1 or from Xxxxx'x
is at least P-1, in each case with maturities of not more than
three hundred sixty-five (365) days from the date of acquisition,
(c) commercial paper issued by any issuer bearing at least a "2"
rating for any short-term rating provided by S&P and/or Moody's
and maturing within two hundred seventy (270) days of the date of
acquisition, (d) repurchase agreements entered into by the
Borrower with a bank or trust company (including any of the
Lenders) or recognized securities dealer having capital and
surplus in excess of $500 million for direct obligations issued
by or fully guaranteed by the United States, or for mortgage
collateral, in which the Borrower shall have a perfected first
priority security interest (subject to
Page 2
no other Liens) and having, on the date of purchase thereof, a fair
market value of at least one hundred percent (100%) of the amount
of the repurchase obligations, (e) variable or fixed rate notes
issued by any issuer rated at least AA by S&P (or the equivalent
thereof) or at least Aa2 by Moody's (or the equivalent thereof)
and maturing within one (1) year of the date of acquisition and
(f) Investments (classified in accordance with GAAP as current
assets) in money market investment programs registered under the
Investment Company Act of 1940, as amended, that are administered
by reputable financial institutions having capital and surplus of
at least $500 million and the portfolios of which are limited to
Investments of the character described in the foregoing
subclauses hereof.
"CHANGE OF CONTROL": the occurrence of any of the
following: (i) the Loan Parties shall sell or transfer all or
substantially all of their assets to any Person other than a Loan
Party, (ii) any Borrower shall merge or consolidate with another
Person other than a Loan Party in a transaction not permitted by
this Agreement or (iii) any "person" or "group" (as such terms
are used in Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")), shall become, or
obtain rights (whether by means of warrants, options or
otherwise) to become, the "beneficial owner" (as defined in Rules
13(d)-3 and 13(d) 5 under the Exchange Act), directly or
indirectly, of more than fifty percent (50%) of the outstanding
Capital Stock of Cadiz.
"CLOSING DATE": the date on which the conditions
precedent set forth in Section 4.1 shall have been satisfied.
"CODE": the Internal Revenue Code of 1986, as amended
from time to time.
"COLLATERAL": all property of the Borrowers and their
Subsidiaries, now owned or hereafter acquired, upon which a Lien
is purported to be created by any Security Document.
"COMMITMENT": the sum of the Tranche A Term Commitment
and the Tranche B Term Commitment.
"COMMONLY CONTROLLED ENTITY": an entity, whether or
not incorporated, that is under common control with the Borrower
within the meaning of Section 4001 of ERISA or is part of a group
that includes the Borrower and that is treated as a single
employer under Section 414 of the Code.
"COMPLIANCE CERTIFICATE": a certificate duly executed
by a Responsible Officer substantially in the form of EXHIBIT B.
"CONTRACTUAL OBLIGATION": as to any Person, any
provision of any security issued by such Person or of any
agreement, instrument or other undertaking to which such Person
is a party or by which it or any of its property is bound.
"CONVERSION DATE": as defined in Section 2.7(a).
"CONVERSION PRICE": with respect to the Tranche A Term
Loan, the Tranche A Conversion Price, and with respect to the
Tranche B Term Loan, the Tranche B Conversion Price.
"CONVERSION SHARES": as defined in Section 2.7(a).
"DEFAULT": any of the events specified in Section 7,
whether or not any requirement for the giving of notice, the
lapse of time, or both, has been satisfied.
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"DISPOSITION": with respect to any property, any sale,
lease, sale and leaseback, assignment, conveyance, transfer or
other disposition thereof. The terms "DISPOSE" and "DISPOSED OF"
shall have correlative meanings.
"DOLLARS" and "$": dollars in lawful currency of the
United States.
"DOMESTIC SUBSIDIARY": any Subsidiary of the Borrower
organized under the laws of any jurisdiction within the United
States.
"ENVIRONMENTAL LAWS": any and all foreign, Federal,
state, local or municipal laws, rules, orders, regulations,
statutes, ordinances, codes, decrees, requirements of any
Governmental Authority or other Requirements of Law (including
common law) regulating, relating to or imposing liability or
standards of conduct concerning protection of human health or the
environment, as now or may at any time hereafter be in effect.
"ERISA": the Employee Retirement Income Security Act
of 1974, as amended from time to time.
"EVENT OF DEFAULT": any of the events specified in
Section 7, PROVIDED that any requirement for the giving of
notice, the lapse of time, or both, has been satisfied.
"EXCHANGE CAP": as defined in Section 2.9.
"FACILITY": each of (a) the Tranche A Term Commitments
and the Tranche A Term Loans made thereunder (the "TRANCHE A TERM
FACILITY"), and (b) the Tranche B Term Commitments and the
Tranche B Term Loans made thereunder (the "TRANCHE B TERM
FACILITY").
"FULLY-DILUTED BASIS": the sum of (i) all common stock
outstanding as of the time of such determination, (ii) all common
stock issuable upon the exchange, exercise or conversion of all
warrants, options, convertible securities or other such
instruments then outstanding (whether or not such instruments are
then exercisable) including, but not limited to, any equity
securities reserved for issuance under any management or employee
benefit plan, and (iii) all other common stock issuable as a
result of any anti-dilution adjustments and pre-emptive or
similar rights granted to any other holder of Borrower's common
stock.
"FUNDING OFFICE": the office of the Agent specified in
Section 9.2 or such other office as may be specified from time to
time by the Agent as its funding office by written notice to the
Borrower and the Lender.
"GAAP": generally accepted accounting principles in
the United States as in effect from time to time. In the event
that any "Accounting Change" (as defined below) shall occur and
such change results in a change in the standards or terms in this
Agreement, then the Borrower and the Agent agrees to enter into
negotiations in order to amend such provisions of this Agreement
so as to reflect equitably such Accounting Changes with the
desired result that the criteria for evaluating the Borrower's
financial condition shall be the same after such Accounting
Changes as if such Accounting Changes had not been made. Until
such time as such an amendment shall have been executed and
delivered by the Borrower and the Agent, all standards and terms
in this Agreement shall continue to be calculated or construed as
if such Accounting Changes had not occurred. "Accounting
Changes" refers to changes in accounting principles required by
the promulgation of any rule, regulation, pronouncement or
opinion by the Financial Accounting Standards Board of the
American Institute of Certified Public Accountants or, if
applicable, the SEC.
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"GOVERNMENTAL AUTHORITY": any nation or government,
any state or other political subdivision thereof, any agency,
authority, instrumentality, regulatory body, court, central bank
or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative functions of or pertaining
to government, any securities exchange and any self-regulatory
organization.
"GUARANTEE OBLIGATION": as to any Person (the
"GUARANTEEING PERSON"), any obligation, including a
reimbursement, counterindemnity or similar obligation, of the
guaranteeing person that guarantees or in effect guarantees, or
which is given to induce the creation of a separate obligation by
another Person (including any bank under any letter of credit)
that guarantees or in effect guarantees, any Indebtedness,
leases, dividends or other obligations (the "PRIMARY
OBLIGATIONS") of any other third Person (the "PRIMARY OBLIGOR")
in any manner, whether directly or indirectly, including any
obligation of the guaranteeing person, whether or not contingent,
(i) to purchase any such primary obligation or any property
constituting direct or indirect security therefor, (ii) to
advance or supply funds (1) for the purchase or payment of any
such primary obligation or (2) to maintain working capital or
equity capital of the primary obligor or otherwise to maintain
the net worth or solvency of the primary obligor, (iii) to
purchase property, securities or services primarily for the
purpose of assuring the owner of any such primary obligation of
the ability of the primary obligor to make payment of such
primary obligation or (iv) otherwise to assure or hold harmless
the owner of any such primary obligation against loss in respect
thereof; PROVIDED, HOWEVER, that the term Guarantee Obligation
shall not include endorsements of instruments for deposit or
collection in the ordinary course of business. The amount of any
Guarantee Obligation of any guaranteeing person shall be deemed
to be the lower of (a) an amount equal to the stated or
determinable amount of the primary obligation in respect of which
such Guarantee Obligation is made and (b) the maximum amount for
which such guaranteeing person may be liable pursuant to the
terms of the instrument embodying such Guarantee Obligation,
unless such primary obligation and the maximum amount for which
such guaranteeing person may be liable are not stated or
determinable, in which case the amount of such Guarantee
Obligation shall be such guaranteeing person's maximum reasonably
anticipated liability in respect thereof as determined by the
Borrower in good faith.
"INDEBTEDNESS": of any Person at any date, without
duplication, (a) all indebtedness of such Person for borrowed
money, (b) all obligations of such Person for the deferred
purchase price of property or services (other than current trade
payables incurred in the ordinary course of such Person's
business), (c) all obligations of such Person evidenced by notes,
bonds, debentures or other similar instruments, (d) all
indebtedness created or arising under any conditional sale or
other title retention agreement with respect to property acquired
by such Person (even though the rights and remedies of the seller
or lender under such agreement in the event of default are
limited to repossession or sale of such property), (e) all
Capital Lease Obligations of such Person, (f) all obligations of
such Person, contingent or otherwise, as an account party or
applicant under or in respect of acceptances, letters of credit,
surety bonds or similar arrangements, (g) the liquidation value
of all redeemable preferred Capital Stock of such Person, (h) all
Guarantee Obligations of such Person in respect of obligations of
the kind referred to in clauses (a) through (g) above, (i) all
obligations of the kind referred to in clauses (a) through (h)
above secured by (or for which the holder of such obligation has
an existing right, contingent or otherwise, to be secured by) any
Lien on property (including accounts and contract rights) owned
by such Person, whether or not such Person has assumed or become
liable for the payment of such obligation, and (j) for the
purposes of Section 7(e) only, all obligations of such Person in
respect of Swap Agreements. The Indebtedness of any Person shall
include the Indebtedness of any other entity (including any
partnership in which such Person is a general partner) to the
extent such Person is liable therefor as a result of such
Person's ownership interest in or other relationship with such
entity, except to the extent the terms of such Indebtedness
expressly provide that such Person is not liable therefor.
Page 5
"ING": ING Capital, LLC.
"ING LOAN": the loan evidenced by that certain Sixth
Amended and Restated Credit Agreement, dated as of December 15,
2003 (as amended) among Cadiz and CRE, as borrowers, the lenders
party thereto and ING Capital, LLC, as Lender, and related
security documents.
"INSOLVENCY": with respect to any Multiemployer Plan,
the condition that such Plan is insolvent within the meaning of
Section 4245 of ERISA.
"INSOLVENT": pertaining to a condition of Insolvency.
"INTELLECTUAL PROPERTY": the collective reference to
all rights, priorities and privileges relating to intellectual
property, whether arising under United States, multinational or
foreign laws or otherwise, including copyrights, copyright
licenses, patents, patent licenses, trademarks, trademark
licenses, technology, know-how and processes, and all rights to
xxx at law or in equity for any infringement or other impairment
thereof, including the right to receive all proceeds and damages
therefrom.
"INVESTMENTS": as defined in Section 6.6.
"LENDER": as defined in the preamble hereto.
"LIEN": any mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or
other), charge or other security interest or any preference,
priority or other security agreement or preferential arrangement
of any kind or nature whatsoever (including any conditional sale
or other title retention agreement and any capital lease having
substantially the same economic effect as any of the foregoing).
"LOAN": any loan made by any Lender pursuant to this
Agreement.
"LOAN DOCUMENTS": this Agreement, the Security
Documents, the Registration Rights Agreement and any amendment,
waiver, supplement or other modification to any of the foregoing.
"LOAN PARTIES": the Borrowers and any of their
subsidiaries that is a party to a Loan Document.
"MATERIAL ADVERSE EFFECT": (a) a material adverse
effect on the business, property, operations, condition
(financial or other) or prospects of the Borrower and its
Subsidiaries taken as a whole, (b) ten (10) Business Days after
the occurrence of an event, which would not otherwise fall into
the purview of clause (a) above, which results in an adverse
effect that has or is reasonably likely to have a financial
consequence of Five Hundred Thousand Dollars ($500,000) or more
to the Borrower and its Subsidiaries taken as a whole, or (c) a
material adverse effect on the validity or enforceability of this
Agreement or any of the other Loan Documents or the rights or
remedies of the Lenders hereunder or thereunder.
"MATERIALS OF ENVIRONMENTAL CONCERN": any hazardous or
toxic substances, materials or wastes, defined or regulated as
such in or under any Environmental Law, including asbestos,
polychlorinated biphenyls and urea-formaldehyde insulation.
"MATURITY DATE": the fifth anniversary of the Closing
Date.
Page 6
"MORTGAGED PROPERTIES": the real properties listed on
Schedule 1.1B, as to which the Agent for the benefit of the
Lenders shall be granted a Lien pursuant to the Mortgage.
"MORTGAGE": the mortgage and deed of trust made by any
Loan Party in favor of, or for the benefit of, the Agent for the
benefit of the Lenders, substantially in the form of EXHIBIT D
(with such changes thereto as shall be advisable under the law of
the jurisdiction in which such deed of trust is to be recorded).
"MULTIEMPLOYER PLAN": a Plan that is a multiemployer
plan as defined in Section 4001(a)(3) of ERISA.
"NASDAQ": The NASDAQ Stock Market or any successor
thereto.
"NASDAQ NOTIFICATION FORM": the Notification Form:
Listing of Additional Shares to be filed with the NASDAQ prior to
closing a transaction that may result in the issuance or
potential issuance of its securities.
"OBLIGATIONS": the unpaid principal of and interest on
(including interest accruing after the maturity of the Loans and
interest accruing after the filing of any petition in bankruptcy,
or the commencement of any insolvency, reorganization or like
proceeding, relating to the Borrower, whether or not a claim for
post-filing or post-petition interest is allowed in such
proceeding) the Loans and all other obligations and liabilities
of the Borrower to the Agent or to any Lender, whether direct or
indirect, absolute or contingent, due or to become due, or now
existing or hereafter incurred, which may arise under, out of, or
in connection with, this Agreement, any other Loan Document or
any other document made, delivered or given in connection
herewith or therewith, whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses
(including all reasonable fees, charges and disbursements of
counsel to the Agent or to any Lender that are required to be
paid by the Borrower pursuant hereto) or otherwise.
"OTHER TAXES": any and all present or future stamp or
documentary taxes or any other excise or property taxes, charges
or similar levies arising from any payment made hereunder or from
the execution, delivery or enforcement of, or otherwise with
respect to, this Agreement or any other Loan Document.
"PARTICIPATION RIGHT": as defined in Section 2.7(e).
"PBGC": the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA (or any
successor).
"PELOTON": Peloton Multi-Strategy Master Fund.
"PERSON": an individual, partnership, corporation,
limited liability company, business trust, joint stock company,
trust, unincorporated association, joint venture, Governmental
Authority or other entity of whatever nature.
"PLAN": at a particular time, any employee benefit
plan that is covered by ERISA and in respect of which the
Borrower or a commonly Controlled Entity is (or, if such plan
were terminated at such time, would under Section 4069 of ERISA
be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"REFERENCE PRICE": $16.50 per common share.
Page 7
"REGISTRATION RIGHTS AGREEMENT": the Registration
Rights Agreement to be executed and delivered by Cadiz and
Peloton, substantially in the form of EXHIBIT G.
"REORGANIZATION": with respect to any Multiemployer
Plan, the condition that such plan is in reorganization within
the meaning of Section 4241 of ERISA.
"REPORTABLE EVENT": any of the events set forth in
Section 4043(c) of ERISA, other than those events as to which the
thirty day notice period is waived under subsections .27, .28,
..29, .30, .31, .32, .34 or .35 of PBGC Reg. 4043.
"REQUIRED LENDERS": at any time, the holders of more
than 50% of the aggregate unpaid principal amount of the Loans
then outstanding.
"REQUIREMENT OF LAW": as to any Person, the
Certificate of Incorporation and By-Laws or other organizational
or governing documents of such Person, and any law, treaty, rule
or regulation or determination of an arbitrator or a court or
other Governmental Authority, in each case applicable to or
binding upon such Person or any of its property or to which such
Person or any of its property is subject.
"RESPONSIBLE OFFICER": the chief executive officer,
president or chief financial officer of the Borrower, but in any
event, with respect to financial matters, the chief financial
officer of the Borrower.
"RESTRICTED PAYMENTS": as defined in Section 6.5.
"SEC": the Securities and Exchange Commission, any
successor thereto and any analogous Governmental Authority.
"SECURITY AGREEMENT": the Security Agreement to be
executed and delivered by the Loan Parties, substantially in the
form of EXHIBIT A.
"SECURITY DOCUMENTS": the collective reference to the
Security Agreement, the Mortgage and all other security documents
hereafter delivered to the Agent granting a Lien on any property
of any Person to secure the obligations and liabilities of any
Borrower under any Loan Document.
"SINGLE EMPLOYER PLAN": any Plan that is covered by
Title IV of ERISA, but that is not a Multiemployer Plan.
"SOLVENT": when used with respect to any Person, means
that, as of any date of determination, (a) the amount of the
"present fair saleable value" of the assets of such Person will,
as of such date, exceed the amount of all "liabilities of such
Person, contingent or otherwise", as of such date, as such quoted
terms are determined in accordance with applicable federal and
state laws governing determinations of the insolvency of debtors,
(b) the present fair saleable value of the assets of such Person
will, as of such date, be greater than the amount that will be
required to pay the liability of such Person on its debts as such
debts become absolute and matured, (c) such Person will not have,
as of such date, an unreasonably small amount of capital with
which to conduct its business, and (d) such Person will be able
to pay its debts as they mature. For purposes of this
definition, (i) "debt" means liability on a "claim", and (ii)
"claim" means any (x) right to payment, whether or not such a
right is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed, legal,
equitable, secured or unsecured or (y) right to an equitable
remedy for breach of performance if such breach gives rise to a
right to payment, whether or not such right to an equitable
remedy is reduced to judgment, fixed, contingent, matured or
unmatured, disputed, undisputed, secured or unsecured.
Page 8
"SUBSIDIARY": as to any Person, a corporation,
partnership, limited liability company or other entity of which
shares of stock or other ownership interests having ordinary
voting power (other than stock or such other ownership interests
having such power only by reason of the happening of a
contingency) to elect a majority of the board of directors or
other managers of such corporation, partnership or other entity
are at the time owned, or the management of which is otherwise
controlled, directly or indirectly through one or more
intermediaries, or both, by such Person. Unless otherwise
qualified, all references to a "Subsidiary" or to "Subsidiaries"
in this Agreement shall refer to a Subsidiary or Subsidiaries of
the Borrower.
"TRANCHE A CONVERSION PRICE": 110% x Reference Price
(initially, $18.15 per common share). The Tranche A Conversion
Price, as well as the Adjusted Tranche A Conversion Price
described in Section 2.8, shall be subject to anti-dilution
protection as described in Section 2.7(g) hereof.
"TRANCHE A TERM COMMITMENT": as to any Lender, the
obligation of such Lender, if any, to make a Tranche A Term Loan
to the Borrower in a principal amount equal to the amount set
forth under the heading "Tranche A Term Commitment" opposite such
Lender's name on SCHEDULE 1.1A. The original aggregate amount of
the Tranche A Term Commitment is $10,000,000.
"TRANCHE A TERM LOAN": as defined in Section 2.1.
"TRANCHE B CONVERSION PRICE": 140% x Reference Price
(initially, $23.10 per common share). The Tranche B Conversion
Price, as well as the Adjusted Tranche B Conversion Price
described in Section 2.8, shall be subject to anti-dilution
protection as described in Section 2.7(g) hereof.
"TRANCHE B TERM COMMITMENT": as to any Lender, the
obligation of such Lender, if any, to make a Tranche B Term Loan
to the Borrower in a principal amount equal to the amount set
forth under the heading "Tranche B Term Commitment" opposite such
Lender's name on SCHEDULE 1.1A. The original aggregate amount of
the Tranche B Term Commitment is $26,375,000.
"TRANCHE B TERM LOAN": as defined in Section 2.1.
"UNITED STATES": the United States of America.
1.2 OTHER DEFINITIONAL PROVISIONS
Unless otherwise specified therein, all terms
defined in this Agreement shall have the defined meanings when
used in the other Loan Documents or any certificate or other
document made or delivered pursuant hereto or thereto.
(a) As used herein and in the other Loan Documents, and
any certificate or other document made or delivered pursuant hereto
or thereto, (i) accounting terms relating to any Loan Party not
defined in Section 1.1 and accounting terms partly defined in
Section 1.1, to the extent not defined, shall have the respective
meanings given to them under GAAP, (ii) the words "include",
"includes" and "including" shall be deemed to be followed by the
phrase "without limitation", (iii) the word "incur" shall be
construed to mean incur, create, issue, assume, become liable in
respect of or suffer to exist (and the words "incurred" and
"incurrence" shall have correlative meanings), (iv) the words
"asset" and "property" shall be construed to have the same
meaning and effect and to refer to any and all tangible and
intangible assets and properties, including cash, Capital Stock,
securities, revenues, accounts, leasehold interests and contract
rights, and (v) references to agreements or other Contractual
Obligations shall, unless otherwise specified, be deemed to refer
to such agreements or Contractual Obligations as amended,
supplemented, restated or otherwise modified from time to time.
Page 9
(b) The words "hereof", "herein" and "hereunder" and
words of similar import, when used in this Agreement, shall refer
to this Agreement as a whole and not to any particular provision
of this Agreement, and Section, Schedule and Exhibit references
are to this Agreement unless otherwise specified.
(c) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such
terms.
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
2.1 TERM COMMITMENTS
Subject to the terms and conditions hereof, each
Lender severally agrees to make (a) a Loan (a "TRANCHE A TERM
LOAN") to the Borrower on the Closing Date in an amount equal to
the Tranche A Term Commitment of such Lender and (b) a Loan (a
"TRANCHE B TERM LOAN") to the Borrower on the Closing Date in an
amount equal to the amount of the Tranche B Term Commitment of
such Lender.
2.2 REPAYMENT OF LOANS
The Accreted Loan Value of the Tranche A Term Loan
and the Tranche B Term Loan shall be due and payable on the
Maturity Date to the Agent for the account of each Lender as set
forth in the Register referenced in Section 9.6(a).
2.3 OPTIONAL PREPAYMENTS
(a) The Borrowers may prepay each of the Loans in
cash solely in accordance with Sections 2.3(b) and 2.3(c) in an
amount equal to the Accreted Loan Value of such Loan as of the
date of such prepayment. The Agent shall deliver any prepayment
notice it receives from the Borrower under this Section 2.3 to
the Lenders within three (3) Business Days.
(b) Subject to Section 2.3(c) below, the Borrowers may
not prepay the Loans, in whole or in part, at any time prior to
the first anniversary of the Closing Date. Thereafter, the
Borrowers may prepay either or both the Tranche A Term Loan and
the Tranche B Term Loan in whole but not in part on no less than
thirty (30) days prior written notice to the Agent, if, for at
least 20 out of 30 consecutive NASDAQ trading days ending not
earlier than five (5) Business Days prior to the giving of such
notice, the daily closing sale price on NASDAQ of the public
common stock of Cadiz on each such trading day exceeds (i) one
hundred forty percent (140%) of the initial Tranche A Conversion
Price (in the event of a prepayment of the Tranche A Term Loan)
or (ii) one hundred forty percent (140%) of the initial Tranche B
Conversion Price (in the event of a prepayment of the Tranche B
Term Loan). It shall not be a condition to the delivery by the
Borrowers of such prepayment notice that the Borrowers have
sufficient available funds to make such prepayment. The Lenders
shall, following delivery of notice thereof from the Agent and
prior to any prepayment under this Section 2.3(b), have the right
to convert any portion of the Loans into the Conversion Shares at
the applicable Conversion Price, subject to the terms and
provisions of Section 2.7.
(c) The Borrowers may prepay all but not less than all
of the Loans in cash in an amount equal to the Accreted Loan
Value of the Loans as of the date of such prepayment, provided
that each of the following conditions has been satisfied:
(i) The County of San Bernardino, or any other designated lead
agency under the California Environmental Quality Act, shall have
certified the Environmental Impact Report (the "EIR") for the
Cadiz Groundwater Storage and Dry-Year Supply Program (the
"PROGRAM") and shall have approved any conditions imposed by the
U.S. Bureau of Land Management's Record of Decision for the
Program;
Page 10
(ii) The U.S. Bureau of Land Management shall have issued a
Record of Decision regarding the Program and which grants the
pipeline right of way, appurtenant rights of way for
construction, and amendments to the California Desert
Conservation Area Plan for the benefit of the Program; and
(iii)Borrower and/or a Subsidiary of Borrower either (i)
shall have secured sufficient financing for the design and
construction of the Program or (2) shall have secured from one or
more water agencies a contractual commitment to fund construction
of the Program or a contractual commitment to purchase water on
terms that enables a project financing to fund construction of
the Program.
Such prepayment shall be subject to the delivery of at least
ninety (90) days prior written notice to the Agent of such date
of prepayment. The Lenders shall, following delivery of notice
thereof from the Agent and prior to any prepayment under this
Section 2.3(c), have the right to convert any portion of the
Loans into the Conversion Shares at the applicable Conversion
Price, subject to the terms and provisions of Section 2.7.
2.4 INTEREST RATES AND PAYMENT DATES
Interest shall accrete to the principal amount of
each of the Tranche A Term Loan and the Tranche B Term Loan
(including any additional principal amount added pursuant to this
Agreement) at the rate of 5.0% per annum from and including the
Closing Date until and including the third anniversary of the
Closing Date, and 6% thereafter. If all or a portion of the
principal amount of any Loan shall not be paid when due (whether
at the stated maturity, by acceleration or otherwise), all
outstanding Loans (whether or not overdue) shall bear interest at
a rate per annum equal to the rate that would otherwise be
applicable thereto pursuant to the foregoing provisions of this
Section PLUS 2%.
2.5 COMPUTATION OF INTEREST AND FEES
Interest and fees payable pursuant hereto shall be
calculated on the basis of a 360-day year for the actual days
elapsed.
2.6 [INTENTIONALLY OMITTED]
2.7 CONVERSION SHARES
(a) Agent, on behalf of any requesting Lender, may
request that the Accreted Loan Value of the Loans be converted
from time to time (such date of conversion, the "CONVERSION
DATE") on not less than three (3) Business Days prior notice to
Cadiz, in whole or in part (in increments of not less than
$100,000), at the applicable Conversion Price into the common
stock of Cadiz with ISIN Code US1275372076 (the "CONVERSION
SHARES"). No fractional shares will be issued upon conversion.
In lieu thereof, the Lenders will receive a cash payment for the
fractional amount. Cadiz shall deliver a letter of instruction
to its transfer agent no later than three (3) Business Days after
the Conversion Date, instructing its transfer agent to issue
stock certificates in respect of any such Conversion Shares to be
issued hereunder and deliver the same to the Agent (for
reasonably prompt distribution to the applicable Lenders).
(b) Cadiz shall at all times reserve and keep
available, out of its authorized but unissued shares of common
stock, such shares of common stock as shall be sufficient to
effect conversion of the Loans and otherwise to comply with the
terms of this Agreement. If at any time the number of authorized
but unissued shares of common stock of Cadiz shall not be
sufficient to effect the conversion of the Loans and otherwise to
comply with the terms of this Agreement, Cadiz will forthwith
take such corporate action as may be necessary to increase its
authorized but unissued shares of such common stock to such
number of shares as shall be sufficient for such purpose. Cadiz
will obtain any authorization, consent, approval or other action
by or make any filing with any court or administrative body that
may be required
Page 11
under applicable securities laws in connection with the issuance
of shares of its common stock upon the conversion of the Loans.
(c) The Conversion Shares, when issued, will be duly
and validly issued, fully paid and nonassessable and will be free
and clear of any Liens caused or created by the Borrowers, and
will have been issued in compliance with all Federal and state
securities laws. When issued, the Conversion Shares will be free
from any restrictions, other than transfer restrictions pursuant
to the securities laws.
(d) For as long as (i) the number of Conversion Shares
into which the Loans held by Peloton may be converted, when added
to the number of shares of Cadiz common stock owned by Peloton,
is equal to or greater than ten percent (10%) of Cadiz's
outstanding common stock on a Fully-Diluted Basis and (ii) a
portion of the Loans remains outstanding, Peloton shall have the
right to designate one (1) independent director to serve on
Cadiz's Board of Directors (subject to any restrictions under
applicable law or the rules and requirements of any securities
exchange upon which any of Cadiz's securities may be traded).
Such director must meet the requirements of "independent
director" for all purposes under the rules and regulations of the
NASDAQ and the SEC. This director designation right is personal
to Peloton and cannot be assigned pursuant to Section 9.6(a).
(e) For so long as any portion of the Loans remain
outstanding, Cadiz shall not issue any Capital Stock without
first offering to sell to the Lenders such Capital Stock at the
same price and on the same terms and in such quantity as will
enable the Lenders to maintain their percentage ownership
interest in Cadiz on a Fully-Diluted Basis with respect to the
Conversion Shares (the "Participation Right"). The Lenders'
Participation Right shall not apply to authorized issuances by
Cadiz in connection with: (i) strategic new business
transactions, (ii) firm underwritten commitments for public
offering of common stock with gross proceeds in excess of Thirty-
Five Million Dollars ($35,000,000), (iii) employee/ consultant
stock incentive plans so long as such issuances have been
approved by a majority of the independent directors on Cadiz's
board of directors, (iv) the conversion of any convertible
securities of Cadiz outstanding as of the Closing Date, (v) the
conversion of convertible securities which are offered in a
transaction in which the Lenders are given a right of
participation pursuant to this Section 2.7(e), (vi) the
conversion of the Conversion Shares pursuant to this Agreement,
and (vii) the issuance of securities pursuant to Section 2.7(f).
Such first offer shall be made in writing by Cadiz to the Agent
(for reasonably prompt distribution to each Lender) and shall
remain open for ten (10) Business Days ("PARTICIPATION PERIOD").
The written notice shall provide (i) information about the terms
and conditions of such sale of Capital Stock; and (iii) the
expiration date of the Participation Period. Notice of the
intention of any Lender to exercise its Participation Right shall
be evidenced by a writing signed by such Lender and delivered to
Cadiz (with a copy to the Agent) prior to the expiration date of
the Participation Period, setting forth such Lender's election.
(f) The Conversion Price in effect at any time and the
Conversion Shares shall be subject to adjustment as follows: In
case Cadiz 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 Conversion Price in effect at the time of the
record date (and thereafter) for such dividend or distribution or
of the effective date of such subdivision, combination or
reclassification shall be adjusted so that such Conversion Price
shall equal the price determined by multiplying the Conversion
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 Cadiz declares a 2 for 1 stock
dividend or stock split and the Conversion Price immediately
prior to such event was $19.25 per share, the adjusted Conversion
Price immediately
Page 12
after such event would be $9.625 per share. Such adjustment shall
be made successively whenever any event listed above in this
paragraph shall occur. Whenever the Conversion Price is adjusted
pursuant to this subsection, the number of Conversion Shares
purchasable pursuant to the terms hereof shall simultaneously be
adjusted by multiplying the number of Conversion Shares issuable
upon conversion pursuant to the terms hereof immediately prior to
such adjustment by the Conversion Price in effect immediately prior
to such adjustment and dividing the product so obtained by the
Conversion Price, as adjusted. No adjustment in the Conversion
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 such reason 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 pursuant to the terms hereof shall
be made to the nearest cent or to the nearest one-hundredth of a
share, as the case may be. In the event that at any time, as a
result of an adjustment made pursuant to this subsection, the
Lenders shall become entitled to receive any shares of the
Capital Stock of Cadiz, other than common stock, thereafter the
number of such other shares so receivable upon conversion
pursuant to the terms hereof 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 this subsection. Cadiz may retain a firm of
independent certified public accountants selected by the Board of
Directors (who may be the regular accountants employed by Cadiz)
to make any computation required pursuant to the terms hereof,
and a certificate signed by such firm shall be conclusive
evidence of the correctness of such adjustment absent manifest
error or negligence.
2.8 CHANGE OF CONTROL ELECTIONS
(a) Each Lender shall have the right, at such
Lender's option, pursuant to an offer (subject only to conditions
required by applicable law, if any) by Cadiz (the "CHANGE OF
CONTROL OFFER") communicated to the Agent, to either (i) require
Cadiz to repay the Loans in cash in an amount equal to the
greater of (x) the Accreted Loan Value of the Loans and (y) the
Adjusted Parity Amount, or (ii) convert the Loans into Conversion
Shares at the Adjusted Tranche A Conversion Price and the
Adjusted Tranche B Conversion Price, as applicable.
(b) The Change of Control Offer shall be made in
writing by Cadiz to the Agent (for reasonably prompt distribution
to each Lender) concurrently with the public announcement of such
Change of Control and shall remain open until the tenth (10th)
day immediately following the consummation of the Change of
Control (the "CHANGE OF CONTROL PERIOD"). The written notice
shall provide (i) information about the terms and conditions of
the Change of Control, (ii) information about the Lenders' right
to elect repayment of the Loans or conversion of the Loans into
Conversion Shares pursuant to Section 2.8(a); and (iii) the
expiration date of the Change of Control Period.
(c) Notice of the intention of any Lender to accept
the Change of Control Offer shall be evidenced by a writing
signed by such Lender and delivered to Cadiz (with a copy to the
Agent) prior to the expiration date of the Change of Control
Period, setting forth such Lender's election ("NOTICE OF
ELECTION").
(d) Upon expiration of the Change of Control Period,
Cadiz shall within (3) Business Days in accordance with the
Notice of Election, with respect to the Loans properly tendered
for repayment or conversion during the Change of Control Period,
either (i) repay such Loans to the Agent (for reasonably prompt
distribution to each Lender) or (ii) deliver a letter of
instruction to its transfer agent, instructing its transfer agent
to issue stock certificates in respect of any such Conversion
Shares to be issued hereunder and to deliver the same to the
Agent (for reasonably prompt distribution to the applicable
Lenders).
2.9 EXCHANGE CAP
Notwithstanding any other provision of this
Agreement, no Loans of any Lender shall be convertible into
Conversion Shares under this Agreement to the extent that
Page 13
after such conversion such Lender would own more than 19.99%
of the currently outstanding common stock of Cadiz (the "EXCHANGE
CAP") unless Cadiz shall have obtained the prior approval of its
stockholders to the issuance of Conversion Shares in excess of
the Exchange Cap; PROVIDED, HOWEVER, that no Conversion Shares
issued to such Lender prior to any such stockholder approval
shall be entitled to vote on any proposal submitted to Cadiz
stockholders to approve the issuance of Conversion Shares in
excess of the Exchange Cap.
SECTION 3. REPRESENTATIONS AND WARRANTIES
To induce the Agent and the Lenders to enter into this
Agreement and to make the Loans, the Borrowers hereby jointly and
severally represent and warrant to the Agent and each Lender
that:
3.1 NO CHANGE
Since December 31, 2005, there has been no
development or event that has had or could reasonably be expected
to have a Material Adverse Effect.
3.2 EXISTENCE; COMPLIANCE WITH LAW
Each Loan Party (a) is duly organized, validly
existing and in good standing under the laws of the jurisdiction
of its organization, (b) has the power and authority, and the
legal right, to own and operate its property, to lease the
property it operates as lessee and to conduct the business in
which it is currently engaged, (c) is duly qualified as a foreign
corporation or other organization and in good standing under the
laws of each jurisdiction where its ownership, lease or operation
of property or the conduct of its business requires such
qualification and (d) is in compliance with all Requirements of
Law except to the extent that the failure to comply therewith
could not, in the aggregate, reasonably be expected to have a
Material Adverse Effect.
3.3 POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS
Each Loan Party has the power and authority, and the
legal right, to make, deliver and perform the Loan Documents to
which it is a party and , in the case of the Borrower, to obtain
extensions of credit hereunder. Each Loan Party has taken all
necessary organizational action to authorize the execution,
delivery and performance of the Loan Documents to which it is a
party and, in the case of the Borrower, to authorize the
extensions of credit on the terms and conditions of this
Agreement. No consent or authorization of, filing with, notice
to or other act by or in respect of, any Governmental Authority
or any other Person is required in connection with the extensions
of credit hereunder or with the execution, delivery, performance,
validity or enforceability of this Agreement or any of the Loan
Documents, except the filings referred to in Section 3.16, the
NASDAQ Notification Form to be filed with the NASDAQ and the
proxy statement to be filed with the SEC in order to obtain
stockholder approval for the issuance of such Conversion Shares
in excess of the Exchange Cap in accordance with Section 2.9.
Each Loan Document has been duly executed and delivered on behalf
of each Loan Party thereto. This Agreement constitutes, and each
other Loan Document upon execution will constitute, a legal,
valid and binding obligation of each Loan Party thereto,
enforceable against each such Loan Party in accordance with its
terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the enforcement of creditors' rights generally and
by general equitable principles (whether enforcement is sought by
proceedings in equity or at law).
3.4 NO LEGAL BAR
The execution, delivery and performance of this
Agreement and the other Loan Documents, the borrowings hereunder
and the use of the proceeds thereof will not violate any
Requirement of Law or any Contractual Obligation of any Loan
Party and will not result in, or require, the creation or
imposition of any Lien on any of their respective properties or
revenues pursuant to any Requirement of Law or any such
Contractual Obligation (other than the Liens created by the
Security Documents). No Requirement of Law or Contractual
Obligation applicable to the Borrower or any of its Subsidiaries
could reasonably be expected to have a Material Adverse Effect.
Page 14
3.5 LITIGATION
No litigation, investigation or proceeding of or
before any arbitrator or Governmental Authority is pending or, to
the knowledge of the Borrowers, threatened by or against any Loan
Party or against any of their respective properties or revenues
(a) with respect to any of the Loan Documents or any of the
transactions contemplated hereby or thereby, or (b) that could
reasonably be expected to have a Material Adverse Effect.
3.6 NO DEFAULT
No Loan Party is in default under or with respect to
any of its Contractual Obligations in any respect that could
reasonably be expected to have a Material Adverse Effect.
3.7 OWNERSHIP OF PROPERTY; LIENS
Each Loan Party has title in fee simple to, or a
valid leasehold interest in, all its real property (other than
the property currently owned by Harweal Investments Limited, the
name of which has subsequently been change to EVCO Limited, as
nominee for Cadiz Land Company, Inc., which property is subject
to no Liens other than Liens in favor of a Loan Party), and good
title to, or a valid leasehold interest in, all its other
property, and none of such property is subject to any Lien except
as permitted by Section 6.2 or such other minor defects in title
that do not interfere with such Loan Party's ability to conduct
its business as currently conducted or to utilize such properties
for their intended purposes. The property subject to the
Mortgage comprises all of the real property owned, leased or
controlled by the Loan Parties and any of their Subsidiaries.
3.8 INTELLECTUAL PROPERTY
Each Loan Party owns, or is licensed to use, all
Intellectual Property necessary for the conduct of its business
as currently conducted. No material claim has been asserted and
is pending by any Person challenging or questioning the use of
any Intellectual Property or the validity or effectiveness of any
Intellectual Property, nor does any Loan Party know of any valid
basis for any such claim. The use of Intellectual Property by
each Loan Party does not infringe on the rights of any Person in
any material respect.
3.9 TAXES
Each Loan Party has filed or caused to be filed all
Federal, state and other material tax returns that are required
to be filed and has paid all taxes shown to be due and payable on
said returns or on any assessments made against it or any of its
property and all other taxes, fees or other charges imposed on it
or any of its property by any Governmental Authority (other than
(i) any the amount or validity of which are currently being
contested in good faith by appropriate proceedings and with
respect to which reserves in conformity with GAAP have been
provided on the books of the relevant Loan Party or (ii) to the
extent the failure of which could not reasonably be expected to
result in a Material Adverse Effect). No tax Lien has been
filed, and, to the knowledge of the Borrower, no claim is being
asserted, with respect to any such tax, fee or other charge.
3.10 ERISA
Neither a Reportable Event nor an "accumulated
funding deficiency" (within the meaning of Section 412 of the
Code or Section 302 of ERISA) has occurred during the five-year
period prior to the date on which this representation is made or
deemed made with respect to any Plan, and each Plan has complied
in all material respects with the applicable provisions of ERISA
and the Code. No "prohibited transaction" (and the transactions
contemplated by this Agreement, will not constitute, or
indirectly result in, a "prohibited transaction" within the
meaning of Section 4975 of the Code or Section 406 of ERISA) has
occurred, or is expected to occur, which has subjected, or could
subject, the Mortgaged Properties, Borrower, or any officer,
director or employee of the Borrower, or Trustee of any Single
Employer Plan, administrator or other fiduciary to any tax or
penalty on prohibited transactions imposed by either Section 502
of ERISA or Section 4975 of the Code or any other liability with
respect thereto. No termination of a Single Employer Plan has
occurred, and no Lien in favor of the PBGC or a Plan has arisen,
during such five-year period. The present value of all accrued
benefits under each Single Employer Plan (based on those
assumptions used to fund such Plans) did not, as of the last
annual valuation date prior to the date on which this
representation is made or deemed made, exceed the
Page 15
value of the assets of such Plan allocable to such accrued benefits
by a material amount. Neither the Borrower nor any Commonly
Controlled Entity has had a complete or partial withdrawal from
any Multiemployer Plan that has resulted or could reasonably be
expected to result in a material liability under ERISA, and
neither the Borrower nor any Commonly Controlled Entity would
become subject to any material liability under ERISA if the
Borrower or any such Commonly Controlled Entity were to withdraw
partially or completely from all Multiemployer Plans as of the
valuation date most closely preceding the date on which this
representation is made or deemed made. No such Multiemployer
Plan is in Reorganization or Insolvent.
3.11 INVESTMENT COMPANY ACT; OTHER REGULATIONS
No Loan Party is an "investment company", or a
company "controlled" by an "investment company", within the
meaning of the Investment Company Act of 1940, as amended. No
Loan Party is subject to regulation under any Requirement of Law
(other than Regulation X of the Board) that limits its ability to
incur Indebtedness.
3.12 SUBSIDIARIES
Except as disclosed to the Agent by the Borrower in
writing from time to time after the Closing Date, (a) Schedule
3.12 sets forth the name and jurisdiction of formation of each
Subsidiary and, as to each such Subsidiary, the percentage of
each class of Capital Stock owned by any Loan Party and (b)
except as disclosed in public filings to the SEC, there are no
outstanding subscriptions, options, warrants, calls, rights or
other agreements or commitments (other than stock options granted
to employees or directors and directors' qualifying shares) of
any nature relating to any Capital Stock of the Borrower or any
Subsidiary, except as created by the Loan Documents.
3.13 USE OF PROCEEDS
The proceeds of the Loans shall be used to repay in
full the ING Loan and for general corporate purposes.
3.14 ENVIRONMENTAL MATTERS
Except as, in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect:
(a) the Mortgaged Properties do not contain, and have not
previously contained, any Materials of Environmental Concern in
amounts or concentrations or under circumstances that constitute
or constituted a violation of, or could give rise to liability
under, any Environmental Law;
(b) no Loan Party has received or is aware of any notice of
violation, alleged violation, non-compliance, liability or
potential liability regarding environmental matters or compliance
with Environmental Laws with regard to any of the Mortgaged
Properties or the business operated by any Loan Party (the
"BUSINESS"), nor does the Borrower have knowledge or reason to
believe that any such notice will be received or is being
threatened;
(c) Materials of Environmental Concern have not been
transported or disposed of from the Mortgaged Properties in violation
of, or in a manner or to a location that could give rise to liability
under, any Environmental Law, nor have any Materials of
Environmental Concern been generated, treated, stored or disposed
of at, on or under any of the Mortgaged Properties in violation
of, or in a manner that could give rise to liability under, any
applicable Environmental Law;
(d) no judicial proceeding or governmental or administrative
action is pending or, to the knowledge of the Borrower,
threatened, under any Environmental Law to which any Loan Party
is or will be named as a party with respect to the Mortgaged
Properties or the Business, nor are there any consent decrees or
other decrees, consent orders, administrative orders or other
orders, or other administrative or judicial requirements
outstanding under any Environmental Law with respect to the
Mortgaged Properties or the Business;
Page 16
(e) there has been no release or threat of release of
Materials of Environmental Concern at or from the Mortgaged Properties,
orvarising from or related to the operations of any Loan Party in
connection with the Mortgaged Properties or otherwise in
connection with the Business, in violation of or in amounts or in
a manner that could give rise to liability under Environmental
Laws;
(f) the Mortgaged Properties and all operations at the
Mortgaged Properties are in compliance, and have in the last five
years been in compliance, with all applicable Environmental Laws, and
there is no contamination at, under or about the Mortgaged
Properties or violation of any Environmental Law with respect to
the Mortgaged Properties or the Business; and
(g) no Loan Party has assumed any liability of any other
Person under Environmental Laws.
3.15 ACCURACY OF INFORMATION, ETC
No statement or information contained in this
Agreement, any other Loan Document, any SEC public filing or any
other document, certificate or statement furnished by or on
behalf of any Loan Party to the Agent or the Lenders, or any of
them, for use in connection with the transactions contemplated by
this Agreement or the other Loan Documents, contained as of the
date such statement, information, document or certificate was so
furnished, any untrue statement of a material fact or omitted to
state a material fact necessary to make the statements contained
herein or therein not misleading. There is no fact known to any
Loan Party that could reasonably be expected to have a Material
Adverse Effect that has not been expressly disclosed herein, in
the other Loan Documents, any SEC public filing or in any other
documents, certificates and statements furnished to the Agent and
the Lenders for use in connection with the transactions
contemplated hereby and by the other Loan Documents.
3.16 SECURITY DOCUMENTS
(a) The Security Agreement is effective to create
in favor of the Agent, for the benefit of the Lenders, a legal,
valid and enforceable security interest in the Collateral
described therein and proceeds thereof. In the case of the other
Collateral described in the Security Agreement, when financing
statements and other filings specified on Schedule 3.16(a) in
appropriate form are filed in the offices specified on
Schedule 3.16(a), the Security Agreement shall constitute a fully
perfected Lien on, and security interest in, all right, title and
interest of the Loan Parties in such Collateral and the proceeds
thereof, as security for the Obligations (as defined in the
Security Agreement), in each case prior and superior in right to
any other Person (except, in the case of Collateral, Liens
permitted by Section 6.2).
(b) The Mortgage is effective to create in favor of
the Agent for the benefit of the Lenders, a legal, valid and
enforceable Lien on the Mortgaged Properties described therein
and proceeds thereof, and when the Mortgage is filed in the
offices specified on Schedule 3.16(b), each such Mortgage shall
constitute a fully perfected Lien on, and security interest in,
all right, title and interest of the Loan Parties in the
Mortgaged Properties and the proceeds thereof, as security for
the Obligations (as defined in the relevant Mortgage), in each
case prior and superior in right to any other Person (except
exceptions permitted by the Agent in the relevant title
policies). SCHEDULE 1.1B lists, as of the Closing Date, each
parcel of owned real property and each leasehold interest in real
property located in the United States and held by the Loan
Parties or any of its Subsidiaries. All of the properties listed
on SCHEDULE 1.1B shall be subject to the Mortgage.
3.17 SOLVENCY
Each Loan Party is, and after giving effect to the
incurrence of all Indebtedness and obligations being incurred in
connection herewith, will be and will continue to be, Solvent.
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3.18 REGULATION H
No Mortgage encumbers improved real property that is
located in an area that has been identified by the Secretary of
Housing and Urban Development as an area having special flood
hazards and in which flood insurance has been made available
under the National Flood Insurance Act of 1968.
3.19 LABOR MATTERS
Except as, in the aggregate, could not reasonably be
expected to have a Material Adverse Effect: (a) there are no
strikes or other labor disputes against any Loan Party pending
or, to the knowledge of the Borrower, threatened; (b) hours
worked by and payment made to employees of each Loan Party have
not been in violation of the Fair Labor Standards Act or any
other applicable Requirement of Law dealing with such matters;
and (c) all payments due from any Loan Party on account of
employee health and welfare insurance have been paid or accrued
as a liability on the books of the relevant Loan Party.
SECTION 4. CONDITIONS PRECEDENT
4.1 CONDITIONS TO EXTENSION OF CREDIT
The obligations of the Lenders to make the Tranche A
Term Loan and the Tranche B Term Loan and otherwise complete the
transactions contemplated by this Agreement are subject to the
satisfaction of each of the following conditions precedent on or
before the Closing Date:
(a) CREDIT AGREEMENT; SECURITY AGREEMENT. The Agent shall have
received (i) this Agreement, executed and delivered by the
Lenders, the Agent, Cadiz and CRE and (ii) the Security
Agreement, executed and delivered by Cadiz, CRE and the Agent.
FINANCIAL STATEMENTS. The Agent shall have received
(i) audited consolidated financial statements of the
Borrowers for the 2004 and 2005 fiscal years and (ii)
unaudited interim consolidated financial statements of the
Borrowers for each fiscal quarter ended after the date of
the latest applicable financial statements delivered
pursuant to clause (i) of this paragraph as to which such
financial statements are available.
APPROVALS AND FILINGS. All governmental and third
party approvals and filings (including landlords' consents
and the NASDAQ Notification Form) necessary in connection
with the continuing operations of the Loan Parties and the
transactions contemplated hereby shall have been
obtained/filed and be in full force and effect, and all
applicable waiting periods shall have expired without any
action being taken or threatened by any competent authority
that would restrain, prevent or otherwise impose adverse
conditions on the financing contemplated hereby.
ING LOAN AND PREFERRED STOCK. The Agent shall have
received (i) an executed payoff letter, in form and
substance satisfactory to the Agent, with respect to (x) the
payment in full of the ING Loan on the Closing Date and (y)
the termination of the liens related thereto, (ii) a waiver,
in form and substance satisfactory to the Agent, with
respect to the waiver of all preemptive rights and
preferences of the Preferred Stock of the Company (including
the Series F Preferred Stock held by ING) in connection with
the transactions contemplated by this Agreement, and (iii) a
consent received from ING for the filing of an amendment to
the Certificate of Designation for the Series F Preferred
Stock, in form and substance satisfactory to the Agent.
OTHER AGREEMENTS. The Agent shall have received the
Registration Rights Agreement and such other agreements as
reasonably requested by the Agent, in each case, executed
and delivered by Cadiz and each other Loan Party party
thereto.
LIEN SEARCHES. The Agent shall have received the
results of a recent lien search in each of the jurisdictions
where assets of the Loan Parties are located, and such
search shall reveal no liens on any of the assets of the
Loan Parties except for liens permitted by Section 6.2 or
discharged on or prior to the Closing Date pursuant to
documentation satisfactory to the Agent.
Page 18
FEES. The Lenders and the Agent shall have received
all fees required to be paid, and all expenses for which
invoices have been presented (including the reasonable fees
and expenses of legal counsel), on or before the Closing
Date. All such amounts will be paid with proceeds of Loans
made on the Closing Date and will be reflected in the
funding instructions given by the Borrower to the Agent on
or before the Closing Date.
CLOSING CERTIFICATE; CERTIFIED CERTIFICATE OF
INCORPORATION; GOOD STANDING CERTIFICATES. The Agent shall
have received (i) a certificate of each Loan Party, dated
the Closing Date, substantially in the form of EXHIBIT C,
with appropriate insertions and attachments, including the
certificate of incorporation, in the case of Cadiz, and the
certificate of formation, in the case of CRE, and (ii) a
good standing certificate for each Borrower from its
jurisdiction of organization.
LEGAL OPINIONS. The Agent shall have received the
following executed legal opinions the legal opinion of
Stephan, Oringher, Xxxxxxx, Xxxxxxxx & Xxxxxx, P.C., counsel
to the Borrower and its Subsidiaries, substantially in the
form of EXHIBIT F. Such legal opinion shall cover such
other matters incident to the transactions contemplated by
this Agreement as the Agent may reasonably require.
FILINGS, REGISTRATIONS AND RECORDINGS. Each document
(including any Uniform Commercial Code financing
statement) required by the Security Documents or under law
or reasonably requested by the Agent to be filed, registered
or recorded in order to create in favor of the Agent, for
the benefit of the Lenders, a perfected Lien on the
Collateral described therein, prior and superior in right to
any other Person (other than with respect to Liens expressly
permitted by Section 6.2), shall be in proper form for
filing, registration or recordation.
MORTGAGE, ETC. (i) The Agent shall have received the
Mortgage with respect to the Mortgaged Properties, executed
and delivered by a duly authorized officer of each party
thereto.
The Agent shall have received irrevocable and
unconditional commitment of Chicago Title Company (the
"TITLE COMPANY") to record the Mortgage relating to the
Mortgaged Properties and to issue to the Agent, on behalf of
the Lenders, effective as of the date and time the Mortgage
are recorded, a CLTA lender's title insurance policy
("LENDER'S POLICY"), or equivalent form acceptable to the
Agent, in form and substance, and with endorsements,
satisfactory to the Agent.
The Agent shall have received a copy of all recorded
documents referred to, or listed as exceptions to title in,
the title policy or policies referred to in clause (ii)
above and a copy of all other material documents affecting
the Mortgaged Properties.
SECTION 5. AFFIRMATIVE COVENANTS
The Borrowers hereby jointly and severally agree that,
so long as the Commitments remain in effect or any Loan is owing
to any Lender hereunder, each of the Borrowers shall and shall
cause each of its Subsidiaries to:
Page 19
5.1 FINANCIAL STATEMENTS
Furnish to the Agent (for reasonably prompt
distribution to each Lender):
(a) within 90 days after the end of each fiscal year of the
Borrower, a copy of the audited consolidated balance sheet of the
Borrower and its consolidated Subsidiaries as at the end of such
year and the related audited consolidated statements of income
and of cash flows for such year, setting forth in each case in
comparative form the figures for the previous year, reported on
without a "going concern" or like qualification or exception, or
qualification arising out of the scope of the audit, by
PriceWaterhouseCoopers LLP or other independent certified public
accountants of nationally recognized standing;
(b) within 45 days after the end of each of the first three
quarterly periods of each fiscal year of the Borrower, the
unaudited consolidated balance sheet of the Borrower and its
consolidated Subsidiaries as at the end of such quarter and the
related unaudited consolidated statements of income and of cash
flows for such quarter and the portion of the fiscal year through
the end of such quarter, setting forth in each case in
comparative form the figures for the previous year, certified by
a Responsible Officer as being fairly stated in all material
respects (subject to normal year-end audit adjustments); and
(c) at the request of the Agent and to the extent prepared for,
and concurrently with the delivery to, Cadiz's management or
Board of Directors, after the end of each month occurring during
each fiscal year of the Borrower, the unaudited consolidated
balance sheets of the Borrower and its Subsidiaries as at the end
of such month and the related unaudited consolidated statements
of income and of cash flows for such month and the portion of the
fiscal year through the end of such month, setting forth in each
case in comparative form the figures for the previous year,
certified by a Responsible Officer as being fairly stated in all
material respects (subject to normal year-end audit adjustments).
All such financial statements shall be complete and correct in
all material respects and shall be prepared in reasonable detail
and in accordance with GAAP applied (except as approved by such
accountants or officer, as the case may be, and disclosed in
reasonable detail therein) consistently throughout the periods
reflected therein and with prior periods.
5.2 CERTIFICATES; OTHER INFORMATION
Furnish to the Agent (for reasonably prompt
distribution to each Lender):
(a) upon Agent's request at a cost to the Borrowers
not to exceed Ten Thousand Dollars ($10,000), a certificate of
the independent certified public accountants reporting on such
financial statements stating that in making the examination
necessary therefor no knowledge was obtained of any Default or
Event of Default, except as specified in such certificate;
(b) concurrently with the delivery of any financial
statements pursuant to Section 5.1, (i) a certificate of a
Responsible Officer stating that, to the best of such Responsible
Officer's knowledge, each Loan Party during such period has
observed or performed all of its covenants and other agreements,
and satisfied every condition contained in this Agreement and the
other Loan Documents to which it is a party to be observed,
performed or satisfied by it, and that such Responsible Officer
has obtained no knowledge of any Default or Event of Default
except as specified in such certificate and (ii) in the case of
quarterly or annual financial statements, (x) a Compliance
Certificate containing all information necessary for determining
compliance by each Loan Party with the provisions of this
Agreement referred to therein as of the last day of the fiscal
quarter or fiscal year of the Borrower, as the case may be, and
(y) to the extent not previously
Page 20
disclosed to the Agent, a description of any change in the
jurisdiction of organization of any Loan Party and a list of any
Intellectual Property acquired by any Loan Party since the date
of the most recent report delivered pursuant to this clause (y)
(or, in the case of the first such report so delivered, since the
Closing Date);
(c) within five days after the same are sent, copies of
all financial statements and reports that the Borrower sends to the
holders of any class of its debt securities or public equity
securities and, within five days after the same are filed, copies
of all financial statements and reports that the Borrower may
make to, or file with, the SEC; and
(d) promptly, such additional financial and other
information as the Agent may from time to time reasonably request.
5.3 PAYMENT OF OBLIGATIONS
Pay, discharge or otherwise satisfy at or before
maturity or before they become delinquent, as the case may be,
all its material obligations of whatever nature, except where the
amount or validity thereof is currently being contested in good
faith by appropriate proceedings and reserves in conformity with
GAAP with respect thereto have been provided on the books of the
relevant Borrower.
5.4 MAINTENANCE OF EXISTENCE; COMPLIANCE
(a)(i) Preserve, renew and keep in full force and
effect its organizational existence and (ii) take all reasonable
action to maintain all rights, privileges and franchises
necessary or desirable in the normal conduct of its business,
except, in each case, as otherwise permitted by Section 6.4 and
except, in the case of clause (ii) above, to the extent that
failure to do so could not reasonably be expected to have a
Material Adverse Effect; and (b) comply with all Contractual
Obligations and Requirements of Law except to the extent that
failure to comply therewith could not, in the aggregate,
reasonably be expected to have a Material Adverse Effect.
5.5 MAINTENANCE OF PROPERTY; INSURANCE
(a) Keep all property useful and necessary in its
business in good working order and condition, ordinary wear and
tear excepted and (b) maintain with financially sound and
reputable insurance companies insurance on all its property in at
least such amounts and against at least such risks (but including
in any event public liability, product liability and business
interruption) as are usually insured against in the same general
area by companies engaged in the same or a similar business.
5.6 INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS
(a) Keep proper books of records and account in
which full, true and correct entries in conformity with GAAP and
all Requirements of Law shall be made of all dealings and
transactions in relation to its business and activities and (b)
permit representatives of the Agent to visit and inspect any of
its properties and examine and make abstracts from any of its
books and records at any reasonable time and as often as may
reasonably be desired and to discuss the business, operations,
properties and financial and other condition of the Loan Parties
with officers and employees of the Loan Parties and with their
independent certified public accountants.
5.7 NOTICES
Promptly give notice to the Agent (for reasonably
prompt distribution to each Lender):
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any
Contractual Obligation of any Loan Party or (ii) litigation,
investigation or proceeding that may exist at any time between any
Loan
Page 21
Party and any Governmental Authority, that in either case, if
not cured or if adversely determined, as the case may be, could
reasonably be expected to have a Material Adverse Effect;
(c) any litigation or proceeding affecting any Loan
Party (i) in which the amount involved is $500,000 or more and not
covered by insurance, (ii) in which injunctive or similar relief is
sought or (iii) which relates to any Loan Document;
(d) the following events, as soon as possible and in any
event within 30 days after the Borrower knows or has reason to know
thereof: (i) the occurrence of any Reportable Event with respect
to any Plan, a failure to make any required contribution to a
Plan, the creation of any Lien in favor of the PBGC or a Plan or
any withdrawal from, or the termination, Reorganization or
Insolvency of, any Multiemployer Plan or (ii) the institution of
proceedings or the taking of any other action by the PBGC or the
Borrower or any Commonly Controlled Entity or any Multiemployer
Plan with respect to the withdrawal from, or the termination,
Reorganization or Insolvency of, any Plan; and
(e) any development or event that has had or could
reasonably be expected to have a Material Adverse Effect.
Each notice pursuant to this Section 5.7 shall be accompanied by
a statement of a Responsible Officer setting forth details of the
occurrence referred to therein and stating what action the
relevant Loan Party proposes to take with respect thereto.
5.8 ENVIRONMENTAL LAWS
(a) Comply in all material respects with, and ensure
compliance in all material respects by all tenants and
subtenants, if any, with, all applicable Environmental Laws, and
obtain and comply in all material respects with and maintain, and
ensure that all tenants and subtenants obtain and comply in all
material respects with and maintain, any and all licenses,
approvals, notifications, registrations or permits required by
applicable Environmental Laws, and (b) conduct and complete all
investigations, studies, sampling and testing, and all remedial,
removal and other actions required under Environmental Laws and
promptly comply in all material respects with all lawful orders
and directives of all Governmental Authorities regarding
Environmental Laws.
5.9 ADDITIONAL COLLATERAL, ETC
(a) With respect to any property acquired after
the Closing Date by any Loan Party (other than (x) any property
described in paragraph (b) below or (y) any property subject to a
Lien expressly permitted by Section 6.2(f)) as to which the
Agent, for the benefit of the Lenders does not have a perfected
Lien, promptly (i) execute and deliver to the Agent such
amendments to the Security Agreement or such other documents as
the Agent deems necessary or advisable to grant to the Agent, for
the benefit of the Lenders, a security interest in such property
and (ii) take all actions necessary or advisable to grant to the
Agent, for the benefit of the Lenders, a perfected first priority
security interest in such property, including the filing of
Uniform Commercial Code financing statements in such
jurisdictions as may be required by the Security Agreement or by
law or as may be requested by the Agent.
(b) With respect to any fee or leasehold interest in
any real property acquired after the Closing Date by any Loan
Party or its Subsidiaries (other than any such real property
subject to a Lien expressly permitted by Section 6.2(f)),
promptly (i) execute and deliver a first priority Mortgage, in
favor of the Agent, for the benefit of the Lenders, covering such
real property, (ii) if requested by the Agent, provide the Agent
with (x) title and extended coverage insurance covering such real
property in an amount at least equal to the purchase price of
such real property (or such other amount as shall be reasonably
specified by the Agent) and (y) any consents or estoppels
reasonably deemed necessary or advisable by the Agent in
connection with such mortgage, each of the foregoing in form and
substance
Page 22
reasonably satisfactory to the Agent and (iii) if
requested by the Agent, deliver to the Agent legal opinions
relating to the matters described above, which opinions shall be
in form and substance, and from counsel, reasonably satisfactory
to the Agent.
5.10 CRE AMENDMENT
At the request of the Agent, CRE shall promptly
amend its Limited Liability Company Agreement, dated as of
December 11, 2003 (as amended), substantially in the form set
forth on Exhibit I, to (i) replace its existing independent
member with a new independent member designated by the Agent,
(ii) replace references to the ING Loan with references to the
Loans hereunder, and (iii) reflect certain other changes required
by the Agent.
SECTION 6. NEGATIVE COVENANTS
The Borrowers hereby jointly and severally agree that,
so long as the Commitments remain in effect or any Loan or other
amount is owing to the Lenders hereunder, each of the Borrowers
shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly:
6.1 INDEBTEDNESS
Create, issue, incur, assume, become liable in
respect of or suffer to exist any Indebtedness, except:
(a) Indebtedness of any Loan Party pursuant to any Loan
Document;
(b) Indebtedness (including, without limitation, Capital
Lease Obligations) incurred to finance the acquisition, construction
or improvement of any assets, and Indebtedness assumed in connection
with the acquisition of any such assets or secured by a Lien on
any such assets prior to the acquisition thereof, and extensions,
renewals and replacements of any such Indebtedness that do not
increase the outstanding principal amount thereof; provided that
(i) such Indebtedness is incurred prior to 90 days after such
acquisition or the completion of such construction or improvement
and (ii) the aggregate principal amount of such Indebtedness
shall not exceed $500,000 at any one time outstanding; and
(c) Indebtedness of any Loan Party to any other Loan
Party, provided that any such intercompany loan is evidenced
by a note that is pledged to the Agent for the benefit of
the Lenders; and
(d) Indebtedness constituting unsecured debt in an
aggregate principal amount not to exceed $500,000 at any one
time outstanding.
6.2 LIENS
Create, incur, assume or suffer to exist any Lien
upon any of its property, whether now owned or hereafter
acquired, except:
(a) Liens for taxes not yet due or that are being contested
in good faith by appropriate proceedings, Provided that adequate
reserves with respect thereto are maintained on the books of the
Borrower or its Subsidiaries, as the case may be, in conformity
with GAAP;
carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary
course of business that are not overdue for a period of more
than 30 days or that are being contested in good faith by
appropriate proceedings;
pledges or deposits in connection with workers'
compensation, unemployment insurance and other social
security legislation;
Page 23
deposits to secure the performance of bids, trade
contracts (other than for borrowed money), leases, statutory
obligations, surety and appeal bonds, performance bonds and
other obligations of a like nature incurred in the ordinary
course of business;
easements, rights-of-way, restrictions and other
similar encumbrances incurred in the ordinary course of
business that, in the aggregate, are not substantial in
amount and that do not in any case materially detract from
the value of the property subject thereto or materially
interfere with the ordinary conduct of the business of the
Borrower or any of its Subsidiaries;
Liens securing Indebtedness of the Borrower or any
other Subsidiary incurred pursuant to Section 6.1(b),
provided that (i) such Liens are incurred prior to 90 days
after such acquisition or the completion of such
construction or improvement, (ii) such Liens do not at any
time encumber any property other than the property financed
by such Indebtedness and (iii) the amount of Indebtedness
secured thereby is not increased;
Liens created pursuant to the Security Documents;
any interest or title of a lessor under any lease
entered into by the Borrower or any other Subsidiary in the
ordinary course of its business and covering only the assets
so leased;
Liens arising out of any judgment awarded against the
Borrower which have been discharged, vacated, reversed or
execution thereof stayed pending appeal;
Liens with respect to which the Borrower or related
lessee shall have provided a bond or other security in an
amount and under terms reasonably satisfactory to the Agent
and which does not involve any material risk of the sale,
forfeiture or loss of any interest in Borrower's real or
personal property;
Liens described in the Lender's Policy issued by the
Title Company, insuring priority in the Mortgage, and
permitted by the Agent as of the Closing Date; and
Liens not otherwise permitted by this Section so long
as the aggregate outstanding principal amount of the
obligations secured thereby does not exceed (as to the Loan
Parties) $200,000 at any one time outstanding.
6.3 FUNDAMENTAL CHANGES
Enter into any merger, consolidation or amalgamation, or
liquidate, wind up or dissolve itself (or suffer any liquidation or
dissolution), or Dispose of all or substantially all of its
property or business, except that any Investment expressly permitted
by Section 6.6 may be structured as a merger, consolidation or
amalgamation.
6.4 DISPOSITION OF PROPERTY
Dispose of any of its property, whether now owned or
hereafter acquired, or, in the case of any Subsidiary, issue or
sell any shares of such Subsidiary's Capital Stock to any Person,
except:
(a) the Disposition of obsolete or worn out property in the
ordinary course of business;
(b) the Disposition of other property having a fair market
value not to exceed $200,000 in the aggregate for any fiscal year of
the Borrower.
6.5 RESTRICTED PAYMENTS
Declare or pay any dividend (other than dividends
payable solely in common stock of the Person making such
dividend) on, or make any payment on account of, or
Page 24
set apart assets for a sinking or other analogous fund for, the
purchase, redemption, defeasance, retirement or other acquisition
of, any Capital Stock of any Loan Party, whether now or hereafter
outstanding, or make any other distribution in respect thereof,
either directly or indirectly, whether in cash or property or in
obligations of any Borrower (collectively, "RESTRICTED
PAYMENTS"), except that any Subsidiary may make Restricted
Payments to the Borrowers.
6.6 INVESTMENTS
Make any advance, loan, extension of credit (by way
of guaranty or otherwise) or capital contribution to, or purchase
any Capital Stock, bonds, notes, debentures or other debt
securities of, or any assets constituting a business unit of, or
make any other investment in, any Person (all of the foregoing,
"INVESTMENTS"), except:
(a) extensions of trade credit in the ordinary course of
business;
(b) investments in Cash Equivalents;
intercompany Investments by any Loan Party in another
Loan Party;
acquisitions (by merger or purchase of assets) where
100% of the purchase price is paid in the Capital Stock of
Cadiz, provided that (i) any such acquisition must be
reasonably acceptable to the Agent and the Required Lenders
and (ii) any equity interests so acquired must be pledged to
the Agent as provided in Section 5.9(a).
6.7 TRANSACTIONS WITH AFFILIATES
Enter into any transaction, including any purchase,
sale, lease or exchange of property, the rendering of any service
or the payment of any management, advisory or similar fees, with
any Affiliate (other than among the Loan Parties) unless such
transaction is (a) otherwise permitted under this Agreement, (b)
in the ordinary course of business of the relevant Loan Party,
and (c) upon fair and reasonable terms no less favorable to the
relevant Loan Party than it would obtain in a comparable arm's
length transaction with a Person that is not an Affiliate.
6.8 SALES AND LEASEBACKS
Enter into any arrangement with any Person providing
for the leasing by any Borrower of real or personal property that
has been or is to be sold or transferred by such Borrower to such
Person or to any other Person to whom funds have been or are to
be advanced by such Person on the security of such property or
rental obligations of such Borrower.
6.9 SWAP AGREEMENTS
Enter into any Swap Agreement, except (a) Swap
Agreements entered into to hedge or mitigate risks to which the
Borrower or any Subsidiary has actual exposure and (b) Swap
Agreements entered into in order to effectively cap, collar or
exchange interest rates (from fixed to floating rates, from one
floating rate to another floating rate or otherwise) with respect
to any interest-bearing liability or investment of the Borrower
or any Subsidiary.
6.10 CHANGES IN FISCAL PERIODS
Permit the fiscal year of the Borrower to end on a
day other than December 31 or change the Borrower's method of
determining fiscal quarters.
6.11 NEGATIVE PLEDGE CLAUSES
Enter into or suffer to exist or become effective
any agreement that prohibits or limits the ability of any Loan
Parties to create, incur, assume or suffer to exist any Lien upon
any of its property or revenues, whether now owned or hereafter
acquired, other than (a) this Agreement and the other Loan
Documents and (b) any agreements governing any purchase money
Liens or Capital Lease Obligations otherwise permitted hereby (in
which case, any prohibition or limitation shall only be effective
against the assets financed thereby).
Page 25
6.12 CLAUSES RESTRICTING SUBSIDIARY DISTRIBUTIONS
Enter into or suffer to exist or become effective
any consensual encumbrance or restriction on the ability of any
Subsidiary of any Borrower to (a) make Restricted Payments in
respect of any Capital Stock of such Subsidiary held by, or pay
any Indebtedness owed to, the Borrower or any other Subsidiary of
the Borrower, (b) make loans or advances to, or other Investments
in, the Borrower or any other Subsidiary of the Borrower or (c)
transfer any of its assets to the Borrower or any other
Subsidiary of the Borrower, except for such encumbrances or
restrictions existing under or by reason of (i) any restrictions
existing under the Loan Documents or the limited liability
company agreement of CRE, (ii) imposed by law, or (iii) any
restrictions with respect to a Subsidiary imposed pursuant to an
agreement that has been entered into in connection with the
Disposition of all or substantially all of the Capital Stock or
assets of such Subsidiary.
6.13 LINES OF BUSINESS
(a) with respect to any Loan Party, enter into any
business, either directly or through any Subsidiary, except for
those businesses in which the Borrower and its Subsidiaries are
engaged on the date of this Agreement or that are reasonably
related thereto, and (b) with respect to any Subsidiary that is
not a Loan Party, engage in any business activity, incur any
liabilities or own any assets, other than those activities
relating to the maintenance of its legal existence as an inactive
Subsidiary.
6.14 AMENDMENTS TO ORGANIZATIONAL DOCUMENTS AND
INCENTIVE PLANS
Amend, supplement or otherwise modify (pursuant to a
waiver or otherwise) the terms and conditions of the (a)
organizational documents of any Borrower or Subsidiary or (b) any
stock incentive plans of Cadiz until at least 50% of the
outstanding principal amount of the Loans have been converted
into Conversion Shares.
SECTION 7. EVENTS OF DEFAULT
If any of the following events shall occur and be
continuing:
(a) the Borrower shall fail to pay any principal of any
Loan when due in accordance with the terms hereof; or the Borrower
shall fail to pay any interest on any Loan, or any other amount
payable hereunder or under any other Loan Document, within five
(5) days after any such interest or other amount becomes due in
accordance with the terms hereof; or
(b) any representation or warranty made or deemed made
by any Loan Party herein or in any other Loan Document or that is
contained in any certificate, document or financial or other
statement furnished by it at any time under or in connection with
this Agreement or any such other Loan Document shall prove to
have been inaccurate in any material respect on or as of the date
made or deemed made; or
(c) (i) any Loan Party shall default in the observance
or performance of any agreement contained in Section 2.7, Section
5.4(a), Section 5.7 or Section 6 of this Agreement or Sections
4.5 of the Security Agreement, (ii) a default under Section 2(b)
under the Registration Rights Agreement shall have occurred and
be continuing, or (iii) an "Event of Default" under and as
defined in any Mortgage shall have occurred and be continuing; or
any Loan Party shall default in the observance or
performance of any other agreement contained in this
Agreement or any other Loan Document (other than as provided
in paragraphs (a) through (c) of this Section), and such
default shall continue unremedied for a period of 30 days
after notice to the Borrower from the Agent; or
(d) any Loan Party shall (i) default in making any payment
of any principal of any Indebtedness (including any Guarantee
Obligation, but excluding the Loans) on the scheduled or
Page 26
original due date with respect thereto beyond the period of grace,
if any; or (ii) default in making any payment of any interest on any
such Indebtedness beyond the period of grace, if any, provided in the
instrument or agreement under which such Indebtedness was
created; or (iii) default in the observance or performance of any
other agreement or condition relating to any such Indebtedness or
contained in any instrument or agreement evidencing, securing or
relating thereto, or any other event shall occur or condition
exist, the effect of which default or other event or condition is
to cause, or to permit the holder or beneficiary of such
Indebtedness (or a trustee or agent on behalf of such holder or
beneficiary) to cause, with the giving of notice if required,
such Indebtedness to become due prior to its stated maturity or
(in the case of any such Indebtedness constituting a Guarantee
Obligation) to become payable; Provided, that a default, event or
condition described in clause (i), (ii) or (iii) of this
paragraph (e) shall not at any time constitute an Event of
Default unless, at such time, one or more defaults, events or
conditions of the type described in clauses (i), (ii) and (iii)
of this paragraph (e) shall have occurred and be continuing with
respect to Indebtedness the outstanding principal amount of which
exceeds in the aggregate $500,000; or
(e) (i) any Loan Party shall commence any case, proceeding
or other action (A) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking to have
an order for relief entered with respect to it, or seeking to
adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution,
composition or other relief with respect to it or its debts, or
(B) seeking appointment of a receiver, trustee, custodian,
conservator or other similar official for it or for all or any
substantial part of its assets, or any Loan Party shall make a
general assignment for the benefit of its creditors; or (ii)
there shall be commenced against any Loan Party any case,
proceeding or other action of a nature referred to in clause (i)
above that (A) results in the entry of an order for relief or any
such adjudication or appointment or (B) remains undismissed,
undischarged or unbonded for a period of 60 days; or (iii) there
shall be commenced against any Borrower any case, proceeding or
other action seeking issuance of a warrant of attachment,
execution, distraint or similar process against all or any
substantial part of its assets that results in the entry of an
order for any such relief that shall not have been vacated,
discharged, or stayed or bonded pending appeal within 60 days
from the entry thereof; or (iv) any Loan Party shall take any
action in furtherance of, or indicating its consent to, approval
of, or acquiescence in, any of the acts set forth in clause (i),
(ii), or (iii) above; or (v) any Loan Party shall generally not,
or shall be unable to, or shall admit in writing its inability
to, pay its debts as they become due; or
(f) (i) any Person shall engage in any "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975
of the Code) involving any Plan, (ii) any "accumulated funding
deficiency" (as defined in Section 302 of ERISA), whether or not
waived, shall exist with respect to any Plan or any Lien in favor
of the PBGC or a Plan shall arise on the assets of any Loan Party
or any Commonly Controlled Entity, (iii) a Reportable Event shall
occur with respect to, or proceedings shall commence to have a
trustee appointed, or a trustee shall be appointed, to administer
or to terminate, any Single Employer Plan, which Reportable Event
or commencement of proceedings or appointment of a trustee is, in
the reasonable opinion of the Required Lenders, likely to result
in the termination of such Plan for purposes of Title IV of
ERISA, (iv) any Single Employer Plan shall terminate for purposes
of Title IV of ERISA, (v) any Loan Party or any Commonly
Controlled Entity shall, or in the reasonable opinion of the
Required Lenders is likely to, incur any liability in connection
with a withdrawal from, or the Insolvency or Reorganization of, a
Multiemployer Plan or (vi) any other event or condition shall
occur or exist with respect to a Plan; and in each case in
clauses (i) through (vi) above, such event or condition, together
with all
Page 27
other such events or conditions, if any, could, in the
sole judgment of the Required Lenders, reasonably be expected to
have a Material Adverse Effect; or
one or more judgments or decrees shall be entered
against any Loan Party involving in the aggregate a
liability (not paid or fully covered by insurance as to
which the relevant insurance company has acknowledged
coverage) of $500,000 or more, and all such judgments or
decrees shall not have been paid, satisfied, vacated,
discharged, stayed or bonded pending appeal within 30 days
from the entry thereof; or
any of the Security Documents shall cease, for any
reason, to be in full force and effect, or any Loan Party or
any Affiliate of any Loan Party shall so assert, or any Lien
created by any of the Security Documents shall cease to be
enforceable and of the same effect and priority purported to
be created thereby;
then, and in any such event, (A) if such event is an Event of
Default specified in clause (i) or (ii) of paragraph (f) above
with respect to the Borrower, automatically the Commitments shall
immediately terminate and the Loans (with accrued interest
thereon) and all other amounts owing under this Agreement and the
other Loan Documents shall immediately become due and payable,
and (B) if such event is any other Event of Default, the Agent
may, or upon the request of the Required Lenders, by notice to
the Borrower, declare the Loans (with accrued interest thereon)
and all other amounts owing under this Agreement and the other
Loan Documents to be due and payable forthwith, whereupon the
same shall immediately become due and payable. Except as
expressly provided above in this Section, presentment, demand,
protest and all other notices of any kind are hereby expressly
waived by the Borrower.
SECTION 8. THE AGENT
8.1 APPOINTMENT
Each Lender hereby irrevocably designates and
appoints the Agent as the administrative agent of such Lender
under this Agreement and the other Loan Documents, and each such
Lender irrevocably authorizes the Agent, in such capacity, to
take such action on its behalf under the provisions of this
Agreement and the other Loan Documents and to exercise such
powers and perform such duties as are expressly delegated to the
Agent by the terms of this Agreement and the other Loan
Documents, together with such other powers as are reasonably
incidental thereto. Notwithstanding any provision to the
contrary elsewhere in this Agreement, the Agent shall not have
any duties or responsibilities, except those expressly set forth
herein, or any fiduciary relationship with any Lender, and no
implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or
any other Loan Document or otherwise exist against the Agent.
8.2 DELEGATION OF DUTIES
The Agent may execute any of its duties under this
Agreement and the other Loan Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Agent
shall not be responsible for the negligence or misconduct of any
agents or attorneys in-fact selected by it with reasonable care.
8.3 EXCULPATORY PROVISIONS
Neither the Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or affiliates
shall be (i) liable for any action lawfully taken or omitted to
be taken by it or such Person under or in connection with this
Agreement or any other Loan Document (except to the extent that
any of the foregoing are found by a final and nonappealable
decision of a court of competent jurisdiction to have resulted
from its or such Person's own gross negligence or willful
misconduct) or (ii) responsible in any manner to any of the
Lenders for any recitals, statements, representations or
warranties made by any Loan Party or any officer thereof
contained in this Agreement or any other Loan Document or in any
certificate, report, statement or other document referred to or
Page 28
provided for in, or received by the Agent under or in connection
with, this Agreement or any other Loan Document or for the value,
validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Loan Document or for
any failure of any Loan Party a party thereto to perform its
obligations hereunder or thereunder. The Agent shall not be
under any obligation to any Lender to ascertain or to inquire as
to the observance or performance of any of the agreements
contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of any
Loan Party.
8.4 RELIANCE BY AGENT
The Agent shall be entitled to rely, and shall be
fully protected in relying, upon any instrument, writing,
resolution, notice, consent, certificate, affidavit, letter,
telecopy, telex or teletype message, statement, order or other
document or conversation believed by it to be genuine and correct
and to have been signed, sent or made by the proper Person or
Persons and upon advice and statements of legal counsel
(including counsel to the Borrower), independent accountants and
other experts selected by the Agent. The Agent shall be fully
justified in failing or refusing to take any action under this
Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of the Required Lenders (or,
if so specified by this Agreement, all Lenders) as it deems
appropriate or it shall first be indemnified to its satisfaction
by the Lenders against any and all liability and expense that may
be incurred by it by reason of taking or continuing to take any
such action. The Agent shall in all cases be fully protected in
acting, or in refraining from acting, under this Agreement and
the other Loan Documents in accordance with a request of the
Required Lenders (or, if so specified by this Agreement, all
Lenders), and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Lenders and all
future holders of the Loans.
8.5 NOTICE OF DEFAULT
The Agent shall not be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default
unless the Agent has received notice from a Lender or the
Borrower referring to this Agreement, describing such Default or
Event of Default and stating that such notice is a "notice of
default". In the event that the Agent receives such a notice,
the Agent shall give notice thereof to the Lenders. The Agent
shall take such action with respect to such Default or Event of
Default as shall be reasonably directed by the Required Lenders
(or, if so specified by this Agreement, all Lenders); PROVIDED
that unless and until the Agent shall have received such
directions, the Agent may (but shall not be obligated to) take
such action, or refrain from taking such action, with respect to
such Default or Event of Default as it shall deem advisable in
the best interests of the Lenders.
8.6 NON-RELIANCE ON AGENT AND OTHER LENDERS
Each Lender expressly acknowledges that neither the
Agent nor any of its officers, directors, employees, agents,
attorneys-in-fact or affiliates have made any representations or
warranties to it and that no act by the Agent hereafter taken,
including any review of the affairs of a Loan Party or any
affiliate of a Loan Party, shall be deemed to constitute any
representation or warranty by the Agent to any Lender. Each
Lender represents to the Agent that it has, independently and
without reliance upon the Agent or any other Lender, and based on
such documents and information as it has deemed appropriate, made
its own appraisal of and investigation into the business,
operations, property, financial and other condition and
creditworthiness of the Loan Parties and their affiliates and
made its own decision to make its Loans hereunder and enter into
this Agreement. Each Lender also represents that it will,
independently and without reliance upon the Agent or any other
Lender, and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit
analysis, appraisals and decisions in taking or not taking action
under this Agreement and the other Loan Documents, and to make
such investigation as it deems necessary to inform itself as to
the business, operations, property, financial and other condition
and creditworthiness of the Loan Parties and their affiliates.
Except for notices, reports and other documents expressly
required to be furnished to the Lenders by the Agent hereunder,
the Agent shall not have any duty or responsibility to provide
any Lender with any credit or other information concerning the
business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of any Loan Party
Page 29
or any affiliate of a Loan Party that may come into the possession
of the Agent or any of its officers, directors, employees,
agents, attorneys-in-fact or affiliates.
8.7 INDEMNIFICATION
The Lenders agree to indemnify each Agent in its
capacity as such (to the extent not reimbursed by the Borrower
and without limiting the obligation of the Borrower to do so),
ratably according to their respective holding of the outstanding
Loans in effect on the date on which indemnification is sought
under this Section, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind whatsoever
that may at any time (whether before or after the payment of the
Loans) be imposed on, incurred by or asserted against the Agent
in any way relating to or arising out of, this Agreement, any of
the other Loan Documents or any documents contemplated by or
referred to herein or therein or the transactions contemplated
hereby or thereby or any action taken or omitted by the Agent
under or in connection with any of the foregoing; PROVIDED that
no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements that are found
by a final and nonappealable decision of a court of competent
jurisdiction to have resulted from the Agent's gross negligence
or willful misconduct. The agreements in this Section shall
survive the payment of the Loans and all other amounts payable
hereunder.
8.8 AGENT IN ITS INDIVIDUAL CAPACITY
The Agent and its affiliates may make loans to,
accept deposits from and generally engage in any kind of business
with any Loan Party as though the Agent were not an Agent. The
terms "Lender" and "Lenders" shall include each Agent in its
individual capacity.
8.9 SUCCESSOR AGENT
The Agent may resign as Agent upon ten (10) days'
notice to the Lenders and the Borrower. If the Agent shall
resign as Agent under this Agreement and the other Loan
Documents, then the Required Lenders shall appoint from among the
Lenders a successor agent for the Lenders, which successor agent
shall (unless an Event of Default under Section 7(a) or Section
7(f) with respect to the Borrower shall have occurred and be
continuing) be subject to approval by the Borrower (which
approval shall not be unreasonably withheld or delayed),
whereupon such successor agent shall succeed to the rights,
powers and duties of the Agent, and the term "Agent" shall mean
such successor agent effective upon such appointment and
approval, and the former Agent's rights, powers and duties as
Agent shall be terminated, without any other or further act or
deed on the part of such former Agent or any of the parties to
this Agreement or any holders of the Loans. If no successor
agent has accepted appointment as Agent by the date that is 10
days following a retiring Agent's notice of resignation, the
retiring Agent's resignation shall nevertheless thereupon become
effective, and the Lenders shall assume and perform all of the
duties of the Agent hereunder until such time, if any, as the
Required Lenders appoint a successor agent as provided for above.
After any retiring Agent's resignation as Agent, the provisions
of this Section 8 shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under this
Agreement and the other Loan Documents.
SECTION 9. MISCELLANEOUS
9.1 AMENDMENTS AND WAIVERS
Neither this Agreement, any other Loan Document, nor
any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this Section
9.1. The Required Lenders and each Loan Party party to the
relevant Loan Document may, or, with the written consent of the
Required Lenders, the Agent and each Loan Party party to the
relevant Loan Document may, from time to time, (a) enter into
written amendments, supplements or modifications hereto and to
the other Loan Documents for the purpose of adding any provisions
to this Agreement or the other Loan Documents or changing in any
manner the rights of the Agent, the Lenders or of the Loan
Parties hereunder or thereunder or (b) waive, on such terms and
conditions as the Required Lenders or the Agent, as the case may
be, may specify in such instrument, any
Page 30
of the requirements of this Agreement or the other Loan Documents or
any Default or Event of Default and its consequences; provided, however,
that no such waiver and no such amendment, supplement or modification
shall (i) forgive the principal amount or extend the final
scheduled date of maturity of any Loan, reduce the stated rate of
any interest or fee payable hereunder or extend the scheduled
date of any payment thereof, in each case without the written
consent of each Lender directly affected thereby; (ii) eliminate
or reduce the voting rights of any Lender under this Section 9.1
without the written consent of such Lender; (iii) reduce any
percentage specified in the definition of Required Lenders,
consent to the assignment or transfer by the Borrowers of any of
their rights and obligations under this Agreement and the other
Loan Documents or release all or substantially all of the
Collateral, in each case without the written consent of all
Lenders; or (iv) amend, modify or waive any provision of Section
9 without the written consent of the Agent. Any such waiver and
any such amendment, supplement or modification shall apply
equally to each of the Lenders and shall be binding upon the Loan
Parties, the Lenders, the Agent and all future holders of the
Loans. In the case of any waiver, the Loan Parties, the Lenders
and the Agent shall be restored to their former position and
rights hereunder and under the other Loan Documents, and any
Default or Event of Default waived shall be deemed to be cured
and not continuing; but no such waiver shall extend to any
subsequent or other Default or Event of Default, or impair any
right consequent thereon.
Page 31
9.2 NOTICES
All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing
(including by telecopy), and, unless otherwise expressly provided
herein, shall be deemed to have been duly given or made when
delivered, or, in the case of telecopy notice, when received,
addressed as follows, or to such other address as may be
hereafter notified by the respective parties hereto:
Borrowers: Cadiz Inc.
000 X. Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attention: Chief Financial Officer
Telecopy: 000-000-0000
Telephone: 000-000-0000
with a copy to:
Stephan, Oringher, Xxxxxxx,
Xxxxxxxx & Xxxxxx, P.C.
0000 Xxxxxxx Xxxx Xxxx, 0xx Xxxxx
Xxx Xxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxxxxxx
Telecopy: 000-000-0000
Telephone: 000-000-0000
Agent: Peloton Partners LLP
00 Xxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxx X0X 0XX
Attention: Xxx Xxxxxx
Telecopy: x00 00 0000 0000
Telephone: x00 00 0000 0000
with a copy to:
Xxxxxxxxx Traurig, LLP
0000 Xxxxxxxx Xxxxxx, Xxxxx 000X
Xxxxx Xxxxxx, XX 00000
Attention: Xxxxxxxx Xxxxx
Telecopy: 000-000-0000
Telephone: 000-000-00000
PROVIDED that any notice, request or demand to or upon the Agent
or the Lenders shall not be effective until received.
Notices and other communications to the Lenders
hereunder may be delivered or furnished by electronic
communications pursuant to procedures approved by the Agent. The
Agent or the Borrower may, in its discretion, agree to accept
notices and other communications to it hereunder by electronic
communications pursuant to procedures approved by it; PROVIDED
that approval of such procedures may be limited to particular
notices or communications.
9.3 NO WAIVER; CUMULATIVE REMEDIES
No failure to exercise and no delay in exercising,
on the part of the Agent or any Lender, any right, remedy, power
or privilege hereunder or under the other Loan Documents shall
operate as a waiver thereof; nor shall any single or partial
exercise
Page 32
of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of
any other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein provided are cumulative
and not exclusive of any rights, remedies, powers and privileges
provided by law.
9.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES
All representations and warranties made hereunder,
in the other Loan Documents and in any document, certificate or
statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement and
the making of the Loans and other extensions of credit hereunder.
9.5 PAYMENT OF EXPENSES AND TAXES; INDEMNIFICATION
The Borrower agrees (a) to pay or reimburse the
Agent for all its out-of-pocket costs and expenses incurred in
connection with the development, preparation and execution of,
and any amendment, supplement or modification to, this Agreement
and the other Loan Documents and any other documents prepared in
connection herewith or therewith, and the consummation and
administration of the transactions contemplated hereby and
thereby, including the reasonable fees and disbursements of
counsel to the Agent and filing and recording fees and expenses,
with statements with respect to the foregoing to be submitted to
the Borrower prior to the Closing Date (in the case of amounts to
be paid on the Closing Date) and from time to time thereafter on
a quarterly basis or such other periodic basis as the Agent shall
deem appropriate, (b) to pay or reimburse the each Lender and the
Agent for all its costs and expenses incurred in connection with
the enforcement or preservation of any rights under this
Agreement, the other Loan Documents and any such other documents,
including the fees and disbursements of counsel (including the
allocated fees and expenses of in-house counsel) to the each
Lender and of counsel to the Agent, (c) to pay, indemnify, and
hold the Agent and the Lenders harmless from, any and all
recording and filing fees and any and all liabilities with
respect to, or resulting from any delay in paying, stamp, excise
and other taxes, if any, that may be payable or determined to be
payable in connection with the execution and delivery of, or
consummation or administration of any of the transactions
contemplated by, or any amendment, supplement or modification of,
or any waiver or consent under or in respect of, this Agreement,
the other Loan Documents and any such other documents, and (d) to
pay, indemnify, and hold the each Lender and the Agent and their
respective officers, directors, employees, affiliates, agents and
controlling persons (each, an "INDEMNITEE") harmless from and
against any and all other liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever with respect to
the execution, delivery, enforcement, performance and
administration of this Agreement, the other Loan Documents and
any such other documents, including any of the foregoing relating
to the use of proceeds of the Loans or the violation of,
noncompliance with or liability under, any Environmental Law
applicable to the operations of any Loan Party or any of the
Mortgaged Properties and the reasonable fees and expenses of
legal counsel in connection with claims, actions or proceedings
by any Indemnitee against any Loan Party under any Loan Document
(all the foregoing in this clause (d), collectively, the
"INDEMNIFIED LIABILITIES"), PROVIDED, that the Borrower shall
have no obligation hereunder to any Indemnitee with respect to
Indemnified Liabilities to the extent such Indemnified
Liabilities are found by a final and nonappealable decision of a
court of competent jurisdiction to have resulted from the gross
negligence or willful misconduct of such Indemnitee. Without
limiting the foregoing, and to the extent permitted by applicable
law, the Borrower agrees not to assert and to cause its
Subsidiaries not to assert, and hereby waives and agrees to cause
its Subsidiaries to waive, all rights for contribution or any
other rights of recovery with respect to all claims, demands,
penalties, fines, liabilities, settlements, damages, costs and
expenses of whatever kind or nature, under or related to
Environmental Laws, that any of them might have by statute or
otherwise against any Indemnitee. All amounts due under this
Section 9.5 shall be payable not later than 10 days after written
demand therefor.
9.6 SUCCESSORS AND ASSIGNS; ASSIGNMENTS AND PARTICIPATIONS
(a) The provisions of this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their
respective
Page 33
successors and assigns permitted hereby, except that
(i) the Borrower may not assign or otherwise transfer any of its
rights or obligations hereunder without the prior written consent
of the Agent (and any attempted assignment or transfer by the
Borrower without such consent shall be null and void) and (ii)
the Lenders may not assign or otherwise transfer its rights or
obligations hereunder except to an assignee ("ASSIGNEE") subject
to the following: (x) no one other than Peloton shall be
entitled to the benefit of the Board Representation provision
that are provided for the benefit of the original Lender in the
Loan Documents set forth in Section 2.8(d); (y) each assignee
shall agree to be subject to the Exchange Cap and an Assignment
and Acceptance, the form of which is attached hereto as EXHIBIT
E; and (z) no transfer of more than 50% of the principal amount
of the Loans shall be permitted without the prior written consent
of Borrower, such consent not to be unreasonably withheld.
Subject to acceptance and recording thereof pursuant to this
Section, from and after the effective date specified in each
Assignment and Assumption the Assignee thereunder shall be a
party hereto and, to the extent of the interest assigned by such
Assignment and Assumption, have the rights and obligations of a
Lender under this Agreement, and the assigning Lender thereunder
shall, to the extent of the interest assigned by such Assignment
and Assumption, be released from its obligations under this
Agreement (and, in the case of an Assignment and Assumption
covering all of the assigning Lender's rights and obligations
under this Agreement, such Lender shall cease to be a party
hereto but shall continue to be entitled to the benefits of
Section 9.5). The Agent, acting for this purpose as an agent of
the Borrower, shall maintain at one of its offices a copy of each
Assignment and Assumption delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the
Commitments of, and principal amount of the Loans owing to, each
Lender pursuant to the terms hereof from time to time (the
"REGISTER"). The entries in the Register shall be conclusive,
and the Borrower, the Agent, and the Lenders may treat each
Person whose name is recorded in the Register pursuant to the
terms hereof as a Lender hereunder for all purposes of this
Agreement, notwithstanding notice to the contrary. Upon its
receipt of a duly completed Assignment and Assumption executed by
an assigning Lender and an Assignee, the Assignee's completed
administrative questionnaire (unless the Assignee shall already
be a Lender hereunder), and any written consent to such
assignment required by this Section, the Agent shall accept such
Assignment and Assumption and record the information contained
therein in the Register. No assignment shall be effective for
purposes of this Agreement unless it has been recorded in the
Register as provided in this paragraph.
(b) Any Lender may, without the consent of the
Borrower or the Agent, sell participations to one or more
entities in all or a portion of such Lender's rights and
obligations under this Agreement (including all or a portion of
its Commitments and the Loans owing to it); provided that (i)
such Lender's obligations under this Agreement shall remain
unchanged, (ii) such Lender shall remain solely responsible to
the other parties hereto for the performance of such obligations
and (iii) the Borrower, the Agent and the other Lenders shall
continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this
Agreement. Any agreement pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the
sole right to enforce this Agreement and to approve any
amendment, modification or waiver of any provision of this
Agreement; provided that such agreement may provide that such
Lender will not, without the consent of the loan participant,
agree to any amendment, modification or waiver that (x) requires
the consent of each Lender directly affected thereby pursuant to
Section 9.1 and (y) directly affects such loan participant.
9.7 SURETY WAIVERS
This paragraph is included solely out of an
abundance of caution, and shall not be construed to mean that any
of the above-referenced provisions of California law are in any
way applicable to this Agreement or to any of the Obligations, or
that CRE is a guarantor hereunder. As used in this paragraph,
any reference to "the principal" includes Cadiz, and any
reference to "the creditor" includes the Agent and the Lenders.
In accordance with Section 2856 of the California Civil Code: (a)
CRE unconditionally and irrevocably waives any and all rights and
defenses available to it by reason of
Page 34
Sections 2787 to 2855, inclusive, 2899 and 3433 of the California
Civil Code; and (b) CRE unconditionally and irrevocably waives any
and all rights and defenses available to it by reason of the Obligation
being secured by real property or otherwise, including without
limitation, any rights and defenses based upon Section 580a,
580b, 580d, or 726 of the California Code of Civil Procedure or
other law, which means, among other things, (1) the creditor may
collect from CRE without first foreclosing on any real or
personal property collateral pledged by the principal, (2) if the
creditor forecloses on any real property collateral pledged by
the principal, (A) the amount of the Obligations may be reduced
only by the price for which that collateral is sold at the
foreclosure sale, even if the collateral is worth more than the
sale price and (B) the creditor may collect from CRE even if the
creditor, by foreclosing on the real property collateral, has
destroyed any right CRE may have to collect from the principal,
and (3) CRE is waiving all rights and defenses arising out of an
election of remedies by the creditor, even though that election
of remedies, such as a nonjudicial foreclosure with respect to
security for the Obligations, has destroyed CRE's rights of
subrogation and reimbursement against the principal by the
operation of Section 580d of the California Code of Civil
Procedure or otherwise, and even though that election of remedies
by the creditor, such as nonjudicial foreclosure with respect to
security for an obligation of any other guarantor of any of the
Obligations, has destroyed CRE's rights of contribution against
any other other guarantor. No other provision of this Agreement
shall be construed as limiting the generality of any of the
covenants and waivers set forth in this paragraph.
9.8 COUNTERPARTS
This Agreement may be executed by one or more of the
parties to this Agreement on any number of separate counterparts,
and all of said counterparts taken together shall be deemed to
constitute one and the same instrument. Delivery of an executed
signature page of this Agreement by facsimile transmission shall
be effective as delivery of a manually executed counterpart
hereof. A set of the copies of this Agreement signed by all the
parties shall be lodged with the Borrower and the Agent.
9.9 SEVERABILITY
Any provision of this Agreement that is prohibited
or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.
9.10 INTEGRATION
This Agreement and the other Loan Documents
represent the entire agreement of the parties hereto with respect
to the subject matter hereof and thereof, and there are no
promises, undertakings, representations or warranties by any such
party relative to the subject matter hereof not expressly set
forth or referred to herein or in the other Loan Documents.
9.11 GOVERNING LAW
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK.
9.12 SUBMISSION TO JURISDICTION; WAIVERS
Each of the Borrowers hereby irrevocably and
unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan
Documents to which it is a party, or for recognition and
enforcement of any judgment in respect thereof, to the
non-exclusive general jurisdiction of the courts of the State of
New York, the courts of the United States for the Southern
District of New York, and appellate courts from any thereof;
Page 35
consents that any such action or proceeding may be
brought in such courts and waives any objection that it may
now or hereafter have to the venue of any such action or
proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees
not to plead or claim the same;
agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by
registered or certified mail (or any substantially similar
form of mail), postage prepaid, to the Borrowers at its
address set forth in Section 9.2 or at such other address of
which the Agent shall have been notified pursuant thereto;
agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by
law or shall limit the right to xxx in any other
jurisdiction; and
waives, to the maximum extent not prohibited by law,
any right it may have to claim or recover in any legal
action or proceeding referred to in this Section any
special, exemplary, punitive or consequential damages.
9.13 ACKNOWLEDGEMENTS
Each of the Borrowers hereby acknowledges that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the other Loan
Documents; and
(b) no joint venture is created hereby or by the other
Loan Documents or otherwise exists by virtue of the transactions
contemplated hereby among the Borrowers and the Lender.
9.14 CONFIDENTIALITY
Each of the Agent and each Lender agrees to keep
confidential all material non-public information provided to it by
any Loan Party pursuant to or in connection with this Agreement
that is designated as confidential; PROVIDED that nothing herein
shall prevent the Agent or any Lender from disclosing any such
information (a) to the Agent, any other Lender or any affiliate
thereof, (b) subject to an agreement to comply with the
provisions of this Section, to any actual or prospective
Assignee, (c) to its employees, directors, agents, attorneys,
accountants and other professional advisors or those of any of
its affiliates, (d) upon the request or demand of any
Governmental Authority, (e) in response to any order of any court
or other Governmental Authority or as may otherwise be required
pursuant to any Requirement of Law, (f) if requested or required
to do so in connection with any litigation or similar proceeding,
(g) that has been publicly disclosed, or (h) in connection with
the exercise of any remedy hereunder or under any other Loan
Document. The Agent and each Lender further agrees that it shall
not engage in any public purchases or sales of any securities of
Cadiz for so long as the Agent or such Lender possesses material
non-public information about the Borrowers.
9.15 WAIVERS OF JURY TRIAL
EACH OF THE BORROWERS , THE AGENT, AND THE LENDERS
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY
LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their proper and
duly authorized officers as of the day and year first above
written.
Page 36
CADIZ INC.
By:
Name:
Title:
CADIZ REAL ESTATE LLC
By:
Name:
Title:
PELOTON PARTNERS LLP, as
Administrative Agent
By:
Name:
Title:
PELOTON MULTI-STRATEGY MASTER FUND,
as Lender
By:
Name:
Title:
MILFAM II L.P.
By: Milfam LLC, as general partner
By:
Name: Xxxxx Xxxxxx, III
Title: Managing Member
Page 37
SCHEDULE 1.1A: LOAN COMMITMENTS
LENDER TRANCHE A TERM TRANCHE B TERM
COMMITMENT COMMITMENT
PELOTON MULTI-STRATEGY MASTER $9,000,000 $23,737,500
FUND
c/o Peloton Partners LLP
00 Xxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxx X0X 0XX
Attention: Xxx Xxxxxx
Telecopy: x00 00 0000 0000
MILFAM II L.P. $1,000,000 $2,637,500
Attn: Xxxxx Xxxxxx
0000 Xxxxxx Xxxxx
Xxxxxx, Xxxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Xxxx X. Xxxxxxxxxxx, Esq.
Xxxxxxx Xxxxx LLP
000 Xxxxxxxxx Xxxxxx, 00xx Xx
Xxx Xxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
AGGREGATE COMMITMENTS $10,000,000 $26,375,000
Page 38
SCHEDULE 1.1B MORTGAGED PROPERTIES
[See attached legal description]
Page 39
SCHEDULE 3.12: SUBSIDIARIES
SUBSIDIARY JURISDICTION PARENT PERCENTAGE
OF FORMATION OWNED
Cadiz Real Delaware Cadiz Inc. 100% Member
Estate LLC
Rancho Cadiz California Cadiz Inc. 100% owned
Mutual Water
Company
(inactive)
Sun World Delaware Cadiz Inc. 100% owned
International,
Inc. (inactive)
Sun World/Rayo California Sun World 100% owned
(inactive) International,
Inc.
Sun Desert, Inc. Delaware Sun World 100% owned
(inactive) International,
Inc.
Coachella Californian Sun Desert, 100% owned
Growers cooperative Inc.
(inactive)
Page 40
SCHEDULE 3.16(a): UCC FILING JURISDICTIONS
LOAN PARTY UCC FILING JURISDICTIONS
Cadiz Inc. Delaware, California
Cadiz Real Estate LLC Delaware, California
Page 41
SCHEDULE 3.16(b): MORTGAGE FILING JURISDICTIONS
LOAN PARTY MORTGAGE FILING JURISDICTIONS
Cadiz Real Estate LLC San Bernardino County,
California
Page 42
--------------------------------------------------------------------------------
EXHIBIT A
EXECUTION VERSION
SECURITY AGREEMENT
made by
CADIZ INC.,
and
CADIZ REAL ESTATE LLC,
as Loan Parties
in favor of
PELOTON PARTNERS LLP,
as Agent
Dated as of June 26, 2006
TABLE OF CONTENTS
Page
SECTION 1. DEFINED TERMS. . . . . . . . . . . . . . . . . . . .1
1.1 DEFINITIONS. . . . . . . . . . . . . . . . . . . . . .1
1.2 OTHER DEFINITIONAL PROVISIONS. . . . . . . . . . . . .3
SECTION 2. GRANT OF SECURITY INTEREST. . . . . . . . . . . . . 3
SECTION 3. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . 4
3.1 TITLE; NO OTHER LIENS. . . . . . . . . . . . . . . . .4
3.2 PERFECTED FIRST PRIORITY LIENS. . . . . . . . . . . . 5
3.3 JURISDICTION OF ORGANIZATION; CHIEF EXECUTIVE OFFICE. 5
3.4 INVENTORY AND EQUIPMENT. . . . . . . . . . . . . . . .5
3.5 FARM PRODUCTS. . . . . . . . . . . . . . . . . . . . .5
3.6 INVESTMENT PROPERTY. . . . . . . . . . . . . . . . . .5
3.7 RECEIVABLES. . . . . . . . . . . . . . . . . . . . . .5
3.8 INTELLECTUAL PROPERTY. . . . . . . . . . . . . . . . .5
SECTION 4. COVENANTS. . . . . . . . . . . . . . . . . . . . . .6
4.1 DELIVERY OF INSTRUMENTS, CERTIFICATED SECURITIES AND
CHATTEL PAPER. . . . . . . . . . . . . . . . . . . . .6
4.2 PAYMENT OF OBLIGATIONS 6
4.3 MAINTENANCE OF PERFECTED SECURITY INTEREST; FURTHER
DOCUMENTATION. . . . . . . . . . . . . . . . . . . . .6
4.4 CHANGES IN LOCATIONS, NAME, ETC. . . . . . . . . . . .7
4.5 NOTICES. . . . . . . . . . . . . . . . . . . . . . . .7
4.6 INVESTMENT PROPERTY. . . . . . . . . . . . . . . . . .7
4.7 RECEIVABLES. . . . . . . . . . . . . . . . . . . . . .8
SECTION 5. REMEDIAL PROVISIONS. . . . . . . . . . . . . . . . .8
5.1 CERTAIN MATTERS RELATING TO RECEIVABLES. . . . . . . .8
5.2 COMMUNICATIONS WITH OBLIGORS; LOAN PARTIES REMAIN
LIABLE. . . . . . . . . . . . . . . . . . . . . . . . 8
5.3 PLEDGED STOCK. . . . . . . . . . . . . . . . . . . . .9
5.4 PROCEEDS TO BE TURNED OVER TO LENDER. . . . . . . . . 9
5.5 APPLICATION OF PROCEEDS. . . . . . . . . . . . . . . 10
5.6 CODE AND OTHER REMEDIES. . . . . . . . . . . . . . . 10
5.7 DEFICIENCY. . . . . . . . . . . . . . . . . . . . . .10
SECTION 6. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . 11
6.1 AMENDMENTS IN WRITING. . . . . . . . . . . . . . . . 11
6.2 NOTICES. . . . . . . . . . . . . . . . . . . . . . . 11
6.3 NO WAIVER BY COURSE OF CONDUCT; CUMULATIVE REMEDIES. 11
6.4 ENFORCEMENT EXPENSES; INDEMNIFICATION. . . . . . . . 11
6.5 SUCCESSORS AND ASSIGNS. . . . . . . . . . . . . . . .11
6.6 SET-OFF. . . . . . . . . . . . . . . . . . . . . . . 11
6.7 COUNTERPARTS. . . . . . . . . . . . . . . . . . . . .12
6.8 SEVERABILITY. . . . . . . . . . . . . . . . . . . . .12
6.9 SECTION HEADINGS. . . . . . . . . . . . . . . . . . .12
6.10 INTEGRATION. . . . . . . . . . . . . . . . . . . . . 12
6.11 GOVERNING LAW. . . . . . . . . . . . . . . . . . . . 12
6.12 SUBMISSION TO JURISDICTION; WAIVERS. . . . . . . . . 12
6.13 ACKNOWLEDGEMENTS. . . . . . . . . . . . . . . . . . .13
6.14 RELEASES. . . . . . . . . . . . . . . . . . . . . . .13
6.15 WAIVER OF JURY TRIAL. . . . . . . . . . . . . . . . .13
SCHEDULES
Schedule 1 Notice Addresses
Schedule 2 Investment Property
Schedule 3 Perfection Matters
Schedule 4 Jurisdictions of Organization and Chief Executive
Offices
Schedule 5 Inventory and Equipment Locations
Schedule 6 Intellectual Property
SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of June26, 2006, made by
each of the signatories hereto (together with any other entity
that may become a party hereto as provided herein, the "LOAN
PARTIES"), in favor of Peloton Partners LLP, as administrative
agent on behalf of the Lenders (in such capacity, the "AGENT"),
in connection with the Credit Agreement, dated as of June 26,
2006 (as amended, supplemented or otherwise modified from time to
time, the "CREDIT AGREEMENT"), among Cadiz Inc. and Cadiz Real
Estate LLC, as borrowers (together, the "BORROWER"), the lenders
party thereto (the "Lenders") and the Agent.
W I T N E S S E T H:
WHEREAS, pursuant to the Credit Agreement, the Lenders
have agreed to make extensions of credit to the Borrower upon the
terms and subject to the conditions set forth therein;
WHEREAS, it is a condition precedent to the obligation
of the Lenders to make their extensions of credit to the Borrower
under the Credit Agreement that the Loan Parties shall have
executed and delivered this Agreement to the Agent;
NOW, THEREFORE, in consideration of the premises
hereunder, and to induce the Agent and the Lenders to enter into
the Credit Agreement and the Lenders to make the extensions of
credit to the Borrower thereunder, each Loan Party hereby agrees
with the Agent as follows:
SECTION 1. DEFINED TERMS
1.1 DEFINITIONS
Unless otherwise defined herein, terms defined in
the Credit Agreement and used herein shall have the meanings
given to them in the Credit Agreement, and the following terms
are used herein as defined in the New York UCC: Accounts,
Certificated Security, Chattel Paper, Commercial Tort Claims,
Contracts, Documents, Equipment, Farm Products, General
Intangibles, Goods, Instruments, Inventory, Letter-of-Credit
Rights and Supporting Obligations. The following terms shall
have the following meanings:
"AGREEMENT": this Security Agreement, as the same may
be amended, supplemented or otherwise modified from time to time.
"BORROWER OBLIGATIONS": the collective reference to
the Obligations, as defined in the Credit Agreement.
"COLLATERAL": as defined in Section 2.
"COLLATERAL ACCOUNT": any collateral account
established by the Agent as provided in Section 5.1 or 5.4.
"COPYRIGHT LICENSES": any written agreement naming any
Loan Party as licensor or licensee (including, without
limitation, those listed in Schedule 6), granting any right under
any Copyright, including, without limitation, the grant of rights
to manufacture, distribute, exploit and sell materials derived
from any Copyright.
Page 1
"COPYRIGHTS": (i) all copyrights arising under the
laws of the United States, whether registered or unregistered and
whether published or unpublished (including, without limitation,
those listed in Schedule 6), all registrations and recordings
thereof, and all applications in connection therewith, including,
without limitation, all registrations, recordings and
applications in the United States Copyright Office, and (ii) the
right to obtain all renewals thereof.
"DEPOSIT ACCOUNT": as such term is defined in the New
York UCC, the deposit accounts listed on Schedule 2.
"LOAN PARTIES": the collective reference to each Loan
Party .
"INTELLECTUAL PROPERTY": the collective reference to
all rights, priorities and privileges relating to intellectual
property arising under United States laws, including, without
limitation, the Copyrights, the Copyright Licenses, the Patents,
the Patent Licenses, the Trademarks and the Trademark Licenses.
"INTERCOMPANY NOTE": any promissory note evidencing
loans made by any Loan Party to another Loan Party.
"INVESTMENT PROPERTY": the collective reference to (i)
all "investment property" as such term is defined in Section 9-
102(a)(49) of the New York UCC and (ii) in any event, all Pledged
Notes and all Pledged Stock.
"ISSUERS": the collective reference to each issuer of
any Investment Property.
"NEW YORK UCC": the Uniform Commercial Code as from
time to time in effect in the State of New York.
"LOAN PARTY OBLIGATIONS": with respect to any Loan
Party, all obligations and liabilities of such Loan Party which
may arise under or in connection with this Agreement, any other
Loan Document to which such Loan Party is a party, in each case
whether on account of guarantee obligations, reimbursement
obligations, fees, indemnities, costs, expenses or otherwise
(including, without limitation, all fees and disbursements of
counsel to the Agent that are required to be paid by such Loan
Party pursuant to the terms of this Agreement, any other Loan
Document).
"OBLIGATIONS": (i) in the case of the Borrower, the
Borrower Obligations, and (ii) in the case of each other Loan
Party, its Loan Party Obligations.
"PATENT LICENSE": all agreements, whether written or
oral, providing for the grant by or to any Loan Party of any
right to manufacture, use or sell any invention covered in whole
or in part by a Patent, including, without limitation, any of the
foregoing referred to in SCHEDULE 6.
"PATENTS": (i) all letters patent of the United
States, all reissues and extensions thereof and all goodwill
associated therewith, including, without limitation, any of the
foregoing referred to in SCHEDULE 6, (ii) all applications for
letters patent of the United States, continuations and
continuations-in-part thereof, including, without limitation, any
of the foregoing referred to in SCHEDULE 6, and (iii) all rights
to obtain any reissues or extensions of the foregoing.
"PLEDGED NOTES": all promissory notes listed on
SCHEDULE 2 and all Intercompany Notes at any time issued to any
Loan Party and all other promissory notes issued to or held by
any Loan Party.
Page 2
"PLEDGED STOCK": (i) the shares of Capital Stock
listed on SCHEDULE 2 and (ii) any other shares, stock
certificates, options, interests or rights of any nature
whatsoever in respect of the Capital Stock of any Person (other
than a Subsidiary that is not a Loan Party) that may be issued or
granted to, or held by, any Loan Party while this Agreement is in
effect.
"PROCEEDS": all "proceeds" as such term is defined in
Section 9-102(a)(64) of the New York UCC and, in any event, shall
include, without limitation, all dividends or other income from
the Investment Property, collections thereon or distributions or
payments with respect thereto.
"RECEIVABLE": any right to payment for goods sold or
leased or for services rendered, whether or not such right is
evidenced by an Instrument or Chattel Paper and whether or not it
has been earned by performance (including, without limitation,
any Account).
"SECURITIES ACT": the Securities Act of 1933, as
amended.
"TRADEMARK LICENSE": any agreement, whether written or
oral, providing for the grant by or to any Loan Party of any
right to use any Trademark, including, without limitation, any of
the foregoing referred to in SCHEDULE 6.
"TRADEMARKS": (i) all trademarks, trade names,
corporate names, company names, business names, fictitious
business names, trade styles, service marks, logos and other
source or business identifiers, and all goodwill associated
therewith, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in
connection therewith, whether in the United States Patent and
Trademark Office or in any similar office or agency of the United
States or any State thereof, or otherwise, and all common-law
rights related thereto, including, without limitation, any of the
foregoing referred to in SCHEDULE 5, and (ii) the right to obtain
all renewals thereof.
1.2 OTHER DEFINITIONAL PROVISIONS
(a) The words "hereof," "herein", "hereto" and
"hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement, and Section and Schedule
references are to this Agreement unless otherwise specified.
(b) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such
terms.
(c) Where the context requires, terms relating to the
Collateral or any part thereof, when used in relation to a Loan
Party, shall refer to such Loan Party's Collateral or the
relevant part thereof.
SECTION 2. GRANT OF SECURITY INTEREST
Each Loan Party hereby grants to the Agent, on behalf
of the Lenders, a security interest in, all of the following
property now owned or at any time hereafter acquired by such Loan
Party or in which such Loan Party now has or at any time in the
future may acquire any right, title or interest (collectively,
the "COLLATERAL"), as collateral security for the prompt and
complete payment and performance when due (whether at the stated
maturity, by acceleration or otherwise) of such Loan Party's
Obligations:
(a) all Accounts;
(b) all Chattel Paper;
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(c) all Contracts;
(d) the Deposit Accounts;
(e) all Documents;
(f) all Equipment;
(g) all General Intangibles;
(h) all Instruments;
(i) all Intellectual Property;
(j) all Inventory;
(k) all Investment Property (other than the capital
stock of any Subsidiary that is not a Loan Party);
(l) all Letter-of-Credit Rights;
(m) all Goods not otherwise described above;
(n) all books and records pertaining to the foregoing; and
(o) to the extent not otherwise included, all Proceeds,
Supporting Obligations and products of any and all of the
foregoing and all collateral security and guarantees given by any
Person with respect to any of the foregoing;
PROVIDED, HOWEVER, that notwithstanding any of the other
provisions set forth in this Section 2, this Agreement shall not
constitute a grant of a security interest in any property to the
extent that such grant of a security interest is prohibited by
any Requirements of Law of a Governmental Authority, requires a
consent not obtained of any Governmental Authority pursuant to
such Requirement of Law or is prohibited by, or constitutes a
breach or default under or results in the termination of or
requires any consent not obtained under, any contract, license,
agreement, instrument or other document evidencing or giving rise
to such property or, in the case of any Investment Property,
Pledged Stock or Pledged Note, any applicable shareholder or
similar agreement, except to the extent that such Requirement of
Law or the term in such contract, license, agreement, instrument
or other document or shareholder or similar agreement providing
for such prohibition, breach, default or termination or requiring
such consent is ineffective under applicable law.
SECTION 3. REPRESENTATIONS AND WARRANTIES
To induce the Lenders and the Agent to enter into the
Credit Agreement and the Lenders to make their extensions of
credit to the Borrower thereunder, each Loan Party hereby
represents and warrants to the Agent that:
3.1 TITLE; NO OTHER LIENS
Except for the security interest granted to the
Agent pursuant to this Agreement and the other Liens permitted to
exist on the Collateral by the Credit Agreement, such Loan Party
owns each item of the Collateral free and clear of any and all
Liens or claims of others. No financing statement or other
public notice with respect to all or any part of the Collateral
is on file or of
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record in any public office, except such as have
been filed in favor of the Agent pursuant to this Agreement or as
are permitted by the Credit Agreement.
3.2 PERFECTED FIRST PRIORITY LIENS
The security interests granted pursuant to this
Agreement (a) upon completion of the filings and other actions
specified on Schedule 3 (which, in the case of all filings and
other documents referred to on said Schedule, have been delivered
to the Agent in completed and duly executed form) will constitute
valid perfected security interests in all of the Collateral in
favor of the Agent as collateral security for such Loan Party's
Obligations, enforceable in accordance with the terms hereof
against all creditors of such Loan Party and any Persons
purporting to purchase any Collateral from such Loan Party and
(b) are prior to all other Liens on the Collateral in existence
on the date hereof except, in the case of Collateral other than
Pledged Stock, to the extent permitted by the Credit Agreement.
3.3 JURISDICTION OF ORGANIZATION; CHIEF EXECUTIVE OFFICE
On the date hereof, such Loan Party's jurisdiction
of organization, identification number from the jurisdiction of
organization (if any) and the location of such Loan Party's chief
executive office or sole place of business or principal
residence, as the case may be, are specified on SCHEDULE 3. Such
Loan Party has furnished to the Agent a certified charter,
certificate of incorporation or other organization document and
long-form good standing certificate as of a date which is recent
to the date hereof.
3.4 INVENTORY AND EQUIPMENT
On the date hereof, a material portion of the
Inventory and the Equipment (other than mobile goods) are kept at
the locations listed on SCHEDULE 5.
3.5 FARM PRODUCTS
None of the Collateral constitutes, or is the
Proceeds of, Farm Products in any material respect.
3.6 INVESTMENT PROPERTY
The shares of Pledged Stock pledged by such Loan
Party hereunder constitute all the issued and outstanding shares
of all classes of the Capital Stock of each Issuer owned by such
Loan Party. All the shares of the Pledged Stock have been duly
and validly issued and are fully paid and nonassessable. Each of
the Pledged Notes constitutes the legal, valid and binding
obligation of the obligor with respect thereto, enforceable in
accordance with its terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a
proceeding in equity or at law) and an implied covenant of good
faith and fair dealing. Such Loan Party is the record and
beneficial owner of, and has good and marketable title to, the
Investment Property pledged by it hereunder, free of any and all
Liens or options in favor of, or claims of, any other Person,
except the security interest created by this Agreement.
3.7 RECEIVABLES
No material amount payable to such Loan Party under
or in connection with any Receivable is evidenced by any
Instrument or Chattel Paper which has not been delivered to the
Agent. The amounts represented by such Loan Party to the Lenders
from time to time as owing to such Loan Party in respect of the
Receivables will at such times be accurate in all material
respects.
3.8 INTELLECTUAL PROPERTY
Schedule 6 lists all registered or applied for
Intellectual Property owned by such Loan Party in its own name on
the date hereof which is material to such Loan Party.
(a) On the date hereof, all material Intellectual
Property is valid, subsisting, unexpired and enforceable, has not
been abandoned and, to the best knowledge of such Loan Party, does
not infringe the intellectual property rights of any other Person.
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(b) Except as set forth in SCHEDULE 6, on the date hereof,
no material Intellectual Property is the subject of any licensing or
franchise agreement pursuant to which such Loan Party is the
licensor or franchisor.
(c) No holding, decision or judgment has been rendered by
any Governmental Authority which would limit, cancel or question the
validity of, or such Loan Party's rights in, any Intellectual
Property in any respect that could reasonably be expected to have
a Material Adverse Effect.
(d) There is no action or proceeding pending, or, to the
knowledge of such Loan Party, threatened, on the date hereof
seeking to limit, cancel or question the validity of any
Intellectual Property or such Loan Party's ownership interest
therein that could reasonably be expected to have a Material
Adverse Effect.
SECTION 4. COVENANTS
Each Loan Party covenants and agrees with the Agent
that, from and after the date of this Agreement until the
Obligations shall have been paid in full:
4.1 DELIVERY OF INSTRUMENTS, CERTIFICATED SECURITIES AND
CHATTEL PAPER
If any amount in excess of an aggregate principal
amount of $100,000 payable under or in connection with any of the
Collateral shall be or become evidenced by any Instrument,
Certificated Security or Chattel Paper, such Instrument,
Certificated Security or Chattel Paper shall be immediately
delivered to the Agent, duly indorsed in a manner satisfactory to
the Agent, to be held as Collateral pursuant to this Agreement.
4.2 PAYMENT OF OBLIGATIONS
Such Loan Party will pay and discharge or otherwise
satisfy at or before maturity or before they become delinquent,
as the case may be, all taxes, assessments and governmental
charges or levies imposed upon the Collateral or in respect of
income or profits therefrom, as well as all claims of any kind
(including, without limitation, claims for labor, materials and
supplies) against or with respect to the Collateral, except that
no such tax, assessment, charge or levy need be paid if the
amount or validity thereof is currently being contested in good
faith by appropriate proceedings, reserves in conformity with
GAAP with respect thereto have been provided on the books of such
Loan Party or such failure to pay could not reasonably be
expected to result in the sale, forfeiture or loss of any
material portion of the Collateral or any interest therein.
4.3 MAINTENANCE OF PERFECTED SECURITY INTEREST; FURTHER
DOCUMENTATION
Such Loan Party shall maintain the security interest
created by this Agreement as a perfected security interest having
at least the priority described in Section 3.2 and shall defend
such security interest against the claims and demands of all
Persons whomsoever, subject to the rights of such Loan Party
under the Loan Documents to dispose of the Collateral. Such Loan
Party will furnish to the Agent from time to time statements and
schedules further identifying and describing the assets and
property of such Loan Party and such other reports in connection
therewith as the Agent may reasonably request, all in reasonable
detail. At any time and from time to time, upon the written
request of the Agent, and at the sole expense of such Loan Party,
such Loan Party will promptly and duly execute and deliver, and
have recorded, such further instruments and documents and take
such further actions as the Agent may reasonably request for the
purpose of obtaining or preserving the full benefits of this
Agreement and of the rights and powers herein granted, including,
without limitation, (i) filing any financing or continuation
statements under the Uniform Commercial Code (or other similar
laws) in effect in any jurisdiction with respect to the security
interests created hereby and (ii) to the extent commercially
reasonable, in the case of Investment Property, the Deposit
Accounts, Letter-of-Credit Rights and any other relevant
Collateral, taking any actions necessary to enable the Agent to
obtain "control" (within the meaning of the applicable Uniform
Commercial Code) with respect thereto.
Page 6
4.4 CHANGES IN LOCATIONS, NAME, ETC
Such Loan Party will not, except upon 10 days' prior
written notice to the Agent and delivery to the Agent of (a) all
additional executed financing statements and other documents
reasonably requested by the Agent to maintain the validity,
perfection and priority of the security interests provided for
herein and (b) if applicable, a written supplement to SCHEDULE 5
showing any additional location at which material Inventory or
Equipment shall be kept:
(i) change its jurisdiction of organization or the location of
its chief executive office or sole place of business or principal
residence from that referred to in Section 3.3; or
(ii) change its name, identity or corporate structure to such an
extent that any financing statement filed by the Agent in
connection with this Agreement would be misleading.
4.5 NOTICES
Such Loan Party will advise the Agent promptly in
reasonable detail of:
(a) any Lien (other than security interests created hereby
or Liens permitted under the Credit Agreement) on any of the
Collateral which would materially adversely affect the ability of
the Agent to exercise any of its remedies hereunder; and
(b) of the occurrence of any other event which could
reasonably be expected to have a material adverse effect on the
aggregate value of the Collateral or on the security interests
created hereby.
4.6 INVESTMENT PROPERTY
(a) If such Loan Party shall become entitled to
receive or shall receive after the date hereof any certificate
(including, without limitation, any certificate representing a
dividend or a distribution in connection with any
reclassification, increase or reduction of capital or any
certificate issued in connection with any reorganization), option
or rights in respect of the Capital Stock of any Issuer, whether
in addition to, in substitution of, as a conversion of, or in
exchange for, any shares of the Pledged Stock, or otherwise in
respect thereof, such Loan Party shall accept the same as the
agent of the Agent, hold the same in trust for the Agent and
deliver the same forthwith to the Agent in the exact form
received, duly indorsed by such Loan Party to the Agent, if
required, together with an undated stock power covering such
certificate duly executed in blank by such Loan Party and with,
if the Agent so requests, signature guaranteed, to be held by the
Agent, subject to the terms hereof, as additional collateral
security for the Obligations. Any sums paid upon or in respect
of the Investment Property upon the liquidation or dissolution of
any Issuer shall be paid over to the Agent to be held by it
hereunder as additional collateral security for the Obligations,
and in case any distribution of capital shall be made on or in
respect of the Investment Property or any property shall be
distributed upon or with respect to the Investment Property
pursuant to the recapitalization or reclassification of the
capital of any Issuer or pursuant to the reorganization thereof,
the property so distributed shall, unless otherwise subject to a
perfected security interest in favor of the Agent, be delivered
to the Agent to be held by it hereunder as additional collateral
security for the Obligations. If any sums of money or property
so paid or distributed in respect of the Investment Property
shall be received by such Loan Party, such Loan Party shall,
until such money or property is paid or delivered to the Agent,
hold such money or property in trust for the Agent, segregated
from other funds of such Loan Party, as additional collateral
security for the Obligations.
(b) Without the prior written consent of the Agent
(not to be unreasonably withheld), such Loan Party will not (i)
vote to enable, or take any other action to permit, any Issuer to
issue any Capital Stock of any nature or to issue any other
securities convertible into or granting the right to purchase or
exchange for any Capital Stock of any nature of any Issuer
(except pursuant to a transaction permitted by the Credit
Agreement), (ii) sell, assign, transfer, exchange, or otherwise
dispose of, or grant any option with respect to, the Investment
Property or Proceeds thereof (except pursuant to a transaction
permitted by the Credit Agreement), (iii) create, incur or permit
to exist any Lien or option in favor of, or any claim
Page 7
of any Person with respect to, any of the Investment Property or
Proceeds thereof, or any interest therein, except for the
security interests created by this Agreement or permitted by the
Credit Agreement or (iv) enter into any agreement or undertaking
restricting the right or ability of such Loan Party or the Agent
to sell, assign or transfer any of the Investment Property or
Proceeds thereof except as permitted by the Credit Agreement.
(c) In the case of each Loan Party which is an Issuer,
such Issuer agrees that it will be bound by the terms of this
Agreement relating to the Investment Property issued by it and
will comply with such terms insofar as such terms are applicable
to it.
(d) In the case of each Loan Party which holds Pledged
Notes that have not been delivered into the possession of the
Agent, such Loan Party agrees that it will not sell, transfer or
otherwise dispose of such Pledged Notes to any other party other
than another Loan Party under the Loan Documents, except for any
sale, transfer or disposition in accordance with Section 6.15.
4.7 RECEIVABLES
Other than in the ordinary course of business
consistent with its past practice and unless commercially
reasonable, such Loan Party will not (i) (as to any Receivable
which is a material amount) grant any extension of the time of
payment of any Receivable, (ii) compromise or settle any
Receivable for less than the full amount thereof, (iii) release,
wholly or partially, any Person liable for the payment of any
Receivable, (iv) allow any credit or discount whatsoever on any
Receivable or (v) amend, supplement or modify any Receivable in
any manner that could materially adversely affect the value
thereof. Such Loan Party will deliver to the Agent a copy of
each material demand, notice or document received by it that
questions or calls into doubt the validity or enforceability of
more than 5% of the aggregate amount of the then outstanding
Receivables.
SECTION 5. REMEDIAL PROVISIONS
5.1 CERTAIN MATTERS RELATING TO RECEIVABLES
If required by the Agent at any time after the
occurrence and during the continuance of an Event of Default, any
payments of Receivables, when collected by any Loan Party, (i)
shall be forthwith (and, in any event, within three Business
Days) deposited by such Loan Party in the exact form received,
duly indorsed by such Loan Party to the Agent if required, in a
Collateral Account maintained under the sole dominion and control
of the Agent, subject to withdrawal by the Agent only as provided
in Section 5.5, and (ii) until so turned over, shall be held by
such Loan Party in trust for the Agent, segregated from other
funds of such Loan Party. Each such deposit of Proceeds of
Receivables shall be accompanied by a report identifying in
reasonable detail the nature and source of the payments included
in the deposit. Upon the occurrence and during the continuance
of an Event of Default, at the Lender's reasonable request, each
Loan Party shall deliver to the Agent all original and other
documents evidencing, and relating to, the agreements and
transactions which gave rise to the Receivables, including,
without limitation, all original orders, invoices and shipping
receipts.
5.2 COMMUNICATIONS WITH OBLIGORS; LOAN PARTIES
REMAIN LIABLE
The Agent in its own name or in the name of others
may at any time after the occurrence and during the continuance
of an Event of Default communicate with obligors under the
Receivables to verify with them to the Lender's satisfaction the
existence, amount and terms of any Receivables. Upon the request
of the Agent at any time after the occurrence and during the
continuance of an Event of Default, each Loan Party shall notify
obligors on the Receivables that the Receivables have been
assigned to the Agent and that payments in respect thereof shall
be made directly to the Agent. Anything herein to the contrary
notwithstanding, each Loan Party shall remain liable under each
of the Receivables to observe and perform all the conditions and
obligations to be observed and performed by it thereunder, all in
accordance with the terms of any agreement giving rise thereto.
The Agent shall not have any obligation or liability under any
Receivable
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(or any agreement giving rise thereto) by reason of or
arising out of this Agreement or the receipt by the Agent of any
payment relating thereto, nor shall the Agent be obligated in any
manner to perform any of the obligations of any Loan Party under
or pursuant to any Receivable (or any agreement giving rise
thereto), to make any payment, to make any inquiry as to the
nature or the sufficiency of any payment received by it or as to
the sufficiency of any performance by any party thereunder, to
present or file any claim, to take any action to enforce any
performance or to collect the payment of any amounts which may
have been assigned to it or to which it may be entitled at any
time or times.
5.3 PLEDGED STOCK
Unless an Event of Default shall have occurred and
be continuing and the Agent shall have given notice to the
relevant Loan Party of the Lender's intent to exercise its
corresponding rights pursuant to Section 5.3 each Loan Party
shall be permitted to receive all cash dividends paid in respect
of the Pledged Stock and all payments made in respect of the
Pledged Notes, in each case paid in the normal course of business
of the relevant Issuer and consistent with past practice, to the
extent permitted in the Credit Agreement, and to exercise all
voting and corporate or other organizational rights with respect
to the Investment Property; provided, however, that no vote shall
be cast or corporate or other organizational right exercised or
other action taken which, in the Lender's reasonable judgment,
would materially impair the Collateral or which would be
inconsistent with or result in any violation of any provision of
the Credit Agreement, this Agreement or any other Loan Document.
If an Event of Default shall occur and be continuing and the
Agent shall give notice of its intent to exercise such rights to
the relevant Loan Party or Loan Parties, (i) the Agent shall have
the right to receive any and all cash dividends, payments or
other Proceeds paid in respect of the Investment Property and
make application thereof to the Obligations in such order as the
Agent may determine and (ii) any or all of the Investment
Property shall be registered in the name of the Agent or its
nominee, and the Agent or its nominee may thereafter exercise (x)
all voting, corporate and other rights pertaining to such
Investment Property at any meeting of shareholders of the
relevant Issuer or Issuers or otherwise and (y) any and all
rights of conversion, exchange and subscription and any other
rights, privileges or options pertaining to such Investment
Property as if it were the absolute owner thereof (including,
without limitation, the right to exchange at its discretion any
and all of the Investment Property upon the merger,
consolidation, reorganization, recapitalization or other
fundamental change in the corporate or other organizational
structure of any Issuer, or upon the exercise by any Loan Party
or the Agent of any right, privilege or option pertaining to such
Investment Property, and in connection therewith, the right to
deposit and deliver any and all of the Investment Property with
any committee, depositary, transfer agent, registrar or other
designated agency upon such terms and conditions as the Agent may
determine), all without liability except to account for property
actually received by it, but the Agent shall have no duty to any
Loan Party to exercise any such right, privilege or option and
shall not be responsible for any failure to do so or delay in so
doing. Each Loan Party hereby authorizes and instructs each
Issuer of any Investment Property pledged by such Loan Party
hereunder to (i) comply with any instruction received by it from
the Agent in writing that (x) states that an Event of Default has
occurred and is continuing and (y) is otherwise in accordance
with the terms of this Agreement, without any other or further
instructions from such Loan Party, and each Loan Party agrees
that each Issuer shall be fully protected in so complying, and
(ii) unless otherwise expressly permitted hereby, pay any
dividends or other payments with respect to the Investment
Property directly to the Lender.
5.4 PROCEEDS TO BE TURNED OVER TO AGENT
In addition to the rights of the Agent specified in
Section 5.1 with respect to payments of Receivables, if an Event
of Default shall occur and be continuing, all Proceeds received
by any Loan Party consisting of cash, checks and other near-cash
items shall be held by such Loan Party in trust for the Agent,
segregated from other funds of such Loan Party, and shall,
forthwith upon receipt by such Loan Party, be turned over to the
Agent in the exact form received by such Loan Party (duly
indorsed by such Loan Party to the Agent, if required). All
Proceeds received by the Agent hereunder shall be held by the
Agent in a Collateral Account maintained under its sole dominion
and control. All Proceeds while held by the Agent in a
Collateral Account (or by such Loan Party in trust
Page 9
for the Lender) shall continue to be held as collateral security for
all the Obligations and shall not constitute payment thereof until
applied as provided in Section 5.5.
5.5 APPLICATION OF PROCEEDS
At such intervals as may be agreed upon by the
Borrower and the Agent or, if an Event of Default shall have
occurred and be continuing, at any time at the Lender's election,
the Agent may apply all or any part of Proceeds constituting
Collateral, whether or not held in any Collateral Account, in
payment of the Obligations in the following order: FIRST, to any
costs, fees and expenses incurred by the Agent in connection with
this Agreement, the Credit Agreement, any other Loan Document or
any of the Obligations (including the reasonable costs, fees and
expenses of its agents and legal counsel, and any costs or
expenses incurred in connection with the exercise by the Agent of
any right or remedy under this Agreement, the Credit Agreement or
any other Loan Document); SECOND, to the ratable satisfaction of
the Obligations; and THIRD, any balance of remaining Proceeds to
the Borrower or to whomsoever may be lawfully entitled to receive
the same. Any balance of such Proceeds remaining after the
Obligations shall have been paid in full and the Commitments
shall have terminated shall be paid over to the Borrower or to
whomsoever may be lawfully entitled to receive the same.
5.6 CODE AND OTHER REMEDIES
If an Event of Default shall occur and be
continuing, the Agent may exercise, in addition to all other
rights and remedies granted to them in this Agreement and in any
other instrument or agreement securing, evidencing or relating to
the Obligations, all rights and remedies of the Agent under the
New York UCC or any other applicable law. Without limiting the
generality of the foregoing, the Agent, without demand of
performance or other demand, presentment, protest, advertisement
or notice of any kind (except any notice required by law referred
to below) to or upon any Loan Party or any other Person (all and
each of which demands, defenses, advertisements and notices are
hereby waived), may in such circumstances forthwith collect,
receive, appropriate and realize upon the Collateral, or any part
thereof, and/or may forthwith sell, lease, assign, give option or
options to purchase, or otherwise dispose of and deliver the
Collateral or any part thereof (or contract to do any of the
foregoing), in one or more parcels at public or private sale or
sales, at any exchange, broker's board or office of the Agent or
elsewhere upon such terms and conditions as it may deem advisable
and at such prices as it may deem best, for cash or on credit or
for future delivery without assumption of any credit risk. The
Agent shall have the right upon any such public sale or sales,
and, to the extent permitted by law, upon any such private sale
or sales, to purchase the whole or any part of the Collateral so
sold, free of any right or equity of redemption in any Loan
Party, which right or equity is hereby waived and released. Each
Loan Party further agrees, at the Lender's request, to assemble
the Collateral and make it available to the Agent at places which
the Agent shall reasonably select, whether at such Loan Party's
premises or elsewhere. The Agent shall apply the net proceeds of
any action taken by it pursuant to this Section 5.6, after
deducting all reasonable costs and expenses of every kind
incurred in connection therewith or incidental to the care or
safekeeping of any of the Collateral or in any way relating to
the Collateral or the rights of the Agent hereunder, including,
without limitation, reasonable attorneys' fees and disbursements,
to the payment in whole or in part of the Obligations, in the
order as set forth in Section 5.5, and only after such
application and after the payment by the Agent of any other
amount required by any provision of law, including, without
limitation, Section 9-615(a) of the New York UCC, need the Agent
account for the surplus, if any, to any Loan Party. To the
extent permitted by applicable law, each Loan Party waives all
claims, damages and demands it may acquire against the Agent
arising out of the exercise by them of any rights hereunder. If
any notice of a proposed sale or other disposition of Collateral
shall be required by law, such notice shall be deemed reasonable
and proper if given at least 10 days before such sale or other
disposition.
5.7 DEFICIENCY
Each Loan Party shall remain liable for any
deficiency if the proceeds of any sale or other disposition of
the Collateral are insufficient to pay its Obligations and the
fees and disbursements of any attorneys employed by the Agent to
collect such deficiency.
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SECTION 6. MISCELLANEOUS
6.1 AMENDMENTS IN WRITING
None of the terms or provisions of this Agreement
may be waived, amended, supplemented or otherwise modified except
in accordance with Section 8.1 of the Credit Agreement.
6.2 NOTICES
All notices, requests and demands to or upon the
Agent or any Loan Party hereunder shall be effected in the manner
provided for in Section 8.2 of the Credit Agreement.
6.3 NO WAIVER BY COURSE OF CONDUCT; CUMULATIVE REMEDIES
The Agent shall not by any act (except by a written
instrument pursuant to Section 6.1), delay, indulgence, omission
or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any Default or Event of
Default. No failure to exercise, nor any delay in exercising, on
the part of the Agent any right, power or privilege hereunder
shall operate as a waiver thereof. No single or partial exercise
of any right, power or privilege hereunder shall preclude any
other or further exercise thereof or the exercise of any other
right, power or privilege. A waiver by the Agent of any right or
remedy hereunder on any one occasion shall not be construed as a
bar to any right or remedy which the Agent would otherwise have
on any future occasion. The rights and remedies herein provided
are cumulative, may be exercised singly or concurrently and are
not exclusive of any other rights or remedies provided by law.
6.4 ENFORCEMENT EXPENSES; INDEMNIFICATION
Each Loan Party agrees to pay, and to save the Agent
harmless from, any and all liabilities with respect to, or
resulting from any delay in paying, any and all stamp, excise,
sales or other taxes which may be payable or determined to be
payable with respect to any of the Collateral or in connection
with any of the transactions contemplated by this Agreement,
except to the extent such liabilities were caused by the gross
negligence or willful misconduct of the Agent, as determined by a
final and nonappealable decision of a court of competent
jurisdiction. Each Loan Party agrees to pay, and to save the
Agent harmless from, any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever with
respect to the execution, delivery, enforcement, performance and
administration of this Agreement to the extent the Borrower would
be required to do so pursuant to Section 9.5 of the Credit
Agreement. The agreements in this Section 6.4 shall survive
repayment of the Obligations and all other amounts payable under
the Credit Agreement and the other Loan Documents.
6.5 SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon the successors
and assigns of each Loan Party and shall inure to the benefit of
the Agent and its successors and assigns; provided that no Loan
Party may assign, transfer or delegate any of its rights or
obligations under this Agreement without the prior written
consent of the Lender.
6.6 SET-OFF
Each Loan Party hereby irrevocably authorizes the
Agent at any time and from time to time while an Event of Default
shall have occurred and be continuing, without notice to such
Loan Party or any other Loan Party, any such notice being
expressly waived by each Loan Party, to set-off and appropriate
and apply any and all deposits (general or special, time or
demand, provisional or final), in any currency, and any other
credits, indebtedness or claims, in any currency, in each case
whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by the Agent to or for the
credit or the account of such Loan Party, or any part thereof in
such amounts as the Agent may elect, against and on account of
the obligations and liabilities of such Loan Party to the Agent
hereunder and claims of every nature and description of the Agent
against such Loan Party, in any currency, whether arising
hereunder, under the Credit Agreement or any other Loan Document,
as the Agent may elect, whether or not the Agent has made any
demand for payment and although such obligations, liabilities and
claims may be contingent or unmatured. The Agent shall notify
such Loan Party promptly of any such set-off and the application
made by the Agent of the proceeds thereof, provided that the
failure to give
Page 11
such notice shall not affect the validity of such
set-off and application. The rights of the Agent under this
Section 6.6 are in addition to other rights and remedies
(including, without limitation, other rights of set-off) which
the Agent may have.
6.7 COUNTERPARTS
This Agreement may be executed by one or more of the
parties to this Agreement on any number of separate counterparts
(including by telecopy), and all of said counterparts taken
together shall be deemed to constitute one and the same
instrument.
6.8 SEVERABILITY
Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.
6.9 SECTION HEADINGS
The Section headings used in this Agreement are for
convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the
interpretation hereof.
6.10 INTEGRATION
This Agreement, the other Loan Documents represent
the agreement of the Loan Parties and the Agent with respect to
the subject matter hereof, and there are no promises,
undertakings, representations or warranties by the Agent relative
to subject matter hereof not expressly set forth or referred to
herein, in the other Loan Documents.
6.11 GOVERNING LAW
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK AND APPLICABLE FEDERAL LAW.
6.12 SUBMISSION TO JURISDICTION; WAIVERS
Each Loan Party hereby irrevocably and
unconditionally:
(a) submits for itself and its property in any legal
action or proceeding relating to this Agreement and the other Loan
Documents to which it is a party, or for recognition and
enforcement of any judgment in respect thereof, to the
non-exclusive general jurisdiction of the courts of the State and
County of New York, the courts of the United States of America
for the Southern District of New York, and appellate courts from
any thereof;
(b) consents that any such action or proceeding may be
brought in such courts and waives any objection that it may now or
hereafter have to the venue of any such action or proceeding in
any such court or that such action or proceeding was brought in
an inconvenient court and agrees not to plead or claim the same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by
registered or certified mail (or any substantially similar form
of mail), postage prepaid, to such Loan Party at its address
referred to in Section 6.2 or at such other address of which the
Agent shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or
shall limit the right to xxx in any other jurisdiction; and
Page 12
(e) waives, to the maximum extent not prohibited by law,
any right it may have to claim or recover in any legal action or
proceeding referred to in this Section any special, exemplary,
punitive or consequential damages.
6.13 ACKNOWLEDGEMENTS
Each Loan Party hereby acknowledges that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the other Loan Documents
to which it is a party;
(b) the Agent has no fiduciary relationship with or duty
to any Loan Party arising out of or in connection with this Agreement
or any of the other Loan Documents, and the relationship between the
Loan Parties, on the one hand, and the Agent, on the other hand,
in connection herewith or therewith is solely that of debtor and
creditor; and
(c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions
contemplated hereby among the Loan Parties and the Lender.
6.14 RELEASES
At such time as the Loans and the other Obligations
shall have been paid in full, the Collateral shall be released
from the Liens created hereby, and this Agreement and all
obligations (other than those expressly stated to survive such
termination) of the Agent and each Loan Party hereunder
(including all guarantee obligations) shall terminate, all
without delivery of any instrument or performance of any act by
any party, and all rights to the Collateral shall revert to the
Loan Parties. At the request and sole expense of any Loan Party
following any such termination, the Agent shall deliver to such
Loan Party any Collateral held by the Agent hereunder, and
execute and deliver to such Loan Party such documents as such
Loan Party shall reasonably request to evidence such termination.
If any of the Collateral shall be sold, transferred or otherwise
disposed of by any Loan Party in a transaction permitted by the
Credit Agreement, then the Agent, at the request and sole expense
of such Loan Party, shall execute and deliver to such Loan Party
all releases or other documents reasonably necessary or desirable
for the release of the Liens created hereby on such Collateral.
6.15 WAIVER OF JURY TRIAL
EACH GRANTOR AND THE LENDER HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT
AND FOR ANY COUNTERCLAIM THEREIN.
IN WITNESS WHEREOF, each of the undersigned has caused
this Security Agreement to be duly executed and delivered as of
the date first above written.
Page 13
LOAN PARTIES:
CADIZ INC.
By:
Name:
Title:
CADIZ REAL ESTATE LLC
By:
Name:
Title:
AGENT:
PELOTON PARTNERS LLP
By:
Name:
Title:
SCHEDULE 1
NOTICE ADDRESSES OF GRANTORS
c/o Cadiz Inc.
000 X. Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attention: Chief Financial Officer
Telecopy: 000-000-0000
Telephone: 000-000-0000
SCHEDULE 2
DESCRIPTION OF INVESTMENT PROPERTY
Pledged Stock:
Issuer Class of Stock No. of Shares
Stock Certificate No.
Cadiz Real Membership N/A 100% Interest
Estate LLC Interest
Pledged Notes:
Issuer Payee Principal Amount
N/A
SCHEDULE 3
FILINGS AND OTHER ACTIONS
REQUIRED TO PERFECT SECURITY INTERESTS
UNIFORM COMMERCIAL CODE FILINGS
LOAN PARTY UCC FILING JURISDICTIONS
Cadiz Inc. Delaware, California
San Bernardino County,
California
Cadiz Real Estate LLC Delaware, California
San Bernardino County,
California
PATENT AND TRADEMARK FILINGS
None
ACTIONS WITH RESPECT TO PLEDGED STOCK**
N/A
SCHEDULE 4
LOCATION OF JURISDICTION OF ORGANIZATION AND CHIEF EXECUTIVE
OFFICE
LOAN PARTY JURISDICTIO LOCATION OF CHIEF
N OF EXECUTIVE OFFICE
ORGANIZATIO
N
Cadiz Inc. Delaware Suite 4250
000 Xxxxx Xxxxxxxx
Xx.
Xxx Xxxxxxx, XX
00000
Suite 4250
Cadiz Real Estate LLC Delaware 000 Xxxxx Xxxxxxxx
Xx.
Xxx Xxxxxxx, XX
00000
SCHEDULE 5
LOCATIONS OF INVENTORY AND EQUIPMENT
LOAN PARTY LOCATIONS
Suite 4250
Cadiz Inc. 000 Xxxxx Xxxxxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Cadiz Real Estate LLC Suite 4250
000 Xxxxx Xxxxxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
00-000 Xxxxxxxx Xxxxxx
Xxxxxxx
Xxxxx, XX 00000
SCHEDULE 6
COPYRIGHTS AND COPYRIGHT LICENSES
[None]
PATENTS AND PATENT LICENSES
[None]
TRADEMARKS AND TRADEMARK LICENSES
[None]
--------------------------------------------------------------------------------
EXHIBIT B
FORM OF COMPLIANCE CERTIFICATE
[on Cadiz letterhead]
Peloton Partners LLP
00 Xxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxx X0X 0XX
Attention: Xxx Xxxxxx
Re: Compliance Certificate dated _______________
Ladies and Gentlemen:
Reference is made to that certain Credit Agreement,
dated as of June __, 2006 (as amended, the "CREDIT AGREEMENT"),
by and among CADIZ INC. ("CADIZ") and CADIZ REAL ESTATE LLC, as
borrowers (together, the "BORROWER"), the lenders party thereto
and PELOTON PARTNERS LLP, as administrative agent (the "AGENT").
Capitalized terms used in this Compliance Certificate have the
meanings set forth in the Credit Agreement unless specifically
defined herein.
Pursuant to SCHEDULE 5.2 of the Credit Agreement, the
undersigned, being a Responsible Officer of Cadiz, hereby
certifies that:
1. The financial information of the Borrower
furnished in SCHEDULE 1 attached hereto, has been prepared in
accordance with GAAP (except for year-end adjustments and the
lack of footnotes), and fairly presents in all material respects
the financial condition of Cadiz and its Subsidiaries.
2. The undersigned has reviewed the terms of the
Credit Agreement and has made, or caused to be made under his/her
supervision, a review in reasonable detail of the transactions
and condition of the Cadiz and its Subsidiaries during the
accounting period covered by the financial statements delivered
pursuant to SCHEDULE 5.2 of the Credit Agreement.
3. Such review has not disclosed the existence on and
as of the date hereof, and the undersigned does not have
knowledge of the existence as of the date hereof, of any event or
condition that constitutes a Default or Event of Default, except
for such conditions or events listed on SCHEDULE 2 attached
hereto, specifying the nature and period of existence thereof and
what action the Cadiz and its Subsidiaries have taken, are
taking, or propose to take with respect thereto.
4. The representations and warranties of the Cadiz
and its Subsidiaries set forth in the Credit Agreement and the
other Loan Documents are true and correct in all material
respects on and as of the date hereof (except to the extent they
relate to a specified date), except as set forth on SCHEDULE 3
attached hereto.
IN WITNESS WHEREOF, this Compliance Certificate is
executed by the undersigned this _____ day of _______________,
________.
CADIZ INC.
By:
Name:
Title:
SCHEDULE 1
Financial Information
SCHEDULE 2
Default or Event of Default
SCHEDULE 3
Representations and Warranties
--------------------------------------------------------------------------------
EXHIBIT C
FORM OF CLOSING CERTIFICATE
This Closing Certificate is being delivered in
connection with the execution and delivery of that certain Credit
Agreement, dated as of June __, 2006 (the "CREDIT AGREEMENT"), by
and among CADIZ INC., a Delaware corporation ("CADIZ"), and CADIZ
REAL ESTATE LLC, a Delaware limited liability company ("cre";
together with Cadiz, the "BORROWER"), the lenders party thereto
(the "Lenders") and PELOTON PARTNERS LLP, as administrative agent
(the "AGENT").
All capitalized terms used but not otherwise defined
herein shall have the meaning ascribed to them in the Credit
Agreement.
The undersigned, in the name of and on behalf of
[Cadiz] [CRE] (the "COMPANY"), hereby certifies that he is the
[Secretary] of the Company and that:
1. Attached hereto as ANNEX "A" are board minutes
reflecting certain resolutions of the Company that were duly adopted
by the [Board of Directors] [Members] on June __, 2006. Such
resolutions are in full force and effect, and authorize and
approve, on behalf of the Company, (i) the Credit Agreement and
(ii) each of the other Loan Documents.
2. Attached hereto as ANNEX "B" is a true and complete
copy of the Certificate of [Incorporation] [Formation]of the Company,
certified by the Secretary of State of the State of California.
3. Attached hereto as ANNEX "C" is true and complete
copy of the [By-laws] [Limited Liability Company Agreement] of the
Company, and such document has not been amended, modified,
revoked or rescinded and is in full force and effect as of the
date hereof.
4. Attached hereto as ANNEX "D" is true and complete copy
of a "good standing" certificate for the Company, certified by the
Secretary of State of the State of California.
5. [__________] is the duly elected and qualified
[____________] of the Company and his signature below is his
genuine signature. He is authorized to execute and deliver, on
behalf of the Company, the Loan Documents and any certificate or
other document to be executed and delivered by the Company
pursuant to the Loan Documents.
[remainder of page intentionally left blank]
IN WITNESS WHEREOF, I have hereunto set my hand this
____ day of June, 2006.
[____________]
[Secretary]
I, [_______________], [______________], hereby certify
in my capacity as [____________] of the Company that
[______________] is the duly elected, qualified and acting
[Secretary] of the Company and that the signature appearing above
is his genuine signature.
IN WITNESS WHEREOF, I have hereunto set my hand this
____ day of June, 2006.
[____________]
[____________]
ANNEX A
ANNEX B
ANNEX C
ANNEX D
--------------------------------------------------------------------------------
EXHIBIT D
WHEN RECORDED MAIL TO:
XXXXXXXXX TRAURIG LLP
0000 Xxxxxxxx Xxxxxx, Xxxxx 000 X
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
Attn.: Xxxxxxxx Xxxxx, Esq.
_________________________________________________________________
SPACE ABOVE THIS LINE FOR RECORDER'S USE
DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS, SECURITY
AGREEMENT, FINANCING STATEMENT AND FIXTURE FILING
THIS DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS,
SECURITY AGREEMENT, FINANCING STATEMENT AND FIXTURE FILING (this
"DEED OF TRUST") is made as of June 26, 2006, by and among Cadiz,
Inc. a Delaware corporation, with an address of 000 Xxxxx
Xxxxxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx, 00000
("CADIZ") and Cadiz Real Estate LLC, a Delaware limited liability
company with an address of 000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 0000,
Xxx Xxxxxxx, Xxxxxxxxxx, 00000 ("CRE") (collectively,
("TRUSTOR"), to Chicago Title Company, whose address is 000 Xxxx
Xxxxxxxxxxx Xxxx, Xxx Xxxxxxxxxx, Xxxxxxxxxx, 00000 ("TRUSTEE")
for the benefit of Peloton Partners LLP, a limited liability
partnership organized under the laws of England and Wales with an
address of 00 Xxxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxx XXX 0XX (together
with any successor beneficiaries, "BENEFICIARY"). Beneficiary
serves as administrative agent (the "AGENT") for the lenders set
forth on SCHEDULE 1 (which lenders may change from time to time).
ARTICLE I
GRANTS AND OBLIGATIONS SECURED
X. XXXXX
1.1. FOR GOOD AND VALUABLE CONSIDERATION, including the
indebtedness herein recited and the trust herein created, the
receipt of which is hereby acknowledged, Trustor hereby
irrevocably grants, transfers, conveys and assigns to Trustee, IN
TRUST, WITH POWER OF SALE AND RIGHT OF ENTRY AND POSSESSION, for
the benefit and security of Beneficiary, under and subject to the
terms and conditions hereinafter set forth, and grants to
Beneficiary a security interest in the following property,
rights, interests and estates of Trustor whether now owned or
hereafter acquired:
(i) that certain real property located in the County of San
Bernardino, State of California more particularly described in
EXHIBIT A-1 attached hereto and by this reference incorporated
herein (all such real property described in EXHIBIT A-1 is
collectively referred to herein as the "PREMISES");
(ii) TOGETHER WITH any and all structures, buildings and
improvements and any and all alterations now or hereafter located
or erected on the Premises, all pumps and pumping stations used
in connection therewith and all shares of stock evidencing the
same, all fixtures, attachments, appliances, equipment,
machinery, furnishings, inventory and other articles or property
used or usable in connection with the Premises or attached or
affixed in any manner to said structures, buildings and
improvements including, but not limited to all storage tanks and
pipelines, all gas, electric, heating, cooling, air conditioning,
refrigeration, ventilation, sanitation, and plumbing fixtures and
equipment and any additions to, substitutions for, changes or
replacements of the whole or any part thereof (collectively, the
"IMPROVEMENTS"), all of which shall be deemed and construed to be
a part of the realty;
(iii)TOGETHER WITH all rents, earnings, issues, profits,
royalties, income, accounts receivable, revenues, deposits,
security deposits, receipts and other benefits (collectively, the
"RENTS") derived or generated from the use and operation of the
Premises, Improvements and the Collateral (as hereinafter
defined) or to which Trustor may be entitled, whether now due,
past due or to become due or from any lease, sublease, license,
franchise or concession or other agreement now or hereafter
affecting all or any portion of the Premises or the Improvements
or the use, operation or occupancy thereof (collectively, the
"LEASES"), subject to the terms and provisions of ARTICLE 3
hereof;
(iv) TOGETHER WITH all right, title and interest now or
hereafter appertaining, belonging to or acquired by Trustor in and
to any easements, rights-of-way, rights, licenses, profits, and
privileges used in connection therewith or as a means of access
thereto, including, without limiting the generality of the
foregoing, all rights pursuant to any trackage agreement and all
rights to the nonexclusive use of common drive entries, any after
acquired title and reversion in or to each and every part of all
streets, roads, highways and alleys adjacent to and adjoining the
same, and all tenements, hereditaments and appurtenances thereof
and thereto;
(v) TOGETHER WITH all right, title and interest of Trustor,
whether owned legally, of record, equitably, beneficially or
otherwise, whether constituting real or personal property (or
subject to any other characterizations), whether created or
authorized under existing or future laws or regulations, and
however arising, in all water rights and assets (collectively,
the "WATER RIGHTS AND ASSETS"), including without limitation, the
following:
(a) All water (including any water inventory in storage),
water rights and entitlements, other rights to water and other
rights to receive water or water rights of every kind or nature
whatsoever including (1) the groundwater on, under, pumped from
or otherwise available to the Premises, whether as the result of
groundwater rights, contractual rights or otherwise, (ii)
Trustor's right to remove and extract any such groundwater
including any permits, rights or licenses granted by any
governmental authority or agency or any rights granted or created
by any use, easement, covenant, agreement, or contract with any
person or entity, (iii) any rights to which the Premises is
entitled with respect to surface water, whether such right is
appropriative, riparian, prescriptive, decreed or otherwise and
whether or not pursuant to permit or other governmental
authorization, or the right to store any such water, (iv) any
water, water right, water allocation, distribution right,
delivery right, water storage right, or other water-related
entitlement appurtenant or otherwise applicable to the Premises
by virtue of the Premises being situated within the boundaries of
any district, agency, or other governmental entity or within the
boundaries of any private water company, mutual water company, or
other non-governmental entity, and (v) all rights in and to
pumping plants, pipes, flumes and all rights in ditches for
irrigation of the Premises;
(b) All stock, interest or rights (including any water
allocations, voting or decision rights) in any entity, together
with any and all rights from any entity or other person to
acquire, receive, exchange, sell, lease or otherwise transfer any
water or other Water Rights and Assets, to store, deposit or
otherwise create water credits in a water bank or similar or
other arrangements for allocating water, to transport or deliver
water, or otherwise to deal with any Water Rights and Assets;
(c) All licenses, permits, approvals, contracts, decrees,
rights and interests to acquire or appropriate any water or other
Water Rights and Assets, water bank or other credits evidencing any
right to water or other Water Rights and Assets, to store, carry,
transport or deliver water or other Water Rights and Assets, to
sell, lease, exchange, or otherwise transfer any water or other
Water Rights and Assets, or to change the point for diversion of
water, the location of any water or Water Rights and Assets, the
place of use of any water or Water Rights and Assets, or the
purpose of the use of any water or Water Rights and Assets;
(d) All rights, claims, causes of action, judgments, awards,
and other judicial, arbiter or administrative relief in any way
relating to any water or Water Rights and Assets;
(e) All storage and treatment rights for any water or any other
Water Rights and Assets, whether on or off the Premises or other
property of Trustor, together with all storage tanks, and other
equipment used or usable in connection with such storage and any
water bank deposit credits, deposit accounts;
(f) All rights to transport, carry, allocate or otherwise
deliver water or other Water Rights and Assets by any means
wherever located;
(g) All guaranties, warranties, marketing, management or
service contracts, indemnity agreements, and water right agreements,
other water related contracts and water reallocation rights, all
insurance policies regarding or relating to any Water Rights and
Assets; and
(h) All rents, issues, profits, proceeds and other accounts,
instruments, chattel paper, contract rights, general intangibles,
deposit accounts, and other rights to payment arising from or on
account of any use, nonuse, sale, lease, transfer or other
disposition of any Water Rights and Assets.
The references to "water" and "water rights and assets"
are used herein in the broadest and most comprehensive sense of
the terms. The term "water" includes water rights and rights to
water or whatever rights to money, proceeds, property or other
benefits are exchanged or received for or on account of any Water
Rights and Assets or any conservation or other nonuse of water,
including whatever rights are achieved by depositing shares of
any Water Right and Assets in any water bank or with any water
authority, or any other water reallocation rights;
TOGETHER WITH all leasehold estates, rights, titles and
interests of Trustor in, to and under all leases, permits,
subleases, licenses, franchises and other agreements covering the
Premises however characterized, issued or in any way furnished,
whether necessary or not for the operation and use of the
Premises, including, without limitation, building permits,
certificates of occupancy, environmental certificates of
operation relating to, the Improvements or any portion thereof
now or hereafter existing or entered into, and all rights, titles
and interests of Trustor thereunder, including, without
limitation, all cash or security deposits, advance rentals, and
deposits or payments of similar nature;
TOGETHER WITH all right, title and interest now owned
or hereafter acquired by Trustor in and to any greater estate in
the Premises or the Improvements;
(vi) TOGETHER WITH all the estate, interest, right, title,
other claim or demand, both in law and in equity, including claims or
demands with respect to the proceeds of insurance in effect with
respect to the Premises or the Improvements, which Trustor now
has or may hereafter acquire in the Premises or the Improvements,
and any and all awards made for the taking by eminent domain, or
by any proceeding of purchase in lieu thereof, of any other
component of the whole or any part of the Trust Estate (as
hereinafter defined), including, without limitation, any awards
resulting from a change of grade of streets and awards for
severance damages;
(vii)TOGETHER WITH all right, title and interest now owned
or hereafter acquired by Trustor in and to any and all articles
of personal property of every kind and nature whatsoever and any
additions to, substitutions for, changes in or replacements of
the whole or any part thereof, including, without limitation, all
goods, fixtures, wall-beds, wall-safes, built-in furniture and
installations, shelving, partitions, door-stops, vaults,
elevators, dumb-waiters, awnings, window shades, venetian blinds,
light fixtures, fire hoses and brackets and boxes for the same,
fire sprinklers, alarm systems, drapery rods and brackets,
screens, linoleum, carpets, plumbing, laundry tubs and trays,
iceboxes, refrigerators, heating units, stoves, ovens, water
heaters, incinerators, furniture and furnishings, communication
systems, all specifically designed installations and furnishings
and all of said articles of property, the specific enumerations
herein not excluding the general, now or at any time hereafter
affixed to, attached to, placed upon, used or useful in any way
in connection with the use, enjoyment, occupancy or operation of
the Premises or the Improvements or any portion thereof and owned
by Trustor or in which Trustor now has or hereafter acquires an
interest, and all building materials, supplies, tools and
equipment now or hereafter delivered to the Premises and intended
to be installed or placed in or about the Improvements;
(viii)TOGETHER WITH all inventory in all of its forms
(except real estate), wherever located, now or hereafter existing,
including, but not limited to, (a) all plastic, corrugated and
other containers and raw materials and work in progress therefor,
finished goods thereof, and materials used or consumed in the
manufacture or production thereof, (b) goods in which the Trustor
has an interest in mass or a joint or other interest or right or
interest of any kind (including, without limitation, goods in
which the Trustor has an interest or right as consignee), and (c)
goods which are returned to or repossessed by the Trustor, and
all accessions thereto and products thereof and documents
therefor;
(ix) TOGETHER WITH all farm products in all of their
respective forms, wherever located, now or hereafter existing, to
be planted or grown on the Premises (including, but not limited to,
crops, nursery stock, root stock, container grown products, seedlings,
vines, trees, and other plants or plant products, fertilizers and
herbicides), but specifically excluding growing crops, and all
accessions to and products of and documents for any of the
foregoing;
(x) TOGETHER WITH all general intangibles relating to
design, development, operation, management and use of the Premises
and construction of the Improvements, including, but not limited to,
(a) all permits, licenses, authorizations, variances, land
use entitlements, approvals and consents issued or obtained in
connection with the construction of the Improvements, (b) all
permits, licenses, approvals, consents, authorizations,
franchises and agreements issued or obtained in connection with
the use, occupancy or operation of the Premises or the
Improvements, (c) all rights as a declarant (or its equivalent)
under any covenants, conditions and restrictions or other matters
of record affecting the Premises or the Improvements, (d) all
materials prepared for filing or filed with any governmental
agency, (e) all rights under any contract in connection with the
development, design, use, operation, management and construction
of the Premises or the Improvements and (f) all books and records
prepared and kept in connection with the acquisition,
construction, operation and occupancy of the Premises, the
Improvements and any other component of the Trust Estate (as
defined in Section 1.2 below);
(xi) TOGETHER WITH all construction, service, engineering,
consulting, leasing, architectural and other similar contracts of
any nature (including, without limitation, those of any general
contractors, subcontractors and materialmen), as such may be
modified, amended or supplemented from time to time, concerning
the design, construction, management, operation, occupancy, use,
and/or disposition of any other component of any portion of or
all of the Trust Estate;
(xii)TOGETHER WITH all architectural drawings, plans,
surveys, specifications, soil tests and reports, feasibility
studies, appraisals, engineering reports and similar materials
relating to any portion or all of the Premises and the
Improvements;
(xiii)TOGETHER WITH all payment and performance bonds or
guarantees and any and all modifications and extensions thereof
relating to the Premises and the Improvements;
(xiv)TOGETHER WITH all reserves, deferred payments,
deposits, refunds, cost savings, letters of credit and payments
of any kind relating to the construction, design, development,
operation, occupancy, use and disposition of any other component
of all or any portion of the Trust Estate, including, without
limitation, any property tax rebates now owing or hereafter
payable to Trustor;
(xv) TOGETHER WITH all proceeds of the loan secured hereby
and any commitment by any lender to extend permanent or additional
construction or other financing to Trustor relating to any other
component of the Trust Estate;
(xvi)TOGETHER WITH all proceeds and claims arising on
account of any damage to or taking of any other component of the
Trust Estate or any part thereof, and all causes of action and
recoveries for any loss or diminution in the value of any other
component of the Trust Estate;
(xvii)TOGETHER WITH all policies of, and proceeds
resulting from, insurance relating to any other component of the
Trust Estate or any of the above collateral, and any and all riders,
amendments, renewals, supplements or extensions thereof, and all
proceeds thereof;
(xviii)TOGETHER WITH all deposits made with or other
security given to utility companies by Trustor with respect to the
Premises and/or the Improvements, and all advance payments of
insurance premiums made by Trustor with respect thereto and
claims or demands relating to insurance and all deposit accounts
wherever located;
(xix)TOGETHER WITH all shares of stock or other evidence
of ownership of any other component of any part of the Trust Estate
that is owned by Trustor in common with others, including all
water stock relating to the Premises or the Improvements, if any,
and all documents or rights of membership in any owners' or
members' association or similar group having responsibility for
managing or operating any part of the Premises or the
Improvements;
(xx) TOGETHER WITH all proceeds, whether cash, promissory
notes, contract rights or otherwise, of the sale or other disposition
of all or any part of the estate of Trustor upon the Trust Estate
now or hereafter existing thereon (provided, however, the
foregoing shall not authorize or entitle Trustor to dispose of
the Trust Estate, except as may be permitted pursuant to the Loan
Documents (as defined below);
(xxi)TOGETHER WITH all sales contracts, escrow agreements
and broker's agreements concerning the sale of any other component
of any or all of the Trust Estate;
(xxii)TOGETHER WITH any and all monies and other property,
real or personal which may from time to time be subjected to the
lien hereof by Trustor or by anyone on its behalf or with its
consent, or which may come into the possession or be subject to
the control of Trustee or Beneficiary pursuant to this Deed of
Trust, that certain Credit Agreement dated as of June 26, 2006
among Trustor and Beneficiary, in the capacities set forth
therein (the "CREDIT AGREEMENT") or any other document,
instrument or agreement evidencing or securing the indebtedness
evidenced thereby or secured hereby (collectively, the "LOAN
DOCUMENTS") including, without limitation, any protective
advances under this Deed of Trust;
(xxiii)TOGETHER WITH all right, title, interest or
beneficial ownership whether directly or indirectly, in that certain
real property described in EXHIBIT A-2;
(xxiv)TOGETHER WITH all Goods, Accounts, Documents,
Instruments, Money, Chattel Paper and General Intangibles, as
those terms are defined in the Commercial Code from time to time
in effect in the State of California ("CALIFORNIA COMMERCIAL
CODE") (collectively with the property described in subsections
(x) through (xxiv), the "COLLATERAL").
The security interest granted by SECTION 1.1 with
respect to the property described in SUBSECTION (iii) above is
intended by Trustor to be subject to the provisions of ARTICLE 3
hereof and shall not take priority unless and until the license
granted to Beneficiary by Trustor in ARTICLE 3 is for any reason
deemed to be ineffective, terminated or revoked.
1.2. MINERAL RIGHTS. Trustor hereby assigns and transfers
to Beneficiary all damages, royalties and revenue of every kind,
nature and description whatsoever that Trustor may be entitled to
receive from any person or entity owning or having or hereafter
acquiring a right to the oil, gas or mineral rights and
reservations of the Premises, with the right of Beneficiary to
receive and receipt therefor, and apply the same to the
indebtedness secured hereby either before or after any default
hereunder, and Beneficiary may demand, xxx for and recover any
such payments but shall have no duty to do so.
The entire estate, property and interest hereby conveyed to
Trustee in SECTIONS 1.1 and 1.2 of this ARTICLE 1(A) may
hereafter be collectively referred to as the "TRUST ESTATE."
1.3. FIXTURE FILING. The personal property in which
beneficiary has a security interest includes goods which are or
shall become fixtures on the Premises. This Deed of Trust is intended
to serve as a fixture filing pursuant to the terms of Division 9 of
the California Commercial Code. This filing is to be recorded in
the real estate records of the county in which the Premises is
located. This filing remains in effect as a fixture filing until
this Deed of Trust is released or satisfied of record or its
effectiveness otherwise terminates as to the Trust Estate. In
that regard, the following information is provided:
Names of Debtor: Cadiz Inc. and Cadiz Real Estate LLC
Address of Debtor: See SECTION 5.5 hereof.
Name of Secured Party: Peloton Partners LLP (as
administrative agent and Lender)
Address of Secured Party: See SECTION 5.5 hereof.
Trustor is the owner of a record interest in the real
estate concerned. Trustor warrants and agrees that there is no
financing statement covering the foregoing Collateral, the
Premises, the Improvements, the Trust Estate, or any part
thereof, on file in any public office except as set forth on
SCHEDULE 2 attached hereto.
B. OBLIGATIONS SECURED
1.1. FOR THE PURPOSE OF SECURING, IN SUCH ORDER OF
PRIORITY AS BENEFICIARY MAY DETERMINE (collectively,
the "Obligations"):
(i) payment of indebtedness in the total principal amount
of up to $36,375,000, with interest thereon, pursuant to the terms
of the Credit Agreement executed by Trustor and payable to
Beneficiary, and any and all modifications, extensions, renewals
and replacements thereof are by this reference hereby made a part
hereof;
(ii) payment of all sums advanced by Beneficiary to
protect the Trust Estate, with interest thereon at the lesser of (a)
the rate otherwise applicable to the outstanding loans under section
2.4 of the Credit Agreement plus four percent (4%), or (b) the
maximum interest rate permitted by applicable law (which rate of
interest is hereinafter referred to as the "AGREED RATE").
(iii)payment of all other sums, with interest thereon,
which may hereafter be loaned to Trustor, its partners, or its
successors or assigns, by Beneficiary, or its successors or
assigns, and all renewals, extensions, modifications, changes or
amendments thereto, reciting that they are secured by this Deed
of Trust;
(iv) performance of every obligation, covenant or agreement
of Trustor contained herein and all supplements, amendments and
modifications thereto and all extensions and renewals thereof;
(v) performance of every obligation, covenant and agreement
of Trustor contained in any Loan Document or any agreement now or
hereafter executed by Trustor which recites that the obligations
thereunder are secured by this Deed of Trust; and
(vi) compliance with and performance of each and every
material provision of any declaration of covenants, conditions and
restrictions pertaining to the Trust Estate or any portion
thereof.
TO PROTECT THE SECURITY OF THIS DEED OF TRUST, TRUSTOR
HEREBY COVENANTS AND AGREES AS FOLLOWS:
ARTICLE II
COVENANTS AND AGREEMENTS OF TRUSTOR
2.1. AUTHORITY. Trustor represents and warrants that it
is duly authorized and has full corporate power to execute this Deed
of Trust and enter into the transactions described herein.
2.2. PAYMENT OF SECURED OBLIGATIONS. Trustor shall pay when
due the principal of and the interest on the indebtedness as stated
in the Credit Agreement; all charges, fees and other sums as
provided in the Loan Documents; the principal of and interest on
any future advances secured by this Deed of Trust; and the
principal of and interest on any other indebtedness secured by
this Deed of Trust.
2.3. FEES AND EXPENSES. Trustor shall pay all filing,
registration or recording fees and taxes and all expenses
incident to the execution, delivery and recording of this Deed of
Trust, any mortgage instrument supplemental hereto, any security
instrument with respect to such portion of the Collateral, any
Uniform Commercial Code financing statements and continuation
statements, and any instrument of further assurance reasonably
required by Trustee or Beneficiary to be filed, registered or
recorded pursuant to this Deed of Trust.
2.4. MAINTENANCE, REPAIR, ALTERATIONS. Trustor shall keep
the Premises and Improvements in good condition and repair; Trustor
shall not remove, demolish or substantially alter any material
portion of the Improvements (other than in the ordinary course of
constructing tenant improvements) except upon the prior written
consent of the Beneficiary or as may be required by any law,
ordinance, rule, regulation or order of any governmental
authority or political subdivision having jurisdiction over the
Trust Estate; Trustor shall complete promptly and in a good and
workmanlike manner any Improvement which may be now or hereafter
constructed on the Premises and promptly restore in like manner
any portion of the Improvements which may be damaged or destroyed
from any cause whatsoever, and pay when due all claims for labor
performed and materials furnished therefor; Trustor shall not
initiate or acquiesce in any change of zoning or other land
classification without Beneficiary's prior written consent;
Trustor shall comply in all material respects with all laws,
ordinances, regulations, covenants, conditions and restrictions
now or hereafter affecting the Trust Estate or any part thereof
or requiring any alterations or improvements; Trustor shall not
commit or permit any waste or deterioration of the Trust Estate,
and shall keep and maintain abutting grounds, sidewalks, roads,
parking and landscape areas in good and neat order and repair;
and Trustor shall not commit, suffer or permit any act to be done
in or upon the Trust Estate in violation of any law, ordinance or
regulation or of any matter of record affecting the Trust Estate.
2.5. REQUIRED INSURANCE. Trustor shall procure and
maintain or shall cause to be procured and maintained continuously in
effect until repayment and performance of all Obligations, policies of
insurance in form and amounts and issued by companies,
associations or organizations satisfactory to Beneficiary
covering such casualties, risks, perils, liabilities and other
hazards required by Beneficiary, including, without limitation,
any insurance required under any of the Loan Documents. All
original policies, or certificates thereof, and endorsements and
renewals thereof shall be delivered to and retained by
Beneficiary unless Beneficiary waives this requirement in
writing. All policies shall expressly protect or recognize
Beneficiary's interest as required by Beneficiary.
2.6. GENERAL REQUIREMENTS. All policies to be maintained
pursuant to SECTION 2.5 shall (a) be issued by companies with a
Best's Insurance Guide rating of at least A-VII and duly
qualified and authorized to do such business in the State of
California and approved by Beneficiary, (b) provide for
severability of interests, (c) provide that an act or omission of
one of the named insureds shall not reduce or avoid coverage to
the other named insureds, (d) shall be subject to the approval of
Beneficiary as to the insuring companies, amount, deductibles,
content and forms of policies and expiration dates, and (e)
provide that it cannot be cancelled or materially modified
without ten (10) days, prior written notice to Beneficiary. Any
policy to be maintained hereunder may be maintained under a so-
called "blanket policy" insuring other parties and/or other
locations so long as the amount of insurance and type of
insurance coverage required to be provided hereunder is not
thereby diminished, changed or adversely affected.
2.7. DELIVERY OF POLICIES, PAYMENT OF PREMIUMS.
(i) At Beneficiary's option, all policies of insurance
shall either have attached thereto a lender's loss payable
endorsement for the benefit of Beneficiary in form satisfactory
to Beneficiary or shall name Beneficiary as an additional insured.
At least (10) days prior to the expiration of each required
policy, Trustor shall deliver to Beneficiary evidence reasonably
satisfactory to Beneficiary of the renewal or replacement (and,
if payment is due at the same time, evidence of the payment of
premium) of such policy continuing insurance in form as required
by this Deed of Trust. At least (10) days prior to the date when
any premium on each such required policy is due, Trustor shall
deliver to Beneficiary evidence reasonably satisfactory to
Beneficiary of the payment of such premium. All such policies
shall contain a provision that, notwithstanding any contrary
agreement between Trustor and the insurance company, such
policies will not be cancelled, allowed to lapse without renewal,
surrendered or materially amended, which term shall include any
reduction in the scope or limits of coverage, without at least
ten (10) days prior written notice to, and (other than a
termination for non-payment) the consent of, Beneficiary.
(ii) In the event Trustor fails to provide, maintain,
keep in force or deliver to Beneficiary the policies of insurance
required by this Deed of Trust or by any Loan Document,
Beneficiary may (but shall have no obligation to) procure such
insurance or single-interest insurance for such risks covering
Beneficiary's interest, and Trustor will pay all premiums thereon
promptly upon demand by Beneficiary, and until such payment is
made by Trustor, the amount of all such premiums shall bear
interest at the Agreed Rate.
(iii)At any time after a default under any Loan Document,
then upon request by Beneficiary, Trustor shall deposit with
Beneficiary in monthly installments an amount equal to one-
twelfth (1/12) of the estimated aggregate annual insurance
premiums on all policies of insurance to be maintained pursuant
to this Deed of Trust. In such event Trustor further agrees to
cause all bills, statements or other documents relating to the
foregoing insurance premiums to be sent or mailed directly to
Beneficiary. Upon receipt of such bills, statements or other
documents evidencing that a premium for a required policy is then
payable, and providing Trustor has deposited sufficient funds
with Beneficiary pursuant to this SECTION 2.7, Beneficiary shall
promptly pay such amounts as may be due thereunder out of the
funds so deposited with Beneficiary. If at any time and for any
reason the funds deposited with Beneficiary are or will be
insufficient to pay such amounts as may be then or subsequently
due, Beneficiary shall notify Trustor and Trustor shall
immediately deposit an amount equal to such deficiency with
Beneficiary. Notwithstanding the foregoing, nothing contained
herein shall cause Beneficiary to be deemed a trustee of said
funds or to be obligated to pay any amounts in excess of the
amount of funds deposited with Beneficiary pursuant to this
SECTION 2.7, nor shall anything contained herein modify the
obligation of Trustor set forth in SECTION 2.5 hereof to maintain
and keep such insurance in force at all times. To the extent
permitted by law, Beneficiary may commingle said reserve with its
own funds and Trustor shall be entitled to no interest thereon.
2.8. CASUALTIES; INSURANCE PROCEEDS. Trustor shall give
prompt written notice to Beneficiary after the happening of any
casualty to or in connection with the Trust Estate or any part
thereof, whether or not covered by insurance. In the event of such
casualty, all proceeds of insurance shall be payable to
Beneficiary, and Trustor hereby authorizes and directs any
affected insurance company to make payment of such proceeds
directly to Beneficiary. If Trustor receives any proceeds of
insurance resulting from such casualty, Trustor shall promptly
pay over such proceeds to Beneficiary. Beneficiary may
participate in any proceedings and join Trustor in adjusting,
settling or compromising any loss or event of loss covered by
insurance, and any such adjustment, settlement or compromise
shall by subject to obtaining the consent of Beneficiary, which
consent shall not be unreasonably withheld. Subject to the next
following sentence, in the event of any damage or destruction of
the Premises or the Improvements, Beneficiary shall apply all
loss proceeds remaining after deduction of all expenses of
collection and settlement thereof, including, without limitation,
attorneys' and adjustors' fees and expenses, to the restoration
of the Improvements, upon such conditions as Beneficiary shall
reasonably determine (it being expressly agreed that Beneficiary
may condition disbursement of such proceeds for restoration upon
proof that an amount equal to the sum which Beneficiary is
requested to disburse has theretofore been paid by Trustor, or is
then due and payable for materials theretofore installed or work
theretofore performed upon said property and properly includable
in the cost of restoration thereof), and any balance of such
proceeds shall be paid over to Trustor. If, notwithstanding the
foregoing to the contrary,
(i) any Event of Default or event which with the passage
of time or giving of notice or both would constitute an Event of
Default (a "POTENTIAL DEFAULT") has occurred and, at the time of
such damage or destruction or at the time of application of
insurance proceeds, is continuing, or
(ii) said loss proceeds are not, in Secured Party's
reasonable judgment, sufficient for restoration of said property, or
(iii)the damage or destruction will, in Secured Party's
reasonable judgment, materially affect or require a change in the
contemplated use or operation of the Improvements or the
Premises, then, unless Trustor cures such Potential Default, or
Trustor provides to Beneficiary reasonable security by depositing
with Beneficiary, within five (5) days of demand by Beneficiary,
the additional amounts necessary to accomplish restoration, or
Beneficiary consents to the contemplated modification or change
to the use and operation of the Improvements or the Premises,
whichever is applicable,
Beneficiary shall have the option, in its sole and absolute
discretion, (a) to apply all or any portion of such proceeds to
any of the Obligations in such order as Beneficiary may
determine, or (b) to apply all or any portion of such proceeds to
the restoration of said property, subject to such conditions as
Beneficiary shall determine, or (c) to deliver all or any portion
of such proceeds to Trustor, subject to such conditions as
Beneficiary shall determine. Nothing herein contained shall be
deemed to excuse Trustor from repairing or maintaining the Trust
Estate as provided in SECTION 2.4 hereof or restoring all damage
or destruction to the Trust Estate, regardless of whether or not
there are insurance proceeds available to Trustor or whether any
such proceeds are sufficient in amount, and the application or
release by Beneficiary of any insurance proceeds shall not cure
or waive any default or notice of default under this Deed of
Trust or invalidate any act done pursuant to such notice,
provided, however, that so long as no Event of Default is then in
existence and Beneficiary has applied all or a portion of such
proceeds to any of the Obligations (such amount which is applied,
the "APPLIED PROCEEDS"), Trustor shall have no obligation to
repair or restore any damage or destruction to the Trust Estate
in an amount equal to the Applied Proceeds, provided, however,
further, that Trustor shall not be excused from using any
proceeds other than the Applied Proceeds plus any deductible
under any applicable insurance policy to repair or restore any
damage or destruction to the Trust Estate.
2.9. ASSIGNMENT OF POLICIES UPON FORECLOSURE. In the
event of a foreclosure pursuant to this Deed of Trust or other
transfer of title or assignment of the Trust Estate in extinguishment,
in whole or in part, of the debt secured hereby, all right, title
and interest of Trustor in and to all policies of insurance
maintained pursuant to SECTION 2.5 shall inure to the benefit of
and pass to the successor in interest to Trustor or the purchaser
or grantee of the Trust Estate.
2.10. INDEMNIFICATION; SUBROGATION; WAIVER OF OFFSET.
(i) Trustor agrees to indemnify, protect, hold harmless
and defend Trustee and Beneficiary from and against any and all
losses, liabilities, suits, obligations, fines, damages,
judgments, penalties, claims, charges, costs and expenses
(including reasonable attorneys' fees and disbursements) which
may be imposed on, incurred or paid by or asserted against
Trustee and/or Beneficiary by reason or on account of, or in
connection with, (a) any willful misconduct of Trustor, (b) the
construction, reconstruction or alteration of the Improvements or
the Premises, (c) any negligence of Trustor or any negligence or
willful misconduct of any lessee or sublessee of the Premises or
the Improvements, or any of their respective agents, contractors,
subcontractors, servants, employees, licensees or invitees, or
(d) any accident, injury, death or damage to any person or
property occurring in, on or about the Premises or the
Improvements or any street, driveway, sidewalk, curb or
passageway adjacent thereto, except for the willful misconduct or
gross negligence of the indemnified person. Any amount payable
to Trustee or Beneficiary under this Section shall be due and
payable within ten (10) days after demand therefor and receipt by
Trustor of a statement from Trustee and/or Beneficiary setting
forth in reasonable detail the amount claimed and the basis
therefor. Trustor's obligations under this Section shall survive
the repayment or any other satisfaction of the Obligations and
shall not be affected by the absence or unavailability of
insurance covering the same or by the failure or refusal of any
insurance carrier to perform any obligation on its part under any
such policy of insurance. If any claim, action or proceeding is
made or brought against Trustee and/or Beneficiary which is
subject to the indemnity set forth in this Section, Trustor shall
resist or defend against the same, if necessary in the name of
Trustee and/or Beneficiary, by attorneys for Trustor's insurance
carrier (if the same is covered by insurance) approved by Trustee
and/or Beneficiary (as applicable) or otherwise by attorneys
retained by Trustor and approved by Trustee and/or Beneficiary
(as applicable). Notwithstanding the foregoing, Trustee and
Beneficiary, in their discretion, if either or both of them
disapprove of the attorneys provided by Trustor or Trustor's
insurance carrier, may engage their own attorneys to resist or
defend, or assist therein, and Trustor shall pay, or, on demand,
shall reimburse Trustee and Beneficiary for the payment of the
reasonable fees and disbursements of such attorneys.
(ii) Trustor waives any and all right to claim or recover
against Beneficiary, its officers, employees, agents and
representatives, for loss of or damage to Trustor, the Trust Estate,
Trustor's property or the property of others under Trustor's control
from any cause insured against or required to be insured against by
the provisions of this Deed of Trust.
(iii)All sums payable by Trustor pursuant to this Deed of
Trust shall be paid without notice, demand, counterclaim, setoff,
deduction or defense and without abatement, suspension,
deferment, diminution or reduction, and the obligations and
liabilities of Trustor hereunder shall in no way be released,
discharged or otherwise affected (except as expressly provided
herein) by reason of: (a) any damage to or destruction of or any
condemnation or similar taking of the Trust Estate or any part
thereof; (b) any restriction or prevention of or interference by
any third party with any use of the Trust Estate or any part
thereof; (c) any title defect or encumbrance or any eviction from
the Premises or the Improvements or any part thereof by title
paramount or otherwise; (d) any bankruptcy, insolvency,
reorganization, composition, adjustment, dissolution, liquidation
or other like proceeding relating to Beneficiary or any guarantor
of any secured obligation, or any action taken with respect to
this Deed of Trust by any trustee or receiver of Beneficiary, or
by any court, in any such proceeding; (e) any claim which Trustor
has or might have against Beneficiary; (f) any default or failure
on the part of Beneficiary to perform or comply with any of the
terms hereof or of any other agreement with Trustor; or (g) any
other occurrence whatsoever, whether similar or dissimilar to the
foregoing; whether or not Trustor shall have notice or knowledge
of any of the foregoing. Except as expressly provided herein,
Trustor waives all rights now or hereafter conferred by statute
or otherwise to any abatement, suspension, deferment, diminution
or reduction of any sum secured hereby and payable by Trustor.
2.11. HAZARDOUS MATERIALS.
(i) ENVIRONMENTAL COMPLIANCE. Trustor shall keep and
maintain (and cause all tenants to keep and maintain) the Trust
Estate, including, without limitation, the groundwater on or under
the Trust Estate, in compliance with, and shall not cause or permit
the Premises to be in violation of, or to require clean up under,
any applicable present and future federal, state or local laws,
statutes, rules, policies, codes, licenses, permits, orders,
approvals, plans, authorizations, ordinances or regulations, now
or hereafter in effect, relating to environmental conditions,
industrial hygiene, public health and safety, or Hazardous
Materials (as defined below) including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, 42 U.S.C. Section 9601, ET SEQ., the
Resource Conservation and Recovery Act, 42 U.S.C. Section 6901,
ET SEQ., the Hazardous Materials Transportation Act, 49 U.S.C.
Section 1801, ET SEQ., the Clean Water Act, 33 U.S.C. Section
1251, ET SEQ., the Clean Air Act, 42 U.S.C. Section 7401, ET
SEQ., the Toxic Substances Control Act, 15 U.S.C. Sections 2601
through 2629, the Safe Drinking Water Act, 42 U.S.C. Sections
300f through 300j, and any similar state and local laws and
ordinances and the regulations now or hereafter adopted,
published and/or promulgated pursuant thereto (collectively, the
"HAZARDOUS MATERIALS LAWS").
(ii) RESTRICTIONS ON USE. Trustor shall not (and shall
take all reasonable efforts to assure that all of its tenants shall
not) use, generate, manufacture, treat, handle, refine, produce,
process, store, discharge, release, dispose of or allow to exist
on, under or about the Trust Estate any flammable explosives,
radioactive materials, asbestos, organic compounds known as
polychlorinated biphenyls, chemicals known to cause cancer or
reproductive toxicity, pollutants, materials containing gasoline,
diesel fuel or other petroleum hydrocarbons, contaminants,
corrosive, infectious or carcinogenic materials, hazardous
wastes, toxic substances or related materials, including, without
limitation, any substances defined as or included in the
definitions of "hazardous substances," "hazardous wastes,"
"hazardous materials" or "toxic substances" under the Hazardous
Materials Laws (collectively, "HAZARDOUS MATERIALS"), except in
compliance with applicable Hazardous Materials Laws and in a
manner that would not reasonably be expected to require cleanup
under any Hazardous Materials Laws. Furthermore, Trustor shall
not allow to exist on, under or about the Trust Estate, any
underground storage tanks or underground deposits.
(iii)ACCESS. Beneficiary shall be entitled, at any
reasonable time, to enter upon and inspect the Trust Estate and
take any other actions it reasonably deems necessary to confirm
Trustor's compliance with the obligations and agreements set
forth in this SECTION 2.11.
(iv) NOTICE TO BENEFICIARY. Trustor shall immediately
advise Beneficiary in writing of (a) any and all enforcement, clean
up, removal, mitigation or other governmental or regulatory actions
instituted, contemplated or threatened pursuant to any Hazardous
Materials Laws affecting the Premises; (b) all actual or
threatened investigation, inquiry, lawsuit, citation, directive,
summons, proceeding, complaint, notice, order, writ, injunction,
claims, liens, encumbrances, penalties or fines made or
threatened by any third party against Trustor or the Trust Estate
relating to damage, contribution, cost recovery, compensation,
loss or injury resulting from any Hazardous Materials (the
matters set forth in clauses (a) and (b) above are hereinafter
referred to as "HAZARDOUS MATERIALS CLAIMS"); (c) any notice or
other communication concerning any actual, alleged, suspected or
threatened violation of Hazardous Materials Laws, or liability of
Trustor for any losses or damages related thereto in connection
with any portion of the Premises or Improvements or past or
present activities of any person thereon, including, without
limitation, any notice or other communication concerning any
Hazardous Materials Claim; (d) Trustor's discovery of any
occurrence or condition on any real property adjoining or in the
vicinity of the Premises that could cause the Trust Estate or any
part thereof to be classified as "border-zone property" under the
provisions of California Health and Safety Code Section 25220, ET
SEQ., or any regulation adopted in accordance therewith or which
may support a similar claim or cause of action under the
Hazardous Materials Laws; and (e) Trustor's discovery of any
occurrence or condition on the Trust Estate or any real property
adjoining or in the vicinity of the Premises which could subject
the Trustor or the Trust Estate to any restrictions on ownership,
occupancy, transferability or use of the Trust Estate under any
Hazardous Materials Laws. Beneficiary shall have the right to
join and participate in, as a party if it so elects, any
settlements, remedial actions, legal proceedings or actions
initiated in connection with any Hazardous Materials Claims and
to have its reasonable attorneys' fees in connection therewith
paid by Trustor.
(v) LIENS. Trustor shall not create or suffer to exist
with respect to the Premises or permit any of its agents to create
or suffer to exist thereon, any lien, security interest or other
charges or encumbrance imposed pursuant to Section 107(f) of the
Superfund Amendments and Reauthorization Act of 1986 (42 U.S.C.
Section 9607(f)) or any similar state statute or local ordinance.
2.12. TAXES AND IMPOSITIONS.
(i) Trustor shall pay, or cause to be paid prior to
delinquency, all real property taxes and assessments, general and
special, and all other taxes and assessments of any kind or nature
whatsoever, including, without limitation, non-governmental levies or
assessments such as maintenance charges, levies or charges
resulting from covenants, conditions and restrictions affecting
the Trust Estate, which are assessed or imposed upon the Trust
Estate, or become due and payable, and which create, may create
or appear to create a lien upon the Trust Estate, or any part
thereof, or upon any person, property, equipment or other
facility used in the operation or maintenance thereof (all the
above collectively hereinafter referred to as "IMPOSITIONS");
provided, however, that if, by law any such Imposition is
payable, or may at the option of the taxpayer be paid, in
installments, Trustor may pay the same or cause it to be paid,
together with any accrued interest on the unpaid balance of such
Imposition, in installments as the same become due and before any
fine, penalty, interest or cost may be added thereto for the
nonpayment of any such installment and interest.
(ii) If at any time after the date hereof there shall be
assessed or imposed (a) a tax or assessment on the Trust Estate in
lieu of or in addition to the Impositions payable by Trustor pursuant
to SUBSECTION 2.12(i), or (b) a license fee, tax or assessment
imposed on Beneficiary and measured by or based in whole or in
part upon the amount of the outstanding obligations secured
hereby, then all such taxes, assessments or fees shall be deemed
to be included within the term "Impositions" as defined in
SUBSECTION 2.12(i) and Trustor shall pay and discharge the same
as herein provided with respect to the payment of Impositions.
If Trustor fails to pay such Impositions prior to delinquency or
if Trustor is prohibited by law from paying such Impositions,
Beneficiary may at its option declare all obligations secured
hereby together with all accrued interest thereon, immediately
due and payable. Anything to the contrary herein
notwithstanding, Trustor shall have no obligation to pay any
franchise, estate, inheritance, income, excess profits or similar
tax levied on Beneficiary or on interest or other income received
by Beneficiary comprising a portion of or in connection with the
obligations secured hereby.
(iii)Subject to the provisions of SUBSECTION 2.12(iv) and
upon request by Beneficiary, Trustor shall deliver to Beneficiary
prior to the date upon which any such Imposition is due and
payable by Trustor, evidence of payment of such Imposition and
within thirty (30) days after the date upon which any such
Imposition is due and payable by Trustor, official receipts of
the appropriate taxing authority, or other proof satisfactory to
Beneficiary, evidencing the payment thereof.
(iv) Trustor shall have the right before any delinquency
occurs to contest or object to the amount or validity of any such
Imposition by appropriate proceedings, but this shall not be
deemed or construed in any way as relieving, modifying or
extending Trustor's covenant to pay any such Imposition at the
time and in the manner provided in this SECTION 2.12, unless
Trustor has given prior written notice to Beneficiary of
Trustor's intent to so contest or object to an Imposition, and
unless, at Beneficiary's sole option, (a) Trustor shall
demonstrate to Beneficiary's satisfaction that the proceedings to
be initiated by Trustor shall conclusively operate to prevent the
sale of the Trust Estate, or any part thereof, to satisfy such
Imposition prior to final determination of such proceedings; or
(b) Trustor shall furnish a good and sufficient bond or surety as
requested by and satisfactory to Beneficiary; or (c) Trustor
shall demonstrate to Beneficiary's satisfaction that Trustor has
provided a good and sufficient undertaking as may be required or
permitted by law to accomplish a stay of any such sale.
(v) At any time after an Event of Default under any Loan
Document, then upon request by Beneficiary, Trustor shall pay to
Beneficiary an initial cash reserve in an amount adequate to pay
all Impositions for the ensuing tax fiscal year and shall
thereafter continue to deposit with Beneficiary, in monthly
installments, an amount equal to one-twelfth (1/12) of the sum of
the annual Impositions reasonably estimated by Beneficiary, for
the purpose of paying the installment of Impositions next due on
the Trust Estate (funds deposited for this purpose shall
hereinafter be referred to as "Impounds"). In such event Trustor
further agrees to cause all bills, statements or other documents
relating to Impositions to be sent or mailed directly to
Beneficiary. Upon receipt of such bills, statements or other
documents, and providing Trustor has deposited sufficient
Impounds with Beneficiary pursuant to this subsection 2.12(v),
Beneficiary shall promptly pay such amounts as may be due
thereunder out of the Impounds so deposited with Beneficiary. If
at any time and for any reason the Impounds deposited with
Beneficiary are or will be insufficient to pay such amounts as
may then or subsequently be due, Beneficiary may notify Trustor
and upon such notice Trustor shall deposit immediately an amount
equal to such deficiency with Beneficiary. Notwithstanding the
foregoing, nothing contained herein shall cause Beneficiary to be
deemed a trustee of said funds or to be obligated to pay any
amounts in excess of the amount of funds deposited with
Beneficiary pursuant to this subsection 2.12(v). To the extent
permitted by law, Beneficiary may commingle Impounds with its own
funds and shall not be obligated to pay or allow any interest on
any Impounds held by Beneficiary pending disbursement or
application hereunder. Beneficiary may reserve for future
payment of Impositions such portion of the Impounds as
Beneficiary may in its absolute discretion deem proper. Upon an
Event of Default, Beneficiary may apply the balance of the
Impounds upon any indebtedness or obligation secured hereby in
such order as Beneficiary may determine, notwithstanding that
said indebtedness or the performance of said obligation may not
yet be due according to the terms thereof. Should Trustor fail
to deposit with Beneficiary (exclusive of that portion of said
payments which has been applied by Beneficiary upon any
indebtedness or obligation secured hereby) sums sufficient to
fully pay such Impositions at least fifteen (15) days before
delinquency thereof, Beneficiary may, at Beneficiary's election,
but without any obligation so to do, advance any amounts required
to make up the deficiency, which advances, if any, shall be
secured hereby and shall be repayable to Beneficiary as herein
elsewhere provided, or at the option of Beneficiary the latter
may, without making any advance whatever, apply any Impounds held
by it upon any indebtedness or obligation secured hereby in such
order as Beneficiary may determine, notwithstanding that said
indebtedness or the performance of said obligation may not yet be
due according to the terms thereof. Should any Event of Default
occur, Beneficiary may, at any time at Beneficiary's option,
apply any sums or amounts in its hands received pursuant to
SUBSECTIONS 2.7(iii) and 2.l2(v) hereof, or as rents or income of
the Trust Estate or otherwise, to any indebtedness or obligation
of the Trustor secured hereby in such manner and order as
Beneficiary may elect, notwithstanding said indebtedness or the
performance of said obligation may not yet be due according to
the terms thereof. The receipt, use or application of any such
Impounds paid by Trustor to Beneficiary hereunder shall not be
construed to affect the maturity of any indebtedness secured by
this Deed of Trust or any of the rights or powers of Beneficiary
or Trustee under the terms of the Loan Documents or any of the
obligations of Trustor or any guarantor under the Loan Documents.
(vi) Trustor shall not suffer, permit or initiate the joint
assessment of any real and personal property which may constitute
all or a portion of the Trust Estate or suffer, permit or
initiate any other procedure whereby the lien of the real
property taxes and the lien of the personal property taxes shall
be assessed, levied or charged to the Trust Estate as single
lien.
(vii)If requested by Beneficiary, Trustor shall cause to be
furnished to Beneficiary a tax reporting service covering the
Trust Estate of the type, duration and with a company
satisfactory to Beneficiary.
2.13. MORTGAGE TAX. In the event of the passage, after
the date of this Deed of Trust, of any law deducting from the value
of the Trust Estate for the purpose of taxation any lien thereon,
or changing in any way the laws now in force for the taxation of
deeds of trust or debts secured by deeds of trust, or the manner
of the collection of any such taxes, so as to affect this Deed of
Trust, or imposing payment of the whole or any portion of any
taxes, assessments or other similar charges against the Trust
Estate upon Beneficiary, the indebtedness secured hereby shall
become due and payable at the option of Beneficiary within sixty
(60) days after delivery of written notice to Trustor; provided,
however, that such election by Beneficiary shall be ineffective
if such law either (a) shall not impose a tax upon Beneficiary
nor increase any tax now payable by Beneficiary, or (b) shall
impose a tax upon Beneficiary or increase any tax now payable by
Beneficiary and prior to the due date: (A) Trustor is permitted
by law and can become legally obligated to pay such tax or the
increased portion thereof (in addition to all interest,
additional interest and other charges payable hereunder and under
the Loan Documents without exceeding the applicable limits
imposed by the usury laws of the State of California); (B)
Trustor does pay such tax or increased portion; and (C) Trustor
agrees with Beneficiary in writing to pay, or reimburse
Beneficiary for the payment of, any such tax or increased portion
thereof when thereafter levied or assessed against the Premises
or the Collateral or any portion thereof. The obligations of
Trustor under such agreement shall be secured hereby.
2.14. UTILITIES. Trustor shall pay when due all utility
charges which are incurred by Trustor for the benefit of the
Trust Estate or which may become a charge or lien against the
Trust Estate for gas, electricity, water, sewer or any other
utility service furnished to the Trust Estate and all other
assessments or charges of a similar nature, whether public or
private, affecting or related to the Trust Estate or any portion
thereof, whether or not such taxes, assessments or charges are or
may become liens thereon.
2.15. ACTIONS AFFECTING TRUST ESTATE. Trustor shall appear
in and contest any action or proceeding purporting to affect the
security hereof or the rights or powers of Beneficiary or
Trustee; and shall pay all costs and expenses, including the cost
of evidence of title and reasonable attorneys' fees, in any such
action or proceeding in which Beneficiary or Trustee may appear.
2.16. ACTIONS BY TRUSTEE OR BENEFICIARY TO PRESERVE TRUST
ESTATE. If Trustor fails to make any payment or to do any act as
and in the manner provided in any of the Loan Documents,
Beneficiary and/or Trustee, each in its own discretion, without
duty or obligation so to do, without releasing Trustor from any
obligation, and without notice to or demand upon Trustor, may
make or do the same in such manner and to such extent as either
may deem necessary to protect the security hereof. In connection
therewith (without limiting their general powers, whether
conferred herein, in the other Loan Documents, or by law),
Beneficiary and Trustee shall have, and are hereby given, the
right, but not the obligation, (a) to enter upon and take
possession of the Trust Estate; (b) to make additions,
alterations, repairs and improvements to the Trust Estate which
they or either of them may consider necessary or proper to keep
the Trust Estate in good condition and repair; (c) to appear and
participate in any action or proceeding affecting or which may
affect the security hereof or the rights or powers of Beneficiary
or Trustee; (d) to pay, purchase, contest or compromise any
encumbrance, claim, charge, lien or debt which in the judgment of
either may affect or appears to affect the security of this Deed
of Trust or be prior or superior hereto; and (e) in exercising
such powers, to pay necessary expenses, including reasonable
attorneys' fees and costs or other necessary or desirable
consultants. Trustor shall, immediately upon demand therefor by
Beneficiary and Trustee or either of them, pay to Beneficiary and
Trustee an amount equal to all respective costs and expenses
incurred by such party in connection with the exercise of the
foregoing rights, including, without limitation, costs of
evidence of title, court costs, appraisals, surveys and
receiver's, trustee's and reasonable attorneys' fees, together
with interest thereon from the date of such expenditures at the
maximum rate permitted by applicable law.
2.17. TRANSFER OF TRUST ESTATE BY TRUSTOR. Except as
otherwise permitted by the Credit Agreement, Trustor shall not
transfer all or any portion of the Trust Estate without obtaining
Beneficiary's prior written consent, which consent may be
withheld in Beneficiary's sole and absolute discretion. In order
to induce Beneficiary to make the loan secured hereby, Trustor
agrees that, in the event of any transfer of the Trust Estate
without the prior written consent of Beneficiary, Beneficiary
shall have the absolute right, at its option, without prior
demand or notice, to declare all sums secured hereby immediately
due and payable. Consent to one such transaction shall not be
deemed to be a waiver of the right to require consent to future
or successive transactions. Beneficiary may grant or deny such
consent in its sole discretion and, if consent should be given,
any such transfer shall be subject to this Deed of Trust, and any
such transferee shall assume all obligations hereunder and agree
to be bound by all provisions contained herein. Such assumption
shall not, however, release Trustor from any liability thereunder
without the prior written consent of Beneficiary. As used
herein, "transfer" includes the sale, agreement to sell,
transfer, conveyance or hypothecation of the Trust Estate, or any
portion thereof or interest therein, whether voluntary,
involuntary, by operation of law or otherwise, the execution of
any installment land sale contract or similar instrument
affecting all or a portion of the Trust Estate, or the lease of
all or substantially all of the Trust Estate.
2.18. FULL PERFORMANCE REQUIRED; SURVIVAL OF WARRANTIES.
All representations, warranties and covenants of Trustor contained
in any Loan Documents or incorporated by reference therein, shall
survive the execution and delivery of this Deed of Trust and
shall remain continuing obligations, warranties and
representations of Trustor so long as any portion of the
Obligations, secured by this Deed of Trust remains outstanding.
2.19. PRESERVATION OF TRUST ESTATE; FURTHER ASSURANCES.
Trustor shall do any and all acts which, from the character or
use of the Trust Estate, may be reasonably necessary to protect
and preserve the lien, the priority of the lien and the security
of Beneficiary granted herein, the specific enumerations herein
not excluding the general. Without limiting the foregoing,
Trustor agrees to execute such documents and take such action as
Beneficiary shall determine to be necessary or desirable to
further evidence, perfect or continue the perfection and/or the
priority of the lien and security interest granted by Trustor
herein.
2.20. COMPLIANCE WITH PREMISES RESTRICTIONS. Trustor
will faithfully perform each and every covenant to be performed by
Trustor under any lien or encumbrance upon or affecting the Trust
Estate, including, without limiting the generality hereof,
mortgages, deeds of trust, leases, declaration of covenants,
easements, conditions and/or restrictions and other agreements
which affect the Premises, in law or in equity and never permit
the same to go into default. Except as contemplated to the
contrary in Section 6.2 of the Credit Agreement, a default or
delinquency under any material lien or encumbrance (as determined
by Beneficiary in its sole and absolute discretion) which is
superior to this Deed of Trust ("SUPERIOR LIEN") shall
automatically and immediately constitute a default under this
Deed of Trust. Beneficiary is hereby authorized to advance, at
its option, all sums necessary to keep any Superior Lien in good
standing, and all sums so advanced, together with interest
thereon at the Agreed Rate permitted by applicable law, shall be
repayable to Beneficiary as in the case of other advances made by
Beneficiary hereunder. Trustor agrees that it shall not make any
agreement with the holder of any Superior Lien which shall in any
way modify, change, alter or extend any of the terms or
conditions of such Superior Lien, nor shall Trustor request or
accept any future advances under such Superior Lien, without the
express written consent of Beneficiary.
2.21. EMINENT DOMAIN. In the event that any proceeding
or action be commenced for the taking of the Trust Estate or any
part thereof or interest therein for public or quasi-public use
under the power of eminent domain, condemnation or otherwise, or
if the same be taken or damaged by reason of any public
improvement or condemnation proceeding, or in any other manner,
or should Trustor receive any notice or other information
regarding such proceeding, action, taking or damage, Trustor
shall give prompt written notice thereof to Beneficiary.
Beneficiary shall be entitled at its option, without regard to
the adequacy of its security, to commence, appear in and
prosecute in its own name any such action or proceeding.
Beneficiary shall also be entitled to make any compromise or
settlement in connection with such taking or damage. All
compensation, awards, damages, rights of action and proceeds
awarded to Trustor by reason of any such taking or damage (the
"CONDEMNATION PROCEEDS") are hereby absolutely and
unconditionally assigned to Beneficiary and Trustor agrees to
execute such further assignments of the Condemnation Proceeds as
Beneficiary or Trustee may require. Subject to the next
following sentence, after deducting from the Condemnation
Proceeds all costs and expenses (regardless of the particular
nature thereof and whether incurred with or without suit),
including reasonable attorneys' fees, incurred by Beneficiary in
connection with any such action or proceeding, Beneficiary shall
apply all such Condemnation Proceeds to the restoration of the
Improvements, upon such conditions as Beneficiary shall
reasonably determine (including, without limitation, those
described in SECTION 2.8 above) and any balance of such proceeds
shall be paid over to Trustor. If, notwithstanding the foregoing
to the contrary,
(i) any Event of Default or Potential Default has
occurred and, at the time of such taking or damage, or at the time
of application of the Condemnation Proceeds, is continuing, or
(ii) said loan proceeds are not, in Beneficiary's
reasonable judgment, sufficient for restoration of said property, or
(iii) the damage or destruction will, in Beneficiary's
reasonable judgment, materially affect or require a change in the
contemplated use or operation of the Improvements, then, unless
Trustor cures such Potential Default, or Trustor provides to
Beneficiary reasonable security by depositing with Beneficiary,
within five (5) days of demand by Beneficiary, the additional
amounts necessary to accomplish restoration, or Beneficiary
consents to the contemplated modification or change to the use
and operation of the Improvements, whichever is applicable,
Beneficiary shall have the option, in its sole and absolute
discretion, (a) to apply all or any portion of such proceeds to
any of the Obligations in such order as Beneficiary may
determine, or (b) to apply all or any portion of such proceeds to
the restoration of said property, subject to such conditions as
Beneficiary shall determine, or (c) to deliver all or any portion
of such proceeds to Beneficiary, subject to such conditions as
Beneficiary shall determine. Application or release of the
Condemnation Proceeds as provided herein shall not cure or waive
any Event of Default or Potential Default or notice of default
hereunder or under any other Loan Document or invalidate any act
done pursuant to such notice.
2.22. ADDITIONAL SECURITY. All right, title and
interest of Trustor in and to all extensions, improvements,
renewals, substitutes and replacements of the Trust Estate, and all
additions and appurtenances thereto, hereafter acquired by or
released to Trustor or constructed, assembled or placed by
Trustor on the Premises and all conversions of the security
constituted thereby, immediately upon such acquisition, release,
construction, assembling, placement or conversion, as the case
may be, and in each such case, without any further deed of trust,
conveyance, assignment or other act by Trustor, shall become
subject to the lien of this Deed of Trust, as fully and
completely, and with the same effect, as though now owned by
Trustor. No other security now existing, or hereafter taken, to
secure the obligations secured hereby shall be impaired or
affected by the execution of this Deed of Trust, and all
additional security shall be taken, considered and held as
cumulative. The taking of additional security, execution of
partial releases of the security, or any extension of the time of
payment of the indebtedness shall not diminish the force, effect
or lien of this Deed of Trust and shall not affect or impair the
liability of any maker, surety or endorser for the payment of
said indebtedness, in the event Beneficiary at any time holds
additional security for any of the obligations secured hereby, it
may enforce the sale thereof or otherwise realize upon the same,
at its option, either before, concurrently, or after a sale is
made hereunder.
2.23. ASSIGNMENT OF CONTRACTS. In addition to any other
grant, transfer or assignment effectuated hereby, without in any
manner limiting the generality of the grants given above, Trustor
shall assign to Beneficiary, as security for the indebtedness
secured hereby, Trustor's interest in all agreements, contracts,
leases, licenses and permits affecting the Premises and
Improvements in any manner whatsoever, such assignments to be
made, if so requested by Beneficiary, by instruments in form
satisfactory to Beneficiary. No such assignment shall be
construed as a consent by Beneficiary to any agreement, contract,
license or permit so assigned, or to impose upon Beneficiary any
obligations with respect thereto.
2.24. APPOINTMENT OF SUCCESSOR TRUSTEE. Beneficiary may,
from time to time, by a written instrument executed and
acknowledged by Beneficiary, mailed to Trustor and recorded in
the county in which the Trust Estate is located and by otherwise
complying with the provisions of applicable law, substitute a
successor or successors to any Trustee named herein or acting
hereunder. Said successor shall, without conveyance from the
Trustee predecessor, succeed to all title, estate, rights, powers
and duties of said predecessor.
2.25. TRUSTEE'S POWERS. At any time, or from time to time,
without liability therefor and without notice, upon written
request of Beneficiary and presentation of this Deed of Trust and
the Credit Agreement secured hereby and without affecting the
personal liability of any person for payment of the indebtedness
secured hereby or the effect of this Deed of Trust upon the
remainder of said Trust Estate, Trustee may (a) reconvey any part
of said Trust Estate, (b) consent in writing to the making of any
map or plat thereof, (c) join in granting any easement thereon,
or (d) join in any extension agreement or any agreement
subordinating the lien or charge hereof.
2.26. BENEFICIARY'S POWERS. Without affecting the
liability of any other person liable for the payment of any
obligation herein mentioned, and without affecting the lien or
charge of this Deed of Trust upon any portion of the Trust Estate not
then or theretofore released as security for the full amount of all
unpaid obligations, Beneficiary may, from time to time and
without notice (a) release any person so liable, (b) extend the
maturity or alter any of the terms of any such obligation, (c)
grant other indulgences, (d) release or reconvey, or cause to be
released or reconveyed at any time at Beneficiary's option any
parcel, portion or all of the Trust Estate, (e) take or release
any other or additional security for any obligation herein
mentioned, or (f) make compositions or other arrangements with
debtors in relation thereto.
2.27. LEASES.
(i) Trustor shall provide Beneficiary with true, correct
and complete copies of all material Leases, together with such other
information relating to the Leases, as Beneficiary shall
reasonably request. Trustor shall not accept prepayments of rent
for any period in excess of three (3) months and shall perform
all covenants of the lessor under all Leases affecting the Trust
Estate. Leases, as used herein, includes any extensions or
renewals thereof and any amendments thereto. Trustor shall
perform and carry out all of the provisions of the Leases to be
performed by Trustor and shall appear in and defend any action in
which the validity of any Lease is at issue and shall commence
and maintain any action or proceeding necessary to establish or
maintain the validity of any lease and to enforce the provisions
thereof.
(ii) If a leasehold estate constitutes a portion of the
Trust Estate, Trustor agrees not to amend, change, terminate or
modify such leasehold estate or any interest therein without the
prior written consent of Beneficiary. Consent to one amendment,
change, agreement or modification shall not be deemed to be a
waiver of the right to require consent to other, future or
successive amendments, changes, agreements or modifications.
Trustor agrees to perform all obligations and agreements under
said leasehold and shall not take any action or omit to take any
action which would effect or permit the termination of said
leasehold. Trustor agrees to promptly notify Beneficiary in
writing with respect to any default or alleged default by any
party thereto and to deliver to Beneficiary copies of all
notices, demands, complaints or other communications received or
given by Trustor with respect to any such default or alleged
default. Beneficiary shall have the option to cure any such
default and to perform any or all of Trustor's obligations
thereunder. All sums expended by Beneficiary in curing any such
default shall be secured hereby and shall be immediately due and
payable without demand or notice and shall bear interest from
date of expenditure at Agreed Rate.
(iii) Subject to the Credit Agreement, each Lease of
any portion of the Trust Estate shall be absolutely subordinate to
the lien of this Deed of Trust, but shall contain a provision
satisfactory to Beneficiary, and in any event, each tenant
thereunder, by virtue of executing a Lease covering the Premises
or any portion thereof, hereby agrees, that in the event of the
exercise of the private power of sale or a judicial foreclosure
hereunder, such Lease, at the option of the purchaser at such
sale, shall not be terminated and the tenant thereunder shall
attorn to such purchaser and, if requested to do so, shall enter
into a new Lease for the balance of the term of such Lease then
remaining upon the same terms and conditions. Each such Lease
shall, at the request of Beneficiary, be assigned to Beneficiary
upon Beneficiary's approved form, and each such assignment shall
be recorded and acknowledged by the tenant thereunder.
Concurrently with the execution of any and all Leases executed
after the date hereof, Trustor shall cause the tenants thereunder
to execute an attornment agreement in favor of Beneficiary in
form and substance satisfactory to Beneficiary and immediately
thereafter deliver such agreement to Beneficiary.
2.28. REIMBURSEMENT; ATTORNEYS' FEES. Trustor shall pay,
within five (5) business days of receiving demand for payment,
all sums expended or expenses incurred by Trustee and/or
Beneficiary in acting under any of the terms of this Deed of
Trust, including, without limitation, any fees and expenses
(including reasonable attorneys' fees) incurred in connection
with any reconveyance of the Trust Estate or any portion thereof,
or to compel payment of the obligations or any portion of the
indebtedness evidenced by the Credit Agreement or Loan Documents
or in connection with any default thereunder. Without limiting
the generality of the foregoing, upon election of either
Beneficiary or Trustee so to do, employment of an attorney is
authorized, and payment by Trustor of all reasonable attorneys'
fees, costs and expenses in connection with any action and/or
actions (including the cost of evidence or search of title) which
may be brought for the foreclosure of this Deed of Trust, and/or
for possession of the Trust Estate covered hereby, and/or for the
appointment of a receiver, and/or for the enforcement of any
covenant or right in this Deed of Trust contained as hereinafter
provided, shall be secured hereby. As used herein, the terms
"attorneys' fees" or "attorneys' fees and costs" shall mean the
fees and expenses of counsel to the parties hereto, which may
include printing, photostating, duplicating and other expenses,
air freight charges, and fees billed for law clerks, paralegals,
librarians and others not admitted to the bar but performing
services under the supervision of an attorney. The terms
"attorneys' fees" or "attorneys' fees and costs" shall also
include, without limitation, all such fees and expenses incurred
with respect to appeals, arbitrations, judicial on nonjudicial
foreclosure and bankruptcy proceedings, and whether or not any
action or proceeding is brought with respect to the matter for
which such fees and expenses were incurred.
2.29. TITLE. Trustor has good and marketable title to the
Trust Estate subject to no lien, charge or encumbrance except as
permitted by the Beneficiary. This Deed of Trust is and will
remain a valid and enforceable lien on the Trust Estate subject
only to the exceptions referred to above. Trustor will preserve
its interest in and title to the Trust Estate and will forever
warrant and defend the same to Trustee and Beneficiary and will
forever warrant and defend the validity and priority of the lien
hereof against the claims of all persons and parties whomsoever.
Trustor shall promptly and completely observe, perform, and
discharge each and every obligation, covenant and agreement
affecting the Trust Estate whether the same is prior and superior
or subject and subordinate hereto including, if the security
hereunder is or will be a condominium, community apartment, stock
cooperative, or part of a planned development, each and every
provision under and declaration of covenants, conditions and
restrictions pertaining thereto.
ARTICLE III
ASSIGNMENT OF RENTS, ISSUES AND PROFITS
3.1. ASSIGNMENT TO BENEFICIARY; LICENSE. Trustor hereby
absolutely and irrevocably grants, sells, assigns, transfers and
sets over to Beneficiary all of the Rents derived from any Lease,
now existing or hereafter created and affecting all or any
portion of the Trust Estate or the use or occupancy thereof,
together with (i) all of Trustor's rights, titles and interests
in the Leases including all modifications, amendments, extensions
and renewals of the Leases (whether heretofore or hereafter
entered into) and all rights and privileges incident thereto; and
(ii) all security deposits, guaranties and other security now or
hereafter held by Trustor as security for the performance of the
obligations of the tenants under the Leases. This assignment of
rents is intended by Trustor and Beneficiary to create and shall
be construed to create an absolute assignment to Beneficiary of
all of Trustor's rights, titles and interests in the Rents and in
the Leases and shall not be deemed to create a security interest
therein for the payment of any indebtedness or the performance of
any obligations of Trustor under the Credit Agreement. Trustor
irrevocably appoints Beneficiary its true and lawful attorney, at
the option of Beneficiary at any time, to demand, receive and
enforce payment, to give receipts, releases and satisfactions,
and to xxx, either in the name of Trustor or in the name of
Beneficiary, for all such income, rents, issues, deposits,
profits and proceeds and apply the same to the indebtedness
secured hereby. Trustor and Beneficiary further agree that,
during the term of this assignment, the Rents shall not
constitute property of Trustor (or of any estate of Trustor)
within the meaning of 11 U.S.C. 541, as amended from time to
time. By its acceptance of this assignment and so long as an
Event of Default shall not have occurred and be continuing under
the Loan Documents, Beneficiary hereby grants to Trustor a
revocable license to enforce the Leases, to collect the Rents, to
apply the Rents to the payment of the costs and expenses incurred
in connection with the development, construction, operation,
maintenance, repair and restoration of the Trust Estate and to
any indebtedness secured thereby and to distribute the balance,
if any, to Trustor as may be permitted by the terms of the Loan
Documents.
3.2. REVOCATION OF LICENSE. Upon the occurrence of an
Event of Default and at any time thereafter during the continuance
thereof, Beneficiary shall have the right to revoke the license
granted to Trustor hereby by giving written notice of such
revocation to Trustor. Upon such revocation, Trustor shall
promptly deliver to Beneficiary the original copies of all Leases
and all Rents then held by Trustor and Beneficiary shall
thereafter be entitled to enforce the Leases, to collect and
receive, without deduction or offset, all Rents payable
thereunder, including but not limited to, all Rents which were
accrued and unpaid as of the date of such revocation and to apply
such rents as provided in the Loan Documents. Trustor hereby
irrevocably constitutes and appoints Beneficiary its true and
lawful attorney-in-fact to enforce, in Trustor's name or in
Beneficiary's name or otherwise, all rights of Trustor in the
instruments, including without limitation checks and money
orders, tendered as payments of rents and to do any and all
things necessary and proper to carry out the purposes hereof.
3.3. ELECTION OF REMEDIES. Upon the occurrence of an
Event of Default hereunder, Beneficiary may, at its option, exercise
(or cause the Trustee to exercise) its rights hereunder. If
Beneficiary elects to exercise its rights hereunder, Beneficiary
or Trustee may, at any time without notice, either in person, by
agent or by a receiver appointed by a court, enter upon and take
possession of all or any portion of the Trust Estate, enforce all
Leases, collect all Rents, including those past due and unpaid,
and apply the same to the costs and expenses of operation and
collection, including, without limitation, reasonable attorneys'
fees, and to any indebtedness then secured hereby, in such order
as Beneficiary may determine. In connection with the exercise by
Beneficiary of its rights hereunder, Trustor agrees that
Beneficiary shall have the right to specifically enforce such
rights and to obtain the appointment of a receiver in accordance
with the provisions of Section 4.2 hereof without regard to the
value of the Trust Estate or the adequacy of any security for the
obligations then secured hereby. The collection of such Rents,
or the entering upon and taking possession of the Trust Estate,
or the application thereof as aforesaid, shall not cure or waive
any default or notice of default hereunder or invalidate any act
done in response to such default or pursuant to such notice of
default.
ARTICLE IV
EVENTS OF DEFAULT AND REMEDIES
4.1. EVENTS OF DEFAULT. The occurrence of any one or more
of the following shall constitute an "EVENT OF DEFAULT" under this Deed
of Trust:
(a) failure to pay any monies, obligations or other
consideration when due under the Credit Agreement, this Deed of
Trust or any other Loan Document, subject to any applicable
notice and cure period;
(b) except with respect to the payment of monies or the
specific items set forth in this SECTION 4.1, failure to comply with,
perform or observe any of the covenants made by Trustor in this
Deed of Trust and such failure continues for more than thirty
(30) days following Trustor's receipt of notice of default
(provided, however, if the breach is not reasonably capable of
cure within such thirty (30) day period, Trustor shall not be in
default of this Deed of Trust if Trustor (i) promptly commences
to cure the breach within the thirty (30) day period, (ii)
diligently and in good faith continues to cure the breach, and
(3) cures such breach within ninety (90) days of the notice of
default);
(c) failure to comply with, perform or observe any
obligation or condition of any of the other Loan Documents within the
time periods specified therein and the expiration of any applicable
notice and cure period set forth thereunder, if any;
(d) any representation, warranty, statement, certificate,
schedule or report furnished by Trustor under or in connection
with the Loan Documents, whether given hereunder or any other
Loan Document or otherwise, shall prove to have been inaccurate
in any material respect on or as of the date deemed made;
(e) the occurrence of a default under Section 7 of the
Credit Agreement, subject to any applicable notice and cure period
thereunder;
(f) failure to procure or maintain any insurance policies
which are determined to be material, as determined by Beneficiary in
its sole and absolute discretion;
(g) if Trustor violates or does not comply with any of the
provisions of SUBSECTION 5.4(ii) hereof;
(h) a default occurs under any of the other Loan Documents
and such default is not cured within the applicable notice and cure
period, if any; or
(i) if the Premises or Improvements become subject to any
lien, other than a lien permitted pursuant to Section 6.2 of the Credit
Agreement.
4.2. REMEDIES. Upon the occurrence of any Event of Default,
Trustee and Beneficiary shall have the following rights and
remedies:
(i) Beneficiary may declare the entire principal amount
then outstanding (if not then due and payable) pursuant to the Credit
Agreement, and accrued but unpaid interest thereon, to be due and
payable immediately, and, notwithstanding the stated maturity in
the Credit Agreement or any other term or provision of the Loan
Documents or this Deed of Trust to the contrary, the outstanding
principal amount of the Loan Documents and the accrued but unpaid
interest thereon shall become and be immediately due and payable.
(ii) Irrespective of whether Beneficiary exercises the
option provided in SECTION 4.2(i) above, Beneficiary in person or by
agent may, without any obligation so to do and without notice or
demand upon Trustor and without releasing Trustor from any
obligation hereunder: (a) make any payment or do any act which
Trustor has failed to make or do; (b) enter upon, take possession
of, manage and operate the Trust Estate or any part thereof; (c)
make or enforce, or, if the same be subject to modification or
cancellation, modify or cancel any Leases of the Trust Estate or
any part thereof upon such terms or conditions as Beneficiary
deems proper; (d) obtain and evict tenants, and fix or modify
rents, make repairs and alterations and do any acts which
Beneficiary deems proper to protect the security hereof; and (e)
with or without taking possession, in its own name or in the name
of Trustor, xxx for or otherwise collect and receive rents,
royalties, issues, profits, revenue, income and other benefits,
including those past due and unpaid, and apply the same less
costs and expenses of operation and collection, including
reasonable attorneys' fees, upon any indebtedness secured hereby,
and in such order as Beneficiary may determine. Upon request of
Beneficiary, Trustor shall assemble and make available to
Beneficiary at the Premises any of the Trust Estate which has
been removed therefrom. The entering upon and taking possession
of the Trust Estate, the collection of any rents, royalties,
issues, profits, revenue, income or other benefits and the
application thereof as aforesaid shall not cure or waive any
default theretofore or thereafter occurring or affect any notice
of default hereunder or invalidate any act done pursuant to any
such notice; and, notwithstanding continuance in possession of
the Trust Estate, or any part thereof, by Beneficiary, Trustee or
a receiver, and the collection, receipt and application of rents,
royalties, issues, profits, revenue, income or other benefits,
Beneficiary shall be entitled to exercise every right provided
for in this Deed of Trust or by law upon or after the occurrence
of an Event of Default, including the right to exercise the power
of sale. Any of the actions referred to in this SECTION 4.2(ii)
may be taken by Beneficiary, either in person or by agent, with
or without bringing any action or proceeding, or by a receiver
appointed by a court, and any such action may also be taken
irrespective of whether any notice of default or election to sell
has been given hereunder and without regard to the adequacy of
the security for the indebtedness hereby secured. Further,
Beneficiary, at the expense of Trustor, either by purchase,
repair or construction, may from time to time maintain and
restore the Trust Estate or any part thereof and complete
construction of the Improvements uncompleted as of the date
thereof and in the course of such completion may make such
changes in the contemplated Improvements as Beneficiary may deem
desirable and may insure the same.
(iii)Beneficiary shall be entitled, without notice and to
the full extent provided by law, to the appointment by a court
having jurisdiction of a receiver to take possession of and
protect the Trust Estate or any part thereof, and operate the
same and collect the Rents.
(iv) Beneficiary may bring an action in any court of
competent jurisdiction to foreclose this Deed of Trust or enforce
any of the terms, covenants and conditions hereof or contained in
any other Loan Document.
(v) Beneficiary, in its sole discretion, may elect to
cause the Trust Estate or any part or parts thereof to be sold as
follows:
(a) Beneficiary may proceed as if all of the Trust Estate
were real property in accordance with subparagraph (d) below, or
Beneficiary may elect to treat any of the Trust Estate which
consists of a right in action or which is property that can be
severed from the Premises or the Improvements without causing
structural damage thereto as if the same were personal property,
and dispose of the same in accordance with subparagraph (c)
below, separate and apart from the sale of real property, the
remainder of the Trust Estate being treated as real property.
(b) Beneficiary may cause any such sale or other disposition
to be conducted immediately following the expiration of any grace
period herein provided (or immediately upon the expiration of any
redemption or reinstatement period required by law) or
Beneficiary may delay any such sale or other disposition for such
period of time as Beneficiary deems to be in its best interest.
Should Beneficiary desire that more than one (1) such sale or
other disposition be conducted, Beneficiary may, at its option,
cause the same to be conducted simultaneously, or successively,
on the same day, or at such different days or times and in such
order as Beneficiary may deem to be in its best interest.
(c) Should Beneficiary elect to cause any of the Trust Estate
to be disposed of as personal property as permitted by subparagraph
(a) above, it may dispose of any part thereof in any manner now
or hereafter permitted by the California Commercial Code, the
commercial code of the state in which any of the Trust Estate is
located or in accordance with any other remedy provided by law.
Any such disposition may be conducted by an employee or agent of
Beneficiary or Trustee. Both Trustor and Beneficiary shall be
eligible to purchase any part or all of such property at any such
disposition. Any such disposition may be either public or
private as Beneficiary may elect, subject to the provisions of
the California Commercial Code or the commercial code of the
state in which any of the Trust Estate is located. Beneficiary
shall have all of the rights and remedies of a Secured Party
under the California Commercial Code or the commercial code of
the state in which any of the Trust Estate is located. Expenses
of retaking, holding, preparing for sale, selling or the like
shall include Beneficiary's reasonable attorneys' fees and legal
expenses, and upon such default, Trustor, upon demand of
Beneficiary, shall assemble such personal property and make it
available to Beneficiary at the Premises, a place which is hereby
deemed reasonably convenient to Beneficiary and Trustor.
Beneficiary shall give Trustor at least five (5) days prior
written notice of the time and place of any public sale or other
disposition of such property or of the time at or after which any
private sale or any other intended disposition is to be made, and
if such notice is sent to Trustor, in the manner provided for the
mailing of notices herein, it shall constitute reasonable notice
to Trustor.
(d) Should Beneficiary elect or be directed to sell the
Trust Estate or any part thereof which is real property or which
Beneficiary has elected to treat as real property, upon such
election, Beneficiary or Trustee shall give such notice of
default and election to sell as may then be required by law and
by any Loan Document. Thereafter, upon the expiration of such
time and the giving of such notice of sale as may then be
required by law, and without the necessity of any demand on
Trustor, Trustee, at the time and place specified in the notice
of sale, shall sell the Trust Estate, or any portion thereof
specified by Beneficiary, at public auction to the highest bidder
for cash in lawful money of the United States or any other form
of consideration acceptable to Beneficiary, subject, however, to
the provisions of SECTION 4.2(vii). Trustee may, and upon
request of Beneficiary shall, from time to time postpone the sale
of all or any portion of the Trust Estate by public announcement
at the time and place of such sale, and from time to time
thereafter may postpone such sale by public announcement at the
time fixed by the preceding postponement or subsequently noticed
sale, and without further notice make such sale at the time fixed
by the last postponement, or may, in its discretion, give a new
notice of sale. If the Trust Estate consists of several lots or
parcels, Beneficiary may direct that the same be sold as a unit
or be sold separately and, if to be sold separately, Beneficiary
may designate the order in which such lots or parcels shall be
offered for sale or sold. Any person, including Trustor, Trustee
or Beneficiary, may purchase at the sale. Upon any sale, Trustee
shall execute and deliver to the purchaser or purchasers a deed
or deeds conveying the property so sold, but without any covenant
or warranty whatsoever, express or implied, whereupon such
purchaser or purchasers shall be let into immediate possession.
(e) Beneficiary, from time to time before any Trustee's sale
as provided herein, may rescind any notice of default and election
to sell or notice of sale by executing and delivering to Trustee
a written notice of such rescission, which such notice, when
recorded, shall constitute a cancellation of any prior
declaration of default and demand for sale. The exercise by
Beneficiary of such right of rescission shall not constitute a
waiver of any breach or default then existing or subsequently
occurring, or impair the right of Beneficiary to execute and
deliver to Trustee, as above provided, other declarations or
notices of default and demand for sale of the Trust Estate to
satisfy the obligations hereof, nor otherwise affect any
provision, covenant or condition of any Loan Document.
(f) In the event of a sale or other disposition of the Trust
Estate, or any part thereof, and the execution of a deed or other
conveyance pursuant thereto, the recitals therein of facts, such
as default, the giving of notice of default and notice of sale,
demand that such sale should be made, postponement of sale, terms
of sale, sale, purchase, payment of purchase money and other
facts affecting the regularity or validity of such sale or
disposition, shall be conclusive proof of the truth of such facts
and any such deed or conveyance shall be conclusive against all
persons as to such facts recited therein.
(g) The acknowledgment of the receipt of the purchase money,
contained in any deed or conveyance executed as aforesaid, shall
be sufficient discharge to the grantee of all obligations to see
to the proper application of the consideration therefor as
hereinafter provided. The purchaser at any trustee's or
foreclosure sale hereunder may disaffirm any easement granted or
rental or lease contract made in violation of any provision of
this Deed of Trust and may take immediate possession of the Trust
Estate free from, and despite the terms of, such grant of
easement and rental or lease contract.
(h) Upon the completion of any sale or sales made by Trustee
or Beneficiary, as the case may be, under or by virtue of this
ARTICLE 4, Trustee or any officer of any court empowered to do
so, shall execute and deliver to the accepted purchaser or
purchasers a good and sufficient instrument, or good and
sufficient instruments, conveying, assigning and transferring all
estate, right, title and interest in and to the property and
rights sold. Trustee is hereby irrevocably appointed the true
and lawful attorney-in-fact of Trustor in its name and stead to
make all necessary conveyances, assignments, transfers and
deliveries of the Trust Estate or any part thereof and the rights
so sold and for that purpose Trustee may execute all necessary
instruments of conveyance, assignment and transfer, and may
substitute one or more persons with like power, Trustor hereby
ratifying and confirming all that its said attorney or any
substitute or substitutes shall lawfully do by virtue hereof.
Nevertheless, Trustor, if so requested by Trustee or Beneficiary,
shall ratify and confirm any such sale or sales by executing and
delivering to Trustee or to such purchaser or purchasers all such
instruments as may be advisable in the judgment of Trustee or
Beneficiary, for the purpose as may be designated in such
request. The foregoing power of attorney is coupled with an
interest and cannot be revoked. Any such sale or sales made
under or by virtue of this Article III, whether made under the
power of sale herein granted or under or by virtue of judicial
proceedings or of a judgment or decree of foreclosure and sale,
shall operate to divest all of the estate, right, title,
interest, claim and demand whatsoever, whether at law or in
equity, of Trustor in and to the properties and rights so sold,
and shall be a perpetual bar, both at law and in equity, against
Trustor and any and all persons claiming or who may claim the
same, or any part thereof, from, through or under Trustor.
(i) Trustor hereby expressly waives any right which it may
have to direct the order in which any of the Trust Estate shall be
sold in the event of any sale or sales pursuant hereto.
(vi) The purchase money, proceeds or avails of any sale made
under or by virtue of this ARTICLE 4, together with all other
sums which may then be held by Trustee or Beneficiary under this
Deed of Trust, whether under the provisions of this ARTICLE 4, or
otherwise, shall be applied as follows:
FIRST: To the payment of the costs and expenses of the
sale, including reasonable compensation to Trustee and
Beneficiary, their agents and counsel, and of any judicial
proceedings wherein the same may be made and to the payment of
all expenses, liabilities and advances made or incurred by
Trustee under this Deed of Trust, together with interest as
specified in the Credit Agreement on all advances made by Trustee
and all taxes or assessments, except for any taxes, assessments
or other charges subject to which the Trust Estate shall have
been sold, and further including all costs of publishing,
recording, mailing and posting notice, the cost of any search
and/or other evidence of title procured in connection therewith
and the cost of any revenue stamps on any deed of conveyance.
SECOND: To the payment of any and all sums expended
under the terms hereof, not then repaid, with accrued interest as
specified in the Credit Agreement and all other sums required to
be paid by Trustor pursuant to any provisions of this Deed of
Trust or of the Credit Agreement or of any other Loan Document,
including all expenses, liabilities and advances made or incurred
by Beneficiary under this Trust Estate or in connection with the
enforcement hereof, together with interest as specified in the
Credit Agreement on all advances.
THIRD: To the payment of the principal and interest
then due, owing and unpaid upon the Credit Agreement, with
interest on the unpaid principal as specified therein from the
due date of any such payment of principal until the same is paid.
FOURTH: The remainder, if any, to the person or
persons legally entitled thereto.
(vii)Upon any sale or sales made under or by virtue of this
ARTICLE 4, whether made under the power of sale herein granted or
under or by virtue of judicial proceedings or of a judgment or
decree of foreclosure and sale, Beneficiary may bid for and
acquire the Trust Estate or any part thereof and, in lieu of
paying cash therefor, may make settlement for the purchase price
by crediting upon the indebtedness or other sums secured by this
Deed of Trust the net sales price after deducting therefrom the
expenses of sale and the costs of the judicial proceedings, if
any, and any other sums which Trustee or Beneficiary is
authorized to deduct under the Trust Estate, and, in such event,
this Deed of Trust, the Loan Documents and documents evidencing
expenditures secured hereby shall be presented to the person or
persons conducting the sale in order that the amount so used or
applied may be credited upon said indebtedness as having been
paid.
(viii)Upon the occurrence of any Event of Default and upon
written demand by Beneficiary, Trustor will pay to Beneficiary
the entire principal then outstanding, and all accrued but unpaid
interest thereon, and, after the happening of said Event of
Default, will also pay to Beneficiary interest as specified in
the Credit Agreement on the then unpaid principal, and the sums
required to be paid by Trustor pursuant to any provision of this
Deed of Trust, or any other Loan Document and in addition thereto
such further amount as shall be sufficient to cover the costs and
expenses of collection, including reasonable compensation to
Trustee and Beneficiary hereunder. In the event Trustor shall
fail forthwith to pay such amounts upon such demand, Beneficiary
shall be entitled and empowered to institute such action or
proceedings at law or in equity as may be advised by its counsel
for the collection of the sums so due and unpaid, and may
prosecute any such action or proceedings to judgment or final
decree, and may enforce any such judgment or final decree against
Trustor and collect, out of the property of Trustor wherever
situated, as well as out of the Trust Estate, in any manner
provided by law, moneys adjudged or decreed to be payable.
(a) Beneficiary shall be entitled to recover judgment as
aforesaid either before or after or during the pendency of any
proceedings for the enforcement of the provisions of this Deed of
Trust, and the right of Beneficiary to recover such judgment
shall not be affected by any entry or sale hereunder, or by the
exercise of any other right, power or remedy for the enforcement
of the provisions of this Deed of Trust, or the foreclosure of
the lien hereof; and in the event of a sale of the Trust Estate,
and of the application of the proceeds of sale, as in this Deed
of Trust provided, to the payment of the debt hereby secured,
Beneficiary shall be entitled to enforce payment of, and to
receive all amounts then remaining due and unpaid and to enforce
payment of all other charges, payments and costs due under this
Trust Estate, and shall be entitled to recover judgment for any
portion of the debt remaining unpaid, with interest. In case of
proceedings against Trustor in insolvency or bankruptcy or any
proceedings for the reorganization of Trustor or involving the
liquidation of its assets, Beneficiary shall be entitled to prove
the whole amount of principal and interest due pursuant to the
Loan Documents to the full amount thereof, and all other
payments, charges and costs due under this Deed of Trust or any
other Loan Document.
(b) No recovery of any judgment by Beneficiary and no levy
of an execution under any judgment upon the Trust Estate or upon
any other property of Trustor shall affect, in any manner or to
any extent, the lien of this Deed of Trust upon the Trust Estate
or any part thereof, or any liens, rights, powers, or remedies of
Trustee or Beneficiary hereunder, but such liens, rights, powers
and remedies of Trustee and Beneficiary shall continue unimpaired
as before.
(c) Any moneys thus collected by Beneficiary under this
SECTION 4.2(viii) shall be applied by Beneficiary in accordance
with the provisions of SECTION 4.2(vi).
(ix) Upon the commencement of any action, suit or other
legal proceedings by Beneficiary to obtain judgment for the principal
of, or interest on sums required to be paid by Trustor pursuant
to any provision of this Deed of Trust, or of any other nature in
aid of the enforcement of the Loan Documents or of this Deed of
Trust, Trustor, to the fullest extent permitted by law, will and
does hereby (a) waive the issuance and service of process and
enter its voluntary appearance in such action, suit or
proceedings, and (b) if required by Beneficiary, consent to the
appointment of a receiver or receivers of the Trust Estate and of
all the Rents. After the happening of any Event of Default, or
upon the commencement of any proceedings to foreclose this Deed
of Trust or to enforce the specific performance hereof or in aid
thereof or upon the commencement of any other judicial
proceedings to enforce any right of Trustee or Beneficiary,
Trustee or Beneficiary shall be entitled forthwith, as a matter
of right, if either shall so elect, without the giving of notice
to any other party and without regard to the adequacy of the
security of the Trust Estate, either before or after declaring
the unpaid principal of the Loan Documents to be due and payable,
to the appointment of such a receiver or receivers.
(x) Notwithstanding the appointment of any receiver,
liquidator or trustee of Trustor, or of any of its property, or of
the Trust Estate or any part thereof, Trustee and Beneficiary shall
be entitled to retain possession and control of all property now or
hereafter held under this Deed of Trust, including, but not
limited to, the Rents.
(xi) No remedy herein conferred upon or reserved to
Trustee or Beneficiary is intended to be exclusive of any other
remedy herein or by any Loan Document or by law provided, but each
shall be cumulative and shall be in addition to every other remedy
given hereunder or by and Loan Document or now or hereafter
existing at law or in equity or by statute. No delay or omission
of Trustee or Beneficiary in exercising any right or power
accruing upon any Event of Default shall impair any right or
power or shall be construed to be a waiver of any Event of
Default or any acquiescence therein; and every power and remedy
given by this Deed of Trust to Trustee or Beneficiary may be
exercised from time to time as often as may be deemed expedient
by Trustee or Beneficiary. If there exists additional security
for the performance of the obligations secured hereby,
Beneficiary, or its assigns, at its sole option, and without
limiting or affecting any of the rights or remedies hereunder,
may exercise any of the rights and remedies to which it may be
entitled hereunder either concurrently with whatever rights it
may have in connection with such other security or in such order
as it may determine. Nothing in this Deed of Trust or any other
Loan Documents shall affect the obligation of Trustor to pay the
principal of, and interest as specified in the Credit Agreement
in the manner and at the time and place therein respectively
expressed.
(xii)To the fullest extent permitted by applicable law,
Trustor will not at any time insist upon, or plead, or in any
manner whatsoever claim or take any benefit or advantage of any
stay or extension or moratorium law or law pertaining to the
marshaling of assets, the administration of estates of decedents,
any exemption from execution or sale of the Trust Estate or any
part thereof, including exemption of homestead, wherever enacted,
now or at any time hereafter in force, which may affect the
covenants and terms of performance of this Deed of Trust, nor
claim, take or insist upon any benefit or advantage of any law
now or hereafter in force providing for the valuation or
appraisal of the Trust Estate, or any part thereof, prior to any
sale or sales thereof which may be made pursuant to any provision
herein, or pursuant to the decree, judgment or order of any court
of competent jurisdiction; nor after any such sale or sales,
claim or exercise any right under any statute heretofore or
hereafter enacted to redeem the property so sold or any part
thereof, and Trustor hereby expressly waives all benefit or
advantage of any such law or laws, and covenants not to hinder,
delay or impede the execution of any power herein granted or
delegated to Trustee or Beneficiary, but to suffer and permit the
execution of every power as though no such law or laws had been
made or enacted. Trustor, for itself and all who claim under it,
hereby waives, to the extent that it lawfully may, all right to
have the Trust Estate marshaled upon any sale or foreclosure
hereunder.
(xiii)Upon the occurrence of any Event of Default and
pending the exercise by Trustee or Beneficiary or their agents or
attorneys of their right to exclude Trustor from all or any part
of the Trust Estate, Trustor agrees to vacate and surrender
possession of the Trust Estate to Trustee or Beneficiary, as the
case may be, or to a receiver, if any, and in default thereof may
be evicted by any summary action or proceeding for the recovery
of possession of leased premises for nonpayment of rent, however
designated.
(xiv)In the event ownership of the Trust Estate or any
portion thereof becomes vested in a person other than the Trustor
herein named, Beneficiary may, without notice to the Trustor
herein named, whether or not Beneficiary has given written
consent to such change in ownership, deal with such successor or
successors in interest with reference to this Deed of Trust and
the indebtedness secured hereby, and in the same manner as with
the Trustor herein named, without in any way vitiating or
discharging Trustor's liability hereunder or for the indebtedness
or obligations hereby secured.
(xv) In the event that there be a Trustee's sale hereunder
and if at the time of such sale Trustor, or its heir, executor,
administrator or assign, be occupying the Premises and
Improvements or any part thereof so sold, each and all shall
immediately become the tenant of the purchaser at such sale,
which tenancy shall be a tenancy from day to day, terminable at
the will of either tenant or landlord, at a reasonable rental per
day based upon the value of the Premises and Improvements, such
rental to be due daily to the purchaser. An action of unlawful
detainer shall lie if the tenant holds over after a demand in
writing for possession of said Premises and Improvements; and
this agreement and the Trustee's deed shall constitute a lease
and agreement under which any such tenant's possession arose and
continued.
(xvi)Trustor shall pay immediately, without notice or
demand, all costs and expenses in connection with the enforcement
of Beneficiary's rights under any of the Loan Documents,
including without limitation reasonable attorneys' fees, whether
or not any suit is filed in connection with such enforcement;
such costs and expenses shall include without limitation all
costs, reasonable attorneys' fees and expenses in connection with
any insolvency, bankruptcy, reorganization, arrangement or other
similar proceedings involving Trustor or Trustor's obligations
under any Loan Document, which in any way affects the exercise by
Beneficiary of its rights and remedies under the Deed of Trust or
any other Loan Document.
4.3. AVOIDANCE TO LOCK-OUT PERIOD. Following an Event of
Default, if Trustor or anyone on Trustor's behalf makes a tender
of payment of the amount necessary to satisfy the Obligations
secured by this Deed of Trust at any time prior to foreclosure
sale (including, but not limited to, sale under power of sale
under this Deed of Trust), or during any redemption period after
foreclosure and such tender of payment as of the date tendered
will constitute a prepayment not permitted by Section 2.3, then,
to the maximum extent permitted by law, Trustor shall pay
Beneficiary, in addition to such tender payment, an amount equal
to the greater of (i) three percent (3%) of all outstanding
principal and interest amounts owed under or in connection with
the Credit Agreement and (ii) an amount equal to the excess of
(A) the sum of the present values of a series of payments payable
at the times and in the amounts equal to the payments of
principal and interest (including, but not limited to the
principal and interest payable on the Maturity Date) which would
have been scheduled to be payable after the date of such tender
under the Credit Agreement had the Obligations not been
accelerated, with each such payment discounted to its present
value at the date of such tender at the rate which when
compounded monthly is equivalent to the Prepayment Rate (as
hereinafter defined), over (B) the then principal amount due
under the Credit Agreement.
The term "PREPAYMENT RATE" means the bond equivalent yield (in
the secondary market) on the United States Treasury Security that
as of the Prepayment Rate Determination Date (hereinafter
defined) has a remaining term to maturity closest to, but not
exceeding, the remaining term to the Maturity Date, as most
recently published in the "Treasury Bonds, Notes and Bills"
section in The Wall Street Journal as of the date of the related
tender of payment. If more than one issue of United States
Treasury Securities has the remaining term to the Maturity Date
referred to above, the "Prepayment Rate" shall be the yield on
the United States Treasury Security most recently issued as of
such date. The term "PREPAYMENT RATE DETERMINATION DATE" shall
mean the date which is five (5) Business Days prior to the
prepayment date. The rate so published shall control absent
manifest error. As used herein, "Business Day" shall mean any
day other than Saturday, Sunday or any other day on which banks
are required or authorized to close in California.
ARTICLE V
MISCELLANEOUS
5.1. AMENDMENTS. This Deed of Trust may only be waived,
changed, discharged or terminated by an instrument in writing signed
by the party against whom enforcement of any waiver, change,
discharge or termination is sought.
5.2. NO WAIVER. By accepting payment of any sum secured
hereby after its due date or in an amount less than the sum due,
Beneficiary does not waive its rights either to require prompt
payment when due of all other sums so secured or to declare a
default as herein provided for failure to pay the total sum due.
5.3. TRUSTOR WAIVER OF RIGHTS. Trustor waives to the
extent permitted by law, (i) the benefit of all laws now existing or
that may hereafter be enacted providing for any appraisement
before sale of any portion of the Trust Estate, (ii) all rights
of redemption, valuation, appraisement, stay of execution, notice
of election to mature or declare due the whole of the secured
indebtedness and marshalling in the event of foreclosure of the
liens hereby created, and (iii) all rights and remedies which
Trustor may have or be able to assert by reason of the laws of
the State of California pertaining to the rights and remedies of
sureties; provided, however, nothing contained herein shall be
deemed to be a waiver of Trustor's rights under Section 2924c of
the California Civil Code.
5.4. ENVIRONMENTAL MATTERS.
(i) Trustor agrees to submit from time to time, if
requested by Beneficiary, a report, satisfactory to Beneficiary,
certifying that the Premises and the Improvements are not now being
used nor been used in the past for any use, generation, transportation,
treatment, storage or disposal of any Hazardous Materials at any
time located on or present or, under or near the Premises.
Beneficiary reserves the right, in its sole and absolute
discretion, to retain, at Trustor's expense, an independent
professional consultant to review any report prepared by Trustor
and/or to conduct its own investigation of the Premises and
Improvements for Hazardous Materials. Trustor hereby grants to
Beneficiary, its agents, employees, consultants and contractors
the right to enter upon the Premises and Improvements and to
perform such tests as are reasonably necessary to conduct such a
review and/or investigation.
(ii) Upon the discovery by Trustor of any event or
situation which would render any of the representations, warranties
or covenants contained in Section 2.11 inaccurate in any respect if
made at the time of such discovery, Trustor shall promptly notify
Beneficiary of such event or situation and, within fifteen (15)
days after such discovery, submit to Beneficiary a preliminary
written environmental plan setting forth a general description of
such event or situation and the action, if any, that Trustor
proposes to take with respect thereto, including, without
limitation, the giving of notice to and receipt of approval from
appropriate governmental agencies. Within fifteen (15) days
after submission of such preliminary report, Trustor shall submit
to Beneficiary a final written environmental report, setting
forth a detailed description of such event or situation and the
action that Trustor proposes to take with respect thereto,
including, without limitation, any proposed corrective work, the
estimated cost and time of completion, the name of the
contractor, a copy of the construction contract, if any, the
governmental agencies contacted, the governmental agencies
claiming jurisdiction, the approvals required from said
governmental agencies and the estimated time to obtain said
approvals, and such additional data, instruments, documents,
agreements or other materials or information as Trustor may
reasonably request. The plan shall be subject to Beneficiary's
written approval, which approval may be granted or withheld in
Beneficiary's reasonable discretion. Beneficiary shall notify
Trustor in writing of its approval or disapproval of the final
plan within fifteen (15) days after receipt thereof by
Beneficiary. If Beneficiary disapproves the plan, Beneficiary's
notice to Trustor of such disapproval shall include a brief
explanation of the reasons therefor. Within fifteen (15) days
after receipt of such notice of disapproval, Trustor shall submit
to Beneficiary a revised final written environmental plan that
remedies the defects identified by Beneficiary as reasons for
Beneficiary's disapproval of the initial final plan. If Trustor
fails to submit a revised plan to Beneficiary within said fifteen
(15) day period, or if such revised plan is submitted to
Beneficiary and Beneficiary disapproves said plan, such failure
or disapproval shall, at Beneficiary's option and upon notice to
Trustor, constitute an "Event of Default" hereunder, in which
event Beneficiary shall have all of the rights and remedies
available to it under SUBSECTION 4.1(ii). If Beneficiary does
not notify Trustor of its approval or disapproval of the final
plan or any revisions thereof within fifteen (15) days after
receipt thereof, the plan or revision shall be deemed
disapproved. Once any such plan is approved in writing or deemed
approved by Beneficiary, Trustor shall promptly commence all
action necessary to implement such plan and to comply with any
requirements and conditions imposed by Beneficiary, and shall
diligently and continuously pursue such action to completion in
strict accordance with the terms thereof.
5.5. NOTICES. Whenever Trustor or Beneficiary shall
desire to give or serve any notice, demand, request or other
communication with respect to this Deed of Trust, each such notice,
demand, request or communication shall be given in writing (at the
address set forth below) by any of the following means: (a)
personal service; (b) electronic communication, whether by telex
or telecopying (if confirmed in writing sent by overnight
delivery service); or (c) overnight delivery service (such as
FedEx), providing proof of delivery. Such addresses may be
changed by notice to the other parties given in the same manner
as provided above. Any notice, demand or request sent pursuant
to either SUBSECTION (a) or (b) hereof shall be deemed received
upon such personal service or upon dispatch by electronic means,
and, if sent pursuant to SUBSECTION (c) shall be deemed received
as of the date of delivery (whether accepted or refused)
established by the overnight carrier's proof of delivery.
To Beneficiary: Peloton Partners LLP
00 Xxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxx X0X 0XX
Attention: Xxx Xxxxxx
Reference: Cadiz
Telephone No.: x00 00 00000 0000
Telecopy No.: x00 00 0000 0000
with a copy to: Xxxxxxxxx Traurig LLP
0000 Xxxxxxxx Xxxxxx, Xxxxx 000 X
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxxx Xxxxx, Esq.
Telephone No.: 000-000-0000
Telecopy No.: 000-000-0000
To Trustor: Cadiz Inc./Cadiz Real Estate LLC
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
Attention: Chief Financial Officer
Telephone No.: 000-000-0000
Telecopy No.: 000-000-0000
with a copy to: Stephan, Oringher, Xxxxxxx, Xxxxxxxx &
Xxxxxx, P.C.
0000 Xxxxxxx Xxxx Xxxx
Xxxxx Xxxxx
Xxx Xxxxxxx, XX 00000-0000
Attention: Xxxxxx Xxxxxxxxxxx, Esq.
Telephone No.: 000-000-0000
Telecopy No.: 000-000-0000
To Trustee: Chicago Title Company
000 Xxxx Xxxxxxxxxxx Xxxx
Xxx Xxxxxxxxxx, Xxxxxxxxxx
Telephone No.: 000-000-0000
Telecopy No.: 000-000-0000
5.6. SALE OF PARTICIPATION. Beneficiary may, at any time,
sell, transfer, assign or grant participations herein and other
obligations secured hereby, and Beneficiary may forward to each
participant and prospective participant all documents and
information which Beneficiary now has or later may acquire
relating to those obligations and to Trustor, and any partners or
joint venturers of Trustor, whether furnished by Trustor or
otherwise, as Beneficiary determines necessary or desirable.
5.7. ACCEPTANCE BY TRUSTEE. Trustee accepts this Trust
when this Deed of Trust, duly executed and acknowledged, is made a
public record as provided by law.
5.8. CAPTIONS. The captions or headings at the beginning
of each Section hereof are for the convenience of the parties and are
not a part of this Deed of Trust.
5.9. AFFIDAVIT TO TRUSTEE. Trustee, upon presentation to
it of an affidavit signed by or on behalf of Beneficiary, setting
forth any fact or facts showing a default by Trustor under any of the
terms or conditions of this Deed of Trust, is authorized to
accept as true and conclusive all facts and statements in such
affidavit and to act hereunder in complete reliance thereon.
5.10. SEVERABILITY; INVALIDITY OF CERTAIN PROVISIONS. Every
provision of this Deed of Trust is intended to be severable. In
the event any term or provision hereof is declared to be illegal
or invalid for any reason whatsoever by a court of competent
jurisdiction, such illegality or invalidity shall not affect the
balance of the terms and provisions hereof, which terms and
provisions shall remain binding and enforceable. If the lien of
this Deed of Trust is invalid or unenforceable as to any part of
the debt, or if the lien is invalid or unenforceable as to any
part of the Trust Estate, the unsecured or partially unsecured
portion of the debt shall be completely paid prior to the payment
of the remaining and secured or partially secured portion of the
debt, and all payments made on the debt, whether voluntary or
under foreclosure or other enforcement action or procedure, shall
be considered to have been first paid on and applied to the full
payment of that portion of the debt which is not secured or fully
secured by the lien of this Deed of Trust.
5.11. WAIVER OF STATUTE OF LIMITATIONS. The right to plead
any and all statutes of limitation as a defense to any demand
secured by this Deed of Trust is hereby waived to the full extent
permitted by law.
5.12. NO MERGER OF LEASE. If both the lessor's and lessee's
estate under any lease or any portion thereof which constitutes a
part of the Trust Estate shall at any time become vested in one
owner, this Deed of Trust and the lien created hereby shall not
be destroyed or terminated by application of the doctrine of
merger unless Beneficiary so elects as evidenced by recording a
written declaration so stating, and, unless and until Beneficiary
so elects, Beneficiary shall continue to have and enjoy all of
the rights and privileges of Beneficiary as to the separate
estates. In addition, upon the foreclosure of the lien created
by this Deed of Trust on the Trust Estate pursuant to the
provisions hereof, any leases or subleases then existing and
affecting all or any portion of the Trust Estate shall not be
destroyed or terminated by application of the law of merger or as
a matter of law or as a result of such foreclosure unless
Beneficiary or any purchaser at such foreclosure sale shall so
elect. No act by or on behalf of Beneficiary or any such
purchaser shall constitute a termination of any lease or sublease
unless Beneficiary or such purchaser shall give written notice
thereof to such tenant or subtenant.
5.13. GOVERNING LAW. Insofar as permitted by otherwise
applicable law, this Deed of Trust and the indebtedness and
obligations secured hereby shall be governed by and construed in
accordance with the laws of California.
5.14. BENEFICIARY'S RIGHT TO ENTER, INSPECT AND CURE.
Beneficiary is authorized, by itself, its contractors, agents,
employees or workmen, to enter at any reasonable time upon any
part of the Premises for the purpose of inspecting the same, and
for the purpose of performing any of the acts it is authorized to
perform under the terms of the Loan Document and this Deed of
Trust.
5.15. INTERPRETATION AND SUCCESSORS IN INTEREST. Subject
to the provisions of SECTION 2.17 hereof, this Deed of Trust applies
to, inures to the benefit of, and binds all parties hereto, their
heirs, legatees, devisees, administrators, executors, successors
and assigns. The term "Beneficiary" shall mean the owner and
holder, including pledgees, of the Credit Agreement, now or
hereafter and whether or not named as Beneficiary herein. In
this Deed of Trust the singular shall include the plural and the
masculine shall include the feminine and neuter and vice versa,
if the context so requires. The word "person" shall include
corporation, partnership or other form of association. Any
reference in this Deed of Trust to any document, instrument or
agreement creating or evidencing an obligation secured hereby
shall include such document, instrument or agreement both as
originally executed and as it may from time to time be modified.
5.16. RECONVEYANCE BY TRUSTEE. Upon written request of
Beneficiary stating that all sums secured hereby have been paid,
and upon surrender of this Deed of Trust to Trustee for
cancellation and retention and upon payment by Trustor of
Trustee's fees, Trustee shall reconvey to Trustor, or to the
person or persons legally entitled thereto, without warranty, any
portion of the Trust Estate then held hereunder. The recitals in
such reconveyance of any matters or facts shall be conclusive
proof of the truthfulness thereof. The grantee in any
reconveyance may be described as "the person or persons legally
entitled thereto."
5.17. CONFLICTS. To the extent that this Deed of Trust or
any of the other Loan Documents are inconsistent with the Credit
Agreement, the Credit Agreement shall supersede any other
agreement or document relating to the matters referred to herein
or therein.
5.18. COUNTERPARTS; RECORDING REFERENCES. This Deed of
Trust may be executed in several original counterparts. To
facilitate filing and recording, there may be omitted from certain
counterparts the parts of EXHIBITS A-1 and A-2 hereto containing
specific descriptions of certain collateral constituting the
Trust Estate which relate to land under the jurisdiction of
offices or located in cities or counties other than the office or
city or county in which the particular counterpart is to be filed
or recorded. A complete copy of this Deed of Trust is being
filed for record in the Office of the County Recorder of San
Bernardino. Each counterpart shall be deemed to be an original
for all purposes, and all counterparts shall together constitute
a single document; provided, however, Beneficiary and Trustee
shall also have the option to exercise all rights and remedies
available to Beneficiary and Trustee hereunder and under
applicable law as though each counterpart hereof were a separate
deed of trust, or other security instrument covering only the
portions of the collateral constituting the Trust Estate located
in the city or county wherein such counterpart is recorded.
Unless otherwise specified in EXHIBITS A-1 and A-2 hereto, all
recording references in EXHIBITS A-1 and A-2 are to the official
real property records of the city or county as appropriate, in
which the affected land is located. The references in XXXXXXXX X-
0 and A-2 to liens, encumbrances and other burdens, if any, shall
not be deemed to recognize or create any rights in third parties.
5.19. NONFOREIGN ENTITY. Section 1445 of the Internal
Revenue Code of 1986, as amended (the "INTERNAL REVENUE CODE")
provides that a transferee of a U.S. real property interest must
withhold tax if the transferor is a foreign person. To inform
Beneficiary that the withholding of tax will not be required in
the event of the disposition of the Premises or Improvements
pursuant to the terms of this Deed of Trust, Trustor hereby
certifies, under penalty of perjury, that:
(i) Trustor is not a foreign corporation, foreign
partnership, foreign trust or foreign estate, as those terms are
defined in the Internal Revenue Code and the regulations promulgated
thereunder; and
(ii) Trustor U.S. employer identification numbers Cadiz 77-
0313235 and CRE ________________; and
(iii)Trustor's principal place of business is 000 Xxxxx
Xxxxxxxx Xxxxxx, Xxx Xxxxxxx XX 00000
It is understood that Beneficiary may disclose the contents of
this certification to the Internal Revenue Service and that any
false statement contained herein could be punished by fine,
imprisonment or both. Trustor covenants and agrees to execute
such further certificates, which shall be signed under penalty or
perjury, as Beneficiary shall reasonably require. The covenant
set forth herein shall survive the foreclosure of the lien of
this Deed of Trust or acceptance of a deed in lieu thereof.
ARTICLE VI
SURETYSHIP WAIVERS
6.1. In addition to all waivers expressed in the Credit
Agreement and the Other Loan Documents, to the extent that any person
or entity comprising Trustor (a "TRUSTOR PARTY") is construed as or
constitutes a surety with respect to any other Trustor Party,
then the following provisions shall apply:
(a) Each Trustor Party hereby absolutely, unconditionally,
knowingly, and expressly waives and agrees not to assert or take
advantage of any defense based upon (1) presentment, demand,
protest and notice of protest, notice of dishonor and of non-
payment, notice of acceptance of the Loan Documents, and
diligence in collection; (2) notice of the existence, creation,
or incurring of any new or additional obligations under or
pursuant to any of the Loan Documents; (3) any right to require
Beneficiary to proceed against, give notice to, or make demand
upon any other Trustor Party; (4) any right to require
Beneficiary to proceed against or exhaust any security or to
proceed against or exhaust any security in any particular order;
(5) any right to require Beneficiary to pursue any remedy of
Beneficiary; (6) any right to direct the application of any
security held by Beneficiary; (7) any right of subrogation or to
enforce any remedy which Beneficiary may have against any other
Trustor Party and any right to participate in any security now or
hereafter held by Beneficiary and any right to reimbursement from
any other person or entity comprising Trustor for amounts paid to
Beneficiary by any other Trustor Party at any time prior to the
Payment in Full (as hereinafter defined) of all obligations of
Trustor under the Loan Documents and of all obligations secured
by this Deed of Trust; (8) any defense arising out of any
disability or other defense of any Trustor Party, including
bankruptcy, dissolution, liquidation, cessation, impairment,
modification, or limitation, from any cause, of any liability of
Trustor, or of any remedy for the enforcement of such liability;
(9) any right to plead or assert any election of remedies by
Beneficiary; (10) any other defenses available to a surety under
applicable law; (11) notice of any adverse change in the
financial condition of any Trustor Party or of any other fact
that might increase such Trustor Party's risk under the Loan
Documents; and (12) all notices (except if such notice is
specifically required to be given to such Trustor Party) and
demands to which Trustor might otherwise be entitled. As used
herein, the term "PAYMENT IN FULL" with respect to any obligation
shall mean the payment in full in cash of all such obligations
and the expiration of all applicable time periods regarding
bankruptcy preference, fraudulent conveyance or other avoidance
actions that may be applicable to the circumstances of payment of
any or all of such obligations under any and all laws of the
State of California and federal laws.
(b) Each Trustor Party hereby waives any rights it may have
under Sections 2845 or 2850 of the California Civil Code, or
otherwise, to require Beneficiary to institute suit against, or
to exhaust any rights and remedies which Beneficiary has or may
have against, any other Trustor Party or any third party, or
against any collateral for the Obligations provided by Trustor or
any third party. In this regard, each Trustor Party agrees that
it is bound to the payment of all Obligations, whether now
existing or hereafter accruing as fully as if such Obligations
were directly owing to Beneficiary by each Trustor Party. Each
Trustor Party further waives any defense arising by reason of any
disability or other defense (other than the defense that the
Obligations shall have been fully and finally performed and paid)
of such Trustor Party or by reason of the cessation from any
cause whatsoever of the liability of such Trustor Party in
respect thereof.
(c) Each Trustor Party hereby waives: (1) any rights to
assert against Beneficiary any defense (legal or equitable), set-off,
counterclaim, or claim which any other Trustor Party may now or
at any time hereafter have against any other Trustor Party or any
other party liable to Beneficiary; (2) any defense, set-off,
counterclaim, or claim, of any kind or nature, arising directly
or indirectly from the present or future lack of perfection,
sufficiency, validity, or enforceability of the Obligations or
any security therefor; and (3) any defense Trustor has to
performance hereunder, and any right Trustor has to be
exonerated, provided by Sections 2819, 2822, or 2825 of the
California Civil Code, or otherwise, arising by reason of: any
claim or defense based upon an election of remedies by
Beneficiary; the impairment or suspension of Beneficiary's rights
or remedies against Trustor; the alteration by Beneficiary of the
Obligations; any discharge of Trustor's obligations to
Beneficiary by operation of law as a result of Beneficiary's
intervention or omission; or the acceptance by Beneficiary of
anything in partial satisfaction of the Obligations.
(d) Each Trustor Party hereby waives any right of subrogation
it may have as against any other Trustor Party with respect to the
Obligations. In addition, each Trustor Party hereby waives any
right to proceed against any other Trustor Party, now or
hereafter, for contribution, indemnity, reimbursement, and any
other suretyship rights and claims, whether direct or indirect,
liquidated or contingent, whether arising under express or
implied contract or by operation of law, which any Trustor Party
may now have or hereafter have as against any other Trustor Party
with respect to the Obligations. Each Trustor Party also hereby
waives any rights to recourse to or with respect to any asset of
any other Trustor Party. Each Trustor Party agrees that in light
of the immediately foregoing waivers, the execution of this Deed
of Trust shall not be deemed to make each Trustor Party a
"creditor" of any other Trustor Party, and that for purposes of
Sections 547 and 550 of the Bankruptcy Code each Trustor Party
shall not be deemed a "creditor" of any other Trustor Party.
Notwithstanding the foregoing, the waivers set forth in this
subsection (N) shall only apply until the Indefeasible Payment in
Full of all obligations of Trustor under the Loan Documents and
of all of the Obligations under this Agreement.
(e) Each Trustor Party waives all rights and defenses arising
out of an election of remedies by Beneficiary, even though that
election of remedies, such as a non-judicial foreclosure with
respect to security for the Obligations, has destroyed such
Trustor Party's rights of subrogation and reimbursement against
the principal by the operation of Section 580d of the California
Code of Civil Procedure (the "CCP") or otherwise. Each Trustor
Party acknowledges and agrees that, as a result of the foregoing
sentence, it is knowingly waiving in advance a complete or
partial defense to this Deed of Trust arising under CCP
Sections 580d or 580a and based upon Beneficiary's election to
conduct a private non-judicial foreclosure sale, even though such
election would destroy, diminish, or affect such Trustor Party's
rights of subrogation against any other Trustor Party or any
other party and each such Trustor Party's rights to pursue any
other Trustor Party or such other party for reimbursement
contribution, indemnity, or otherwise.
(f) WITHOUT LIMITING THE GENERALITY OF ANY OTHER WAIVER OR
OTHER PROVISION SET FORTH IN THIS DEED OF TRUST OR ANY OTHER AGREEMENT
ENTERED INTO WITH RESPECT TO THE LOAN DOCUMENTS, TRUSTOR HEREBY
WAIVES AND AGREES NOT TO ASSERT ANY AND ALL BENEFITS OR DEFENSES
ARISING DIRECTLY OR INDIRECTLY UNDER ANY ONE OR MORE OF
CALIFORNIA CIVIL CODE SECTIONS 2799, 2808, 2809, 2810, 2815,
2819, 2820, 2821, 2822, 2825, 2839, 2845, 2848, 2849, 2850, 2899
and 3433, AND CHAPTER 2 OF TITLE 14 OF THE CALIFORNIA CIVIL CODE.
IN WITNESS WHEREOF, Trustor has executed this Deed of
Trust as of the day and year first above written.
CADIZ INC., a Delaware
corporation
By:
Name:
Title:
CADIZ REAL ESTATE LLC, a
Delaware limited liability
company
By:
Name:
Title:
[NOTARIAL ACKNOWLEDGEMENT]
EXHIBIT A-1
[Legal Description]
EXHIBIT A-2
[Legal Description]
SCHEDULE 1
[List of Lenders]
SCHEDULE 2
Schedule of Financing Statements
That certain Deed of Trust, Assignment of Leases and Rents,
Security Agreement, Financing Statement and Fixture Filing, dated
as of even herewith by Trustor in favor of Trustee and
Beneficiary to secure payment of indebtedness in the total
principal amount as of of $____________ as more
fully described therein.
Liens described in Preliminary Report No. 602040811-K32 issued by
Chicago Title Company, insuring priority in this Deed of Trust
and showing ________ as insured.
STATE OF CALIFORNIA }
} S.S.
COUNTY OF LOS ANGELES }
On before me,
___________________________________________, personally appeared
personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person whose name is subscribed
to the within instrument and acknowledged to me that he executed
the same in his authorized capacity, and that by his signature on
the instrument the person, or the entity upon behalf of which the
person acted, executed the instrument.
WITNESS my hand and official seal.
Signature___________________________
--------------------------------------------------------------------------------
EXHIBIT E
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
This ASSIGNMENT AND ASSUMPTION AGREEMENT (this
"ASSIGNMENT AGREEMENT") is entered into as of______________
between________________________(the "ASSIGNOR") and
(the "ASSIGNEE"). Reference is made to the credit agreement
described in ANNEX I hereto (the "CREDIT AGREEMENT").
Capitalized terms used herein and not otherwise defined shall
have the meanings ascribed to them in the Credit Agreement.
1. In accordance with the terms and conditions of
SECTION 9.6 of the Credit Agreement, the Assignor hereby sells and
assigns to the Assignee, and the Assignee hereby purchases and assumes
from the Assignor without recourse and without representation or
warranty (except as provided in this Assignment Agreement), that
interest in and to the Assignor's rights and obligations under
the Loan Documents as of the date hereof with respect to the
Obligations owing to the Assignor to the extent specified on
ANNEX I.
2. The Assignor (a) represents and warrants that (i) it
is the legal and beneficial owner of the interest being assigned by
it hereunder and that such interest is free and clear of any adverse
claim and (ii) it has full power and authority, and has taken all
action necessary, to execute and deliver this Assignment
Agreement and to consummate the transactions contemplated hereby;
(b) makes no representation or warranty and assumes no
responsibility with respect to (i) any statements,
representations or warranties made in or in connection with the
Loan Documents, or (ii) the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Loan
Documents or any other instrument or document furnished pursuant
thereto; (c) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of
Borrower or the performance or observance by Borrower of any of
its obligations under the Loan Documents or any other instrument
or document furnished pursuant thereto, and (d) represents and
warrants that the amount set forth as the Purchase Price on ANNEX
I represents the amount owed by Borrower to Assignor with respect
to Assignor's share of the Loans assigned hereunder, as reflected
on the Assignor's books and records.
3. The Assignee represents and warrants that (a) it
has full power and authority, and has taken all action necessary,
to execute and deliver this Assignment Agreement and to consummate
the transactions contemplated hereby and (b) that this Assignment
Agreement has been duly authorized, executed and delivered by the
Assignee and that this Assignment Agreement constitutes a legal,
valid and binding obligation of the Assignee, enforceable in
accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, moratorium or other similar
laws affecting creditors' rights generally and by general
equitable principles.
4. The Assignee (a) confirms that it has received copies
of the Credit Agreement and the other Loan Documents, together with
copies of the financial statements referred to therein and such
other documents and information as it has deemed appropriate to
make its own credit analysis and decision to enter into this
Assignment Agreement and that it is not relying upon any
representation, warranty or statement (except any such representation,
warranty or statement expressly set forth in this Assignment Agreement);
(b) agrees that it will, independently and without reliance upon Agent,
Assignor or any other Lender based upon such documents and
information as it shall deem appropriate at the time, continue to make
its own credit decisions in taking or not taking any action under the
Loan Documents; (c) appoints and authorizes the Agent to take such
action as agent on behalf and to exercise such powers under the
Loan Documents as are delegated to the Agent by the terms thereof,
together with such powers as are reasonably incidental thereto;
(d) agrees that it will perform in accordance with their terms all of
the obligations which by the terms of the Loan Documents are required
to be performed by it as a Lender; and (e) and attaches the forms
prescribed by the Internal Revenue Service of the United States
certifying as to the Assignee's status for purposes of
determining exemption from United States withholding taxes with
respect to all payments to be made to the Assignee under the
Credit Agreement or such other documents as are necessary to
indicate that all such payments are subject to such rates at a
rate reduced by an applicable tax treaty. The Assignor shall
have no duty or responsibility either initially or on a
continuing basis to make any such investigation or any such
appraisal on behalf of the Assignee or to provide the Assignee
with any credit or other information with respect thereto,
whether coming into its possession before the making of the
initial extension of credit under the Credit Agreement or at any
time or times thereafter.
5. Following the execution of this Assignment Agreement
by the Assignor and Assignee, the Assignor will deliver this Assignment
Agreement to the Agent for recording by the Agent. The effective
date of this Assignment (the "SETTLEMENT DATE") shall be the
later to occur of (a) the date of the execution and delivery
hereof by the Assignor and the Assignee, and (b) the date
specified in ANNEX I.
6. As of the Settlement Date (a) the Assignee shall be a
party to the Credit Agreement and, to the extent of the interest
assigned pursuant to this Assignment Agreement, have the rights
and obligations of the Lender thereunder and under the other Loan
Documents, and (b) the Assignor shall, to the extent of the
interest assigned pursuant to this Assignment Agreement,
relinquish its rights and be released from its obligations under
the Credit Agreement and the other Loan Documents.
7. Upon the Settlement Date, Assignee shall pay to Assignor
the Purchase Price (as set forth in ANNEX I). From and after the
Settlement Date, the Agent shall make all payments that are due
and payable to the holder of the interest assigned hereunder
(including payments of principal, interest, fees and other
amounts) to Assignor for amounts which have accrued up to but
excluding the Settlement Date and to Assignee for amounts which
have accrued from and after the Settlement Date. On the
Settlement Date, Assignor shall pay to Assignee an amount equal
to the portion of any interest, fee, or any other charge that was
paid to Assignor prior to the Settlement Date on account of the
interest assigned hereunder and that are due and payable to
Assignee with respect thereto, to the extent that such interest,
fee or other charge relates to the period of time from and after
the Settlement Date.
8. This Assignment Agreement may be executed in
counterparts and by the parties hereto in separate counterparts, each
of which when so executed and delivered shall be an original, but all
of which shall together constitute one and the same instrument.
This Assignment Agreement may be executed and delivered by
telecopier or other facsimile transmission all with the same
force and effect as if the same were a fully executed and
delivered original manual counterpart.
9. THIS ASSIGNMENT AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have caused this
Assignment Agreement and Annex I hereto to be executed by their
respective officers, as of the first date written above.
[NAME OF ASSIGNOR]
a ___________________,
as Assignor
By:
Name:
Title:
[NAME OF ASSIGNEE]
a ___________________,
as Assignee
By:
Name:
Title:
ANNEX FOR ASSIGNMENT AND ASSUMPTION
ANNEX I
1. Borrower: Cadiz Inc. and Cadiz Real Estate LLC
2. Name and Date of Credit Agreement:
Credit Agreement, dated as of June __, 2006 (as
amended, the "CREDIT AGREEMENT"), by and among
Cadiz Inc. and Cadiz Real Estate LLC, as borrowers
(the "BORROWER"), the lenders party thereto,
Peloton Partners LLP, as administrative agent (the
"AGENT").
3. Date of Assignment Agreement:
4. Amounts:
b. Assigned Amount of Tranche A Term Loan $_____________
a. Assigned Amount of Tranche B Term Loan $_____________
5. Settlement Date:
6. Purchase Price $_____________
7. Notice and Payment Instructions, etc.
Assignee:____________________ Assignor:___________________
8. Agreed and Accepted:
[ASSIGNOR] [ASSIGNEE]
By: By:
Title: Title:
--------------------------------------------------------------------------------
EXHIBIT F
____________________, 2006
Peloton Partners LLP, as Administrative Agent
00 Xxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxx X0X 0XX
Lenders to the Credit Agreement
Re: CADIZ INC.; CADIZ REAL ESTATE LLC
Dear Gentlemen:
We have acted as counsel to Cadiz Inc. ("Cadiz") and as
special counsel to Cadiz Real Estate LLC ("CRE") (individually, a
"Borrower" and collectively, the "Borrowers"), in connection with
the Credit Agreement dated as of ________________, 2006, (the
"Credit Agreement") between the Borrowers and Peloton Partners
LLP (the "Agent") and those certain transactions described,
contemplated, or referred to in the Credit Agreement. This
opinion is delivered to you pursuant to Section 4.1(k) of the
Credit Agreement. Capitalized terms not otherwise defined herein
are used herein as defined in the Credit Agreement.
In connection with this opinion, we have (i) investigated
such questions of law, (ii) examined such corporate documents and
records of Borrowers, certificates of public officials and other
documents, and (iii) received such information from officers,
managers and representatives of Borrowers, as we have deemed
necessary for the purpose of this opinion. We have examined,
among other documents, the following documents:
(a) a copy of the Credit Agreement;
(b) a copy of the Security Agreement;
(c) a copy of the Mortgage;
(d) a copy of any other Security Documents;
(e) a copy of any other Loan Documents;
(f) a copy of the CRE Amendment;
(g) a copy of the Registration Rights Agreement;
(h) a copy of the Purchaser Certificate; and
(i) a copy of the Form UCC1 financing statements
naming the Borrowers as debtors and the Agent, for the
benefit of the Lenders and the Agent, as secured party (the
"Financing Statements") to be filed with the Secretary of
State of the State of Delaware (the "UCC Filing Office").
The agreements, instruments and other documents referred to
in the foregoing lettered clauses are referred to
collectively as the "Transaction Documents".
In such examination, we have assumed without any inquiry,
investigation or verification the genuineness of all signatures,
the authenticity of all documents submitted to us as originals
and the conformity to authentic original documents of all
documents submitted to us as certified, conformed or photostatic
copies. We have also assumed, without any inquiry, investigation
or verification that each party (other than Borrowers) to any
documents has full right, power, authority and capacity to enter
into the applicable document, that all such documents have been
duly authorized, executed and delivered by the applicable parties
thereto (other than Borrowers), and are valid, binding and
enforceable upon the applicable parties (other than Borrowers),
and that each document constitutes the complete agreement of all
parties thereto, with respect to the subject matter thereof.
With respect to our opinion in paragraph 8, we have assumed that
the Agent has not entered into any agreement with any party other
than Borrowers or otherwise taken any action, other than any
action involving Borrowers, which would result in the imposition
of any Lien or encumbrance on the shares of Common Stock issuable
upon the conversion of the Loans in accordance with the terms of
the Credit Agreement.
As to questions of fact material to our opinions, we have
relied, to the extent that relevant facts were not independently
established by us, and to the extent such reliance is reasonable,
on certificates of public officials and certificates, oaths and
declarations of officers and other representatives of Borrowers.
To the extent that any conclusion of law contained in this
opinion is based upon underlying facts, our opinion is limited to
our actual knowledge, with due inquiry, of such underlying facts.
We have assumed with your permission that the Security
Documents have been filed in the appropriate public records.
We have assumed with your permission that the Lender (and
any subsequent holder or assignee of the Obligations) is an
exempt lender as defined by California usury law.
We have not made or undertaken to make any investigation of
the condition of title to the properties of Borrowers which are
the subject of the Transaction Documents and we express no
opinion with respect to the title, or the priority of any lien or
interest created with respect to such properties.
We offer no opinion as to any matter or any law not
expressly contained in this opinion.
Our opinions as set forth herein speak solely as of date
hereof.
Based on and subject to the above, and subject to the
assumptions, limitations, qualifications, exceptions and
reservations set forth herein, it is our opinion that:
1. Cadiz is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of
Delaware and, except where the failure to do so, individually or
in the aggregate, could not reasonably be expected to result in a
Material Adverse Effect, is qualified to do business in, and is
in good standing in, every jurisdiction where such qualification
is required.
2. CRE is a limited liability company duly formed,
validly existing and in good standing under the laws of the State
of Delaware and, except where the failure to do so, individually
or in the aggregate, could not reasonably be expected to result
in a Material Adverse Effect, is qualified to do business in, and
is in good standing in, every jurisdiction where such
qualification is required.
3. Each of the Transaction Documents to which either
Borrower is a party has been duly authorized by all necessary
corporate action on the part of such Borrower and has been duly
executed and delivered on behalf of such Borrower, and the
performance by either Borrower, as applicable, of its obligations
thereunder does not contravene (i) the Borrower's charter or
bylaws, (ii) to the best of our knowledge, with due inquiry,
which inquiry is limited to matters for which we have been
engaged by the Borrowers, any law, rule or regulation applicable
to the Borrowers (including, without limitation, Regulation X of
the Board of Governors of the Federal Reserve System) or (iii) to
the best of our knowledge, with due inquiry, which inquiry is
limited to matters for which we have been engaged by the
Borrowers, any contractual or legal restriction binding on or
affecting either Borrower.
4. To the best of our knowledge, with due inquiry,
which inquiry is limited to matters for which we have been
engaged by the Borrowers, no authorization, order, license,
franchise, consent or approval or other action by, and no notice
to or registration or filing with, any governmental authority or
regulatory body in a State or any political subdivision thereof
is required for (i) the due execution, delivery, recordation,
filing or performance by the Borrower of their obligations under
the Transaction Documents; (ii) the continued effectiveness,
enforceability, perfection and priority of the liens and other
rights granted by the Security Documents; or (iii) the perfection
of or the exercise by Lender of its rights under any Loan
Documents (except for recordation of all recordable documents
executed pursuant to the Transaction Documents and otherwise as
specifically set forth in the Transaction Documents).
5. Each of the Transaction Documents to which a
Borrower is a party is the valid and binding obligation of such
Borrower, enforceable against such Borrower in accordance with
its terms.
6. Except for the matters disclosed in the
Transaction Documents or in public filings made by Cadiz with the
U.S. Securities and Exchange Commission, there is no pending or,
to the best of our knowledge after due inquiry, threatened action
or proceeding against either Borrower before any court,
governmental agency or arbitrator which is likely to have a
materially adverse effect upon the financial condition or
operations of either Borrower.
7. The Mortgage creates a valid security interest in
favor of the Agent on the real property covered by such Mortgage,
each such Mortgage creates a valid security interest in favor of
the Agent in any goods located or to be located thereon which now
or may hereafter constitute "fixtures" within the meaning of
Article 9 of the California Commercial Code ("UCC") (such goods
being herein referred to as the "Fixtures"), each Mortgage
creates a valid security interest in favor of the Agent in the
property covered thereby (other than Fixtures) which is subject
to the UCC (the "Non-Fixture Personal Property"), in each case as
security for the Obligations.
8. The shares of Common Stock issuable upon
conversion of the Loans pursuant to the terms of the Credit
Agreement have been duly authorized and reserved for issuance by
Cadiz and, upon due conversion of the Loans in accordance with
the terms of the Credit Agreement, said Common Stock will be
validly issued, fully paid and non-assessable, free and clear of
any Liens or encumbrances.
9. All membership interests in CRE have been duly
authorized by all necessary limited liability company action on
the part of CRE and, upon issuance in accordance with the CRE LLC
Agreement, will be validly issued, fully paid and non-assessable.
The membership interests of CRE are not subject to any preemptive
rights or rights of first refusal, except as set forth in the CRE
LLC Agreement or under applicable law.
10. Assuming the accuracy of the representations of
purchasers contained in the Purchaser's Certificate, the offer
and sale of the Loans under the circumstances contemplated by the
Credit Agreement constitute exempt transactions under the
Securities Act and applicable state law.
11. Neither Borrower is (a) an "investment company" as
defined in, or subject to regulation under, the Investment
Company Act of 1940 or (b) a "holding company" as defined in, or
subject to regulation under, the Public Utility Holding Company
Act of 1935.
12. The security interest granted by the Borrowers in
favor of the Agent for the benefit of the Lenders and the Agent
in the Collateral described in the Security Agreement securing
the performance of the obligations purported to be secured
thereby will, upon the due filing of the Financing Statements in
the UCC Filing Office, be perfected to the extent that a security
interest in such Collateral can be perfected by the filing of a
UCC-1 financing statement in such governmental filing office.
Our opinions set forth above are subject to the
qualifications set forth in (i), (ii) (iii) and (iv) below:
(i) In the case of the Fixtures and the Non-
Fixture Personal Property, Article 9 of the UCC requires the
filing of continuation statements within the period of six months
prior to the expiration of five years from the date of the
original filings, in order to maintain the effectiveness of the
filings referred to in the paragraph. In the event either of the
Borrowers changes its "location" as defined in Section 9307 of
the UCC or effects a transfer of the Collateral to another person
so as to cause the application of the law of a jurisdiction other
than Delaware to the perfection of the security interest in the
Collateral, such security interest will become unperfected as
against purchasers of the Collateral for value, unless a new
financing statement is properly filed in the appropriate
jurisdiction within the time frame prescribed by Section 9316 of
the UCC. In the event either of the Borrowers changes its name
or corporate structure to such an extent so as to make the
Financing Statements seriously misleading under Section 9506 of
the UCC, the Financing Statements will not be effective to
perfect a security interest in Collateral acquired by the
Borrowers more than four months after the change, unless an
amendment or amendments to the Financing Statements which render
the Financing Statements not seriously misleading are properly
filed before the expiration of four months after such change.
(ii) In the case of property which becomes
property covered by a Mortgage after the date hereof, Section 552
of the Federal Bankruptcy Code limits the extent to which
property acquired by a debtor after the commencement of a case
under the Federal Bankruptcy Code may be subject to a security
interest arising from a security agreement entered into by a
debtor before the commencement of such case.
(iii) The opinions expressed herein as to enforceability
are qualified to the extent that enforcement may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium, or other laws of general application
relating to or affecting the enforcement of the rights of creditors
or for the relief of debtors generally. In addition, our opinions
expressed herein as to enforceability (i) are subject to general
principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law or in a bankruptcy
proceeding), and (ii) are subject to limitations on the availability
of equitable relief including specific performance.
(iv) We express no opinion with respect to the
enforceability of any provision of the Transaction Documents
which purports to waive the Borrowers' right to trial by jury.
In Grafton Partners L.P. v. Superior Court, 36 Cal. 4th 944
(2005), the California Supreme Court held that pre-dispute jury
trial waivers not authorized by statute are unenforceable under
California law.
Our opinions expressed below are expressed with respect only
to the laws of the State of California, the federal laws of the
United States, the Delaware General Corporation Law and the
Delaware Limited Liability Company Act, and are expressed only as
to the outcome that would pertain were the laws of the State of
California, the federal laws of the United States and the
Delaware General Corporation Laws the governing laws applicable
to the relevant issue. We express no opinion as to whether the
laws of any particular jurisdiction apply. We call your
attention to the fact that the Transaction Documents are stated
therein to be governed by New York law and that we are not
members of the Bar of the State of New York. We are not admitted
to practice in any state other than the State of California, and
we express no opinion with respect to the applicability thereto,
or the effect thereon, of the laws of any other jurisdiction
(other than the Delaware General Corporation Law and the Delaware
Limited Liability Company Act), or as to any matters of municipal
law or the laws of any local agencies within any state. Our
opinions and confirmations herein are based upon our
consideration of only those statutes, rules and regulations
which, in our experience, are normally applicable to loan
transactions, provided that no opinion or confirmation is
expressed in paragraph 3 with respect to state securities laws,
tax laws, antitrust or trade regulation laws, insolvency or
fraudulent transfer laws, antifraud laws or compliance with
fiduciary duty requirements. We express no opinion as to any
state or federal laws or regulations applicable to the subject
transaction because of the nature or extent of the business of
any parties to the Transaction Documents other than the
Borrowers.
Other than the addressee hereof and its counsel, no one is
entitled to rely on this opinion.
Very truly yours,
STEPHAN, ORINGHER, XXXXXXX,
XXXXXXXX & XXXXXX, P.C.
--------------------------------------------------------------------------------
EXHIBIT G
REGISTRATION RIGHTS AGREEMENT
by and among
CADIZ INC. and
PELOTON PARTNERS LLP,
On behalf of
EACH HOLDER OF REGISTRABLE SECURITIES
_______________, 2006
TABLE OF CONTENTS
Page
Section 1. Certain Definitions. . . . . . . . . . . . . . . . 1
Section 2. Demand Registration Rights. . . . . . . . . . . . . 4
Section 3. Piggy-Back Registration Rights. . . . . . . . . . . 7
Section 4. Selection of Underwriters. . . . . . . . . . . . . .8
Section 5. Blackout Periods. . . . . . . . . . . . . . . . . . 9
Section 6. Holdback. . . . . . . . . . . . . . . . . . . . . . 9
Section 7. Ineligibility to Effect a Demand Registration. . . 10
Section 8. Liquidated Damages. . . . . . . . . . . . . . . . .10
Section 9. Registration Procedures. . . . . . . . . . . . . . 11
Section 10. Registration Expenses. . . . . . . . . . . . . . . 15
Section 11. Rule 144. . . . . . . . . . . . . . . . . . . . . .15
Section 12. Covenants of Holders. . . . . . . . . . . . . . . .15
Section 13. Indemnification; Contribution. . . . . . . . . . . 15
Section 14. Injunctions. . . . . . . . . . . . . . . . . . . . 18
Section 15. Amendments and Waivers. . . . . . . . . . . . . . .18
Section 16. Notices. . . . . . . . . . . . . . . . . . . . . . 18
Section 17. Successors and Assigns. . . . . . . . . . . . . . .19
Section 18. Representations and Warranties of the Company. . . 19
Section 19. Counterparts. . . . . . . . . . . . . . . . . . . .20
Section 20. Descriptive Headings. . . . . . . . . . . . . . . .20
Section 21. Choice of Law. . . . . . . . . . . . . . . . . . . 20
Section 22. Severability. . . . . . . . . . . . . . . . . . . .20
Section 23. Entire Agreement. . . . . . . . . . . . . . . . . .21
Section 24. Further Actions; Reasonable Best Efforts. . . . . .21
REGISTRATION RIGHTS AGREEMENT
This Agreement (this "AGREEMENT") is made as of this ___
day of _______________, 2006 by and among Cadiz Inc., a Delaware
corporation (the "COMPANY"), Peloton Partners LLP ("PELOTON"), as
administrative agent on behalf of each holder of Registrable
Securities (as defined herein) ("HOLDERS").
RECITALS:
WHEREAS, the Company has entered into a Credit
Agreement dated June __, 2006 (the "Credit Agreement) with
Peloton, as administrative agent, whereby the several lenders
from time to time parties thereto shall make secured loans to the
Company in the aggregate principal amount of $36,375,000, which
secured loans are convertible into shares of the Company's common
stock, par value $.01 per share (the "COMMON STOCK"), upon the
terms and subject to the limitations and conditions set forth in
the Credit Agreement; and
WHEREAS, the Company has agreed to grant to the Holders
the registration rights described in this Agreement with respect
to the Registrable Securities.
NOW THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
Section 1. CERTAIN DEFINITIONS
For purposes of this Agreement, the following terms
have the following meanings:
(a) "AFFILIATE" has the meaning ascribed to such term in
Rule 12b-2 of the Exchange Act.
(b) "AGREEMENT" has the meaning specified in the Preamble
hereof.
(c) "BENEFICIALLY OWN" has the meaning ascribed to such
term in Rule 13d-3 of the Exchange Act.
(d) "BLACKOUT PERIOD" has the meaning specified in Section
5 hereof.
(e) "BOARD" has the meaning specified in Section 5 hereof.
(f) "BUSINESS DAY" means a day other than a Saturday,
Sunday or other day on which commercial banks are authorized to close
under the laws of the State of New York and the United States of
America.
(g) "COMMON STOCK" has the meaning specified in the Recitals
hereof.
(h) "COMPANY" has the meaning specified in the Preamble hereof.
Page 1
(i) "DEMAND" has the meaning specified in Section 2(a) hereof.
(j) "DEMAND REGISTRATION" has the meaning specified in
Section 2(a) hereof.
(k) "EXCHANGE ACT" means the Securities Exchange Act of 1934,
as amended, and the rules and regulations of the SEC thereunder, all
as the same shall be in effect at the time that reference is made
thereto.
(l) "FAIR MARKET VALUE" means, with respect to the securities
of the Company that trade in a liquid market such as NASDAQ or the
New York Stock Exchange, the average of the closing price as best
established for the 30-day period prior to the date on which the
Fair Market Value is determined, and with respect to the
securities of the Company that do not trade in a liquid market
such as NASDAQ or the New York Stock Exchange, the fair market
value of such securities as determined by the Board in good
faith.
(m) "HOLDBACK PERIOD" has the meaning specified in
Section 6(a) hereof.
(n) "HOLDER" has the meaning specified in the Preamble hereof,
and shall include any person to whom the rights of a Holder under
this Agreement have been transferred in accordance with the
provisions of this Agreement.
(o) "INELIGIBILITY ACCOMMODATION PERIOD" has the meaning
specified in Section 7 hereof.
(p) "INSPECTORS" has the meaning specified in Section 9(k)
hereof.
(q) "LIQUIDATED DAMAGES" has the meaning specified in Section
8(a) hereof.
(r) "NASD" means the National Association of Securities
Dealers, Inc.
(s) "NASDAQ" means the Nasdaq Stock Market, Inc.
(t) "NEW NOTE" means that certain new note or new notes in the
principal amount of $36.375 million.
(u) "NYSE" means the New York Stock Exchange, Inc.
(v) "OTHER RIGHTS HOLDERS" has the meaning specified in
Section 2(f) hereof.
(w) "PELOTON" has the meaning specified in the Preamble hereof.
Page 2
(x) "PERSON" means any individual, firm, partnership,
corporation (including, without limitation, a business trust),
limited liability company, joint stock company, trust,
unincorporated association, joint venture or other entity, and
shall include any successor (by merger or otherwise) of any such
entity.
(y) "PIGGY-BACK REQUEST" has the meaning specified in
Section 3(b) hereof.
(z) "PIGGY-BACK RIGHTS" has the meaning specified in
Section 3(a) hereof.
(aa) "PROSPECTUS" means the prospectus included in any
Registration Statement, as amended or supplemented by any
prospectus supplement, with respect to the terms of the offering
of any portion of the Registrable Securities covered by any
Registration Statement and by all other amendments and
supplements to the prospectus, including post-effective
amendments and all material incorporated by reference in such
prospectus.
(bb) "RECORDS" has the meaning specified in Section 9(k) hereof.
(cc) "REGISTRABLE SECURITIES" means any and all of (i) the
shares of Common Stock of the Company received by Holders upon
conversion of the New Note and (ii) any securities issuable or
issued or distributed in respect of any of the securities
identified in clause (i) by way of stock dividend or stock split
or in connection with a combination of shares, recapitalization,
reorganization, merger, consolidation or otherwise. Registrable
Securities shall cease to be Registrable Securities when and to
the extent that they shall have (i) been Transferred by Holders
pursuant to an effective Registration Statement; or (ii) ceased
to be outstanding. Notwithstanding anything herein to the
contrary, the Company shall not be required to have any of the
Registrable Securities registered (or maintain the effectiveness
of any prior registration of Registrable Securities) 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 making a Demand in the reasonable
judgment of such Holder), or counsel for such Holder,
knowledgeable and experienced in federal securities matters (said
counsel to be acceptable to the Company in the Company's
reasonable judgment), all Registrable Securities held by such
Holder (and its Affiliates) may be sold pursuant to Rule 144
under the Securities Act during any ninety (90) day period.
(dd) "REGISTRATION DEFAULT" has the meaning specified in
Section 8(a) hereof.
(ee) "REGISTRATION EXPENSES" means any and all reasonable
out-of-pocket expenses incident to performance of or compliance with
this Agreement, including, without limitation, (i) all SEC, NASD
and securities exchange registration and filing fees,
Page 3
(ii) all fees and expenses of complying with state securities or "blue
sky" laws (including fees and disbursements of counsel for any
underwriters in connection with blue sky qualifications of the
Registrable Securities), (iii) all processing, printing, copying,
messenger and delivery expenses, (iv) all fees and expenses
incurred in connection with the listing of the Registrable
Securities on any securities exchange pursuant to Section 9(h)
hereof, (v) all fees and disbursements of counsel for the Company
and of its independent public accountants (including the expenses
of any special audits or comfort letters), and (vi) the
reasonable fees and expenses of any special experts retained in
connection with a registration under this Agreement, but
excluding (A) any underwriting discounts and commissions and
transfer taxes relating to the sale or disposition of Registrable
Securities pursuant to a Registration Statement, and (B) any
fees, expenses or disbursements of counsel and other advisers to
the Holders and any Other Rights Holders, other than the
reasonable fees and disbursements of one counsel to all Holders.
(ff) "REGISTRATION STATEMENT" means any registration
statement (including a Shelf Registration) of the Company referred
to in Section 2 or Section 3 hereof, including any Prospectus,
amendments and supplements to any such registration statement,
including post-effective amendments, and all exhibits and all
material incorporated by reference in any such registration
statement.
(gg) "RULE 144" means Rule 144 under the Securities Act,
or any similar or successor rules or regulations hereafter adopted by
the SEC.
(hh) "SEC" means the United States Securities and Exchange
Commission and any successor federal agency having similar
powers.
(ii) "SECURITIES ACT" means the Securities Act of 1933, as
amended, and the rules and regulations of the SEC thereunder, all
as the same shall be in effect at the time that reference is made
thereto.
(jj) "SHELF REGISTRATION" means a "shelf" registration
statement on an appropriate form pursuant to Rule 415 under the
Securities Act (or any successor rule that may be adopted by the SEC).
(kk) "TRANSFER" means, with respect to any security, any
direct or indirect sale, transfer, assignment, hypothecation, pledge
or any other disposition of such security or any interest therein.
(ll) "UNCONTROLLED EVENT" has the meaning specified in
Section 5 hereof.
(mm) "UNDERWRITTEN OFFERING" means an offering in which
securities of the Company are sold to an underwriter for
reoffering to the public pursuant to an effective Registration
Statement under the Securities Act.
Section 2. DEMAND REGISTRATION RIGHTS
Page 4
(a) Any Holder may, subject to the terms hereof, request
the Company in writing (each such request, a "DEMAND") to effect a
registration with the SEC under and in accordance with the
provisions of the Securities Act of all or part of the
Registrable Securities Beneficially Owned by such Holder (a
"DEMAND REGISTRATION"). The Demand shall specify the aggregate
number of shares of Registrable Securities requested to be so
registered on behalf of such Holder. For purposes of this
Agreement, Holders shall be deemed to have made a Demand with
respect to all of the Registrable Securities effective as of the
date of this Agreement (the "CLOSING DEMAND"). Any request
received by the Company from a Holder as provided in this
Section 2(a) shall be deemed to be a "DEMAND" for purposes of
this Agreement, unless the Company, in accordance with the terms
of this Agreement, shall have notified such Holder in writing,
prior to its receipt of such request from such Holder, of its
intention to register securities with the SEC, in which case the
request from such Holder shall be governed by Section 3 hereof,
not this Section 2. All Demands to be made by a Holder pursuant
to this Section 2(a) and any notifications by the Company
pursuant to the preceding sentence must be based upon a good
faith intent of such Holder or the Company, as the case may be,
to effect the sale of securities pursuant to such registrations
as promptly as practicable after the date of the Demand or
notification, as the case may be, in accordance with the terms of
this Agreement.
(b) After receipt of a Demand from a Holder, the Company
shall use its best efforts to prepare and file a Registration Statement
for the Registrable Securities so requested to be registered.
With respect to the Closing Demand, the Company shall use its
best efforts to prepare and file a Registration Statement for the
Registrable Securities within 30 days and use its reasonable best
efforts to cause such Registration Statement to become effective
within 90 days (or 120 days in the event the Registration
Statement is reviewed by the SEC); provided, however, that the
failure of such Registration Statement to become effective within
180 days shall constitute a default under this Agreement. With
respect to any other Demand, the Company shall use its best
efforts to prepare and file a Registration Statement for the
Registrable Securities within 60 days and use its reasonable best
efforts to cause such Registration Statement to become effective
within 120 days (or 150 days in the event the Registration
Statement is reviewed by the SEC).
(c) Notwithstanding anything in this Agreement to the
contrary, the Company shall not be required to file a Registration
Statement for Registrable Securities pursuant to a Demand:
(i) if the Company shall have previously effected a
Demand Registration at any time during the immediately preceding
ninety (90) day period;
(ii) if the Company shall have previously effected a
registration of Registrable Securities to be issued and sold by
the Company at any time during the immediately preceding ninety
(90) day period (other than a registration on Form S-4,
Page 5
Form S-8 or Form S-3(with respect to dividend reinvestment plans
and similar plans) or any successor forms thereto);
(iii) during the pendency of any Blackout Period;
(iv) during the pendency of any Ineligibility Accommodation
Period;
(v) if the Company shall have previously effected four (4)
Demand Registrations pursuant to the terms of this Agreement;
(vi) if the aggregate value of the Registrable Securities to
be registered pursuant to a Demand Registration does not equal at
least $2,500,000; or
(vii)if the Registrable Securities that are the subject of
the Demand are the subject of an effective Shelf Registration.
(d) The Company shall be permitted to satisfy its
obligations under this Section 2 by amending (to the extent permitted
by applicable law) any Shelf Registration previously filed by the
Company under the Securities Act so that such Shelf Registration
(as amended) shall permit the disposition (in accordance with the
intended methods of disposition specified as aforesaid) of all of
the Registrable Securities for which a Demand shall have been
made. Notwithstanding the foregoing, the Company shall have no
obligation under this Agreement to file any Shelf Registration.
(e) A requested Demand Registration shall not be deemed to
count as a Demand Registration described in Section 2(c)(ii) hereof if:
(i) such registration has not been declared effective by the
SEC or does not become effective in accordance with the Securities
Act, (ii) after becoming effective, such registration is
materially interfered with by any stop order, injunction or
similar order or requirement of the SEC or other governmental
agency or court for any reason not attributable to a Holder and
does not thereafter become effective, (iii) the conditions to
closing specified in any underwriting agreement entered into in
connection with such Demand Registration are not satisfied or
waived other than by reason of an act or omission on the part of
a Holder, or (iv) the Holder making a Demand shall have withdrawn
its Demand or otherwise determined not to pursue such
registration, PROVIDED that, in the case of this clause (iv),
such Holder shall have reimbursed the Company for all of its out-
of-pocket expenses incurred in connection with such Demand.
(f) If the lead managing underwriters of an Underwritten
Offering made pursuant to a Demand shall advise the Holder making
a Demand in writing (with a copy to the Company) that marketing
or other factors require a limitation on the number of shares of
Registrable Securities which can be sold in such offering within
a price range acceptable to the Holder, then (i) if the Company
shall have elected to include any
Page 6
securities to be issued and sold by the Company or sold on behalf of
any of the Company's security holders excluding such Holder ("OTHER
RIGHTS HOLDERS") in such Registration Statement, then the Company
shall reduce the number of securities the Company shall intend to
issue and sell (and, if applicable, the number of securities being
sold on behalf of the Other Rights Holders) pursuant to such
Registration Statement such that the total number of securities being
sold by each such party shall be equal to the number which can be sold
in such offering within a price range acceptable to such Holder, and
(ii) if the Company shall not have elected to include any
securities to be issued and sold by the Company or sold on behalf
of Other Rights Holders in such Registration Statement or if the
reduction referred to in the previous clause (i) shall not be
sufficient, then, the Holder shall reduce the number of
Registrable Securities requested to be included in such offering
to the number that the lead managing underwriter advises can be
sold in such offering within a price range acceptable to the
Holder. The Holder shall not be required to reduce the number of
Registrable Securities requested to be included in any such
offering until the number of securities referred to in the
previous clause (i) shall have been reduced to zero (0). A
requested Demand reduced pursuant to this Section 2(f) shall
count as a Demand Registration described in Section 2(c)(ii)
hereof. In the event that a requested Demand Registration so
reduced does not result in at least $2,500,000 in aggregate gross
sales proceeds being received by the Holder, such requested
Demand Registration shall not be deemed to count as a Demand
Registration described in Section 2(c)(ii) hereof, Provided that
Holders shall have reimbursed the Company for all of its out-of-
pocket expenses incurred in the preparation, filing and
processing of the Registration Statement.
Section 3. PIGGY-BACK REGISTRATION RIGHTS
(a) At any time on or after the date hereof, whenever the
Company shall propose to file a Registration Statement under the
Securities Act relating to the public offering of securities for
sale for cash, the Company shall give written notice to the
Holders as promptly as practicable, but in no event less than
fifteen (15) days prior to the anticipated filing thereof,
specifying the approximate date on which the Company proposes to
file such Registration Statement and the intended method of
distribution in connection therewith, and advising Holders of
their right to have any or all of the Registrable Securities then
Beneficially Owned by them included among the securities to be
covered by such Registration Statement (the "PIGGY-BACK RIGHTS").
(b) Subject to Section 3(c) and Section 3(d) hereof, in
the event that Holders have and shall elect to utilize their Piggy-
Back Rights, the Company shall include in the Registration
Statement the Registrable Securities identified by the Holders in
a written request (a "PIGGY-BACK REQUEST") given to the Company
not later than five (5) Business Days prior to the proposed
filing date of the Registration Statement. The Registrable
Securities identified in a Piggy-Back Request shall be included
in the
Page 7
Registration Statement on the same terms and conditions as
the other securities included in the Registration Statement.
(c) Notwithstanding anything in this Agreement to the
contrary, Holders shall not have Piggy-Back Rights with respect to
(i) a Registration Statement on Form S-4 or Form S-8 or Form S-3
(with respect to dividend reinvestment plans and similar plans) or
any successor forms thereto or (ii) a Registration Statement filed
in connection with an exchange offer or an offering of securities
solely to employees of the Company.
(d) If the lead managing underwriters selected by the
Company for an Underwritten Offering for which Piggy-Back Rights
are requested shall advise the Company in writing that marketing
or other factors require a limitation on the number of shares of
securities which can be sold in such offering within a price
range acceptable to the Company, then, (i) such underwriters
shall provide written notice thereof to the Holders and
(ii) there shall be included in the offering, (A) first, all
securities proposed by the Company to be sold for its account (or
such lesser amount as shall equal the maximum number determined
by the lead managing underwriters as aforesaid); (B) second, all
Registrable Securities requested to be included in such
Registration Statement by Holders, or such lesser number as shall
equal, together with the amount referred to in (A), the maximum
number determined by the lead managing underwriters as aforesaid;
and (c) third, only that number of securities requested to be
included by any Other Rights Holders that such lead managing
underwriters reasonably and in good faith believe will not
substantially interfere with (including, without limitation,
adversely affecting the pricing of) the offering of all the
securities that the Company desires to sell for its own account
and all the Registrable Securities that the Holders desire to
sell for their own accounts.
(e) Nothing contained in this Section 3 shall create
any liability on the part of the Company to the Holders if the
Company for any reason should decide not to file a Registration
Statement for which Piggy-Back Rights are available or to
withdraw such Registration Statement subsequent to its filing,
regardless of any action whatsoever Holders may have taken,
whether as a result of the issuance by the Company of any notice
hereunder or otherwise.
(f) A request made by Holders pursuant to their Piggy-
Back Rights to include Registrable Securities in a Registration
Statement shall not be deemed to be a Demand Registration
described in Section 2(c)(ii) hereof.
Section 4. SELECTION OF UNDERWRITERS
In connection with any Underwritten Offering made
pursuant to a Demand or a Piggy-Back Right, the Company may, at its
sole discretion, select a book running managing underwriter to manage
the Underwritten Offering with the prior written consent of the
Holders (which consent shall not be unreasonably withheld);
provided, however, that the Company shall have no obligation to
Page 8
use an underwriter in connection with any registration made
pursuant to a Demand or Piggy-Back Request.
Section 5. BLACKOUT PERIODS
If (i) within five (5) Business Days following the
exercise by a Holder of a Demand, the Company determines in good
faith and notifies such Holder in writing that the registration
and distribution of Registrable Securities (or the use of the
Registration Statement or related Prospectus) resulting from a
Demand received from such Holder would materially and adversely
interfere with any planned or proposed business combination
transaction involving the Company, or any pending financing,
acquisition, corporate reorganization or any other corporate
development involving the Company or any of its subsidiaries or
(ii) following the exercise by such Holder of a Demand but before
the effectiveness of the Registration Statement, (A) a business
combination, tender offer, acquisition or other corporate event
involving the Company is proposed, initiated or announced by
another Person beyond the control of the Company (an
"UNCONTROLLED EVENT"), (B) in the reasonable judgment of at least
a majority of the members of the Board of Directors of the
Company (the "BOARD"), the filing or seeking the effectiveness of
the Registration Statement would materially and adversely
interfere with such Uncontrolled Event or would otherwise
materially and adversely affect the Company and (C) the Company
promptly so notifies such Holder, then the Company shall be
entitled to (x) postpone the filing of the Registration Statement
otherwise required to be filed by the Company pursuant to
Section 2 hereof, or (y) elect that the effective Registration
Statement not be used, in either case for a reasonable period of
time, but not to exceed ninety (90) days after the date that
(1) the Demand was made (in the case of an clause (i) above) or
(2) the Company so notifies such Holder of such determination (in
the case of clause (ii) above) (each, a "BLACKOUT PERIOD"). Any
such written notice shall contain a general statement of the
reasons for such postponement or restriction on use and an
estimate of the anticipated delay. The Company shall
(a) promptly notify the Holder making a Demand of the expiration
or earlier termination of such Blackout Period and (b) use its
reasonable best efforts to effect the Demand Registration as
promptly as practicable after the end of the Blackout Period.
Section 6. HOLDBACK
(a) If (i) at any time after the date hereof, the
Company shall file a Registration Statement (other than a
registration on Form X-0, Xxxx X-0 or Form S-3 (with respect to
dividend reinvestment plans and similar plans) or any successor
forms thereto) with respect to any shares of its capital stock,
and (ii) upon reasonable prior notice the managing underwriter or
underwriters (in the case of an Underwritten Offering) advise the
Company and the Holders in writing that a sale or distribution of
Registrable Securities would adversely impact such offering, then
the Holders shall, to the extent not inconsistent with applicable
law, refrain from effecting any sale or distribution of
Registrable Securities during the period commencing on the
effective date of such Registration Statement and continuing
until the ninetieth (90th) day after the
Page 9
effective date of such Registration Statement; PROVIDED that such
restriction shall apply to the Holders only if in connection with
such offering, the underwriters require the directors and executive
officers of the Company to refrain from selling the Company's
securities for a like period and on like terms (such period, a
"HOLDBACK PERIOD").
(b) During the ninety (90) day period commencing on the
effective date of a Registration Statement filed by the Company
on behalf of Holders in connection with an Underwritten Offering
pursuant to a Demand, the Company shall not effect (except
pursuant to registrations on Form S-4 or Form S-8 or Form S-3
(with respect to dividend reinvestment plans and similar plans)
or any successor forms thereto and except pursuant to
Section 2(f) hereof) any public sale or distribution of its
securities.
Section 7. INELIGIBILITY TO EFFECT A DEMAND REGISTRATION
(a) If, following receipt of a Demand (other than the
Closing Demand) from a Holder, after giving effect to any Holdback
Period and any Blackout Period, the Company has not filed a
Registration Statement for the Registrable Securities so requested
to be registered or has not used its reasonable best efforts to cause
such Registration Statement to become effective because it is not
eligible to effect a registration pursuant to the Securities Act,
the Company shall have 60 additional days to file such
Registration Statement for the Registrable Securities so
requested to be registered or to use its reasonable best efforts
to cause such Registration Statement to become effective (such
additional days, the "INELIGIBILITY ACCOMMODATION PERIOD").
Section 8. LIQUIDATED DAMAGES
(a) The parties hereto agree that the Holders will suffer
damages if the Company fails to perform its obligations under
Section 2 or Section 3 hereof and that it would not be feasible
to ascertain the extent of such damages. Accordingly, in the
event that after a Holder has made a Demand and all Ineligibility
Accommodation Periods, Blackout Periods and Holdback Periods have
expired the Company has not filed a Registration Statement for
the Registrable Securities so requested to be registered or has
not caused such Registration Statement to become effective as
provided in Section 2(b) hereof, or has not maintained the
effectiveness of such Registration Statement as provided in
Section 9(b) hereof (such events, a "REGISTRATION DEFAULT"), then
damages ("LIQUIDATED DAMAGES") will accrue in the form of
additional interest on the New Note with respect to each 30-day
period immediately following the occurrence of such Registration
Default during which, at any point during such period, such
Registration Default is continuing, in an amount equal to 0.5%
multiplied by the initial principal amount of the New Note. Such
additional interest shall continue to accrue until such
Registration Default has been cured; PROVIDED, HOWEVER, that,
during which time at any point during such period, any Holder who
has made a Demand that is the subject of a Registration Default
and who is not a payee with respect to the New Note shall be
Page 10
entitled to receive a cash payment from the Company in like
amounts no later than 30 days after each such 30-day period.
(b) The parties hereto agree that the Liquidated Damages
provided for in this Section 8 constitute a reasonable estimate
of the damages that will be suffered by Holders of Securities by
reason of the happening of any Registration Default.
Section 9. REGISTRATION PROCEDURES
If and whenever the Company shall be required to use
its reasonable best efforts to effect or cause the registration
of any Registrable Securities under the Securities Act as
provided in this Agreement, the Company shall and, with respect
to Section 9(m) and Section 9(n), the Holders shall:
(a) prepare and file with the SEC a Registration Statement
with respect to such Registrable Securities on any form for which the
Company then qualifies or that counsel for the Company shall deem
appropriate, and which form shall be available for the sale of
the Registrable Securities in accordance with the intended
methods of distribution thereof, and use its reasonable best
efforts to cause such Registration Statement to become and remain
effective;
(b) prepare and file with the SEC amendments and post-
effective amendments to such Registration Statement and such amendments
and supplements to the Prospectus used in connection therewith as may
be necessary to maintain the effectiveness of such registration
or as may be required by the rules, regulations or instructions
applicable to the registration form utilized by the Company or by
the Securities Act for a Shelf Registration or otherwise
necessary to keep such Registration Statement effective for at
least ninety (90) days (or one hundred eighty (180) days in the
case of a Shelf Registration) and cause the Prospectus as so
supplemented to be filed pursuant to Rule 424 under the
Securities Act, and to otherwise comply with the provisions of
the Securities Act with respect to the disposition of all
securities covered by such Registration Statement until the
earlier of (x) such 90th or 180th day, as the case may be, or
(y) such time as all Registrable Securities covered by such
Registration Statement shall have ceased to be Registrable
Securities (it being understood that the Company at its option
may determine to maintain such effectiveness for a longer period,
whether pursuant to a Shelf Registration or otherwise); PROVIDED,
HOWEVER, that a reasonable time before filing a Registration
Statement or Prospectus, or any amendments or supplements thereto
(other than reports required to be filed by it under the Exchange
Act), the Company shall furnish to the Holders, the managing
underwriter and their respective counsel for review and comment,
copies of all documents proposed to be filed;
(c) furnish, without charge, to the Holders and to any
underwriter in connection with an Underwritten Offering such
number of conformed copies of such Registration Statement and of
each amendment and post-effective amendment thereto (in each case
including all exhibits) and such number of copies of any
Prospectus or Prospectus supplement and such other documents as
Holders or such underwriter may
Page 11
reasonably request in order to facilitate the disposition of the
Registrable Securities by the Holders or the underwriter (the Company
hereby consenting to the use (subject to the limitations set forth in
Section 9(n) hereof) of the Prospectus or any amendment or supplement
thereto in connection with such disposition);
(d) use its reasonable best efforts to register or qualify
such Registrable Securities covered by such Registration Statement
under such other securities or "blue sky" laws of such
jurisdictions as Holders shall reasonably request, except that
the Company shall not for any such purpose be required to qualify
generally to do business as a foreign corporation in any
jurisdiction where, but for the requirements of this
Section 9(d), it would not be obligated to be so qualified, to
subject itself to taxation in any such jurisdiction, or to
consent to general service of process in any such jurisdiction;
(e) as promptly as practicable, notify the managing
underwriters (if any) and Holders, at any time when a Prospectus
relating thereto is required to be delivered under the Securities
Act within the appropriate period mentioned in Section 9(b) hereof,
of the Company's becoming aware that the Prospectus included in
such Registration Statement, as then in effect, includes an
untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances
then existing, and, as promptly as practicable, prepare and
furnish to the Holders a reasonable number of copies of an
amendment or supplement to such Registration Statement or related
Prospectus as may be necessary so that, as thereafter delivered
to the purchasers of such Registrable Securities, such Prospectus
shall not include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light
of the circumstances then existing;
(f) notify the Holders, as promptly as practicable, at
any time:
(i) when the Prospectus or any Prospectus supplement or post-
effective amendment has been filed, and, with respect to the
Registration Statement or any post-effective amendment, when the
same has become effective;
(ii) of any request by the SEC for amendments or
supplements to the Registration Statement or the Prospectus or for
additional information;
(iii)of the issuance by the SEC of any stop order suspending
the effectiveness of the Registration Statement or any order
preventing the use of a related Prospectus, or the initiation (or
any overt threats) of any proceedings for such purposes;
(iv) of the receipt by the Company of any written notification
of the suspension of the qualification of any of the Registrable
Securities for sale in any jurisdiction or the initiation (or
overt threats) of any proceeding for that purpose; and
Page 12
(v) if at any time the representations and warranties of the
Company contemplated by Section 9(i) below cease to be true and
correct in all material respects;
(g) otherwise comply with all applicable rules and
regulations of the SEC, and make available to Holders an earnings
statement that shall satisfy the provisions of Section 11(a) of the
Securities Act, PROVIDED that the Company shall be deemed to have
complied with this Section 9(g) if it shall have complied with
Rule 158 under the Securities Act;
(h) use its reasonable best efforts to cause all such
Registrable Securities to be listed on the NYSE, NASDAQ or any
other national securities exchange or automated quotation system
on which the class of Registrable Securities being registered is
then listed, if such Registrable Securities are not already so
listed and if such listing is then permitted under the rules of
such exchange, and to provide a transfer agent and registrar for
such Registrable Securities covered by such Registration
Statement no later than the effective date of such Registration
Statement;
(i) enter into agreements (including, if applicable, an
underwriting agreement and other customary agreements in the form
customarily entered into by other companies in comparable
underwritten offerings) and take all other appropriate and all
commercially reasonable actions in order to expedite or
facilitate the disposition of such Registrable Securities and in
such connection, whether or not an underwriting agreement shall
be entered into and whether or not the registration shall be an
underwritten registration:
(i) make such representations and warranties to the
Holders and the underwriters, if any, in form, substance and scope
as are customarily made by companies to underwriters in comparable
underwritten offerings;
(ii) obtain opinions of counsel to the Company and updates
thereof (which counsel and opinions shall be reasonably
satisfactory (in form, scope and substance) to the managing
underwriters) addressed to the underwriters covering the matters
customarily covered in opinions requested in comparable
underwritten offerings by the Company;
(iii)obtain "comfort letters" and updates thereof from
the Company's independent certified public accountants addressed
to the Board and the underwriters, if any, such letters to be in
customary form and covering matters of the type customarily
covered in "comfort letters" by independent accountants in
connection with comparable underwritten offerings on such date or
dates as may be reasonably requested by the managing
underwriters, or if such offering is not an Underwritten
Offering, the Board; PROVIDED, HOWEVER, that in connection with
any non-Underwritten Offering, such comfort letter shall not be
required except to the extent requested by the Board.
Page 13
(iv) provide the indemnification in accordance with the
provisions and procedures of Section 13 hereof to all parties to
be indemnified pursuant to such Section 13 and any other
indemnification customarily required in underwritten public
offerings; and
(v) deliver such documents and certificates as may be
reasonably requested by the Holders and the managing underwriters,
if any, to evidence compliance with Section 9(f) above and with any
customary conditions contained in the underwriting agreement or
other agreement entered into by the Company;
(j) cooperate with the Holders and the managing underwriter
or underwriters, if any, to facilitate, to the extent reasonable
under the circumstances, the timely preparation and delivery of
certificates representing the securities to be sold under such
Registration Statement, and enable such securities to be in such
denominations and registered in such names as the managing
underwriter or underwriters, if any, or the Holders may request
and/or in a form eligible for deposit with the Depository Trust
Company;
(k) make available to the Holders, any underwriter
participating in any disposition pursuant to such Registration
Statement, and any attorney, accountant or other agent retained by
the Holders or such underwriter (collectively, the "INSPECTORS"),
reasonable access to appropriate officers and employees of the Company
and the Company's subsidiaries to ask questions and to obtain
information reasonably requested by such Inspector and all
financial and other records and other information, pertinent
corporate documents and properties of any of the Company and its
subsidiaries and Affiliates (collectively, the "RECORDS"), as
shall be reasonably necessary to enable them to exercise their
due diligence responsibility; PROVIDED, HOWEVER, that the Records
that the Company determines, in good faith, to be confidential
and which it notifies the Inspectors in writing are confidential
shall not be disclosed to any Inspector unless such Inspector
signs a confidentiality agreement in customary form reasonably
satisfactory to the Company or either (i) the disclosure of such
Records is necessary to avoid or correct a misstatement or
omission of a material fact in such Registration Statement, or
(ii) the release of such Records is ordered pursuant to a
subpoena or other order from a court of competent jurisdiction;
PROVIDED, FURTHER, that any decision regarding the disclosure of
information pursuant to subclause (i) shall be made only after
consultation with counsel for the applicable Inspectors; and
PROVIDED, FURTHER, that the Holders agree that they shall,
promptly after learning that disclosure of such Records is sought
in a court having jurisdiction, give notice to the Company and
allow the Company, at the Company's expense, to undertake
appropriate action to prevent disclosure of such Records;
(l) in the event of the issuance of any stop order
suspending the effectiveness of the Registration Statement or of
any order suspending or preventing the use of any related Prospectus
or suspending the qualification of any Registrable
Page 14
Securities included in the Registration Statement for sale in any
jurisdiction, the Company shall use its reasonable best efforts
promptly to obtain its withdrawal;
(m) the Holders shall furnish the Company with such
information regarding them and pertinent to the disclosure
requirements relating to the registration and the distribution
of such securities as the Company may from time to time reasonably
request in writing or as shall be required in connection with the
action to be taken by the Company hereunder; and
(n) the Holders shall, upon receipt of any notice from
the Company of the happening of any event of the kind described in
Section 9(e) hereof, forthwith discontinue disposition of
Registrable Securities pursuant to the Prospectus or Registration
Statement covering such Registrable Securities until the Holders
shall have received copies of the supplemented or amended
Prospectus contemplated by Section 9(e) hereof, and, if so
directed by the Company, the Holders shall deliver to the Company
(at the Company's expense) all copies, other than permanent file
copies then in their possession, of the Prospectus covering such
Registrable Securities current at the time of receipt of such
notice.
Section 10. REGISTRATION EXPENSES
Except as otherwise provided herein, in connection
with all registrations of Registrable Securities made pursuant to
a Demand Registration or Piggy-Back Rights, the Company shall pay
all Registration Expenses; PROVIDED, HOWEVER, that the Holders
shall pay, and shall hold the Company harmless from, (i) any
underwriting discounts and commissions and transfer taxes
relating to the sale or disposition of Registrable Securities and
(ii) any fees, expenses or disbursements of its counsel and other
advisors.
Section 11. RULE 144
From and after the date which is more than one
hundred eighty (180) days after the date hereof, the Company
shall, at all times when the Holders Beneficially Own any
Registrable Securities, take such measures and file and/or make
available such information, documents and reports as shall be
required by the SEC as a condition to the availability of
Rule 144; PROVIDED, HOWEVER, that the Company need not take any
of the foregoing actions during any Ineligibility Accommodation
Period.
Section 12. COVENANTS OF HOLDERS
Each Holder hereby covenants and agrees that it
shall not sell any Registrable Securities in violation of the
Securities Act or this Agreement.
Section 13. INDEMNIFICATION; CONTRIBUTION
(a) The Company shall indemnify and hold harmless each
Holder, its respective officers and directors, and each Person, if
any, who controls such Holder within the meaning of either Section
15 of the Securities Act or Section 20 of the Exchange Act and any
agents, representatives or advisers thereof against all losses,
Page 15
claims, damages, liabilities and expenses (including reasonable
attorneys' fees and expenses and reasonable costs of
investigation) incurred by such party pursuant to any actual or
threatened action, suit, proceeding or investigation arising out
of or based upon (i) any untrue or alleged untrue statement of
material fact contained in any Registration Statement, any
Prospectus or preliminary Prospectus, or any amendment or
supplement to any of the foregoing, (ii) any omission or alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein (in the case
of a Prospectus or a preliminary Prospectus, in light of the
circumstances then existing) not misleading, or (iii) any
violation or alleged violation by the Company of any United
States federal, state or common law rule or regulation applicable
to the Company and relating to action required of or inaction by
the Company in connection with any such registration except in
each case insofar as the same arise out of or are based upon, any
such untrue statement or omission made in reliance on and in
conformity with written information with respect to the Holders
furnished in writing to the Company by the Holders or their
counsel expressly for use therein. In connection with an
Underwritten Offering, the Company shall indemnify the
underwriters thereof, their officers, directors and agents and
each Person who controls such underwriters (within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange
Act) to the same extent as provided above with respect to the
indemnification of the Holders.
(b) Any Person entitled to indemnification hereunder
agrees to give prompt written notice to the indemnifying party
after the receipt by such indemnified party of any written notice
of the commencement of any action, suit, proceeding or investigation
or threat thereof made in writing for which such indemnified party
may claim indemnification or contribution pursuant to this
Section 13 (provided that failure to give such notification shall
not affect the obligations of the indemnifying party pursuant to
this Section 13 except to the extent the indemnifying party shall
have been materially prejudiced as a result of such failure). In
case any such action shall be brought against any indemnified
party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish,
jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel reasonably satisfactory
to such indemnified party (who shall not, except with the consent
of the indemnified party, be counsel to the indemnifying party),
and after notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party
under this Section 13 for any legal expenses of other counsel or
any other expenses, in each case subsequently incurred by such
indemnified party, in connection with the defense thereof other
than reasonable costs of investigation. Notwithstanding the
foregoing, if (i) the indemnifying party shall not have employed
counsel reasonably satisfactory to such indemnified party to take
charge of the defense of such action within a reasonable time
after notice of commencement of such action (so long as such
failure to employ counsel is not the result of an unreasonable
determination by such indemnified party that counsel selected
pursuant to the immediately preceding
Page 16
sentence is unsatisfactory) or if the indemnifying party shall not
have demonstrated to the reasonable satisfaction of the indemnified
party its ability to finance such defense, or (ii) the indemnified
party shall have reasonably concluded or been advised by counsel
that there may be legal defenses available to other indemnified
parties to such action which could result in a conflict of interest
for such counsel or prejudice the prosecution of the defenses available
to such indemnified party, then such indemnified party shall have
the right to employ separate counsel of its choosing, at the
expense of the indemnifying party. No indemnifying party shall
consent to entry of any judgment or enter into any settlement
without the consent (which consent, in the case of an action,
suit, claim or proceeding exclusively seeking monetary relief,
shall not be unreasonably withheld) of the applicable indemnified
party.
(c) If the indemnification from the indemnifying party
provided for in this Section 13 is unavailable to an indemnified
party hereunder in respect of any losses, claims, damages,
liabilities or expenses referred to therein, then the indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute
to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities and expenses in such
proportion as is appropriate to reflect the relative fault of the
indemnifying party and indemnified party in connection with the
actions or omissions which resulted in such losses, claims,
damages, liabilities and expenses, as well as any other relevant
equitable considerations. The relative fault of such
indemnifying party and indemnified party shall be determined by
reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact,
has been made by, or relates to information supplied (in writing,
in the case of the Holders) by, such indemnifying party or
indemnified party, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such
action or omission. The amount paid or payable by a party as a
result of the losses, claims, damages, liabilities and expenses
referred to above shall be deemed to include, subject to the
limitations set forth in Section 13(b) hereof, any legal and
other fees and expenses reasonably incurred by such indemnified
party in connection with any investigation or proceeding. The
parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 13(c) were determined by
pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to
above in this Section 13(c). Any underwriter's obligations in
this Section 13(c) to contribute shall be several in proportion
to the number of Registrable Securities underwritten by them and
not joint. Notwithstanding the provisions of this Section 13(c),
no underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the
Registrable Securities underwritten by it and distributed to the
public were offered to the public exceeds the amount of any
damages which such underwriter has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission
or alleged omission. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person
Page 17
who was not guilty of such fraudulent misrepresentation. If
indemnification is available under this Section 13, the
indemnifying parties shall indemnify each indemnified party to
the fullest extent provided in Section 13(a) hereof without
regard to the relative fault of such indemnifying parties or
indemnified party or any other equitable consideration provided
for in this Section 13(c).
(d) The provisions of this Section 13 shall be in
addition to any liability which any party may have to any other
party and shall survive any termination of this Agreement. The
indemnification provided by this Section 13 shall survive the
Transfer of such Registrable Securities by the Holders and shall
remain in full force and effect irrespective of any investigation
made by or on behalf of an indemnified party.
Section 14. INJUNCTIONS
EACH PARTY HERETO ACKNOWLEDGES AND AGREES THAT
IRREPARABLE DAMAGE WOULD OCCUR IN THE EVENT THAT ANY OF THE
PROVISIONS OF THIS AGREEMENT WERE NOT PERFORMED IN ACCORDANCE
WITH ITS SPECIFIC TERMS OR WERE OTHERWISE BREACHED. THEREFORE,
EACH PARTY SHALL BE ENTITLED TO AN INJUNCTION OR INJUNCTIONS TO
PREVENT BREACHES OF THE PROVISIONS OF THIS AGREEMENT AND TO
ENFORCE SPECIFICALLY THE TERMS AND PROVISIONS HEREOF IN ANY COURT
HAVING JURISDICTION, SUCH REMEDY BEING IN ADDITION TO ANY OTHER
REMEDY TO WHICH SUCH PARTY MAY BE ENTITLED AT LAW OR IN EQUITY.
Section 15. AMENDMENTS AND WAIVERS
No amendment, modification, supplement, termination,
consent or waiver of any provision of this Agreement, nor consent
to any departure herefrom, shall in any event be effective unless
the same is in writing and is signed by the party against whom
enforcement of the same is sought. Any waiver of any provision
of this Agreement and any consent to any departure from the terms
of any provision of this Agreement shall be effective only in the
specific instance and for the specific purpose for which given.
Section 16. NOTICES
All notices, consents, requests, demands and other
communications hereunder must be in writing, and shall be deemed
to have been duly given or made: (i) when delivered in person;
(ii) three (3) days after deposited in the United States mail,
first class postage prepaid; (iii) in the case of telegraph or
overnight courier services, one (1) Business Day after delivery
to the telegraph company or overnight courier service with
payment provided; or (iv) in the case of telex or telecopy or
fax, when sent, verification received; in each case addressed as
follows:
if to the Company:
Cadiz Inc.
000 X. Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Chief Financial Officer
Page 18
with a copy to:
Xxxxxx Xxxxxxxxxxx, Esq.
Stephan, Oringher, Xxxxxxx, Xxxxxxxx & Xxxxxx, P.C.
0000 Xxxxxxx Xxxx Xxxx, Xxxxx Xxxxx
Xxx Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
if to Peloton,
Peloton Partners LLP
00 Xxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxx X0X 0XX
Attention: Xxx Xxxxxx
Reference: Cadiz
Telephone: x00 00 0000 0000
Facsimile: x00 00 0000 0000
with a copy to:
Xxxxxxxxx Xxxxxxx
0000 Xxxxxxxx Xxxxxx, Xxxxx 000X
Xxxxx Xxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxx, Esq.
Section 17. SUCCESSORS AND ASSIGNS
This Agreement shall inure to the benefit of and be
binding upon the successors and assigns of each of the parties
hereto, including, without the need for an express assignment or
any consent by the Company thereto, subsequent Holders. The
Company hereby agrees to extend the benefits of this Agreement to
any Holder and any such Holder may specifically enforce the
provisions of this Agreement as if an original party hereto.
Section 18. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the other
parties hereto as follows:
(a) Such party is duly organized and validly existing
under the laws of its jurisdiction of organization.
Page 19
(b) Such party has full corporate or other organizational
power and authority to enter into this Agreement and to carry out and
perform its obligations hereunder. The execution, delivery and
performance by such party of this Agreement have been duly
authorized and approved by all necessary corporate or other
organizational action. This Agreement has been duly authorized,
executed and delivered by such party and constitutes the legal,
valid and binding obligation of such party enforceable against it
in accordance with its terms, subject to applicable bankruptcy,
insolvency and similar laws affecting creditors' rights generally
and to general principles of equity.
(c) The execution, delivery and performance by such party
of its obligations under this Agreement, and compliance by such party
with the terms and conditions hereof will not (i) violate, with
or without the giving of notice or the lapse of time, or both, or
require any registration, qualification, approval or filing
(other than registrations, qualifications, approvals and filings
that have already been made or obtained) under, any provision of
law, statute, ordinance or regulation applicable to it or any of
its subsidiaries and (ii) conflict with, or require any consent
or approval under, or result in the breach or termination of any
provision of, or constitute a default under, or result in the
acceleration of the performance of the obligations of such party
or any of its subsidiaries under, or result in the creation of
any claim, lien, charge or encumbrance upon any of the
properties, assets or businesses of such party or any of its
subsidiaries pursuant to (x) its organizational documents,
(y) any order, judgment, decree, law, ordinance or regulation
applicable to it or any of its subsidiaries or (z) any contract,
instrument, agreement or restriction to which it or any of its
subsidiaries is a party or by which it or any of its subsidiaries
or any of its respective assets or properties is bound.
Section 19. COUNTERPARTS
This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more
counterparts have been signed by each of the parties and
delivered to the other parties.
Section 20. DESCRIPTIVE HEADINGS
The descriptive headings used herein are inserted
for convenience of reference only and are not intended to be part
of or to affect the meaning or interpretation of this Agreement.
Section 21. CHOICE OF LAW
THIS AGREEMENT SHALL BE CONSTRUED, INTERPRETED AND
THE RIGHTS OF THE PARTIES DETERMINED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF CALIFORNIA, WITHOUT REGARD TO THE CONFLICTS OF
LAW PRINCIPLES THEREOF.
Section 22. SEVERABILITY
In the event that any one or more of the provisions
contained herein, or the application thereof in any
circumstances, shall be held invalid, illegal or unenforceable in
any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and
of the remaining provisions contained herein shall not be in any
way impaired thereby, it being intended that all remaining
Page 20
provisions contained herein shall not be in any way impaired
thereby.
Section 23. ENTIRE AGREEMENT
This Agreement, including any schedules, exhibits or
attachments referred to herein, is intended by the parties as a
final expression and a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of
the subject matter hereof. There are no restrictions, promises,
warranties or undertakings with respect to the subject matter
hereof, other than those set forth or referred to herein. This
Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matter.
Section 24. FURTHER ACTIONS; REASONABLE BEST EFFORTS
Each Holder shall use its reasonable best effort to take
or cause to be taken all appropriate action and to do or cause to be
done all things reasonably necessary, proper or advisable under
applicable law and regulations to assist the Company in the
performance of its obligations hereunder, including, without
limitation, the preparation and filing of any Registration
Statements pursuant to any Demand.
Page 21
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the day and year first above written.
CADIZ INC.
By:__________________________
Name:
Title:
PELOTON PARTNERS LLP
By:__________________________
Name:
Title:
--------------------------------------------------------------------------------
EXHIBIT H
PURCHASER'S CERTIFICATE
CADIZ INC. PERSONAL AND CONFIDENTIAL
000 Xxxxx Xxxxxxxx Xxxxxx,
Xxxxx 0000
Xxx Xxxxxxx, XX 00000
The undersigned is a Lender as defined in that certain
Credit Agreement (the "Agreement")] among Cadiz Inc. (the
"Company") and Cadiz Real Estate LLC ("CRE"), the Lenders from
time to time party thereto, and Peloton Partners LLC, as
administrative agent. This Purchaser's Certificate, together
with all documents and agreements relating to the Agreement and
the transactions contemplated thereby are hereafter collectively
referred to as the "Transaction Documents". The undersigned
acknowledges that the Notes are convertible into shares of the
Common Stock of the Company, in accordance with the terms of the
Agreement (the "Conversion Shares"). The Notes and the
Conversion Shares shall hereinafter be referred to collectively
as the "Securities". Terms used herein without definition shall
have the meanings ascribed to them in the Agreement.
The undersigned shall have such registration rights with
respect to the Conversion Shares as are set forth in a
Registration Rights Agreement to be executed by the Company and
the undersigned and except as provided therein, the undersigned
understands it is contemplated that the Securities will not be
registered under the Securities Act of 1933, as amended (the
"Act"), or the state blue sky laws. The undersigned also
understands that in order to assure that the offering (the
"Offering") of the Securities will be exempt from registration
under the Act and various state securities laws, each prospective
offeree must have such knowledge and experience in financial and
business matters in order that he or she is able to evaluate the
risks and merits of an investment in the Securities.
The undersigned understands that the information supplied in
this Purchaser's Certificate will be disclosed to no one other
than the officers and directors and employees of the Company
and/or to counsel, accountants, advisors, or agents for the
Company without the undersigned's consent, except as necessary
for the Company to use such information to support the exemption
from registration under the Act to be claimed for this
transaction, and except as necessary to be provided to federal,
state and local governmental and other regulatory agencies,
including the Securities and Exchange Commission (the "SEC") or
as otherwise may be required by law or legal process.
For purposes of this Certificate, the undersigned represents and
warrants that:
1. The undersigned is either experienced in or knowledgeable
with regard to the business of the Company, or is capable, by
reason of knowledge and experience in financial and business
matters in general, and investments in particular, of evaluating
the merits and risks of an investment in the Securities, and is
able to bear the economic risk of the investment and can
otherwise be reasonably assumed to have the capacity to protect
the undersigned's own interests in connection with the investment
in the Securities.
2. The undersigned is an "accredited investor", as that term
is defined in Rule 501(a) promulgated under the Act.
3. In evaluating the merits and risks of an investment in the
Securities, the undersigned has not relied upon the Company or
the Company's attorneys or advisers for legal or tax advice, and
has, if desired, in all cases sought the advice of the
undersigned's own personal legal counsel and tax advisers.
4. The acquisition of the Securities by the undersigned is
solely for the undersigned's own account, for investment, and not
with a view to, or to offer or sell for an issuer in connection
with, the distribution of the Securities, or to participate or
have a direct or indirect participation in any such undertaking,
or to participate or have a participation in the direct or
indirect underwriting of any such undertaking in violation of the
Act. The undersigned has no contract, arrangement or
understanding with the Company or any other person to participate
in the distribution of the Securities.
5. The offer to sell the Securities was directly communicated
to the undersigned, and the undersigned was able to ask questions
of and receive answers concerning the terms of this transaction.
At no time was the undersigned presented with or solicited by any
leaflet, newspaper or magazine article, radio or television
advertisement, or any other form of general advertising or
solicited or invited to attend a promotional meeting otherwise
than in connection and concurrently with such communicated offer.
6. The undersigned has heretofore received and reviewed the
Company's press releases, public filings with the SEC, and
exhibits attached thereto (the "Disclosure Documents"). In
addition to the foregoing, the undersigned has had the
opportunity to speak directly with officers of the Company
concerning the Company's business plan and operations. The
undersigned agrees to keep confidential any material non-public
information received by the undersigned as a consequence of the
foregoing.
7. The undersigned represents and warrants that it never has
been represented, guaranteed, or warranted to the undersigned by
any officer or director of the Company, their agents or employees
or any other person in connection with the Company, expressly or
by implication, any of the following:
(a) the approximate or exact length of time that the
undersigned will be required to remain as the owner of the Securities;
(b) the exact amount of profit and/or amount or type of
consideration, profits or losses (including tax benefits) to be
realized, if any, by the Company; or
(c) that the past performance or experience of the officers
and directors of the Company, or any other person connected with the
Company can predict the results of the ownership of the
Securities or the overall success of the Company.
8. The undersigned represents and warrants that the undersigned
has been advised that:
(a) the issuance of the Securities that the undersigned is
acquiring has not been registered under the Act, and the
Securities must be held indefinitely unless a transfer of the
Securities is subsequently registered under the Act or an
exemption from such registration is available;
(b) the Securities that the undersigned is acquiring are
"restricted securities" as that term is defined in Rule 144
promulgated under the Act; and
(c) any and all certificates representing the Securities
shall bear an investment legend restricting the transfer of such
Securities.
9. The undersigned understands the following:
(a) there are a number of risks relating to an investment
in the Company as set forth herein, as further described in the
Disclosure Documents and in the undersigned's direct communications
with the Company;
(b) the undersigned may lose the undersigned's entire
investment in the Securities and the Company;
(c) no federal or state agency, or any other regulatory
body, has passed upon the Securities, or an investment therein, or
made any finding or determination as to the fairness of the Offering;
and
10. The undersigned has relied solely upon this Purchaser's
Certificate, the Disclosure Documents and independent
investigations made by the undersigned or the undersigned's
representatives with respect to the undersigned's investment in
the Securities, and no oral or written representations
inconsistent with the contents of the Disclosure Documents have
been made to the undersigned by the Company or any of its
representatives.
11. The Company has made no representations to the
undersigned regarding the undersigned's reporting requirements with
the SEC related to the undersigned's ownership in the Company, and
the undersigned acknowledges and agrees that it is the responsibility
of the undersigned to ensure that it complies with any disclosure
and reporting requirements of the SEC.
12. The undersigned, if not an individual, is empowered and
duly authorized to enter into this Purchaser's Certificate under
any applicable partnership agreement, trust instrument, pension plan,
charter, articles or certificate of incorporation, bylaws or any
other like governing document. The person signing this
Purchaser's Certificate on behalf of the undersigned is empowered
and duly authorized to do so by the applicable governing
document, board of directors or stockholder resolution, or the
like.
PURCHASER'S CERTIFICATE SIGNATURE PAGE
Executed this ___ day of ______________________, 2006, at
_____________, City of ______________, ______________________
(State or Country).
By: _________________________
Name:
Title:
ACKNOWLEDGED AND AGREED TO:
CADIZ INC., a Delaware corporation
By:____________________________ Date: __________________, 2006
Name:
Title:
--------------------------------------------------------------------------------
EXHIBIT I
AMENDMENT NO. 2
TO LIMITED LIABILITY COMPANY AGREEMENT
OF
CADIZ REAL ESTATE LLC
This AMENDMENT NO. 1 TO LIMITED LIABILITY COMPANY AGREEMENT
("Amendment") is entered into as of ________, 2006. The parties to
this Amendment are hereinafter sometimes referred to collectively
as the "Parties".
RECITALS:
WHEREAS, Cadiz Inc. ("Cadiz") and X. Xxxxxxx & Associates,
Inc. (the "Independent Member") (collectively, the "Parties")
have entered into a Limited Liability Company Agreement of Cadiz
Real Estate LLC dated as of December 11, 2003, as amended by
Amendment No. 1 dated October 29, 2004 (the "LLC Agreement"); and
WHEREAS, pursuant to Section 9.1 of the LLC Agreement, for
as long as any amounts due under the terms of the New Note are
outstanding, any amendment to the LLC Agreement requires the
prior written consent of (i) the lenders holding at least 66% of
the interest in the New Note or such higher supermajority as may
be required pursuant to the terms of the New Note, and (ii) the
Independent Member; and
WHEREAS, as of the date hereof, the New Note has been repaid
in full, as a consequence of which the LLC Agreement may be
amended as of the date hereof without the prior written consent
of (i) the lenders holding at least 66% of the interest in the
New Note or such higher supermajority as may be required pursuant
to the terms of the New Note, and (ii) the Independent Member;
and
WHEREAS, the New Note has been repaid in full using proceeds
of a convertible term loan facility (the "Term Loan Facility");
and
WHEREAS, Section 3.1(b) of the LLC Agreement provides that
the Independent Member shall cease to be a Member at such time as
all amounts due under the terms of the New Note are no longer
outstanding, so that X. Xxxxxxx & Associates, Inc. has ceased to
be the Independent Member upon the payment in full of the New
Note; and
WHEREAS, Section 4.1(a) of the LLC Agreement provides that
the Independent Manager shall cease to be a member of the Board
of Managers at such time as all amounts due under the terms of
the New Note are no longer outstanding, so that X. Xxxxxxx &
Associates, Inc. has ceased to be the Independent Manager upon
the payment in full of the New Note; and
WHEREAS, it is a requirement of the Term Loan Facility that
the LLC Agreement be amended in order to provide the Lender under
the Term Loan Facility with rights and privileges similar to
those previously benefiting the Bank pursuant to the New Note;
NOW THEREFORE, in consideration of the above recitals, the
promises and the mutual representations, warranties, covenants
and agreements herein contained, the undersigned, constituting
the sole Member and all of the Managers of the LLC hereby agree
as follows:
1. AMENDMENT OF SECTION 1.1. Section 1.1 the LLC
Agreement is hereby amended as follows:
a. The definitions of "Bank" (Section 1.1(d)), "New
Note" (Section 1.1(s)), "Restructuring" (Section 1.1(u)), Sixth
Amended and Restated Credit Agreement" (Section 1.1(v)) and
"Sixth Global Amendment Agreement" (Section 1.1(w)) are hereby
deleted;
b. The reference to X. Xxxxxxx Associates, Inc.,
within the definition of "Independent Member" (Section 1.1(m)) is
hereby deleted and replaced with [____ __];
c. Section 1.1(x) is hereby added to read in its
entirety as follows:
"(x) "TERM LOAN FACILITY" shall mean all
obligations of any borrower evidenced by, or under, that certain
Credit Agreement dated as of June __, 2006 among Cadiz and the
Company, as borrowers, the several Lenders from time to time
parties thereto, and Peloton Partners LLP, as Administrative
Agent"; and
d. Section 1.1(y) is hereby added to read in its
entirety as follows:
"(y) "LENDER" shall have the same meaning as set
forth in the Term Loan Facility."
2. "NEW NOTE" REPLACED BY "TERM LOAN FACILITY". Each and
every reference to "New Note" in the LLC Agreement (other than in
Section 1.1) is hereby deleted and replaced by a corresponding
reference to "Term Loan Facility.
3. "BANK" REPLACED BY "LENDER". Each and every reference
to "Bank" in the LLC Agreement (other than in Section 1.1) is
hereby deleted and replaced by a corresponding reference to
"Lender".
4. AMENDMENT OF SECTION 9.7. Section 9.7 the LLC
Agreement is hereby amended to replace the final clause of the
first full paragraph to read "in each case addressed to Cadiz and
to the Independent Member at the last known address of such
party", and to delete the remainder of Section 9.7.
5. EXISTING LLC AGREEMENT. Except as otherwise amended or
modified herein or hereby, the provisions of the LLC Agreement
are hereby reaffirmed and shall remain in full force and effect.
IN WITNESS WHEREOF, each of the undersigned has caused this
Amendment No. 2 to Limited Liability Company Agreement to be
executed and delivered as of the date first above written.
"MEMBER"
CADIZ INC.
By: __________________________________
"MANAGERS"
___________________________
Xxxxxx Xxxxxxxxx
___________________________
Xxxxxxx Xxxxxxxx
