AMENDMENT NO. 2 TO REORGANIZATION PLAN AND AGREEMENT FOR PURCHASE AND SALE OF ASSETS
EXHIBIT
10.13
AMENDMENT
NO. 2 TO REORGANIZATION PLAN
AND
AGREEMENT FOR PURCHASE AND SALE OF ASSETS
This AMENDMENT NO. 2 TO
REORGANIZATION PLAN AND AGREEMENT FOR PURCHASE AND SALE OF ASSETS (“Amendment
No. 2”) is entered into as of October 1, 2007 among Cadiz Inc., a
Delaware corporation (“Cadiz”),
and Xxxx X. Xxxxxxx (“Xxxxxxx”),
in his capacity as successor in interest to Exploration Research Associates,
Incorporated., a California corporation (“ERA”)
and in his individual capacity as former sole shareholder of ERA and as the
successor in interest to ERA. The parties to this Amendment No. 2 are
hereinafter sometimes referred to collectively as the "Parties".
RECITALS:
WHEREAS, Cadiz, ERA and
Xxxxxxx entered into a Reorganization Plan and Agreement for Purchase and Sale
of Assets dated as of February 18, 1998, pursuant to which Cadiz purchased the
assets of ERA. ERA subsequently liquidated, with Xxxxxxx, as the sole
shareholder of ERA, becoming the successor in interest to ERA. In
March 2000, subsequent to such liquidation, Cadiz and Xxxxxxx entered into an
Amendment to the Reorganization Plan and Agreement for Purchase and Sale of
Assets (“Amendment
No. 1”). Such Reorganization Plan and Agreement for Purchase
and Sale of Assets, as amended, shall be referred to as the "Reorganization
Plan and Agreement"; and
WHEREAS, concurrently
herewith, the Parties are entering into a Settlement Agreement and Release
(“Settlement
Agreement”) by which the Parties will fully and finally settle, terminate
and resolve any and all disputes, claims, demands and causes of action, whether
known or unknown, contingent or certain, past, present or future, which they may
have had in any way related to the Reorganization Plan and Agreement;
and
WHEREAS, the Settlement
Agreement requires that the Parties execute and deliver this Amendment No.
2;
NOW THEREFORE, in
consideration of the above recitals, the promises and the mutual
representations, warranties, covenants and agreements herein contained, the
Parties hereby agree as follows. Defined terms used herein shall, if
not otherwise defined in this Amendment No. 2, have the same meaning as set
forth in the Reorganization Plan and Agreement.
1. Contingent
Shares. The first paragraph of Section 2.01(b) is hereby
deleted and replaced in its entirety with the following:
"(b) Up
to 300,000 additional shares of Cadiz Common Stock shall be contingently
issuable to the Shareholder as set forth below. The Cadiz Common
Stock to be delivered to the Shareholder pursuant to this subsection (b) shall
be referred to herein as the "Contingent
Shares".
One Hundred Twenty Five
Thousand (125,000) Contingent Shares shall be issued to Shareholder if, on or
prior to October 1, 2013, any one of the five conditions set forth on Schedule A
is satisfied;
The remaining One Hundred
Seventy Five Thousand (175,000) Contingent Shares shall be issued to Shareholder
if, on or prior to October 1, 2013, any one of the three conditions set forth on
Schedule B is satisfied.
In the
event that the number of outstanding shares of Cadiz Common Stock is changed by
a stock dividend, recapitalization, stock split, reverse stock split,
subdivision, combination, reclassification or similar change in the capital
structure of the Cadiz without consideration, then the number of Contingent
Shares shall be proportionately adjusted.
2. Extension
of Agreement. The first sentence of the third paragraph of
Section 2.01(b) is hereby amended by replacing the phrase "within the first ten
years following the Closing Date" with the phrase "on or before October 1,
2013."
3. Definitions.
A. The
third sentence of the third paragraph of Section 2.01(b) is hereby deleted and
replaced with the following sentence:
"For purposes of this
subsection (b), the term “Change
in Control” shall mean the occurrence of any of the following: (a) when
the Company acquires actual knowledge that any person (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act) is or becomes the beneficial owner
(as defined in Rule 13d-3 of the Exchange Act) directly or indirectly, of
securities of the Company representing 50% or more of the combined voting power
of the Company's then-outstanding securities; (b) upon the first purchase of
Common Stock pursuant to a tender or exchange offer (other than a tender or
exchange offer made by the Company); (c) upon the approval by the Company's
shareholders of: (i) a merger or consolidation of the Company with or into
another corporation (other than an Affiliate of the Company), which does not
result in any capital reorganization or reclassification or other change in the
Company's then-outstanding shares of Common Stock, (ii) a sale or disposition of
all or substantially all of the Company's assets, or (iii) a plan of liquidation
or dissolution of the Company; or (d) if during any period of two consecutive
years, the individuals who at the beginning of such period constitute the Board
of Directors of the Company cease for any reason to constitute at least a
majority thereof, unless the election, or the nomination for election by the
Company's shareholders, of each new director is approved by a vote of at least
two-thirds of the directors then still in office who were directors at the
beginning of the period.
B. The
third sentence of the fourth paragraph of Section 2.01(b) is hereby
deleted.
4. Successors
and Assigns. A new Section 14.12 is hereby added to read in
its entirety as follows:
"14.12 Successors
and Assigns. This Agreement shall be binding upon and inure to
the benefit of the Parties and their respective successors, heirs, personal
representatives and assigns."
5. Counterparts;
Effectiveness. This Amendment No. 2 may be executed in any
number of counterparts, each of which, when executed and delivered, shall be
deemed to be an original. All of such counterparts, taken together,
shall constitute but one and the same agreement. This Amendment No. 2
shall become effective upon the execution of a counterpart of this Amendment No.
2 by each of the parties hereto.
6. Existing
Agreement. Except as otherwise amended or modified herein or
hereby, the provisions of the Reorganization Plan and Agreement are hereby
reaffirmed and shall remain in full force and effect.
IN
WITNESS WHEREOF, the parties hereto have caused this Amendment No. 2 to be duly
executed and delivered by their proper and duly authorized officers as of the
day and year first above written.
By:
Name: Xxxxx Xxxxxxxxx
Title: Chairman and Chief Executive Officer
Name: Xxxxx Xxxxxxxxx
Title: Chairman and Chief Executive Officer
Xxxx X.
Xxxxxxx
SETTLEMENT
AGREEMENT AND RELEASE
This Settlement
Agreement and Release ("Agreement")
is made and entered into as of October 1, 2007 among Cadiz Inc., a Delaware
corporation (“Cadiz”),
and Xxxx X. Xxxxxxx (“Xxxxxxx”),
in his capacity as successor in interest to Exploration Research Associates,
Incorporated, a California corporation (“ERA”)
and in his individual capacity as former sole shareholder of ERA and as the
successor in interest to ERA. Xxxxxxx and Cadiz are sometimes
individually referred to herein as "Party" and are sometimes referred to herein
collectively as "Parties."
RECITALS
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A.
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Cadiz,
ERA and Xxxxxxx entered into a Reorganization Plan and Agreement for
Purchase and Sale of Assets dated as of February 18, 1998, pursuant to
which Cadiz purchased the assets of ERA. Such Reorganization
Plan and Agreement for Purchase and Sale of Assets, as amended, shall be
referred to in this Agreement as the "Reorganization
Plan and Agreement". ERA subsequently liquidated, with
Xxxxxxx, as the sole shareholder of ERA, becoming the successor in
interest to ERA. In March 2000, subsequent to such liquidation,
Cadiz and Xxxxxxx entered into an Amendment to the Reorganization Plan and
Agreement for Purchase and Sale of Assets (“Amendment
No. 1”).
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B.
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By
entering into this Agreement, it is the intention of the Parties to fully
and finally settle, terminate and resolve any and all disputes, claims,
demands and causes of action, whether known or unknown, contingent or
certain, past, present or future, which they may have had in any way
related to the Reorganization Plan and
Agreement.
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C.
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Prior
to the execution of the Reorganization Plan and Agreement, Cadiz and
Xxxxxxx were parties to certain agreements (the "Royalty
Agreements") pursuant to which, among other things, Cadiz granted
to Xxxxxxx participation rights and fee rights (collectively, the "Royalty
Rights") relating to the acquisition and/or disposition by Cadiz of
certain property rights (including water rights). Prior to the
execution of the Reorganization Plan and Agreement, all of the rights of
Xxxxxxx under such Royalty Agreements were assigned by Xxxxxxx to ERA and,
as assets of ERA, were assigned and transferred to Cadiz pursuant to the
Reorganization Plan and Agreement.
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D.
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The
Reorganization Plan and Agreement provides for the contingent issuance to
Xxxxxxx of up to 600,000 shares of the common stock of Cadiz (before
giving effect to the 1 for 25 reverse split of Cadiz' common stock in
2003) (the “Contingent
Shares”), of which 100,000 shares were issued to Xxxxxxx in 2000
pursuant to Amendment No. 1.
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E.
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The
conditions provided in the Reorganization Plan and Agreement for the
issuance of the Contingent Shares to Xxxxxxx were designed in large part
to replace the Royalty Rights previously held by Xxxxxxx and/or ERA, and
were crafted with a view to the reasonable expectations of the Parties
concerning the process and timing by which Cadiz would be developing its
land and water resources, including the Cadiz Groundwater Storage and
Dry-Year Supply Program in the Cadiz and Xxxxxx Valleys (the “Cadiz
Project”).
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F.
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Due
to, among other things, certain actions taken by the Metropolitan Water
District of Southern California (the “MWD”)
in 2002, Cadiz was not able to proceed with the Cadiz Project and its
other land and water resource development programs as originally
anticipated by the parties to the Reorganization Plan and Agreement and,
as a consequence, the benchmarks provided in the Reorganization Plan and
Agreement for the issuance of Contingent Shares to Xxxxxxx became no
longer meaningful or practical as a means for measuring Xxxxxxx'x
entitlement to the consideration originally intended by the parties to the
Reorganization Plan and Agreement to be associated with the sale to Cadiz
of the assets of ERA.
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X.
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Xxxxx
believes that the assertion by Xxxxxxx, following the actions of the MWD
in 2002, of any claims against Cadiz or any third party that he has been
unduly deprived of the economic benefits of the Reorganization Plan and
Agreement would not then have been, nor would it presently be, in the best
interests of Cadiz, the Cadiz Project, or development of other Cadiz
properties subject to the Reorganization Plan and
Agreement.
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X.
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Xxxxxxx
believes that the Reorganization Plan and Agreement included an implied
provision that the number of Contingent Shares be proportionately adjusted
for the number of outstanding shares of Cadiz Common Stock changed by a
stock dividend, recapitalization, stock split, reverse stock split,
subdivision, combination, reclassification or similar change in the
capital structure of Cadiz.
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X.
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Xxxxxxx
has not, to date, exercised any legal right he may have to formally assert
such claims.
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X.
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Xxxxx
desires to derive the full benefit of the assets acquired by
Cadiz.
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K.
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In
order to avoid litigation, attorneys' fees and aggravation, and in order
to avoid any controversy which may adversely affect the Cadiz Project and
Cadiz' other land and water resource development programs, it is in the
best interests of the Parties that the Reorganization Plan and Agreement
be further amended so as to enable Xxxxxxx to receive substantially the
same economic benefit intended by the parties to the Reorganization Plan
and Agreement.
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AGREEMENT
NOW, THEREFORE,
for and in consideration of the foregoing promises/recitals, and the mutual
undertakings set forth below, and for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Parties hereby
agree as follows:
1. Recitals
The
recitals are incorporated herein as though fully set forth in the
Agreement.
2. Settlement Consideration
b
2. Settlement Consideration
In
consideration of the covenants, undertakings, and releases given herein by the
Parties, and in full and complete satisfaction of all disputes between them with
respect to the Reorganization Plan and Agreement:
A. Amendment
No. 2 to Reorganization Plan and Agreement. The
Parties shall, concurrently herewith, execute and deliver to each other
"Amendment No. 2 to Reorganization Plan and Agreement for Purchase and Sale of
Assets" in the form of Exhibit A hereto ("Amendment No. 2");
and
B. Covenant
Not to Assert Claims. Xxxxxxx agrees that neither Xxxxxxx nor
any of his agents, successors, assigns, subsidiaries, partners or affiliates
shall, without the express prior written consent of Cadiz, assert any right,
claim, demand, action, cause of action, or suit against any person or entity not
a party to this Agreement ("Third
Party") seeking damages or any other remedy with respect, generally, to
the subject matter of the Reorganization Plan and Agreement or this Agreement
or, specifically, to any action which such Third Party has taken or failed to
take which may have adversely impacted the ability of Xxxxxxx or any of his
agents, successors, assigns, subsidiaries, partners or affiliates to receive or
otherwise realize any anticipated benefits under the Reorganization Plan and
Agreement.
3. No
Admission of Liability
This
Agreement constitutes a compromise and settlement of disputed claims which are
denied and contested and nothing in this Agreement, or any document referred to
herein, nor any act (including, but not limited to, the execution of this
Agreement) of any Party hereto, nor any transaction occurring between any
Parties hereto prior to the date hereof is or shall be treated, construed or
deemed as an admission by any Party hereto of any liability, fault,
responsibility, or guilt of any kind to any other Party hereto or to any
person. All such liability, fault, responsibility and guilt of any
kind is hereby expressly denied.
4. Limited
Release
In consideration
of the recitals, the execution by the Parties of Amendment No. 2, and the
promises, warranties and covenants contained in this Agreement, each Party
hereto, on behalf of itself, his or its agents, successors, assigns,
subsidiaries, partners and affiliates hereby fully releases and forever
discharges each other Party hereto and each of their agents, consultants, heirs,
successors, assigns, affiliates, directors, officers, employees, shareholders,
executives, attorneys, accountants, representatives and other related persons
(collectively, the "Released Parties") from any and all rights, claims, demands,
actions, causes of action, costs, losses, suits, liens, debts, damages,
judgments, executions and demands of every nature, kind and description
whatsoever, whether known or unknown, either at law, in equity or otherwise,
which any Party hereto or any of his or its agents, successors, assigns,
subsidiaries, partners and/or affiliates ever had or may have against the
Released Parties, and which arise under or in connection with the Reorganization
Plan and Agreement or the subject matter thereof, and/or in connection with the
dealings between the Parties with respect to the subject matter of the
Reorganization Plan and Agreement up to and including the closing of the
transactions contemplated in the Agreement; provided that nothing herein shall
be deemed to release any Released Party from any liability or obligations
arising in connection with facts or circumstances which occur or arise for the
first time after the effective date of Amendment No. 2.
5. Waiver
of Civil Code Section 1542
The
Parties hereby waive any and all rights or benefits which they may have under
Section 1542 of the California Civil Code, which provides:
A GENERAL
RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO
EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM
MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.
The Parties
represents and warrant that they understand the effect of this waiver of Section
1542 of the California Civil Code. It is expressly understood and
agreed that the possibility that unknown claims exist has been explicitly taken
into account in determining the consideration to be given for this Agreement and
that a portion of that consideration, having been bargained for in full
knowledge of the possibility of such unknown claims, was given in exchange for
the release and discharge of claims covered by this waiver.
6. Authority
The
Parties, and each of them, represent and warrant that they have the full power
and authority to execute, deliver and perform under this Agreement, and that any
needed consent or approval from any other person has been obtained.
7. Voluntary
Agreement/Understanding of the Terms of the
Agreement
The
Parties, and each of them, enter into this Agreement and any documents referred
to herein, knowingly and voluntarily. By signing this Agreement and
any of the documents referred to herein, the Parties acknowledge that: (a) they
have been furnished with copies of, and have read, this Agreement, (b) they have
relied upon their own judgment, belief, knowledge, understanding and expertise
(after having had the opportunity to consult with legal counsel) concerning the
terms, conditions and legal effects of this Agreement, (c) they fully understand
and agree to the terms, conditions and effects of this Agreement and their
rights and obligations hereunder, (d) they have freely and voluntarily entered
into this Agreement without duress or undue influence, and (e) they hereby agree
to be fully bound by the terms of the Agreement.
Each
Party hereby acknowledges that it has not relied upon the other Party or the
other Party's attorneys or advisors for legal or tax advice, and has, if
desired, in all cases sought the advice of such Party's own legal counsel and
tax advisers.
The
Parties hereto and the individuals executing this document warrant that all
factual statements and representations contained in this Agreement are true and
correct and that no material information has been omitted or concealed from them
that would render such statements or representations false or materially
misleading.
9. No
Other Actions - Convenant Not to Xxx
The
Parties, and each of them, represent and warrant to one another that no Party
has commenced or prosecuted (and will not commence or prosecute) any
other action or proceeding for recovery of damages or for any form of equitable
relief, declaratory relief or any other form of action or proceeding or
arbitration against one another based upon the claims, damages, causes of
action, obligations, damages and/or liabilities released in this Agreement
including, but not limited to, the claims that are the subject of this
Agreement. The Parties, and each of them, expressly agree that this
Agreement shall constitute a complete defense to any action or other proceeding
related to the matters herein released and a judicial bar to the institution of
any such action or proceeding.
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10.
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No
Assignment, Liens or Subrogation
Claims
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The
Parties, and each of them, represent and warrant that no portion of any claim,
right, demand, action or cause of action which they have or might have arising
out of the matters referred to herein, nor any portion of any recovery or
settlement to which they might be entitled, has been assigned or transferred to
any other person, including by way of subrogation or operation of law or
otherwise, and that they are the legal and beneficial owner of such claims free
and clear of all liens, claims, encumbrances and charges. The
Parties, and each of them agree to indemnify, defend, and hold all other Parties
harmless from any liability, claims, demands, damages, costs, expenses or
attorneys’ fees incurred by any Party as a result of any persons asserting any
such assignment or transfer of any rights or claims under such assignment or
transfer.
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11.
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Additional
Documents — Duty to
Cooperate
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The
Parties, and each of them, shall execute and deliver such other and further
instruments, documents and papers, and shall perform any and all acts necessary
to give full force and effect to all of the terms and provisions of this
Agreement.
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12.
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Binding
Effect
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The
Agreement and all documents referred to herein, shall bind and inure to the
benefit of each of the Parties hereto and their respective successors in
interest. Except as expressly provided herein, this Agreement is not
for the benefit of any person not a Party hereto or specifically identified as a
beneficiary herein or not specifically identified as a person or entity released
hereby, and is not intended to constitute a third party beneficiary
contract.
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13.
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Governing
Law
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This
Agreement shall be interpreted, enforced and construed in accordance with the
laws of the State of California.
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14.
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Enforceability
— Severable Provisions
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If any
provision of this Agreement shall be found by a court to be void, voidable,
invalid, or unenforceable, the remaining portions shall remain in full force and
effect except in the event of a material failure of consideration.
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15.
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No
Violation of Law
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Nothing
herein shall be construed as an agreement by any party to do anything which is
in violation of California law or in violation of the public policy of
California.
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16.
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Integration
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This
Agreement, and the documents and instruments referred to herein, constitute a
single, integrated written contract expressing the entire agreement and
understanding of the Parties relative to the subject matter
hereof. No covenants, agreements, representations or warranties of
any kind whatsoever have been made by any party hereto, except as specifically
set forth in this Agreement. All prior commitments, discussions,
understandings and negotiations, whether written or oral, express or implied,
have been, and are, merged and integrated into, and are superseded by, this
Agreement.
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17.
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Fees
and Costs
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All
Parties, and each of them, shall bear their own costs and attorneys' fees
incurred in connection with this Agreement.
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18.
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Waiver,
Modification and Amendments
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No breach
of this Agreement or of any provision herein can be waived except by an express
written waiver executed by the Party waiving such breach. Waiver of
any one breach shall not be deemed a waiver of any other breach of the same or
other provisions of this Agreement. Moreover, this Agreement may be
amended, altered, modified or otherwise changed in any respect or particular
only by a writing duly executed by the Parties hereto or their authorized
representative.
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19.
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Neutral
Interpretation — Ambiguities or
Uncertainties
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In any
action to construe the terms of this Agreement, this Agreement shall be
considered the product of negotiation by and among the Parties. Any
ambiguities or uncertainties contained in this Agreement shall be equally and
fairly interpreted and construed. No clause or provision shall be
interpreted more strongly in favor of or against one party or the other, based
upon the source of the draftsmanship, but shall be interpreted in a neutral
manner. Accordingly, the Parties hereby waive the benefit of
California Civil Code Section 1654 and any successor or amended statute,
providing that in cases of uncertainty, language of a contract should be
interpreted most strongly against the drafter of the contract.
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20.
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Counterparts
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This
Agreement may be executed by facsimile transmission and in counterpart originals
by each Party, which, when taken together, shall constitute the whole of the
agreement as between the Parties. True and correct copies of the
fully executed Agreement will be effective to enforce the terms and provisions
set forth herein.
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21.
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Survival
of the Executory Provisions
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Any and
all executory provisions under this Agreement and the documents referred to
herein shall survive the consummation of this Agreement and shall continue in
full force and effect until fully performed and satisfied.
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22.
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Captions
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Section,
paragraph and other captions or headings contained in this Agreement are
inserted as a matter of convenience and for reference, and in no way define,
limit, extend or otherwise describe the scope or intent of this
Agreement.
IN WITNESS
WHEREOF, the Parties execute this Agreement.
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____________________________________
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Xxxx
X. Xxxxxxx
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CADIZ,
INC.
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By:
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Xxxxx
Xxxxxxxxx
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| Its: | Chairman and Chief Executive Officer |
