EXHIBIT 10.1
------------
AMENDED AND RESTATED CREDIT AGREEMENT
dated as of
September 13, 1996
between
SUN WORLD INTERNATIONAL, INC.
and
CAISSE NATIONALE DE CREDIT AGRICOLE,
ACTING THROUGH ITS GRAND CAYMAN BRANCH
TABLE OF CONTENTS
Page
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1. Definitions . . . . . . . . . . . . . . . . . . . . . . 2
2. Amount and Term of Restructured Loan. . . . . . . . . . 21
2.1 The Restructured Loan. . . . . . . . . . . . . . . 21
2.2 The Note . . . . . . . . . . . . . . . . . . . . . 23
2.3 Interest . . . . . . . . . . . . . . . . . . . . . 23
2.4 Principal Payments; Interest Payments. . . . . . . 24
2.4.1 Principal Payments . . . . . . . . . . . 24
2.4.2 Interest Payments. . . . . . . . . . . . 25
2.5 Voluntary Prepayment . . . . . . . . . . . . . . . 25
2.6 Breakage Fees. . . . . . . . . . . . . . . . . . . 25
2.7 Payments Generally . . . . . . . . . . . . . . . . 26
2.8 Payment on Non-Business Days . . . . . . . . . . . 27
2.9 Notations. . . . . . . . . . . . . . . . . . . . . 27
2.10 Special Provisions Regarding LIBOR . . . . . . . . 27
2.10.1 Interest Periods . . . . . . . . . . . . 27
2.10.2 Illegality or Impossibility. . . . . . . 28
2.10.3 Special Costs. . . . . . . . . . . . . . 28
2.11 Capital Requirements . . . . . . . . . . . . . . . 29
2.12 Released Claims. . . . . . . . . . . . . . . . . . 29
3. Conditions Precedent. . . . . . . . . . . . . . . . . . 29
3.1 Effective Date . . . . . . . . . . . . . . . . . . 30
3.2 Cadiz Payment. . . . . . . . . . . . . . . . . 30
3.3 Working Capital Contribution . . . . . . . . . 30
3.4 Pro Forma Balance Sheets; Opening Financial
Position; Certain Financial Results. . . . . . 30
3.5 DIP Credit Agreement . . . . . . . . . . . . . 31
3.6 ▇▇▇▇ ▇▇▇▇▇▇▇ Credit Agreement. . . . . . . . . 31
3.7 Intercreditor Agreement. . . . . . . . . . . . 32
3.8 Rayo Water Rights. . . . . . . . . . . . . . . 32
3.9 Marketing Agreements; Certain Information. . . 32
3.10 Mutual Releases. . . . . . . . . . . . . . . . 33
3.10.1 Borrower . . . . . . . . . . . . . . 33
3.10.2 ▇▇▇▇ ▇▇▇▇▇▇▇ . . . . . . . . . . . . 34
3.10.3 Former Stockholders. . . . . . . . . 34
3.10.4 Certain Other Persons. . . . . . . . 34
3.10.5 Cadiz. . . . . . . . . . . . . . . . 35
3.11 Initial Interest Period. . . . . . . . . . . . 35
3.12 Executed Documents . . . . . . . . . . . . . . 35
3.13 Related Agreements . . . . . . . . . . . . . . 37
3.14 Minimum Release Price Schedule . . . . . . . . 38
3.15 Title Insurance. . . . . . . . . . . . . . . . 38
3.16 Corporate Actions. . . . . . . . . . . . . . . 38
3.17 Evidence of Insurance. . . . . . . . . . . . . 39
3.18 Evidence of Required Licenses. . . . . . . . . 39
3.19 Environmental Studies. . . . . . . . . . . . . 39
3.20 Material Adverse Effect. . . . . . . . . . . . 40
3.21 Legal Opinions . . . . . . . . . . . . . . . . 40
3.21.1 Water Rights . . . . . . . . . . . . 40
3.21.2 Intellectual Property. . . . . . . . 40
3.21.3 Cadiz Opinion. . . . . . . . . . . . 40
3.21.4 Borrower Opinion . . . . . . . . . . 40
3.21.5 HPM Opinion. . . . . . . . . . . . . 40
3.22 No Defaults. . . . . . . . . . . . . . . . . . 40
3.23 Representations and Warranties . . . . . . . . 40
3.24 Bringdown Certificates . . . . . . . . . . . . 40
3.25 . . . . . . . . . . . . . . . . . . . . . . . 41
3.27 Lending Relationships. . . . . . . . . . . . . 41
3.28 Other Approvals, Consents, Documents and Opinions 41
4. Representations and Warranties. . . . . . . . . . . 41
4.1 Corporate Status; Power and Authority. . . . . 41
4.1.1 Corporate Status . . . . . . . . . . 41
4.1.2 Power and Authority. . . . . . . . . 42
4.2 Legally Enforceable Agreements . . . . . . . . 42
4.3 Stock; Subsidiaries. . . . . . . . . . . . . . 43
4.3.1 Stock. . . . . . . . . . . . . . . . 43
4.3.2 Subsidiaries . . . . . . . . . . . . 43
4.4 Properties and Assets. . . . . . . . . . . . . 43
4.5 Debt; Liens; Other Obligations . . . . . . . . 44
4.6 Major Account Debtors. . . . . . . . . . . . . 44
4.7 Withholding Taxes. . . . . . . . . . . . . . . 45
4.8 Other Taxes. . . . . . . . . . . . . . . . . . 45
4.9 Labor Disputes and Acts of God . . . . . . . . 45
4.10 No Defaults on Outstanding Judgments or Orders 45
4.11 ERISA. . . . . . . . . . . . . . . . . . . . . 45
4.12 Operation of Business. . . . . . . . . . . . . 46
4.13 Litigation . . . . . . . . . . . . . . . . . . 46
4.14 Environmental Conditions . . . . . . . . . . . 46
4.15 Investment Company Act . . . . . . . . . . . . 47
4.16 Full Disclosure. . . . . . . . . . . . . . . . 47
5. Affirmative Covenants . . . . . . . . . . . . . . . 48
5.1 Maintenance of Records . . . . . . . . . . . . 48
5.2 Maintenance of Properties and Collateral . . . 48
5.3 Maintenance of Insurance . . . . . . . . . . . 49
5.4 Cash Account . . . . . . . . . . . . . . . . . 51
5.5 Compliance with Laws and Orders. . . . . . . . 52
5.6 Payroll Withholding. . . . . . . . . . . . . . 52
5.7 Officers; Directors. . . . . . . . . . . . . . 52
5.7.1 Chief Executive Officer. . . . . . . 52
5.7.2 Chief Financial Officer. . . . . . . 53
5.7.3 Independent Board. . . . . . . . . . 53
5.8 Maintenance of Separate Existence. . . . . . . 54
5.9 Marketing Agreements . . . . . . . . . . . . . 54
5.10 Financial Covenants. . . . . . . . . . . . . . 54
5.10.1 Working Capital. . . . . . . . . . . 54
5.10.2 Current Ratio. . . . . . . . . . . . 55
5.10.3 Debt Service Coverage Ratio. . . . . 56
5.10.4 Interest Coverage Ratio. . . . . . . 56
5.10.5 Debt to EBITDA Ratio . . . . . . . . 56
5.10.6 Tangible Net Worth . . . . . . . . . 57
5.10.7 Debt to Equity Ratio . . . . . . . . 57
5.10.8 Compliance . . . . . . . . . . . . . 58
5.11 Reporting Requirements . . . . . . . . . . . . 58
5.11.1 Business Plan; Crop Development Plan 58
5.11.2 Monthly Financial Statements . . . . 59
5.11.3 Annual Financial Statements. . . . . 60
5.11.4 Management Letters . . . . . . . . . 60
5.11.5 Certificate of No Default. . . . . . 60
5.11.6 Notice of Litigation . . . . . . . . 60
5.11.7 Notice of Defaults and
Events of Default. . . . . . . . . . 61
5.11.8 ERISA Reports. . . . . . . . . . . . 61
5.11.9 Environmental Matters. . . . . . . . 61
5.11.10 Debtors' Audited Financial Statements 61
5.11.11 Property Sales . . . . . . . . . . . 61
5.11.12 Blythe Ranch Cash Flow . . . . . . . 61
5.11.13 Notices to ▇▇▇▇▇▇▇ . . . . . . . . . 62
5.11.14 General Information. . . . . . . . . 62
5.12 Cancellation of Preferred Stock. . . . . . . . 62
5.13 Sale of Blythe Ranch . . . . . . . . . . . . . 62
5.14 AAI. . . . . . . . . . . . . . . . . . . . . . 62
5.15 PACA License . . . . . . . . . . . . . . . . . 63
5.16 Legal Opinion. . . . . . . . . . . . . . . . . 63
5.17 Leasehold Documents. . . . . . . . . . . . . . 63
5.18 Further Assurances . . . . . . . . . . . . . . 63
5.19 Access to Information. . . . . . . . . . . . . 63
6. Negative Covenants. . . . . . . . . . . . . . . . . 64
6.1 Inactive Subsidiaries. . . . . . . . . . . . . 64
6.2 Liens and Claims . . . . . . . . . . . . . . . 64
6.3 Debt . . . . . . . . . . . . . . . . . . . . . 66
6.4 Leases; Other Acquisitions . . . . . . . . . . 68
6.5 Dividends; Distributions; Other Payments
and Actions. . . . . . . . . . . . . . . . . . 68
6.6 Dispositions of Assets . . . . . . . . . . . . 69
6.7 Payments of Debt; Other Obligations. . . . . . 72
6.8 Guaranties . . . . . . . . . . . . . . . . . . 72
6.9 Investments; Funds . . . . . . . . . . . . . . 73
6.9.1 Investments. . . . . . . . . . . . . 73
6.9.2 Subsidiaries; Joint Ventures . . . . 74
6.9.3 Funds. . . . . . . . . . . . . . . . 74
6.10 Mergers and Consolidations . . . . . . . . . . 74
6.11 Transactions with Insiders or Affiliates . . . 74
6.12 Stock of Subsidiaries. . . . . . . . . . . . . 75
6.13 Amendments to Governing Documents or Plans . . 75
6.14 Changes in Business. . . . . . . . . . . . . . 76
6.15 Capital Expenditures; Research and Development
Expenditures. . . . . . . . . . . . . . . . . . 76
6.16 Certain Obligations. . . . . . . . . . . . . . 76
6.17 Change in Chief Executive Offices. . . . . . . 76
6.18 Change in Fiscal Year. . . . . . . . . . . . . 76
6.19 Inspection Policies and Procedures . . . . . . 77
7. Events of Default . . . . . . . . . . . . . . . . . 77
7.1 Events of Default. . . . . . . . . . . . . . . 77
7.2 Consequences of Default. . . . . . . . . . . . 81
8. Miscellaneous . . . . . . . . . . . . . . . . . . . 81
8.1 Amendments and Waivers . . . . . . . . . . . . 81
8.2 Notices, Etc.. . . . . . . . . . . . . . . . . 81
8.3 Independence of Covenants; Effect of Execution
and Delivery of ▇▇▇▇ ▇▇▇▇▇▇▇ Loan Documents. . 83
8.5 Survival . . . . . . . . . . . . . . . . . . . 83
8.6 Successors and Assigns . . . . . . . . . . . . 84
8.7 Certain Participations and Assignments . . . . 84
8.8 Costs, Expenses and Taxes. . . . . . . . . . . 84
8.9 Right of Set off . . . . . . . . . . . . . . . 85
8.10 Severability of Provisions . . . . . . . . . . 85
8.11 Headings . . . . . . . . . . . . . . . . . . . 86
8.12 Certain Interpretations. . . . . . . . . . . . 86
8.13 Governing Law. . . . . . . . . . . . . . . . . 86
8.14 Counterparts . . . . . . . . . . . . . . . . . 86
8.15 Entire Agreement; No Novation. . . . . . . . . 86
8.16 Indemnity. . . . . . . . . . . . . . . . . . . 86
8.17 Consent to Jurisdiction; Waiver of Right
to Jury Trial. . . . . . . . . . . . . . . . . 88
SCHEDULES AND EXHIBITS
SCHEDULES:
1. . . . . . . . . . . . . . . . . .Calculation of Funded Crop Costs
3.9. . . . . . . . . . .Persons Under Control of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
4.3. . . . . . . . . . . . . . . . . . . . . . . Stock; Subsidiaries
4.4. . . . . . . . . . . . . . . . . . . . . . Properties and Assets
4.5.1. . . . . . . . . . . . . . . . . . . . . . . . Debts and Liens
4.8. . . . . . . . . . . . . . . . . . . . . . . . . . . Tax Matters
4.10 . . . . . . . . . . . . . . . . . . . . . . . Certain Judgments
4.11 . . . . . . . . . . . . . . . . . . . . . Certain ERISA Matters
4.12 . . . . . . . . . . . . . . . . . . . . Operation of Businesses
4.13 . . . . . . . . . . . . . . . . . . . . . . Material Litigation
4.14 . . . . . . . . . . . . . . . . . . . Environmental Disclosures
5.3. . . . . . . . . . . . . . . . . . . .Maximum Insurance Premiums
EXHIBITS:
A. . . . . . . . . . . . . . . . . . . . . . . . . . . .Form of Note
B. . . . . . . . . . . . . . . . . . . . Form of Subsidiary Guaranty
C. . . . . . . . . . . . . . . . . . . . . . Form of Cadiz Agreement
D 1, D 2 . . . . . . . . . . . . . . . . . . Forms of Deeds of Trust
E 1, E 2 . . . . . . . . . . . . . Forms of Leasehold Deeds of Trust
F 1, F 2 . . . .Forms of Amendments to Lease with Lender Cure Rights
G 1, G 2 . . . . . . . . . . . . . . . .Forms of Security Agreements
H 1, H 2 . . . . . . . . . . . . . .Forms of Stock Pledge Agreements
I. . . . . . . . . Formula for Determination of Minimum Cash Balance
J. . . . . . . . . . . . . . . .Form of Opinion of Counsel for Cadiz
K. . . . . . . . . . . . . . Form of Opinion of Counsel for Borrower
L. . . . . . . . . . . . . . . . . . . . Form of Agency Provisions
AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT ("Agreement")
is dated as of September 13, 1996, between SUN WORLD INTERNATIONAL,
INC., a Delaware corporation ("Borrower"), and CAISSE NATIONALE DE
CREDIT AGRICOLE, ACTING THROUGH ITS GRAND CAYMAN BRANCH, a banking
corporation organized and existing under the laws of France
("Lender").
RECITALS
A. Borrower is the surviving corporation in the merger
between Sun World International, Inc. ("SWII") and Sun World, Inc.
("SWI"). Lender provided a revolving credit facility to SWI,
guarantied by SWII, pursuant to the Amended and Restated Revolving
Credit Agreement dated December 8, 1989 (as amended as of the
Petition Date, the "Pre Petition Revolving Credit Agreement").
B. Lender also provided certain term loans to SWI, supported
by SWII's guaranty, pursuant to the Credit Agreement dated as of
December 8, 1989 (as amended as of the Petition Date, the "Pre
Petition Term Credit Agreement").
C. The obligations of SWI and SWII and certain of their
Subsidiaries and Affiliates in respect of the revolving credit
facility and term loans so provided by Lender are evidenced by the
Loan Documents, as defined in either the Pre Petition Revolving
Credit Agreement or the Pre Petition Term Credit Agreement
(collectively, the "Pre Petition Loan Documents", and including
each of the Pre Petition Revolving Credit Agreement and the Pre
Petition Term Credit Agreement and each other agreement, document
or instrument executed and delivered by SWII, SWI or any Subsidiary
or Affiliate of either SWII or SWI to Lender or any Bank (as
defined therein) pursuant to or in connection with the Pre Petition
Revolving Credit Agreement or the Pre Petition Term Credit
Agreement and the transactions contemplated thereby, and each other
agreement entered into at any time prior to the Petition Date
identifying itself as a Loan Document, in each case, as amended,
supplemented or modified as of the Petition Date).
D. Pursuant to the Debtors' Modified Fourth Amended
Consolidated Plan of Reorganization dated June 3, 1996 (As Amended)
(the "Plan"), confirmed in the jointly administered bankruptcy
proceedings (administered under Case No. SB94-23212 DN, in the
United States Bankruptcy Court for the Central District of
California) of SWII, SWI, Coachella Growers and Sun Desert, Inc. as
Debtors and Debtors-In-Possession, the obligations of SWII and SWI
and their Subsidiaries and Affiliates pursuant to the Pre Petition
Loan Documents are being restructured as provided herein, and this
Agreement amends and restates both the Pre Petition Revolving
Credit Agreement and the Pre Petition Term Credit Agreement.
NOW, THEREFORE, BORROWER (THE "REORGANIZED SUN WORLD"
REFERRED TO IN THE PLAN) AND LENDER HEREBY AGREE AS FOLLOWS:
1. DEFINITIONS. The following terms have the following
meanings (terms defined in the singular to have the same meaning
when used in the plural and vice versa):
"AAI" means AAI Services, Inc., a California corporation and a
wholly owned Subsidiary of Borrower.
"Acquisition" means the acquisition by Cadiz of all of the
outstanding capital stock of Borrower pursuant to the Plan.
"Adjusted Original Amount" means the initial amount of the
Restructured Loan, determined in accordance with Section 2.1.1, as
reduced pursuant to Section 2.4.1(a).
"Affiliate" means, with respect to a Person, any Person (i)
which directly or indirectly controls, or is controlled by, or is
under common control with, such Person; (ii) which (as of the date
of this Agreement or at any time thereafter) directly or indirectly
beneficially owns or holds five percent (5%) or more of any class
of voting stock of such Person or any Subsidiary of such Person; or
(iii) five percent (5%) or more of the voting stock of which is
directly or indirectly beneficially owned or held by such Person or
any Subsidiary of such Person. The term "control" means the
possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract, or
otherwise.
"Aggregate Capital Expenditures" means, for any period,
determined on a Consolidated basis, the sum of (i) Borrower's
aggregate Capital Expenditures, other than Crop Development Costs,
for such period, plus (ii) Net Crop Development Costs for such
period.
"Agreement" means this Amended and Restated Credit Agreement,
as amended, supplemented or modified from time to time.
"Amendments to Lease with Lender Cure Rights" means the
Amendments to Lease with Lender Cure Rights executed by Borrower
and each lessor of Land to Borrower (or amendment and restatement
or reaffirmation of an existing such agreement between SWI and such
lessor), in favor of Lender, with respect to each leasehold
interest subject to a Leasehold Deed of Trust, in substantially the
form of Exhibit F 1 or F 2, as the case may be, as amended,
supplemented or modified from time to time.
"Ansbacher" means ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ & Co. Limited.
"Asset Sales Proceeds" means, with respect to any sale of a
Pre Identified Asset, the difference between (i) the gross
consideration for the sale of such Pre Identified Asset (provided
that, in determining the Asset Sales Proceeds relating to any sale
of a Pre Identified Asset together with crops growing thereon, the
gross consideration for the sale of such Pre Identified Asset shall
not include the Crop Value ascribed to such crops), and (ii) all
Sales Costs pertaining to such sale.
"Available Cash" means, for Borrower and its Subsidiaries,
determined on a Consolidated basis, the total of all (i) cash
(including all funds held in deposit or other accounts), and (ii)
Permitted Cash Investments.
"Bankruptcy Code" means the provisions of ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇ Code, as from time to time in effect.
"Base Period Financial Statements" means the opening position
financial statements of Borrower delivered to Lender in accordance
with Section 3.4.1.
"Blythe Ranch" means that certain Land (together with all
related fixtures and appurtenant Water Rights), located in
Riverside County, California, commonly known as "Blythe Ranch."
"Blythe Ranch Cash Flow" means, for any year, the actual "Cash
Flow" of Blythe Ranch for such year, calculated in the same manner
as the Projected Blythe Ranch Cash Flow for such year.
"Blythe Ranch Projections" means the operating projections for
Blythe Ranch submitted by Cadiz to Lender under cover of a letter
dated June 12, 1996.
"Blythe Ranch Release Price" means the release price for
Blythe Ranch set forth on the Minimum Release Price Schedule.
"Borrower" means Sun World International, Inc., a Delaware
Corporation, the "Reorganized Sun World" referred to in the Plan,
and, except where the context otherwise requires, Borrower's
predecessor Debtors.
"Branch Office" means Lender's branch office at Mid
Continental Plaza Building, ▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
"Business Day" means any day other than Saturday, Sunday, or
other day on which commercial banks are authorized or required to
close under the laws of the State of California, the State of
Illinois or the State of New York.
"Business Plan" means, with respect to the fiscal year ending
December 31, 1996, the "1996 Business Plan" in effect under the DIP
Credit Agreement immediately prior to the Effective Date, and with
respect to any subsequent fiscal year, the final business plan
delivered to Lender pursuant to Section 5.11.1, in each case, as
amended, modified or supplemented from time to time with Lender's
prior written consent.
"Cadiz" means Cadiz Land Company, Inc., a Delaware
corporation, and any successor, by merger, succession, acquisition
of assets, or otherwise.
"Cadiz Agreement" means the Cadiz Agreement, dated as of the
Effective Date, executed by Cadiz for the benefit of Lender, in
substantially the form of Exhibit C, as amended, modified or
supplemented from time to time.
"Cadiz Lease" means the lease executed by Cadiz, Southwest
Fruit Growers, L.P., a Delaware Limited Partnership, Cadiz Land
Valley Development Corporation, a Delaware corporation, and
Borrower pursuant to the Cadiz Services Agreement, as amended,
modified or supplemented from time to time.
"Cadiz Payment" means the cash payment, in the amount of
$3,500,000, to be made by Cadiz to Lender on the Effective Date
pursuant to Section 3.2.
"Cadiz Preferred Stock" means the Series A Preferred Stock,
par value $.01 per share, the Series B Preferred Stock, par value
$.01 per share, and the Series C Preferred Stock, par value $.01
per share, of Cadiz.
"Cadiz Services Agreement" means the agreement between Cadiz
and Borrower, dated as of the Effective Date, relating to the
provision of certain services to Borrower by Cadiz, in form and
substance acceptable to Lender, as amended, modified or
supplemented from time to time.
"Cadiz Working Capital Contribution Amount" means $15,000,000.
"Capital Contribution" means a contribution to the equity of
Borrower, either (i) without consideration or (ii) solely in
respect of the issuance of common stock of Borrower.
"Capital Expenditure" means (i) any expense that would be
classified as a capital expenditure under GAAP, and (ii) any Crop
Development Cost, whether or not it would be classified as a
capital expenditure under GAAP.
"Capital Expenditure Rollover Amount" means, with respect to
any fiscal year of Borrower, the difference between (i) the maximum
Aggregate Capital Expenditures Borrower and its Subsidiaries were
permitted to make during the immediately preceding fiscal year in
accordance with Section 6.15 (without regard to any Capital
Expenditure Rollover Amount applicable to such preceding fiscal
year), and (ii) if less, the actual Aggregate Capital Expenditures
of Borrower and its Subsidiaries for such preceding fiscal year.
"Capital Lease" means a lease that has been or should be
capitalized on the books of the lessee in accordance with GAAP.
"Cash Account" means a deposit account maintained pursuant to
this Agreement with the Chicago Branch, pursuant to documentation
in form and substance acceptable to Lender.
"Change of Control" means (i) any transaction or series of
related transactions in which any Person or two or more Persons
acting in concert shall acquire beneficial ownership, directly or
indirectly, of securities of Cadiz (or other securities convertible
into such securities) representing forty percent (40%) or more of
the combined voting power of all securities of Cadiz entitled to
vote in the election of directors; or (ii) during any period of
twelve (12) consecutive months, commencing on the Effective Date,
individuals who at the beginning of such twelve month period were
directors of Cadiz shall cease for any reason to constitute a
majority of the Board of Directors of Cadiz and the Persons
replacing such individuals shall not have been nominated by the
Board of Directors of Cadiz.
"Chapter 11 Case" means Case Nos. SB94-23212 DN and SB94-23213
DN commenced on October 3, 1994 in the Court, being jointly
administered.
"Coachella Growers" means Coachella Growers, a California non
profit agricultural cooperative association, of which Sun Desert is
the sole member.
"Collateral" means all of the real property and personal
property assets of Borrower and each of the Guarantors, whether now
owned or hereafter acquired, other than (i) the Unsecured Claims
Disbursement Account and (ii) the undivided 50% interest in Blythe
Ranch to be subjected to a Lien in favor of Zenith pursuant to the
Plan as security for the Zenith Note. "Collateral" shall not
include the Released Claims to be released as of the Effective
Date.
"Concentration Account" means the account, maintained by
Borrower with the Collection Account Bank pursuant to Section 5.4,
into which all collections under the Concentration Account
Agreement are to be initially deposited.
"Concentration Account Agreement" means an agreement, in form
and substance satisfactory to Lender, between Borrower (as
successor to any one or more Debtors or otherwise) and the
Concentration Account Bank governing the administration of a
collection, or lockbox, arrangement with respect to Borrower's and
its Subsidiaries' funds, as at any time amended, supplemented or
modified.
"Concentration Account Bank" means, at any time, the financial
institution with which the Concentration Account is then
maintained, acting in its capacity as the collecting bank under the
Concentration Account Agreement.
"Consolidated" means, when used with respect to any of the
terms defined herein, such term as reflected in a consolidation of
the accounts or other items of Borrower and of the accounts or
other items of Borrower's Subsidiaries in conformity with GAAP.
"Contract Period" has the meaning given to it in the
definition of Permitted Water Sale.
"Court" means the United States Bankruptcy Court for the
Central District of California.
"Crop Value" has the meaning ascribed to it in Section
6.6.4(c).
"Crop Development Cost" means each expenditure of Borrower or
any of its Subsidiaries for the acquisition, planting or
cultivation or other maintenance of a vine, tree or other permanent
planting that is not reasonably expected to produce a crop that can
be commercially marketed during the crop year during which such
expenditure is incurred.
"Crop Development Plan" means, with respect to the fiscal year
ending December 31, 1996, the crop development plan delivered to
Lender in accordance with Section 3.26, and with respect to any
subsequent fiscal year, the crop development plan delivered to
Lender pursuant to Section 5.11.1, in the form approved by Lender
in writing, in each case, as amended, modified or supplemented from
time to time with Lender's prior written consent.
"Current Assets" means, on a Consolidated basis, as of any
date of determination, all assets of Borrower and its Subsidiaries
that are treated as current assets in accordance with GAAP
consistent with GAAP used in the preparation of the Base Period
Financial Statements, excluding, however, from the determination of
current assets, loans or advances to directors, officers, employees
or Affiliates.
"Current Liabilities" means on a Consolidated basis, as of any
date of determination, all liabilities of Borrower and its
Subsidiaries that are treated as current liabilities in accordance
with GAAP consistent with GAAP used in the preparation of the Base
Period Financial Statements, including, without limitation, (i) all
obligations payable on demand or within one year after the date on
which the determination is made, and (ii) sinking fund or mandatory
redemption payments required to be made within one year after the
date on which the determination is made, but excluding all such
liabilities or obligations that, pursuant to written agreement, are
renewable or extendable at the option of the debtor to a date more
than one year from the date of the determination.
"Debt" of any Person means, at any date, without duplication,
(i) all obligations of such Person for borrowed money, (ii) all
obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments and all securities providing for
noncontingent, mandatory payments of money, (iii) all obligations
of such Person pursuant to revolving credit agreements or similar
arrangements, (iv) all obligations of such Person to pay the
deferred purchase price of property or services, except trade
accounts payable (including trade accounts payable to
professionals) arising in the ordinary course of business
(including, without limitation, in connection with the Chapter 11
Case), (v) all obligations of such Person as lessee under Capital
Leases, (vi) all obligations of such Person to reimburse or prepay
any bank or other Person in respect of amounts paid under a letter
of credit, banker's acceptance or similar instrument, whether drawn
or undrawn, (vii) to the extent not included in clause (iv) hereof,
all obligations of such Person to purchase securities (or other
property) which arise out of or in connection with the sale of the
same or substantially similar securities or property, (viii)
recourse or repurchase obligations in connection with the sale of
receivables, (ix) all debt of others Guarantied by such Person, and
(x) all obligations of such Person of the character described in
the foregoing clauses (i) through (ix) to the extent that such
Person remains legally liable in respect thereof notwithstanding
that such obligation is deemed under GAAP to have been
extinguished.
"Debt Service Coverage Ratio" means, with respect to any
fiscal year of Borrower, the ratio of (i) EBITDA for such fiscal
year, to (ii) the sum of Consolidated interest expense of Borrower
and its Subsidiaries for such fiscal year, plus scheduled payments
of principal on Debt of Borrower and its Subsidiaries (after giving
effect to the application of prepayments of principal pursuant to
this Agreement and to the ▇▇▇▇ ▇▇▇▇▇▇▇ Credit Agreement) for the
immediately succeeding fiscal year.
"Debtors" means each debtor and debtor-in-possession in the
Chapter 11 Case, and each Subsidiary of any other Debtor that is
also a debtor or debtor in possession in any bankruptcy proceeding
as of the Effective Date.
"Deed of Trust" means (i) each Deed of Trust executed as
security for Lender's pre petition claims with respect to any fee
interest in Land retained by Borrower after the Effective Date, as
amended and restated in substantially the form of Exhibit D 1, and
(ii) each other Deed of Trust encumbering the interest of Borrower
or any Subsidiary in any fee, in substantially the form of Exhibit
D 2 (or in such other form as may be approved in writing by
Lender), entered into pursuant to this Agreement or any Security
Document and securing the payment and performance of the
obligations of (1) Borrower under the Loan Documents or (2) one or
more Guarantors under the Subsidiary Guaranty, in any such case, as
amended, supplemented or modified from time to time.
"Default" means any event which, with the giving of notice or
the lapse of time, or both, would constitute an Event of Default.
"Default Rate" means, as of any date, a rate of interest per
annum equal to the greater of (i) 12.6% and (ii) sum of the Prime
Rate plus 400 basis points.
"Deferral Period" means the period commencing on, and
including, the day after the last Business Day of March in each
year, and ending on, and including, the last Business Day of July
in each year.
"Dinuba" means Dinuba Packing Corporation, a California
corporation and a wholly owned subsidiary of Borrower.
"DIP Credit Agreement" means the Amended and Restated Debtor
in Possession Credit Agreement dated as of February 28, 1996, among
SWII, SWI and Lender, as amended, supplemented or modified from
time to time.
"Dual Pledged Securities" means the capital stock of Sun World
Brands, a California corporation, Sun World/Rayo, a California
corporation, Sun World Management Corporation, a California
corporation, Dinuba, SFENV and SFEBV.
"EBITDA" means, on a Consolidated basis, for any fiscal
period, (i) the total amount of Borrower's income before interest
and taxes, plus (ii) to the extent deducted in determining such
income, depreciation, amortization, and other similar non cash
charges, plus (iii) to the extent recognized in determining such
income, charges not arising from operations, minus (iv) to the
extent recognized in determining such income, gains not arising
from operations, in each case for such fiscal period; provided that
EBITDA shall be determined without giving effect to minority
interests.
"Effective Date" means the first date on which (i) the
Effective Date, as defined in the Plan, has occurred, and (ii) each
of the conditions precedent set forth in Section 3 has been
satisfied or, in Lender's sole discretion, waived.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations thereunder
and published interpretations thereof.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that, together with Borrower, would be treated as a
single employer under Section 4001 of ERISA.
"ERISA Plan" means any pension or employee benefit plan
established, maintained, or to which contributions have been made
by Borrower or any ERISA Affiliate.
"Ernst & Young" means Ernst & Young LLP.
"Ernst & Young Claims" means the claims and causes of action
of Borrower (as successor to any one or more Debtors or otherwise)
against Ernst & Young, its former independent public accountants,
based on any and all theories of liability which may be available
to Borrower, and including all rights to recover all monetary
damages of any kind and amount which Borrower may be entitled to
recover from Ernst & Young in connection with any and all
professional services rendered by Ernst & Young or any of its
predecessors to any Debtor (or predecessor of a Debtor) at any
time, and including all defenses available to Borrower under the
Plan, the Bankruptcy Code or other applicable law.
"Event of Default" has the meaning set forth in Section 7.1.
"Exception Ranch" means the Pre Identified Asset identified on
the Exception Ranch on the Minimum Release Price Schedule.
"Excess Cash" means the excess, as of December 31 of each
year, of (i) Available Cash over the sum of (ii) (a) the Minimum
Cash Balance, (b) funds held by or on behalf of Borrower as
deposits with respect to the sale of Land, (c) proceeds of the sale
of any security for the ▇▇▇▇ ▇▇▇▇▇▇▇ Obligations required to be
remitted to ▇▇▇▇ ▇▇▇▇▇▇▇, (d) the Capital Expenditure Rollover
Amount, if any, applicable to the next succeeding fiscal year, (e)
funds held in the Unsecured Claims Disbursement Account, and (f)
the regularly scheduled installment of principal and interest (if
any) due and payable to ▇▇▇▇ ▇▇▇▇▇▇▇ on the next succeeding January
1 (or, if applicable under the ▇▇▇▇ ▇▇▇▇▇▇▇ Credit Agreement, the
next succeeding Business Day).
"Excess Water" means, with respect to either a given parcel or
parcels of real property, or all parcels of real property, located
within a given water district, that volume of water (after giving
effect to all other existing or proposed Permitted Water Sales)
that (i) Borrower is entitled to own, use or consume, pursuant to
any law, regulation, rule, permit, contract, lease, deed or any
other arrangement of any nature whatsoever, and (ii) will not be
needed by Borrower or any of its Subsidiaries during the relevant
Contract Period (A) to maintain, farm, cultivate, use or otherwise
operate such parcel or parcels in compliance with the Loan
Documents and the ▇▇▇▇ ▇▇▇▇▇▇▇ Loan Documents, or (B) to satisfy
any other lawful commitment or obligation of Borrower or any of its
Subsidiaries.
"Final Order" means any order of the Court that has been
entered and as to which (i) the time for appeal has expired without
any appeal having been filed, or (ii) any appeal that was timely
filed has been resolved in a manner affirming such order and the
time for any further appeal has expired.
"Foreign Grower Policies and Procedures" means the policies
and procedures governing advances to Growers located outside the
United States of America delivered to Lender pursuant to Section
3.9.3, as from time to time amended with Lender's prior written
consent.
"Funded Crop Costs" means, with respect to any crops growing
on an identified parcel or parcels of Land, those costs and
expenses (excluding costs and expenses that are, or will or are
required to be, capitalized by Borrower under GAAP) that are
directly attributable to such growing crops and are accounted for
in Borrower's books and records within any of the categories of
"direct expenses" set forth on Schedule 1 hereto; in each case,
determined and accounted for in accordance with the accounting and
budgeting practices of Debtors prior to the Effective Date,
regardless of whether such practices conformed to GAAP.
"GAAP" means generally accepted accounting principles in the
United States.
"Grower" means each Person engaged in the farming of produce
for whom Borrower provides marketing services, whether or not
Borrower also provides harvesting, hauling and packing services to
such Person.
"Grower Advances" has the meaning ascribed to it in Section
6.9.1.
"Guarantor" means each of the Subsidiaries of Borrower other
than Sun World (Europe) B.V.
"Insurance Summary" has the meaning ascribed to it in Section
5.3.1(b).
"Intercreditor Agreement" has the meaning ascribed to it in
Section 3.7.
"Interest Coverage Ratio" means, with respect to any fiscal
period, the ratio of (i) EBITDA for such fiscal period, to (ii) the
sum of Consolidated interest expense of Borrower and its
Subsidiaries for such fiscal period.
"Interest Payment Date" means the last Business Day of each of
January, February, March, August, September, October, November and
December of each year, commencing with the first such date to occur
after the Effective Date, and the Maturity Date.
"Interest Period" means, at any time that the Default Rate
does not apply, a period of one (1), two (2), three (3) or nine (9)
months, as elected by Borrower in accordance with the provisions of
this Agreement; provided, however, that (i) the initial Interest
Period may not begin on any day other than the first day of a
calendar month, (ii) if any Interest Period would otherwise end on
a day that is not a Business Day, that Interest Period shall be
extended to the next succeeding Business Day unless the result of
such extension would be to extend such Interest Period into another
calendar month, in which event such Interest Period shall end on
the immediately preceding Business Day; and (iii) no Interest
Period shall (a) end during the Deferral Period of any year, or (b)
extend beyond the next succeeding Principal Payment Date.
"Investment" has the meaning set forth in Section 6.9.1.
"▇▇▇▇ ▇▇▇▇▇▇▇" means ▇▇▇▇ ▇▇▇▇▇▇▇ Mutual Life Insurance
Company.
"▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ Agreement" means the "Cadiz Agreement",
dated as of the Effective Date, executed by Cadiz for the benefit
of ▇▇▇▇ ▇▇▇▇▇▇▇ pursuant to the ▇▇▇▇ ▇▇▇▇▇▇▇ Credit Agreement, as
amended, modified or supplemented from time to time.
"▇▇▇▇ ▇▇▇▇▇▇▇ Credit Agreement" means that certain New Credit
Agreement entered into by and between Borrower and ▇▇▇▇ ▇▇▇▇▇▇▇
pursuant to the Plan with respect to ▇▇▇▇ ▇▇▇▇▇▇▇'▇ secured claim
against the Debtors, as amended, supplemented or modified from time
to time.
"▇▇▇▇ ▇▇▇▇▇▇▇ Liens" means the Liens in favor of ▇▇▇▇ ▇▇▇▇▇▇▇
granted or confirmed pursuant to the ▇▇▇▇ ▇▇▇▇▇▇▇ Credit Agreement
or any other ▇▇▇▇ ▇▇▇▇▇▇▇ Loan Document.
"▇▇▇▇ ▇▇▇▇▇▇▇ Loan Documents" means the ▇▇▇▇ ▇▇▇▇▇▇▇ Credit
Agreement, the ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ Agreement and each other
agreement, document or instrument executed and delivered by
Borrower or any of its Subsidiaries or Affiliates to ▇▇▇▇ ▇▇▇▇▇▇▇
pursuant to the ▇▇▇▇ ▇▇▇▇▇▇▇ Credit Agreement or in connection with
the transactions contemplated thereby, in each case, as amended,
supplemented or modified from time to time. Each reference in this
Agreement to any ▇▇▇▇ ▇▇▇▇▇▇▇ Loan Document, unless the context
otherwise clearly requires, shall be deemed a reference to such
▇▇▇▇ ▇▇▇▇▇▇▇ Loan Document as amended, supplemented or modified
from time to time.
"▇▇▇▇ ▇▇▇▇▇▇▇ Obligations" means the obligations of Borrower
or any of its Subsidiaries to ▇▇▇▇ ▇▇▇▇▇▇▇ under the ▇▇▇▇ ▇▇▇▇▇▇▇
Credit Agreement and the other ▇▇▇▇ ▇▇▇▇▇▇▇ Loan Documents.
"▇▇▇▇ ▇▇▇▇▇▇▇ Re Advance" has the meaning ascribed to it in
Section 6.2.2 (f).
"Joint Venture" means any special purpose corporation,
partnership (whether a general, limited or limited liability
partnership), limited liability company, trust, estate or other
entity created by (i) Borrower or any of its Subsidiaries, and (ii)
any Person or Persons other than Borrower or any of its
Subsidiaries, in order to conduct a common business enterprise with
such Person or Persons.
"Land" means all real property (including all improvements
thereon), now owned or hereafter acquired, by Borrower or any
Guarantor, or in which Borrower or any Guarantor now has or
hereafter acquires any interest, including, without limitation, all
leasehold interests of Borrower or any Guarantor.
"Leasehold Deeds of Trust" means (i) each Leasehold Deed of
Trust executed as security for Lender's pre petition claims with
respect to any leasehold interest retained by Borrower (as lessee)
after the Effective Date, as amended and restated in substantially
the form of Exhibit E 1, and (ii) each other Leasehold Deed of
Trust encumbering the interest of Borrower or any Subsidiary (as
lessee) in any leasehold, in substantially the form of Exhibit E 2
(or in such other form as may be approved in writing by Lender),
entered into pursuant to this Agreement or any Security Document,
in any such case, as amended, supplemented or modified from time to
time.
"Lender" means Caisse Nationale de Credit Agricole, acting
through its Grand Cayman Branch, a banking corporation organized
and existing under the laws of France.
"LIBOR" means, with respect to any Interest Period, the rate
per annum determined by Lender to be the rate quoted, on an
immediately available funds basis, to Lender, at approximately 8:00
a.m., Chicago time, on the date two (2) Business Days prior to the
first day of such Interest Period, for the offering by banks in the
London interbank market of United States Dollar deposits with
Lender in an amount comparable to the outstanding principal amount
of the Restructured Loan and for a period comparable to such
Interest Period.
"LIBOR (Adjusted) Rate" means, with respect to any Interest
Period, a rate per annum (rounded upward to the nearest 1/16 of 1%)
determined pursuant to the following formula:
LIBOR (Adjusted) Rate = LIBOR
1 LIBOR Reserve Requirement
(expressed as a fraction)
"LIBOR Reserve Requirement" means, with respect to any
Interest Period, the daily average of the stated maximum rate
(expressed as a decimal) at which reserves (including any marginal,
supplemental, or emergency reserves) are required to be maintained
during such Interest Period by Lender against Eurocurrency
liabilities but without benefit of credit proration, exemptions, or
offsets that might otherwise be available to Lender from time to
time under Regulation D of the Board of Governors of the Federal
Reserve Systems. Without limiting the effect of the foregoing, the
LIBOR Reserve Requirement shall reflect any other reserves required
to be maintained by Lender against (i) any category of liabilities
that includes deposits by reference to which the LIBOR (Adjusted)
Rate is to be determined; or (ii) any category of extension of
credit or other assets which includes all or any portion of the
Restructured Loan.
"Lien" means any mortgage, deed of trust, pledge, security
interest, hypothecation, assignment, deposit arrangement,
encumbrance, lien (statutory or other), preference, or other
security agreement or preferential arrangement, charge, or
encumbrance of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention
agreement, any financing lease having substantially the same
economic effect as any of the foregoing, and the filing of any
financing statement under the Uniform Commercial Code or comparable
law of any jurisdiction to evidence any of the foregoing).
"Loan Documents" means this Agreement, the Note, the
Subsidiary Guaranty, the Cadiz Agreement, the Security Documents,
the assignment of the Ernst & Young Claims delivered pursuant to
Section 3.12.14, the agreement setting forth the Minimum Release
Price Schedule executed and delivered pursuant to Section 3.14 and
each other agreement, document or instrument executed and delivered
by Borrower (or any Debtor or Subsidiary of a Debtor, in the case
of Loan Documents constituting amendments or amendments and
restatements) or any of its Subsidiaries or Affiliates to Lender
pursuant hereto or in connection with the transactions contemplated
hereby, and each other agreement, at any time entered into,
identifying itself as a Loan Document, in each case, as amended,
supplemented or modified from time to time. Each reference in this
Agreement to any Loan Document, unless the context otherwise
clearly requires, shall be deemed a reference to such Loan Document
as amended, supplemented or modified from time to time.
"Long Term Debt" means, on a Consolidated basis, as of any
date of determination, all Debt of Borrower and its Subsidiaries
which is payable more than one (1) year after the date on which the
determination is being made and which is shown on the balance sheet
as a liability in accordance with GAAP consistent with GAAP used in
the preparation of the Base Period Financial Statements. Any
obligation shall be treated as Long Term Debt if it is renewable,
pursuant to written agreement, at the option of the debtor, under
the terms thereof or of a revolving credit, to a date more than one
(1) year after the date of the determination.
"Marketing Agreement" means each written agreement between
Borrower (as successor to any Debtor or otherwise) and a Grower
pursuant to which (i) Borrower agrees to purchase produce from such
Grower for resale or (ii) Borrower agrees to market such Grower's
produce, on consignment or otherwise, whether or not such agreement
contemplates that Borrower shall provide harvesting, hauling or
packing services to such Grower and whether or not such agreement
provides that Borrower shall have an interest in such produce.
"Material Adverse Effect" means (i) a material adverse effect
on (A) the value of the Collateral, considered as a whole, (B) the
ability of Borrower or any of its Subsidiaries to perform such
Person's obligations under the Loan Documents, (C) the current or
future Consolidated business, operations or financial condition of
Borrower and its Subsidiaries, taken as a whole, (D) the ability of
SWII or Cadiz to consummate the Plan, or (E) the validity or
enforceability of any material provision of the Loan Documents or
any material right or material remedy of Lender thereunder; or (ii)
the effect of imposing any material liability on Lender.
"Maturity Date" means the date that is the tenth anniversary
of the Effective Date.
"Merger" means the merger of SWII and SWI, pursuant to which
SWI will be (or has become) the surviving corporation and will be
(or has been) renamed Sun World International, Inc., provided for
under the Plan.
"Minimum Cash Balance" means, as of any date of determination,
the lesser of (i) $36,000,000, and (ii) $38,000,000 minus the sum
of the products of (a) for each type of acreage identified on
Exhibit I, the number of acres of such type included in each Pre
Identified Asset sold by Borrower or any of its Subsidiaries after
the Effective Date but on or before the date of determination,
times (b) the per acre adjustment set forth on Exhibit I for such
type of acreage; provided, however, that in no event shall the
Minimum Cash Balance be less than (x) if the Exception Ranch is
sold, $34,690,000, or (y) in any other case, $35,000,000.
"Minimum Release Price" means, with respect to any Pre
Identified Asset, the amount specified therefor on the Minimum
Release Price Schedule.
"Minimum Release Price Schedule" means the schedule relating
to Minimum Release Prices and the Blythe Ranch Release Price agreed
to by Borrower, Lender and ▇▇▇▇ ▇▇▇▇▇▇▇ on or before the Effective
Date, identifying the Pre Identified Assets and classifying certain
of them as Tier A Pre Identified Assets or Tier B Pre Identified
Assets, listing the applicable Minimum Release Price for each such
Pre Identified Asset and the Blythe Ranch Release Price and setting
forth, for illustrative purposes only, the aggregate adjustment to
the Minimum Cash Balance (subject to the limitation set forth in
the proviso included in the definition of Minimum Cash Balance)
that would result from the sale of such Pre Identified Asset in its
entirety, based on the circumstances existing as of June 30, 1996.
"Minimum Sales Price" means, with respect to any Pre
Identified Asset, an amount equal to the sum of (i) the Minimum
Release Price for such Pre Identified Asset, (ii) any applicable
Crop Value, and (iii) the Sales Costs associated with the sale of
such Pre Identified Asset.
"Multiemployer Plan" means a Plan described in Section
4001(a)(3) of ERISA that covers employees of Borrower or ERISA
Affiliate.
"Net Crop Development Costs" means, with respect to any period
(determined on a Consolidated basis), (i) Borrower's aggregate Crop
Development Costs for such period, less (ii) all revenues derived
by Borrower during such period from the sale of any non commercial
crops in respect of which Crop Development Costs were incurred.
"Net Income" means, with respect to any period, Borrower's net
income for such period, determined on a Consolidated basis and in
accordance with GAAP.
"Note" means the promissory note, in substantially the form of
Exhibit A, evidencing the Restructured Loan, as amended,
supplemented or modified from time to time.
"PACA" means the Perishable Agricultural Commodities Act (7
U.S.C. Section 499a et seq.), as amended from time to time.
"PBGC" means the Pension Benefit Guaranty Corporation
established pursuant to ERISA or any entity succeeding to any or
all of its functions under ERISA.
"Permitted Cash Investments" means each of the following
Investments, provided that, as of the date of acquisition thereof,
such Investment has a remaining maturity of six months or less:
(i) securities issued or fully guarantied or insured by the United
States Government or any agency thereof; (ii) certificates of
deposit, overnight bank deposits, bankers' acceptances and
repurchase agreements of Lender or any other commercial bank whose
unsecured short term debt obligations are rated at least A 1 by
Standard & Poor's Corporation or P 1 by ▇▇▇▇▇'▇ Investors Service,
Inc.; and (iii) commercial paper or other securities rated at least
A 1 by Standard & Poor's Corporation or P 1 by ▇▇▇▇▇'▇ Investors
Services, Inc.
"Permitted Lien" means any Lien permitted to exist under
Section 6.2.
"Permitted Water Sale" means a sale or exchange by Borrower,
in compliance with applicable law, of Excess Water, for cash or
other consideration, pursuant to an arm's length contract
("Contract") satisfying each of the following conditions:
(i) Borrower shall not have not entered into, or otherwise
become legally obligated or bound under, such Contract
more than fifteen (15) days in advance of the date on
which the buyer's rights to use Excess Water under such
Contract commence;
(ii) the period during which the buyer shall have rights to
use Excess Water under such Contract (including all
extension or renewal periods available to the buyer
thereunder) (the "Contract Period") shall not exceed
twelve (12) months; and
(iii) such Contract shall be in writing and shall include
provisions substantively identical to the following:
"(A) Unless sooner terminated or expired in
accordance with the terms hereof, this agreement
shall, automatically and without further oral or
written notice to anyone, expire and be of no
further force or effect on the date that is twelve
(12) calendar months after the date hereof.
"(B) The parties hereto acknowledge that
Caisse Nationale de Credit Agricole, acting through
its Grand Cayman Branch ("Credit Agricole"), has
been granted a security interest in and/or lien upon
(1) the water and/or water rights covered by this
agreement, and (2) the rights of seller hereunder.
Under no circumstances shall this agreement be
deemed to create, nor shall buyer otherwise be
deemed to hold by reason of the transactions
contemplated hereby or the performance or
nonperformance of either party hereunder, any
security interest or lien upon all or any portion of
the assets of seller (including, without limitation,
the water and/or water rights that are the subject
of this agreement).
"(C) Any provision herein or other actual
or purported understanding between the parties
hereto that is contrary to, or inconsistent with,
either of the foregoing paragraphs (A) and (B) shall
be null and void and of no force and effect."
"Person" means an individual, partnership (general, limited or
limited liability), corporation, limited liability company,
business trust, joint stock company, trust, unincorporated
association, joint venture, governmental authority, or other entity
of whatever nature.
"Petition Date" means October 3, 1994.
"Plan" means the Debtors' Modified Fourth Amended Consolidated
Plan of Reorganization dated June 3, 1996 (As Amended), as
confirmed by a Final Order.
"Pre Identified Asset" has the meaning ascribed to it in
Section 6.6.4(a).
"Pre Petition Debt" means Debt and other obligations of any
Debtor or any Subsidiary of a Debtor incurred prior to, or
outstanding on, the Petition Date.
"Prime Rate" means the floating commercial lending rate
announced by Lender at its Branch Office as its "prime rate", as in
effect from time to time, it being understood that the Prime Rate
is a reference rate and does not necessarily represent the lowest
or best rate actually charged to any customer, and that Lender may
make commercial loans or other loans at rates of interest at, above
or below the Prime Rate.
"Principal Payment Date" means each of (i) the Effective Date,
(ii) the last Business Day of each of the months of March, August
and December of each year, commencing with the first such date to
occur after the Effective Date, and (iii) the Maturity Date.
"Prohibited Transaction" means any transaction set forth in
Section 406 of ERISA or Section 4975 of the Internal Revenue Code
of 1954, as amended from time to time.
"Projected Blythe Ranch Cash Flow" means, for any year, the
"Cash Flow" of Blythe Ranch projected for such year, as reflected
in the Blythe Ranch Projections.
"Rabobank" means Cooperatieve Centrale Raiffeisen
Boerenleenbank B.A.
"Re Advance" has the meaning ascribed to it in Section 2.1.2.
"Recorded Tax Lien" means any Lien of the United States, the
State of California or any other taxing authority in respect of
taxes alleged to be due and payable by Borrower or any of its
Subsidiaries, or any Debtor, and affecting any Collateral or any
other property, real or personal, of Borrower, or any of its
Affiliates, filed or recorded in the office of the Secretary of
State of California, in the office of any recorder for any county
in the State of California, or in any other place, the effect of
which is to give record notice of, or to perfect, such Lien.
"Released Claims" means the claims and causes of action of the
Debtors and their Subsidiaries, existing prior to the Effective
Date, released pursuant to the Plan.
"Reportable Event" means any of the events set forth in
Section 4043 of ERISA.
"Research and Development Expenditure" means each expenditure
(without netting, or otherwise adjusting for, any revenue) of
Borrower and its Subsidiaries that (i) (A) in accordance with GAAP
consistent with GAAP used in the preparation of the Base Period
Financial Statements, would be classified as a research and
development cost, or (B) regardless of how such expenditure is
recorded on the books and records of Borrower (including, without
limitation, as an administrative expense), otherwise constitutes an
expenditure reasonably allocable (by a method of allocation
consistent with that employed in the preparation of the 1996
Business Plan) to Borrower's research and development activities,
including, without limitation, (1) the salary, wages or benefits of
any individual engaged in research and development activities on
behalf of Borrower or any of its Subsidiaries, and (2) cultivation
costs at Borrower's research and development facilities; or (ii) is
an expenditure in respect of intellectual property, whether or not
such expenditure is, or is intended by Borrower to be, capitalized.
"Restructured Loan" has the meaning ascribed to it in Section
2.1.1.
"Sales Costs" means, with respect to any sale of a Pre
Identified Asset, all bona fide out of pocket costs or expenses
paid or incurred by Borrower or any Subsidiary of Borrower to one
or more third parties directly in connection with the sale of such
Pre Identified Asset, including, without limitation, reasonable
attorneys' fees, escrow costs and fees, title and insurance
premiums, brokerage or finder's fees, filing and recordation costs
and transfer taxes, but excluding (i) delinquent real estate taxes
or assessments, if any, (ii) Borrower's (or the relevant
Subsidiary's) share of any pro rated non delinquent real estate
taxes or assessments, and (iii) expenditures (paid by Borrower or
the relevant Subsidiary through the escrow of such sale) necessary
to cause such Pre Identified Asset to comply with applicable law.
In determining the Sales Costs relating to a sale of a Pre
Identified Asset together with crops growing thereon, neither
(1) costs and expenses clearly allocable to the sale of
such crops, as opposed to the sale of such Pre Identified Asset,
nor
(2) if any costs and expenses related to the sale of such
Pre Identified Asset together with such growing crops are not
clearly allocable to either the real property component or the crop
component of such sale, that portion of such unallocable costs and
expenses equal to the product of (x) the total of such unallocable
costs and expenses times (y) a fraction, the numerator of which is
the Crop Value ascribed to such crops and the denominator of which
is the sum of such Crop Value and the gross consideration for such
Pre Identified Asset,
shall be considered costs or expenses incurred directly in
connection with the sale of such Pre Identified Asset.
"Security Agreement" means each security agreement (or an
amendment or restatement of an existing security agreement, and
including the security agreement so amended or restated), executed
by Borrower or any Subsidiary of Borrower pursuant to this
Agreement in substantially the form of Exhibit G 1 or G 2, as the
case may be, in any such case, as amended, supplemented or modified
from time to time.
"Security Documents" means the Security Agreements, the Stock
Pledge Agreements, the Deeds of Trust, the Leasehold Deeds of
Trust, the Amendments to Lease with Lender Cure Rights and each
other document creating, evidencing or perfecting the security
interests provided for herein.
"SFEBV" means Superior Farming Europe B.V., a Netherlands
corporation and a wholly owned subsidiary of Borrower.
"SFENV" means Superior Farming Europe N.V., a Netherlands
Antilles corporation and a wholly owned subsidiary of Borrower.
"Stock Pledge Agreements" means each of (i) the Amended and
Restated Stock Pledge Agreement executed by Borrower under the
terms of this Agreement in favor of Lender, in substantially the
form of Exhibit H 1 and (ii) the Stock Pledge Agreement executed by
Cadiz under the terms of this Agreement in favor of Lender, in
substantially the form of Exhibit H 2, in each case, as amended,
supplemented or modified from time to time.
"Subsidiary" means, as to any Person, (i) a corporation of
which shares of stock having ordinary voting power (other than
stock having such power only by reason of the happening of a
contingency) to elect a majority of the board of directors or other
managers of such corporation are at the time owned, or the
management of which is otherwise controlled, directly or
indirectly, through one or more intermediaries, or both, by such
Person and/or by one or more Subsidiaries of such Person, (ii) a
partnership a majority of the equity interests in which is owned,
or the management of which is otherwise controlled, directly or
indirectly, through one or more intermediaries, or both, by such
Person or by any one or more Subsidiaries of such Person, (iii) as
to Borrower and Sun Desert, Coachella Growers, and (iv) as to
Borrower, Sun World (Europe) B.V.
"Subsidiary Guaranty" means, collectively, each of the
Subsidiary Guaranties executed by one or more Guarantors under the
terms of this Agreement in favor of Lender, in substantially the
form of Exhibit B, as amended, supplemented or modified from time
to time.
"Sun Desert" means Sun Desert, Inc., a Delaware corporation
and a wholly-owned Subsidiary of Borrower.
"Sun World/North" means Sun World/North, a California general
partnership between Borrower and Dinuba.
"Tangible Assets" means, as of the date of its calculation,
the Consolidated assets of Borrower and its Subsidiaries,
determined in accordance with GAAP consistent with GAAP applied in
the preparation of the Base Period Financial Statements; excluding,
however, all assets that would be classified as intangible assets
under GAAP consistent with GAAP applied in the preparation of the
Base Period Financial Statements (including, without limitation,
goodwill, patents, trademarks, trade names, copyrights and
franchises).
"Tangible Net Worth" means, on a Consolidated basis as of any
date of determination, for Borrower and its Subsidiaries, the
excess of (i) Tangible Assets over (ii) total liabilities
determined in accordance with GAAP consistent with GAAP applied in
the preparation of the Base Period Financial Statements.
"Tax Sharing Agreement" means the agreement between Cadiz and
Borrower, dated as of the Effective Date, relating to the sharing
of certain income tax obligations, in form and substance acceptable
to Lender, as amended, modified or supplemented from time to time.
"Tier A Pre Identified Asset" means a Pre Identified Asset
identified as such on the Minimum Release Price Schedule.
"Tier B Pre Identified Asset" means a Pre Identified Asset
identified as such on the Minimum Release Price Schedule.
"UCC" means the Uniform Commercial Code, as from time to time
in effect in any relevant jurisdiction.
"Unsecured Claims Disbursement Account" means the "Unsecured
Claims Disbursement Account" established and maintained by Borrower
pursuant to the Plan.
"Unsecured Claims Reserve Account" means the "Unsecured Claims
Reserve Account" established and maintained by Cadiz pursuant to
the Plan.
"Water Rights" means, with respect to any Person, all right,
title and interest of such Person in and to all water, water rights
and entitlements, and other rights to water or water rights of
every kind or nature whatsoever, including all water inventory and
rights to use, acquire, appropriate, exchange or otherwise obtain
the benefit of any water, such as: (i) ground or subsurface water
(including groundwater or water stored in a groundwater basin that
is made available to such Person through any water district or
company or other Person, or otherwise), wherever located, whether
or not subject to pumping or other extraction from real property or
from any underground river, aquifer, storage basin or other source,
whether or not subject to removal, use or extraction pursuant to
any easement, license, contract, servitude, covenant running with
any land or other property, permit, approval, consent, judicial or
water authority decision, by operation of law or other basis of
right, including pursuant to any water related contract, water
approval, or water reallocation right or otherwise; (ii) surface
water from any source, whether based upon any appropriative,
riparian, prescriptive or other right, or water approval, water
related contract or water reallocation right, whether
"preconsolidation" water from the California aqueduct or other
water authority water or subsequent to any such consolidation,
whether based upon any easement, license, contract, servitude,
covenant running with the land or other property, permit, approval,
consent, judicial or water authority decision, by operation of law
or other basis of right, including rights accruing because of the
location of any real property within the boundaries of any water
district or other water authority, ownership of any securities or
equity or other interest in any water company or other water
authority or otherwise; and (iii) any right to acquire or transfer
any water or water right, any water allocation or distribution
right, any storage, delivery or transportation right, or other
right, whether or not appurtenant to any real property, whether
based upon any water related contract or any ownership or other
interests in any real property, any stock securities or other
equity or other interests in any water company or other water
authority, any nonuse of any allocable share of water creating any
credit or right from any water bank or other water authority
(including any water reallocation right), or otherwise. For
purposes of this definition, the term "water" includes water rights
and rights to water or whatever rights to money, property or other
benefits are exchanged or received for or on account of any water
or any conservation or other nonuse of water, including whatever
rights are achieved by depositing one's share of any water in any
water bank or with any water authority, and any other water
reallocation rights.
"Working Capital" means, at any time, the excess of Current
Assets over Current Liabilities.
"Zenith" means Zenith Insurance Company.
"Zenith Note" means the promissory note issued to Zenith
pursuant to the Plan, as amended, supplemented or modified from
time to time.
"Zenith Intercreditor Agreement" means the Intercreditor
Agreement, dated as of the Effective Date, between Lender and
Zenith, as amended, supplemented or modified from time to time.
2. AMOUNT AND TERM OF RESTRUCTURED LOAN.
2.1 THE RESTRUCTURED LOAN.
2.1.1 On the Effective Date Lender's claims
against the Debtors in respect of the loans made pursuant to the
Pre Petition Loan Documents shall be restructured as a secured
claim against Borrower in the original principal amount of
$55,386,583.29 (i.e., the sum of (a) $50,569,799.05 (the
outstanding principal balance of such pre petition claims as of the
Petition Date), less any and all payments made in respect of the
principal of such pre petition claims prior to the Effective Date;
plus (b) interest accrued on Lender's pre petition claims
(including, as applicable, interest at the default rate provided in
the Pre Petition Revolving Credit Agreement) and remaining unpaid
as of the Petition Date, in the amount of $2,918,525.15, plus (c)
interest accrued on Lender's pre petition claims, at the default
rate provided in the Pre Petition Revolving Loan Agreement, from
and including the Petition Date to and including the Effective
Date; plus (d) costs and expenses invoiced to or otherwise incurred
by Lender in respect of its pre petition claims and remaining
unpaid as of the Petition Date, in the amount of $1,500,365.55;
plus (e) to the extent reasonably determinable as of the Effective
Date, costs and expenses invoiced to or otherwise incurred by
Lender in respect of its pre petition claims from and including the
Petition Date to and including August 31, 1996; minus (f) any and
all adequate protection payments received by the Lender with
respect to its pre petition claims as of the Effective Date; and
minus (g) any and all other payments received by the Lender with
respect to its pre petition claims (other than in respect of
principal) prior to the Effective Date) (such secured claim,
including the Re Advance, if any, the "Restructured Loan").
2.1.2
(a) If, in the case of an event described
in either clause (i) or clause (iii) of Section 3(b) of the Cadiz
Agreement, (i) Cadiz pays in full the $2,000,000 payment it is
required to make to Lender thereunder; and (ii) thereafter, both
(A) the Restructured Loan is reinstated and (B) on or before the
third anniversary of the Effective Date, ▇▇▇▇ ▇▇▇▇▇▇▇ has received
Asset Sales Proceeds (including at least $5,000,000 in Asset Sales
Proceeds from the sale of Tier B Pre Identified Assets) in an
aggregate amount equal to at least $30,000,000; then, subject to
the satisfaction of the conditions precedent set forth in Section
2.1.2(b), (x) Lender shall readvance to Borrower the sum of
$2,000,000 (the "Re Advance") by transferring the amount thereof
into the Cash Account, and (y) Borrower shall be permitted to
distribute such amount to Cadiz in accordance with Section 6.5.1.
(b) Lender's obligation to make the Re
Advance shall be subject to the satisfaction of the following
conditions precedent (the satisfaction of which shall be
determined, and may be waived, by Lender on or prior to the date on
which the Re Advance is funded (which shall, in any event, be the
first day of an Interest Period)):
(i) The Lender shall have received a
drawdown request, executed by Borrower, no later than 11:00 a.m.,
Chicago time, at least four (4) Business Days prior to the date on
which Borrower desires the Re Advance to be funded, requesting that
the Re Advance be funded on the first day of the next succeeding
Interest Period.
(ii) All representations and
warranties of Cadiz or Borrower or any Subsidiary of either Cadiz
or Borrower set forth in any Loan Document (other than those that
speak as of a specific date) shall be true and correct in all
material respects as if made on and as of the date of the Re
Advance.
(iii) As of the date of the Re
Advance, there shall not have occurred and then be continuing (or
would exist immediately after the Re Advance is made and the
proceeds thereof are used by Borrower) any Default or Event of
Default.
(iv) Borrower shall have provided to
Lender, at Borrower's sole cost and expense, such endorsements
dated as of the date of the Re Advance, in form and substance
satisfactory to Lender, to the existing policy of title insurance
insuring the Liens of the Deeds of Trust as Lender may reasonably
request, including, without limitation, endorsements insuring
Lender that the Liens on real property provided for therein
continue to constitute valid Liens upon the real property interests
covered thereby securing the Note in the full amount of the
outstanding principal of the Restructured Loan after giving effect
to the Re Advance, subject only to such title exceptions as Lender
approved in writing in connection with the Effective Date.
(v) Lender shall have received
evidence, reasonably satisfactory to Lender, that the ▇▇▇▇ ▇▇▇▇▇▇▇
Re Advance has been made, or will be made concurrently with the Re
Advance.
On the date on which the Re Advance is funded, Borrower shall be
deemed to have represented and warranted to Lender that each of the
conditions precedent to the funding of the Re Advance not waived in
writing by Lender has been satisfied.
2.2 THE NOTE. Borrower's obligation to repay the
Restructured Loan shall be evidenced by the Note. The Note shall
be payable to the order of Lender and shall be in a face amount
equal to the Adjusted Original Amount.
2.3 INTEREST.
2.3.1 Subject to the provisions of Section 2.3.2,
the principal amount of the Restructured Loan outstanding hereunder
from time to time shall bear interest at a rate per annum equal to
(a) the sum of (i) the LIBOR (Adjusted) Rate applicable to the
Interest Period then in effect, plus (ii) three percent (3%) per
annum, or (b) at any time that no Interest Period is in effect, the
sum of (i) the Prime Rate in effect from time to time, plus (ii)
two percent (2%) per annum.
2.3.2 Any payment in respect of the Restructured
Loan not paid when due, whether of principal, interest or any other
amount and whether on a scheduled payment date, at stated maturity,
by acceleration or otherwise, shall thereafter bear interest (after
as well as before judgment, and during the pendency of any
bankruptcy proceedings), payable upon demand, at the Default Rate.
In addition, during the continuance of any Default or Event of
Default, the entire outstanding principal amount of the
Restructured Loan shall bear interest (after as well as before
judgment, and during the pendency of any bankruptcy proceedings) at
the Default Rate.
2.3.3 On the last Business Day of each month
occurring during the Deferral Period, interest accrued on the
Restructured Loan but remaining unpaid as of such date shall
commence to bear interest itself, commencing on such date and
continuing until paid in full, compounded monthly, at the rate per
annum applicable to the Restructured Loan. Such interest shall be
due and payable in accordance with Section 2.4.2.
2.3.4 All interest shall be computed on the basis
of a 360-day year and the actual number of days elapsed in the
period during which it accrues.
2.4 PRINCIPAL PAYMENTS; INTEREST PAYMENTS.
2.4.1 PRINCIPAL PAYMENTS. Principal of the
Restructured Loan shall be due and payable as follows:
(a) On the Effective Date, an amount
equal to the Cadiz Payment shall be credited to payment of the
principal of the Restructured Loan, and the initial principal
amount of the Restructured Loan shall be reduced by such amount.
(b) On each Principal Payment Date,
Borrower shall pay to Lender an amount equal to (i) if such
Principal Payment Date occurs on or before March 31, 1999, one and
two thirds percent (1 2/3%) of the Adjusted Original Amount; (ii)
if such Principal Payment Date occurs at any time after March 31,
1999 but prior to the Maturity Date, two and one half percent (2
1/2%) of the Adjusted Original Amount; and (iii) if such Principal
Payment Date is the Maturity Date, the remaining unpaid principal
balance of the Restructured Loan. The Adjusted Original Amount
shall not be reduced on account of the installment of principal due
on the Effective Date.
(c) In addition to the other payments of
principal provided for herein, on the fifth Business Day of each
year, commencing with the fifth Business Day of January, 1997,
Borrower shall pay to Lender an amount equal to Excess Cash,
determined as of the immediately preceding December 31, to be
applied to the payment of the principal of the Restructured Loan as
follows: (i) 50% to the installments of principal due under
Section 2.4.1(b), in the order of their maturity, and (ii) 50% to
the installments of principal due under Section 2.4.1(b), in the
inverse order of their maturity, together with a certificate of the
Chief Executive Officer and Chief Financial Officer of Borrower
setting forth in reasonable detail the computations pursuant to
which the amount of Excess Cash was calculated.
(d) In addition to the other payments of
principal provided for herein, in the event of any sale of the
Blythe Ranch, Borrower shall pay to Lender an amount equal to the
net proceeds to Borrower of such sale, less any amount due and
payable to Zenith in respect of the Zenith Note in accordance with
the Zenith Intercreditor Agreement, in any such case to be applied:
(i) if Blythe Ranch is sold on or before the third anniversary of
the Effective Date, then (A) 50% to the payment of the installments
of principal due under Section 2.4.1(b), in the order of their
maturity, and (B) 50% to the payment of the installments of
principal due under Section 2.4.1(b), in the inverse order of their
maturity; and (ii) in any other case, to the payment of the
installments of principal due under Section 2.4.1(b) in the inverse
order of their maturity.
(e) Any payment made by Cadiz to Lender
under the Cadiz Agreement in respect of ▇▇▇▇ ▇▇▇▇▇▇▇'▇ failure to
receive, on or before the third anniversary of the Effective Date,
principal payments aggregating at least $30,000,000 in Asset Sales
Proceeds from the sale of Pre Identified Assets (including at least
$5,000,000 in Asset Sales Proceeds from the sale of Tier B Pre
Identified Assets) shall be credited towards payment of the
installments of principal due under Section 2.4.1(b) in the inverse
order of their maturity.
2.4.2 INTEREST PAYMENTS. Accrued and unpaid
interest shall be due and payable on each Interest Payment Date;
provided that (a) one half of the aggregate interest accrued during
each Deferral Period (excluding interest accrued thereon pursuant
to Section 2.3.3) shall be due and payable on the Interest Payment
Date occurring in August of the year in which such Deferral Period
occurred (together with all interest accrued under Section 2.3.3
and unpaid as of such Interest Payment Date); and (b) all interest
accrued during any Deferral Period and remaining unpaid as of the
Interest Payment Date occurring in September of the year in which
such Deferral Period occurred (together with all interest accrued
under Section 2.3.3 and unpaid as of such Interest Payment Date)
shall be due and payable on such Interest Payment Date.
2.5 VOLUNTARY PREPAYMENT. Borrower may, upon prior
written or telephonic (promptly confirmed in writing) notice to
Lender, no later than 11:00 a.m., Chicago time, at least three (3)
Business Days prior to the date of prepayment, which notice shall
be irrevocable, at any time prepay the Restructured Loan in whole
or in part in multiples of $100,000, together with accrued and
unpaid interest on the amount so prepaid, without penalty or
premium other than the breakage fees described in Section 2.6
applicable to any prepayment on a date other than the last day of
an Interest Period.
2.6 BREAKAGE FEES. Borrower acknowledges that if any
repayment of any portion of the Restructured Loan, whether pursuant
to Section 2.5 (other than prepayment on the last day of the
applicable Interest Period), pursuant to any provision of Section
2.4, by reason of acceleration or otherwise, is effected on a date
other than the last day of the applicable Interest Period, such
repayment may result in Lender's incurring additional costs,
expenses, liabilities or losses, including, without limitation,
funding losses or loss of anticipated profits, and therefore agrees
to pay to Lender, within ten (10) days after Lender's demand, a fee
equal to the sum of the discounted monthly differences for each
month from the month of prepayment through the month in which such
Interest Period matures, calculated as follows for each such month:
2.6.1 Lender shall first determine the amount of
interest that would have accrued each month on the amount so repaid
at the interest rate applicable to such amount had it remained
outstanding until the last day of the applicable Interest Period.
2.6.2 Lender shall then subtract from the amount
determined in Section 2.6.1 the amount of interest that would
accrue for the same month on the amount so repaid for the remaining
term of the applicable Interest Period at the LIBOR (Adjusted) Rate
in effect on the date of such repayment for a new loan made for
such term and in a principal amount equal to the amount so repaid.
2.6.3 If the difference so determined by Lender
for any month is greater than zero, Lender shall discount that
difference by the LIBOR (Adjusted) Rate used in Section 2.6.2.
Borrower agrees that said amount represents a reasonable estimate
of the costs, expenses, liabilities and losses of Lender attendant
upon any repayment of principal occurring on a date other than the
last day of an Interest Period.
2.7 PAYMENTS GENERALLY.
2.7.1 All payments of principal, interest and
fees hereunder and under the Notes shall be made in immediately
available funds and delivered (a) to Lender not later than either
(i) 11:00 a.m., Chicago time or (ii) if Borrower delivers to Lender
prior to 11:00 a.m. Chicago time notice of the amount to be paid,
12:00 p.m. (i.e., noon), Chicago time on the date due; and (b) to
the account of Lender indicated on the signature pages hereto, or
such other place as shall have been designated in writing by
Lender.
2.7.2 Without limiting in any manner the
obligation of Borrower to pay, as and when due under the relevant
Loan Document, all amounts due and payable in respect of the
Restructured Loan: on each day on which any amount is due and
payable under this Agreement or any other Loan Document, Lender may
debit the Cash Account and apply the amount so debited to the
payment of the amount then so due and payable. Borrower hereby
irrevocably authorizes Lender to debit the Cash Account directly as
provided herein. No application of funds so debited as provided
herein or in any other Loan Document shall constitute a recovery in
violation of any one action or anti deficiency statute, law, rule
or regulation of the State of California or any other jurisdiction.
2.7.3 Provided that no Default or Event of
Default shall have occurred and be continuing, all payments shall
be applied first to the payment of fees, costs and expenses then
due and payable for which demand has been made to Borrower, second
to the payment of interest then due and payable; and third to the
payment of principal.
2.7.4 Borrower acknowledges that, under the terms
of the Amended and Restated Intercreditor Agreement between Lender
and ▇▇▇▇ ▇▇▇▇▇▇▇, Lender may be required to turn over to ▇▇▇▇
▇▇▇▇▇▇▇ certain amounts debited by, or otherwise paid to, Lender in
respect of Borrower's obligations under the Loan Documents, and
agrees that, in any such event, Borrower's obligation to pay to
Lender the amount so turned over to ▇▇▇▇ ▇▇▇▇▇▇▇ shall be
reinstated (and interest shall resume accruing thereon commencing
as of the date of such turnover to ▇▇▇▇ ▇▇▇▇▇▇▇), all as though
such amount had never been debited by or paid to Lender. Lender
shall give notice to Borrower of the date on which any amount is so
turned over to ▇▇▇▇ ▇▇▇▇▇▇▇ and of the amount thereof; provided,
however, that Lender's failure to give such notice shall not limit
or otherwise affect the obligation of Borrower hereunder with
respect to such turnover.
2.8 PAYMENT ON NON-BUSINESS DAYS. Whenever any payment
to be made hereunder or under the Note shall be stated to be due on
a day that is not a Business Day, such payment shall be made on the
next succeeding Business Day and such extension of time shall in
such case be included in the computation of the payment of interest
hereunder or under the Notes, as the case may be.
2.9 NOTATIONS. Lender is hereby authorized to note on
Lender's books and records (either manually or by electronic
entry), on a schedule attached to the Note, or both, the amounts
and dates of all payments with respect to the Restructured Loan
made by Borrower hereunder; provided, however, that failure to make
a notation or the inaccuracy of any notation shall not limit or
otherwise affect the obligations of Borrower hereunder or under the
Note or any other Loan Document.
2.10 SPECIAL PROVISIONS REGARDING LIBOR.
2.10.1 INTEREST PERIODS. Borrower shall designate
to Lender in writing (or telephonically, promptly confirmed in
writing), no later than 11:00 a.m., Chicago time, at least four (4)
Business Days prior to (a) the Effective Date (or, if the Effective
Date does not occur on the first day of a calendar month, the first
day of the calendar month next succeeding the month in which the
Effective Date occurs), with respect to the initial Interest
Period, or (b) in any other case, the last day of any Interest
Period then applicable to the Restructured Loan (or, if at any time
after the initial Interest Period, there is no Interest Period, the
first day of the next calendar month as of which an Interest Period
may be selected), a new Interest Period therefor. If the Company
shall fail to elect the initial Interest Period or any succeeding
Interest Period pursuant to this Section 2.10.1, the initial (or
such succeeding) Interest Period (but without limiting the effect
of Section 2.3.2) shall be identical to the preceding Interest
Period; provided, however, that (x) if there is an insufficient
number of months left between the last day of the expiring Interest
Period and the next succeeding Principal Payment Date, such
succeeding Interest Period shall have a term of one (1) month, and
(y) if there is less than one (1) month left between the last day
of the expiring Interest Period and the next succeeding Principal
Payment Date, there shall be no immediately succeeding Interest
Period, but (absent a timely election by Borrower of an Interest
Period having a different duration) a new Interest Period, having a
duration identical to the preceding Interest Period, shall commence
on the first day of the next succeeding calendar month.
2.10.2 ILLEGALITY OR IMPOSSIBILITY.
Notwithstanding any other provision of this Agreement, in the event
that (a) Lender determines in its reasonable opinion that the
introduction of, any change in, or any change in the interpretation
of, any law or regulation applicable to it shall make it unlawful
for Lender to fund or maintain or charge interest determined with
respect to LIBOR, or (b) Lender determines in good faith that by
reason of circumstances affecting the applicable interbank market,
adequate and reasonable methods do not exist for determining the
LIBOR (Adjusted) Rate that would otherwise be applicable to the
Restructured Loan, or (c) Lender determines in good faith that
deposits of United States Dollars in the relevant amount for the
applicable Interest Period are not available in the London
Eurodollar interbank market, then Lender shall promptly give notice
of such determination to Borrower (which notice shall be conclusive
and binding). Upon such notification, (x) no election of an
Interest Period shall be made thereafter until Lender determines
that such illegality or other circumstance no longer exists, and
(y) if Lender cannot lawfully maintain the Restructured Loan on the
basis of an interest rate determined with respect to LIBOR, then
the Restructured Loan shall, at the option of Lender, instead bear
interest at a rate per annum equal to the sum of (i) the Prime
Rate, as it may change from time to time, plus (ii) two percent
(2%) per annum; provided, however, that if any such introduction or
change shall permit the Restructured Loan to continue to bear
interest determined with respect to LIBOR until the expiration of
the Interest Period then applicable thereto, then the Restructured
Loan shall continue to earn interest at the rate determined in
accordance with Section 2.3.1 until the end of such Interest
Period. In the event the Restructured Loan is converted to a lower
rate in accordance with the foregoing terms prior to the last day
of the applicable Interest Period, Borrower, in addition to all
other amounts payable to Lender with respect thereto, shall pay to
Lender, within ten (10) days after demand by Lender (which demand
shall set forth in reasonable detail the basis for requesting such
amount or amounts), such amount or amounts as may be necessary to
compensate Lender for any loss in connection therewith.
2.10.3 SPECIAL COSTS. Upon notice from Lender
(which notice shall set forth in reasonable detail the basis for
requesting such reimbursement), Borrower shall promptly reimburse
Lender for any increase in its costs (which shall include, but not
be limited to, taxes, other than income, franchise, or other
similar taxes imposed on the overall net income of Lender, fees,
charges, and/or reserve requirements, after taking into account any
reserve requirements reflected in the determination of the LIBOR
(Adjusted) Rate) directly or indirectly resulting due to any
circumstances from the maintaining of the Restructured Loan as a
credit for which interest is determined with respect to LIBOR. The
amount of such costs shall be determined by Lender based upon the
assumption that Lender funded 100% of the Restructured Loan in the
London Eurodollar interbank market. In attributing Lender's
general costs relating to its operations to any transaction under
this Agreement, or averaging any costs over a period of time,
Lender may use any reasonable attribution or averaging methods
which it deems appropriate and practical.
2.11 CAPITAL REQUIREMENTS. Notwithstanding any other
provision of this Agreement, in the event Lender determines in good
faith that, after the date of this Agreement, either (a) the
introduction of, any change in, or any change in the interpretation
or administration of, any law or regulation by any governmental
authority charged with the interpretation or administration thereof
or (b) any compliance (not required as of the date of this
Agreement) with any guideline or request from any such governmental
authority (whether or not having the force of law) has or would
have the effect of reducing the rate of return on the capital of
Lender as a consequence of or with reference to Lender's making or
maintaining any commitment, or other transaction hereunder below
the rate that Lender could have achieved but for such introduction,
change or compliance (taking into account the policies of Lender
with regard to capital), then Borrower shall pay to Lender within
ten (10) days after Lender's demand, such additional amounts as may
be sufficient to compensate it for such reduction. A certificate
as to such amounts, together with the detailed calculations
therefor, submitted to Borrower by Lender, shall be conclusive and
binding for all purposes, absent manifest error. Lender agrees
promptly to notify Borrower of any circumstances that might cause
Borrower to pay additional amounts pursuant to this Section 2.11;
provided, however, that the failure to give such notice shall not
affect Borrower's obligation to pay such additional amounts
hereunder.
2.12 RELEASED CLAIMS. Effective on the Effective Date
and in consideration of the payment to Lender by Cadiz of
$2,000,000 in cash (constituting a portion of the Cadiz Payment),
Lender hereby releases its Liens on the Released Claims.
3. CONDITIONS PRECEDENT. The effectiveness of Section 2 of
this Agreement is subject to the satisfaction of the following
conditions precedent (the satisfaction of which shall be
determined, and may be waived, by Lender) on or prior to the
Effective Date; provided, however, that AAI shall not be required
to have executed and delivered (and Borrower shall not be required
to have delivered with respect to AAI) any document, and neither
Borrower nor AAI shall be required to have taken any action with
respect to AAI, that it would otherwise be required to have
executed and delivered, or to have taken, as a condition precedent
to the effectiveness of Section 2:
3.1 EFFECTIVE DATE. (a) An order shall have been
entered, and shall have become a Final Order, confirming the Plan
in form and substance satisfactory to Lender; and (b) all
conditions precedent to the occurrence of the Effective Date
(including, without limitation, the consummation of each of the
Acquisition and the Merger in accordance with the terms of the
Plan), other than those set forth herein, shall have been
satisfied, or waived by the Person or Persons entitled to the
benefit thereof. Without limiting the generality of the foregoing:
3.1.1 Cadiz shall have paid in full, as provided
in the Plan, the $3,000,000 in aggregate payments to be made under
the Plan to the holders of Interests in Classes 9 and 10, as
defined in the Plan.
3.1.2 Cadiz shall have funded at least
$11,000,000 into the Unsecured Claims Reserve Account.
3.1.3 In addition to the amount required to be
funded under Section 3.1.2, Cadiz shall have funded into the
Unsecured Claims Reserve Account an amount equal to the aggregate
amount required to be paid under the Plan on the Effective Date in
respect of Class 6 Claims.
3.1.4 Cadiz shall have paid to ▇▇▇▇ ▇▇▇▇▇▇▇, in
cash, the $2,000,000 to be paid to ▇▇▇▇ ▇▇▇▇▇▇▇ on the Effective
Date under the ▇▇▇▇ ▇▇▇▇▇▇▇ Credit Agreement.
3.1.5 The sum of all amounts due in respect of
the DIP Credit Agreement as of the Effective Date shall not exceed
$15,000,000.
3.1.6 At least eighty percent (80%) of the
outstanding stock of Borrower held by Cadiz upon consummation of
the Acquisition and the Merger shall have been acquired by Cadiz
from the former stockholders of SWII.
3.2 CADIZ PAYMENT. Cadiz shall have paid to Lender the
Cadiz Payment.
3.3 WORKING CAPITAL CONTRIBUTION. Cadiz shall have
deposited into the Cash Account, as a Capital Contribution to
Borrower, the Cadiz Working Capital Contribution Amount.
3.4 PRO FORMA BALANCE SHEETS; OPENING FINANCIAL
POSITION; CERTAIN FINANCIAL RESULTS.
3.4.1 Lender shall have received pro forma (a)
Consolidated and consolidating balance sheets of Borrower and its
Subsidiaries, and (b) a Consolidated balance sheet of Cadiz and its
Subsidiaries (including Borrower and Borrower's Subsidiaries), in
each case (x) prepared on a purchase accounting basis as of the
Effective Date and immediately after giving effect to the
consummation of the Plan and of all transactions contemplated by
the Plan to be consummated thereon (including, without limitation,
the Acquisition and the Merger, all Capital Contributions to be
made to Borrower by Cadiz on the Effective Date pursuant to the
Plan, all payments to be made by Debtors or Cadiz on the Effective
Date pursuant to the Plan, the payment of any tax liability arising
by reason of or otherwise in connection with the Acquisition, and
the restructuring of the pre petition claims of Lender and ▇▇▇▇
▇▇▇▇▇▇▇ as contemplated hereby); and (y) excluding (i) any amounts
remaining in the Debtors' bankruptcy estates and (ii) any
obligations that remain obligations of such estates, rather than of
Borrower or any Subsidiary of Borrower; in each case, together with
a certification by the Chief Executive Officer and Chief Financial
Officer of Borrower or Cadiz, as the case may be, to the effect
that (p) such pro forma balance sheets (1) are reasonably stated in
light of the actual (to the extent available) or reasonably
anticipated (to the extent that actual results are not available)
yields and prices of crops as of the Effective Date and (2) have
been prepared on a purchase accounting basis in accordance with
GAAP; (q) such pro forma balance sheets have been reviewed by Price
Waterhouse LLP in connection with such accountants' standard
procedures relating to the preparation of audited financial
statements for Cadiz for the fiscal year ending March 31, 1997; and
(r) such accountants have orally informed such officers that such
pro forma balance sheets appear to have been properly prepared.
3.4.2 Lender shall have received evidence, in
form and substance reasonably acceptable to it, that as of July 31,
1996, determined (i) on a Consolidated basis in accordance with the
DIP Credit Agreement, and (ii) as if the Effective Date had
occurred thereon (and, without limitation, reflecting Borrower's
expenditure of all amounts required to obtain all bonds necessary
to secure the issuance of all licenses, under PACA or other
applicable law, required for the conduct of Borrower's business),
the total of all (x) cash (including all funds held in deposit or
other accounts) of Debtors and their Subsidiaries and (y)
investments of Debtors and their Subsidiaries that would have
qualified as Permitted Cash Investments under this Agreement had
such investments been held by Borrower as of the Effective Date,
was at least $5,000,000.
3.5 DIP CREDIT AGREEMENT. The commitment of Lender
under the DIP Credit Agreement shall have been terminated, all
amounts payable in connection therewith shall have been paid in
full and all outstanding letters of credit under the DIP Credit
Agreement, if any, shall have been cash collateralized in
accordance with the provisions thereof.
3.6 ▇▇▇▇ ▇▇▇▇▇▇▇ CREDIT AGREEMENT. (a) (i) The ▇▇▇▇
▇▇▇▇▇▇▇ Credit Agreement, and each other ▇▇▇▇ ▇▇▇▇▇▇▇ Loan Document
required to have been executed and delivered thereunder as of the
Effective Date, shall have been executed and delivered by all
parties thereto, in such form as shall have been approved by Lender
in writing, and all conditions precedent to the full effectiveness
of the ▇▇▇▇ ▇▇▇▇▇▇▇ Credit Agreement shall have been satisfied, or
waived by ▇▇▇▇ ▇▇▇▇▇▇▇ on terms and conditions satisfactory to
Lender; and (ii) Lender shall have received a certificate from ▇▇▇▇
▇▇▇▇▇▇▇, in form and substance reasonably satisfactory to Lender,
confirming such satisfaction or waiver; and (b) the initial
principal amount of the ▇▇▇▇ ▇▇▇▇▇▇▇ Obligations shall not exceed
$91,083,853.95.
3.7 INTERCREDITOR AGREEMENT. Lender and ▇▇▇▇ ▇▇▇▇▇▇▇
shall have executed and delivered an intercreditor agreement and
subordination agreement (as amended, supplemented or modified from
time to time, the "Intercreditor Agreement") providing that their
respective Liens shall have the same relative priorities as
provided in the Intercreditor and Subordination Agreement executed
and delivered in connection with their pre-petition claims against
the Debtor and its Affiliates, irrespective of the order in which
such Liens may have been perfected.
3.8 RAYO WATER RIGHTS. Cadiz shall have vested, or
caused to be vested, in Borrower, pursuant to documentation in form
and substance satisfactory to Lender, full and indefeasible title
to the "▇▇▇▇▇▇▇▇▇ ▇▇▇▇ Water Rights", as defined in the Plan,
including all claims and causes of action (and any proceeds
therefrom, in settlement or otherwise), arising out of or in
connection with any and all underlying contract rights.
3.9 MARKETING AGREEMENTS; CERTAIN INFORMATION.
3.9.1
(a) Borrower shall have entered into, and
shall have recorded in the real estate records in each county in
which any property affected thereby is located, a memorandum of, a
Marketing Agreement with (i) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, with respect to
all farming acreage owned, leased or otherwise operated by ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇, and (ii) with each other Person under the control of
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, including each limited or general partnership
of which ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ or any Affiliate of ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇ is a general partner (including each Person listed on
Schedule 3.9) (each such Person, a "Marguleas Controlled Grower"),
with respect to all farming acreage owned, leased or otherwise
operated by such Person. Each such Marketing Agreement (and each
memorandum of a Marketing Agreement) shall be on terms and
conditions satisfactory to Lender, including, without limitation,
in the case of a Marketing Agreement, providing (x) that such
Marketing Agreement shall remain in effect for a term of at least
five years after the Effective Date and that the Grower party
thereto shall not convey the real property subject thereto except
to a Person that assumes such Marketing Agreement, (y) for the
release by the Grower party thereto of all of its claims and causes
of action against Borrower or any of its Subsidiaries arising prior
to the Effective Date, and (z) for the release by Borrower and its
Subsidiaries of their respective claims and causes of action
against the Grower party thereto arising prior to the Effective
Date. The release by Borrower and such Subsidiaries shall take
effect annually in twenty percent (20%) increments so that the
value of the claims and causes of action being released by Borrower
and its Subsidiaries increases as Borrower records marketing and
packing revenue from such Marketing Agreement; provided, however,
that the release by Borrower and its Subsidiaries of ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇ shall take effect only for so long as ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
does not default under the provisions of his Stock Purchase
Agreement with Cadiz (pursuant to which Cadiz has acquired his
capital stock of SWII) relating to his obligations to enter into,
or to cause certain other Persons to enter into, Marketing
Agreements), and then only to the extent that the Marketing
Agreements entered into with all Marguleas Controlled Growers
(other than Marguleas Controlled Growers that, over the opposition
of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, (p) sell all or any portion of the farming
acreage covered by the Marketing Agreements to which they are party
or (q) remove ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ (or his Affiliate, as the case
may be) from his (or such Affiliate's) position as managing general
partner (or other relevant control position)) remain in effect.
(b) Borrower shall have delivered to
Lender (i) copies of the partnership agreement or other
organizational documents of each Marguleas Controlled Grower,
certified by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ as a true and correct copy of the
original thereof, (ii) in the case of any Marguleas Controlled
Grower that is a limited partnership, a copy of such Person's Form
LP 1, certified by the California Secretary of State, and (iii)
evidence, in form and substance reasonably acceptable to Lender, of
the due authorization and execution by such Marguleas Controlled
Entity of both the Marketing Agreement and the release in favor of
Lender to which such Marguleas Controlled Grower is a party.
3.9.2 Borrower shall have delivered to Lender (a)
the schedule of Marketing Agreements referred to in Section 4.4,
and (b) the schedule of major account debtors referred to in
Section 4.6.
3.9.3 Borrower shall have delivered to Lender the
set of policies and procedures, in form and substance acceptable to
Lender, that will apply initially to Borrower's making of advances
to Growers located outside the United States of America including,
among other things, separate aggregate dollar limits on cultural,
packing and crossing advances.
3.10 MUTUAL RELEASES.
3.10.1 BORROWER. Lender and Borrower and each of
its Subsidiaries, on behalf of themselves and their respective
controlled Affiliates and their and such Affiliates' respective
predecessors, successors and assigns, shall have executed and
delivered mutual general releases of each other and their
respective Affiliates and their and such Affiliates' respective
stockholders, directors, employees, agents, representatives and
attorneys, and the predecessors, successors, assigns and personal
representatives of each of the foregoing Persons, with respect to
any and all claims and other obligations or liabilities, of any
nature whatsoever, whether known or unknown, in any way relating to
the credit relationship between Lender and any of its Affiliates
and Borrower and any of its Affiliates, or to the Debtors'
bankruptcy proceedings, and arising from any action or omission
occurring on or before the Effective Date; provided, however, that
such releases shall not include any claims, obligations or
liabilities arising under documents executed in connection with the
consummation of the Plan.
3.10.2 ▇▇▇▇ ▇▇▇▇▇▇▇. Lender and ▇▇▇▇ ▇▇▇▇▇▇▇, on
behalf of themselves and their respective predecessors, successors
and assigns, shall have executed and delivered mutual general
releases of each other and their respective stockholders,
directors, employees, agents, representatives and attorneys, and
the predecessors, successors, assigns and personal representatives
of each of the foregoing Persons, with respect to any and all
claims and other obligations or liabilities, of any nature
whatsoever, whether known or unknown, in any way relating to their
respective claims against Borrower or any Affiliate of Borrower, or
to the Debtors' bankruptcy proceedings, and arising from any action
or omission occurring on or before the Effective Date; provided,
however, that such releases shall not include any claims,
obligations or liabilities arising under documents executed in
connection with the consummation of the Plan.
3.10.3 FORMER STOCKHOLDERS. Lender and each of
the former stockholders of SWII other than the ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇
▇. ▇▇▇▇ Revocable Trust dated 6 15 88, on behalf of themselves and
their respective controlled Affiliates and their and such
Affiliates' respective predecessors, successors and assigns, shall
have executed and delivered mutual general releases of each other
and their respective Affiliates and their and such Affiliates'
respective stockholders, directors, employees, agents,
representatives and attorneys, and the predecessors, successors,
assigns and personal representatives of each of the foregoing
Persons, with respect to any and all claims and other obligations
or liabilities, of any nature whatsoever, whether known or unknown,
in any way relating to the credit relationship between Lender and
any of its Affiliates and Borrower and any of its Affiliates, to
any transaction between Borrower or any of its Affiliates and such
other Person, or to the Debtors' bankruptcy proceedings, and
arising from any action or omission occurring on or before the
Effective Date; provided, however, that such releases shall not
include any claims, obligations or liabilities arising under
documents executed in connection with the consummation of the Plan.
3.10.4 CERTAIN OTHER PERSONS. (a) Lender and The
Irvine Company, and (b) Lender and Zenith, on behalf of themselves
and their respective controlled Affiliates and their and such
Affiliates' respective predecessors, successors and assigns, shall
have executed and delivered mutual general releases of each other
and their respective Affiliates and their and such Affiliates'
respective stockholders, directors, employees, agents,
representatives and attorneys, and the predecessors, successors,
assigns and personal representatives of each of the foregoing
Persons, with respect to any and all claims and other obligations
or liabilities, of any nature whatsoever, whether known or unknown,
in any way relating to the credit relationship between Lender and
any of its Affiliates and Borrower and any of its Affiliates, to
the transactions between The Irvine Company or Zenith,
respectively, and Borrower or any of its Affiliates, or to the
Debtors' bankruptcy proceedings, and arising from any action or
omission occurring on or before the Effective Date; provided,
however, that such releases shall not include any claims,
obligations or liabilities arising under documents executed in
connection with the consummation of the Plan.
3.10.5 CADIZ. Lender and Cadiz, on behalf of
themselves and their respective controlled Affiliates and their and
such Affiliates' respective predecessors, successors and assigns,
shall have executed and delivered mutual general releases of each
other and their respective Affiliates and their and such
Affiliates' respective stockholders, directors, employees, agents,
representatives and attorneys, and the predecessors, successors,
assigns and personal representatives of each of the foregoing
Persons, with respect to any and all claims and other obligations
or liabilities, of any nature whatsoever, whether known or unknown,
in any way relating to the Acquisition, the Merger or the other
transactions contemplated thereby, or to the credit relationship
between Lender and any of its Affiliates and Borrower and any of
its Affiliates, or to the Debtors' bankruptcy proceedings, in each
case, arising from any action or omission occurring on or before
the Effective Date; provided, however, that such releases shall not
include any claims, obligations or liabilities arising under
documents executed in connection with the consummation of the Plan.
3.11 INITIAL INTEREST PERIOD. If the Effective Date
occurs on the first day of a calendar month, Borrower shall have
timely notified Lender of the initial Interest Period.
3.12 EXECUTED DOCUMENTS. In addition to those documents
the delivery of which is otherwise required under the Agreement,
Borrower shall have delivered, or caused to be delivered, to Lender
the following documents, duly executed by all parties thereto and
in form and substance acceptable to Lender:
3.12.1 The Note.
3.12.2 The Subsidiary Guaranty.
3.12.3 The Security Agreements.
3.12.4 The Stock Pledge Agreements.
3.12.5 A Deed of Trust with respect to each fee
interest identified on Schedule 4.4.
3.12.6 The Cadiz Agreement.
3.12.7 (a) A Leasehold Deed of Trust, and (b) an
Amendment to Lease With Lender Cure Rights, with respect to each
leasehold interest identified on Schedule 4.4, together with
evidence, reasonably satisfactory to Lender, that each such
leasehold interest has been placed of record in the county in which
the real property subject thereto is located.
3.12.8 Executed UCC-1 financing statements (or
amendments to existing financing statements) from Cadiz, Borrower
and each Guarantor in proper form for filing in all jurisdictions
in which filing may be necessary to perfect the Liens provided for
in the Security Documents.
3.12.9 With respect to each Grower to whom
Borrower contemplates making (or will have outstanding, as of the
Effective Date) Grower Advances: (a) an original counterpart of
the security agreement between Borrower and such Grower granting to
Borrower the security interest required to be obtained by Borrower
pursuant to Section 6.9.1, certified by Borrower as being a true
and complete such counterpart; (b) acknowledgment copies of
financing statements filed or recorded by Borrower, sufficient to
perfect such security interests; and (c) an assignment to Lender of
all rights thereunder.
3.12.10 Copies of (i) notices to all depository
institutions with which Borrower or any Guarantor maintains one or
more accounts, as listed on Schedule 4.4, informing such depository
institutions of Lender's Liens thereon, acknowledged as having been
received by each such depository institution and (ii) such
agreements as may be reasonably required by Lender to provide for
the establishment of the Cash Account and the Concentration Account
and for the collection, concentration and transfer of Borrower's
and its Subsidiaries' funds in accordance with Section 5.4.
3.12.11 A Patent, Trademark and Copyright Security
Agreement, executed on behalf of Borrower and each Guarantor owning
any interest in patents, trademarks or copyrights, in form
appropriate for filing with the United States Patent and Trademark
Office and with the United States Copyright Office.
3.12.12 A collateral assignment of each keyman life
insurance policy identified in the Insurance Summary as insuring
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇.
3.12.13 (a) To the extent not already in Lender's
possession, certificates representing all shares of stock subject
to either Stock Pledge Agreement (other than Dual Pledged
Securities), together with appropriately endorsed stock
assignments, and (b) with respect to the Dual Pledged Securities,
an executed notice from Borrower to ▇▇▇▇ ▇▇▇▇▇▇▇ advising ▇▇▇▇
▇▇▇▇▇▇▇ of the Lien thereon in favor of Lender, countersigned by
▇▇▇▇ ▇▇▇▇▇▇▇ to acknowledge its receipt of such notice and that it
holds the Dual Pledged Securities as bailee of Lender as well as in
its own capacity.
3.12.14 (a) An assignment to Lender of the Ernst &
Young Claims and (b) a tolling agreement among Borrower, Lender,
and Ernst & Young, in each instance in form and substance also
acceptable to ▇▇▇▇▇▇ & ▇▇▇▇, special counsel to Lender regarding
the Ernst & Young Claims.
3.13 RELATED AGREEMENTS. Borrower shall have delivered,
or shall have caused to be delivered, to Lender, duly executed and
delivered by each Person party thereto, copies of the following
documents, (i) duly certified as of the Effective Date as being
true and complete copies of the originals thereof and in full force
and effect, without amendment, and (ii) in form and substance
acceptable to Lender:
3.13.1 The Cadiz Services Agreement.
3.13.2 The Cadiz Lease.
3.13.3 The Tax Sharing Agreement.
3.13.4 The consent of each of Rabobank and
Ansbacher to the Acquisition and the Merger and to Cadiz'
execution, delivery and performance of each of the Loan Documents
and each of the ▇▇▇▇ ▇▇▇▇▇▇▇ Loan Documents.
3.13.5 Each consent of any other Person required
for the execution and delivery by Borrower or any Guarantor of the
Loan Documents required to be executed and delivered by it under
this Agreement or for the consummation of the transactions
contemplated hereby (including, without limitation, the consent of
the Bank of Scotland to the transfer to Cadiz of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇'▇
capital stock of SWII).
3.13.6 Documentation providing for the
restructuring of Cadiz' obligations to Rabobank to extend the
maturity date of Cadiz' obligations to Rabobank to a date no
earlier than the second anniversary of the Effective Date.
3.13.7 Documentation effecting the settlement by
Borrower of its disputes with Zenith, on terms and conditions
providing, among other things, for the release by Zenith of (a) its
Lien on ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇'▇ capital stock of SWII and (b) all of its
claims against Borrower and its Subsidiaries.
3.13.8 If Borrower has reached a settlement with
LSL Biotechnologies, Inc., documentation effecting the settlement
by Borrower of its disputes with LSL Biotechnologies, Inc. on terms
and conditions providing, among other things, for the release by
LSL Biotechnologies, Inc. of all of its claims against Borrower and
its Subsidiaries.
3.13.9 If Borrower has reached a settlement with
the Internal Revenue Service with respect to the outstanding FICA
tax claims, documentation effecting such settlement.
3.13.10 The agreement between Cadiz and the
depository institution with which the Unsecured Claims Reserve
Account is established providing for the establishment and
maintenance thereof.
3.14 MINIMUM RELEASE PRICE SCHEDULE. An agreement
setting forth the Minimum Release Price Schedule shall have been
executed and delivered by Borrower, Lender and ▇▇▇▇ ▇▇▇▇▇▇▇.
3.15 TITLE INSURANCE. Borrower shall have provided to
Lender, at Borrower's sole cost and expense, such endorsements, in
form and substance satisfactory to Lender, to the policies of title
insurance insuring the validity and priority of the existing Deeds
of Trust as Lender may request, insuring Lender that the Liens on
real property provided for herein, including, without limitation,
the Blythe Ranch, constitute valid Liens upon the real property
interests covered thereby securing the Note and the other
obligations of Borrower or the Guarantors under the Loan Documents,
as the case may be, subject only to the Liens of ▇▇▇▇ ▇▇▇▇▇▇▇ with
respect to all fee estates in real property other than Blythe Ranch
and to such other Liens as Lender may approve in writing.
3.16 CORPORATE ACTIONS. Borrower shall have delivered
(or caused to be delivered) to Lender:
3.16.1 resolutions of the Board of Directors of
each of Cadiz, Borrower and each Guarantor authorizing (a) the
execution, delivery and performance of such of the Loan Documents
as have been or are to be executed by such Person (on behalf of
itself or any other Person, as a general partner thereof), (b) the
consummation of the transactions contemplated hereby and thereby,
and (c) all other actions to be taken by such Person (or any
partnership of which such Person is a general partner) in
connection herewith, each certified by the secretary or an
assistant secretary of such Person as being in full force and
effect, without amendment, as of the Effective Date; and
3.16.2 a certificate of the Secretary or Assistant
Secretary of each of Cadiz, Borrower and each Guarantor certifying
the incumbency, names and true signatures of the officers of such
Person authorized to sign such of the Loan Documents to which such
Person is or is to become a party pursuant hereto;
3.16.3 a copy of each of (a) the Certificate or
Articles of Incorporation and (b) bylaws of each of Cadiz, Borrower
and each Guarantor, certified by the Secretary or an Assistant
Secretary of such Person as being a true and complete copy thereof,
including all amendments, as in full force and effect on the
Effective Date and after giving effect to the Merger;
3.16.4 a certificate or certificates of the
Secretary of State or other appropriate official of the State of
incorporation of each of Cadiz, Borrower and each Guarantor, and of
each other State in which such Person is qualified to do business,
dated as of a date close to the Effective Date, to the effect that
(a) such Person is validly existing (or qualified to do business,
as the case may be) and in good standing in such State, or the
equivalent thereof, and (b) if generally available in such State,
to the effect that such Person is in good standing with the tax
authorities of such State, or the equivalent thereof; and
3.16.5 A copy of the Agreement of Merger between
SW and SWII giving effect to the Merger, certified by the Secretary
of State of the State of Delaware as being a true and correct copy
of the original, as filed.
3.17 EVIDENCE OF INSURANCE. Borrower shall have
provided Lender with certificates of insurance evidencing the
continued maintenance of the insurance required to be maintained
pursuant to Section 5.3, reflecting Lender as a loss payee or
additional insured, as the case may be, in accordance with Section
5.3, and otherwise in form and substance satisfactory to Lender.
3.18 EVIDENCE OF REQUIRED LICENSES. Borrower shall have
provided Lender with evidence, satisfactory to Lender, that, on the
Effective Date, Borrower holds (i) all licenses required under the
laws of the State of California to permit the marketing by Borrower
of produce on behalf of Growers, and (ii) a written commitment,
from the United States Department of Agriculture and in form and
substance acceptable to Lender, of the license required under PACA
to permit the marketing by Borrower of produce on behalf of
Growers.
3.19 ENVIRONMENTAL STUDIES. Lender shall have received
copies, certified by Borrower as true and complete copies of the
originals thereof, of each assessment, report, study or other
investigation, produced at any time after December 8, 1989 and
prior to the Effective Date, regarding the actual, alleged or
possible production, use, presence, treatment, storage,
transportation, disposal, release or threatened release of any
hazardous substance or hazardous waste (defined in Section 4.14)
at, on or about any real property or personal property currently or
formerly owned, leased or operated by Borrower or any Subsidiary of
Borrower.
3.20 MATERIAL ADVERSE EFFECT. No Material Adverse
Effect shall have occurred since December 31, 1995.
3.21 LEGAL OPINIONS.
3.21.1 WATER RIGHTS. Borrower shall have
provided Lender with a favorable opinion of special counsel to
Borrower (or, in Lender's discretion, to Lender) satisfactory to
Lender, in form and substance satisfactory to Lender, with respect
to such matters regarding Borrower's Water Rights as Lender may
reasonably request.
3.21.2 INTELLECTUAL PROPERTY. Lender shall have
received, at Borrower's expense, a favorable opinion of special
counsel to Borrower satisfactory to Lender, in form and substance
satisfactory to Lender, with respect to such matters regarding
Patents, Trademarks and Copyrights (each, as defined in the
Security Agreements) as Lender may reasonably request.
3.21.3 CADIZ OPINION. Cadiz shall have provided
Lender with a favorable opinion (or opinions) from outside legal
counsel to Cadiz satisfactory to Lender, in substantially the form
of Exhibit J.
3.21.4 BORROWER OPINION. Borrower shall have
provided Lender with a favorable opinion (or opinions) from outside
legal counsel to Borrower satisfactory to Lender, in substantially
the form of Exhibit K.
3.21.5 HPM OPINION. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ shall
have provided Lender with a favorable opinion (or opinions) from
▇▇▇▇▇▇▇, Triester & ▇▇▇▇▇ or other legal counsel to ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇ satisfactory to Lender, in form and substance
satisfactory to Lender, with respect to such matters as Lender may
reasonably request.
3.22 NO DEFAULTS. No Default or Event of Default shall
have occurred and be continuing or shall exist immediately
following the effectiveness of Section 2.
3.23 REPRESENTATIONS AND WARRANTIES. All
representations and warranties of Borrower or any Subsidiary of
Borrower or of Cadiz set forth herein or in any other Loan Document
(other than those that speak as of a specific date) shall be true
and correct in all material respects as if made on and as of the
date of such effectiveness.
3.24 BRINGDOWN CERTIFICATES. Lender shall have
received a certificate, dated as of the Effective Date and in form
and substance satisfactory to Lender, of (a) the Chief Executive
Officer and Chief Financial Officer of Borrower, to the effect that
(i) no Default or Event of Default shall have occurred and be
continuing or shall exist immediately following the effectiveness
of Section 2; (ii) all representations and warranties of such
Person or any Subsidiary such Person set forth herein or in any
other Loan Document (other than those that speak as of a specific
date) are true and correct in all material respects on the
Effective Date as if made on and as of the Effective Date; and
(iii) all other conditions precedent set forth in this Section 3
have been satisfied; and (b) the Chief Executive Officer and Chief
Financial Officer of Cadiz, to the effect that (i) no Default or
Event of Default with respect to Cadiz or any of its Subsidiaries
other than Borrower and Borrower's Subsidiaries shall have occurred
and be continuing or shall exist immediately following the
effectiveness of Section 2; and (ii) all representations and
warranties of Cadiz set forth in the Cadiz Agreement or in any
other Loan Document (other than those that speak as of a specific
date) executed and delivered by Cadiz are true and correct in all
material respects on the Effective Date as if made on and as of the
Effective Date.
3.25 [INTENTIONALLY OMITTED.]
3.26 CROP DEVELOPMENT PLAN. Lender shall have received
Borrower's crop development plan for the remainder of the fiscal
year ending December 31, 1996, in form and substance reasonably
acceptable to Lender.
3.27 LENDING RELATIONSHIPS. Lender shall have
determined that Cadiz's business relationships and agreements with
its principal creditors (including, without limitation, Ansbacher)
are satisfactory to Lender.
3.28 OTHER APPROVALS, CONSENTS, DOCUMENTS AND OPINIONS.
Lender shall have received such other approvals, consents,
opinions, and/or documents as Lender may reasonably request.
4. REPRESENTATIONS AND WARRANTIES. Borrower represents and
warrants to Lender (as of the date hereof and as of each subsequent
date as of which Borrower is required to make (or is deemed to have
made) such representation and warranty, as a condition or otherwise
(and including, without limitation, the Effective Date and the date
of any Re Advance)) that:
4.1 CORPORATE STATUS; POWER AND AUTHORITY.
4.1.1 CORPORATE STATUS. Borrower is a
corporation duly organized, validly existing, and in good standing
under the laws of the State of Delaware, is duly qualified to do
business and is in good standing in every jurisdiction where the
nature of its business requires it to be so qualified (except where
the failure to so qualify would not have a Material Adverse
Effect), and has all requisite power and authority to conduct its
business, to own, lease, sell or otherwise dispose of its
properties, and to execute and deliver this Agreement, each of the
other Loan Documents and any other instruments or documents
executed and delivered, or to be executed and delivered, by
Borrower in connection with the consummation of the Plan and the
transactions contemplated thereby, and to perform its obligations
thereunder. Each Subsidiary of Borrower is a corporation (or
partnership, as the case may be) duly organized, and except for Sun
Harvest, Inc. and Pacific Farm Service, Inc. (neither of which
holds any material assets and neither of which currently engages in
any business whatsoever), validly existing and in good standing
under, the laws of the State of its organization (as indicated on
Schedule 4.3), is duly qualified to do business and is in good
standing in every jurisdiction where the nature of its business
requires it to be so qualified (except where the failure to so
qualify would not have a Material Adverse Effect), and has all
requisite power and authority to conduct its business, to own,
lease, sell or otherwise dispose of its properties, and to execute
and deliver each of the Loan Documents to which it is or is to
become a party and any other instruments or documents executed and
delivered, or to be executed and delivered, by such Subsidiary in
connection with the consummation of the Plan and the transactions
contemplated thereby, and to perform its obligations thereunder.
Sun World (Europe) B.V. has no significant assets and is inactive;
Borrower, acting alone or together with one or more of its
Subsidiaries, has no authority to cause the direction of Sun World
(Europe) B.V.'s management.
4.1.2 POWER AND AUTHORITY. The execution,
delivery, and performance by Borrower of each of this Agreement and
the other Loan Documents to be executed and delivered it in
connection herewith or pursuant hereto, and the execution, delivery
and performance by Cadiz and by each Guarantor of the Loan
Documents to be executed and delivered by it in connection herewith
or pursuant hereto, have been duly authorized by all necessary
corporate or partnership action on the part of such Person and do
not and will not (a) require any consent or approval of the
stockholders or partners of such Person or of any other Person,
except such consents as shall have obtained on or before the
Effective Date; (b) contravene such Person's charter or bylaws or
partnership agreement, as applicable; (c) violate any provision of
any law, rule, regulation (including, without limitation,
Regulation of the Board of Governors of the Federal Reserve
System), order, writ, judgment, injunction, decree, determination,
or award presently in effect having applicability to such Person;
(d) except to the extent excused by the Bankruptcy Code or a lawful
order of the Court, result in a breach of or constitute a default
under any indenture or loan or credit agreement or any other
material agreement, lease, or instrument to which such Person is a
party or by which it or its properties may be bound or affected;
(e) result in, or require, the creation or imposition of any Lien
(except for Permitted Liens), upon or with respect to any of the
properties now owned or hereafter acquired by such Person; or (f)
cause such Person to be in default under any such law, rule,
regulation, order, writ, judgment, injunction, decree,
determination or award.
4.2 LEGALLY ENFORCEABLE AGREEMENTS. This Agreement is,
and each of the other Loan Documents executed and delivered, or to
be executed and delivered, by Borrower, by Cadiz or by any
Guarantor, is, or when delivered under this Agreement, will be, a
legal, valid, and binding obligation of each such Person party
thereto, enforceable against such Person in accordance with its
respective terms, except to the extent that such enforcement may be
limited by applicable bankruptcy, insolvency, and other similar
laws affecting creditors' rights generally, or otherwise limited by
general principles of equity.
4.3 STOCK; SUBSIDIARIES.
4.3.1 STOCK. The authorized and outstanding
capital stock of Borrower upon consummation of the Plan, after
giving effect to the Acquisition and the Merger, will be as set
forth on Schedule 4.3. All of the outstanding shares of capital
stock of Borrower are, and, upon consummation of the Plan, the
Acquisition and the Merger, will be, (a) validly issued, fully paid
and nonassessable, and (b) owned by Cadiz.
4.3.2 SUBSIDIARIES. A true and correct list of
all Subsidiaries of Borrower as of the date of this Agreement,
indicating, for each such Subsidiary (a) its true corporate or
partnership name, (b) its jurisdiction of organization, (c) the
name of each record holder of all or any portion of its outstanding
capital stock or other outstanding equity interests and the
percentage of such capital stock or equity interest held by each
such record holder, (d) whether such Subsidiary is active or
inactive, and (e) whether or not it holds assets having a fair
market value in excess of $500,000, is set forth on Schedule 4.3.
4.4 PROPERTIES AND ASSETS. Schedule 4.4 sets forth,
with respect to Borrower and each Subsidiary of Borrower, as of the
date of this Agreement, a complete and correct list of (a) each
patent, patent application, trademark, copyright, tradename,
license, permit relating to intellectual property, franchise or
other right of such Person; (b) each deposit or other account in
which such Person holds any funds, identifying the number of each
such account and the name and address of the depository institution
with which such account is maintained; (c) all tradenames under
which such Person currently conducts, or has within the last five
years conducted, business; (d) the addresses of all locations at
which such Person conducts any portion of its business; (e) all
real property owned or leased by such Person and indicating on
which parcels such Person grows, or intends to grow, crops; (f) all
Investments of such Person, and (g) all insurance policies under
which such Person is either a loss payee or an additional insured.
Borrower has heretofore delivered to Lender a schedule of all
Marketing Agreements to which any such Person is a party as of the
date of this Agreement, including, with respect to each such
Marketing Agreement, the names of the parties thereto, the crops
and number of acres to which it applies, the term and payment terms
thereof, the date by which such Marketing Agreement must be renewed
or replaced by a new Marketing Agreement with the Grower party
thereto with respect to the next succeeding crop cycle, and the
percentage of the total units of produce projected to be sold by
Borrower under Marketing Agreements during the fiscal year ending
December 31, 1996 represented by such Marketing Agreement.
Borrower, and each Subsidiary of Borrower, owns title to, or valid
leasehold interests in, all of its properties and assets, real and
personal, free and clear of any Lien other than Permitted Liens.
Borrower, and each Subsidiary of Borrower, has received all
assignments, bills of sale and other documents necessary to
establish, protect and perfect such Person's right, title and
interest in and to all of the property described in the foregoing
clause (a), except where the failure so to receive any such
assignment, ▇▇▇▇ of sale or other document, individually or in the
aggregate, does not conflict with the rights of others so as to
result in a material and adverse effect on the condition or
prospects, financial or otherwise, of Borrower and its
Subsidiaries, taken as a whole. Borrower, and each of its
Subsidiaries, has duly effected all filings, recordings and other
actions necessary in the reasonable judgment of Borrower to
establish, protect and perfect any such Person's right, title and
interest in and to all of the property described in the foregoing
clause (a). Borrower's chief executive office and chief place of
business is located at the address for notices set forth for
Borrower in Section 8.2.
4.5 DEBT; LIENS; OTHER OBLIGATIONS.
4.5.1 Schedule 4.5.1 is a complete and correct
list, as of the date of this Agreement, of (a) (i) all credit
agreements, indentures, purchase agreements, guaranties, Capital
Leases, and other investments, agreements and arrangements
presently in effect providing for or relating to extensions of
credit (including agreements and arrangements for the issuance of
letters of credit or for acceptance financing) in respect of which
any Debtor, or any Subsidiary of a Debtor, is or was in any manner
directly or contingently obligated and that will remain in effect
as obligations of Borrower or any Subsidiary of Borrower after the
Effective Date; and (ii) the maximum principal or face amounts of
the credit in question, which are outstanding and which can be
outstanding; (b) to the extent not included under the foregoing
clause (a), all other Pre Petition Debt that will remain in effect
after the Effective Date; and (c) all Liens of any nature given or
agreed to be given as security for any of the foregoing or
otherwise affecting any property or assets of such Person and that
will remain in effect after the Effective Date.
4.5.2 There exists no nondischargeable liability
of any Debtor that, as of the Effective Date, will become an
obligation of Borrower or any of its Subsidiaries, except for such
liabilities as have been expressly provided for under the Plan.
4.6 MAJOR ACCOUNT DEBTORS. Borrower has heretofore
delivered to Lender a complete and correct list, including the
name, address and (where available) telecopy number, of each Person
who has incurred any liability or liabilities, in excess of $15,000
in the aggregate, to any Debtor or any Subsidiary of a Debtor
within the twelve months preceding the date of this Agreement
arising from the sale of produce to such Person.
4.7 WITHHOLDING TAXES. Since at least January 1, 1992,
SWI, SWII or the relevant Subsidiary of SWII has withheld and paid,
as and when due in connection with any wages payable by any such
Person, to the United States and to the State of California, and to
each other taxing authority to which payment was due, in accordance
with applicable law: all taxes and other amounts required to be
withheld from wages paid with funds of (or provided for that
purpose by) the relevant Person (determined, in the case of
nonimmigrant recipients of such wages, whether such recipients were
classified for purposes of United States immigration law as "A9",
"A09", or otherwise, as if such employees were residents of the
United States).
4.8 OTHER TAXES. Except as disclosed on Schedule 4.8,
each Debtor, and each Subsidiary of any Debtor, has filed all tax
returns (foreign, federal, state, and local) required to be filed,
or has received all appropriate extensions of time to file, and has
paid all taxes, assessments, and governmental charges and levies
thereon, including interest and penalties.
4.9 LABOR DISPUTES AND ACTS OF GOD. Neither the
business, the real property nor the personal property of Borrower
or of any Subsidiary of Borrower is affected by any fire,
explosion, accident, strike, lockout or other labor dispute,
drought, storm, hail, earthquake, embargo, act of God or of the
public enemy, or other casualty (whether or not covered by
insurance) materially and adversely affecting such business or
properties or the operations of Borrower or of such Subsidiary.
4.10 NO DEFAULTS ON OUTSTANDING JUDGMENTS OR ORDERS.
Except as set forth on Schedule 4.10, Borrower, and each Subsidiary
of Borrower, will have satisfied, as of the Effective Date, all
judgments, and neither Borrower nor any Subsidiary of Borrower is
in default with respect to any judgment, writ, injunction, decree,
rule, or regulation of any court, arbitrator, or federal, state,
municipal or other governmental authority, commission, board,
bureau, agency or instrumentality, domestic or foreign.
4.11 ERISA. Borrower, and each Subsidiary of Borrower,
is in compliance in all material respects with all applicable
provisions of ERISA. Neither a Reportable Event nor a Prohibited
Transaction has occurred and is continuing with respect to any
ERISA Plan; no notice of intent to terminate an ERISA Plan has been
filed, nor has any ERISA Plan been terminated; no circumstances
exist which constitute grounds under Section 4042 of ERISA
entitling the PBGC to institute proceedings to terminate, or
appoint a trustee to administrate, an ERISA Plan, nor has the PBGC
instituted any such proceedings; neither Borrower nor any ERISA
Affiliate (nor any Debtor or Person that was previously treated as
a single employer with any Debtor under Section 4001 of ERISA) has
completely or partially withdrawn under Sections 4201 or 4204 or
ERISA from a Multiemployer Plan (except as set forth on Schedule
4.11); Borrower, and each ERISA Affiliate (and each Debtor or
Person that was previously treated as a single employer with any
Debtor under Section 4001 of ERISA), has met its minimum funding
requirements under ERISA with respect to all of its ERISA Plans and
the present value of all vested benefits under each such ERISA Plan
exceeds the fair market value of all ERISA Plan assets allocable to
such benefits, as determined on the most recent valuation date of
the ERISA Plan and in accordance with the provisions of ERISA for
calculating the potential liability of Borrower or any ERISA
Affiliate (or of any Debtor or Person that was previously treated
as a single employer with any Debtor under Section 4001 of ERISA)
to the PBGC or the ERISA Plan under Title IV of ERISA; and neither
Borrower nor any ERISA Affiliate (nor any Debtor or Person that was
previously treated as a single employer with any Debtor under
Section 4001 of ERISA) has incurred any liability to the PBGC under
ERISA.
4.12 OPERATION OF BUSINESS. Except as set forth on
Schedule 4.12: (a) Borrower, and each Subsidiary of Borrower (and
each Debtor and any Subsidiary of a Debtor), has been and is
conducting its business and operations in compliance with all
applicable laws and directives of governmental authorities having
the force of law, except to the extent that noncompliance would not
be reasonably likely to have a Material Adverse Effect; and (b) (i)
Borrower, and each Subsidiary of Borrower, possesses all rights and
authorizations, including, without limitation, Water Rights
(including rights to any required irrigation water), licenses,
permits, franchises, patents, copyrights, trademarks, and trade
names, or rights thereto, to conduct its respective business
substantially as now conducted and as presently proposed to be
conducted, and (ii) neither Borrower nor any Subsidiary of Borrower
is in violation of any such rights or authorizations or any valid
rights of any other Person with respect to any of the foregoing,
except to the extent that such violation would not be reasonably
likely to have a Material Adverse Effect.
4.13 LITIGATION. Except as set forth on Schedule 4.13,
as of the date of this Agreement, there is no pending or threatened
action or proceeding against Borrower or any Subsidiary of Borrower
(or against any Debtor or Subsidiary of a Debtor) before any court,
governmental agency, or arbitrator which, in any one case or in the
aggregate, if decided adversely to such Person, could expose such
Person to a net uninsured liability in excess of $1,000,000.
4.14 ENVIRONMENTAL CONDITIONS. Except as set forth on
Schedule 4.14, as of the date of this Agreement there are no
conditions presently or potentially posing a significant hazard to
human health or the environment, whether or not in compliance with
law, existing on or in the vicinity of, or otherwise affecting, the
real property or personal property currently or formerly owned,
leased or operated by Borrower or any Subsidiary of Borrower (or
any Debtor or Subsidiary of a Debtor), and, except in the course of
normal agricultural operations conducted in full compliance with
all applicable laws and regulations, there has been no production,
use, presence, treatment, storage, transportation, disposal,
release or threatened release of any hazardous substance or
hazardous waste (as hereinafter defined) at or on such property or
real property. "Hazardous waste" and "hazardous substance" shall
have the meanings set forth in the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, 42
U.S.C. Section 9601 et seq. ("CERCLA") and the Resource
Conservation and Recovery Act, as amended, 42 U.S.C. Section 6901
et seq., and the regulations adopted pursuant thereto, except that
the term "hazardous substance," as used herein, shall, in addition
to its definition under CERCLA, also include petroleum, petroleum
products and any substance classified as "hazardous" or "toxic"
under any applicable state law or regulation.
4.15 INVESTMENT COMPANY ACT. Neither Borrower nor any
Subsidiary of Borrower is an "investment company", or a company
"controlled" by an "investment company," within the meaning of the
Investment Company Act of 1940, as amended.
4.16 FULL DISCLOSURE. All information in the nature of
facts or statements of fact heretofore or hereafter furnished by or
under the supervision of any officer or acting officer of Borrower
or any Subsidiary of Borrower (or any Debtor or Subsidiary of a
Debtor), or by any of their respective agents, to Lender for
purposes of or in connection with this Agreement or any transaction
contemplated hereby was (or will be, as the case may be) true and
accurate in all material respects on the date as of which such
information was (or is) stated or certified and not incomplete by
omitting to state any material fact known to any officer of
Borrower or any Subsidiary of Borrower necessary to make such
information not misleading. Each written projection heretofore
delivered to Lender, and each other written projection delivered
hereafter to Lender, by or on behalf of Borrower, SWII or SWI in
connection with the transactions contemplated by this Agreement,
upon delivery to Lender, will be, prepared on the basis of the
assumptions set forth therein, such assumptions are (or will be, as
the case may be) reasonable in light of the financial condition and
prospects of Borrower; and each projection heretofore delivered to
Lender represented, and each such projection hereafter delivered to
Lender will represent, the good faith opinion of the Chief
Executive Officer and the Chief Financial Officer of Borrower or
SWII, as the case may be, at the time of delivery thereof to
Lender, as to the course of business of Borrower or the Debtors
during the period covered thereby.
4.17 NO SIDE AGREEMENTS. There are no agreements,
understandings, or arrangements of any kind, oral or written,
between, among, or binding upon any of Cadiz, Borrower, any of
Borrower's Subsidiaries, or any Affiliate of any such Person, on
the one hand, and ▇▇▇▇ ▇▇▇▇▇▇▇, Zenith, LSL Biotechnologies, Inc.,
The Irvine Company, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, any other former
shareholder of SWII, Rabobank, Ansbacher, Bank of Scotland, any
past or present member of the Unsecured Creditors' Committee, or
any Affiliate of any such Person, on the other hand, which have not
been fully disclosed by Borrower to Lender (including by delivery
of copies of all relevant writings) or are not a matter of public
record.
5. AFFIRMATIVE COVENANTS. So long as the Note or any other
amount payable by Borrower under any of the Loan Documents shall
remain unpaid, Borrower agrees that it shall:
5.1 MAINTENANCE OF RECORDS. Keep, and cause each of
its Subsidiaries to keep, adequate records and books of account,
separate from the records and books of account maintained by Cadiz
and its other Subsidiaries, in which complete entries will be made
in accordance with GAAP consistently applied, reflecting all
financial transactions of Borrower and its Subsidiaries.
5.2 MAINTENANCE OF PROPERTIES AND COLLATERAL. Except
to the extent that the failure to do so would not be reasonably
likely to have a Material Adverse Effect:
5.2.1 Except for sales or other dispositions
expressly permitted under this Agreement, maintain, keep, and
preserve, and cause each of its Subsidiaries to maintain, keep, and
preserve, all of its real property and personal property (tangible
and intangible) necessary or useful in the proper conduct of its
business and in good working order and condition, ordinary wear and
tear excepted, including, without limitation, maintain in full
force and effect all permits and licenses necessary to the conduct
of such Person's business as presently conducted, including,
without limitation, "Produce Dealer" and "Processor" licenses
issued by the California Department of Food and Agriculture and all
licenses required to operate in compliance with PACA. Without
limiting the generality of the foregoing, Borrower shall cause
copies of the documentation filed with the Delaware Secretary of
State to effect the Merger, and of any other documentation required
to be filed or recorded in order to reflect the Merger and the
Acquisition and to protect Borrower's (or any of its Subsidiaries')
rights to patents, trademarks and copyrights, to be recorded (a)
with the United States Patent and Trademark Office within sixty
(60) days after the Effective Date, (b) with the United States
Copyright Office within fifteen (15) days after the date hereof,
and (iii) with such foreign patent and trademarks offices as may be
reasonably necessary for such purpose.
5.2.2 Keep in force, and cause each of its
Subsidiaries to keep in force, each lease on which Borrower or any
Subsidiary of Borrower is at any time growing crops, until such
crops have been harvested and removed from the land subject
thereto.
5.2.3 Keep in force, and cause each of its
Subsidiaries to keep in force, all Water Rights held by such
Person, including, without limitation, all rights to irrigation
water. Without limiting the generality of the foregoing, Borrower
shall cause an appropriately completed Form 7 2181 to be filed with
the ▇▇▇▇▇ ▇▇▇▇▇▇ Water Storage District within thirty (30) days
after the Effective Date.
5.3 MAINTENANCE OF INSURANCE.
5.3.1 Maintain, and cause each of its
Subsidiaries to maintain, in full force and effect at all time,
such levels of insurance, and against such risks, as are commonly
maintained by prudently managed companies engaging in businesses,
and having properties, the same as or similar to those engaged in
or owned or operated by Borrower, which insurance shall in any
event include:
(a) insurance against loss or damage to
any of the Collateral by fire or any of the risks covered by
insurance known as "all risk coverage", in an amount not less than
the full replacement cost thereof (in the case of real property,
exclusive of the cost of excavations, foundations and footings
below the lowest basement floor), each such policy to contain a
replacement cost endorsement reasonably satisfactory to Lender;
(b) business interruption insurance
and/or loss of rental value insurance in amounts at least equal to
those currently in effect, as reflected in the Insurance Summary,
dated August 5, 1996, prepared by Aon Risk Services, Inc. with
respect to insurance coverages maintained by the Debtors (the
"Insurance Summary");
(c) comprehensive public liability
insurance against claims for personal injury, including, without
limitation, bodily injury, death or property damage occurring on,
in or about any real property and adjoining streets, in amounts at
least equal to those reflected in the Insurance Summary;
(d) products liability and contractual
liability insurance coverage or endorsements in amounts at least
equal to those reflected in the Insurance Summary;
(e) to the extent required to do so under
the ▇▇▇▇ ▇▇▇▇▇▇▇ Loan Documents, "keyman" life insurance coverage
with respect to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇' life, in an aggregate amount
no greater than $13,000,000 and, with respect to Policy Nos. C
11634064L and C 11640005L issued by Aurora National Life Assurance
Company (or any replacement policies therefor) at a premium cost
not to exceed for any coverage period the maximum amount set forth
opposite such coverage period on Schedule 5.3;
(f) insurance providing such other
coverages, and in such amounts, as are reflected in the Insurance
Summary;
(g) such other insurance providing such
other coverages, and in such amounts, as Lender may from time to
time reasonably request; and
(h) directors' and officers' insurance,
providing aggregate coverage for claims brought during the then
current annual policy period in an amount no less than $5,000,000.
5.3.2 If Borrower shall fail to maintain or cause
to be maintained any of the foregoing insurance as and when
required hereby, or if any such insurance shall be materially
reduced, canceled, surrendered or not renewed, Lender may (but is
not required to do so), in its own name only, for its own benefit
or for the benefit of Borrower, or both, obtain all or a portion of
such insurance from any carrier selected by Lender in its sole
discretion, and Borrower shall reimburse Lender, within ten (10)
days after Lender's demand, for any premiums or other costs
associated with obtaining such insurance. Sums paid by Lender
hereunder shall bear interest at the Default Rate.
5.3.3 All insurance required by this Section 5.3
shall be provided by policies written in terms, and amounts, and by
companies, reasonably satisfactory to Lender; provided that (a)
Lender shall not require that directors' and officers' insurance be
required in an amount greater than $5,000,000; (b) Borrower and its
Subsidiaries may maintain a system of self insurance in an
aggregate amount, and with respect to such risks, as are both (i)
customary for prudently managed corporations engaged in the same or
similar businesses as Borrower and its Subsidiaries, owning or
operating similar properties as Borrower and its Subsidiaries, and
having a credit standing similar to that of Borrower and its
Subsidiaries, and (ii) acceptable to Lender; (c) Lender shall be
named as additional insured on all liability policies, as its
interests may appear; and (d) losses under all policies (including,
without limitation, policies covering the Collateral but for the
benefit of other creditors), other than policies of directors' and
officers' insurance, shall be payable to Lender, as its interests
may appear, pursuant to a loss payee endorsement reasonably
satisfactory to Lender.
5.3.4 At least thirty (30) days prior to the
expiration of each such policy, Borrower shall furnish Lender with
evidence reasonably satisfactory to Lender of the payment of
premiums and the reissuance of a policy or policies continuing such
coverages in force as are required by this Agreement. All such
policies shall contain provisions to the effect that (a) except in
the case of liability insurance, they shall provide coverage to
Lender notwithstanding any breach by Borrower or any Subsidiary of
Borrower (or by any predecessor of Borrower or of any Subsidiary of
Borrower) of any representation or warranty, (b) there shall be no
recourse to Lender for payment of premiums or other amounts with
respect thereto, (c) they shall not be subject to co insurance, (e)
they may not be canceled (except for non payment of premiums or
fraud), or amended to reduce any limitation of liability, to
increase the amount of any deductible or co insurance, or to add
any exclusions to the coverage provided thereunder, without at
least thirty (30) days' prior written notice to Lender, and (f)
they may not be canceled for non payment of premiums or for fraud
without at least ten (10) days' prior written notice to Lender.
Upon Lender's request, Borrower shall cause all bills, statements
or other documents relating to the foregoing insurance to be sent
or mailed directly to Lender, and shall give notice to each insurer
providing any such insurance policy (other than directors' and
officers' insurance) of Lender's security interest therein.
5.4 CASH ACCOUNT.
5.4.1 At all times maintain the Cash Account, and
(subject to Section 5.4.2) maintain all of its and its
Subsidiaries' cash on deposit in the Cash Account, except for (a)
Permitted Cash Investments in which Lender holds a perfected Lien,
(b) such amounts as may be transferred to one or more demand
deposit accounts in which Lender holds a perfected Lien, as
reasonably necessary to permit the clearance of checks or other
payment orders drawn on such accounts, and (c) such immaterial
amount of cash as may be retained by Borrower and its Subsidiaries
as "▇▇▇▇▇ cash". The Cash Account shall be an unrestricted
account. So long as no Event of Default has occurred and is
continuing (i) Borrower shall be free to withdraw funds from the
Cash Account for any use not in contravention of this Agreement or
any other Loan Document, and (ii) Lender shall follow Borrower's
requests and instructions regarding the acquisition or disposition
of Permitted Cash Investments (it being understood and agreed that,
under the custodial arrangements contemplated by Section 6.9,
Borrower shall not have any right to instruct the custodian holding
the Permitted Cash Investments).
5.4.2 (a) Instruct, and cause each Guarantor to
instruct, each Person (i) that regularly remits payments to
Borrower or such Guarantor by check or other instrument, or (ii)
that Borrower reasonably anticipates will remit to Borrower or such
Guarantor checks or other instruments in an aggregate face amount
in excess of $15,000, to remit all such payments to the post office
box maintained pursuant to the Concentration Account Agreement; (b)
instruct, and cause each Guarantor to instruct, each Person that
Borrower or such Guarantor reasonably anticipates to remit payments
to it by wire or other electronic transfer to remit all such
payments to the Concentration Account; (c) subject to ▇▇▇▇
▇▇▇▇▇▇▇'▇ right to receive Asset Sales Proceeds in accordance with
Section 6.6.4, deposit, and cause each Guarantor to deposit, all
other cash, collections and proceeds of any property immediately in
kind into the Concentration Account; and (d) instruct the
Concentration Account Bank to initiate, or itself initiate, daily
wire transfers of all collected funds in the Concentration Account
to the Cash Account; provided, however, that funds may be
transferred directly from the Unsecured Claims Reserve Account into
the Unsecured Claims Disbursement Account in accordance with
Section 6.5.4.
5.5 COMPLIANCE WITH LAWS AND ORDERS. Except to the
extent that noncompliance would not be reasonably likely to have a
Material Adverse Effect: comply, and cause each of its
Subsidiaries to comply, with all applicable laws, rules,
regulations, and orders, such compliance to include, without
limitation, paying before the same become delinquent all taxes,
assessments, and government charges imposed upon it or upon its
property.
5.6 PAYROLL WITHHOLDING. Pay as and when due in
connection with any wages payable by Borrower or any Subsidiary of
Borrower: (a) to the United States and to the State of California,
and to each other taxing authority to which payment is due, in
accordance with applicable law, all taxes and other amounts
required to be withheld from wages paid with funds of (or provided
for that purpose by) Borrower or any Subsidiary of Borrower
(determined, in the case of nonimmigrant recipients of such wages,
whether such recipients were classified for purposes of United
States immigration law as "A9", "A09", or otherwise, as if such
employees were residents of the United States); and (b) to the
person or entity to whom such funds are to be remitted (in
accordance with applicable law, any applicable agreement or as
otherwise required), all other amounts required to be withheld
from, or paid with respect to, wages paid with funds of (or
provided for that purpose by) Borrower or any Subsidiary of
Borrower, including, without limitation, payments in respect of
union dues, medical insurance or union medical contributions and
disability insurance.
5.7 OFFICERS; DIRECTORS.
5.7.1 CHIEF EXECUTIVE OFFICER.
(a) Employ at all times, as Chief
Executive Officer of Borrower, a person having experience in the
management of companies engaged in agriculture and in marketing
activities such as those currently engaged in by Borrower, as may
be reasonably acceptable to Lender. The Chief Executive Officer
shall have the chief executive authority for Borrower and each
Subsidiary of Borrower. An individual employed by Borrower,
reasonably satisfactory to Lender and designated by the Chief
Executive Officer, shall have chief financial authority for
Borrower and shall review and approve all operating plans,
strategic plans and capital expenditure programs. The Chief
Executive Officer shall report only to Borrower's Board of
Directors. The Chief Executive Officer shall be accessible to
Lender and its counsel and consultants to discuss Borrower's
strategic and operating plans, capital expenditure programs, and
other aspects of the business and financial affairs of Borrower and
its Subsidiaries. Borrower may terminate the Chief Executive
Officer with cause, or without cause with the prior written consent
of Lender. If the Chief Executive Officer is terminated or
resigns, Borrower shall replace him or her within sixty (60)
Business Days after such termination or resignation with another
Chief Executive Officer possessing the qualifications described
above and reasonably acceptable to Lender.
(b) As of the date of his or her
employment by Borrower, the Chief Executive Officer shall not be or
have been a director or stockholder of, or employed in any capacity
by: (i) Cadiz or any of its Subsidiaries or Affiliates (other than
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or another individual with respect to whom Lender
concludes, in its sole discretion, that his or her employment by
Borrower will not impair either (A) the continued separation
between the operations of Cadiz and its other Subsidiaries, on the
one hand, and of Borrower and its Subsidiaries, on the other hand,
or (B) the perception of Cadiz and Borrower, by their respective
creditors, as distinct entities); or (ii) any Debtor or Subsidiary
or Affiliate of a Debtor, or the Debtors' independent accountants,
at any time prior to the Effective Date.
5.7.2 CHIEF FINANCIAL OFFICER. Employ at all
times, as chief financial officer, a person who (i) as of the date
of his or her employment by Borrower in such capacity, (A) has
never been a director or stockholder of Borrower or any Debtor, and
(B) has not been a director of, or employed in any capacity by,
Cadiz or any of its Subsidiaries or Affiliates (other than an
employee of Borrower, to the extent permitted under the following
clause (ii), or ▇▇▇▇▇▇▇ ▇▇▇▇▇ or another individual with respect to
whom Lender concludes, in its sole discretion, that his or her
employment by Borrower will not impair either (A) the continued
separation between the operations of Cadiz and its other
Subsidiaries, on the one hand, and of Borrower and its
Subsidiaries, on the other hand, or (B) the perception of Cadiz and
Borrower, by their respective creditors, as distinct entities), and
(ii) was not a director of, or employed in any capacity by, any
Debtor or Subsidiary or Affiliate of a Debtor, or the Debtors'
independent accountants, at any time prior to the Effective Date.
5.7.3 INDEPENDENT BOARD. Maintain at all times a
Board of Directors (a) a majority of the members of which are
"independent" within the meaning of that term as used in Section 3
of the New York Stock Exchange Listed Company Manual, and (b) none
of whom was at any time a director or shareholder of any Debtor or
any Subsidiary of a Debtor. For purposes of this Section 5.7.3:
(x) ▇▇▇▇▇▇ ▇▇▇▇▇▇, current chair of the Board of Directors of
Cadiz, shall be deemed independent notwithstanding the foregoing
sentence, but (y) no other person who, at the time he or she
becomes a director of Borrower or any of its Subsidiaries, is (or
becomes) or has been a director or officer or other employee of
Cadiz or any of its Affiliates (including Borrower and its
Subsidiaries) shall be considered independent, and (z) no person
who, after becoming a director of Borrower or any of its
Subsidiaries, becomes (i) a director or officer or other employee
of Cadiz or any of its Affiliates (other than Borrower and its
Subsidiaries) or (ii) an officer or other employee of Borrower or
any of its Subsidiaries, shall be considered independent.
5.8 MAINTENANCE OF SEPARATE EXISTENCE.
5.8.1 Hold regular corporate meetings and
otherwise observe corporate formalities, and cause each of its
Subsidiaries to observe corporate formalities.
5.8.2 Maintain its assets, and cause the assets
of each of its Subsidiaries to be maintained, separately from the
assets of Cadiz or any Affiliate of Cadiz other than Borrower or
its Subsidiaries, including, without limitation, by maintaining
bank accounts separate from those maintained by Cadiz and such
other Affiliates of Cadiz and by not commingling any such assets
with those of Cadiz or any such other Affiliate of Cadiz.
5.8.3 (a) Conduct, and cause each of its
Subsidiaries to conduct, all business correspondence and other
communications of Borrower or any of its Subsidiaries in Borrower's
(or such Subsidiary's) own name, on its own stationery; (b)
maintain a separately listed telephone number from that of Cadiz;
and (c) otherwise present itself to the public as a Person separate
from Cadiz, independently engaged in the businesses in which it is
engaged in accordance with the provisions of the Loan Documents.
5.9 MARKETING AGREEMENTS. Maintain Marketing
Agreements with each Grower for whom Borrower provides marketing
services, and keep in force, and diligently perform its obligations
and enforce its rights under, all Marketing Agreements, including,
without limitation, by all appropriate legal proceedings and
without waiver or amendment except with Lender's prior written
consent.
5.10 FINANCIAL COVENANTS.
5.10.1 WORKING CAPITAL.
(a) Cause Working Capital at the end of
each fiscal year set forth below to be at least equal to the amount
set forth opposite such fiscal year:
FISCAL YEAR ENDING MINIMUM WORKING CAPITAL
December 31, 1996 $35.2 million
December 31, 1997 34.5 million
December 31, 1998 34.4 million
December 31, 1999 34.1 million
December 31, 2000 34.0 million
December 31, 2001 36.0 million
December 31, 2002 36.0 million
December 31, 2003 36.0 million
December 31, 2004 36.0 million
December 31, 2005 36.0 million
(b) Cause Working Capital at the end of
each fiscal quarter set forth below to be at least equal to the
amount set forth opposite fiscal quarter:
FISCAL QUARTER ENDING MINIMUM WORKING CAPITAL
March 31 of any
fiscal year $25.0 million
June 30 of any
fiscal year 10.0 million
September 30 of any
fiscal year ending 27.0 million
5.10.2 CURRENT RATIO.
(a) Cause the ratio of Current Assets to
Current Liabilities at the end of each fiscal year set forth below
to be at least equal to the ratio set forth opposite such fiscal
year:
FISCAL YEAR ENDING MINIMUM RATIO
December 31, 1996 3.16 to 1
December 31, 1997 3.06 to 1
December 31, 1998 2.93 to 1
December 31, 1999 2.72 to 1
December 31, 2000 2.67 to 1
December 31, 2001 2.71 to 1
December 31, 2002 2.71 to 1
December 31, 2003 2.71 to 1
December 31, 2004 2.71 to 1
December 31, 2005 2.71 to 1
(b) Cause the ratio of Current Assets to
Current Liabilities at the end of each fiscal quarter set forth
below to be at least equal to the ratio set forth opposite such
fiscal quarter:
FISCAL QUARTER ENDING MINIMUM RATIO
March 31 of any
fiscal year 2.50 to 1
June 30 of any
fiscal year 1.22 to 1
September 30 of any
fiscal year 2.30 to 1
5.10.3 DEBT SERVICE COVERAGE RATIO. Cause the
Debt Service Coverage Ratio for each fiscal year set forth below to
be at least equal to the ratio set forth opposite such fiscal year:
FISCAL YEAR ENDING MINIMUM RATIO
December 31, 1996 0.68 to 1
December 31, 1997 1.01 to 1
December 31, 1998 1.16 to 1
December 31, 1999 1.12 to 1
December 31, 2000 1.05 to 1
December 31, 2001 1.25 to 1
December 31, 2002 1.25 to 1
December 31, 2003 1.25 to 1
December 31, 2004 1.25 to 1
December 31, 2005 1.25 to 1
5.10.4 INTEREST COVERAGE RATIO. Cause the
Interest Coverage Ratio for each fiscal year set forth below to be
at least equal to the ratio set forth opposite such fiscal year:
FISCAL YEAR ENDING MINIMUM RATIO
December 31, 1996 1.10 to 1
December 31, 1997 1.38 to 1
December 31, 1998 1.73 to 1
December 31, 1999 2.01 to 1
December 31, 2000 2.33 to 1
December 31, 2001 2.94 to 1
December 31, 2002 2.94 to 1
December 31, 2003 2.94 to 1
December 31, 2004 2.94 to 1
December 31, 2005 2.94 to 1
5.10.5 DEBT TO EBITDA RATIO. Cause the ratio of
(a) Consolidated Debt of Borrower and its Subsidiaries at the end
of each fiscal year set forth below to (b) EBITDA for such fiscal
year to be no greater than the ratio set forth opposite such fiscal
year:
FISCAL YEAR ENDING MAXIMUM RATIO
December 31, 1996 8.69 to 1
December 31, 1997 6.81 to 1
December 31, 1998 5.42 to 1
December 31, 1999 4.54 to 1
December 31, 2000 3.85 to 1
December 31, 2001 2.99 to 1
December 31, 2002 2.99 to 1
December 31, 2003 2.99 to 1
December 31, 2004 2.99 to 1
December 31, 2005 2.99 to 1
5.10.6 TANGIBLE NET WORTH. Cause Tangible Net
Worth at the end of each fiscal year set forth below to be at least
equal to the amount set forth opposite such fiscal year:
FISCAL YEAR ENDING MINIMUM TANGIBLE NET WORTH
December 31, 1996 $20.0 million
December 31, 1997 22.5 million
December 31, 1998 26.5 million
December 31, 1999 31.9 million
December 31, 2000 37.7 million
December 31, 2001 45.3 million
December 31, 2002
through December 31,
2005 $45.3 million plus one hundred
percent (100%) of the cumulative
aggregate Consolidated Net
Income of Borrower and its
Subsidiaries for each fiscal
year of Borrower beginning with
and including fiscal year 2002.
5.10.7 DEBT TO EQUITY RATIO. Cause the ratio of
(a) Consolidated Debt of Borrower and its Subsidiaries at the end
of each fiscal year set forth below to (b) Consolidated
stockholders' equity of Borrower and its Subsidiaries at the end of
such fiscal year, determined in accordance with GAAP consistent
with GAAP used in the preparation of the Base Period Financial
Statements, to be no greater than the ratio set forth opposite such
fiscal year:
FISCAL YEAR ENDING MAXIMUM RATIO
December 31, 1996 5.76 to 1
December 31, 1997 4.59 to 1
December 31, 1998 3.53 to 1
December 31, 1999 2.84 to 1
December 31, 2000 2.21 to 1
December 31, 2001 1.66 to 1
December 31, 2002 1.66 to 1
December 31, 2003 1.66 to 1
December 31, 2004 1.66 to 1
December 31, 2005 1.66 to 1
5.10.8 COMPLIANCE. For purposes of determining
Borrower's compliance with any of Sections 5.10.3, 5.10.4 and
5.10.5 with respect to the fiscal year ending December 31, 1996,
(a) all calculations shall be based on Borrower's (including
Debtors') Consolidated operations for the entire calendar year
1996, excluding (i) the effects of (A) the Acquisition and (B) the
application of purchase accounting; (ii) (A) adequate protection
payments made in the Debtors' bankruptcy cases and recorded as
expenses on the Debtors' income statement, (B) professional fees
paid in connection with the Debtors' bankruptcy cases, (C) (without
duplication of amounts excluded under clause (ii)(A)) expenses
recorded by the Debtors to reflect increases in liabilities
relating to (1) interest accruals at contracted default rates and
contractually reimbursable costs and expenses (including, without
limitation, professional fees) incurred by third parties, and (2)
adjudication or settlement of claims against the Debtors in amounts
greater than the amount recorded by the Debtors for such claims on
their financial statements, and (D) income arising from the
adjudication or settlement of claims against the Debtors in amounts
less than the amounts recorded by the Debtors for such claims on
their financial statements; and (b) interest expense for the period
from January 1, 1996 through September 13, 1996 shall be deemed to
be $11,227,374.
5.11 REPORTING REQUIREMENTS. Furnish (or cause to be
furnished) to Lender:
5.11.1 BUSINESS PLAN; CROP DEVELOPMENT PLAN.
(a) No later than December 1 of each year,
(i) a final business plan for the fiscal year ending December 31 of
the following calendar year, (A) (1) based on the then current
Business Plan, revised to take into account asset sales,
abandonments, new plantings and other known changes, (2) including
any then available operating budgets for such succeeding fiscal
year, (3) reflecting estimated maximum expenditures during such
succeeding fiscal year in respect of Grower Advances, land leases
and long term contracts for the purchase of packaging materials,
chemicals and other supplies, based on then current contract
negotiations, and (4) explaining in reasonable detail all variances
from the then current Business Plan; and (B) certified by the Chief
Financial Officer of Borrower as having been (1) approved by
Borrower's Board of Directors in final form, (2) prepared on the
basis of reasonable assumptions and (3) representing the good faith
opinion of the Chief Executive Officer and the Chief Financial
Officer of Borrower, at the time of delivery thereof to Lender, as
to the course of business of Borrower during the period covered
thereby; and (ii) a final crop development plan for the fiscal year
ending December 31 of the following calendar year, in form and
substance reasonably satisfactory to Lender, based on the then
current Crop Development Plan, (A) revised to take into account
asset sales, abandonments, new plantings and other known changes,
and (B) explaining in reasonable detail all variances from the then
current Crop Development Plan;
(b) on June 1 and September 15 of each
year, commencing with 1997, a reforecast of Borrower's projected
results for the fiscal year ending December 31 of such year,
including a comparison to the projections included in the then
current Business Plan;
(c) promptly following each (i)
allocation or reallocation of costs or other amounts under the
Cadiz Services Agreement, (ii) determination of any amount payable
to or by Borrower under the Tax Sharing Agreement or (iii)
determination of the annual rent payable under the Cadiz Lease,
notice thereof; and
(d) no later than two (2) Business Days
prior to effecting any payment from the Unsecured Claims
Disbursement Account, notice of the amount to be so paid, together
with evidence, reasonably satisfactory to Lender, that sufficient
funds (i) have been made available to Borrower by Cadiz from the
Unsecured Claims Reserve Account, as a Capital Contribution, and
(ii) are held in the Unsecured Claims Disbursement Account, to
effect such payment.
5.11.2 MONTHLY FINANCIAL STATEMENTS. (a) With
respect to each of the fiscal months of Borrower ending on or
before the first anniversary of the Effective Date (other than the
last fiscal month of Borrower's fiscal year): (i) as soon as
available and in any event within thirty (30) days after the end of
each of such month, monthly and year to date financial statements,
prepared in a manner consistent with those delivered by the Debtors
during the year immediately preceding the Effective Date, and (ii)
as soon as available and in any event within sixty (60) days after
the end of each such month, monthly and year to date financial
statements, prepared in accordance with GAAP consistent with GAAP
applied in the preparation of the Base Period Financial Statements
(subject to normal year end adjustments) and so certified by
Borrower's Chief Financial Officer; and (b) with respect to each of
Borrower's fiscal months ending after the first anniversary of the
Effective Date (other than the last fiscal month of a fiscal year):
as soon as available and in any event within thirty (30) days after
the end of each such month, monthly and year to date financial
statements, prepared in accordance with GAAP consistent with GAAP
applied in the preparation of the Base Period Financial Statements
(subject to normal year end adjustments) and so certified by
Borrower's Chief Financial Officer. Such financial statements,
whether delivered pursuant to clause (a) or clause (b) of this
Section 5.11.2, shall include profit and loss statements and a
balance sheet of Borrower and its Subsidiaries, on a Consolidated
basis, as of the end of such month, together with a comparison and
reconciliation of Borrower's actual performance for such month to
the then current Business Plan;
5.11.3 ANNUAL FINANCIAL STATEMENTS. As soon as
available and in any event no later than one hundred nine (109)
days after the end of each of Borrower's fiscal years: (a) a
consolidated and consolidating balance sheet of Borrower and its
Subsidiaries as of the end of such fiscal year and (to the extent
applicable) of the preceding fiscal year, (b) a consolidated and
consolidating statement of income and retained earnings of Borrower
and its Subsidiaries for such fiscal year and (to the extent
applicable) each of the two preceding fiscal years, and (c) a
consolidated statement of cash flows of Borrower and its
Subsidiaries for such fiscal year and (to the extent applicable)
each of the two preceding fiscal years, all in reasonable detail
and stating in comparative form the respective consolidated and
consolidating figures for the corresponding date and period in the
prior fiscal year, and all prepared in accordance with GAAP
consistently applied and certified without qualification as to
going concern or scope by Price Waterhouse LLP or Deloitte & Touche
LLP or other independent accountants selected by Borrower and
reasonably acceptable to Lender;
5.11.4 MANAGEMENT LETTERS. Promptly upon receipt
thereof, copies of any reports submitted to Borrower or any of its
Subsidiaries by independent certified public accountants in
connection with the examination of the financial statements of
Borrower or any of its Subsidiaries made by such accountants;
5.11.5 CERTIFICATE OF NO DEFAULT. As soon as
possible and in any event within fifty five (55) days after the end
of each fiscal quarter of Borrower, a certificate of the Chief
Executive Officer and the Chief Financial Officer of Borrower
(accompanied by calculations sufficient in detail to establish
compliance with each of the covenants set forth in each of (i) in
the case of the first three quarters of any fiscal year, Sections
5.10.1(b) and 5.10.2(b), and (ii) in the case of the last quarter
of a fiscal year, Sections 5.10.1(a), 5.10.2(a) and 5.10.3 through
5.10.7, 6.3.4, 6.4(a), 6.5.6 and 6.16) certifying that, to the best
of their knowledge following diligent inquiry, no Default or Event
of Default has occurred and is continuing or, if a Default or Event
of Default has occurred and is continuing, a statement as to the
nature thereof and the action which is proposed to be taken with
respect thereto;
5.11.6 NOTICE OF LITIGATION. Promptly after the
commencement thereof, notice of all actions, suits, and proceedings
before any court or governmental department, commission, board,
bureau, agency, or instrumentality, domestic or foreign, affecting
Borrower or any of its Subsidiaries;
5.11.7 NOTICE OF DEFAULTS AND EVENTS OF DEFAULT.
Immediately upon obtaining knowledge of the occurrence of any
Default or Event of Default, a written notice setting forth the
details of such Default or Event of Default and the action which is
proposed to be taken by Borrower with respect thereto;
5.11.8 ERISA REPORTS. Promptly after the filing
or receipt thereof, copies of all reports (including annual
reports) and notices that Borrower or any Subsidiary of Borrower
files with or receives from the PBGC or the U.S. Department of
Labor under ERISA; and as soon as possible after Borrower or any
Subsidiary of Borrower knows or has reason to know that any
Reportable Event or Prohibited Transaction has occurred with
respect to any ERISA Plan or that the PBGC or Borrower or any such
Subsidiary has instituted or will institute proceedings under Title
IV of ERISA to terminate any ERISA Plan, a certificate of the Chief
Executive Officer setting forth details as to such Reportable Event
or Prohibited Transaction or ERISA Plan termination and the action
Borrower proposes to take with respect thereto;
5.11.9 ENVIRONMENTAL MATTERS. Promptly after the
receipt thereof, copies of any notice received from any
governmental authority or other Person asserting that Borrower or
any Subsidiary of Borrower is responsible or potentially
responsible for any release or threatened release of any hazardous
waste or hazardous substance (as such terms are defined in Section
4.14);
5.11.10 DEBTORS' AUDITED FINANCIAL STATEMENTS. No
later than October 25, 1996, audited financial statements for each
of the fiscal years of Debtors ended December 31, 1994, and
December 31, 1995, certified by Deloitte & Touche LLP or other
independent accountants selected by Borrower and reasonably
acceptable to Lender;
5.11.11 PROPERTY SALES. No later than the date on
which any sale of a Pre Identified Asset by Borrower or any
Subsidiary of Borrower closes, a notice thereof, executed on behalf
of Borrower by its Chief Executive Officer, certifying as to (i)
the number of acres of farming acreage of each type listed on
Exhibit I included in such sale, and (ii) a computation of the
Minimum Cash Balance reflecting such sale;
5.11.12 BLYTHE RANCH CASH FLOW. No later than June
30 of each year, a certificate, executed on behalf of Borrower by
its Chief Executive Officer and Chief Financial Officer, attaching,
and certifying as to the accuracy and completeness of, (a) a
calculation, in reasonable detail and using the methodology used in
preparing the Blythe Ranch Projections, of the Blythe Ranch Cash
Flow for the crop season then most recently ended, and (b) a
comparison of such Blythe Ranch Cash Flow, and of the Blythe Ranch
Cash Flow for any prior years covered by the Blythe Ranch
Projections, to the Projected Blythe Ranch Cash Flow for each of
such years and such prior years.
5.11.13 NOTICES TO ▇▇▇▇▇▇▇. Concurrently with the
delivery thereof to ▇▇▇▇ ▇▇▇▇▇▇▇, a copy of each notice or other
communication required to be delivered to ▇▇▇▇ ▇▇▇▇▇▇▇ under the
▇▇▇▇ ▇▇▇▇▇▇▇ Loan Documents; and
5.11.14 GENERAL INFORMATION. Such other
information respecting the condition or operations, financial or
otherwise, of Borrower or any Subsidiary of Borrower as Lender may
from time to time reasonably request, including, without
limitation, updates of any or all of the Schedules hereto.
5.12 CANCELLATION OF PREFERRED STOCK. No later than the
date that is thirty (30) days after the Effective Date, cancel
(without the payment of any amount, by way of dividend or other
distribution thereon or otherwise) all outstanding shares of
Borrower's preferred stock, including all rights to any accrued but
unpaid dividends, and deliver to Lender copies, certified by
Borrower's Secretary as true and complete copies of the originals,
of all actions of Borrower's stockholder and board of directors
giving effect to such cancellation.
5.13 SALE OF BLYTHE RANCH. When and as provided in Part
2 of the Minimum Release Price Schedule (but subject to Section
6.6.3): promptly commence (and thereafter continue) diligent
efforts to sell Blythe Ranch, marketing it (x) actively and
extensively, (y) to as broad a range of potential purchasers as is
reasonably possible and (z) in a manner designed to consummate the
sale of Blythe Ranch at a purchase price equal to or greater than
the Blythe Ranch Release Price. Provided that Borrower has, in
Lender's judgment (reasonably applied), made diligent efforts to
market Blythe Ranch to Persons other than Affiliates of Cadiz,
Borrower may, with Lender's prior written consent, not to be
unreasonably withheld or delayed, sell Blythe Ranch to Cadiz at a
price equal to the higher of (p) the Blythe Ranch Release Price and
(q) the highest bona fide offer for Blythe Ranch, if any, received
from a Person other than an Affiliate of Cadiz.
5.14 AAI. No later than December 13, 1996, (a) cause
the pending bankruptcy proceedings of AAI to be dismissed in
accordance with the Bankruptcy Code, and (b) deliver to Lender, and
cause AAI to execute and deliver to Lender, each of the documents
that would have been required to be delivered by or with respect to
AAI as a condition precedent to the effectiveness of Section 2 but
for the proviso set forth in the first paragraph of Section 3; and
(b) take each of the acts with respect to AAI, and cause AAI to
take each of the acts AAI would have been required to take, as a
condition precedent to the effectiveness of Section 2 but for the
proviso set forth in the first paragraph of Section 3.
5.15 PACA LICENSE. No later than October 15, 1996, (a)
obtain the license from the United States Department of Agriculture
the issuance of which was provided for under the commitment
delivered pursuant to Section 3.18, and (b) deliver a copy thereof
to Lender.
5.16 LEGAL OPINION. No later than November 15, 1996,
deliver to Lender an opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ (a) as to whether
or not the capital stock of each of Borrower's Subsidiaries has
been duly authorized and validly issued and is fully paid and
nonassessable; and (b) if the capital stock of any Subsidiary of
Borrower is not duly authorized and validly issued, or is not fully
paid and nonassessable, explaining the reasons for such opinion.
5.17 LEASEHOLD DOCUMENTS. Use reasonably diligent
efforts to obtain and to deliver to Lender, by October 15, 1996,
each of the Amendments to Lease With Lender Cure Rights and related
memoranda of leases that were not delivered on the Effective Date,
together with the related Leasehold Deed of Trust.
5.18 FURTHER ASSURANCES. Execute, deliver, record,
register and file or take, and cause each of its Subsidiaries to
execute, deliver, record, register and file or take, all such
notices, statements and other documents and other steps, including
but not limited to the amendment of the Loan Documents and any
financing statements prepared thereunder, as may be reasonably
necessary or advisable, or that Lender may reasonably request, to
render fully valid and enforceable, under all applicable laws, the
rights, Liens and priorities of Lender with respect to all security
from time to time furnished under this Agreement or any other Loan
Document or intended to be so furnished or otherwise in order more
fully to carry out the provisions and intentions of this Agreement,
in each case in such form and at such times as shall be reasonably
satisfactory to Lender; and, without limiting the generality of the
foregoing: if any Collateral (or collateral subject to a security
interest created pursuant to the Security Document) is evidenced by
a promissory note, negotiable document, chattel paper or
instrument, deliver and pledge to Lender hereunder or under the
relevant Security Document (or cause the relevant Guarantor to
deliver and pledge to Lender pursuant to the relevant Security
Document) such note, document, chattel paper or instrument, duly
indorsed and accompanied by duly executed instruments of transfer
or assignment, all in form and substance satisfactory to Lender.
5.19 ACCESS TO INFORMATION. At any time and from time
to time, permit (and cause each of its Subsidiaries to permit)
Lender, or any agent or representative of or consultant to Lender
or its counsel (including, without limitation, any employee,
principal or other representative of any consultant to Lender or
its counsel), the reasonable costs of which shall be paid by
Borrower within ten (10) days after Lender's demand, to examine and
make copies of and abstracts from the records and books of account
of, and visit the real property and other assets of, Borrower and
any of its Subsidiaries, and to discuss the status of the growing
crops and the affairs, finances and accounts of Borrower and its
Subsidiaries, with any of their respective officers, directors or
other personnel and their respective independent accountants. This
Section 5.14 shall constitute Borrower's irrevocable authorization
and direction to such officers, directors, other personnel and
independent accountants to make such records available and to
discuss such matters with Lender or its representatives.
6. NEGATIVE COVENANTS. So long as the Note or any other
amount payable by Borrower under any of the Loan Documents shall
remain unpaid, Borrower agrees that it shall not:
6.1 INACTIVE SUBSIDIARIES. Cause or permit (a) either
of Sun Harvest, Inc. and Pacific Farm Service, Inc., unless and
until it is restored to the status of a corporation validly
existing and qualified to do business and in good standing under
the laws of the State of California, to enter into any transaction
whatsoever; or (b) Sun World (Europe) B.V., or any other Subsidiary
of Borrower described on Schedule 4.3 as being inactive to acquire
or dispose of any assets or to enter into any other transaction
that would be material with respect to such Subsidiary.
6.2 LIENS AND CLAIMS. Create, incur, assume or suffer
to exist, or permit any Subsidiary of Borrower to create, incur,
assume or suffer to exist:
6.2.1 any Lien or claim with respect to any of
such Person's properties that would be pari passu with or senior to
the Liens in favor of Lender provided for herein or Lender's claim
against Borrower in respect of the obligations arising under this
Agreement and the other Loan Documents, other than (a) such senior
Liens as may be expressly permitted by Lender, as listed in the
title policy endorsements delivered to Lender in accordance with
Section 3.15; (b) Liens that were prior to Lender's pre petition
Liens as of the Petition Date, securing an amount not in excess of
the principal amount thereof as of the Effective Date, as reduced
from time to time by any payments of principal made thereon, and
accrued and unpaid interest thereon and other costs, expenses and
fees and other amounts payable under the documentation governing
the obligations secured thereby; (c) the ▇▇▇▇ ▇▇▇▇▇▇▇ Liens, to the
extent such Liens (i) are permitted to exist under Section 6.2.2(f)
and (ii) have priority over the Liens in favor of Lender pursuant
to the Intercreditor Agreement; (d) purchase money security
interests in personal property (i) securing purchase money Debt
incurred after the Effective Date in accordance with the provisions
of this Agreement, in an amount not in excess of the original
principal amount thereof, as reduced from time to time by any
payments of principal made thereon, and accrued and unpaid interest
thereon and other costs, expenses and fees and other amounts
payable under the documentation governing such Debt, and (ii)
covering only the property so acquired; and (e) Liens described in
Section 6.2.2(b), 6.2.2(c) or 6.2.2(e), in any such case, to the
extent such Liens (i) are permitted to exist under such Section and
(ii) have priority over the Liens in favor of Lender by operation
of law;
6.2.2 any other Lien with respect to any of such
Person's properties, except for the following:
(a) Liens in favor of Lender;
(b) Liens, other than Recorded Tax Liens,
for taxes or assessments or other government charges or levies that
are not yet due and payable or, if due and payable, that are being
contested in good faith by appropriate proceedings and for which
appropriate reserves are maintained;
(c) Liens imposed by law, such as
producers', mechanics', materialmen's, landlords', warehousemen's,
carriers' and agricultural Liens (including, without limitation,
the rights of growers and vendors of perishable farm products under
PACA), and other similar Liens, securing obligations incurred in
the ordinary course of business, provided that the aggregate amount
of such Liens that are both (i) more than thirty (30) days past due
and (ii) not being contested in good faith by appropriate
proceedings, for which appropriate reserves have been established,
does not exceed $100,000;
(d) Liens under worker's compensation,
unemployment insurance, social security, or similar legislation;
(e) Liens, deposits, or pledges, in any
case, made in the ordinary course of business, to secure (i) the
performance of bids, tenders, contracts (other than contracts for
the payment of money), or public or statutory obligations; (ii)
surety, stay, appeal, indemnity, performance, or other similar
bonds (including Borrower's pledge of cash collateral, in an amount
not exceeding $1,180,000, to the Department of Agriculture or to
the issuer of any bond delivered to the Department of Agriculture
in lieu of a cash deposit, as required to obtain the issuance of
(or to maintain thereafter) Borrower's license under PACA); or
(iii) other similar obligations.
(f) the ▇▇▇▇ ▇▇▇▇▇▇▇ Liens securing the
▇▇▇▇ ▇▇▇▇▇▇▇ Obligations in an amount not in excess of (i) the
principal amount thereof as of the Effective Date, as reduced from
time to time by any payments of principal made thereon (but without
limiting in any manner the provisions of Section 6.7 and subject to
an increase, on a single occasion, in the amount of $2,000,000
arising from ▇▇▇▇ ▇▇▇▇▇▇▇'▇ making of a re advance to Borrower in
that amount (the "▇▇▇▇ ▇▇▇▇▇▇▇ Re Advance") in connection with
Lender's making of the Re Advance), and (ii) accrued and unpaid
interest thereon (including, when applicable under the ▇▇▇▇ ▇▇▇▇▇▇▇
Loan Documents, interest at the Default Rate provided for therein)
and (iii) other costs, expenses and fees and other amounts that,
under the ▇▇▇▇ ▇▇▇▇▇▇▇ Loan Documents, are (A) payable by any
Debtor (as defined in the ▇▇▇▇ ▇▇▇▇▇▇▇ Credit Agreement ("▇▇▇▇
▇▇▇▇▇▇▇ Debtor")) and (B) secured by the ▇▇▇▇ ▇▇▇▇▇▇▇ Liens,
including, but not limited to: (W) any late charges or Make Whole
Amounts or other prepayment premiums, (X) any and all amounts
advanced by ▇▇▇▇▇▇▇ for the protection or preservation of property
subject to the ▇▇▇▇ ▇▇▇▇▇▇▇ Liens, including, but not limited to,
payment of real property taxes and assessments, insurance premiums,
attorneys' fees, fees for receivers, consultants' fees, and all
other fees, costs or expenses incurred or expended by ▇▇▇▇ ▇▇▇▇▇▇▇
in connection with the enforcement of any rights, remedies or
options it may have under the ▇▇▇▇ ▇▇▇▇▇▇▇ Loan Documents; (Y) any
environmental damages due under any secured environmental indemnity
agreement; and (Z) any damages, claims, actions or causes of
actions that ▇▇▇▇ ▇▇▇▇▇▇▇ may have against the ▇▇▇▇ ▇▇▇▇▇▇▇
Debtors; but not (x) the grant by Borrower or any of its
Subsidiaries to ▇▇▇▇ ▇▇▇▇▇▇▇ of additional security in respect of
environmental issues, or (y) any other extension of the ▇▇▇▇
▇▇▇▇▇▇▇ Liens to other property, except for After Acquired Property
(as defined in the ▇▇▇▇ ▇▇▇▇▇▇▇ Credit Agreement as in effect on
the Effective Date) and proceeds of property subject to the ▇▇▇▇
▇▇▇▇▇▇▇ Liens as permitted hereunder;
(g) any other Lien listed on Schedule
4.5.1 (including the Lien on an undivided one half interest in
Blythe Ranch and related fixtures and equipment granted to Zenith
pursuant to the Plan), securing the obligation it is identified as
securing thereon, in an amount not in excess of the principal
amount thereof as of the Effective Date (as indicated on Schedule
4.5.1, if so indicated), as reduced from time to time by any
payments of principal made thereon (but without limiting in any
manner the provisions of Section 6.7), and accrued and unpaid
interest thereon, but not the extension of such Liens to other
property, except for proceeds of property subject to such Lien as
of the Effective Date; or
(h) Easements, rights of way,
restrictions, and other similar encumbrances which, in the
aggregate, do not materially interfere with the occupation, use,
and enjoyment by Borrower or any Subsidiary of Borrower of any real
property or other property or assets encumbered thereby in the
normal course of its business or materially impair the value of the
property subject thereto.
6.3 DEBT. Create, incur, assume, or suffer to exist,
or permit any Subsidiary of Borrower to create, incur, assume, or
suffer to exist, any trade debt, any unfunded liabilities under
ERISA Plans, or any Debt of any kind (including, without
limitation, under any Capitalized Lease), other than:
6.3.1 (a) the obligations of Borrower to Lender
under the Loan Documents; (b) the ▇▇▇▇ ▇▇▇▇▇▇▇ Obligations,
provided that the principal amount thereof shall not exceed the
principal amount thereof as of the Effective Date, as reduced from
time to time by any payments of principal made thereon (but without
limiting in any manner the provisions of Section 6.7 and subject to
an increase, on a single occasion, in the amount of $2,000,000
arising from ▇▇▇▇ ▇▇▇▇▇▇▇'▇ making of the ▇▇▇▇ ▇▇▇▇▇▇▇ Re Advance);
and (c) other Debt that exists as of the Effective Date and is
listed on Schedule 4.5.1, provided that the principal amount
thereof shall not exceed the principal amount thereof as of the
Effective Date, as reduced from time to time by any payments of
principal made thereon (but without limiting in any manner the
provisions of Section 6.7);
6.3.2 accounts payable to trade creditors for
goods or services which are not aged more than one hundred twenty
(120) days from billing date, and current operating liabilities
(other than for borrowed money), in each case incurred in the
ordinary course of business; provided that the aggregate amount of
such accounts payable or other current operating liabilities that
are both (a) more than sixty (60) days past due and (b) not being
contested in good faith by appropriate acts or proceedings, for
which appropriate reserves have been established, does not exceed
$100,000;
6.3.3 current liabilities with respect to
unfunded vested benefits under any ERISA Plan that are not material
in amount; or
6.3.4 Debt (a) incurred from and after January 1,
1997, in an aggregate amount not exceeding, in any fiscal year of
Borrower, the lesser of (i) $1,500,000, and (ii) the excess, if
any, of (A) Borrower's consolidated Capital Expenditures for such
fiscal year over (B) Borrower's consolidated Capital Expenditures
for such fiscal year used to improve or maintain assets subject to
the ▇▇▇▇ ▇▇▇▇▇▇▇ Liens or to acquire assets that, upon Borrower's
(or the acquiring Subsidiary's) acquisition of rights therein,
become subject to the ▇▇▇▇ ▇▇▇▇▇▇▇ Liens, (b) owed to vendors in
respect of personal property (other than property the cost of which
constitutes a Crop Development Cost), not previously owned by
Borrower, any Subsidiary of Borrower or Cadiz or any other
Subsidiary or Affiliate of Cadiz, purchased from such vendors and
as to which, in respect of any individual acquisition: (w) the
amount of the related Debt does not exceed the fair market value of
the property so acquired, (x) the terms of such Debt require the
payment of regular installments of principal that approximate, in
the reasonable good faith judgment of the Chief Financial Officer,
the diminution in the fair market value of such property over time,
(y) any Lien securing such Debt is limited to the property so
acquired, and (z) if such Debt had been incurred on the first day
of the fiscal year preceding the fiscal year in which it is
actually incurred, Borrower would have been in compliance, as of
the last day of such preceding fiscal year, with each of the
financial covenants contained in Section 5.10 required to be
measured as of the last day of such preceding fiscal year.
6.4 LEASES; OTHER ACQUISITIONS.
(a) Create, incur, assume, or suffer to exist,
or permit any Subsidiary of Borrower to create, incur, assume, or
suffer to exist, any obligation (as lessee, licensee or otherwise)
for the rental, hire or use of (i) any personal property, other
than in the ordinary course of business; or (ii) any real property,
other than (A) (1) to replace Land owned or leased as of the
Effective Date (or Land subsequently leased to replace such Land in
accordance with this Section 6.4) for the growing of row crops and
(2) provided that (a) the then current Business Plan calls for such
row crops to continue to be grown in quantities necessitating
Borrower's entry into such replacement lease, (b) the lessor
thereunder agrees to place a memorandum of such lease of record,
and (c) Borrower executes and acknowledges (or causes to be so
executed and acknowledged), and causes to be recorded, both a
Leasehold Deed of Trust and an Amendment to Lease with Lender Cure
Rights with respect thereto; or (B) temporary rentals in the
ordinary course of business for the storage of equipment or
inventory and like purposes, provided that aggregate rentals paid
or incurred by Borrower and its Subsidiaries under such leases
during any fiscal year of Borrower do not exceed $100,000; or
(b) acquire, or permit any Subsidiary of Borrower
to acquire, any fee interest in real property.
6.5 DIVIDENDS; DISTRIBUTIONS; OTHER PAYMENTS AND
ACTIONS.
6.5.1 Declare or pay any dividends or other
distributions, of any nature whatsoever (other than dividends or
distributions payable solely in shares of Borrower's common stock),
on any shares of Borrower's capital stock, or purchase, redeem or
otherwise retire any shares of Borrower's capital stock, or agree
to do so; provided, however, that, provided that there shall not
have occurred and then be continuing (or would exist immediately
thereafter) any Default or Event of Default, Borrower may
distribute the Re Advance and the ▇▇▇▇ ▇▇▇▇▇▇▇ Re Advance to Cadiz;
6.5.2 pay to Cadiz on a Consolidated basis, in
respect of management services provided under the Cadiz Services
Agreement, an amount in excess of $375,000 per calendar quarter;
6.5.3 (a) at any time during (i) the period
commencing on the first day of the Deferral Period and ending on
the date on which all interest accrued in respect of the
Restructured Loan during the Deferral Period has been paid in full
or (ii) during the continuance of any Default or Event of Default:
pay (or cause to be paid) any amount to Cadiz (or any Subsidiary of
Cadiz that is not a Subsidiary of Borrower) in respect of any
obligation, including, without limitation, any amount due under the
Cadiz Services Agreement, the Tax Sharing Agreement or the Cadiz
Lease; or (b) pay, prior to the due date thereof, any amount owed
under the Cadiz Services Agreement, the Tax Sharing Agreement, the
Cadiz Lease or any other agreement with Cadiz or any Subsidiary of
Cadiz that is not a Subsidiary of Borrower;
6.5.4 pay, or permit any Subsidiary of Borrower
to pay, any amount in respect of any Class 6 Claim or Class 8 Claim
(including, without limitation, any amount payable to LSL
Biotechnologies, Inc., pursuant to a settlement of its claims or
otherwise, with respect to its pre petition claims against the
Debtors) except (a) from funds transferred to the Unsecured Claims
Disbursement Account from the Unsecured Claims Reserve Account, as
a Capital Contribution by Cadiz to Borrower, and (b) following
compliance with Section 5.11.1(d), or pay or incur (or permit any
Subsidiary of Borrower to pay or incur) any expense of resolving
any Disputed Claim (as defined in the Plan);
6.5.5 issue any securities other than common
stock; or
6.5.6 pay, or permit any Subsidiary of Borrower
to pay, any amount to any Grower in the nature of a "rendering up"
payment; provided, however, that this provision shall not prohibit
Borrower and its Subsidiaries from making payments to Growers, not
exceeding $150,000 in the aggregate for all Growers during any
calendar year, in respect of (a) produce damaged, or other errors
or omissions in the marketing of produce, by Borrower or any of its
Subsidiaries, or (b) the failure of any buyer of a Grower's produce
to pay the purchase price in full where, under the relevant
Marketing Agreement, the risk of such nonpayment has been assumed
by Borrower.
6.6 DISPOSITIONS OF ASSETS. Sell, lease, assign,
transfer, or otherwise dispose of, or permit any Subsidiary of
Borrower to sell, lease, assign, transfer, or otherwise dispose of,
any asset, including, without limitation, any shares of any capital
stock of any Subsidiary of such Person and Water Rights; provided
that:
6.6.1 Borrower and its Subsidiaries may, in the
ordinary course of business and on commercially reasonable terms,
(a) sell inventory, (b) effect Permitted Water Sales or (c) license
Trademarks or Patents to third parties;
6.6.2 Borrower and its Subsidiaries may lease
real property to others in the ordinary course of business, for a
term (including all extensions and renewals) not to exceed three
(3) years;
6.6.3 Provided that Borrower causes to be paid to
Lender, from escrow, the amount required to be paid to Lender under
Section 2.4.1(d), Borrower may sell Blythe Ranch at a price,
payable in cash at the close of sale, equal to at least the Blythe
Ranch Release Price; and
6.6.4 (a) Subject to Sections 6.6.4(b) and (c),
Borrower may sell any asset listed on the Minimum Release Price
Schedule ("Pre Identified Asset"; provided that such term shall
exclude Blythe Ranch), at a price equal to at least the Minimum
Sales Price for such Pre Identified Asset and on terms requiring
that the full sales price be paid, in cash, by the close of sale.
(b) Asset Sales Proceeds from any sale
permitted under Section 6.6.4(a) shall be paid to ▇▇▇▇ ▇▇▇▇▇▇▇ to
be applied to reduction of the principal of the ▇▇▇▇ ▇▇▇▇▇▇▇
Obligations, as follows:
(i) if the relevant Pre Identified
Asset is sold on or before the third anniversary of the Effective
Date, (x) 50% towards the payment of the next required installments
of principal due under the ▇▇▇▇ ▇▇▇▇▇▇▇ Obligations, in the order
of their maturity, and (y) 50% toward the payment of the
installments (including the final balloon payment) of principal due
under the ▇▇▇▇ ▇▇▇▇▇▇▇ Obligations in the inverse order of their
maturity, until an aggregate amount of $30,000,000 has been so
applied in accordance with this clause (i); provided that (p) no
more than $25,000,000 in Asset Sales Proceeds from the sale of Tier
A Pre Identified Assets shall be so applied; and (q) if such Asset
Sales Proceeds are received:
(A) at a time when the ▇▇▇▇ ▇▇▇▇▇▇▇
Obligations have been accelerated; or
(B) at a time when (1) there has
occurred any default in (a) the payment when due of any scheduled
installment of principal or interest under the ▇▇▇▇ ▇▇▇▇▇▇▇
Obligations, or (b) the payment, within ten (10) days after written
demand therefor, of other amounts due under the ▇▇▇▇ ▇▇▇▇▇▇▇
Obligations aggregating at least $250,000, and (2) the overdue
payment(s) have not been made (from funds other than such Asset
Sales Proceeds); or
(C) at a time when the Restructured
Loan has been accelerated and such acceleration has not been
rescinded; or
(D) after the occurrence of any of
the following:
(1) the receipt by Lender, and
application by Lender to the payment of the obligations of Borrower
under the Loan Documents, of any dividends, cash, securities,
instruments or other property or distributions under Section 3 of
the Stock Pledge Agreement executed by Cadiz in favor of Lender, or
the exercise (by proxy or otherwise) by Lender of any voting or
other consensual rights with respect to the stock of Borrower
pursuant to Section 4 of such Stock Pledge Agreement,
(2) the exercise by Lender,
prior to acceleration of the Restructured Loan, of any right or
remedy arising upon or after a Default that (a) results in
Borrower's loss of use or control of any assets (other than the
Cash Account or the cash therein) such that Borrower is rendered
unable to conduct business substantially in the ordinary course, or
(b) constitutes a liquidation by Lender of any material assets
(other than property subject to the ▇▇▇▇ ▇▇▇▇▇▇▇ Liens) into cash
proceeds for the benefit of Lender, or
(3) the exercise by Lender of
any right of set off Lender may have with respect to assets of
Borrower or any Subsidiary of Borrower, under Section 8.9 or
otherwise;
then ▇▇▇▇ ▇▇▇▇▇▇▇ may allocate the entire amount of such Asset
Sales Proceeds to the payment of amounts due under the ▇▇▇▇ ▇▇▇▇▇▇▇
Obligations in accordance with the provisions of the ▇▇▇▇ ▇▇▇▇▇▇▇
Loan Documents; and
(ii) to the extent that (A) Asset
Sales Proceeds from the sale of Tier A Pre Identified Assets exceed
$25,000,000, (B) Asset Sales Proceeds from all sales of Pre
Identified Assets (other than that portion of Asset Sales Proceeds
from the sale of Tier A Pre Identified Assets in excess of
$25,000,000) exceed $30,000,000, or (C) the relevant Pre Identified
Asset is sold after the third anniversary of the Effective Date,
toward the payment of the installments of principal (including the
final balloon payment) due under the ▇▇▇▇ ▇▇▇▇▇▇▇ Obligations in
the inverse order of their maturity.
For purposes of this Agreement, a Pre Identified Asset shall be
deemed to have been "sold" on or before the third anniversary of
the Effective Date if (r) the sale of such Pre Identified Asset
closes on or before such third anniversary, or (s) (A) a contract
for the sale of such Pre Identified Asset has been executed and
delivered, and an escrow for such sale has been opened, on or
before the third anniversary of the Effective Date, and (B) such
sale closes on or before the date that is six months after the date
on which escrow was opened.
(c) Notwithstanding the foregoing, if any
sale of a Pre Identified Asset permitted under Section 6.6.4
includes a sale of crops growing on such Pre Identified Asset at
the time of closing of such sale: (i) Borrower (or the relevant
Subsidiary) and the purchaser shall agree upon in good faith and on
arm's length terms, and reflect in writing, a separate purchase
price for such growing crops (the "Crop Value"); and (ii) if the
Crop Value is less than 80% of the Funded Crop Costs allocable to
such Pre Identified Asset, then Borrower (or relevant Subsidiary,
if applicable) shall not sell such Pre Identified Asset together
with such growing crops except with Lender's express prior written
consent.
6.7 PAYMENTS OF DEBT; OTHER OBLIGATIONS.
6.7.1 Prepay, or permit any Subsidiary of
Borrower to prepay, any amount in respect of any Debt other than
(a) the Restructured Loan; (b) solely from Asset Sales Proceeds as
permitted under Section 6.6.4, the ▇▇▇▇ ▇▇▇▇▇▇▇ Obligations (and,
without limiting the generality of the foregoing, no prepayment of
the ▇▇▇▇ ▇▇▇▇▇▇▇ Obligations shall be effected in connection with
any "Change of Control," as defined in the ▇▇▇▇ ▇▇▇▇▇▇▇ Credit
Agreement); or (c) solely from the net proceeds of a sale of Blythe
Ranch permitted under Section 6.6.3, the Zenith Note;
6.7.2 Except with Lender's prior written consent:
(a) consent, or permit any Subsidiary of Borrower to consent, to
any amendment, modification, supplement, waiver or termination of
any of the documentation governing any Debt, or (b) enter into, or
otherwise agree to, any settlement of claims asserted by or against
LSL Biotechnologies, Inc.;
6.7.3 (a) Pay, or permit any Subsidiary of
Borrower to pay, more than three (3) days prior to its due date,
any amount due in respect of an operating lease, or (b) pay, or
permit any Subsidiary to pay, prior to the date that is twenty five
(25) days after the date of the relevant invoice, any amount due
under an account payable owed to a trade creditor, except to the
extent that such payment would be made prior to such date in the
ordinary course of Borrower's or such Subsidiary's business; or (c)
taking into account Borrower's and its Subsidiaries' reasonably
expected seasonal requirements in the ordinary course of business,
make any other expenditure of cash that would give rise to current
assets outside the ordinary course of business.
6.8 GUARANTIES. Assume, guaranty, endorse, or
otherwise be or become directly or contingently responsible or
liable, or permit any Subsidiary of Borrower to assume, guarantee,
endorse, or otherwise be or become directly or contingently
responsible or liable (including, but not limited to, an agreement
to purchase any obligation, stock, assets, goods, or services, or
to supply or advance any funds, assets, goods, or services, or to
maintain or cause such Person to maintain a minimum working capital
or net worth, or otherwise to assure the creditors of any Person
against loss) for obligations of any Person (any of the foregoing,
a "Guaranty"), except (i) Guaranties by endorsement of negotiable
instruments for deposit or collection or similar transactions in
the ordinary course of business; (ii) the assumption by Borrower,
pursuant to Marketing Agreements entered into in the ordinary
course of business, of the risk of nonpayment by buyers of produce
marketed by Borrower on behalf of Growers, (iii) Guaranties by
Borrower of any Debt of any of its wholly owned Subsidiaries, if
such Debt exists, or is incurred, in accordance with the provisions
of this Agreement; (iv) the Guaranties of the ▇▇▇▇ ▇▇▇▇▇▇▇
Obligations, as required under the ▇▇▇▇ ▇▇▇▇▇▇▇ Credit Agreement,
by Sun Desert and by those other Subsidiaries of Borrower the stock
of which constitutes the Dual Pledged Securities; and (v)
Guaranties in favor of Lender.
6.9 INVESTMENTS; FUNDS.
6.9.1 INVESTMENTS. Make, or permit any
Subsidiary of Borrower to make, any loan or advance to any Person,
or purchase or otherwise acquire, or permit any such Subsidiary to
purchase or otherwise acquire, any capital stock, obligations, or
other securities of, make any Capital Contribution to, or otherwise
invest in or acquire all or substantially all of the assets or the
business of any Person, or acquire any interest in any Person
(each, an "Investment"), except: (a) Permitted Cash Investments
held in a custodial account with the Bankers Trust Company, or
another financial institution reasonably acceptable to Lender, in
which Lender holds a perfected Lien; (b) investments existing as of
the Effective Date and listed on Schedule 4.4; (c) advances by
Borrower to any of its Subsidiaries consisting of the payment, on
behalf of such Subsidiary, of expenses incurred in the ordinary
course of such Subsidiary's business; (d) (i) the performance, by
the employees of Borrower, in a prudent manner consistent with
standard industry practices, of harvest, haul and pack services for
any Grower, or (ii) the payment by Borrower of a Grower's labor
expenses incurred in harvesting a crop to be marketed by Borrower,
in each case, pursuant to a Marketing Agreement permitting Borrower
to deduct its charges for such services or to deduct amounts so
advanced by Borrower in respect of harvesting expenses before
remitting to such Grower such Grower's share of the proceeds of
sale of produce subject to such Marketing Agreement; and (e)
Investments consisting of (i) working capital "grower advances", in
accordance with standard industry practice ("Grower Advances"), (A)
(1) to growers located in the United States that at the time of
their entry into Marketing Agreements are not, and have not
previously been, Affiliates of Borrower or any Debtor, provided
that such Grower Advances are secured by a perfected security
interest of first priority in those crops and such perfected
security interest is assigned to Lender, or (2) to Growers located
in Mexico, Chile or South Africa, made substantially in accordance
with the Foreign Grower Policies and Procedures (but in an
aggregate amount, for all such Growers, in no event in excess of
the then current maximum aggregate amount set forth in the Foreign
Grower Policies and Procedures); (B) solely pursuant to Marketing
Agreements that permit Borrower to deduct all amounts owed to it
before remitting to such Growers their respective shares of the
proceeds of sale of crops marketed pursuant to such Marketing
Agreements; and (C) provided that such advances are used by the
Growers to finance their respective working capital needs directly
relating to the crops subject to such Marketing Agreements; or (ii)
advances in the form of seed provided to Growers (A) made
substantially in accordance with the Foreign Grower Policies and
Procedures; (B) solely pursuant to Marketing Agreements that permit
Borrower to deduct all amounts owed to it before remitting to such
Growers their respective shares of the proceeds of sale of crops
marketed pursuant to such Marketing Agreements; (C) in an amount,
in each instance, that is commercially reasonable for a single crop
cycle; and (D) provided that such seed is used by such Growers to
produce a crop that will be marketed by Borrower pursuant to a
Marketing Agreement in effect at the time of such advance.
6.9.2 SUBSIDIARIES; JOINT VENTURES. (a) Create
or acquire, or permit any Subsidiary of Borrower to create or
acquire, any Subsidiary; or (b) enter into or remain a party to, or
permit and Subsidiary of Borrower to enter into or remain a party
to, any Joint Venture other than (i) Joint Ventures consisting of
partnerships existing as of the Effective Date and listed on
Schedule 4.4, and (ii) Joint Ventures with Growers relating to the
production and sale of row crops, entered into in the ordinary
course of business and substantially in accordance with Debtors'
past practices.
6.9.3 FUNDS. (a) Except (i) to the extent of
funds required under the Plan to be transferred by or on behalf of
Cadiz into the Unsecured Claims Disbursement Account, and (ii)
subject to the provisions of any escrow opened in connection with a
permitted sale of Collateral: maintain, make or cause, or permit
any Subsidiary of Borrower to maintain, make or cause, any deposit
of funds of such Person into an account other than one in which
Lender holds a perfected, first priority Lien; or (b) except with
the Lender's prior written consent, amend, modify, cancel,
terminate or replace the Concentration Account Agreement.
6.10 MERGERS AND CONSOLIDATIONS. Merge (whether as the
disappearing or the surviving Person) or consolidate with, or sell,
assign, lease, or otherwise dispose of (whether in one transaction
or in a series of transactions) all or substantially all of its
assets (whether now owned or hereafter acquired) to any Person, or
permit any Subsidiary of Borrower to do so.
6.11 TRANSACTIONS WITH INSIDERS OR AFFILIATES.
6.11.1 (a) Enter into or continue any transaction,
including, without limitation, the purchase, sale, or exchange of
property or the rendering of any service, with any Affiliate
(including, without limitation, Cadiz), or permit any Subsidiary of
Borrower to enter into or continue any transaction, including,
without limitation, the purchase, sale, or exchange of property or
the rendering of any service, with any Affiliate, except (i) if
otherwise not prohibited by this Agreement and with an Affiliate
that is (A) Borrower or a Subsidiary of Borrower, or (B) an
Affiliate of Cadiz that owns ten percent (10%) or less of the
outstanding voting securities of Cadiz: (x) upon fair and
reasonable terms no less favorable to Borrower or such Subsidiary
than those which would obtain in a comparable arm's length
transaction with a Person not an Affiliate and (y) in the ordinary
course of Borrower's (or such Subsidiary's) business; or (ii) if
such Affiliate is (A) Cadiz or a Subsidiary of Cadiz other than
Borrower or any of its Subsidiaries, or (B) an Affiliate of Cadiz
that owns more than ten percent (10%) of the outstanding voting
securities of Cadiz: (X) pursuant to a Marketing Agreement upon
fair and reasonable terms no less favorable to Borrower or such
Subsidiary than those which would obtain in a comparable arm's
length transaction with a Person not an Affiliate, or (Y) in
accordance with the Cadiz Services Agreement, the Tax Sharing
Agreement or the Cadiz Lease; or (b) except with Lender's prior
written consent, amend, supplement or otherwise modify the Cadiz
Services Agreement, the Tax Sharing Agreement or the Cadiz Lease in
any respect. Without limiting the generality of the foregoing,
Borrower shall not (x) cause or permit Cadiz or any Affiliate of
Cadiz to be involved in the day to day management of Borrower; or
(y) grant, or permit any Subsidiary of Borrower to grant, ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ authority to (i) act as an agent for Borrower or any
Subsidiary with authority to bind such Person, or (ii) exercise
control over the disposition of any funds of Borrower or any
Subsidiary or otherwise to engage in the management of Borrower's
or any of its Subsidiary's financial affairs.
6.11.2 Except in accordance with the Cadiz
Services Agreement, the Tax Sharing Agreement or the Cadiz Lease,
permit, or permit any Subsidiary of Borrower to permit, Cadiz or
any Affiliate of Cadiz other than Borrower or its Subsidiaries, to
(a) pay Borrower's or such Subsidiary's expenses; (b) except to the
extent expressly provided in the Loan Documents, guaranty
Borrower's (or any Subsidiary's) obligations; or (c) advance funds
to Borrower or such Subsidiary, for the payment of expenses or
otherwise; provided, however, that Cadiz may from time to time make
Capital Contributions to Borrower (including, without limitation,
in connection with the transfer of funds into the Unsecured Claims
Reserve Account as required to comply with its obligations under
the Plan).
6.11.3 (a) Act, or permit any Subsidiary of
Borrower to act, as agent for Cadiz, or (b) except in accordance
with either the Cadiz Services Agreement or the Tax Sharing
Agreement, take any action or permit any action to be taken on its
behalf, or permit any Subsidiary of Borrower to take any action or
permit any action to be taken on its behalf (or, in either such
case, fail to take any action or cause any action to be taken on
its behalf) if the effect of taking or not taking such action, as
the case may be, could result in Borrower's being substantively
consolidated in the estate of another Person in the event of a
bankruptcy or insolvency of any such Person.
6.12 STOCK OF SUBSIDIARIES. Sell or otherwise dispose
of any shares of capital stock of any Subsidiary of Borrower, or
permit any Subsidiary of Borrower to issue any additional shares of
its capital stock.
6.13 AMENDMENTS TO GOVERNING DOCUMENTS OR PLANS. (a)
Amend, or permit any Subsidiary of Borrower to amend, the articles
or certificate of incorporation or bylaws, or the partnership
agreement, of Borrower or any Subsidiary of Borrower; or (b) except
with Lender's prior written consent (not to be unreasonably
withheld), amend the then current Business Plan or Crop Development
Plan.
6.14 CHANGES IN BUSINESS. Engage, or permit any
Subsidiary of Borrower to engage, in any line of business in which
the Debtors did not historically engage during the twelve months
preceding the date of this Agreement; or, except with Lender's
prior written consent (which shall not be unreasonably withheld)
deviate, or permit any Subsidiary of Borrower to deviate,
materially from the then current Business Plan.
6.15 CAPITAL EXPENDITURES; RESEARCH AND DEVELOPMENT
EXPENDITURES. Make or incur, or permit any Subsidiary of Borrower
to make or incur, any (a) Capital Expenditure (i) during the period
commencing on the Effective Date and ending December 31, 1996, to
the extent that, including such Capital Expenditure, Aggregate
Capital Expenditures made or incurred on or after the Effective
Date by Borrower or any of its Subsidiaries, would exceed
$1,538,000; or (ii) in any fiscal year commencing with the fiscal
year ending December 31, 1997, to the extent that, including such
Capital Expenditure, Aggregate Capital Expenditures made or
incurred during such fiscal year would exceed the sum of (A)
$4,000,000, and (B) the Capital Expenditure Rollover Amount
applicable to such fiscal year; or (b) Research and Development
Expenditure (i) during the period commencing on the Effective Date
and ending December 31, 1996, to the extent that such Research and
Development Expenditure, when aggregated with all other Research
and Development Expenditures made or incurred on or after the
Effective Date by Borrower or any of its Subsidiaries, would exceed
$300,000; or (ii) in any fiscal year commencing with the fiscal
year ending December 31, 1997, to the extent that such Research and
Development Expenditure, when aggregated with all other Research
and Development Expenditures made or incurred during such fiscal
year, would exceed the sum of (A) $1,100,000 plus (B) for each
fiscal year commencing with the fiscal year ending December 31,
1998, the product of (1) $50,000 times (2) the number of fiscal
years of Borrower that have commenced since January 1, 1998.
6.16 CERTAIN OBLIGATIONS. Enter into or otherwise
incur, or permit to exist, any obligation in respect of any
interest rate or currency swap, collar, floor or cap or other
similar agreement, whether or not such agreement would be accounted
for as a hedging obligation under GAAP.
6.17 CHANGE IN CHIEF EXECUTIVE OFFICES. Move its chief
executive office to a state other than California, or permit any
Subsidiary of Borrower to move its chief executive office to a
state other than California.
6.18 CHANGE IN FISCAL YEAR. Change Borrower's or any
Subsidiary's fiscal year to one ending on a date other than
December 31.
6.19 INSPECTION POLICIES AND PROCEDURES. Adopt any
policy or procedure relating to inspections or other investigations
of the Collateral that would permit any material portion of the
Collateral to be destroyed or damaged in the course of any
inspection or investigation.
7. EVENTS OF DEFAULT.
7.1 EVENTS OF DEFAULT. The occurrence of any of the
following (for any reason whatsoever, whether voluntarily or by
compulsion of law or otherwise), shall constitute an Event of
Default:
7.1.1 (a) Borrower shall fail to pay (i) any
installment of the principal on the Note as and when due and
payable, (ii) any interest on the Note within three (3) Business
Days after such interest first becomes due and payable, or (iii)
any other amount due under this Agreement or any other Loan
Document as and when due and payable (or, if no due date is
specified, within ten (10) days after Lender's demand therefor); or
(b) Cadiz shall fail to pay when due (or, if no due date is
specified, within ten (10) days after Lender's demand therefor) any
amount required to be paid by Cadiz under the Cadiz Agreement or
any other Loan Document; or (c) any Subsidiary of Borrower shall
fail to pay when due (or, if no due date is specified, within ten
(10) days after Lender's demand therefor) any amount required to be
paid by such Subsidiary under the Subsidiary Guaranty or any other
Loan Document.
7.1.2 Any representation or warranty made or
deemed made in this Agreement, or any other Loan Document, or which
is contained in any certificate, document, opinion, or financial or
other statement furnished at any time under or in connection with
this Agreement or any other Loan Document, by Borrower, by Cadiz or
by any Subsidiary or Affiliate of either Borrower or Cadiz, shall
prove to have been incorrect or misleading in any material respect
on or as of the date made or deemed made.
7.1.3 (a) Borrower shall fail to perform or
observe any term, provision, covenant or agreement contained in any
of Sections 5.2, 5.4, 5.5, 5.6(a), 5.7, 5.8.1, 5.8.2, 5.8.3(b),
5.8.3(c), 5.10, 5.11.1 through 5.11.3, 5.11.5, 5.11.10, 5.13 and 6;
or (b) Borrower shall fail to perform or observe any term,
provision, covenant or agreement contained in this Agreement, other
than one specifically addressed in the foregoing clause (a) or
another subsection of this Section 7.1, and such failure shall
continue for more than fifteen (15) days after the earlier of (i)
written notice from Lender, and (ii) the date on which Borrower's
Chairman, Chief Executive Officer, Chief Financial Officer or
General Counsel, or any Vice President of Borrower, first becomes
aware of such failure; or (c) Borrower shall fail to perform or
observe any term, provision, covenant or agreement contained in any
other Loan Document to which Borrower is or is to become a party,
other than one specifically addressed in another subsection of this
Section 7.1, and such failure shall continue beyond the expiration
of any applicable grace or cure period provided for thereunder; or
(d) Cadiz shall fail to perform or observe any term, provision,
covenant or agreement contained in the Cadiz Agreement or any other
Loan Document to which Cadiz is or is to become a party, other than
one specifically addressed in another subsection of this Section
7.1, and such failure shall continue beyond the expiration of any
applicable grace or cure period provided for thereunder; or (e) any
Subsidiary of Borrower shall fail to perform or observe any term,
provision, covenant or agreement contained in the Subsidiary
Guaranty or any other Loan Document to which such Subsidiary is or
is to become a party, other than one specifically addressed in
another subsection of this Section 7.1, and such failure shall
continue beyond the expiration of any applicable grace or cure
period provided for thereunder.
7.1.4 Borrower shall fail to maintain any
insurance required to be maintained under Section 5.3 and such
failure shall continue for a period of five (5) consecutive
Business Days after Borrower first becomes aware of such failure,
by notice from Lender or otherwise.
7.1.5 (a) This Agreement, or any other Loan
Document executed and delivered in connection herewith, fails to be
the valid and binding obligation of Borrower, any Subsidiary of
Borrower, or Cadiz, or any other Person party thereto, or (b) the
Liens in Lender's favor provided for under any Loan Document shall
fail, with respect to Collateral having an aggregate fair market
value in excess of $25,000, to have the priority required pursuant
to the terms hereof, or (c) (i) the validity or enforceability of
any Loan Document shall be contested by Borrower, any Subsidiary of
Borrower, or Cadiz, or any other Person party thereto, or (ii)
Borrower, any Subsidiary of Borrower, Cadiz or any other such
Person shall deny it has any further liability or obligation under
any Loan Document to which it is party.
7.1.6 (a) Borrower, any Subsidiary of Borrower or
Cadiz or any Subsidiary of Cadiz shall fail to pay at maturity any
other Debt in an outstanding principal amount in excess of
$250,000; or (b) any event occurs that, with or without the giving
of notice, the passage of time, or both, would cause or permit (A)
the ▇▇▇▇ ▇▇▇▇▇▇▇ Obligations or (B) any other Debt of Borrower or
any of its Subsidiaries or of Cadiz or any of its Subsidiaries (in
an aggregate principal amount in excess of $250,000), to become, or
be declared to be, due and payable prior to maturity or to be
purchased, redeemed or otherwise acquired by Borrower or any of its
Subsidiaries or by Cadiz or any of its Subsidiaries.
7.1.7 Any "Default" or "Event of Default", as
defined in any ▇▇▇▇ ▇▇▇▇▇▇▇ Loan Document, as in effect on the
Effective Date (i.e., irrespective of any waivers, consents,
amendments, supplements or other modifications becoming effective
thereafter) shall occur.
7.1.8 One or more judgments, decrees, or orders
for the payment of money as to which Borrower's or Cadiz' maximum
aggregate liability (determined on a consolidated basis) not fully
covered by insurance exceeds $250,000 shall be rendered against
Borrower or any of its Subsidiaries or Cadiz or any of its
Subsidiaries and such judgments, decrees, or orders shall continue
unsatisfied and in effect for a period of thirty (30) consecutive
days without being vacated, discharged, satisfied, or stayed or
bonded pending appeal.
7.1.9 Any of the following events occur or exist
with respect to Borrower or any ERISA Affiliate: (a) any Prohibited
Transaction involving any ERISA Plan; (b) any Reportable Event with
respect to any ERISA Plan; (c) the filing under Section 4041 of
ERISA of a notice of intent to terminate any ERISA Plan or the
termination of any ERISA Plan; (d) any event or circumstance that
might constitute grounds entitling the PBGC to institute
proceedings under Section 4042 of ERISA for the termination of, or
for the appointment of a trustee to administer, any ERISA Plan, or
the institution by the PBGC of any such proceedings; (e) complete
or partial withdrawal under Section 4201 or 4204 of ERISA from a
Multiemployer Plan or the reorganization, insolvency, or
termination of a Multiemployer Plan; and in each any such case,
such event or condition, together with all other events or
conditions, if any, could in the opinion of Lender subject Borrower
to any tax, penalty, or other liability to an ERISA Plan, a
Multiemployer Plan, the PBGC, or otherwise (or any combination
thereof) which in the aggregate exceed or may exceed $50,000.
7.1.10 Any attachment, execution, garnishment, tax
lien or any other Lien shall be issued against any property of
Borrower or Cadiz any of their respective Subsidiaries for an
amount in excess of $250,000 and shall not be vacated, discharged,
satisfied or stayed or bonded pending appeal within thirty (30)
days after such issuance.
7.1.11 (x) Cadiz and its Subsidiaries, on a
Consolidated basis, or (y) Borrower and its Subsidiaries, on a
Consolidated basis, shall, in any fiscal year:
(a) become liable, pursuant to one or
more orders or judgments of one or more courts or governmental
agencies (except to the extent that such liability is being
contested in good faith by appropriate proceedings and for which an
adequate reserve has been established and is maintained in
accordance with GAAP) for, or
(b) admit liability or otherwise agree to
expend in remediation of hazardous substances or hazardous waste
claims or to pay,
as damages, fines, other penalties or otherwise, in respect of
hazardous substances or hazardous waste claims, an aggregate amount
that, together with the costs of investigating or defending claims
relating to hazardous substances or hazardous waste incurred by
Cadiz and its Subsidiaries or Borrower and its Subsidiaries, as the
case may be, during such fiscal year, exceeds $1,000,000.
7.1.12 (a) As of December 31, 1996, the
stockholders of Cadiz have failed to authorize the issuance of
sufficient additional shares of the common stock of Cadiz to permit
the full conversion, into such common stock, of (i) all of the
Cadiz Preferred Stock issued in connection with the Acquisition,
and (ii) all other outstanding warrants, options or other rights to
acquire, or to cause the issuance of, Cadiz' common stock; or (b)
as of the date that is six months prior to the mandatory redemption
date of any shares of the Cadiz Preferred Stock, all of the Cadiz
Preferred Stock has not been converted into common stock of Cadiz.
7.1.13 A Change of Control shall occur.
7.1.14 Borrower shall fail to be a wholly owned
Subsidiary of Cadiz.
7.1.15 Cadiz or Borrower or any of their
respective Subsidiaries (a) shall generally not, or shall be unable
to, or shall admit in writing its inability to, pay its debts as
such debts become due; or (b) shall make an assignment for the
benefit of creditors or petition or apply to any tribunal for the
appointment of a custodian, receiver, or trustee for it or a
substantial part of its assets; or (c) shall commence any
proceeding under any bankruptcy, reorganization, arrangements,
readjustment of debt, dissolution, or liquidation law or statute of
any jurisdiction, whether now or hereafter in effect; or (d) shall
have any such petition or application filed or any such proceeding
commenced against it in which an order for relief is entered or
adjudication or appointment is made and which remains undismissed
for a period of thirty (30) days or more; or (e) by any act or
omission to act shall indicate its consent to, approval of, or
acquiescence in, any such petition, application, or proceeding, or
order for relief, or the appointment of a custodian, receiver, or
trustee for all or any substantial part of its properties; or (f)
shall suffer any such custodianship, receivership, or trusteeship
to continue undischarged for a period of thirty (30) days or more;
provided that the currently pending chapter 11 case in which AAI is
a debtor and debtor in possession shall not constitute an Event of
Default.
7.1.16 Borrower, Cadiz or any Subsidiary of either
of them shall file (or otherwise commence) any adversary proceeding
against Lender or any of its Affiliates in respect of any matter
arising out of or related to the Loan Documents or the transactions
contemplated by the Loan Documents.
7.1.17 Borrower shall not have sold, on or before
the third anniversary of the Effective Date, sufficient Tier B Pre
Identified Assets to produce Asset Sales Proceeds payable to ▇▇▇▇
▇▇▇▇▇▇▇ in an aggregate amount equal to at least $5,000,000.
7.2 CONSEQUENCES OF DEFAULT. If an Event of Default
shall occur, Lender may, by notice to Borrower, declare the Note,
all interest thereon, and all other amounts payable under this
Agreement or any other Loan Document to be forthwith due and
payable, whereupon the Note, all such interest, and all such
amounts shall become and be forthwith due and payable, without
presentment, demand, protest, or further notice of any kind, all of
which are hereby expressly waived by Borrower; provided that if an
event described in Section 7.1.15 shall occur, acceleration of the
Restructured Loan shall occur automatically, without the giving of
any notice by Lender; and if an Event of Default shall occur,
Lender may immediately, whether or not the actions referred to
above in this Section 7.2 have been taken, exercise any or all of
its rights and remedies under the Loan Documents. The enumeration
of the foregoing rights and remedies is not intended to be
exhaustive, and the exercise of any right or remedy shall not
preclude the exercise of any other rights or remedies, all of which
shall be cumulative and not alternative.
8. MISCELLANEOUS.
8.1 AMENDMENTS AND WAIVERS. No amendment or
modification of any provision of this Agreement, the Note or any
other Loan Document shall be effective without the written
agreement of Lender and Borrower. No waiver of any provision of
this Agreement shall be effective unless set forth in a writing
executed by the Person against whom it is sought to be enforced.
8.2 NOTICES, ETC. All notices, demands and other
communications provided for under this Agreement and under the
other Loan Documents, or which any party may desire to deliver to
another party, shall be in writing and mailed, telecopied, telexed
or delivered:
8.2.1 if to Borrower, at its address at:
Sun World International, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, #▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
Telecopier: (▇▇▇) ▇▇▇ ▇▇▇▇
Telephone: (▇▇▇) ▇▇▇ ▇▇▇▇
with a copy to:
Cadiz Land Company, Inc.:
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇ ▇▇▇▇
Telephone: (▇▇▇) ▇▇▇ ▇▇▇▇
and to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇., ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇ ▇▇▇▇
Telephone: (▇▇▇) ▇▇▇ ▇▇▇▇
8.2.2 if to Lender, at its address at:
Caisse Nationale de Credit Agricole
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Head of Special Asset Management
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Credit Agricole, Representative ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Manager
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
and to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Heller, Ehrman, White & ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier: ▇▇▇-▇▇▇-▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
or, as to each party, at such other address as shall be designated
by such party in a written notice to the other party complying as
to delivery with the terms of this Section 8.2. All such notices
and communications shall, when mailed, telecopied or personally
delivered, be effective on receipt and, if sent by telex, when the
telex is sent and the appropriate answerback is received.
8.3 INDEPENDENCE OF COVENANTS; EFFECT OF EXECUTION AND
DELIVERY OF ▇▇▇▇ ▇▇▇▇▇▇▇ LOAN DOCUMENTS.
8.3.1 All covenants hereunder shall be given
independent effect so that if a particular action or condition is
not permitted by any of such covenants, the fact that it would be
permitted by an exception to, or be otherwise within the
limitations of, another covenant shall not avoid the occurrence of
an Event of Default or Default if such action is taken or such
condition exists.
8.3.2 Neither the satisfaction of Section 3.6,
nor any waiver thereof by Lender, shall (i) constitute a waiver by
Lender of any other provision of this Agreement or of any other
Loan Document, (ii) impair in any manner Lender's right to exercise
any and all of its rights and remedies arising out of the failure
of any other provision, covenant or condition of any Loan Document
to be observed, performed, complied with or satisfied, or (iii)
constitute an acknowledgment by Lender of any matter asserted or
represented in any ▇▇▇▇ ▇▇▇▇▇▇▇ Loan Document, including, without
limitation, assertions relating to the scope or priority of any
Lien securing the ▇▇▇▇ ▇▇▇▇▇▇▇ Obligations or Borrower's or Cadiz's
obligations to Lender. If a particular action or condition is not
permitted to be taken, or to exist, under the Loan Documents, the
fact that it would be permitted to be taken or to exist, or is
required to be taken or to exist, under the ▇▇▇▇ ▇▇▇▇▇▇▇ Loan
Documents shall not avoid the occurrence of a Default or an Event
of Default if such action is taken or such condition exists; and
(2) if a particular action or condition is required to be taken, or
to exist, under the Loan Documents, the fact that it would not be
permitted to be taken or to exist, or is prohibited from being
taken or from existing, under the ▇▇▇▇ ▇▇▇▇▇▇▇ Loan Documents shall
not avoid the occurrence of Default or an Event of Default if such
action is not taken or such condition fails to exist.
8.4 NO WAIVER; REMEDIES. No failure on the part of
Lender to exercise, and no delay in exercising, any right, power,
or remedy under any Loan Document shall operate as a waiver
thereof; nor shall any waiver of, or single or partial exercise of,
any right, power or remedy under any Loan Document preclude any
other or further exercise thereof or the exercise of any other
right. The remedies provided in the Loan Documents are cumulative
and not exclusive of any remedies provided by law or otherwise
available to Lender.
8.5 SURVIVAL. Except as otherwise expressly provided
for in the Loan Documents: no termination or cancellation
(regardless of cause or procedure) of any financing arrangement
under this Agreement shall in any way affect or impair the powers,
obligations, duties, rights and liabilities of Borrower, Cadiz and
the Guarantors or the rights of Lender relating to any transaction
or event occurring prior to such termination or cancellation.
8.6 SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon and inure to the benefit of Borrower and Lender and
their respective successors and assigns, except that Borrower may
not assign or transfer any of its rights under any Loan Document
without the prior written consent of Lender.
8.7 CERTAIN PARTICIPATIONS AND ASSIGNMENTS.
Notwithstanding any other provisions of this Agreement, Borrower
agrees that Lender may, at any time, transfer participations or
other interests in all or any part of its interest in the
Restructured Loan to one or more financial institutions. Lender
shall give Borrower prompt notice of any transfer, other than the
transfer of a participation, of all or any part of its interest in
the Restructured Loan, provided that Lender's failure to deliver
such notice shall not impair any rights of either Lender or its
assignee under the Loan Documents. It is expressly agreed that, in
connection with the sale and transfer of any participations or
other interests in the Restructured Loan or the Note, or offers
therefor, Lender may provide such information pertaining to
Borrower and its Subsidiaries, or any Affiliate of Borrower, as
Lender may deem appropriate, and to the extent such information is
not publicly available, Lender shall obtain the agreement of the
recipient to hold such information so obtained in confidence except
as disclosure might be required by governmental authorities,
pursuant to legal process or otherwise by law or governmental
regulation. Upon the assignment by Lender of an interest in the
Restructured Loan, Borrower shall (and shall cause each of its
Subsidiaries), at Lender's request, enter into one or more
amendments to this Agreement and the other Loan Documents
incorporating the agency provisions set forth on Exhibit L and
making such other amendments to this Agreement and such other Loan
Documents as Lender may reasonably deem necessary to reflect
Lender's status as agent for itself and each assignee of an
interest in the Restructured Loan.
8.8 COSTS, EXPENSES AND TAXES. Borrower agrees to pay
to Lender, within ten (10) days after Lender's demand, whether or
not the Effective Date occurs, (a) to the extent not included in
the principal amount of the Restructured Loan pursuant to Section
2.1.1, all reasonable out-of-pocket costs and expenses of Lender in
connection with the preparation, review, execution, delivery,
filing and recording of this Agreement and the other Loan Documents
and any other documents to be delivered hereunder or thereunder,
including, without limitation, the reasonable fees and
out-of-pocket expenses of consultants to and counsel for Lender,
including local or special counsel or consultants who may be
retained by said counsel, with respect thereto; (b) all reasonable
costs and expenses of Lender in connection with the administration
of this Agreement and the other Loan Documents and each other
document to be delivered hereunder or thereunder, including,
without limitation, the reasonable fees and out-of-pocket expenses
of consultants to and counsel for Lender, including local or
special counsel or consultants who may be retained by said counsel
with respect to advising Lender as to the rights and
responsibilities of Lender under this Agreement, the other Loan
Documents and such other documents; (c) all reasonable
out-of-pocket costs and expenses of Lender, if any, in connection
with the enforcement of this Agreement, the other Loan Documents
and such other documents, including, without limitation, the fees
and out-of-pocket expenses of counsel for Lender and of any
consultants retained by Lender or its counsel with respect to
advising Lender with respect to the Restructured Loan or any other
aspect of the credit relationship among Lender and Borrower or
their respective Subsidiaries and Affiliates; and (d) all
reasonable out-of-pocket costs and expenses of Lender, if any, in
connection with any bankruptcy or other insolvency proceeding
involving Borrower or any of its Subsidiaries, Affiliates or
stockholders, including, without limitation, the fees and
out-of-pocket expenses of counsel for Lender and of any consultants
retained by Lender or its counsel with respect to any such
proceeding. In addition, Borrower shall pay to Lender, within ten
(10) days after Lender's demand, any property, excise, sales or
other tax, assessment or governmental charge (other than income,
franchise and other similar taxes relating solely to the gross
income of Lender) to which Lender may be subject as a result of any
transaction contemplated by this Agreement, and Borrower agrees to
hold Lender harmless from and against any and all liabilities with
respect to or resulting from any delay in paying or omission to pay
such taxes.
8.9 RIGHT OF SET OFF. Upon the occurrence and during
the continuance of any Event of Default, Lender, and any of the
Affiliates of Lender, is hereby authorized at any time and from
time to time, without notice to Borrower, any Guarantor or any
other Person (any such notice being expressly waived by Borrower,
and, by execution and delivery of the Loan Documents to be
delivered by them on the Effective Date, Cadiz and each Guarantor)
and to the fullest extent permitted by law, to set off and apply
any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at
any time owing by Lender to or for the credit or the account of
Borrower or any Guarantor against any and all of the obligations of
the Company or any Guarantor now or hereafter existing under this
Agreement, the Note and the Security Documents, irrespective of
whether or not Lender shall have made any demand under this
Agreement, the Note or the Security Documents and although such
obligations may be unmatured. Lender agrees promptly to notify
Borrower after any such set off and application; provided, however,
that the failure to give such notice shall not affect the validity
of such set off and application. The rights of Lender under this
Section 8.9 are in addition to other rights and remedies
(including, without limitation, other rights of set off) which
Lender may have.
8.10 SEVERABILITY OF PROVISIONS. Any provision of any
Loan Document which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be amended so as to
achieve the intent of the parties to the extent possible, and if
not amendable shall be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining
provisions of such Loan Document or affecting the validity or
enforceability of such provision in any other jurisdiction.
8.11 HEADINGS. Article and section headings in the Loan
Documents are included in such Loan Documents for the convenience
of reference only and shall not constitute a part of the applicable
Loan Documents for any other purpose.
8.12 CERTAIN INTERPRETATIONS. All words used herein in
the plural shall be deemed to have been used in the singular, and
all words used herein in the singular shall been deemed to have
been used in the plural, where the context and construction so
require. In interpreting the meaning of this Agreement and of any
other Loan Document: (a) "includes" and "including" shall not be
limiting; (b) "or" shall not be exclusive; and (c) "all" includes
"any" and "any" includes "all."
8.13 GOVERNING LAW. This Agreement shall be governed
by, and construed in accordance with, the laws and decisions of the
State of California without regard to principles of conflicts of
law.
8.14 COUNTERPARTS. This Agreement may be signed in any
number of counterparts, and by different parties hereto in separate
counterparts, with the same effect as if the signatures to each
such counterpart were upon a single instrument. All counterparts
shall be deemed an original of this Agreement.
8.15 ENTIRE AGREEMENT; NO NOVATION. This Agreement, the
Note, the Security Documents and the other Loan Documents, and any
other documents required to be executed and delivered hereunder or
thereunder, contain all of the terms and conditions required by the
Plan and agreed upon by the parties relating to the subject matter
of this Agreement and supersede any and all prior and
contemporaneous agreements, negotiations, correspondence,
understandings and communications of the parties, whether oral or
written, respecting that subject matter. In the event of any
conflict between the provisions of the Plan and of this Agreement
or any other Loan Document, the provisions of this Agreement or of
the relevant Loan Document, as the case may be, shall control.
This Agreement and the other Loan Documents are not intended to
effect a satisfaction or novation of Lender's pre petition claims
against the Debtors, but rather to restructure, in their entirety,
the obligations of Borrower and its Affiliates relating thereto.
8.16 INDEMNITY. Borrower shall indemnify, defend and
hold Lender harmless from and against any and all losses, costs,
claims, damages, liabilities and/or causes of action (including
attorneys' and expert witnesses' fees and costs) that Lender may
incur to any Person as a direct or indirect consequence of: (a)
the restructuring of the Debtors' obligations to Lender as provided
herein, except for violations of banking laws or regulations by
Lender; (b) the failure of Borrower to perform any obligations on
its part to be performed as and when required by this Agreement or
any of the Loan Documents; (c) any failure at any time of any
representations and warranties of Borrower to be true and correct;
(d) any act or omission by Borrower or any contractor, agent,
employee or representative of Borrower with respect to any of the
Collateral; (e) the Acquisition, the Merger or the Plan, or any
other transaction contemplated by this Agreement or any other Loan
Document, including, without limitation, any matters, claims or
losses relating to the execution and delivery of this Agreement or
any other Loan Document; and (f) any action taken or omitted to be
taken by Lender in its capacity as such under this Agreement.
Notwithstanding the foregoing, Borrower shall not be obligated to
indemnify, defend or hold Lender harmless from or against losses,
costs, claims, damages or liabilities resulting from Lender's own
gross negligence or willful misconduct. Borrower shall pay to
Lender, within ten (10) days after Lender's demand, any amounts
owing under this indemnity together with interest from the date of
Lender's demand at the Default Rate until paid.
[The rest of this page has been left blank intentionally]
8.17 CONSENT TO JURISDICTION; WAIVER OF RIGHT TO JURY
TRIAL.
8.17.1 BORROWER HEREBY CONSENTS AND SUBMITS TO THE
NONEXCLUSIVE JURISDICTION OF ALL FEDERAL AND STATE COURTS IN THE
STATE OF CALIFORNIA FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENTS OR
THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH OF BORROWER
AND LENDER AGREES THAT SUCH COURTS SHALL HAVE JURISDICTION FOR ALL
SUCH LEGAL PROCEEDINGS. EACH OF BORROWER AND LENDER IRREVOCABLY
CONSENTS TO THE SERVICE OF PROCESS OUT OF THE AFOREMENTIONED COURTS
IN ANY SUCH LEGAL PROCEEDING BY THE MAILING OF COPIES THEREOF, BY
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO SUCH PARTY AT ITS
ADDRESS FOR NOTICES DETERMINED IN ACCORDANCE WITH SECTION 8.2 IN
ACCORDANCE WITH RULES OF THE RELEVANT COURT. NOTHING HEREIN SHALL
ADVERSELY AFFECT THE RIGHT OF LENDER TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR
OTHERWISE PROCEED AGAINST BORROWER OR ANY OF THE COLLATERAL IN ANY
OTHER JURISDICTION.
8.17.2 EACH OF BORROWER AND LENDER HEREBY
EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION (a) ARISING UNDER THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT OR OTHER DOCUMENT REFERRED TO HEREIN OR
DELIVERED IN CONNECTION HEREWITH, OR (b) IN ANY WAY CONNECTED WITH
THE RESTRUCTURED LOAN OR ANY LOAN DOCUMENT OR OTHER SUCH DOCUMENT,
IN ANY SUCH CASE, WHETHER SOUNDING IN TORT OR CONTRACT OR
OTHERWISE. EACH OF BORROWER AND LENDER HEREBY AGREES AND CONSENTS
THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE
DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT EITHER PARTY TO
THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR COPY OF THIS
SECTION 8.17.2 WITH ANY COURT OR OTHER GOVERNMENTAL BODY AS
EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF
THEIR RESPECTIVE RIGHTS TO TRIAL BY JURY.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed by their respective officers thereunto duly authorized,
as of the date first above written.
BORROWER: SUN WORLD INTERNATIONAL, INC.
By:/S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------
Title: Chief Financial Officer
LENDER: CAISSE NATIONALE DE
CREDIT AGRICOLE, ACTING THROUGH
ITS GRAND CAYMAN BRANCH
By: /S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------
Title: Vice President
INITIAL ACCOUNT FOR PAYMENTS:
▇▇▇▇▇▇ Guaranty Trust Company
New York, N.Y.
ABA #021 000 238
Acct #630 00 205
CNCA Chicago
Ref: SUNWORLD