Item 1.01 Entry into a Material Definitive Agreement.
Fifth Amendment to Amended and Restated Credit Agreement
Cadiz Inc. (the “Company”) and Cadiz
Real Estate LLC (collectively, the “Borrowers”), along with MSD Credit Opportunity Master Fund, L.P., MILFAM II L.P.
and WPI-Cadiz Farm CA, LLC (collectively, the “Senior Lenders”) and Wells Fargo Bank, National Association, as agent
for the Senior Lenders, are a party to that certain Amended and Restated Credit Agreement, dated as of October 30, 2013, and as
subsequently amended on November 23, 2015, February 8, 2016, March 4, 2016 and April 28, 2016 (the “Credit Agreement”),
as previously reported.
On November 29, 2016, and effective as
of November 30, 2016, the Borrowers and the Senior Lenders entered into a Fifth Amendment to the Credit Agreement (“Fifth
Amendment”) for the purpose of, among other things, (i) permitting the Borrowers to elect to satisfy the cash interest payment
obligations under the Credit Agreement through the issuance of shares of the Company’s common stock, based on a per-share
price equal to the 10-day volume weighted average trading price of the common stock on the date of the election and (ii) extending
the maturity date of the Credit Agreement from September 28, 2017 to September 28, 2019. Following each election by the Company
to pay cash interest by the issuance of shares of its common stock, the Company will make each issuance on the applicable interest
payment date to the Senior Lenders pursuant to a form of interest share issuance agreement to be executed by the Company with each
Senior Lender. In connection with entering into the Fifth Amendment, the Company issued to the Senior Lenders, in accordance with
their respective pro rata interests of the loans outstanding under the Credit Agreement, an aggregate of 357,500 shares of its
common stock and warrants to purchase an aggregate 357,500 shares of its common stock. Such shares of common stock and the warrants
were offered to the Senior Lenders pursuant to an effective registration statement on Form S-3 (File No. 333-214318) and were issued
to the Senior Lenders pursuant to a form of closing share and warrant issuance agreement executed by the Company with each Senior
Lender. The shares of common stock underlying the warrants and the shares of common stock to be paid as interest to the Senior
Lenders will be offered under such foregoing or similar registration statement, as available at exercise or issuance, as applicable.
Any payment of any interest by the Company via shares of common stock under the Fifth Amendment is subject to the satisfaction
of certain equity conditions, including the effectiveness a registration statement for such shares and a minimum 10-day volume
weighted average trading price of the common stock on the date of payment.
Under the closing share and warrant issuance
agreements, the Senior Lenders will not, and will cause their wholly-owned subsidiaries not to, sell, transfer, encumber or otherwise
dispose of any or all of their respective allocations of the 357,500 shares of common stock issued under the closing share and
warrant issuance agreements prior to May 28, 2017 without the Company’s written consent, other than transfers to affiliates
of the Senior Lenders (provided, however, that any common stock issued under the closing share and warrant issuance agreements
transferred to such affiliate shall be subject, as of the date of such transfer, to the remaining term, if any as of such date,
of the foregoing transfer restrictions).
The warrants generally have a five year term
and an exercise price of $0.01 per share, subject to adjustment for corporate actions including, but not limited to, stock dividends,
stock splits, reverse stock splits, corporate reorganizations and mergers (collectively, “Price Adjustments”) as well
as certain dilutive issuances at a price per share (subject to Price Adjustments) below either of (i) the fair market value of
the common stock, or (ii) $9.05, as provided pursuant to the terms of the warrants. A holder of a warrant may exercise the warrant,
from time-to-time, commencing on the 180th day following the execution date of the Fifth Amendment if any principal or interest
amounts are outstanding under the Credit Agreement as of such day. Once the warrant becomes exerciseable as of such 180th day,
such exerciseability is irrevocable notwithstanding any subsequent pay off of the principal and interest under the Credit Agreement.
The discussion above does not purport to be
a complete description of the Fifth Amendment, the warrants, the closing share and warrant issuance agreements and the form of
interest share issuance agreement described in this Current Report and discussion of each is qualified in its entirety by reference
to the full text of such document, each of which is attached as an exhibit to this Current Report and is incorporated herein by
reference.
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