Document:

artl_ex42.htm

EXHIBIT 4.2
  
 EXHIBIT B TO ABIO SUBSCRIPTION AGREEMENT
  
 EXHIBIT B
  
 Form of Series A Common Stock Warrant
  
  
  
  
  	 
	 Exhibit B

	 
 
	 

  
 EXHIBIT B TO ABIO SUBSCRIPTION AGREEMENT
  
 NEITHER THIS SECURITY NOR ANY SECURITIES WHICH MAY BE ISSUED UPON EXERCISE OF THIS SECURITY HAVE BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY U.S. STATE OR OTHER JURISDICTION OR ANY EXCHANGE OR SELF-REGULATORY ORGANIZATION, IN RELIANCE UPON EXEMPTIONS FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, AND SUCH OTHER LAWS AND REQUIREMENTS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR LISTING OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, SUCH REGISTRATION AND/OR LISTING REQUIREMENTS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH WILL BE REASONABLY ACCEPTABLE TO THE COMPANY.
  
 ARTELO BIOSCIENCES, INC.
  
 SERIES A COMMON STOCK PURCHASE WARRANT
  
  	 No. A-000[●] 
	 Issuance Date: [●], 2017

  
 Artelo Biosciences, Inc., a Nevada corporation (the “Company”), hereby certifies that [NAME], its permissible transferees, designees, successors and assigns (collectively, the “Holder”), for value received, is entitled to purchase from the Company at any time and from time to time commencing on the date first appearing above (the “Issuance Date”), up to and through 12:01 a.m. (EST) on the date five (5) years from the Issuance Date (the “Termination Date”) up to [INSERT #] shares (each, a “Share” and collectively the “Shares”) of the Company’s common stock, par value $0.001 (the “Common Stock”), at an exercise price per Share of $1.00 (the “Exercise Price”). The number of Shares purchasable hereunder and the Exercise Price are subject to adjustment as provided in Section 4 hereof.
  
 This Series A Common Stock Purchase Warrant (this “Warrant”) is issued pursuant to the Subscription Agreement between the Holder and the Company (the “Subscription Agreement”). Capitalized terms used herein, but not otherwise defined, shall have the meanings ascribed to such terms in the Subscription Agreement.
  
 1. Method of Exercise; Payment.
  
 (a) Exercise. The purchase rights represented by this Warrant may be exercised for cash, by the Holder, in whole or in part, at any time, or from time to time, by the surrender of this Warrant (with the notice of exercise form (the “Notice of Exercise”) attached hereto as Exhibit A duly executed) at the principal office of the Company, and by payment to the Company of an amount equal to the Exercise Price multiplied by the number of the Shares being purchased, which amount may be paid, at the election of the Holder, by wire transfer or check payable to the order of the Company. The person or persons in whose name(s) any certificate(s) representing Shares shall be issuable upon exercise of this Warrant shall be deemed to have become the holder(s) of record of, and shall be treated for all purposes as the record holder(s) of, the Shares represented thereby (and such Shares shall be deemed to have been issued) immediately prior to the close of business on the date or dates upon which this Warrant is exercised.
  
 (b) FOR AFFILIATED PURCHASERS ONLY.
  
 In the event Holder is an Affiliated Purchaser and wishes to exercise this Warrant by means of a “cashless exercise” in which Holder shall be entitled to receive a certificate for the number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:
  
  	 
	
	 
 
	 

  
 EXHIBIT B TO ABIO SUBSCRIPTION AGREEMENT
  
 (A) equals the closing price of the Company’s Common Stock, as reported on the Trading Market on which the Company’s Common Stock is then listed or quoted for trading on the Trading Date preceding the date of the election to exercise; or, if the Company’s Common Stock is not then listed or traded on a Trading Market, then the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Recipient and the Company, the fees and expenses of which shall be paid by the Company;
  
 (B) equals the Exercise Price of the Warrant, as adjusted from time to time in accordance herewith; and
  
 (X) equals the number of Warrant Shares Holder wishes to exercise in accordance with the terms of this Warrant by means of a cashless exercise.
  
 (c) Stock Certificates. In the event of any exercise of the rights represented by this Warrant, as promptly as practicable after this Warrant is surrendered and delivered to the Company along with all other appropriate documentation on or after the date of exercise and in any event within ten (10) days thereafter, the Company at its expense shall issue and deliver to the person or persons entitled to receive the same a certificate or certificates for the number of Shares issuable upon such exercise. In the event this Warrant is exercised in part, the Company at its expense will execute and deliver a new Warrant of like tenor exercisable for the number of Shares for which this Warrant may then be exercised.
  
 (d) Taxes. The issuance of the Shares upon the exercise of this Warrant, and the delivery of certificates or other instruments representing such Shares, shall be made without charge to the Holder for any tax or other charge in respect of such issuance.
  
 (e) Acknowledgment. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this Section 1, following the purchase of a portion of the Shares hereunder, the number of Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.
  
 2. Warrant.
  
 (a) Transfer and Replacement. Subject to compliance with applicable securities laws, this Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto as Exhibit B duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. A Warrant, if properly assigned, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued. The Holder consents that the Company may, if it desires, permit the transfer of this Warrant out of the Holder’s name only when the Holder’s request for transfer is accompanied by an opinion of counsel reasonably satisfactory to the Company that neither the sale nor the proposed transfer results in a violation of the Securities Act of 1933, as amended (the “Securities Act”), or any applicable state “blue sky” laws. At any time prior to the exercise hereof, this Warrant may be exchanged upon presentation and surrender to the Company, alone or with other warrants of like tenor of different denominations registered in the name of the same Holder, for another warrant or warrants of like tenor in the name of such Holder exercisable for the aggregate number of Shares as the warrant or warrants surrendered.
  
  	 
	
	 
 
	 

  
 EXHIBIT B TO ABIO SUBSCRIPTION AGREEMENT
  
 (b) Replacement of Warrant. Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction, or mutilation of this Warrant and, in the case of any such loss, theft, or destruction, upon delivery of an indemnity agreement reasonably satisfactory in form and amount to the Company, or, in the case of any such mutilation, upon surrender and cancellation of this Warrant, the Company, at its expense, will execute and deliver in lieu thereof, a new Warrant of like tenor.
  
 (c) Cancellation; Payment of Expenses. Upon the surrender of this Warrant in connection with any transfer, exchange or replacement as provided in this Section 2, this Warrant shall be promptly canceled by the Company. The Holder shall pay all taxes and all other expenses (including legal expenses, if any, incurred by the Holder or transferees) and charges payable in connection with the preparation, execution and delivery of Warrants pursuant to this Section 2.
  
 (d) Warrant Register. The Company shall maintain, at its principal executive offices (or at the offices of the transfer agent for the Warrant or such other office or agency of the Company as it may designate by notice to the holder hereof), a register for this Warrant (the “Warrant Register”), in which the Company shall record the name and address of the person in whose name this Warrant has been issued, as well as the name and address of each transferee and each prior owner of this Warrant.
  
 3. Rights and Obligations of Holders of this Warrant.
  
 The Holder of this Warrant shall not, by virtue hereof, be entitled to any rights of a shareholder in the Company, either at law or in equity; provided, however, that in the event any certificate representing shares of Common Stock or other securities is issued to the holder hereof upon exercise of this Warrant, such holder shall, for all purposes, be deemed to have become the holder of record of such Common Stock on the date on which this Warrant, together with a duly executed Notice of Exercise, was surrendered and payment of the aggregate Exercise Price was made, irrespective of the date of delivery of such Common Stock certificate.
  
 4. Adjustments.
  
 During the Exercise Period, the Exercise Price and the number of Warrant Shares shall be subject to adjustment from time to time as provided in this Section 4.
  
 (a) Subdivision or Combination of Common Stock. If the Company at any time subdivides (by any stock split, stock dividend, recapitalization, reorganization, reclassification or otherwise) the shares of Common Stock acquirable hereunder into a greater number of shares, then, after the date of record for effecting such subdivision, the Exercise Price in effect immediately prior to such subdivision will be proportionately reduced. If the Company at any time combines (by reverse stock split, recapitalization, reorganization, reclassification or otherwise) the shares of Common Stock acquirable hereunder into a smaller number of shares, then, after the date of record for effecting such combination, the Exercise Price in effect immediately prior to such combination will be proportionately increased.
  
 (b) Adjustment in Number of Shares. Upon each adjustment of the Exercise Price pursuant to the provisions of this Section 4, the number of shares of Common Stock issuable upon exercise of this Warrant shall be adjusted by multiplying a number equal to the Exercise Price in effect immediately prior to such adjustment by the number of shares of Common Stock issuable upon exercise of this Warrant immediately prior to such adjustment and dividing the product so obtained by the adjusted Exercise Price.
  
  	 
	
	 
 
	 

  
 EXHIBIT B TO ABIO SUBSCRIPTION AGREEMENT
  
 (c) Consolidation, Merger or Sale. In case of any consolidation of the Company with, or merger of the Company into any other corporation, or in case of any sale or conveyance of all or substantially all of the assets of the Company other than in connection with a plan of complete liquidation of the Company, then as a condition of such consolidation, merger or sale or conveyance, adequate provision will be made whereby the holder of this Warrant will have the right to acquire and receive upon exercise of this Warrant in lieu of the shares of Common Stock immediately theretofore acquirable upon the exercise of this Warrant, such shares of stock, securities or assets as may be issued or payable with respect to or in exchange for the number of shares of Common Stock immediately theretofore acquirable and receivable upon exercise of this Warrant had such consolidation, merger or sale or conveyance not taken place. In any such case, the Company will make appropriate provision to insure that the provisions of this Section 4 hereof will thereafter be applicable as nearly as may be in relation to any shares of stock or securities thereafter deliverable upon the exercise of this Warrant. The Company will not effect any consolidation, merger or sale or conveyance unless prior to the consummation thereof, the successor corporation (if other than the Company) assumes by written instrument the obligations under this Section 4 and the obligations to deliver to the holder of this Warrant such shares of stock, securities or assets as, in accordance with the foregoing provisions, the holder may be entitled to acquire.
  
 (d) Distribution of Assets. In case the Company shall declare or make any distribution of its assets (including cash) to holders of Common Stock as a partial liquidating dividend, by way of return of capital or otherwise, then, after the date of record for determining shareholders entitled to such distribution, but prior to the date of distribution, the holder of this Warrant shall be entitled upon exercise of this Warrant for the purchase of any or all of the shares of Common Stock subject hereto, to receive the amount of such assets which would have been payable to the holder had such holder been the holder of such shares of Common Stock on the record date for the determination of shareholders entitled to such distribution.
  
 (e) Notice of Adjustment. Upon the occurrence of any event which requires any adjustment of the Exercise Price, then, and in each such case, the Company shall give notice thereof to the holder of this Warrant, which notice shall state the Exercise Price resulting from such adjustment and the increase or decrease in the number of Warrant Shares purchasable at such price upon exercise, setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based. Such calculation shall be certified by the Chief Financial Officer of the Company.
  
 (f) Minimum Adjustment of Exercise Price. No adjustment of the Exercise Price shall be made in an amount of less than 1% of the Exercise Price in effect at the time such adjustment is otherwise required to be made, but any such lesser adjustment shall be carried forward and shall be made at the time and together with the next subsequent adjustment which, together with any adjustments so carried forward, shall amount to not less than 1% of such Exercise Price.
  
 (g) No Fractional Shares. No fractional shares of Common Stock are to be issued upon the exercise of this Warrant, but the Company shall round up the number of shares to the issued.
  
 (h) Other Notices. In case at any time:
  
  	  
	  
	(i)	the Company shall declare any dividend upon the Common Stock payable in shares of stock of any class or make any other distribution (including dividends or distributions payable in cash out of retained earnings) to the holders of the Common Stock;

  
  	 
	
	 
 
	 

  
 EXHIBIT B TO ABIO SUBSCRIPTION AGREEMENT
  
  	  
	  
	(ii)	the Company shall offer for subscription pro rata to the holders of the Common Stock any additional shares of stock of any class or other rights;
	  
	  
	  
	  

	  
	  
	(iii)	there shall be any capital reorganization of the Company, or reclassification of the Common Stock, or consolidation or merger of the Company with or into, or sale of all or substantially all its assets to, another corporation or entity; or
	  
	  
	  
	  

	  
	  
	(iv)	there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Company;

  
 then, in each such case, the Company shall give to the holder of this Warrant (a) notice of the date on which the books of the Company shall close or a record shall be taken for determining the holders of Common Stock entitled to receive any such dividend, distribution, or subscription rights or for determining the holders of Common Stock entitled to vote in respect of any such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding-up and (b) in the case of any such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding-up, notice of the date (or, if not then known, a reasonable approximation thereof by the Company) when the same shall take place. Such notice shall also specify the date on which the holders of Common Stock shall be entitled to receive such dividend, distribution, or subscription rights or to exchange their Common Stock for stock or other securities or property deliverable upon such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation, or winding-up, as the case may be. Such notice shall be given at least 30 days prior to the record date or the date on which the Company’s books are closed in respect thereto. Failure to give any such notice or any defect therein shall not affect the validity of the proceedings referred to in clauses (i), (ii), (iii) and (iv) above.
  
 (i) Certain Events. If any event occurs of the type contemplated by the adjustment provisions of this Section 4 but not expressly provided for by such provisions, the Company will give notice of such event as provided in Section 8 hereof, and the Company’s Board of Directors will make an appropriate adjustment in the Exercise Price and the number of shares of Common Stock acquirable upon exercise of this Warrant so that the rights of the holder shall be neither enhanced nor diminished by such event.
  
 5. Legends.
  
 All certificates representing shares of Common Stock underlying this Warrant shall bear a restrictive legend to the effect that the Shares represented by such certificate have not been registered under the Securities Act, and that the Shares may not be sold or transferred in the absence of such registration or an exemption therefrom, such legend to be substantially in the form of the bold-face language appearing at the top of Page 1 of this Warrant.
  
 6. Disposition of Warrants or Shares.
  
 The Holder of this Warrant, each transferee hereof and any holder and transferee of any Shares, by his or its acceptance thereof, agrees that no public distribution of Warrants or Shares will be made in violation of the provisions of the Securities Act. Furthermore, it shall be a condition to the transfer of this Warrant that any transferee thereof deliver to the Company his or its written agreement to accept and be bound by all of the terms and conditions contained in this Warrant.
  
  	 
	
	 
 
	 

  
 EXHIBIT B TO ABIO SUBSCRIPTION AGREEMENT
  
 7. Merger or Consolidation.
  
 The Company will not merge or consolidate with or into any other corporation, or sell or otherwise transfer its property, assets and business substantially as an entirety to another corporation, unless the corporation resulting from such merger or consolidation (if not the Company), or such transferee corporation, as the case may be, shall expressly assume, by supplemental agreement reasonably satisfactory in form and substance to the Holder, the due and punctual performance and observance of each and every covenant and condition of this Warrant to be performed and observed by the Company.
  
 8. Notices.
  
 Except as otherwise specified herein to the contrary, all notices, requests, demands and other communications required or desired to be given hereunder shall only be effective if given in writing by certified or registered U.S. mail with return receipt requested and postage prepaid; by private overnight delivery service (e.g. Federal Express); by facsimile transmission (if no original documents or instruments must accompany the notice); or by personal delivery. Any such notice shall be deemed to have been given (a) on the business day immediately following the mailing thereof, if mailed by certified or registered U.S. mail as specified above; (b) on the business day immediately following deposit with a private overnight delivery service if sent by said service; (c) upon receipt of confirmation of transmission if sent by facsimile transmission; or (d) upon personal delivery of the notice. All such notices shall be sent to the following addresses (or to such other address or addresses as a party may have advised the other in the manner provided in this Section 8):
  
 If to the Company:
  
 Aretelo Biosciences, Inc.
 888 Prospect St, Suite 210, La Jolla, CA 92037
 President and Chief Executive Officer
  
 If to the Holder, at the address set forth on the signature page of the Subscription Agreement.
  
 Notwithstanding the time of effectiveness of notices set forth in this Section 8, a Notice of Exercise shall not be deemed effectively given until it has been duly completed and submitted to the Company together with this original Warrant and payment of the Exercise Price in a manner set forth in this Section 8.
  
 9. Governing Law.
  
 This Agreement shall be governed by and construed solely and exclusively in accordance with and pursuant to the internal laws of the State of New York without regard to the conflicts of laws principles thereof. The parties hereto hereby expressly and irrevocably agree that any suit or proceeding arising directly and/or indirectly pursuant to or under this Agreement shall be brought solely in a federal or state court located in the City of New York. By its execution hereof, the parties hereby covenant and irrevocably submit to the in personam jurisdiction of the federal and state courts located in the City of New York, New York and agree that any process in any such action may be served upon any of them personally, or by certified mail or registered mail upon them or their agent, return receipt requested, with the same full force and effect as if personally served upon them in New York. The parties hereto expressly and irrevocably waive any claim that any such jurisdiction is not a convenient forum for any such suit or proceeding and any defense or lack of in personam jurisdiction with respect thereto. In the event of any such action or proceeding, the party prevailing therein shall be entitled to payment from the other party hereto of all of its reasonable counsel fees and disbursements.
  
  	 
	
	 
 
	 

  
 EXHIBIT B TO ABIO SUBSCRIPTION AGREEMENT
  
 10. Successors and Assigns.
  
 This Warrant shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns.
  
 11. Headings.
  
 The headings of various sections of this Warrant have been inserted for reference only and shall not affect the meaning or construction of any of the provisions hereof.
  
 12. Severability.
  
 If any provision of this Warrant is held to be unenforceable under applicable law, such provision shall be excluded from this Warrant, and the balance hereof shall be interpreted as if such provision were so excluded.
  
 13. Modification and Waiver.
  
 This Warrant and any provision hereof may be amended, waived, discharged or terminated only by an instrument in writing signed by the Company and the Holder.
  
 14. Specific Enforcement.
  
 The Company and the Holder acknowledge and agree that irreparable damage would occur in the event that any of the provisions of this Warrant were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent or cure breaches of the provisions of this Warrant and to enforce specifically the terms and provisions hereof, this being in addition to any other remedy to which either of them may be entitled by law or equity.
  
 15. Assignment.
  
 This Warrant may be transferred or assigned, in whole or in part, at any time and from time to time by the then Holder by submitting this Warrant to the Company together with a duly executed Assignment in substantially the form and substance of the Form of Assignment which accompanies this Warrant as Exhibit B hereto, and, upon the Company’s receipt thereof, and in any event, within five (5) business days thereafter, the Company shall issue a Warrant to the Holder to evidence that portion of this Warrant, if any as shall not have been so transferred or assigned.
  
 [SIGNATURE PAGE FOLLOWS]
  
  	 
	
	 
 
	 

  
 EXHIBIT B TO ABIO SUBSCRIPTION AGREEMENT
  
 IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by one of its officers thereunto duly authorized.
  
  	ARTELO BIOSCIENCES, INC.	
	 	 	 
	By:		
	 Name:
	 Peter O’Brien
	 
	Title: 	 Senior Vice President, European Operations
	 

  
  	 
	
	 
 
	 

  
 EXHIBIT B TO ABIO SUBSCRIPTION AGREEMENT
  
 EXHIBIT A
  
 NOTICE OF EXERCISE
  
 To Be Executed by the Holder in Order to Exercise the Series A Common Stock Purchase Warrant
  
 The undersigned Holder hereby elects to purchase _______ Shares pursuant to the attached Series A Common Stock Purchase Warrant, and requests that certificates for securities be issued in the name of:
  
 __________________________________________________________
  
 __________________________________________________________
  
 __________________________________________________________
 (Please type or print name and address)
  
 __________________________________________________________
  
 (Social Security or Tax Identification Number)
  
 and to be delivered to:______________________________________________________________
  
 ___________________________________________________________________.
  
 (Please type or print name and address if different from above)
  
 If such number of Shares being purchased hereby shall not be all the Shares that may be purchased pursuant to the attached Warrant, a new Warrant for the balance of such Shares shall be registered in the name of, and delivered to, the Holder at the address set forth below.
  
 In full payment of the purchase price with respect to the Shares purchased and transfer taxes, if any, the undersigned hereby tenders payment of $_________ by check, money order or wire transfer payable in United States currency to the order of [______________].
  
 OR
  
 If permitted, the cancellation of such number of Shares as is necessary, in accordance with the formula set forth in Section 1(a) of the Warrant with respect to the maximum number of Shares purchasable pursuant to the cashless exercise procedure set forth Section 1(a).
  
  	 HOLDER:
	
	 	 	 
	By:		
	 Name:
		 
	Title:		 
	Address:	 	 

  
 Dated: _________________
  
 
 	 
	
	 
 
	 

  
 EXHIBIT B TO ABIO SUBSCRIPTION AGREEMENT
  
 EXHIBIT B
  
 ASSIGNMENT FORM
  
 (To assign the foregoing warrant, execute this form and supply required information.
 Do not use this form to exercise the warrant.)
  
  	 TO:
	 Artelo Biosciences, Inc.

	  
	 888 Prospect St, Suite 210, La Jolla, CA 92037

  
 FOR VALUE RECEIVED, ______________ shares of the foregoing Series A Common Stock Purchase Warrant of Artelo Biosciences, Inc. and all rights evidenced thereby are hereby assigned to:
  
  	 _______________________________________________ whose address is:

	 (Print Name)

	  

	 _______________________________________________________________

	 (Address)

	  

	 _______________________________________________________________

	 (City, State, Zip)

	  
	  
	  
	  

	  
	  
	 Dated: _____________, 20___

	  
	  
	  
	  

	  
	 Holder’s Signature:
	  
	  

	  
	  
	  
	  

	  
	 Holder’s Address:
	  
	  

	  
	  
	  
	  

	  
	  
	  
	  

	  
	  
	  
	  

	 Signature Guaranteed: ___________________________________________

  
 NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Series A Common Stock Purchase Warrant, without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Series A Common Stock Purchase Warrant.Exhibit 10.1

 

SETTLEMENT AGREEMENT AND RELEASE

 

This Settlement Agreement
and Release (“Agreement”) is made, entered into and effective October 2, 2017 (the “Effective Date”),
by and between Cadiz. Inc., a Delaware corporation (“Cadiz Inc.”), Cadiz Real Estate LLC, a Delaware limited
liability company (together with Cadiz Inc., “Cadiz”), MSD Credit Opportunity Master Fund, L. P. (“MSD”),
Milfam II L.P. (“Milfam”), and WPI-Cadiz Farm CA, LLC (“WPI,” and together with Milfam and
MSD, the “Lenders,” and individually, a “Lender”). Cadiz and the Lenders may be referred
to herein as the Parties, or individually, a Party.

 

RECITALS

 

A.       WHEREAS,
Cadiz, as borrowers; the Lenders; and Wells Fargo Bank, National Association, as agent (“Agent”), were party
to that certain Amended and Restated Credit Agreement, dated as of October 30, 2013, as amended (the “Credit Agreement”).
In connection therewith, Cadiz Inc. issued to each of the Lenders those certain Warrant Nos. A-1, A-2 and A-3 to Purchase Common
Stock of Cadiz Inc. (the “Warrants”).

 

B.       WHEREAS,
the Parties and the Agent thereafter entered into that certain Amended and Restated Payoff Agreement and Stipulation (the “Payoff
Agreement”), dated May 24, 2017. Pursuant to the terms of the Payoff Agreement, the Lenders agreed to, and did, authorize
the Agent to accept prepayment in full of the secured term loans (the “Loans”) evidenced by the Credit Agreement.
Accordingly, Cadiz prepaid the Loans in full on May 25, 2017.

 

C.       WHEREAS,
pursuant to the Payoff Agreement, the Parties agreed to submit to arbitration certain issues and questions (the “Dispute”)
arising from the Credit Agreement, the prepayment of the Loans, and the Warrants.

 

D.       WHEREAS,
since the execution of the Payoff Agreement and the prepayment of the Loans, the Parties have engaged in settlement negotiations
in good faith.

 

E.       WHEREAS,
the Parties now wish to fully and finally resolve their Dispute and therefore avoid the arbitration contemplated by the Payoff
Agreement.

 

NOW THEREFORE, in
consideration of the foregoing facts and agreements herein contained, the Parties agree as follows:

 

AGREEMENT

 

1.       SETTLEMENT
TERMS

 

1.1       Recitals
Incorporated. The recitals set forth above, inclusive and alone, are incorporated herein by reference and made a material part
of this Agreement.

 

    	 	1	 

     

    

 

1.2       Issuance
of Common Stock by Cadiz Inc.

 

	 	(a)	Number of Settlement Shares. Cadiz Inc. shall issue to the Lenders an aggregate of 264,096 shares of common stock, par value $0.01 per share, of Cadiz Inc. (the “Settlement Shares”).1 Cadiz Inc. shall cause its transfer agent to deliver the Settlement Shares to the Lenders, in the amounts for each Lender as set forth on Exhibit A attached hereto, on the business day immediately following the Effective Date and the Lenders shall deliver the Warrants to Cadiz Inc. for cancellation. The Settlement Shares will be delivered by crediting the account of each Lender’s prime broker (as specified on Exhibit A for each Lender) with the Depository Trust Company through its Deposit/Withdrawal At Custodian system. Effective upon the delivery of the Settlement Shares in accordance with this Agreement, the Warrants may not be exercised by the Lenders and shall be deemed cancelled and retired on the books and records of Cadiz Inc., including any applicable warrant register.

 

	 	(b)	Registration of Settlement Shares. The offering and issuance of the Settlement Shares (collectively, the “Issuance”) pursuant to Section 1.2(a) is being made pursuant to (i) an effective Registration Statement on Form S-3, No. 214318, including all amendments thereto, the exhibits and any schedules thereto, the documents otherwise deemed to be a part thereof or included therein or any immediately succeeding registration statement that is filed under the Securities Act (as defined in the Credit Agreement) on Form S-3 and immediately becomes effective (the “Fifth Amendment Registration Statement”) filed by Cadiz Inc. with the Commission (as defined in the Credit Agreement) in conformity with the Securities Act under the Rules and Regulations (as defined in the Credit Agreement) of the Commission, including the prospectus contained therein (the “Fifth Amendment Base Prospectus”) and (ii) a final prospectus supplement filed with the Commission and delivered to each Lender (together with the Fifth Amendment Base Prospectus, a “Fifth Amendment Prospectus”) containing amended and/or certain supplemental information regarding the Settlement Shares and terms of the Issuance. If Cadiz Inc. has filed one or more abbreviated registration statements to register additional shares of Common Stock pursuant to Rule 462(b) under the Rules and Regulations (each a “Rule 462(b) Registration Statement”), then any reference herein to the term “Fifth Amendment Registration Statement” shall also be deemed to include any such Rule 462(b) Registration Statement.

 

 

 

 

1 The aggregate number of Settlement Shares has
been determined as follows: (i) multiplying (x) an amount equal to (A) the aggregate number of shares that were issuable under
the Warrants on May 30, 2017 (357,500) less (B) the number of shares withheld for an assumed cashless exercise of the Warrants
as of May 30, 2017 (229.0199) by (y) the closing price per share of Cadiz common stock as of May 30, 2017 ($15.40), (ii) multiplying
$5,501,973.09, i.e., the result of clause (i), by 0.6 to determine sixty percent of the May 30, 2017 economic value and (iii)
dividing $3,301,183.86, i.e., the result of clause (ii), by $12.50. Any fractional shares that might have been issuable to a Lender
following pro rata division of the result of clause (iii) have been rounded up to the nearest whole share. The result of the foregoing
clause (iii) calculation and fraction share rounding: 264,096 Settlement Shares.

 

    	 	2	 

     

    

 

	 	(c)	Cadiz Inc. Issuance Representations. Cadiz Inc. represents and warrants to each Lender, as of the date hereof and as of the date that the Settlement Shares are credited to each Lender’s prime broker account with the Depository Trust Company through its Deposit/Withdrawal At Custodian system, that the representations and warranties set forth in Sections 3(b) through (d) and (f) through (m) of the Form of Closing Share and Warrant Issuance Agreement attached as Exhibit K to the Credit Agreement, as incorporated by reference herein and modified in accordance with the next succeeding sentence, are true and correct on and as of each such date. The foregoing representations and warranties are incorporated herein by reference as if fully set forth herein mutatis mutandi with (i) all references to “the Closing Shares” or “the Securities” therein replaced with “the Settlement Shares,” (ii) all references to “the Closing Date” therein replaced with “the Effective Date” and “the date that the Settlement Shares are credited to each Lender’s prime broker account with the Depository Trust Company through its Deposit/Withdrawal At Custodian system,” (iii) all references to the “Fifth Amendment Registration Statement” and the “Fifth Amendment Prospectus” therein to such terms as defined herein, (iv) all references to “this Agreement” therein to such term as defined herein, (v) the reference to “357,500 shares of Common Stock” in Section 3(m) thereof replaced with “the Settlement Shares” and (vi) all references to “the Warrant” and “the Warrant Stock” therein removed.

 

1.3       Release
by MSD. Subject to Cadiz Inc.’s compliance with Section 1.2 and MSD’s receipt of the Settlement Shares, MSD, on
behalf of itself and its respective agents, employees, representatives, assignors, insurers, heirs and assigns (collectively, the
“MSD Releasing Parties”), hereby fully and forever mutually releases and discharges Cadiz, and each of them,
and each of their current and former directors, officers, agents and employees, representatives, assignors, insurers, heirs and
assigns, as applicable (collectively, the “Cadiz Released Parties”), from any and all charges, complaints, claims,
causes of action, liabilities of any kind, rights, obligations, accountings or damages arising from the Credit Agreement and all
amendments thereto, the Payoff Agreement, the Loans, the Warrants, or the Dispute, whether known or unknown, suspected or unsuspected,
and whether or not concealed or hidden, which any of the MSD Releasing Parties have, may have or have had against any of the Cadiz
Released Parties that existed on or before the Effective Date. Notwithstanding the foregoing, nothing shall prevent MSD from enforcing
any term of this Agreement.

 

1.4       Release
by Milfam. Subject to Cadiz Inc.’s compliance with Section 1.2 and Milfam’s receipt of the Settlement Shares, Milfam,
on behalf of itself and its respective agents, employees, representatives, assignors, insurers, heirs and assigns (collectively,
the “Milfam Releasing Parties”), hereby fully and forever mutually releases and discharges the Cadiz Released
Parties from any and all charges, complaints, claims, causes of action, liabilities of any kind, rights, obligations, accountings
or damages arising from the Credit Agreement and all amendments thereto, the Payoff Agreement, the Loans, the Warrants, or the
Dispute, whether known or unknown, suspected or unsuspected, and whether or not concealed or hidden, which any of the Milfam Releasing
Parties have, may have or have had against any of the Cadiz Released Parties that existed on or before the Effective Date. Notwithstanding
the foregoing, nothing shall prevent Milfam from enforcing any term of this Agreement.

 

    	 	3	 

     

    

 

1.5       Release
by WPI. Subject to Cadiz Inc.’s compliance with Section 1.2 and WPI’s receipt of the Settlement Shares, WPI, on
behalf of itself and its respective agents, employees, representatives, assignors, insurers, heirs and assigns (collectively, the
“WPI Releasing Parties”), hereby fully and forever mutually releases and discharges the Cadiz Released Parties
from any and all charges, complaints, claims, causes of action, liabilities of any kind, rights, obligations, accountings or damages
arising from the Credit Agreement and all amendments thereto, the Payoff Agreement, the Loans, the Warrants, or the Dispute, whether
known or unknown, suspected or unsuspected, and whether or not concealed or hidden, which any of the WPI Releasing Parties have,
may have or have had against any of the Cadiz Released Parties that existed on or before the Effective Date. Notwithstanding the
foregoing, nothing shall prevent WPI from enforcing any term of this Agreement.

 

1.6       Release
by Cadiz. Cadiz, and each of them, on behalf of themselves and their respective agents, employees, representatives, assignors,
insurers, heirs and assigns (collectively, the “Cadiz Releasing Parties”), hereby fully and forever mutually
release and discharge each of: (a) the MSD Released Parties; (b) the Milfam Released Parties; and (c) the WPI Released Parties
from any and all charges, complaints, claims, causes of action, liabilities of any kind, rights, obligations, accountings or damages
arising from the Credit Agreement and all amendments thereto, the Payoff Agreement, the Loans, the Warrants, or the Dispute, whether
known or unknown, suspected or unsuspected, and whether or not concealed or hidden, which any of the Cadiz Releasing Parties have,
may have or have had against any of the (a) the MSD Released Parties; (b) the Milfam Released Parties; or (c) the WPI Released
Parties that existed on or before the Effective Date. Notwithstanding the foregoing, nothing shall prevent Cadiz, or any of them,
from enforcing any term of this Agreement.

 

1.7       Waiver
of California Civil Code section 1542. The Parties further acknowledge that they are familiar with and hereby expressly waive
the provisions of section 1542 of the California Civil Code, and any similar statute, code, law or regulation of any state in the
United States, to the fullest extent that they may waive such rights and benefits. Section 1542 of the California Civil Code provides:

 

A general release does not
extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release,
which if known by him or her must have materially affected his or her settlement with the debtor.

 

2.       MISCELLANEOUS.

 

2.1       Compromise.
It is understood and agreed that this is a compromise settlement of disputed claims, or potential disputed claims. This
Agreement is solely the result of a good faith compromise and settlement between the Parties. Nothing contained herein is or
is to be construed as an admission by any of the Parties of liability, wrongdoing, or responsibility, and the Parties deny
any such liability or wrongdoing and continue to disclaim such responsibility. It is further agreed that this compromise and
Agreement are being entered into solely for the purpose of avoiding further expense and inconvenience from prosecuting and/or
defending against the claims, rights, demands, actions, obligations, liabilities and causes of action referred to
hereinabove.

 

    	 	4	 

     

    

 

2.2       Governing
Law. This Agreement shall be governed by and construed under the laws of the State of New York, without giving effect to its
principles or rules of conflict of laws to the extent such principles or rules are not mandatorily applicable by statute and would
require or permit the application of the laws of another jurisdiction.

 

2.3       Submission
to Jurisdiction. Each of the Parties hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive
jurisdiction of the Supreme Court of the State of New York sitting in New York County and of the United States District Court of
the Southern District of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating
to this Agreement, or for recognition or enforcement of any judgment, and each of the Parties hereby irrevocably and unconditionally
agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the
extent permitted by law, in such Federal court. Each of the Parties agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.

 

2.4       Waiver
of Right to Trial by Jury. EACH OF THE PARTIES WAIVES ANY RIGHT TO TRIAL BY JURY ON ANY CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION (A) ARISING UNDER THIS AGREEMENT OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE BORROWERS
OR THE LENDERS WITH RESPECT TO THIS AGREEMENT OR THE TRANSACTIONS RELATED HERETO, IN EACH CASE WHETHER SOUNDING IN CONTRACT OR
TORT OR OTHERWISE. EACH OF THE PARTIES AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED
BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS CLAUSE WITH
ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. EACH PARTY ACKNOWLEDGES
THAT THEY HAVE HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL REGARDING THIS CLAUSE, THAT THEY FULLY UNDERSTAND ITS TERMS, CONTENT
AND EFFECT, AND THAT THEY VOLUNTARILY AND KNOWINGLY AGREE TO THE TERMS OF THIS CLAUSE. 

 

2.5       Equitable
Remedies. Each of the Parties acknowledges and agrees that the other Parties would be irreparably damaged in the event that
any of the terms or provisions of this Agreement are not performed in accordance with their specific terms or otherwise are breached.
Therefore, notwithstanding anything to the contrary set forth in this Agreement, each of the Parties hereby agrees that the other
Parties shall be entitled to seek an injunction or injunctions to prevent breaches of any of the terms or provisions of this Agreement,
and to enforce specifically the performance by such first party under this Agreement, and each Party hereby agrees to waive the
defense in any such suit that the other parties to this Agreement have an adequate remedy at law and to interpose no opposition,
legal or otherwise, as to the propriety of injunction or specific performance as a remedy, and hereby agrees to waive any requirement
to post any bond in connection with obtaining such relief. The equitable remedies described in this Section 2.5 shall be in addition
to, and not in lieu of, any other remedies at law or in equity that the Parties may elect to pursue.

 

2.6       Cooperation.
Each of the Parties agrees to execute documents, instruments, or conveyances of any kind in mutually agreed (such agreement not
to be unreasonably withheld) form and substance which may be necessary or advisable to carry out any of the transactions contemplated
hereunder and to cooperate with any other Party in connection with the foregoing.

 

    	 	5	 

     

    

 

2.7       Notice.
All notices required under this Agreement shall be given in writing to the Parties by either: (i) personal delivery; or (ii) nationally
recognized overnight courier with all fees prepaid. All notices are deemed to have been made upon sending.

 

For Cadiz:

 

Timothy J. Shaheen, CFO

CADIZ, INC.

550 South Hope Street, Suite 2850

Los Angeles, California 90071

 

With a copy to (which
does not constitute notice):

 

Eisner Jaffe, A Professional
Corporation

9601 Wilshire Blvd.,
7th Floor

Beverly Hills, CA
90210

Attention: Michael
Eisner

 

For MSD:

 

Marcello Liguori, Managing Director

MSD CREDIT OPPORTUNITY MASTER FUND, L.P.

645 Fifth Avenue, 21st Floor

New York, New York 10022

 

With a copy to (which does not constitute notice):

 

Skadden, Arps, Slate, Meagher & Flom LLP

155 North Wacker Drive

Chicago, Illinois 60606

Attention: Albert L. Hogan III

 

For Milfam:

 

Lloyd I. Miller, III

MILFAM II, L.P.

3300 S. Dixie Highway, Suite 1-365

West Palm Beach, Florida 33405

 

For WPI:

 

WPI-Cadiz Farm Ca, LLC

509 Madison Avenue, Suite 804

New York, NY 10022

Attn: Stacy Kincaid

 

2.8       Benefit
and Burden. This Agreement shall be binding upon and inure to the benefit of the Parties, as well as their respective heirs,
representatives, successors and assigns.

 

    	 	6	 

     

    

 

2.9       Waiver
and Amendment. No breach of any provision hereof can be waived except by a writing executed by all of the Parties to this Agreement.
Waiver of any breach shall not be deemed to be a waiver of any other breach of the same or any other provisions hereof. This Agreement
may not be modified, amended, supplemented or terminated except by a written agreement executed by the Parties in interest at the
time of amendment.

 

2.10      Construction
and Headings. This Agreement has been prepared based on the joint efforts of the Parties. This Agreement is to be construed
simply and fairly and not strictly for or against any of the Parties. The paragraph headings contained in this Agreement are for
convenience only and shall not be considered for any purpose in construing this Agreement. No provision in this Agreement is to
be interpreted for or against either Party because that Party or its legal representative drafted such provision.

 

2.11      Difference
in Facts. The Parties understand that if any fact with respect to any matter covered by this Agreement is found to be other
than, or different from, the facts now believed by any Party to be true, that Party expressly accepts and assumes the risk of such
possible difference in facts and agrees that this Agreement shall be, and will remain, in full force and effect notwithstanding
such difference in fact.

 

2.12      Entire
Agreement. This Agreement constitutes the entire understanding and agreement of the Parties with respect to the subject matter
of this Agreement, and it supersedes and replaces all prior discussions, offers, negotiations, proposed agreements and agreements
related to the subject matter of this Agreement. Each of the Parties acknowledges that no other party, nor any agent, representative
or attorney of any other party, has made any promise, agreement, covenant, representation or warranty whatsoever, express or implied,
concerning the subject matter of this Agreement that is not contained in this Agreement.

 

2.13      Independent
Advice of Counsel. Each of the Parties represents and declares that in executing this Agreement he/she/it has relied solely
upon its own judgment, belief and knowledge, and the advice and recommendations of its own independently selected counsel, concerning
the nature, extent and duration of its rights and claims. The Parties acknowledge that they have executed this Agreement without
fraud, duress or undue influence.

 

2.14      No
Prior Assignments. Each of the Parties represents that they have not heretofore assigned to any other person or entity any
of the rights or claims, or any portion thereof, which they may have against one another, and that they are aware of no fact, circumstance
or reason that would limit in any manner the releases that they provide by this Agreement.

 

2.15      Counterparts
and Faxed/Scanned/Emailed Signatures. This Agreement may be executed in counterparts, each of which shall be deemed an original
and all of which shall constitute together one and the same instrument. Facsimile or scanned signatures may be used and shall be
deemed original signatures.

 

2.16      Cost/Attorneys’
Fees. The Parties shall bear their own fees and costs in connection with this Agreement. However, in the event of any action
or proceeding arising out of this Agreement, the prevailing party shall be entitled to recover his/her/its reasonable attorneys’
fees, expert witness fees, and costs.

 

2.17      Signatures.
By their signatures below, each of the representatives executing this Agreement represents that they have read and fully understand
the Agreement and that they are authorized to execute the same on behalf of the Party they represent.

 

    	 	7	 

     

    

 

	CADIZ,
    INC.	 	MILFAM
    II, L.P.
	 	 	 	 	 
	Sign:	/s/
    Tim Shaheen	 	Sign:	/s/
    Lloyd I. Miller, III
	Name:	Tim
    Shaheen 	 	Name:	Lloyd
    I. Miller, III
	Its:	CFO	 	Its:	Manager
	Date:	10/02/2017	 	Date:	10/02/2017
	 	 	 	 	 
	CADIZ
    REAL ESTATE LLC	 	WPI-CADIZ
    FARM CA, LLC 
	 	 	 	 	 
	Sign:	/s/
    Tim Shaheen	 	Sign:	/s/
    Marc Robert
	Name:	Tim
    Shaheen 	 	Name:	Marc
    Robert 
	Its:	CFO	 	Its:	Member
	Date:	10/02/2017	 	Date:	10/02/2017
	 	 	 	 	 
	MSD CREDIT OPPORTUNITY MASTER FUND, L.P.	 	 
	 	 	 	 	 
	Sign:	/s/
    Marcello Liguori	 	 	 
	Name:	Marcello
    Liguori 	 	 	 
	Its:	Managing
    Director	 	 	 
	Date:	10/02/2017	 	 	 

 

    	 	8	 

     

    

 

EXHIBIT A

 

	Lender	Number
    of 

    Settlement Shares	Prime
    Broker
	MSD Credit Opportunity Master Fund, L.P.	226,442	Goldman Sachs & Co

c/o Eliann Shadmi

Email: eliann.shadmi@gs.com

Phone: (212) 357-6173

DTC #: 005

Account #: 00244298
	Milfam II L.P.	29,113	The Northern Trust

c/o Jamie Wiecdzorek

E-mail:  Jw140@ntrs.com

Phone: (312) 557-0947

DTC #: 2669

Account #: 26-14417
	WPI-Cadiz Farm CA, LLC	8,541	J.P. Morgan Clearing Corp.

DTC# 352

Account Name: Water Property Investor LP

Account #: 920-38863
	Total	264,096	N/A

  

 

 

9

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