SERVICES AND EXCLUSIVITY AGREEMENT

This Services and Exclusivity Agreement (“Agreement”) is made and entered into as of the 2nd day of November, 2009, by and between LAYNE CHRISTENSEN COMPANY, a Delaware corporation (“Layne”) and CADIZ, INC., a Delaware corporation (“Cadiz”), (each a “Party” and collectively the “Parties”).

1. Exclusive Services.  During the term of this Agreement and subject to the limitations described in Section 4(b) below, with respect to the Project, Cadiz shall contract exclusively with Layne for the following water-related services (individually, the “Service” and collectively, the “Services”):

2. Term.  The term of this Agreement is 10 years from the date of execution.

3. Competitive Services.  Cadiz’ commitment to use Layne for the Services is expressly subject to the limitation that the prices charged by Layne must be competitive.  Layne covenants and agrees that the prices it charges for the Services will be competitively priced.  After receiving a written proposal from Layne for a specific Service, Cadiz may elect to solicit proposals from other competent providers, as agreed between Cadiz and Layne, of services similar to the Services.  If another service provider is willing to provide the specific Service for a price that is at least 15% percent lower than the price quoted by Layne, then Layne will have 14 days to either agree to perform the Service at a price within 5% of the other service provider’s proposal, or if Layne either declines or fails to timely respond, then Cadiz may use the alternative service provider on the specific Service.  Layne’s decision to decline to adjust its price (or refuse to timely respond) on any specific Service will not affect its right to provide exclusive service on future Services.

4. Payment.  The revised work to be provided by Layne and contemplated by the Parties as depicted in Exhibit “C” has been estimated by Layne at $971,120.  As a final and total payment for the completion of the services contemplated by Exhibits A, B and C, inclusive of any and all any unanticipated actions or costs, Cadiz will pay the following:

(b)           If Layne satisfactorily and substantially completes the job before 5.00 p.m. (pst) on November 30, 2009, Layne will be owed the full amount remaining for such work ($671,120) (the “Full Payment”).  However, if Layne completes the job at any time after 5.00 p.m. (pst) on November 30, 2009, in lieu of full payment, Layne will be owed only the sum of $530,585 in full satisfaction for such work (the “Reduced Payment”).  The Full Payment and the Reduced Payment may collectively be referred to as the “Remaining Payment”).  The Remaining Paym ent will be payable as follows (without any interest owed to Layne):

 

(1)           If Cadiz transmits written notice by December 31, 2012 of its intention to proceed with the Project and to use Layne as the exclusive provider of Services as provided herein, Cadiz will not owe Layne any of the Remaining Payment, and the Initial Payment will be in full satisfaction of the work described above.

 

(2)           If Cadiz transmits written notice by December 31, 2012 of its intention to proceed with the Project and not use Layne as its exclusive provider of services as provided herein, in Cadiz’s reasonable discretion, Cadiz will pay Layne 125% of the applicable Remaining Payment owed to Layne and the exclusivity requirements shall terminate.

 

(3)           If Cadiz transmits written notice by December 31, 2012 of its intention not to proceed with the Project, Cadiz will pay Layne the applicable Remaining Payment owed to Layne within 30 days of such notice and the exclusivity requirements shall terminate.

 

(4)           If the Project is halted because in Cadiz’s sole and complete discretion it determines that: (a) the two test wells do not meet Cadiz’s expectations or (b) the Project is deemed technically infeasible, then Cadiz will pay Layne the full applicable Remaining Payment as stated in 4(b)(3), within 30 days of Cadiz’s determination.

 

(5)           Regardless of any such action Cadiz takes with regards to 4(b)(1) through (4) above, Cadiz will notify Layne in writing absolutely no later than December 31, 2012 of Cadiz’s intentions to proceed with the Project or not to proceed with the Project.

 

(6)           If Cadiz notifies Layne of the termination of the Project pursuant to paragraph 4(b)(3) or 4(b)(4) above, and Cadiz subsequently elects to resume the Project within five years after the date of such notice, the Parties’ rights and obligations under this Agreement will be reinstated as if the Project had not been terminated, with the term continuing to run from the original date of this Agreement.

5. Covenant of Good Faith and Fair Dealing.  This Agreement shall be subject to the covenant of good faith and fair dealing.

6. Miscellaneous.

(a)           Notices.  All notices, requests, demands or other communications required, permitted or desired to be given hereunder shall be deemed to have been duly given if delivered in writing by hand delivery, one business day after delivery by overnight courier, or 72 hours after deposit in the US mail and mailed by certified mail and addressed as follows:

(f)           Attorneys Fees.  Should any action or proceeding be necessary to construe or enforce the terms and conditions of this Agreement, or the rights and duties of the Parties hereunder, the Party prevailing in such action shall be entitled to recover all court costs and actual attorneys’ fees.

(h)           Severability.  In case any one or more provisions contained in this Agreement shall, for any reason, be held invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision hereof and this Agreement shall be construed as if such invalid, illegal or unenforceable provision had not been contained herein.

This Amendment No. 1 to Services and Exclusivity Agreement (“Amendment”) is made and entered into as of January 4, 2010, by and between LAYNE CHRISTENSEN COMPANY, a Delaware corporation (“Layne”) and CADIZ, INC., a Delaware corporation (“Cadiz”), (each a “Party” and collectively the “Parties”).

1. Amendment.  The Agreement is hereby modified and amended by this Amendment.  Except as expressly modified herein, the Agreement continues in full force and effect.  All capitalized terms not defined herein shall have the meanings given in the Agreement.

 

2. Payment.  In addition to the payment provisions described in Section 6 of the Agreement, the following shall apply with respect to the payment for the TW-2(B) Well:

 

(a) Pursuant to the terms described in the Project Estimate, the estimated cost to complete the TW-2(B) Well is $117,375.00.

 

(b) Promptly following execution of the Project Estimate, Cadiz shall pay Layne 40% of the estimated cost to complete the TW-(B) Well ($46,950) (“Initial TW-2(B) Payment”).

 

(c) If Layne satisfactorily and substantially completes the work before 5:00 p.m. (pst) on January 19, 2010, Layne will be owed the full amount remaining for such work ($70,425).  However, if Layne completes the work at any time after such date, the remaining amount owed to Layne shall be reduced by 10%.  Every two weeks that the work has not satisfactorily and substantially completed commencing on 5:00 p.m. (pst) on February 2, 2010, the remaining payment will be reduced by an additional 10% until the work is completed.  The remaining payment owed for the TW-2(B) Well, as it may be reduced as set forth above is referred to as “Rema ining TW-2(B) Payment”.  The Remaining TW-2(B) Payment will be payable as follows (without any interest owed to Layne):

 

(1) If Cadiz transmits written noticed by December 31, 2012, of its intention to proceed with the Project and to use Layne as the exclusive provider of Services, Cadiz will not owe Layne any of the Remaining TW-2(B) Payment, and the Initial TW-2(B) Payment will be in full satisfaction of the work described above.

 

(2) If Cadiz transmits written notice by December 31, 2012, of its intention to proceed with the Project and not use Layne as its exclusive provider of services as provided herein, in Cadiz’s reasonable discretion, Cadiz will pay Layne 125% of the applicable Remaining TW-2(B) Payment owed to Layne and the exclusivity requirements shall terminate.

 

(3) If Cadiz transmits written notice by December 31, 2012, of its intention not to proceed with the Project, Cadiz will pay Layne the applicable Remaining TW-2(B) Payment owed to Layne within 30 days of such notice and the exclusivity requirements shall terminate.

 

3. Execution in Counterparts.  This Amendment may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one of the same instrument.

1. Amendment.  The Agreement is hereby modified and amended by this Amendment No. 2.  Except as expressly modified herein, the Agreement continues in full force and effect.  All capitalized terms not defined herein shall have the meanings given in the Agreement.

 

2. Payment of TW-1 and TW-2 Wells.  Although the Remaining Payment will continue to be deferred in accordance with Section 4(b) of the Original Agreement, the Parties acknowledge that Layne has met the requirements necessary for the Full Payment with respect to TW-1 and TW-2.  Further, because of additional work performed by Layne and approved by Cadiz, the amount of the Remaining Payment for TW-1 and TW-2 shall be increased by $81,270 ($752,390 total Remaining Payment for TW-1 and TW-2).

 

3. TW-3 Well.  With respect to TW-3, the Parties agree that Layne will perform the work and for the fees described in the Project Estimate ($72,350).  Such work shall be performed in a timely manner.  The following shall apply with respect to the payment for the TW-3 Well:

 

 (a)           Within 30 days following substantial completion of the TW-3 Well, Cadiz shall pay Layne 40% of the total amount owed under the Project Estimate ($28,940) (“Initial TW-3 Payment”).

 

(b)           The remaining payment owed for the TW-3 Well is referred to as the “Remaining TW-3 Payment”).  The Remaining TW-3 Payment will be payable as follows (without any interest owed to Layne):

 

(1)           If Cadiz transmits written notice by December 31, 2012 of its intention to proceed with the Project and to use Layne as the exclusive provider of Services, Cadiz will not owe Layne any of the Remaining TW-3 Payment, and the Initial TW-3 Payment will be in full satisfaction of the work described above.

 

(2)           If Cadiz transmits written notice by December 31, 2012 of its intention to proceed with the Project and not use Layne as its exclusive provider of services as provided herein, in Cadiz’s reasonable discretion, Cadiz will pay Layne 125% of the Remaining TW-3 Payment owed to Layne and the exclusivity requirements shall terminate.

 

(3)           If Cadiz transmits written notice by December 31, 2012 of its intention not to proceed with the Project, Cadiz will pay Layne the applicable Remaining TW-3 Payment owed to Layne within 30 days of such notice and the exclusivity requirements shall terminate.

 

4. Execution in Counterparts. This Amendment may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.