Item 1.01 Entry into a Material Definitive Agreement

On December 7, 2012, Cadiz Inc. (the "Company") entered into a Second Amended Option Agreement ("Agreement") with El Paso Natural Gas ("EPNG"), a wholly-owned entity of Kinder Morgan, Inc., related to the Company's option to purchase an existing natural gas pipeline. The pipeline, owned by EPNG, originates near Bakersfield, California and extends 220 miles into Cadiz, California, the location of the Company's principal landholdings. The original option agreement, which was entered into in September 2011 and subsequently amended and extended in February 2012, provided the Company the option to purchase the 220-mile pipeline for $40 million.

The Agreement divides the 220-mile pipeline currently under option to the Company into two segments, with the Company maintaining option rights to the 96-mile eastern segment between Barstow and the Cadiz Valley and returning to EPNG rights to the 124-mile western segment between Barstow and Wheeler Ridge, California.

Pursuant to the Agreement, EPNG has reduced the purchase price of the 96-mile eastern segment to $1 (one dollar), plus previous option payments totaling $1,070,000 already made by the Company. The remaining purchase price of $1 is payable before expiration of the option period on April 9, 2014. In addition, if EPNG files for regulatory approval of any new use of the 124-mile western segment by December 31, 2015, EPNG will make an additional payment to the Company of $10 million, payable on the date the application for regulatory approval is filed.