<PAGE> 1
As filed with the Securities and Exchange Commission on August 16, 1996
Securities Act File No. 333-___________ Exchange Act File No. 0-18756
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
WESTERN WATER COMPANY
(Exact name of registrant as specified in its charter)
Delaware 33-0085833
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4660 La Jolla Village Drive, Suite 825
San Diego, California 92122
(619) 535-9282
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)
Peter L. Jensen, President
Western Water Company
4660 La Jolla Village Drive, Suite 825
San Diego, California 92122
(619) 535-9282
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
With copies to:
Istvan Benko, Esq.
Troy & Gould Professional Corporation
1801 Century Park East, Suite 1600
Los Angeles, California 90067
(310) 553-4441
Approximate date of commencement of proposed sale to public:
From time to time after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, please check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===================================================================================================================
Proposed Maximum Proposed Maximum
Title of Each Class of Securities Amount To Be Offering Price Aggregate Offering Amount of
To Be Registered Registered Per Share(1) Price(1) Registration Fee
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<S> <C> <C> <C> <C>
Common Stock ($.001 par value).... 20,000 shares $ 19.25 $ 385,000 $ 133
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</TABLE>
(1) Estimated pursuant to Rule 457(c), solely for the purpose of
calculating the registration fee, based on the average of the high and
low sale prices per share of Common Stock, as reported on the Nasdaq
National Market, on August 14, 1996.
--------------------
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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<PAGE> 2
SUBJECT TO COMPLETION, AUGUST ___, 1996
PROSPECTUS
WESTERN WATER COMPANY
__________ SHARES OF COMMON STOCK
This Prospectus relates to the offer by the securityholder named herein
("Selling Securityholder") for sale from time to time of up to _______ shares
(the "Shares") of common Stock, $.001 par value (the "Common Stock"), of Western
Water Company, a Delaware corporation (the "Company"). The Company will not
receive any proceeds from the sale of the Shares offered hereby.
The Common Stock is quoted on the Nasdaq National Market under the
symbol "WWTR." The closing price of the Common Stock reported on the Nasdaq
National Market on August 14, 1996 was $20.00 per share.
The Selling Securityholder has advised the Company that it may sell,
directly or through brokers, all or a portion of the securities offered hereby
in negotiated transactions or in one or more transactions in the market at the
price prevailing at the time of sale. In connection with such sales, the Selling
Securityholder and any participating broker may be deemed to be "underwriters"
of the Common Stock within the meaning of the Securities Act of 1933, as
amended. It is anticipated that usual and customary brokerage fees will be paid
by the Selling Securityholder in all open market transactions. The Company will
pay all other expenses of this offering. See "Plan of Distribution."
The Company has informed the Selling Securityholder that the
anti-manipulation provisions of Rules 10b-6 and 10b-7 under the Securities
Exchange Act of 1934 may apply to its sales of the shares offered hereby. The
Company also has advised the Selling Securityholder of the requirement for
delivery of this Prospectus in connection with any sale of the shares offered
hereby.
--------------------------
AN INVESTMENT IN THE SECURITIES OFFERED HEREBY INVOLVES
A HIGH DEGREE OF RISK. SEE "RISK FACTORS" ON
PAGES 5 THROUGH 7 OF THE PROSPECTUS.
--------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is August ___, 1996
<PAGE> 3
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934 (the "Exchange Act") and in accordance therewith
files reports, proxy or information statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, as well as at the following regional
offices: Seven World Trade Center, New York, New York 10048, and Citicorp
Center, 500 W. Madison Street, Chicago, Illinois 60661. Copies of such material
can be obtained from the Public Reference Section of the Commission at Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.
Additional information regarding the Company and the securities offered
hereby is contained in the Registration Statement of which this Prospectus is a
part, and the exhibits thereto, filed with the Commission under the Securities
Act of 1933, as amended (the "Securities Act"). For further information
pertaining to the Company and the securities offered hereby, reference is made
to the Registration Statement and the exhibits thereto, which may be inspected
without charge at, and copies thereof may be obtained at prescribed rates from,
the office of the Commission at Judiciary Plaza, 450 Fifth Street, Washington,
D.C. 20549. Statements contained herein concerning the provisions of any
document are not necessarily complete and in each instance reference is made to
the copy of the document filed as an exhibit or schedule to the Registration
Statement. Each such statement is qualified in its entirety by reference to the
copy of the applicable documents filed with the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission under
the Exchange Act are incorporated in this Prospectus by reference: (a) the
Company's Annual Report on Form 10-K for the year ended March 31, 1996; (b) the
Company's quarterly report on Form 10-Q for the quarter ended June 30, 1996,
filed with the Commission on August 14, 1996; (c) all other reports filed with
the Commission pursuant to Section 13 and 15(d) of the Exchange Act since August
14, 1996; and (d) the description of the Common Stock set forth in the Company's
Registration Statement on Form 8-B under the Exchange Act, including any
amendment or report subsequently filed by the Company for the purpose of
updating that description. The file number of each of the foregoing documents is
0-18756.
All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of the offering of the securities offered hereby shall
be deemed to be incorporated by reference into this Prospectus and to be a part
of this Prospectus from the date of filing of such documents. Any statement
contained in a document incorporated by reference herein shall be deemed to be
modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, on the written or oral request of any such person, a
copy of any or all of the documents incorporated by reference (other than
exhibits to such documents that are not specifically incorporated by reference
in such documents). Written requests for such copies should be directed to
Marilyn Buseman Dreyer, Chief Financial Officer, Western Water Company, 4660 La
Jolla Village Drive, Suite 825, San Diego, California 92122. Telephone requests
may be directed to Ms. Dreyer at (619) 535-9282.
2.
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THE COMPANY
Western Water Company (the "Company") is engaged in (i) a broad range
of activities related to the identification, acquisition, ownership,
development, transfer and sale of water and water rights primarily in the
Western United States and (ii) in the sale of real estate properties acquired in
connection with the Company's water supply business activities. The Company,
directly and indirectly, owns a diverse portfolio of water rights and real
estate interests in California, Colorado and Nevada. The Company's plan is to
develop and package its own water and water rights for sale to municipalities
and other water users and to provide a variety of water-related services to
unaffiliated owners of water rights. Such services include identifying,
developing, marketing, transporting, distributing and selling water or water
rights that are owned by the unaffiliated owners. In addition, the Company's
plan is to resell the real estate interests that it owns and occasionally
acquires in connection with its acquisition of water interests.
The principal California water interests owned by the Company consist
of (i) certain riparian and appropriative water rights, together with certain
groundwater rights, associated with approximately 9,055 acres of real property
(the "Yuba Property") located along the Yuba River in California, (ii) the water
rights associated with 2,236 acres of California rice farms and ranches, and
(iii) interests owned in various California mutual water companies.
The principal Colorado water interests owned by the Company consist of
the water rights associated with an aggregate of 4,559 acres of undeveloped land
and certain other water rights in the Cherry Creek basin. The Cherry Creek basin
is the drainage area of Cherry Creek south of Denver, Colorado. The Cherry Creek
assets were acquired primarily for the purpose of developing, processing,
packaging and selling water and water rights in the Cherry Creek basin (the
"Cherry Creek Project"). The Company has filed a plan of augmentation with the
Colorado Water Court in order to obtain the right to sell packages of long-term,
reliable water resources. In February 1996, the Company entered into an
agreement in principle with United Infrastructure Company, a company owned by
Bechtel Enterprises, Inc. and Peter Kiewit & Sons, to establish a joint venture
company for the purpose of designing, constructing, operating and maintaining
the infrastructure that will facilitate delivery of Cherry Creek water to retail
as well as wholesale purchasers of the water. The Company believes that this
arrangement with United Infrastructure Company will broaden the market for the
Company's water by enabling the Company to offer fully integrated water services
in Cherry Creek.
The Company's water interests in Nevada consists of its indirect 35.3%
interest in approximately 1.4 million acres of land and related water interests
located in the State of Nevada (the "Nevada Property"). As an owner of a 35.3%
interest in the Nevada Land and Resource Company LLC (the "Nevada LLC"), the
Delaware limited liability company that owns the Nevada Property, the Company
also owns an interest in the real estate and water interests owned by the Nevada
LLC. In addition to its indirect ownership of the foregoing water interests, the
Company also has been retained by the Nevada LLC to develop and market the
Nevada LLC's water interests.
On October 18, 1995, the Company contributed $12,000,000 to the capital
of the Nevada LLC and thereby acquired a 35.3% initial percentage interest in
the Nevada LLC. Accordingly, the Company will be entitled to a 35.3% interest in
all distributions made by the Nevada LLC, which percentage interest is subject
to future increase if and when the Nevada LLC has made aggregate distributions
to its members equal to 100% of all capital contributions plus certain specified
cumulative annual returns on investment. The other member of the Nevada LLC, a
joint venture comprised of The Morgan Stanley Real Estate Fund II, L.P. and two
affiliates of that real estate partnership, contributed $22,000,000 for its
64.7% percentage interest in the Nevada LLC. The Company and the Morgan Stanley
affiliated joint venture jointly manage the Nevada LLC. The Nevada LLC was
formed for the sole purpose of acquiring, financing, managing, developing,
leasing, selling and otherwise disposing of the real estate and water interests
that comprise the Nevada Property. In order to fund the foregoing capital
contribution, the Company in September 1995 issued and sold $15,000,000
principal amount of debentures. The purchase price paid by the LLC for the
Nevada Property was $44,743,000.
The principal real estate interests owned by the Company consist of (i)
2,205 acres of undeveloped land located in the Cherry Creek basin, Colorado,
(ii) a total of approximately 1,602 acres located in Northern California, and
(iii) the Company's interest in the approximately 1.4 million acres of Nevada
real estate owned by the Nevada LLC. The real estate owned by the Company in
California consists of four rice farms and ranches (adjacent 455-
3.
<PAGE> 5
acre and 744-acre farms, and 225-acre and 136-acre farms and ranches), a total
of 42 acres of the 9,055-acre Yuba Property. The Company also owns certain
mineral interests and other property rights in a total of 3,018 acres located in
California. The Company has sold or exchanged 2,343 acres of the 4,559 acres it
owned in the Cherry Creek basin and currently is marketing approximately 1,900
additional acres of its Cherry Creek, Colorado, real estate.
The Company is currently engaged by The Atchison, Topeka and Santa Fe
Railway Company and by Burlington Northern Railroad Company (collectively,
"Burlington Santa Fe") to act as Burlington Santa Fe's exclusive agent in
California, Arizona, New Mexico, Colorado, Washington and Montana in connection
with identifying, developing and marketing water assets owned by Burlington
Santa Fe, and to identify and assist in marketing Burlington Santa Fe's Texas
water rights, and to advise Burlington Santa Fe in connection with such matters.
The Company is also involved in the business of effecting water
transfers. The Company recently entered into its first agreements to transfer
water from Northern California to Southern California.
On March 28, 1996, the Company issued a 100% stock dividend whereby the
Company issued one share of Common Stock for each share of Common Stock then
outstanding (the "Stock Dividend"). A 100% stock dividend effectively is the
equivalent of a 2-for-1 stock split. All share, per share and other information
contained in this Prospectus has been adjusted to reflect the 2-for-1 stock
adjustment.
The Company's principal executive office is located at 4660 La Jolla
Village Drive, Suite 825, San Diego, California 92122. Its telephone number is
(619) 535-9282. Unless the context requires otherwise, references to the
"Company" in this report include YG Procyon Corporation, its wholly-owned
subsidiary, and YG Rice Farms, L.P., a California limited partnership directly
and indirectly wholly owned and controlled by the Company. On September 18,
1992, the Company changed its name from "YG Development Company" to "Western
Water Company," and on March 23, 1994, the Company changed its state of
incorporation from California to Delaware.
4.
<PAGE> 6
RISK FACTORS
The securities offered hereby are speculative in nature, involve a high
degree of risk, and should not be purchased by any investor who cannot afford
the loss of his entire investment. Prior to making an investment decision with
respect to the securities offered hereby, prospective investors should carefully
consider, along with the other matters discussed in this Prospectus, the
following risk factors:
LIMITED HISTORY OF OPERATIONS IN PRINCIPAL BUSINESS. To date, the
Company's activities have primarily consisted of (i) acquiring its various water
rights and related assets, (ii) raising capital to fund both the cost of such
acquisitions and its working capital needs, and (iii) developing its water
rights. Although the Company operates in two business segments (water rights
activities and its real estate development and disposition activities), the
Company anticipates that a majority of its revenues in the future will be
derived from its water rights activities. However, the Company only generated
$974,000 and $207,000 of revenues from its water rights activities during the
fiscal years ended March 31, 1996 and March 31, 1995, respectively, and only
generated $65,000 of revenues from its water rights activities during the fiscal
quarter ended June 30, 1996. Accordingly, the Company does not have an
established record of water rights transactions. To date, the Company's
administrative and interest expenses have exceeded its on-going revenues from
its water and water rights development and disposition business, and the
majority of its operating revenues have been derived from the sale of the
Company's real estate assets. No assurance can be given that the Company will
continue to be able to profitably resell its remaining real estate holdings in
the future or that it will be able to successfully develop, package and sell
water rights.
UNCERTAINTY OF FUTURE REAL ESTATE REVENUES. During the past two fiscal
years, revenues from the disposition of real estate have constituted
approximately 80% and 92%, respectively, of the Company's total revenues.
Accordingly, until the Company completes its water development activities and
derives revenues from the sale or other disposition of its water resources, the
Company's ability to generate revenues will continue to be dependent primarily
on its ability to sell its real estate holdings. To date, the Company's real
estate sales efforts in Colorado have benefitted from a strong demand for real
estate in the Cherry Creek basin. No assurance can, however, be given that the
current market conditions in the Cherry Creek market will continue or that the
Company will be able to profitably resell its real estate assets in the future.
The Company did not consummate any real estate sales for the fiscal quarter
ended June 30, 1996 and, accordingly, derived no revenues from its real estate
activities during that fiscal quarter. The Company's ability to sell its
Colorado and California real estate properties will also be dependent on general
economic conditions, on interest rates, and on the location and particular
characteristics of the properties offered for sale. The Company also has a
significant economic interest in the Nevada LLC and in that company's real
estate holdings. Revenues derived from the development and sales of the Nevada
Properties will, to a large extent, be dependent upon the ability of the Nevada
LLC to successfully develop, market and sell the Nevada LLC's real estate
holdings. To date, the Nevada LLC has not yet consummated a material sale of its
real estate holdings.
UNCERTAINTY OF FUTURE WATER REVENUES. The Company's business plan is
twofold: to engage in various water acquisition, transfer, development and sale
activities, and to develop and dispose of the real estate that it acquires in
connection with the acquisition of water rights. While the Company's current
operating revenues have been primarily derived from real estate sales, the
Company's long-term future profitability will be primarily dependent on (i) the
ability of the Nevada LLC to develop and sell water and water rights, (ii) the
Company's ability to sell significant quantities of water from the Yuba
Property, and (iii) the Company's ability to develop and sell water or water
rights packages as part of the Cherry Creek Project. The Company is currently
unable to accurately estimate the amount of developable water contained within
the Nevada Property. The Nevada LLC has not, to date, developed or sold any of
its water or water rights, and no assurance can be given that the Nevada LLC
will be able to develop or sell any water or water rights in the future. Until
May 1996, the Company's plan was to permit the Yuba County Water Agency to
integrate the Company's Yuba Property water into the Water Agency's conjunctive
use plans for developing and marketing water to third parties. The Company's
agreement with the Yuba County Water Agency regarding the joint development and
marketing of water expired in May 1996, and the Company has not yet finally
determined how it plans to commercially exploit its Yuba Property water rights.
The Colorado Water Court has rejected the Company's initial plan of
authorization based on objections that were filed with the court by the third
parties. Although the Company has since received the consent of all but one of
the objectors, no assurance can be given that the Colorado Water Court will
approve the Company's plan of augmentation in the near future, or ever.
Furthermore, while the Company believes that its agreement with United
Infrastructure Company will
5.
<PAGE> 7
broaden the market for the Company's Cherry Creek water, the Company has not yet
sold a material amount of water or water rights from its Cherry Creek Project,
and no assurance can be given that the Company will be able to profitably
dispose of its Cherry Creek water rights in the future.
YUBA PROPERTY TITLE ISSUES. It is possible that owners of adjoining
land or land located downstream from the Yuba Property could assert claims to
the groundwater adverse to the Company due to possible uncertainties as to the
source of water located on or under the Yuba Property and the complexities of
water laws. Although the Company believes that its claims would be held to be
superior to any claims by other property owners, no assurance can be given that
adverse claims, if asserted, would not be sustained.
ENVIRONMENTAL REGULATION AND RISK. Water leased or sold by the Company
may be subject to regulation as to quality by the United States Environmental
Protection Agency (the "EPA") acting pursuant to the Federal Safe Drinking Water
Act (the "US Act"). In California, the responsibility for enforcing the US Act
is delegated to the California Department of Health Services (the "Health
Department") and to the Resources Board acting pursuant to the California Safe
Drinking Water Act (the "Cal Act"). The US Act provides for the establishment of
uniform minimum national water quality standards, as well as governmental
authority to specify the type of treatment processes to be used for public
drinking water. Moreover, the EPA has an ongoing directive to issue regulations
under the US Act and to require disinfection of drinking water, specification of
maximum contaminant levels ("MCLS") and filtration of surface water supplies.
The Cal Act and the mandate of the Health Department are similar to the US Act
and the mandate of the EPA, and in many instances MCLS and other requirements of
the Health Department are more restrictive than those promulgated by the EPA.
Both the EPA and the Health Department have promulgated regulations and
other pronouncements which require various testing and sampling of water and
inspections by producers which set MCLS for numerous contaminants. Since the
Company does not intend to sell water directly to the consumers, these standards
only affect the water agencies that may buy or lease the Company's water. While
environmental regulations do not directly affect the Company, the regulations
regarding the quality of water distributed affects the Company's intended
customers and may, therefore, depending on the quality of the Company's water,
impact the price and terms upon which the Company may in future sell its water
or water rights.
Under various federal, state and local laws, regulations and ordinances
(collectively, "Environmental Laws"), an owner or operator of real estate
interests may be liable for the costs of cleaning up, as well as certain damages
resulting from, past or present spills, disposals or other releases of hazardous
or toxic substances or wastes on, in or from a property. Certain Environmental
Laws including the federal Comprehensive Environmental Response Compensation and
Liability Act ("CERCLA") and Resource Conservation and Recovery Act ("RCRA"),
impose such liability without regard to whether the owner knew of, or was
responsible for, the presence of hazardous or toxic substances or wastes at or
from the property. The presence of such substances or wastes, or the failure to
properly remediate any resulting contamination, also may adversely affect the
owner's or operator's ability to sell, lease, or operate its property or to
borrow using its property as collateral. Although the Company is not aware of
any such environmental contamination on any of its real estate holdings or on
any locations adjacent to its holdings, there can be no assurance that such
environmental contamination does not exist.
VOLATILE MARKET FOR COMMON STOCK. There has been significant volatility
in the market for the Company's Common Stock. Since April 1, 1995 (the beginning
of the fiscal year ended March 31, 1996), the daily closing sales prices of the
Common Stock have ranged from $10.125 to $23.25 per share. The trading price of
the Common Stock has fluctuated widely, and it may be subject to similar future
fluctuations in response to quarter-to-quarter variations in the Company's
operating results, Company announcements regarding acquisitions or dispositions
of properties, and variations in the stock market indices in general.
ANTI-TAKEOVER EFFECT OF CHARTER AND BYLAW PROVISIONS. The Company's
Certificate of Incorporation and Bylaws contain certain provisions that may
discourage attempts to acquire control of the Company that are not negotiated
with the Company's Board of Directors. These provisions may have the effect of
discouraging takeover attempts that some stockholders might deem to be in their
best interests, including takeover proposals in which stockholders might receive
a premium for their shares over the then current market price, as well as making
it more difficult for individual stockholders or a group of stockholders to
elect directors. The Board of Directors believes, however, that these provisions
are in the best interests of the Company and its stockholders because such
provisions
6.
<PAGE> 8
may encourage potential acquirors to negotiate directly with the Board of
Directors which is in the best position to act on behalf of all stockholders.
The Certificate of Incorporation provides that the affirmative vote of the
holders of at least 66-2/3% of the total voting power of all outstanding
securities of the Company then entitled to vote generally in the election of
directors, voting together as a single class, is required to amend certain
provisions of the Certificate of Incorporation, including among others, those
provisions relating to the number, election and term of directors; the removal
of directors and the filling of vacancies; and the supermajority voting
requirements of the Certificate of Incorporation. These voting requirements will
have the effect of making more difficult any amendments, even if a majority of
the Company's stockholders believes that such amendment would be in their best
interest.
DIVIDENDS UNLIKELY. The Company has never paid cash dividends on its
Common Stock and anticipates that for the foreseeable future all earnings, if
any, will be retained for operations and for the development of the Company's
assets and business. The Company's ability to pay any dividends is dependent on
its financial condition and on Delaware law. Under Delaware law, a corporation
is permitted to pay dividends only out of surplus (including paid-in and earned
surplus) or out of net profits for the current and immediately preceding fiscal
years. Although the Company currently is permitted by Delaware law to make
dividend payments, no assurance can be given that the Company will in the future
be permitted under Delaware law to pay dividends.
DEPENDENCE ON KEY PERSONNEL. The success of the Company is largely
dependent upon the knowledge, efforts and active participation of Mr. Peter L.
Jensen, its President, and Messrs. John H. Huston and Eric R. Robbins, its Vice
Presidents. The Company's employment agreements with Messrs. Jensen, Huston and
Robbins expire in January, February and November, 1997, respectively. The loss
of the services of either Messrs. Jensen, Huston or Robbins could have a
material adverse effect on the Company.
AUTHORIZATION OF PREFERRED STOCK; PROVISIONS AFFECTING CHANGES IN
CONTROL. The Company's Certificate of Incorporation authorizes the issuance of
"blank check" preferred stock with such designation, rights and preferences as
may be determined from time to time by the Board of Directors. Accordingly, the
Board of Directors is empowered, without stockholder approval, to issue a new
series of preferred stock with dividend, liquidation, conversion, voting or
other rights which could adversely affect the voting power or other rights of
the holders of the Company's Common Stock. In the event of issuance, the new
series of preferred stock could be utilized, under certain circumstances, as a
method of discouraging, delaying or preventing a change in control of the
Company. Although the Company has no present intention to issue any additional
shares of its preferred stock, there can be no assurance that the Company will
not do so in the future.
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of any
securities offered hereby. The Company will pay all of the costs of this
offering.
7.
<PAGE> 9
SELLING SECURITYHOLDER
On July 25, 1996, the Company entered into that certain Agreement for
Sale of Water Rights and Option to Sell Water Rights (the "Agreement") with
Golden West Refining Company, a California corporation ("Golden West"). Pursuant
to the Agreement, the Company agreed to purchase from Golden West, and Golden
West agreed to sell to the Company the rights to 100 acre feet per year of water
located in the Central Water Basin, Los Angeles County, California, for a
purchase price of $320,000. In addition, the Agreement grants Golden West the
option, but not the obligation, to sell to the Company the water rights to up to
an additional 978 acre feet per year of water in the Central Water Basin for a
price of $3,200 per acre foot. The option has a term of one year, although
Golden West, in its discretion, may terminate the option at any time during the
last nine months of the option term. The purchase price paid by the Company for
first the 100 acre feet sold under the Agreement was paid in the Shares included
in this Prospectus, and the purchase price for all future sales under the
Agreement will likewise be paid in shares of Common Stock. The amount of shares
to be issued to Golden West was determined, and in the event that the option is
exercised by Golden West will in the future be determined, by the average last
trading price of the Common Stock as reported by The Nasdaq Stock Market during
the 20 trading days immediately preceding the closing date of each sale. The
Agreement also contained registration rights provisions that require the Company
to register the shares of Common Stock to be issued to Golden West.
The terms of the foregoing transaction were determined by arm's-length
negotiations between the Company and Golden West. Neither Golden West nor its
affiliates had or has any material relationship with the Company or its
officers, directors or affiliates except as described above.
SELLING SECURITYHOLDER TABLE
The following table sets forth as of the date of this Prospectus the
number and percent of shares of Common Stock owned by the Selling
Securityholder, the number of shares of Common Stock offered by it, and the
number and percent of shares of Common Stock to be held by it after the
conclusion of this offering.
<TABLE>
<CAPTION>
Before Offering After Offering
--------------------------- --------------------------
Number of Number of
Shares Number of Shares
Selling Beneficially Shares Beneficially
Securityholder Owned Percent Being Offered Owned Percent
-------------- ----- ------- ------------- ----- -------
<S> <C> <C> <C> <C> <C>
Golden West Refining Company *% -0- 0%
</TABLE>
- --------------
* less than 1%.
8.
<PAGE> 10
PLAN OF DISTRIBUTION
The Selling Securityholder may sell, directly or through brokers, the
shares of Common Stock in negotiated transactions or in one or more transactions
in the market at the price prevailing at the time of sale. In connection with
such sales, the Selling Securityholder and any participating broker may be
deemed to be "underwriters" of the shares of Common Stock within the meaning of
the Securities Act, although the offering of these securities will not be
underwritten by a broker-dealer firm. Sales in the market may be made to
broker-dealers making a market in the Common Stock or other broker-dealers, and
such broker-dealers, upon their resale of such securities, may be deemed to be
"selling securityholders" in this offering. The NASD member firms who make a
market in the Company's Common Stock, as most recently reported to the Company
by The Nasdaq Stock Market, are Bear Stearns & Co.; L.H. Friend, Weinress &
Frankson, Inc.; Dean Witter Reynolds, Inc.; Neuberger & Berman; Herzog, Heine,
Geduld, Inc.; Troster Singer Corp.; Mayer & Schweitzer, Inc.; Sherwood
Securities Corp.; Fahnestock & Co., Inc.; and Knight Securities L.P. The Company
will not receive any of the proceeds from the sale of the Common Stock by the
Selling Securityholder. Pursuant to the terms under which the Shares were sold,
the Company has agreed to indemnify the Selling Securityholder against such
liabilities as it may incur as a result of any untrue statement of a material
fact in the Registration Statement of which this Prospectus forms a part, or any
omission herein or therein to state a material fact necessary in order to make
the statements made, in the light of the circumstances under which they were
made, not misleading. Such indemnification includes liabilities that the Selling
Securityholder may incur under the Securities Act.
The Company will bear all costs and expenses of the registration under
the Securities Act and certain state securities laws of the Common Stock, other
than fees of counsel (if any) for the Selling Securityholder and any discounts
or commissions payable with respect to sales of such securities.
From time to time this Prospectus will be supplemented and amended as
required by the Securities Act. During any time when a supplement or amendment
is so required, the Selling Securityholder is required to cease sales until the
Prospectus has been supplemented or amended.
The Company has informed the Selling Securityholder that the
antimanipulation provisions of Rules 10b-6 and 10b-7 under the Securities
Exchange Act of 1934 may apply to their sales of the Shares and has furnished
the Selling Securityholder with a copy of these rules, as well as a copy of
certain interpretations thereof by the Commission. The Company also has advised
the Selling Securityholder of the requirement for delivery of this Prospectus in
connection with any sale of the Shares.
LEGAL MATTERS
The validity of the securities offered hereby has been passed upon by
Troy & Gould Professional Corporation, Los Angeles, California. Troy & Gould
Professional Corporation owns 47,686 shares of Common Stock.
EXPERTS
The audited consolidated financial statements contained in the Annual
Report on Form 10-K of Western Water Company for the year ended March 31, 1996
and incorporated in this Prospectus by reference, have been so incorporated in
reliance on the reports of Harlan & Boettger, independent public accountants,
given on the authority of said firm as experts in auditing and accounting.
9.
<PAGE> 11
================================================================================
No dealer, salesman or other person has been authorized to give any
information or make any representations, other than those contained in this
Prospectus, in connection with the offering hereby, and, if given or made, such
information and representations must not be relied upon as having been
authorized by the Company or the Selling Securityholder. This Prospectus does
not constitute an offer to sell, or a solicitation of an offer to buy, any
securities to any person in any State or other jurisdiction in which such offer
or solicitation is unlawful. Neither the delivery of this Prospectus nor any
sale made hereunder shall, under any circumstances, create any implication that
there has been no change in the affairs of the Company or the facts herein set
forth since the date hereof.
---------------
TABLE OF CONTENTS
Page
----
Available Information ................................................... 2
Incorporation of Certain Documents by Reference ......................... 2
The Company ............................................................. 3
Securities Offered ...................................................... 4
Risk Factors ............................................................ 5
Use of Proceeds ......................................................... 8
Selling Securityholder .................................................. 9
Plan of Distribution .................................................... 11
Legal Matters ........................................................... 11
Experts ................................................................. 11
===============================================================================
===============================================================================
___________ Shares of Common Stock
WESTERN WATER COMPANY
____________
PROSPECTUS
____________
August __, 1996
===============================================================================
<PAGE> 12
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The Company estimates that expenses in connection with the distribution
described in this Registration Statement will be as follows. All expenses
incurred with respect to the distribution will be paid by the Company.
<TABLE>
<S> <C>
SEC registration fee...................................... $ 133
Accounting fees and expenses.............................. 3,000
Legal fees and expenses................................... 5,000
Miscellaneous............................................. 367
-------
Total.................................................. $ 8,500
=======
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Pursuant to Section 102(b)(7) of the General Corporation Law of the
State of Delaware (the "GCL"), the Certificate of Incorporation of the Company
eliminates the liability of the Company's directors to the Company or its
stockholders, except for liabilities related to breach of duty of loyalty,
actions not in good faith, and certain other liabilities.
The Certificate of Incorporation, and the Bylaws of the Company provide
for the indemnification of directors and officers to the fullest extent
permitted by the GCL.
Section 145 of the GCL authorizes indemnification when a person is made
a party to any proceeding by reason of the fact that such person is or was a
director, officer, employee or agent of the corporation or was serving as a
director, officer, employee or agent of another enterprise, at the request of
the corporation, and if such person acted in good faith and in a manner
reasonably believed by him or her to be in, or not opposed to, the best
interests of the corporation. With respect to any criminal proceeding, such
person must have had no reasonable cause to believe that his or her conduct was
unlawful. If it is determined that the conduct of such person meets these
standards, he or she may be indemnified for expenses incurred and amounts paid
in such proceeding if actually and reasonably incurred by him or her in
connection therewith.
If such a proceeding is brought by or on behalf of the corporation
(i.e., a derivative suit), such person may be indemnified against expenses
actually and reasonably incurred if he or she acted in good faith and in a
manner reasonably believed by him or her to be in, or not opposed to, the best
interests of the corporation. There can be no indemnification with respect to
any manner as to which such person is adjudged to be liable to the corporation;
however, a court may, even in such case, allow such indemnification to such
person for such expenses as the court deems proper. Where such person is
successful in any such proceeding, he or she is entitled to be indemnified
against expenses actually and reasonably incurred by him or her. In all other
cases, indemnification is made by the corporation upon determination by it that
indemnification of such person is proper because such person has met the
applicable standard of conduct.
The registration rights agreement between the Company and the Selling
Securityholder provides that the Company shall indemnify the Selling
Securityholder, and the Selling Securityholder shall indemnify the Company and
the officers and directors of the Company, for certain liabilities, including
certain liabilities under the Securities Act.
(i)
<PAGE> 13
ITEM 16. EXHIBITS
4.1 Form of Common Stock certificate.(1)
5.1 Opinion of Troy & Gould Professional Corporation.
23.1 Consent of Harlan & Boettger
23.2 Consent of Troy & Gould Professional Corporation (contained in Exhibit
5.1).
99 Agreement for Sale of Water Rights and Option to Sell Water Rights,
dated July 25, 1996, between the Company and Golden West.
- ------------------
(1) Previously filed as Exhibit 4.1 to the Company's Form 10 filed August
9, 1990, (and incorporated herein by reference).
ITEM 17. UNDERTAKINGS
(a) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Securities Act") may be permitted to directors,
officers and controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in the opinion of
the Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
(b) The undersigned registrant hereby undertakes that for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made of the securities registered hereby, a post-effective amendment to this
Registration Statement.
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of this Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this Registration
Statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
(ii)
<PAGE> 14
provided, however, that (i) and (ii) do not apply if the Registration Statement
is on Form S-3, and the information required to be included in a post-effective
amendment is contained in periodic reports filed by the registrant pursuant to
Section 13 or Section 15(d) of the Exchange Act that are incorporated by
reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(iii)
<PAGE> 15
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of San Diego, State of California, on August 16, 1996.
WESTERN WATER COMPANY
By /s/ PETER L. JENSEN
-------------------------------
Peter L. Jensen, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following person in the capacities
and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ PETER L. JENSEN Director, President and Chief August 16, 1996
- ---------------------------
Peter L. Jensen Executive Officer (Principal)
Executive Officer)
/s/ MARILYN B. DREYER Chief Financial Officer and August 16, 1996
- ---------------------------
Marilyn Buseman Dreyer Secretary (Principal Financial
and Accounting Officer)
/s/ JOHN H. HUSTON Director, Vice President August 16, 1996
- ---------------------------
John H. Huston
Director August __, 1996
- ---------------------------
Jeffrey A. Smith
/s/ JAY B. ABRAMSON Director August 16, 1996
- ---------------------------
Jay B. Abramson
</TABLE>
<PAGE> 16
EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
No. Description Page
--- ----------- ----
<S> <C> <C>
4.1 Form of Common Stock certificate.(1)
5.1 Opinion of Troy & Gould Professional Corporation.
23.1 Consent of Harlan & Boettger.
23.2 Consent of Troy & Gould Professional Corporation (contained in
Exhibit 5.1).
99 Agreement for Sale of Water Rights and Option to Sell Water Rights,
dated July 25, 1996, between the Company and Golden West.
</TABLE>
- --------------
(1) Previously filed as Exhibit 4.1 to the Company's Form 10 filed August
9, 1990, (and incorporated herein by reference).
<PAGE> 1
August 16, 1996
WES M.1
Western Water Company
4660 La Jolla Village Drive
Suite 825
San Diego, California 92122
Gentlemen:
We have acted as counsel for Western Water Company (the "Company") in
connection with the preparation and filing with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, of a Registration
Statement on Form S-3, as amended (the "Registration Statement"). The
Registration Statement relates to the offer and sale by the selling
securityholder named therein (the "Selling Securityholder") of up to 20,000
shares (collectively, the "Shares") of Common Stock, $.001 par value, of the
Company.
In acting as counsel to the Company, we have examined originals or
copies, certified to our satisfaction, of such documents, corporate records and
other instruments as we have deemed necessary, and we are familiar with the
proceedings heretofore taken by the Company in connection with the authorization
issue and sale by the Company to the Selling Securityholder of the Shares. In
addition, we have examined such books and records of the Company as in our
judgment is necessary or appropriate to enable us to render the opinions
expressed below.
Based upon the foregoing, it is our opinion that the Shares, when sold
by the Selling Securityholder in the manner contemplated in the Prospectus made
part of the Registration Statement, will be legally and validly issued, fully
paid and nonassessable.
EXHIBIT 5.1
<PAGE> 2
August 16, 1996
Page 2
We consent to the use of this opinion as an exhibit to the Registration
Statement and the use of our name in the Registration Statement and Prospectus
of the Company made part of thereof. By giving you this opinion and consent, we
do not admit that we are experts with respect to any part of the Registration
Statement or Prospectus within the meaning of the term "expert" as used in
Section 11 of the Securities Act of 1933, as amended, or the rules and
regulations promulgated thereunder, nor do we admit that we are in the category
of persons whose consent is required under Section 7 of said Act.
Very truly yours,
/s/ TROY & GOULD
TROY & GOULD
Professional Corporation
EXHIBIT 5.1
<PAGE> 1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors of Western Water Company:
We consent to the use of our report incorporated herein by reference and to the
reference of our firm under the heading "Experts" in the Prospectus.
Harlan & Boettger
San Diego, California
August 16, 1996
EXHIBIT 23.1
<PAGE> 1
AGREEMENT FOR SALE OF WATER RIGHTS
AND OPTION TO SELL WATER RIGHTS
This Agreement for Sale of Water Rights and Option to Sell Water Rights
("Agreement"), entered into this 25th day of July, 1996, by and between Golden
West Refining Company, a California corporation ("Seller"), and Western Water
Company, a Delaware corporation ("Buyer") (Buyer and Seller are sometimes
hereinafter individually referred to as a "Party" and collectively as the
"Parties"), is made with respect to the following facts:
RECITALS
A. Seller is the owner of an allowed pumping allocation (the "Pumping
Allocation") comprising approximately 1,347.5 acre feet, more or less, in the
Central Water Basin (the "Basin"), Los Angeles County, California.
B. Seller has the adjudicated right to extract eighty percent (80%) of
the Pumping Allocation, or approximately 1,078 acre feet (the "Water Rights"),
more or less, from the Basin. The Water Rights are more particularly described
in Exhibit "A" attached hereto and incorporated herein by reference.
C. Seller desires to sell to Buyer, and Buyer desires to purchase from
Seller, one hundred (100) acre feet per year (the "Purchase Water Rights") of
Seller's Water Rights, and Seller and Buyer desire to enter into an option for
the sale from Seller to Buyer of the remaining nine hundred seventy-eight (978)
acre feet per year (the "Option Water Rights") of Seller's Water Rights, subject
to the following terms and conditions.
NOW THEREFORE, in consideration of the mutual covenants contained
herein, and for other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, Seller and Buyer agree as follows:
OPERATIVE PROVISIONS
1. Agreement to Transfer Title to Buyer. At the Purchase Closing
(defined below), Seller shall grant, sell and convey to Buyer all of Seller's
right, title and interest in and to the Purchase Water Rights, and Buyer shall
purchase the Purchase Water Rights from Seller, in accordance with the terms and
provisions of this Agreement. The consummation of such purchase and sale is
hereinafter called the "Purchase Closing."
2. Conveyance of Title. At the Purchase Closing, and at each Option
Closing (defined below), whichever applies, Seller
1
<PAGE> 2
shall grant, sell and convey to Buyer any and all of Seller's right, title and
interest in and to the Water Rights, by grant deed (the "Grant Deed"), duly
executed and acknowledged, in recordable form, and by duly executed bill of sale
(the "Bill of Sale"). The Grant Deed shall be substantially in the form of
Exhibit "A" attached hereto and incorporated herein by reference, and the Bill
of Sale shall be substantially in the form of Exhibit "B" attached hereto and
incorporated herein by reference.
3. Purchase Price. The purchase price for the Purchase Water Rights
shall be Three Thousand Two Hundred Dollars ($3,200.00) per acre foot (the "Per
Acre Foot Price"), or Three Hundred Twenty Thousand and No/100 Dollars
($320,000.00) (the "Purchase Price"), payable as hereinafter provided.
3.1 Western Water Stock. The Purchase Price shall be payable
in stock ("Western Water Stock") of Buyer. The number of shares of Western Water
Stock to which Seller shall be entitled shall be determined by dividing the
Purchase Price by the Per Share Value (defined below).
3.2 Per Share Value. The per share value ("Per Share Value")
of Western Water Stock to be issued to Seller in payment for the Purchase Water
Rights shall be the average of the last trading price, as reported by The Nasdaq
Stock Market ("Nasdaq"), of Buyer's shares during the twenty (20) trading days
immediately preceding the Closing Date (defined below).
3.3 Registration Filing. Buyer agrees to prepare and file with
the Securities and Exchange Commission (the "Commission"), by no later than the
ten (10) calendar days after the date of this Agreement, a shelf registration
statement in accordance with the provisions of Section 3 of Exhibit "C" (the
"Registration Filing") pursuant to Rule 415 of the Securities Act of 1933, as
amended (the "Securities Act"), on Form S-3, or any successor form thereto,
covering all of the shares of Western Water Stock to be issued to Seller, and
shall thereafter use its best efforts to cause such Registration Filing to be
declared effective by the Commission as soon as possible. The procedures and
other provisions related to the filing of the Registration Filing are set forth
in Exhibit "C" attached hereto, the terms of which are hereby incorporated by
reference. This Agreement may be terminated at any time (i) after October 25,
1996 by Buyer if the Registration Filing has not been declared effective by the
Commission on or before October 25, 1996, or (ii) after September 23, 1996 by
Seller if the Registration Filing has not been declared effective by the
Commission before the date on which notice of termination is given by Seller.
3.4 Price Adjustment.
2
<PAGE> 3
3.4.1 Seller's Resale. On the Closing Date, the
Western Water Stock issued to Seller pursuant to this Section 3 shall be
registered under the Securities Act for resale by Buyer. Buyer agrees to keep
the Registration Filing effective with the Commission for two (2) years
following the effective date of the Registration Filing, or until all shares
issued to Seller hereunder have been resold by Seller, whichever occurs sooner.
If Seller sells all or any portion of the Western Water Stock during the Sale
Period (as defined below), Seller shall cause Seller's broker to notify Buyer in
the manner set forth in Section 14.4, of the total net consideration actually
received by Seller for all Western Water Stock sold within the Sale Period after
payment of all sale expenses and commissions (the "Sale Consideration"). The
"Sale Period" shall mean the ninety (90) day period following the Closing Date.
If, however, during such ninety (90) day period Seller is not able to sell any
of the Western Water Stock because either (i) the Registration Filing has been
withdrawn, suspended or otherwise terminated, (ii) the shares of Western Water
Stock have not been approved for trading on the exchange on which the shares of
Buyer's common stock are then listed, or (iii) the shares of Western Water Stock
have not been qualified for resale in the blue sky jurisdictions that Seller has
reasonably requested before the effectiveness of the Registration Filing, then
the ninety (90) day period shall be extended by the number of days that any of
the foregoing sale restrictions was in effect.
3.4.2 Adjustment. If Seller sells all or any portion
of the Western Water Stock during the Sale Period, then there shall be an
adjustment (the "Price Adjustment") hereunder if the Sale Consideration is less
than: (a) the Purchase Price, if all of the Western Water Stock is sold during
the Sale Period; or (b) the pro rata portion of the Purchase Price (the "Pro
Rata Purchase Price") that is the product of the Per Share Value multiplied by
the number of shares of Western Water Stock actually sold, if less than all of
the Western Water Stock is sold during the Sale Period. Buyer shall pay, in
cash, by certified or cashier's check or by corporate check, at Buyer's option,
to Seller an amount equal to the difference between the Purchase Price or the
Pro Rata Purchase Price, whichever applies, and the Sale Consideration;
provided, however, that notwithstanding the foregoing, the maximum amount of the
Price Adjustment that Buyer is obligated to pay Seller pursuant to this Section
3.4.2 shall be the amount that is equal to the product of the number of shares
of Western Water Stock to which Seller is entitled pursuant to this Agreement
multiplied by one-half (1/2) of the Per Share Value. The Price Adjustment shall
be paid within thirty (30) days of Buyer's receipt from Seller of all broker
slips substantiating the Sale Consideration for the portion of Western Water
Stock sold during the Sale Period.
3
<PAGE> 4
3.4.2.1 Example. By way of example, if
Seller is entitled to receive sixteen thousand (16,000) shares of Western Water
Stock pursuant to this Agreement, and if the Per Share Value is Twenty Dollars
($20.00), then the maximum amount Seller would be entitled to receive from
Western Water, as a Price Adjustment pursuant to Section 3.4.2, would be One
Hundred Sixty Thousand Dollars ($160,000.00), calculated by multiplying sixteen
thousand (16,000) by Ten Dollars ($10.00) (which is one-half (1/2) of the Per
Share Value). If, therefore, Seller sold all of the Western Water Stock during
the Sale Period and the Sale Consideration equaled Three Hundred Thousand
Dollars ($300,000.00), then Buyer would pay Twenty Thousand Dollars ($20,000.00)
to Seller pursuant to Section 3.4.2. Moreover, if Seller sold one-half (1/2) of
the Western Water Stock during the Sale Period and the Sale Consideration
equaled One Hundred Fifty Thousand Dollars ($150,000.00), then Buyer would pay
Ten Thousand Dollars ($10,000.00) to Seller pursuant to Section 3.4.2. If,
however, Seller sold all of the Western Water Stock during the Sale Period, and
the Sale Consideration equaled One Hundred Thirty Thousand Dollars
($130,000.00), then Buyer would pay One Hundred Sixty Thousand Dollars
($160,000.00) to Seller pursuant to Section 3.4.2.
3.4.3 Security For Price Adjustment. Buyer's
obligation to pay to Seller any Price Adjustment due hereunder shall be secured
pursuant to the terms of that certain security agreement (the "Security
Agreement"), substantially in the form of Exhibit "D" attached hereto and
incorporated herein by reference. Pursuant to the Security Agreement, Buyer
shall pledge the Purchase Water Rights as security for payment of the Price
Adjustment and shall grant to Seller a security interest therein. The Security
Agreement shall provide that, if Buyer fails to pay all or any portion of the
Price Adjustment due hereunder, then Seller shall be entitled to foreclose on
that portion of the Purchase Water Rights that is calculated by dividing the
unpaid portion of the Price Adjustment (plus all reasonable attorneys' fees,
costs and expenses incurred by Seller in the foreclosure) by the Per Acre Foot
Price. By way of example, if the Price Adjustment due hereunder is Thirty
Thousand Dollars ($30.000.00), and Buyer fails to pay Seller the Price
Adjustment and Seller incurs $2,000.00 of reasonable foreclosure expenses, then
Seller shall be entitled to foreclose on ten (10) acre feet of the Purchase
Water Rights (calculated by dividing $32,000 by $3,200) pursuant to the Security
Agreement.
3.4.4 Expiration of Price Adjustment. Notwithstanding
anything contained in this Section 3.4 to the contrary, there shall be no
adjustment, and the price adjustment made pursuant to this Section 3.4 shall
expire and be of no further force and effect, for any portion of the Western
Water Stock that Seller fails to sell during the Sale Period.
4
<PAGE> 5
3.4.5 Redemption of Western Water Stock. If the
effectiveness of the Registration Filing is suspended or terminated by the
Commission during the Sale Period and such suspension or termination is still in
effect on the first anniversary of the Closing Date, then Seller shall have the
right to demand that Buyer redeem the Western Water Stock for a price equal to
the Per Share Value. Any such redemption request shall be made in writing during
the thirty (30) day period following the first anniversary of the Closing Date.
The redemption rights shall expire at the end of such thirty (30) day period.
The shares of Western Water Stock shall be redeemed by Buyer within ten (10)
business days following receipt of such redemption request.
4. Option.
4.1 Grant of Option. In consideration of the mutual covenants
and promises herein contained, the Parties hereby agree that Seller shall have
an option (the "Option") but not the obligation to sell the Option Water Rights
in accordance with the terms and conditions set forth herein.
4.2 Option Term. The term of the Option ("Option Term") shall
commence on the Closing Date and shall expire one (1) year thereafter, unless
earlier terminated by Seller (which termination can only be exercised by Seller
after the expiration of the initial Sale Period defined in Section 3.4.1) or
extended by mutual agreement of the Parties. Should Seller not exercise its
option to sell all of the Option Water Rights within the Option Term for any
reason other than the breach by Seller of any of its covenants, representations
or warranties hereunder or the failure of any of Seller's conditions herein
contained, then upon the expiration of the Option Term, the Option shall
terminate as to the unexercised portion of the Option Water Rights and both
Parties shall be released from their obligations under this Section 4.
4.3 Option Price. The purchase price (the "Option Purchase
Price") for the Option Water Rights shall be calculated by multiplying the Per
Acre Foot Price by the portion of Option Water Rights that Seller elects to sell
at each Option Closing (defined below).
4.4 Payment of Option Price. The Option Purchase Price shall
be paid by Buyer to Seller with Western Water Stock. Accordingly, the provisions
of Sections 3.2, 3.3 and 3.4 of this Agreement shall apply to the payment of the
Option Purchase Price, except that: (a) the Per Share Value shall be the average
of the last trading price, as reported by Nasdaq, of Buyer's shares during the
twenty (20) trading days immediately preceding an Option Closing Date (defined
below); (b) the Registration
5
<PAGE> 6
Filing shall be prepared and filed as soon as possible following Buyer's receipt
of Seller's Exercise Notice; (c) with respect to the portion of Option Water
Rights Seller elects to sell, the Sale Period shall commence on the Option
Closing Date and continue for ninety (90) days thereafter; and (d) Buyer and
Seller shall execute a Security Agreement securing payment of the Price
Adjustment for each portion of Option Water Rights Seller elects to sell to
Buyer.
4.5 Exercise of Option.
4.5.1 Portion of Option Water Rights. Seller may
exercise the Option at any time and from time to time as to any portion of the
Option Water Rights; provided, however, that Seller shall not elect to sell less
than one hundred (100) acre feet per year of Option Water Rights at any one
time.
4.5.2 Exercise. Seller shall exercise the Option by
delivering to Buyer written notice ("Exercise Notice") of Seller's election to
exercise the Option. The Exercise Notice shall specify the portion of Option
Water Rights that are the subject of such exercise. Unless and until Seller
shall exercise the option as to any portion of the Option Water Rights, Seller
shall have no obligation to sell such Option Water Rights to Buyer.
5. Closing.
5.1 Closing Date. The closing for the sale of the Purchase
Water Rights shall occur on the date ("Closing Date") that the Registration
Filing is declared effective by the Commission.
5.2 Option Closing. The consummation of the purchase and sale
of the portion of Option Water Rights for each exercise of the Option ("Option
Closing") shall occur on the date ("Option Closing Date") that the Registration
Filing prepared and filed in connection with the Option Water Rights is declared
effective by the Commission.
5.3 Closing Notice. Pursuant to the Commission's rules, Buyer
is required to give the Commission forty-eight (48) hours' prior written notice
of its desire to have the Registration Filing declared effective (an
"Acceleration Request"), which notice is required to state the date and time on
which such Registration Filing shall be declared effective. Buyer hereby agrees
to deliver a copy of the foregoing Acceleration Request to the Seller
concurrently with the delivery of such notice to the Commission. The Parties
agree to schedule the Purchase Closing and the Option Closing for the time and
day specified in the Acceleration Request.
6
<PAGE> 7
5.4 Closing. The Grant Deed, Bill of Sale, Security Agreement,
and all other closing documents and certificates shall be dated as of the date
that the Registration Filing is actually declared effective (whether or not such
date is the date requested in the Acceleration Request), shall be delivered at
such time as telephonic confirmation of the effectiveness is received by Buyer
and Seller, at which time the Bill of Sale shall be delivered to Buyer, the
Security Agreement shall be delivered to Seller, and the Grant Deed shall be
delivered to Buyer and recorded in the official records of the County Recorder
for the County of Los Angeles, State of California. In the event that the Grant
Deed is not recorded on the Closing Date, the Grant Deed shall be recorded as
soon thereafter as possible.
6. Seller's Conditions for Sale. Seller's obligations to sell the Water
Rights pursuant to this Agreement shall be subject to satisfaction or waiver by
Seller, in its sole and absolute discretion, of the following conditions as of
the Closing Date and each Option Closing Date, whichever applies:
6.1 Registration Filing. The Registration Filing shall have
become effective with the Commission.
6.2 Board Approval. The Boards of Directors of Buyer and
Seller shall have approved this Agreement and the transactions contemplated
hereby.
6.3 Buyer's Performance. Buyer shall have performed all
obligations to be performed by Buyer pursuant to this Agreement, and Buyer's
representations, warranties and covenants set forth herein shall be true and
correct.
7. Buyer's Conditions for Purchase. Buyer's obligations to purchase the
Water Rights pursuant to this Agreement shall be subject to satisfaction or
waiver by Buyer, in its sole and absolute discretion, of the following
conditions as of the Closing Date and each Option Closing Date, whichever
applies:
7.1 Marketable Title. Seller shall possess good and marketable
title to the Water Rights, free and clear of all liens, encumbrances, lis
pendens, other notices of pending actions, leases, tenancies, claims, defects,
and other interests not approved or consented to by Buyer.
7.2 Third-Party Approvals. Seller shall have obtained all
necessary written approvals from the State of California Department of Water
Resources, Southern District (the "Watermaster") for the transfer of the Water
Rights to Buyer.
7.3 No Adverse Changes. There shall be no material adverse
change affecting the Water Rights.
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7.4 Litigation. No action, suit, investigation or proceeding
shall have been instituted or threatened to restrain or prohibit or otherwise
challenge the legality or validity of the transactions contemplated hereby.
7.5 No Moratorium. There shall be no moratorium, prohibition
or any other measure, rule, regulation or restriction, whose effect would be to
preclude the resale by Buyer of any of the Water Rights to be purchased by Buyer
hereunder.
7.6 Registration Filing. The Registration Filing shall have
become effective with the Commission.
7.7 Board Approval. The Boards of Directors of Buyer and
Seller shall have approved this Agreement and the transactions contemplated
hereby.
7.8 Seller's Performance. Seller shall have performed all
obligations to be performed by Seller pursuant to this Agreement, and Seller's
representations, warranties and covenants set forth herein shall be true and
correct.
8. Seller's Files. Seller hereby agrees to make available to Buyer for
Buyer's review prior to the Closing Date all files, records, surveys, tests,
studies, investigative reports, documents and other information, including
without limitation information stored or reduced to computer records or on
diskettes (collectively the "Historical Data"), relating to or concerning the
Water Rights in Seller's custody, control or possession. The right to review the
Historical Data shall be co-extensive with the term of this Agreement, the
Option Term or any extension hereof or thereof, respectively.
9. Deliveries At Closing.
9.1 By Seller. On the Closing Date, and each Option Closing
Date, whichever applies, Seller shall deliver to Buyer the Grant Deed, the Bill
of Sale and all other assignments, deeds, instruments and agreements, including
without limitation the Watermaster's approval, duly executed and, where
applicable, acknowledged, necessary to transfer to Buyer all of Seller's right,
title and interest in and to the Purchase Water Rights or Option Water Rights,
whichever applies.
9.2 By Buyer. On the Closing Date, and each Option Closing
Date, whichever applies, Buyer shall deliver to Seller the Security Agreement
and the duly executed certificate(s) for the Western Water Stock showing Seller
as the registered owner of the Western Water Stock.
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<PAGE> 9
10. Representations and Warranties of Seller. Seller makes the
following representations, warranties and covenants to Buyer:
10.1 Due Organization. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of California.
10.2 Title. Seller owns the Water Rights in fee simple
absolute and has good and marketable title thereto, subject to no liens, claims
or encumbrances other than those disclosed by Seller to Buyer in writing. Seller
has not alienated, encumbered, transferred, optioned, leased, assigned, or
otherwise conveyed its interest or any portion of its interest in the Water
Rights or any portion thereof, nor has Seller entered into any agreement (other
than this Agreement) to do so.
10.3 Corporate Power and Authority. Subject to obtaining
approval of the Board of Directors of Seller, Seller has full right, power and
authority to enter into this Agreement and to perform its obligations hereunder,
and the persons executing this Agreement on behalf of Seller have the right,
power and authority to do so.
10.4 Enforceability. Subject to approval of the Board of
Directors of Seller, this Agreement constitutes the legal, valid and binding
obligation of Seller enforceable against Seller in accordance with its terms. To
Seller's best knowledge, neither this Agreement nor the consummation of any of
the transactions contemplated hereby violates or shall violate any provision of
any agreement or document to which Seller is a party or to which Seller is
bound.
10.5 Hazardous Materials. Seller has not used Hazardous
Material (defined in Section 15 below) with respect to the Water Rights in any
manner which violated or violates Environmental Requirements (also defined in
Section 15 below), and that, to Seller's actual knowledge, no prior tenant,
subtenant or user of any of the Water Rights or any predecessor thereof has used
Hazardous Materials with respect to the Water Rights in any manner which
violated or violates any Environmental Requirements. Except for the Clean-up
Abatement Order No. 93-082 (the "Abatement Order") issued to Seller by the
California Regional Water Quality Control Board Los Angeles Region on December
21, 1993, Seller has never received any notice of any violation of Environmental
Requirements in regard to the Water Rights and, to Seller's actual knowledge, no
actions or proceedings have been commenced or threatened by any person alleging
noncompliance with any Environmental Requirements in regard to the Water Rights.
Seller is not in default under the Abatement Order and, in accordance with
Section 13 hereof, Seller shall save, indemnify, hold harmless and defend Buyer
with respect to the provisions of the Abatement Order.
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<PAGE> 10
10.6 No Default. Seller has received no written notice, and to
Seller's best knowledge Seller has received no oral notice, that any event has
occurred which with the giving of notice or the passage of time, or both, would
constitute a default, and to Seller's best knowledge Seller is not in default,
under any contract, transaction, agreement, covenant, condition, restriction,
lease, easement, encumbrance or instrument pertaining to the Water Rights.
10.7 No Conflicts. To Seller's best knowledge, there is not
now, nor will the closing of the transaction contemplated by this Agreement
constitute, any material violation of any law, ordinance, rule or regulation, or
any violation of any administrative or judicial order affecting the Water
Rights, including without limitation the Plan (defined in Section 10.13 below)
and that certain Judgment (Declaring and establishing water rights in Central
Basin and enjoining extractions therefrom in excess of specified quantities)
filed on October 18, 1965 in California Superior Court, County of Los Angeles,
Case No. 786,656, entitled Central and West Basin Water Replenishment District,
etc., Plaintiff, vs. Charles E. Adams, et al., Defendants, and related cross
actions.
10.8 No Litigation. There is no suit, action or arbitration,
or legal, administrative, or other proceeding or governmental investigation,
formal or informal, including but not limited to eminent domain or condemnation
proceeding, or zoning change proceeding, pending or threatened, or any judgment,
moratorium or other government policy or practice which affects the Water
Rights.
10.9 No Other Agreements. Seller has made no oral or written
commitments or representations to, or understandings or agreements with, any
Governmental Authority which would in any way be binding on Buyer or would
interfere with Buyer's ability to sell, transfer or use the Water Rights, and
Seller will not make or enter into any such commitment, representations,
understandings or agreements without Buyer's written consent prior to the
expiration of the Option term.
10.10 Full Disclosure. Seller has made available to Buyer all
Historical Data in Seller's possession concerning the Water Rights.
10.11 No Liens. There are no liens (including without
limitation, mechanics liens), claims, encumbrances, easements, covenants,
conditions, restrictions or other matters of record affecting title to the Water
Rights which Seller has not disclosed to Buyer.
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<PAGE> 11
10.12 No Other Consents Needed. Other than the consent of the
Watermaster, no consent from any third party or any Governmental Authority is
required before Seller may sell the Purchase Water Rights and grant or sell the
Option Water Rights to Buyer pursuant to this Agreement.
10.13 No Bankruptcy or Insolvency. Except as disclosed below,
neither Seller nor any entity or person that directly or indirectly owns or
controls Seller is bankrupt or insolvent under any applicable Federal or state
standard, or has filed for protection or relief under any applicable bankruptcy
or creditor protection statute or has been threatened by creditors with an
involuntary application of any applicable bankruptcy or creditor protection
statute. Seller is not entering into the transactions described in this
Agreement with an intent to defraud any creditor or to prefer the rights of one
creditor over any other. Seller and Buyer have negotiated this at arms-length
and the consideration to be paid represents fair value for the Water Rights.
Seller has disclosed to Buyer that Seller and Seller's parent company, Golden
West Distribution Company, are reorganized debtors pursuant to that certain plan
of reorganization (the "Plan"), dated February 28, 1995, and that the sale and
option contemplated in this Agreement are not prohibited by the Plan.
10.14 No Untrue Statements or Omissions. Neither this
Agreement nor any of the Exhibits hereto, nor any document, certificate, or
statement referred to herein or furnished by Seller to Buyer in connection with
the transaction contemplated herein (whether delivered prior to, simultaneously
with, or subsequent to the execution of this Agreement) contains any untrue
statement of material fact or omits to state a material fact in any way
concerning the Water Rights or otherwise affecting or concerning the
transactions contemplated hereby.
All representations, warranties and covenants of Seller in this
Agreement are made as of the date of this Agreement, and as of the Closing and
each Option Closing and shall survive the Closing and each Option Closing
hereunder and the recordation of any Grant Deed or execution and delivery of any
bill of sale for a period of four (4) years thereafter. It shall be a material
default if Seller is unable to make such representations and warranties
truthfully as of the Closing Date and each Option Closing Date.
11. Representations and Warranties of Buyer. Buyer makes the following
representations, warranties and covenants to Seller:
11.1 Due Organization. Buyer is a corporation duly organized,
validly existing and in good standing under the laws
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of the State of Delaware, qualified to do and doing business in the State of
California.
11.2 Corporate Power and Authority. Subject to obtaining
approval of the Board of Directors of Buyer, Buyer has the right, power and
authority to enter into this Agreement and to perform its obligations hereunder,
and the person(s) executing Agreement on behalf of Buyer have the right, power
and authority to do so.
11.3 Enforceability. Subject to obtaining approval of the
Board of Directors of the Buyer, this Agreement constitutes the legal, valid and
binding obligation of the Buyer enforceable against Buyer in accordance with its
terms. To Buyer's best knowledge, neither this Agreement nor the consummation of
any of the transactions contemplated hereby violates or shall violate any
provision of any agreement or document to which Buyer is a party or to which
Buyer is bound.
11.4 No Default. Buyer has received no written notice, and to
Buyer's best knowledge Buyer has received no oral notice, that any event has
occurred which with the giving of notice or the passage of time, or both, would
constitute a default, and to Buyer's best knowledge Buyer is not in default,
under any contract, transaction, agreement, covenant, condition, restriction,
lease, easement, encumbrance or instrument which would prohibit Buyer from
purchasing the Water Rights.
11.5 No Conflicts. To Buyer's best knowledge, there is not
now, nor will the closing of the transaction contemplated by this Agreement
constitute, any material violation of any law, ordinance, rule or regulation, or
any violation of any administrative or judicial order which would prohibit Buyer
from purchasing the Water Rights.
11.6 No Litigation. There is no suit, action or arbitration,
or legal, administrative, or other proceeding or governmental investigation,
formal or informal, including but not limited to eminent domain or condemnation
proceeding, or zoning change proceeding, pending or threatened, or any judgment,
moratorium or other government policy or practice which seeks to enjoin or
prohibit Buyer from purchasing the Water Rights.
11.7 No Other Agreements. Buyer has made no oral or written
commitments or representations to, or understandings or agreements with, any
Governmental Authority which would in any way interfere with Buyer's ability to
purchase the Water Rights, and Buyer will not make or enter into any such
commitment, representations, understandings or agreements without Buyer's
written consent prior to the expiration of the Option term.
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11.8 No Bankruptcy or Insolvency. Neither Buyer nor any entity
or person that directly or indirectly owns or controls Buyer is bankrupt or
insolvent under any applicable Federal or state standard, or has filed for
protection or relief under any applicable bankruptcy or creditor protection
statute or has been threatened by creditors with an involuntary application of
any applicable bankruptcy or creditor protection statute. Buyer is not entering
into the transactions described in this Agreement with an intent to defraud any
creditor or to prefer the rights of one creditor over any other. Seller and
Buyer have negotiated this at arms-length and the consideration to be paid
represents fair value for the Water Rights.
11.9 No Untrue Statements or Omissions. Neither this Agreement
nor any of the Exhibits hereto, nor any document, certificate, or statement
referred to herein or furnished by Buyer to Seller in connection with the
transaction contemplated herein (whether delivered prior to, simultaneously
with, or subsequent to the execution of this Agreement) contains any untrue
statement of material fact or omits to state a material fact in any way
concerning the Water Rights or otherwise affecting or concerning the
transactions contemplated hereby.
All representations and warranties of Buyer in this Agreement are made
as of the date of this Agreement, and as of the Closing and each Option Closing
and shall survive the Closing and each Option Closing hereunder and the
recordation of any Grant Deed or execution and delivery of any bill of sale for
a period of four (4) years thereafter. It shall be a material default if Buyer
is unable to make such representations and warranties truthfully as of the
Closing Date and each Option Closing Date.
12. No Sale or Encumbrance. Seller shall not, directly or indirectly,
alienate, encumber, transfer, option, lease, assign, sell, transfer or convey
its right, title or interest, or any portion of its right, title or interest, in
the Water Rights or any portion thereof so long as Buyer is not in breach of
this Agreement and so long as this Agreement, or any extension thereof, is in
force and the Option Term, or any extension thereof, has not expired or has not
been terminated by Seller in accordance with Section 4.2.
13. Indemnity.
13.1 Indemnity by Golden West. Seller agrees to save,
indemnify, hold harmless and defend Buyer, its successors, assigns and
affiliates, and their respective officers, directors, controlling persons (if
any), employees, attorneys, agents, consultants, and shareholders (the "Buyer
Indemnitees") from, against and in respect of any and all claims, suits,
actions,
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proceedings (formal and informal), investigations, judgments, deficiencies,
damages, settlements, liabilities, and legal and other expenses (including
reasonable legal fees and expenses of attorneys chosen by the Buyer Indemnitees)
as and when incurred by any of the Buyer Indemnitees arising out of or based
upon any breach of any express representation, warranty, covenant, or agreement
of Seller contained in this Agreement or in any document, instrument, or
agreement executed and delivered by Seller in connection herewith.
13.2 Indemnity by Buyer. Buyer agrees to save, indemnify, hold
harmless and defend Seller and its respective successors, assigns and
affiliates, and their respective officers, directors, controlling persons (if
any), employees, attorneys, agents, consultants, and shareholders (collectively
the "Seller Indemnitees") from, against and in respect of any and all claims,
suits, actions, proceedings (formal and informal), investigations, judgments,
deficiencies, damages, settlements, liabilities, and legal and other expenses
(including reasonable legal fees and expenses of attorneys chosen by the Seller
Indemnitees) as and when incurred by any of the Seller Indemnitees arising out
of or based upon any breach of any express representation, warranty, covenant,
or agreement of Buyer contained in this Agreement or in any document, instrument
or agreement executed and delivered by Buyer hereunder or in connection
herewith.
13.3 Defense of Claims. No right to indemnification under this
Section 13 shall be available to any Buyer Indemnitee or Seller Indemnitee
unless the Party seeking indemnification (the "Indemnified Party") shall have
given to the Party obliged to provide indemnification (the "Indemnitor") to such
Indemnified Party a notice (a "Claim Notice") describing in reasonable detail
the facts giving rise to any claim for indemnification hereunder promptly after
receipt of knowledge of the facts upon which such claim is based. Upon receipt
by the Indemnitor of a Claim Notice from an Indemnified Party with respect to a
claim of a third party, such Indemnitor may assume the defense thereof with
counsel reasonably satisfactory to the Indemnified Party and the Indemnified
Party shall cooperate in the defense or prosecution thereof and shall furnish
such records, information, and testimony and attend all such conferences,
discovery proceedings, hearings, trials and appeals as may be reasonably
requested by the Indemnitor in connection therewith. If the Indemnitor assumes
such defense as provided above, then: (a) the Indemnified Party shall have the
right to employ its own counsel in any such case, but the fees and expenses of
such counsel shall be at the expense of the Indemnified Party; and (b) the
Indemnitor shall have the right, in its sole discretion, to settle any claim for
which indemnification has been sought and is available hereunder, provided the
Indemnified Party is fully released from all known
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and unknown claims of such third party and the Indemnified Party is not
obligated to perform any actions or pay any money on account of such settlement.
If the Indemnitor does not assume such defense as provided above, then: (a) the
Indemnified Party shall have the right to employ its own counsel in any such
case, and the fees and expenses of such counsel shall be at the expense of
Indemnitor; and (b) the Indemnified Party shall have the right, in its sole
discretion, to settle any claim for which indemnification has been sought and is
available hereunder.
14. Miscellaneous Provisions.
14.1 Further Actions. At any time and from time to time after
the date hereof, each of the Parties agrees to take such actions and to execute
and deliver such documents as each of the other Parties may reasonably request
to effectuate the purposes of this Agreement.
14.2 Amendment. Neither this Agreement nor any provision
hereof may be waived, modified, amended, discharged, or terminated except by an
instrument in writing signed by the Party against which the enforcement of such
writing is sought, and then only to the extent set forth in such writing.
14.3 Entire Agreement. This Agreement and the agreements
provided for herein constitute the entire understanding among the Parties with
respect to the matters set forth herein and supersede all prior or
contemporaneous understandings or agreements among the Parties with respect to
the subject matter hereof, whether oral or written.
14.4 Notices. Any notice, approval, consent, waiver or other
communication required or permitted to be given or to be served upon any of the
Parties in connection with this Agreement shall be in writing. Such notice shall
be personally served, sent by facsimile, telegram, or cable, or sent prepaid by
registered or certified mail with return receipt requested, or sent by reputable
overnight delivery service, such as Federal Express, and shall be deemed given:
(a) if personally served, when delivered to the Party to whom such notice is
addressed; (b) if given by facsimile, telegram, or cable, when sent; (c) if
given by prepaid or certified mail with return receipt requested, on the date of
execution of the return receipt; or (d) if sent by reputable overnight delivery
service, such as Federal Express, when received. Any notice given by facsimile,
telegram, or cable shall be confirmed in writing, and the Party sending the
notice shall deliver or send such confirmation by any of the other means of
delivery set forth in this Section 14.4, within forty-eight (48) hours after
notice was sent by facsimile, telegram or cable. Such notices shall be addressed
to the Party to whom such notice is to be given at the Party's address set forth
below or as such
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Party shall otherwise direct in a writing to all other Parties delivered or sent
in accordance with this Section 14.4.
If to Seller to: Golden West Refining Company
13539 East Foster Road
Santa Fe Springs, CA 90670
Attn: J. Roger Kemple, President
Fax No. (310) 921-7510
If to Buyer to: Western Water Company
4660 La Jolla Village Drive, Suite 680
San Diego, CA 92122
Attn: Peter L. Jensen, President
Fax No. (619) 535-9260
14.5 Binding Effect; Assignment. Neither this Agreement nor
any of the rights, interests, or obligations hereunder shall be assignable or
delegable by any Party without the other Party's prior written consent, which
shall not be unreasonably withheld. Subject to the foregoing, the provisions of
this Agreement shall be binding upon and inure to the benefit of the Parties
hereto and their respective affiliates, parent corporations, subsidiaries,
assigns, successors-in-interest, personal representatives, administrators,
heirs, devisees and legatees. Any assignment or delegation made in violation of
this Agreement shall be null and void and of no force or effect.
14.6 Controlling Law. This Agreement shall be governed by,
construed and interpreted in accordance with the laws of the State of
California, without giving effect to any choice-of-law or conflicts-of-laws rule
or principle that would result in the application of any other laws.
14.7 Headings. Headings, titles and captions are for
convenience only and shall not constitute a portion of this
Agreement or be used for the interpretation thereof.
14.8 Waiver. Any waiver of any provision or of any breach of
any provision of this Agreement must be in writing, and any waiver by any Party
of any breach of any provision of this Agreement shall not operate as or be
construed to be a waiver of any other breach of that provision or of any breach
of any other provision of this Agreement. The failure of any Party to insist
upon strict adherence to any term of the Agreement on one or more occasions will
not be considered or construed or deemed a waiver of any provision or any breach
of any provision of this Agreement or deprive that Party of the right thereafter
to insist upon strict adherence to that term or provision or any other term or
provision of this Agreement. No delay or omission on the part of any of the
Parties in exercising any right under this Agreement
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shall operate as a waiver of any such right or any other right under this
Agreement.
14.9 Liberal Construction. This Agreement constitutes a fully
negotiated agreement among commercially sophisticated Parties, each assisted by
legal counsel, and the terms of this Agreement shall not be construed or
interpreted for or against any Party hereto because that Party or his or its
legal representative drafted such provision.
14.10 Severability. If any provision of this Agreement is
invalid, illegal or unenforceable, such provision shall be deemed to be severed
or deleted from this Agreement and the balance of this Agreement shall remain in
full force and effect notwithstanding such invalidity, illegality or
unenforceability.
14.11 Good Faith and Fair Dealing. The Parties hereto
acknowledge and agree that the performances required by the provisions of this
Agreement shall be undertaken in good faith, and with all Parties dealing fairly
with each other.
14.12 No Third Party Beneficiaries. Subject to Section 13
hereof, this Agreement does not create, and shall not be construed to create,
any rights enforceable by any person, partnership, corporation, joint venture,
limited liability company or other form of organization or association of any
kind that is not a party to this Agreement.
14.13 Execution in Counterparts; Facsimile Signatures. This
Agreement 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. The signature page of any counterpart may be detached therefrom
without impairing the legal effect of the signature(s) thereon, provided such
signature page is attached to any other counterpart identical thereto except
having additional signature page(s) executed by one or more of the other
Parties. Each of the Parties agrees that each of the other Parties may rely upon
the facsimile signature of any party on this Agreement as constituting a duly
authorized, irrevocable, actual, current delivery of this Agreement as fully as
if this Agreement contained the original ink signature of the Party or Parties
supplying a facsimile signature.
14.14 Time of the Essence. Time is of the essence of each and
every provision of this Agreement. Unless business days are expressly provided
for, all references to "days" herein shall refer to consecutive calendar days.
If a Closing Date, Option Closing Date or any other date or time period provided
for in this Agreement is or ends on a Saturday, Sunday or Federal,
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state or legal holiday, then such date shall automatically be extended to the
next day which is not a Saturday, Sunday or Federal, state or legal holiday.
14.15 Cumulative Rights. The rights created under this
Agreement, or by law or equity, shall be cumulative and may be exercised at any
time and from time to time. No failure by any Party to exercise, and no delay in
exercising, any rights shall be construed or deemed to be a waiver thereof, nor
shall any single or partial exercise by any Party preclude any other or future
exercise thereof or the exercise of any other right.
14.16 Attorneys' Fees. Should any Party to this Agreement
reasonably retain counsel for the purpose of enforcing any provision of this
Agreement, including without limitation instituting any action or proceeding to
enforce any provision of this Agreement, for damages or injunctive or other
relief by reason of any alleged breach of any provision of this Agreement, for a
declaration based on a demonstrated necessity of such Party's rights or
obligations under this Agreement, or for any other judicial or equitable remedy,
then if the matter is settled by judicial or quasi-judicial determination
(including arbitration, if such arbitration is agreed to by the Parties), the
prevailing Party or Parties shall be entitled, in addition to such other relief
as may be granted, to be reimbursed by the losing Party or Parties for all costs
and expenses incurred, including without limitation all attorneys' fees and
costs for services rendered to the prevailing Party or Parties and any
attorneys' fees and costs incurred in enforcing any judgment or order entered.
The prevailing Party or Parties shall be determined by the court (or arbitrator,
if arbitration is agreed to by the Parties) in the initial or any subsequent
proceeding.
15. Definitions. For the purposes of this Agreement the following terms
shall have the following meanings:
15.1 Hazardous Material. The term "Hazardous Material" shall
mean any material or substance that, whether by its nature or use, is now or
hereafter defined as hazardous waste, hazardous substance, pollutant or
contaminant under any Environmental Requirement (hereinafter defined), or which
is toxic, explosive, corrosive, flammable, infectious, radioactive,
carcinogenic, mutagenic or otherwise hazardous and which is now or hereafter
regulated under any Environmental Requirement, or which is or contains
petroleum, gasoline, diesel fuel or another petroleum hydrocarbon product or
material.
15.2 Environmental Requirements. The term "Environmental
Requirements" shall mean collectively all present and future laws, statutes,
ordinances, rules, regulations, orders, codes, licenses, permits, decrees,
judgments, directives
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or the equivalent of or by any Governmental Authority (hereinafter defined) and
relating to or addressing the protection of the environment or human health or
safety.
15.3 Governmental Authority. The term "Governmental Authority"
shall mean the Federal government, or any state or other political subdivision
thereof, or any agency, court or body of the Federal government, any state or
other political subdivision thereof, exercising executive, legislative,
judicial, regulatory or administrative functions.
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first above written.
"Seller"
GOLDEN WEST REFINING COMPANY,
a California corporation
By: /s/ J. ROGER KEMPLE
----------------------------
J. Roger Kemple,
Senior Vice President
"Buyer"
WESTERN WATER COMPANY,
a Delaware corporation
By: /s/ PETER L. JENSEN
-----------------------------
Peter L. Jensen,
President
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EXHIBIT "C"
REGISTRATION FILING
1. CERTAIN DEFINITIONS.
As used in this Exhibit "C", the following terms shall have
the following respective meanings:
a. AFFILIATE of a specified Person means any other Person that
directly, or indirectly through one or more intermediates, controls, is
controlled by or is under common control with the Person specified, or who holds
or beneficially owns fifty percent (50%) or more of the equity interest in the
Person specified or fifty percent (50%) or more of any class of voting
securities of the Person specified. A managed account of a Person is also an
Affiliate of such Person.
b. REGISTRATION FILING means the registration statement filed
by Buyer to register the Shares.
c. EXCHANGE ACT means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated thereunder.
d. REGISTRATION EXPENSES means all expenses incident to the
performance of or compliance with the registration rights granted herein,
including, without limitation, all registration, filing, listing and NASD fees,
all fees and expenses of complying with securities or blue sky laws, all word
processing, duplicating, and printing expenses, messenger and delivery expenses,
the fees and expenses of the Buyer's counsel, the fees and expenses of the
Buyer's independent public accountants.
e. PERSON means any individual, corporation, partnership,
joint venture, association, joint-stock company, limited liability company,
trust, unincorporated organization or government or other agency or political
subdivision thereof.
f. SHARES means the shares of Buyer's common stock that are
included for registration in any Registration Filing.
2. REGISTRATION OBLIGATIONS.
a. REGISTRATION STATEMENT FORM. Buyer shall prepare and file a
registration statement on Form S-3 (or any successor or similar short form
registration statement).
b. EXPENSES. The Buyer shall pay all Registration Expenses
incurred in connection with the Registration Filing.
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3. REGISTRATION PROCEDURES.
a. Buyer, as expeditiously as possible and subject to the
terms and conditions herein, will:
i. prepare and file with the Commission the requisite
registration statement to effect such registration and use its best efforts to
cause such registration to become effective;
ii. prepare and file with the Commission such
amendments and supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to keep such registration
statement effective and to comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such registration
statement until the earlier of (x) two years from the effective date of the
Registration Filing or (y) such time as all of the shares of Western Water Stock
included in a Registration Filing and actually issued to Seller have been
disposed of by Seller. The foregoing two (2) year period will be extended by one
(1) day for each day that Seller is unable to sell any of its Shares because
either (i) the Registration Filing has been withdrawn, suspended or otherwise
terminated, (ii) the Shares have not been approved for trading on the exchange
on which the shares of Buyer's common stock are then listed, or (iii) the Shares
have not been qualified for resale in the blue sky jurisdictions that Seller has
reasonably requested before the effectiveness of the Registration Filing;
iii. furnish to Seller such number of conformed
copies of such registration statement and of each such amendment and supplement
thereto (in each case including all exhibits), such number of copies of the
prospectus contained in such registration statement (including each preliminary
prospectus and any summary prospectus) and any other prospectus filed under Rule
424 under the Securities Act, in conformity with the requirements of the
Securities Act, and such other documents, as Seller may reasonably request;
iv. use its best efforts to register or qualify all
Shares covered by such registration statement under such other United States
state securities or blue sky laws of such jurisdictions as Seller shall
reasonably request, to keep such registration statement qualification in effect
for so long as such registration remains in effect, and take any other action
which may be reasonably necessary or advisable to enable Seller to consummate
the disposition in such jurisdictions of the securities owned by Seller, except
that the Buyer shall not for any such purpose be required to: (a) qualify
generally to do business as a foreign corporation in any jurisdiction wherein it
would not but for the requirements of this subdivision (iv) be
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obligated to be so qualified; (b) subject itself to taxation in any such
jurisdiction; or (c) consent to general service of process in any such
jurisdiction;
v. use its best efforts to cause all Shares covered
by such registration statement to be registered with or approved by such other
United States state governmental agencies or authorities as may be necessary to
enable Seller to consummate the disposition of such Shares;
vi. immediately notify Seller at any time when a
prospectus relating thereto is required to be delivered under the Securities
Act, of the happening of any event as a result of which the prospectus included
in such registration statement, as then in effect, includes an untrue statement
of a material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading in the light
of the circumstances under which they were made, and at the request of Seller
promptly prepare and furnish to Seller a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be necessary so that, as
thereafter delivered to the purchasers of such securities, such prospectus shall
not include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances under which they were made;
vii. provide a transfer agent and registrar for all
Shares covered by such registration statement not later than the effective date
of such registration statement; and
viii. list all Shares covered by such registration
statement on any securities exchange on which any of the shares of Buyer's
common stock are then listed.
b. As a condition of filing the Registration Filing, the Buyer
may require the Seller, at its own expense, to furnish the Buyer with such
information and undertakings as it may reasonably request regarding such Seller
and the distribution of such securities as the Buyer may from time to time
reasonably request in writing, and Seller, by its execution hereof, agrees to
provide such information and make such undertakings as are requested.
c. Seller agrees: (i) that upon receipt of any notice from the
Buyer of the happening of any event of the kind described in subdivision (vi) of
Section 3(a), Seller will forthwith discontinue its disposition of Shares
pursuant to the registration statement relating to such Shares until Seller's
receipt of the copies of the supplemental or amended prospectus contemplated by
subdivision (vi) of Section 3(a) and, if so directed by the Buyer, will deliver
to the Buyer all copies,
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other than permanent file copies, then in Seller's possession of the prospectus
relating to such Shares current at the time of receipt of such notice; and (ii)
that Seller will immediately notify the Buyer, at any time when a prospectus
relating to the registration of such Shares is required to be delivered under
the Securities Act, of the happening of any event as a result of which
information previously furnished by Seller to the Buyer for inclusion in such
prospectus contains an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances under which they were
made. If Buyer or Seller shall give any such notice, the period referred to in
subdivision (ii) of Section 3(a) shall be extended by a number of days equal to
the number of days during the period from and including the giving of notice
pursuant to subdivision (vii) of Section 3(a) to and including the date when
Seller shall have received the copies of the supplemented or amended prospectus
contemplated by subdivision (vii) of Section 3(a).
4. INDEMNIFICATION; CONTRIBUTION. The parties hereto agree as follows
with respect to the preparation and use of a Registration Filing under this
Agreement:
a. To the extent permitted by applicable law, the Buyer shall
indemnify and hold harmless each Seller, each Person, if any, who controls such
Seller within the meaning of the Securities Act, and each officer, director,
partner, and employee of such Seller and such controlling Person, against any
and all losses, claims, damages, liabilities, and expenses (joint or several),
including attorneys' fees and disbursements and expenses of investigation,
incurred by such party pursuant to any actual or threatened action, suit,
proceeding, or investigation, or to which any of the foregoing Persons may
become subject under the Securities Act, the Exchange Act or other federal or
state laws, insofar as such losses, claims, damages, liabilities, and expenses
arise out of or are based upon any of the following statements, omissions, or
violations (collectively a "Violation"):
i. Any untrue statement or alleged untrue statement
of a material fact contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein, or any amendments
or supplements thereto;
ii. The omission or alleged omission to state therein
a material fact required to be stated therein, or necessary to make the
statements therein not misleading; or
iii. Any violation or alleged violation by the Buyer
of the Securities Act, the Exchange Act, any applicable
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state securities law or any rule or regulation promulgated under the Securities
Act, the Exchange Act or any applicable state securities law;
provided, however, that the indemnification required by this Section 4(a) shall
not apply to amounts paid in settlement of any such loss, claim, damage,
liability, or expense if such settlement is effected without the consent of the
Buyer (which consent shall not be unreasonably withheld), nor shall the Buyer be
liable in any such case for any such loss, claim, damage, liability, or expense
to the extent that it arises out of or is based upon a Violation which occurs in
reliance upon and in conformity with written information furnished to the Buyer
by the indemnified party expressly for use in connection with such registration;
provided, further, that the indemnity agreement contained in this Section 4
shall not apply to any underwriter to the extent that any such loss is based on
or arises out of an untrue statement or alleged untrue statement of a material
fact, or an omission or alleged omission to state a material fact, contained in
or omitted from any preliminary prospectus if the final prospectus shall correct
such untrue statement or alleged untrue statement, or such omission or alleged
omission, and a copy of the final prospectus has not been sent or given to such
person at or prior to the confirmation of sale to such person if such
underwriter was under an obligation to deliver such final prospectus and failed
to do so. Buyer shall also indemnify underwriters, selling brokers, dealer
managers and similar securities industry professionals participating in the
distribution, their officers, directors, agents and employees and each person
who controls such person (within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act) to the same extent as provided above with
respect to the indemnification of Seller.
b. To the extent permitted by applicable law, each Seller
shall indemnify and hold harmless the Buyer, each of its directors, each of its
officers who shall have signed the registration statement, each Person, if any,
who controls the Buyer within the meaning of the Securities Act, any other
Seller, any controlling Person of any such other Seller and each officer,
director, partner, and employee of such other Seller and such controlling
Person, against any and all losses, claims, damages, liabilities, and expenses
(joint and several), including attorneys' fees and disbursements and expenses of
investigation, incurred by such party pursuant to any actual or threatened
action, suit, proceeding, or investigation, or to which any of the foregoing
Persons may otherwise become subject under the Securities Act, the Exchange Act
or other federal or state laws, insofar as such losses, claims, damages,
liabilities, and expenses arise out of or are based upon any Violation, in each
case to the extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity with written
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information furnished by such Seller expressly for use in connection with such
registration; provided, however, that (i) the indemnification required by this
Section 4(b) shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability or expense if settlement is effected without the
relevant Seller's consent, which shall not be unreasonably withheld, and (ii) in
no event shall the amount of any indemnity under this Section 4(b) exceed the
Purchase Price, as defined in Section 3 of the Agreement.
c. Promptly after receipt by an indemnified party under this
Section 4 of notice of the commencement of any action, suit, proceeding,
investigation, or threat thereof, made in writing for which such indemnified
party may make a claim under this Section 4, such indemnified party shall
deliver to the indemnifying party a written notice of the commencement thereof
and the indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and disbursements and
expenses to be paid by the indemnifying party, if representation of such
indemnified party by the counsel retained by the indemnifying party would be
inappropriate due to actual or potential differing interests between such
indemnified party and any other party represented by such counsel in such
proceeding. The failure to deliver written notice to the indemnifying party
within a reasonable time following the commencement of any such action, if
prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
4 but shall not relieve the indemnifying party of any liability that it may have
to any indemnified party otherwise than pursuant to this Section 4. Any fees and
expenses incurred by the indemnified party (including any fees and expenses
incurred in connection with investigating or preparing to defend such action or
proceeding) shall be paid to the indemnified party, as incurred, within thirty
(30) days of written notice thereof to the indemnifying party (regardless of
whether it is ultimately determined that an indemnified party is not entitled to
indemnification hereunder). Any such indemnified party shall have the right to
employ separate counsel to any such action, claim, or proceeding and to
participate in the defense thereof, but the fees and expenses of such counsel
shall be the expenses of such indemnified party unless: (i) the indemnifying
party has agreed to pay such fees and expenses; or (ii) the indemnifying party
shall have failed to promptly assume the defense of such action, claim or
proceeding; or (iii) the named parties to any such action, claim, or proceeding
(including any impleaded parties) include both such indemnified party and the
indemnifying party, and such indemnified party shall have been advised by
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counsel that there may be one or more legal defenses available to it which are
different from or in addition to those available to the indemnifying party and
that the assertion of such defenses would create a conflict of interest such
that counsel employed by the indemnifying party could not faithfully represent
the indemnified party (in which case, if such indemnified party notifies the
indemnifying party in writing that it elects to employ separate counsel at the
expense of the indemnifying party, the indemnifying party shall not have the
right to assume the defense of such action, claim, or proceeding on behalf of
such indemnified party, it being understood, however, that the indemnifying
party shall not, in connection with any one such action, claim, or proceeding or
separate but substantially similar or related actions, claims, or proceedings in
the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys (together with appropriate legal counsel) at any time
for all such indemnified parties, unless in the reasonable judgment of such
indemnified party a conflict of interest may exist between such indemnified
party and any other of such indemnified parties with respect to such action,
claim, or proceeding, in which event the indemnifying party shall be obligated
to pay the fees and expenses of such additional counsel or counsel(s). No
indemnifying party shall be liable to an indemnified party for any settlement of
any action, proceeding, or claim without the written consent of the indemnifying
party, which consent shall not be unreasonably withheld.
d. If the indemnification required by this Section 4 from the
indemnifying party is unavailable to an indemnified party hereunder in respect
to any losses, claims, damages, liabilities, or expenses referred to in this
Section 4:
i. The indemnifying party, in lieu of indemnifying
such indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities, or
expenses in such proportion as is appropriate to reflect the relative fault of
the indemnifying party and indemnified parties in connection with the action
which resulted in such losses, claims, damages, liabilities, or expenses, as
well as any other relevant equitable considerations. The relative fault of such
indemnifying party and indemnified parties shall be determined by reference to,
among other things, whether any Violation has been committed by, or relates to
information supplied by, such indemnifying party or indemnified parties, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such Violation. The amount paid or payable by a party as a
result of the losses, claims, damages, liabilities, and expenses referred to
above shall be deemed to include, subject to the limitations set forth in
Section 4(a) and Section 4(b), any legal or other
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fees or expenses reasonably incurred by such party in connection with any
investigation or proceeding.
ii. The parties hereto agree that it would not be
just and equitable if contribution pursuant to this Section 4(d)(ii) were
determined by pro rata allocation or by any other method of allocation which
does not take into account the equitable considerations referred to in Section
4(d)(i). No Person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
Person who was not guilty of such fraudulent misrepresentation.
e. If indemnification is available under this Section 4, the
indemnifying parties shall indemnify each indemnified party to the full extent
provide in this Section 4 without regard to the relative fault of such
indemnifying party or indemnified party or any other equitable consideration
referred to in Section 4(c).
f. The obligations of the Buyer, and Seller under this Section
4 shall survive the completion of any offering of Shares pursuant to a
registration statement under this Agreement, and otherwise.
5. COVENANTS OF THE BUYER. Buyer hereby agrees and covenants as
follows:
a. Buyer shall file as and when applicable, on a timely basis,
all reports required to be filed by it under the Exchange Act.
b. Buyer shall not, directly or indirectly, (i) enter into any
merger, consolidation, or reorganization in which the Buyer shall not be the
surviving corporation or (ii) transfer or agree to transfer all or substantially
all the Buyer's assets, unless prior to such merger, consolidation,
reorganization, or asset transfer, the surviving corporation or the transferee,
respectively, shall have agreed in writing to assume the obligations of the
Buyer under this Agreement, and for that purpose references hereunder to
"Shares" shall be deemed to include the securities which Seller would be
entitled to receive in exchange for Shares pursuant to any such merger,
consolidation, or reorganization.
c. During the ninety (90) day period following the Closing
Date, Buyer shall not sell any shares of Buyer's common stock, or any securities
convertible into or exchangeable into shares of such common stock, in a public
offering registered under the Securities Act if the sales price of such shares
of common stock, or the conversion price of convertible securities, is less than
the Per Share Value.
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