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As filed with the Securities and Exchange Commission on June 25, 1997
Securities Act File No. 333-28759 Exchange Act File No. 0-18756
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
PRE-EFFECTIVE
AMENDMENT NO. 1
TO
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. [ ]
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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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PROSPECTUS
WESTERN WATER COMPANY
10,350 SHARES OF SERIES C CONVERTIBLE REDEEMABLE PREFERRED STOCK
880,312 SHARES OF COMMON STOCK
This Prospectus relates to the offer by the securityholders named
herein ("Selling Securityholders") for sale from time to time of the following
securities of Western Water Company, a Delaware corporation (the "Company"): (i)
9,000 outstanding shares of the Company's Series C Convertible Redeemable
Preferred Stock, $1,000 per share stated value ("Series C Preferred Stock"),
(ii) up to 1,350 shares of Series C Preferred Stock issuable as dividends on the
outstanding shares of Series C Preferred Stock that the Company may pay in lieu
of cash dividends, (iii) up to 622,744 shares of the Company's common stock,
$.001 par value ("Common Stock"), issuable upon the conversion of Series C
Preferred Stock, (iv) 88,238 shares of Common Stock currently outstanding, and
(v) 169,330 shares of Common Stock issuable upon the exercise of currently
outstanding stock purchase options granted under the Company's 1993 Stock Option
Plan (the "Options"). The Company will not receive any proceeds from the sale of
the Series C Preferred Stock or from the sale of the Common Stock offered
hereby. Upon the exercise of the Options, the Company will receive $2,255,948 in
the aggregate.
Each share of Series C Preferred Stock provides for dividends in the
amount of $72.50 per year, payable semi-annually, and is convertible at any time
at the option of the holder into shares of Common Stock at an initial conversion
price of $16.62 per share. The initial conversion price, and therefore the
number of shares of Common Stock issuable upon the conversion of the Series C
Preferred Stock, is subject to adjustment in certain events to prevent dilution.
The Company may redeem some or all of the shares of Series C Preferred Stock on
or after April 1, 1999 at a cash redemption price of $1,000 per share, plus
accrued but unpaid dividends. Each holder of Series C Preferred Stock is
entitled to vote on any matter submitted to the stockholders as if the Series C
Preferred Stock had been converted into Common Stock. Each share of Series C
Preferred Stock has a liquidation preference equal to its $1,000 stated value.
See "Description of Securities -- Preferred Stock."
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 June 24, 1997 was $14.25 per share. There is no established
trading market for the Series C Preferred Stock, and it is not anticipated that
an established trading market will develop.
The Selling Securityholders have 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
Securityholders and any participating broker may be deemed to be "underwriters"
of the Series C Preferred Stock and 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 Securityholders in all open market
transactions. The Company will pay all other expenses of this offering. See
"Plan of Distribution."
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AN INVESTMENT IN THE SECURITIES OFFERED HEREBY INVOLVES
A HIGH DEGREE OF RISK. SEE "RISK FACTORS" ON
PAGES 6 THROUGH 8 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 June 25, 1997
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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, Suite 1400, 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. In addition, the Commission maintains a Web site that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission. The address
of the Commission's Web site is http://www.sec.gov. The Common Stock of the
Company is quoted on the Nasdaq National Market. Reports, proxy statements and
other information concerning the Company may be inspected at the offices of the
National Association of Securities Dealers, Inc. at 1735 K Street, N.W.,
Washington, D.C. 20006.
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) the Company's quarterly report
on Form 10-Q for the quarter ended September 30, 1996, filed with the Commission
on November 14, 1996; (d) the Company's quarterly report on Form 10-Q for the
quarter ended December 31, 1996, filed with the Commission on February 14, 1997;
(e) the Company's current report on Form 8-K dated March 31, 1997, filed with
the Commission on March 31, 1997; (f) the Company's current report on Form 8-K
dated April 30, 1997, filed with the Commission on May 1, 1997; (g) the
Company's proxy statement furnished in connection with its Annual Meeting of
Shareholders on December 4, 1996, filed with the Commission on November 6, 1996;
(h) all other reports filed with the Commission pursuant to Section 13 and 15(d)
of the Exchange Act since February 14, 1997; and (i) 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
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requests for such copies should be directed to Ronald I. Simon, Vice President
and Chief Financial Officer, Western Water Company, 4660 La Jolla Village Drive,
Suite 825, San Diego, California 92122. Telephone requests may be directed to
Mr. Simon at (619) 535-9282.
Safe Harbor Statement under the Private Securities Litigation Reform
Act of 1995.
Except for the historical information contained herein, the matters
discussed in this Prospectus are forward-looking statements which involve risks
and uncertainties, including but not limited to economic, competitive,
governmental and environmental factors affecting the Company's revenues,
operations, markets, properties and prices, and other factors discussed in the
section entitled "Risk Factors" on pages 6 through 8 of this Prospectus.
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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) 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 and Colorado. The Company's principal business
plan is to develop, package and sell its water and water rights 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 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 assets.
The Company has recently focused its efforts on becoming an independent
water provider to municipalities and other agencies located primarily in
Southern California. The Company's goal is to acquire water assets and to sell
or lease such water or water assets to municipalities or other water agencies or
districts. In order to fund a portion of the anticipated cost of acquiring
groundwater rights and other water-related assets, the Company recently
completed a $9,000,000 private placement of its Series C Preferred Stock. In
addition, in November 1996 the Company entered into a letter agreement with J.P.
Morgan Securities, Inc. pursuant to which J.P. Morgan was appointed as the
Company's financial advisor and agent in arranging the placement of debt
securities for the special purpose entities expected to be formed for the
purpose of acquiring such water assets. To date, one special purpose entity has
been organized, but no financing has yet been raised by J.P. Morgan for any
special purpose entity. Before the Company can effect any water transfer
arrangements, the Company will have to purchase water assets, finance such
purchase, and then sell the water rights. Although the Company is currently
evaluating certain water transfer opportunities and has held discussions with
certain Southern California water districts regarding the sale and transfer of
water to such water districts, the Company has not yet entered into any binding
agreements with such water districts.
The principal California water interests currently 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, (iii) interests owned in various California mutual water companies, and
(iv) certain groundwater pumping rights in Los Angeles County and San Bernardino
County, California. The Company's California real estate holdings consist of a
total of approximately 1,602 acres located in Northern California.
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 to water districts 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. Although the Company believes
that there is a market for its Cherry Creek water and water rights, in order to
increase the number of potential purchasers for its water and to increase the
possible price of such water, the Company may have to develop and build a water
delivery infrastructure. The Company and certain infrastructure developer are
currently jointly marketing to water agencies a package consisting of the
Company's water rights and a water delivery system. However, the Company does
not have any definitive agreements with any potential builders of such a water
delivery system. The principal real estate interests owned by the Company
consist of approximately 1,887 acres of undeveloped land located in the
Cherry Creek basin, Colorado.
On April 23, 1997, the Company sold its 35.3% initial percentage
interest in Nevada Land and Resource Company, LLC (the "Nevada LLC") to Global
Equity Corporation, an Ontario, Canada corporation ("Global"). The Nevada LLC is
the limited liability company that was formed by the Company and a joint venture
comprised of The Morgan Stanley Real Estate Fund II, L.P. and two affiliates of
that real estate partnership (collectively, "Western Land JV") to own
approximately 1.38 million acres of land and related water interests in Nevada
(the "Nevada Property"). The Company acquired its interest in the Nevada LLC
in October 1995 for $12,000,000. The purchase price received by the Company
from the sale of the Nevada LLC interest was $13,360,000, of which $12,024,000
was paid in cash and $1,336,000 was paid by the delivery to the Company of a
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convertible note from Global due on December 31, 1997. In addition to the sale
of the Company's interest in the Nevada LLC to Global, the Nevada LLC entered
into a consulting agreement with Western Agua, L.P. (the "Consulting
Agreement"). Western Agua, L.P. is a Delaware limited partnership formed by the
Company and Western Land JV. The Company owns a 70% interest in Western Agua,
L.P. and is the sole general partner of the partnership. In exchange for
providing consulting services to Nevada LLC, Western Agua, L.P. will receive 50%
of all the net proceeds, if any, derived from the Nevada Property after Global
both recoups its investment in the Nevada LLC and earns a 20% cumulative
annually compounded return on its investment in the Nevada LLC. In addition, the
Western Land JV has agreed to provide the Company with a three-year right of
first offer to review all Western Land JV's water investment opportunities in
the Western United States.
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.
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.
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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
$261,000, $974,000 and $207,000 of revenues from its water rights activities
during the fiscal years ended March 31, 1997, March 31, 1996 and March 31, 1995,
respectively. 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 three
fiscal years, revenues from the disposition of real estate have constituted
approximately 86%, 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'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.
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
Company's ability to sell significant quantities of water from the Company's
Northern California water assets, (ii) the Company's ability to develop and sell
water or water rights packages as part of the Cherry Creek Project, and (iii)
the Company's activities as an independent water provider in Southern
California. 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 is
currently evaluating various alternative plans to commercially exploit its Yuba
Property water rights. The value of the Company's Cherry Creek Project is
dependent upon the approval of the Company's proposed plan of augmentation. The
Colorado Water Court has rejected the Company's initial Cherry Creek plan of
augmentation 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. The
Company's ability to become an independent water provider in Southern California
is dependent upon the Company acquiring groundwater rights and other water
assets, its ability to arrange for the transportation and storage of water, its
success in obtaining all necessary consents and approvals, and on its ability to
finance the foregoing activities. To date, the Company has not yet consummated
any water transfer transactions in Southern California, and no assurance can be
given that the Company will be able to do so in the future.
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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. The Common
Stock offered by this Prospectus (assuming conversion of all shares of Series C
Preferred Stock into shares of Common Stock and the exercise of all Options)
constitutes approximately 10% of the total amount of Common Stock currently
outstanding (assuming the conversion of all shares of Series C Preferred Stock
and the exercise of all Options). Such Common Stock may be offered and sold from
time to time throughout an indefinite and extended period of time, which sales
may have an adverse effect on the prevailing market price for the Common Stock.
The extent of such adverse effect, if any, cannot be predicted, but based on the
volume of trading in the market and on the number of shares that could be sold
hereunder by the Selling Securityholders, such adverse effect may be material.
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
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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 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. See "Description of Securities --
Anti-Takeover Provisions."
ABSENCE OF PUBLIC MARKET FOR SERIES C PREFERRED STOCK. Prior to this
offering, there was no established trading market for the Series C Preferred
Stock, and it is not anticipated that an established trading market will
develop. The Company does not plan to apply to have the Series C Preferred Stock
quoted on The Nasdaq Stock Market or any other exchange.
DIVIDENDS UNLIKELY. The Company has never paid cash dividends on its
Common Stock (other than the Stock Dividend effected in March 1996) 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 payment of any dividends on the Common Stock is subject to the
prior payment of dividends on the outstanding shares of Series C Preferred
Stock. The Company's ability to meet its semi-annual dividend obligations under
the terms of the Series C Preferred Stock 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 on
the Series C Preferred Stock, no assurance can be given that the Company will
continue to do so in the future or that the Company will in the future be
permitted under Delaware law to pay dividends.
See "Description of Securities."
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 July 1997. 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 Series C Preferred Stock and the 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. See "Description of Securities."
8.
<PAGE> 10
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale by the
Selling Securityholders of any of the shares of Series C Preferred Stock and
Common Stock offered hereby. The Company will pay all of the costs of this
offering.
SELLING SECURITYHOLDERS
THE SERIES C PREFERRED STOCK PRIVATE PLACEMENT
The Company sold a total of 9,000 shares of Series C Preferred Stock
(at a price of $1,000 per share) in a private placement that was completed on
April 21, 1997 (the "Private Placement"). Credit Suisse First Boston acted as
the financial advisor and placement agent to the Company in connection with the
Private Placement. In connection with the Private Placement, the Company agreed
to use its best efforts to promptly register the shares of Series C Preferred
Stock (and the Common Stock issuable upon the conversion of the Series C
Preferred Stock) under the Securities Act. This Prospectus was prepared, in
part, pursuant to the foregoing contractual commitment to register the Series C
Preferred Stock and the underlying Common Stock.
Except as set forth in the footnotes to the table below, no investor in
the Private Placement has, or during the past three years had, any position,
office, or other material relationship with the Company or any predecessor or
affiliate of the Company.
SALE OF COMMON STOCK IN CONNECTION WITH PURCHASE OF WATER RIGHTS
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 from time to time to purchase from Golden
West, and Golden West agreed from time to time to sell to the Company the rights
to water located in the Central Water Basin, Los Angeles County, California, for
a purchase price of $3,200 per acre foot. The Agreement grants Golden West the
option, but not the obligation, to sell to the Company the water rights to up to
a total of 1,078 acre feet of water per year. The option expires on September
27, 1997, although Golden West, in its discretion, may terminate the option at
any time during the last nine months of the option term. The Company has
previously purchased the rights to 300 acre feet of water. On February 13, 1997
and on May 9, 1997, the option for the purchase of an aggregate of 400 acre feet
of additional water was exercised. The purchase price paid by the Company for
the additional 400 acre feet was paid in shares of Common Stock included in this
Prospectus. The purchase price for any future sales of water under the Agreement
will likewise be paid in shares of Common Stock. The amount of shares issued to
Golden West in connection with the foregoing purchase, and the amount of shares
to be issued in the event the option is exercised in the future by Golden West,
is 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. This Prospectus was prepared, in part, pursuant to the
registration rights provisions contained in the Agreement.
The terms of the Agreement were determined by arm's-length negotiations
between the Company and Golden West. Except for the transactions contemplated by
the Agreement, Golden West does not have, or during the past three years has not
had, any material relationship with the Company or any of its predecessors or
affiliates.
OPTIONS
The Options consist of stock purchase options to purchase a total of
169,330 shares of Common Stock. The Options were granted in 1997 pursuant to the
Company's 1993 Stock Option Plan. All of the Options were granted to persons
who, at the time of grant, were officers and directors of the Company. The
weighted average exercise price of the Options is $13.32 per share.
9.
<PAGE> 11
The following table lists the Selling Securityholders, the number of
shares of Series C Preferred Stock and Common Stock beneficially owned by each
such Selling Securityholder as of the date of this Prospectus, the number of
shares offered by them pursuant to this Prospectus, and the number of shares of
Common Stock beneficially owned by each Selling Securityholder after the
completion of this offering. The shares listed under the caption "Number of
Shares Being Offered -- Shares of Common Stock" refer (i) to the number of
shares of Common Stock into which the shares of Series C Preferred Stock held by
each Selling Securityholder can be converted, (ii) the number of shares of
Common Stock issuable upon the exercise of any Options owned by the Selling
Securityholder, and, (iii) for those Selling Securityholders who do not own any
shares of Series C Preferred Stock or Options, the shares of Common Stock owned
by such Selling Securityholder that are included in this Prospectus. All shares
of Common Stock listed under the caption "Number of Shares Being Offered --
Shares of Common Stock" may be sold pursuant to this Prospectus. The Company
believes that the Selling Securityholders own no securities of the Company other
than as listed in the table.
<TABLE>
<CAPTION>
SHARES OF
SERIES C SHARES OF NUMBER OF SHARES
PREFERRED COMMON STOCK BEING OFFERED (3) AFTER OFFERING(1)(2)
BENEFICIALLY BENEFICIALLY ----------------------------- --------------------------
OWNED AS OF OWNED AS OF SHARES OF SHARES OF SHARES OF
THE DATE OF THE DATE OF SERIES C COMMON COMMON STOCK
PROSPECTUS PROSPECTUS(1) PREFERRED STOCK BENEFICIALLY OWNED PERCENT
------------- ------------- --------- --------- ------------------ -------
<S> <C> <C> <C> <C> <C> <C>
T. Rowe Price New Era Fund
Inc. 2,000 464,837(4) 2,000 120,337 344,500 4.2%
T. Rowe Price Small-Cap
Value Fund, Inc. 2,000 455,537(4) 2,000 120,337 335,200 4.1%
Ashford Capital Partners, L.P. 1,000(5) 60,168(5) 1,000 60,168 0 --
Workplace Health, Safety and
Compensation Commission of
New Brunswick 250 15,042 250 15,042 0 --
Dalhousie University General
Endowment Fund 125 7,521 125 7,521 0 --
Dalhousie University Killam
Endowment Fund 100 6,017 100 6,017 0 --
Dalhousie University Pension
Fund 500 30,084 500 30,084 0 --
Wisconsin Alumni Research
Foundation 1,000 60,168 1,000 60,168 0 --
Trustees of Dartmouth College 300 18,051 300 18,051 0 --
Ashford Capital Management,
Inc. as investment advisor for
certain investment accounts 1,725(6) 103,791(6) 1,725 103,791 0 --
Golden West Refining
Company(7) -- 88,238 -- 88,238 0 --
Peter Jensen -- 388,536 -- 41,666 346,870 4.2%
Marilyn B. Dreyer -- 109,517 -- 20,000 89,517 1.0%
John Huston -- 322,458 -- 33,332 289,126 3.5%
Arik Prawer -- 75,000 -- 25,000 50,000 *
Eric Robbins -- 73,332 -- 33,332 40,000 *
Ronald I. Simon -- 16,000 -- 16,000 0 --
</TABLE>
- -------------------
* less than 1%.
(1) Pursuant to the rules promulgated under the Exchange Act, a person is
deemed to be the beneficial owner of a security if that person has the
right to acquire ownership of such security within 60 days. Since the
Series C Preferred Stock is immediately convertible into Common Stock,
this column also includes shares of Common Stock that may be issued
upon the conversion of the Series C Preferred Stock.
10.
<PAGE> 12
(2) The table assumes that the Selling Securityholders will dispose of all
shares of Series C Preferred Stock and Common Stock owned by them or
issuable to them that are being registered for sale by this Prospectus.
(3) Excludes (i) shares of Series C Preferred Stock that the holders of
Series C Preferred Stock may receive if the Company exercises its right
to pay dividends on the Series C Preferred Stock by issuing additional
shares of Series C Preferred Stock, and (ii) the Common Stock issuable
upon the conversion of such additional shares of Series C Preferred
Stock.
(4) T. Rowe Price Associates, Inc., the investment advisor of T. Rowe
Price New Era Fund, Inc. and T. Rowe Price Small-Cap Value Fund, Inc.,
as investment advisor, beneficially owns 1,058,874 shares for these
and other investment advisory clients.
(5) Reflects shares held of record and beneficially owned by Ashford
Capital Partners, L.P., a Delaware limited partnership, of which the
general partner is Ashford Capital Management, Inc. Excludes the
1,725 shares of Series C Preferred Stock (103,791 shares of Common
Stock) held of record and beneficially by or on behalf of certain
investment advisory client accounts managed by Ashford Capital
Management, Inc., as investment adviser, as indicated in footnote
(6) below. Ashford Capital Management, Inc., acting as general
partner, has the sole power to vote and dispose of securities on
behalf of Ashford Capital Partners, L.P.
(6) Reflects shares held of record and beneficially owned by separate
investment accounts on behalf of sixteen (16) different investors
for which Ashford Capital Management, Inc. acts as investment adviser
and has the sole power to vote and dispose of such securities as
attorney-in-fact with respect to such accounts. Excludes (i) shares
held by Ashford Capital Partners, L.P. for which Ashford Capital
Management, Inc. acts as general partner, as indicated in footnote
(5) above, and (ii) shares listed above of Workplace Health, Safety
and Compensation Commission of New Brunswick; Dalhousie University
General Endowment Fund; Dalhousie University Killam Endowment Fund;
Dalhousie University Pension Fund; Wisconsin Alumni Research
Foundation; and Trustees of Dartmouth College, for whom Ashford
Capital Management, Inc. also acts as investment adviser and
attorney-in-fact.
(7) Golden West may, at any time prior to September 27, 1997, exercise its
option to sell to the Company rights to an additional 378 acre feet of
water at a price of $3,200 per acre foot. The purchase price to be paid
for such water rights is required to be paid in shares of Common Stock.
The number of shares to be issued upon any such future option exercise
will be based upon the then current trading price of the Common Stock.
Since the future trading price of the Common Stock is not currently
known, the Company is unable to determine the number of shares of
Common Stock that could be issued to the Selling Securityholders.
Accordingly, the amounts set forth in this table do not include any
shares that could be issued in the future under the Agreement.
11.
<PAGE> 13
PLAN OF DISTRIBUTION
The Selling Securityholders may sell, directly or through brokers, the
shares of Series C Preferred Stock and 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 Securityholders and any
participating broker may be deemed to be "underwriters" of the shares 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. Inc.; Mayer & Schweitzer
Inc.; Carr Securities Co.; Neuberger & Berman; Fahnestock & Co., Inc.; Sharpe
Capital Inc.; Furman Selz Incorporated; Sherwood Securities Corp.; Herzog,
Heine, Geduld, Inc.; Torrey Pines Securities Inc.; L.H. Friend & Co.; and
Troster Singer Corp. The Company will not receive any of the proceeds from the
sale of the shares of Series C Preferred Stock or Common Stock by the Selling
Securityholders. Pursuant to the terms under which the shares of Series C
Preferred Stock and Common Stock were sold, the Company has agreed to indemnify
the Selling Securityholders against such liabilities as they 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 Securityholders 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 Series C Preferred
Stock and Common Stock, other than fees of counsel (if any) for the Selling
Securityholders 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 Securityholders are required to cease sales until
the Prospectus has been supplemented or amended.
DESCRIPTION OF SECURITIES
GENERAL
The Company is authorized to issue 20,000,000 shares of Common Stock,
$.001 par value, and 1,000,000 shares of preferred stock, $.001 par value, of
which 15,000 have been designated as the Series C Convertible Redeemable
Preferred Stock.
COMMON STOCK
The holders of Common Stock are entitled to one vote for each share
held of record by them on all matters voted on by stockholders. The Company's
Certificate of Incorporation ("Certificate") does not provide for cumulative
voting in the election of directors. The holders of Common Stock are entitled to
receive dividends when, as and if declared by the Board of Directors out of
funds legally available therefor, subject to the prior rights of the holders of
any preferred stock. In the event of liquidation, dissolution or a winding up of
the Company's affairs, the holders of Common Stock are entitled to share ratably
in all assets of the Company that are legally available for distribution, after
payment of or provision for all debts and liabilities and after provision has
been made for payments with respect to the class of stock, including any
preferred stock outstanding at that time, that has preference over the Common
Stock. Holders of shares of Common Stock, as such, have no conversion,
preemptive or other subscription rights, and there are no redemption or sinking
fund provisions applicable to the Common Stock. All of the outstanding shares of
Common Stock are fully paid and nonassessable.
PREFERRED STOCK
General. Shares of preferred stock may be issued without stockholder
approval. The Board of Directors is authorized to issue such shares in one or
more series and to fix the rights, preferences, privileges, qualifications,
12.
<PAGE> 14
limitations and restrictions thereof, including dividend rights and rates,
conversion rights, voting rights, terms of redemption, redemption prices,
liquidation preferences and the number of shares constituting any series or the
designation of such series, without any vote or action by the stockholders. As
of the date of this Prospectus, the Company has no current plans for the
issuance of any additional shares of the preferred stock. Any preferred stock
that may, however, be issued in the future could rank prior to the Common Stock
offered hereby with respect to dividend rights and rights on liquidation. The
Board of Directors, without stockholder approval, may issue preferred stock with
voting and conversion rights that could adversely affect the voting power of
holders of Common Stock offered hereby or create impediments to persons seeking
to gain control of the Company.
Series C Convertible Redeemable Preferred Stock. Each share of Series C
Preferred Stock has a stated value of $1,000, a par value of $.001, and is
convertible at any time at the option of the holder into shares of Common Stock
at a conversion price of $16.62 per share. The conversion price, and therefore
the number of shares of Common Stock issuable upon the conversion of the Series
C Preferred Stock, is subject to adjustment in certain events to prevent
dilution.
The holders of Series C Preferred Stock are entitled to vote on all
matters presented to the stockholders, together with the holders of Common Stock
as one class, except as otherwise required by law. Each share of Series C
Preferred Stock is entitled to the number of votes equal to the number of shares
of Common Stock into which such share of Series C Preferred Stock would have
been convertible, if such conversion had taken place on the record date set for
determining stockholders entitled to vote at a meeting or the date of the
consent of stockholders if action is being taken by written consent. In the
event that the Company is in default in the payment of two or more semi-annual
dividends, the holders of the Series C Preferred Stock would have the right,
voting as a class, to elect a majority of the directors of the Company, and the
holders of the Common Stock would have the right to elect the remaining
directors. The right of the holders to elect a majority of the directors of the
Company would continue until dividends are paid for at least two consecutive
semi-annual periods, after which the right to elect directors shall revert to
the Common Stock and the Series C Preferred Stock, voting as a single class.
The holders of Series C Preferred Stock are entitled to receive annual
dividends in the amount of $72.50 per share, payable semi-annually on January 15
and July 15 of each year ($36.25 semi-annually). The first four semi-annual
dividend payments (July 15, 1997 through and including January 15, 1999) to be
made with respect to Series C Preferred Stock may be made, in the sole
discretion of the Board of Directors, in cash or, in full or in part, by issuing
shares of Series C Preferred Stock. Thereafter all dividend payments made with
respect to the Series C Preferred Stock are payable in cash. Upon the conversion
of any shares of Series C Preferred Stock, the holder shall be entitled to
receive unpaid dividends declared prior to the date of the conversion if the
holder owned the Series C Preferred Stock on the record date, but shall not be
entitled to receive any accumulated, accrued and unpaid dividends with respect
to the shares so converted.
The Company may, upon 30 days' written notice to the holders, redeem
all or any portion of the Series C Preferred Stock at any time after March 30,
1999 at a cash redemption price of $1,000 per share plus accrued but unpaid
dividends. However, the Company may redeem the Series C Preferred Stock only if
the average closing price of the Common Stock during the 20 consecutive trading
days prior to the notice of redemption is not less than 150% of the conversion
price (initially $16.62 per share, subject to adjustment). In case of the
redemption of a part only of the outstanding shares of Series C Preferred Stock,
the shares so to be redeemed shall be selected pro rata. Redeemed shares shall
be cancelled and revert to authorized but unissued shares of preferred stock
undesignated as to series.
Commencing on April 1, 2006 and continuing until March 31, 2007, each
holder of shares of the Series C Preferred Stock may, from time to time, during
such period, at such holder's option, cause the Company to redeem for cash, out
of funds legally available therefore, up to an aggregate of one-half of all
shares of Series C Preferred Stock owned by such holder on April 1, 2006.
Commencing on April 1, 2007, each holder of shares of Series C Preferred Stock
may, from time to time thereafter, at such holder's option, cause the Company to
redeem for cash, out of funds legally available therefore, some or all of such
holder's shares of Series C Preferred Stock. The redemption price for each share
of Series C Preferred Stock shall be $1,000 per share, plus, in each case, all
declared and unpaid dividends, if any.
13.
<PAGE> 15
The Series C Preferred Stock has a preference in liquidation over the
holders of Common Stock of $1,000 per share plus accrued and unpaid dividends.
ANTI-TAKEOVER PROVISIONS
The provisions of the Certificate and the Bylaws of the Company (the
"Bylaws") summarized in the succeeding paragraphs may be deemed to have
anti-takeover effects and may delay, defer or prevent a tender offer or takeover
attempt that a stockholder might consider to be in such stockholder's best
interests, including those attempts that might result in a premium over the
market price for the shares held by stockholders.
Amendment of Certain Provisions of the Certificate of Incorporation and
Bylaws. The Certificate 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, including those provisions relating to the number, election and
term of directors; the removal of directors and the filling of vacancies;
indemnification of directors, officers and others; and the supermajority voting
requirements in the Certificate. The Certificate further provides that the
Bylaws may be amended by the Board of Directors or by an affirmative vote of the
holders of not less than 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. These voting requirements will
have the effect of making more difficult any amendment by stockholders, even if
a majority of the Company's stockholders believes that such amendment would be
in their best interests.
Classified Board of Directors. The Certificate divides the Board of
Directors into three classes of directors serving staggered three-year terms. As
a result, approximately one-third of the Board of Directors will be elected at
each annual meeting of stockholders.
The classification of directors and provisions in the Certificate that
limit the ability of stockholders to increase the size of the Board of Directors
without the vote of at least 66-2/3% of the total voting power of all
outstanding voting securities, together with provisions in the Certificate that
limit the ability of stockholders to remove directors and that permit the
remaining directors to fill any vacancies on the Board, will have the effect of
making it more difficult for stockholders to change the composition of the Board
of Directors. As a result, at least two annual meetings of stockholders may be
required for the stockholders to change a majority of the directors, whether or
not a change in the Board of Directors would be beneficial to the Company and
its stockholders and whether or not a majority of the Company's stockholders
believes that such a change would be desirable.
Advance Notice Requirements for Stockholder Proposals and Director
Nominations. The Bylaws establish advance notice procedures with regard to
stockholder proposals and the nomination, other than by or at the direction of
the Board of Directors, of candidates for election as directors. The Company may
reject a stockholder proposal or nomination that is not made in accordance with
such procedures.
Section 203 of the Delaware General Corporation Law/Provisions in
Certificate of Incorporation. Subject to certain exclusions summarized below,
Section 203 of the Delaware General Corporation law ("Section 203") prohibits
any Interested Stockholder from engaging in a "business combination" with a
Delaware corporation for three years following the date such person became an
Interested Stockholder. Interested Stockholder generally includes (i) any person
who is the beneficial owner of 15% or more of the outstanding voting stock of
the corporation and (ii) any person who is an affiliate or associate of the
corporation and who held 15% or more of the outstanding voting stock of the
corporation at any time within three years before the date on which such
person's status as an Interested Stockholder is determined. Subject to certain
exceptions a "business combination" includes, among other things: (i) any merger
or consolidation involving the corporation; (ii) the sale, lease, exchange,
mortgage, pledge, transfer or other disposition of assets having an aggregate
market value equal to 10% or more of either the aggregate market value of all
assets of the corporation determined on a consolidated basis or the aggregate
market value of all the outstanding stock of the corporation; (iii) any
transaction that results in the issuance or transfer by the corporation of any
stock of the corporation to the Interested Stockholder, except pursuant to a
transaction that effects a pro rata distribution to all stockholders of the
corporation; (iv) any transaction involving the corporation that has the effect
of increasing the proportionate share of the stock of any class or series, or
securities convertible into the stock of any class or series, of the corporation
that is owned directly or indirectly by
14.
<PAGE> 16
the Interested Stockholder; and (v) any receipt by the Interested Stockholder of
the benefit (except proportionately as a stockholder) of any loans, advances,
guarantees, pledges or other financial benefits provided by or through the
corporation.
Section 203 does not apply to a business combination if: (i) before a
person became an Interested Stockholder, the board of directors of the
corporation approved the transaction in which the Interested Stockholder became
an Interested Stockholder or the business combination; (ii) upon consummation of
the transaction that resulted in the person becoming an Interested Stockholder,
the Interested Stockholder owned at least 85% of the voting stock of the
corporation outstanding at the time the transaction commences (other than
certain excluded shares); or (iii) following a transaction in which the person
became an Interested Stockholder, the business combination is (a) approved by
the board of directors of the corporation and (b) authorized at a regular or
special meeting of stockholders (and not by written consent) by the affirmative
vote of the holders of at least 66-2/3% of the outstanding voting stock of the
corporation not owned by the Interested Stockholder.
In addition to the restrictions imposed on certain business
combinations by Section 203, the Certificate contains certain provisions which
require that certain business combinations with an interested stockholder must
be approved by the affirmative vote of the holders of at least 66 2/3% of the
outstanding voting stock, unless (a) with respect to business combinations that
do not involve payment of cash or other consideration to the Company's
stockholders, such business combination is approved by (i) a majority of
directors who were directors at the time of the Company's incorporation or are
not interested stockholders and became directors prior to the time the
interested stockholder became an interested stockholder, or (ii) a majority of
the shares held by stockholders other than the interested stockholder, and (b)
with respect to other business combinations, the interested stockholder provides
"fair" consideration to the stockholders (with the fairness determined in
accordance with the provisions of the Certificate), and (c) certain other
conditions are satisfied.
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 38,686 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.
15.
<PAGE> 17
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 Securityholders. 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
<TABLE>
<CAPTION>
Page
<S> <C>
Available Information.................... 2
Incorporation of Certain
Documents by Reference................. 2
The Company.............................. 4
Risk Factors............................. 6
Use of Proceeds........................... 9
Selling Securityholders................... 9
Plan of Distribution..................... 12
Description of Securities................ 12
Legal Matters............................ 15
Experts.................................. 15
</TABLE>
10,350 Shares of Series C Convertible
Redeemable Preferred Stock
880,312 Shares of Common Stock
WESTERN WATER COMPANY
_______________
PROSPECTUS
_______________
June 25, 1997
<PAGE> 18
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, and such
amounts, with the exception of the Securities and Exchange Commission
registration fees, are estimates.
<TABLE>
<S> <C>
SEC registration fee..................................$ 4,320
Nasdaq listing fees................................... 7,500
Accounting fees and expenses.......................... 1,000
Legal fees and expenses............................... 5,000
Miscellaneous......................................... 1,000
-------
Total..............................................$18,820
=======
</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
Securityholders provides that the Company shall indemnify the Selling
Securityholders, and the Selling Securityholders shall indemnify the Company and
the officers and directors of the Company, for certain liabilities, including
certain liabilities under the Securities Act.
(i)
<PAGE> 19
ITEM 16. EXHIBITS
The following exhibits, which are furnished with this Registration
Statement or incorporated by reference, are filed as part of this Registration
Statement:
<TABLE>
<CAPTION>
Exhibit
No. Description
------- -----------
<S> <C>
4.1 Form of Common Stock certificate.(1)
4.2 Form of Series C Convertible Redeemable Preferred Stock
certificate.
4.3 Certificate of Designations for Series C Convertible Redeemable
Preferred Stock.(2)
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).
24.1 Power of Attorney (contained in Part II).(2)
99.1 Agreement for Sale of Water Rights and Option to Sell Water Rights,
dated July 25, 1996, between the Company and Golden West.(3)
99.2 Form of Stock Purchase Agreement for the purchase and sale of
Series C Convertible Redeemable Preferred Stock.(2)
</TABLE>
- --------------
(1) Previously filed as Exhibit 4.1 to the Company's Form 10 filed on
August 9, 1990, which exhibit is hereby incorporated herein by
reference.
(2) Previously filed as an Exhibit to this Registration Statement.
(3) Previously filed as Exhibit 99 to the Company's Registration Statement
(File No. 333-10367) on Form S-3 filed on August 16, 1996, which
exhibit is hereby 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.
(ii)
<PAGE> 20
(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;
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> 21
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 Amendment
No. 1 to 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 June 24, 1997.
WESTERN WATER COMPANY
By /s/ PETER L. JENSEN
-----------------------------------
Peter L. Jensen, President
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to 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 June 24, 1997
- ------------------------- Executive Officer (Principal)
Peter L. Jensen Executive Officer)
/s/ RONALD I. SIMON Chief Financial Officer June 24, 1997
- ------------------------- (Principal Financial
Ronald I. Simon and Accounting Officer)
/s/ JOHN H. HUSTON* Director, Vice President June 24, 1997
- --------------------------
John H. Huston
Director June __, 1997
- --------------------------
Scott Katzmann
/s/ WILLIAM D. WATT* Director June 24, 1997
- ---------------------------
William D. Watt
</TABLE>
- ------------
* Executed on behalf of such person by Mr. Peter L. Jensen pursuant to the
power of attorney granted to Mr. Jensen in the Registration Statement filed
June 6, 1997.
<PAGE> 22
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Description
------- -----------
<S> <C>
4.1 Form of Common Stock certificate.(1)
4.2 Form of Series C Convertible Redeemable Preferred Stock
certificate.
4.3 Certificate of Designations for Series C Convertible Redeemable
Preferred Stock.(2)
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).
24.1 Power of Attorney (contained in Part II).(2)
99.1 Agreement for Sale of Water Rights and Option to Sell Water
Rights, dated July 25, 1996, between the Company and Golden
West.(3)
99.2 Form of Stock Purchase Agreement for the purchase and sale of
Series C Convertible Redeemable Preferred Stock.(2)
</TABLE>
- --------------
(1) Previously filed as Exhibit 4.1 to the Company's Form 10 filed on
August 9, 1990, which exhibit is hereby incorporated herein by
reference.
(2) Previously filed as an Exhibit to this Registration Statement.
(3) Previously filed as Exhibit 99 to the Company's Registration Statement
(File No. 333-10367) on Form S-3 filed on August 16, 1996, which
exhibit is hereby incorporated herein by reference.
<PAGE> 1
EXHIBIT 5.1
[TROY & GOULD LETTERHEAD]
June 25, 1997
Western Water Company
4660 La Jolla Village Drive
Suite 825
San Diego, California 92122
Gentlemen:
We have acted as counsel to 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 (File No. 333-28759), as amended (the "Registration
Statement"). The Registration Statement relates to the offer and sale by the
selling securityholders named therein (the "Selling Securityholders") of up to
10,350 shares of the Company's Series C Convertible Redeemable Preferred Stock,
$1,000 per share stated value, and up to 899,074 shares of the Company's Common
Stock, $.001 par value (collectively, the "Shares").
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 Securityholders of
the Shares. In addition, we have examined such books and records of the
Company as in our judgment are 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 Securityholders in the manner contemplated in the Prospectus
made part of the Registration Statement, will be legally and validly issued,
fully paid and nonassessable.
<PAGE> 2
Troy & Gould
June 25, 1997
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 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
<PAGE> 1
EXHIBIT 23.1
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
June 24, 1997
