Filed
Pursuant to Rule 424(b)(5)
Registration
No. 333-214318
Prospectus
Supplement dated May 1, 2017
(to Prospectus
dated November 14, 2016)
Cadiz
Inc.
Warrants
to Purchase Common Stock and shares of Common Stock underlying the Warrants
We
and Cadiz Real Estate LLC, as borrowers, are parties to that certain Credit Agreement dated as of May 1, 2017 (which we refer
to as the “Credit Agreement”) along with Apollo Special Situations Fund, L.P. and other lenders from time to time
party to the Credit Agreement (which we refer to collectively as the “Investors”) and Wells Fargo Bank, National Association,
as agent (which we refer to as the “Agent”).
Pursuant
to this prospectus supplement and the accompanying prospectus, we are offering warrants (which we refer to as the “warrants”)
for the purchase of an aggregate 357,500 shares of our common stock, par value $0.01 per share (which we refer to as the “common
stock”), to the Investors in connection with the incurrence of senior secured term loans under the Credit Agreement. This
prospectus also relates to the offering of shares of common stock issuable upon exercise of the warrants. The number of shares
of common stock subject to the warrants may be increased to 362,500 shares of common stock by agreement between us and the Investors.
We will allocate a value to the warrants upon the closing date under the Credit Agreement in accordance with its terms. We will
receive no proceeds from the offering of the warrants. If the warrants are exercised for cash, we would receive the warrant exercise
price.
The
warrants are not and will not be listed for trading on The NASDAQ Global Market or any other securities exchange or nationally
recognized trading system. There is no market through which the warrants may be sold, and the Investors may not be able to resell
the warrants purchased under this prospectus supplement. This may affect the pricing of the warrants in the secondary market,
the transparency and availability of trading prices, and the liquidity of the warrants.
You
should read carefully this prospectus supplement and the accompanying prospectus, as well as the documents incorporated by reference
herein and therein, before you invest in our securities.
Our
common stock is traded on the NASDAQ Global Market under the symbol “CDZI.” On May 1, 2017, the closing price of our
common stock was $15.00.
Investing
in our common stock involves risks that are described in the “Risk Factors” section beginning on page S-3 of this
prospectus supplement and on page 2 of the prospectus. You should carefully read and consider those risks before making an investment
decision.
Neither
the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or
passed upon the adequacy or accuracy of this prospectus supplement. Any representation to the contrary is a criminal offense.
We
currently anticipate that the final settlement of the offering will take place on or prior to June 15, 2017. See “Plan of
Distribution.” The warrants offered hereby are being sold directly by us without the use of underwriters or agents.
The
date of this prospectus supplement is May 1, 2017.
TABLE
OF CONTENTS
PROSPECTUS
SUPPLEMENT
ABOUT
THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
This
prospectus supplement and the accompanying prospectus form part of a registration statement on Form S-3 that we filed with the
Securities and Exchange Commission (or the “Commission”) using a “shelf” registration process. This document
consists of two parts. The first part is this prospectus supplement, which describes the specific terms of this offering. The
second part is the accompanying prospectus, which contains more general information. Before you invest in our warrants, you should
read both this prospectus supplement and the accompanying prospectus, together with additional information described below under
the caption “Where You Can Find More Information.”
If
the description of this offering varies between this prospectus supplement and the accompanying prospectus, you should rely upon
the information in this prospectus supplement. Any statement made in the accompanying prospectus or in a document incorporated
or deemed to be incorporated by reference therein will be deemed to be modified or superseded for purposes of this prospectus
supplement to the extent that a statement contained in this prospectus supplement or in any other subsequently filed document
that is also incorporated or deemed to be incorporated by reference in this prospectus supplement modifies or supersedes that
statement. Any statement so modified or superseded will not be deemed, except as so modified or superseded, to constitute a part
of this prospectus supplement.
We
are responsible for the information contained in or incorporated by reference in this prospectus supplement, the accompanying
prospectus and any related free writing prospectus we have authorized for use in connection with this offering. This prospectus
supplement may be used only for the purpose for which it has been prepared. Neither we nor any other person has authorized anyone
to provide information different from the information contained in this prospectus supplement, the accompanying prospectus and
any related free writing prospectus and the documents incorporated by reference herein and therein.
We
are not making an offer to sell our securities in any jurisdiction where the offer or sale is not permitted. You should not assume
that the information appearing in this prospectus supplement, the accompanying prospectus or any free writing prospectus we have
authorized for use in connection with this offering is accurate as of any date other than the date of the applicable document.
Neither this prospectus supplement nor the accompanying prospectus constitutes an offer or an invitation to subscribe for and
purchase any of our securities, and may not be used for or in connection with an offer or solicitation by any person, in any jurisdiction
in which such an offer or solicitation is not authorized or to any person to whom it is unlawful to make such an offer or solicitation.
In
this prospectus supplement and the accompanying prospectus, unless expressly noted or the content indicates otherwise, the words
“we,” “us,” “our,” “Cadiz,” “the Company” and similar references mean
Cadiz Inc. and its subsidiaries.
SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
All
statements in this prospectus supplement and the documents incorporated by reference herein that are not historical facts should
be considered “forward looking statements” within the meaning of the “safe harbor” provisions of the Private
Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that
may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements
expressed or implied by the forward-looking statements. Some of the forward-looking statements can be identified by the use of
words such as “believe,” “expect,” “may,” “will,” “should,” “seek,”
“approximately,” “intend,” “plan,” “estimate,” “project,” “continue”
or “anticipates” or similar expressions or words, or the negatives of those expressions or words. Although we believe
that our plans, intentions and expectations reflected in, or suggested by, such forward-looking statements are reasonable, we
can give no assurance that such plans, intentions, or expectations will be achieved.
Some
of the important factors that could cause actual results to differ materially from our expectations are disclosed under “Risk
Factors” and elsewhere in this prospectus supplement and the accompanying prospectus. All subsequent written and oral forward-looking
statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by these cautionary
statements. Additional risks, uncertainties and other factors are incorporated herein by reference to our most recent Annual Report
on Form 10-K and our subsequent Quarterly Reports on Form 10-Q, as updated by our subsequent filings under the Exchange Act. Except
as otherwise required by applicable securities laws, we undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events, changed circumstances, or any other reason, after the date
of this prospectus supplement.
SUMMARY
About
Cadiz
We
are a land and water resource development company with 45,000 acres of land in three areas of eastern San Bernardino County, California.
Virtually all of this land is underlain by high-quality, naturally recharging groundwater resources, and is situated in proximity
to the Colorado River and the Colorado River Aqueduct (“CRA”), California's primary mode of water transportation for
imports from the Colorado River into the State. Our properties are suitable for various uses, including large-scale agricultural
development, groundwater storage and water supply projects. Our main objective is to realize the highest and best use of our land
and water resources in an environmentally responsible way.
We
believe that the long-term highest and best use of our land and water assets can best be realized through the development of a
combination of water supply and storage projects at our properties. Therefore, the Company has been primarily focused on the development
of the Cadiz Valley Water Conservation, Recovery and Storage Project (“Water Project” or “Project”), which
will capture and conserve millions of acre-feet
1
of native groundwater currently
being lost to evaporation from the aquifer system beneath our 34,000-acre property in the Cadiz and Fenner valleys of eastern
San Bernardino County (the “Cadiz/Fenner Property”), and deliver it to water providers throughout Southern California.
A second phase of the Water Project would offer storage of up to one million acre-feet of imported water in the aquifer system.
We believe that the ultimate implementation of this Water Project will provide a significant source of future cash flow.
The
primary factor driving the value of such projects is ongoing pressure on California’s traditional water supplies and the
resulting demand for new, reliable supply solutions that can meet both immediate and long-term water needs. Available supply is
constrained by environmental and regulatory restrictions on each of the State’s three main water sources: the CRA, the State
Water Project, which provides water supplies from Northern California to the central and southern parts of the state, and the
Los Angeles Aqueduct, which delivers water from the eastern Sierra Nevada mountains to Los Angeles. Southern California's water
providers rely on imports from these systems for a majority of their water supplies, but deliveries from all three into the region
have been below capacity over the last several years.
Availability
of supplies in California also differs greatly from year to year due to natural hydrological variability. Over the last several
years, California has struggled through an historic drought featuring record-low winter precipitation and reservoir storage levels.
However, following a series of strong storms through the 2016-2017 winter, California has received record amounts of rain and
snow, eliminating drought conditions in much of Northern California and easing drought in the South. The rapid swing from drought
to an extremely wet year has challenged California's traditional infrastructure system, and deliveries into Southern California
from the State Water Project, Colorado River Aqueduct and Los Angeles Aqueduct remain below capacity.
The
Water Project is a local supply option in Southern California that could help address the region’s water supply challenges
by providing new reliable supply and local groundwater storage opportunities in both dry and wet years. The Project has received
permits in accordance with the California Environmental Quality Act (“CEQA”) which allow the capture and conservation
of 2.5 million acre-feet of groundwater over 50 years under the terms of a groundwater management plan approved by San Bernardino
County, which is responsible for groundwater use at the Project area.
Our
2017 working capital requirements relate largely to the final development activities associated with the Water Project and those
activities consistent with the Water Project related to further development of our land and agricultural assets. While we continue
to believe that the ultimate implementation of the Water Project will provide the primary source of our future cash flow, we also
believe there is significant additional value in our underlying agricultural assets. Demand for agricultural land with water rights
is at an all-time high; therefore, in addition to our Water Project proposal, we are engaged in agricultural joint ventures at
the Cadiz/Fenner Property that put some of the groundwater currently being lost to evaporation from the underlying aquifer system
to immediate beneficial use. We have farmed portions of the Cadiz/Fenner Property since the late 1980s relying on groundwater
from the aquifer system for irrigation and have found the site is well suited for various permanent and seasonal crops. Presently,
the property has 2,100 acres leased to third parties for a variety of crops, including citrus, dried-on-the-vine raisins and seasonal
vegetables.
We
also continue to explore additional uses of our land and water resource assets, including renewable energy development, the marketing
of our approved desert tortoise land conservation bank, which is located on our properties outside the Water Project area, and
other long-term legacy uses of our properties, such as habitat conservation and cultural development.
Corporate
Information
We
are a Delaware corporation with our principal executive offices located at 550 South Hope Street, Suite 2850, Los Angeles, California
90071. Our telephone number is (213) 271-1600. We maintain a corporate website at www.cadizinc.com. The information contained
in, or that can be accessed through, our website is not a part of this prospectus.
1
One acre-foot is equal to approximately 326,000 gallons or the volume of water that will cover an area of one acre to a
depth of one-foot. An acre-foot is generally considered to be enough water to meet the annual water needs of one average California
household.
THE
OFFERING
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Securities
offered
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We
are offering warrants for the purchase of an aggregate 357,500 shares of common stock to the Investors in connection with
entering into the Credit Agreement. The number of shares may be increased, upon the agreement of the Company and the Investors,
to 362,500 shares of common stock. This prospectus also relates to the offering of shares of common stock issuable upon exercise
of the warrants.
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Common
stock outstanding after this offering
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As
of May 1, 2017, the number of shares of common stock outstanding was 22,257,646. The number of shares to be issued
pursuant to this offering will depend on whether the warrants are exercised by the Investors. If the warrants are
fully exercised by the Investors, we will be required to issue an additional 357,500 shares of common stock (or 362,500 shares
of common stock upon the agreement of the Company and the Investors). Therefore, assuming the issuance of 357,500
shares of common stock upon exercise of the warrants, the total number of shares outstanding after giving effect to the offering
would be 22,615,146 (or 22,620,146 if the number of warrant shares is increased to 362,500 upon the agreement of the Company
and the Investors).
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Warrant
terms
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The
warrants have an exercise price of $14.94 per share, subject to adjustment as provided pursuant to the terms of the warrants. The
warrants have a five year term. A holder of a warrant may exercise the warrant, from time-to-time, from the Original Issue
Date, as defined in the warrants, through 4:00 P.M., Eastern Standard Time on the Expiration Date, as defined in the warrants. For
a more detailed discussion of the warrants, see “Description of Securities Being Offered.”
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Use
of proceeds
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If
the warrants are exercised for cash, we will receive the exercise price. Any proceeds we receive from exercise
of the warrants will be used for general corporate purposes.
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NASDAQ
Global Market symbol
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CDZI
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RISK
FACTORS
Our
business is subject to significant risks. Before you invest in our securities you should carefully consider, among other matters,
the risks and uncertainties described below, as well as the other information contained or incorporated by reference in this prospectus
supplement and the accompanying prospectus, including our consolidated financial statements and accompanying notes and the information
under the heading “Risk Factors” in our most recent annual report on Form 10-K and quarterly reports on Form 10-Q.
See “Information Incorporated by Reference.” If any of the risks and uncertainties described in this prospectus supplement
or the accompanying prospectus or the documents incorporated by reference herein actually occur, our business, financial condition,
or results of operations could be adversely affected in a material way. This could cause the trading price of our common stock
to decline, perhaps significantly, and you may lose part or all of your investment. Please note that additional risks not presently
known to us or that we currently deem immaterial may also impair our business, financial condition and operations.
Risks
Relating to Ownership of the Warrants
You
may not be able to resell the warrants.
There
is no established trading market for the warrants being offered in this offering, and we do not expect such a market to develop.
In addition, we do not intend to apply for listing of the warrants on any securities exchange or other nationally recognized trading
system; therefore you may not be able to resell your warrants. If your warrants cannot be resold, you will have to depend upon
any appreciation in the value of our common stock over the exercise price of the warrants in order to realize a return on your
investment in the warrants.
Investors
will have no rights as a common stockholder with respect to their warrants until they exercise their warrants and acquire our
common stock.
Until
you acquire shares of our common stock upon exercise of your warrants, you will have no rights with respect to the shares of our
common stock underlying the warrants. Upon exercise of your warrants, you will be entitled to exercise the rights of a common
stockholder only as to matters for which the record date occurs on or after the exercise date.
If
an Investor owns a significant number of shares of our common stock, the Investor may be unable to exercise its warrants.
The
warrants being offered hereby will prohibit a holder from receiving shares of our common stock upon exercise of the warrants to
the extent that such exercise would cause the Holder Group, as defined in the warrants, to become, directly or indirectly, a beneficial
owner of more than 4.99% of our common stock. This percentage (i) may be increased or decreased, in the holder’s sole discretion,
upon 61 days’ written notice to the Company, provided, however, that in no event may the beneficial ownership limitation
exceed 19.99% of shares of common stock outstanding as of any date from the original issue date of the warrant through the Expiration
Date and (ii) shall automatically be increased to a maximum percentage of 19.99% on the date that is 15 days prior to the Expiration
Date.
As
a result, you may not be able to exercise your warrants for shares of our common stock at a time when it would be financially
beneficial for you to do so. In such circumstance, you could seek to sell your warrants to realize value but you may be unable
to do so.
USE
OF PROCEEDS
We
will receive no proceeds from the offering of the warrants that are being offered to the Investors in connection with entering
into the Credit Agreement. Assuming no increase in the number of shares of common stock subject to the warrants, if all of the
warrants for 357,500 shares of common stock are exercised for cash, we would receive the exercise price of the warrants, which
would total $5,341,050. If the number of shares of common stock subject to the warrants is increased to 362,500, we would receive
a total of $5,415,750 if the warrants are exercised in full. The proceeds from the exercise of the warrants, if any, will be used
for general corporate purposes.
DESCRIPTION
OF SECURITIES BEING OFFERED
We
are offering warrants to purchase an aggregate of 357,500 shares of our common stock. The number of shares subject to the warrants
may be increased, upon the agreement of the Company and the Investors, to 362,500 shares of common stock.
Following
the completion of this offering and assuming no increase in the number of shares of common stock covered by the warrants, we will
have warrants to purchase a total of up to 715,000 shares of our common stock outstanding. If the number of shares subject to
the warrants is increased to 362,500, we will have warrants to purchase a total of up to 720,000 shares of our common stock outstanding.
The
warrants have a term of five years and a per share exercise price of $14.94, subject to adjustment as follows:
If,
at any time after the warrants are issued, the number of shares of common stock outstanding is increased by a stock dividend payable
in shares of common stock or by a subdivision or split-up of shares of common stock, then, following the record date for the determination
of holders of common stock entitled to receive such stock dividend, or to be affected by such subdivision or split-up, the exercise
price shall be appropriately decreased by multiplying each price by a fraction, the numerator of which is the number of shares
of common stock outstanding immediately prior to such increase and the denominator of which is the number of shares of common
stock outstanding immediately after such increase.
If,
at any time after the warrants are issued, the number of shares of common stock outstanding is decreased by a combination or reverse
stock split of the outstanding shares of common stock into a smaller number of shares of common stock, then, following the record
date to determine shares affected by such combination or reverse stock split, the exercise price shall be appropriately increased
by multiplying the price by a fraction, the numerator of which is the number of shares of common stock outstanding immediately
prior to such decrease and the denominator of which is the number of shares of common stock outstanding immediately after such
decrease.
In
the event of any capital reorganization, any reclassification of our capital stock (other than changes in par value or as a result
of a stock dividend or subdivision, stock-split, reverse stock-split or combination of shares), any consolidation or merger where
we are not the survivor or where there is a change in or distribution with respect to our common stock, or sale, transfer or other
disposition of all or substantially all of our property, assets or business to a third party, each warrant will be exercisable
for the kind and number of shares of stock or other securities or property of ours or of any successor to which the holder of
the number of shares of common stock deliverable (immediately prior to the time of such reorganization, reclassification, consolidation,
merger or disposition of assets) upon exercise of the warrant would have been entitled upon such reorganization, reclassification,
consolidation, merger or disposition of assets.
The
warrants also include a reduction to the exercise price in the following instances:
(i)
if, at any time after the warrants are issued, we issue any shares of common stock, options to purchase or rights to subscribe
for common stock, securities by their terms convertible into or exchangeable for common stock, or options to purchase or rights
to subscribe for such convertible or exchangeable securities (collectively “Equity Issuances”) without consideration
or for consideration per share less than the greater of (x) the exercise price in effect immediately prior to the issuance of
such common stock or securities and (y) the Fair Market Value per share of the common stock immediately prior to such issuance
(the greater of (x) and (y), the “Reference Price”), or
(ii)
if we directly or indirectly redeem, purchase or otherwise acquire any shares of our common stock, options to purchase or rights
to subscribe for our common stock, securities by their terms convertible into or exchangeable for shares of our common stock,
or options to purchase or rights to subscribe for such convertible or exchangeable securities (collectively, “Equity Acquisitions”),
for a consideration per share (plus, in the case of such options, rights, or securities, the additional consideration required
to be paid to us upon exercise, conversion or exchange) greater than the Fair Market Value per share of common stock immediately
prior to the earlier of (x) the announcement of such event or (y) such event.
In
the event of an Equity Issuance, the exercise price will be lowered to a price equal to the price obtained by multiplying the
exercise price in effect immediately prior to the Equity Issuance by a fraction of which (x) the numerator will be the sum of
(i) the number of shares of common stock outstanding immediately prior to the Equity Issuance and (ii) the number of additional
shares of common stock which the aggregate consideration for the number of shares of common stock so offered would purchase at
the Reference Price and (y) the denominator will be the number of shares of common stock outstanding immediately after the Equity
Issuance.
In
the event of an Equity Acquisition, the exercise price will be lowered to a price equal to the price obtained by multiplying (i)
the exercise price in effect immediately prior to the Equity Acquisition by (ii) a fraction (A) the numerator of which will be
(1) the product of (a) the number of shares of common stock outstanding and (b) the Fair Market Value per share of the common
stock, in each case immediately prior to the Equity Acquisition, minus (2) the aggregate consideration paid by the Company in
such event (plus, in the case of such options, rights, or convertible or exchangeable securities, the aggregate additional consideration
required to be paid to the Company upon exercise, conversion or exchange), and (B) the denominator of which will be the product
of (1) the number of shares of common stock outstanding immediately after the Equity Acquisition and (2) the Fair Market Value
per share of common stock immediately prior to the Equity Acquisition.
If
we have issued or issue in the future any of our securities to a financial institution, lender, other credit provider, leasing
company or other lessor in connection with the provisions of any financing or lending agreements, containing provisions (including,
without limitation, anti-dilution and registration rights) which are more favorable than those set forth in the warrants, we will
make such provisions (or any more favorable portion thereof) available to the warrant holders and will enter into amendments necessary
to confer such rights on the warrant holders.
None
of the adjustments discussed herein will apply to (i) the issuance and exercise of options to purchase shares of common stock
and the issuance of shares of common stock made to eligible recipients pursuant to any equity incentive plan duly adopted by our
Board of Directors in the ordinary course of business, or (ii) any issuance of shares of common stock upon conversion of our convertible
debt securities outstanding as of the business day immediately preceding the date of the Credit Agreement.
Upon
an adjustment of the exercise price as set forth above, a warrant holder will be entitled to purchase a number of shares of common
stock (calculated to the nearest 1/100th of a share) obtained by multiplying the exercise price in effect immediately prior to
such adjustment by the number of shares of common stock issuable on the exercise of the warrant immediately prior to such adjustment
and dividing that product by the exercise price resulting from such adjustment.
After
giving effect to all of the provisions discussed above, the number of shares of common stock purchasable upon exercise of the
warrants will be increased when the exercise price is adjusted to an amount below the then-existing par value of the common stock,
including successive adjustments to the exercise price to an amount further below the then-existing par value. The number of additional
shares purchasable upon exercise of the warrants will be equal to the number obtained by dividing (i) the product of (A) the number
of shares purchasable upon exercise of the warrants before application of this adjustment and (B) the difference between the then-existing
par value per share of the common stock minus the adjusted exercise price, by (ii) the difference between the Fair Market Value
of the common stock on the exercise date minus the then-existing par value per share of the common stock subject to the warrants.
The
exercise price may be paid (i) with cash, (ii) by instructing us to withhold a number of shares of common stock then issuable
upon exercise of the warrant with an aggregate Fair Market Value equal to the exercise price, (iii) by surrendering to us shares
of common stock previously acquired by the warrant holder with an aggregate Fair Market Value equal to the exercise price, or
(iv) any combination of the foregoing.
A
warrant holder generally will not receive shares of our common stock upon exercise of the warrant to the extent that such exercise
or receipt would cause the Holder Group, defined as any group in respect of Common Stock, where “group” has the meaning
established under Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the rules
promulgated thereunder, if the warrant holder or any other person having beneficial ownership of common stock beneficially owned
by the warrant holder is a member of such group, directly or indirectly, a beneficial owner of a number of shares of common stock
that exceeds the Maximum Percentage, defined as 4.99%, of outstanding shares of common stock, which percentage may be increased
or decreased by the warrant holder; provided, however, that if at any time after the date of the warrant the Holder Group beneficially
owns in excess of 4.99% of the outstanding common stock (excluding any common stock that could be acquired by exercise of the
warrant), then the Maximum Percentage will automatically increase to 9.99%, which may nonetheless be increased or decreased by
the warrant holder. In no event, however, will the warrant holder increase the beneficial ownership limitation described herein
to raise the Maximum Percentage in excess of 19.99% as of any date from the date of the warrant through the expiration date of
the warrant. The Maximum Percentage will automatically be increased to 19.99% on the date that is 15 days prior to the expiration
date of the warrant.
In
addition, the Company may not, without stockholder approval as required by the applicable rules of the Company’s principal
Trading Market, as defined in the warrants, issue an amount of common stock upon exercise of the warrants that would exceed, in
the aggregate, 19.99% of the number of shares of common stock outstanding as of November 29, 2016. If such issuance cap is met,
warrant holders will receive Fair Market Value for the number of shares by which the exercise is reduced as a result of such issuance
cap.
The
term “Fair Market Value” is defined in the warrants as follows:
(i)
as to any common stock listed or quoted on a Trading Market, the 10-Day VWAP determined in respect of such primary Trading Market
and (ii) as to any common stock not listed or quoted on a Trading Market or any other security, (A) the Ten Day Average of the
average closing prices of such security’s sales on all domestic securities exchanges on which such security may at the time
be listed, or (B) if there have been no sales on any such exchange such that the foregoing Ten Day Average cannot be calculated,
the average of the highest bid and lowest asked prices on all such exchanges at the end of the Business Day immediately prior
to the date that Fair Market Value is determined as of, or (C) if on any day such security is not listed any domestic securities
exchange such that neither the foregoing Ten Day Average nor the foregoing bid-and-asked price average can be calculated, the
average of the highest bid and lowest asked prices at the end of the Business Day immediately prior to the date that Fair Market
Value is determined in the domestic over-the-counter market as reported by the National Association of Securities Dealers Automated
Quotation System or similar organization (and in each such case excluding any trades that are not bona fide, arm’s length
transactions). If neither the foregoing clause (i) nor clause (ii) is applicable, then (i) the “Fair Market Value”
of such security as of an applicable determination date shall be as determined in accordance with the Appraisal Procedure.
In
the event we declare or pay any dividends or if any other distribution is made on or with respect to our common stock, the warrant
holder as of the record date established by our Board of Directors for such dividend or distribution will be entitled to receive
a fee (the “Dilution Adjustment”) in an amount (whether in the form of cash, securities or other property) equal to
the amount (and in the form) of the dividends or distribution that such holder would have received had the warrant been exercised
as of the date immediately prior to the record date for such dividend or distribution; provided, however, that if we declare and
pay a dividend or distribution on our common stock consisting in whole or in part of common stock, then no Dilution Adjustment
will be payable in respect of the warrant and, in lieu thereof, the applicable adjustment will apply.
The
above description of the warrants is qualified in its entirety by reference to the full text of the Form of Warrant attached
as Exhibit E to the Credit Agreement, which is attached to the Current Report on Form 8-K we filed on May 2, 2017, which we
incorporate herein by reference.
PLAN
OF DISTRIBUTION
We,
the Investors and the Agent have entered into the Credit Agreement. Pursuant to the Credit Agreement, the Investors have agreed
to make secured term loans to us in an aggregate principal amount of $60,000,000.
We
are offering warrants for the purchase of 357,500 shares of common stock directly to the Investors in connection with entering
into the Credit Agreement. We may, with the agreement of the Investors, increase the number of shares of common stock subject
to the warrants to 362,500 shares.
We
will receive no proceeds from the offering of these securities, although if the warrants were to be exercised for cash we would
receive the exercise price. No underwriters or agents will be involved, and no commissions will be payable by us with respect
to the offering.
All
of our obligations under the Credit Agreement will be secured by first priority security interests in substantially all of our
assets. The Credit Agreement includes customary representations, warranties and covenants, and acceleration, indemnity and events
of default provisions.
LEGAL
MATTERS
The
validity of the securities offered hereby will be passed upon for us by Mitchell Silberberg & Knupp LLP, Los Angeles, California.
EXPERTS
The
financial statements and management’s assessment of the effectiveness of internal control over financial reporting (which
is included in Management’s Report on Internal Control over Financial Reporting) incorporated in this prospectus supplement
by reference to our Annual Report on Form 10-K for the year ended December 31, 2016 have been so incorporated in reliance on the
report (which contains an explanatory paragraph relating to the Company’s ability to continue as a going concern as described
in Note 2 to the financial statements) of PricewaterhouseCoopers LLP, an independent registered public accounting firm, given
on the authority of said firm as experts in auditing and accounting.
WHERE
YOU CAN FIND MORE INFORMATION
We
have filed with the Commission a registration statement on Form S-3 under the Securities Act of 1933, as amended, to register
with the Commission the securities being offered in this prospectus supplement and the accompanying prospectus. This prospectus
supplement and the accompanying prospectus, which constitute a part of the registration statement, do not contain all of the information
set forth in the registration statement or the exhibits and schedules filed with the registration statement. For further information
about us, and the securities being offered, reference is made to the registration statement and the exhibits and schedules filed
with the registration statement. Any statements contained or incorporated by reference in this prospectus supplement regarding
the contents of any contract or any other document that is filed as an exhibit to the registration statement are not necessarily
complete, and each such statement is qualified in all respects by reference to the full text of such contract or other document
filed as an exhibit to the registration statement. We file annual, quarterly and current reports, proxy and registration statements
and other information with the Commission. You may read and copy any reports, statements, or other information that we file, including
the registration statement of which this prospectus supplement and the accompanying prospectus form a part, and the exhibits and
schedules filed with the registration statement, without charge at the public reference room maintained by the Commission, located
at 100 F Street, NE, Room 1024, Washington, D.C. 20549, and copies of all or any part of the registration statement may be obtained
from the Commission on the payment of the fees prescribed by the Commission. Please call the Commission at 1-800-SEC-0330 for
further information about the public reference room. Our filings with the Commission, including the registration statement, are
available to you on the Commission’s website at http://www.sec.gov. In addition, documents that we file with the Commission
are available on our website at www.cadizinc.com. Unless specifically incorporated by reference into this prospectus supplement
or the accompanying prospectus, information contained on our website is not, and should not be interpreted to be, part of this
prospectus supplement or the accompanying prospectus.
We
are “incorporating by reference” into this prospectus supplement and the accompanying prospectus specified documents
we file with the Commission. The information we incorporate by reference into this prospectus supplement is an important part
of the prospectus of which this prospectus supplement is a part.
We
incorporate by reference into this prospectus supplement the information contained in the following documents, which is considered
to be a part of this prospectus supplement:
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our
Annual Report on Form 10-K for the year ended December 31, 2016, filed on March 16, 2017;
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our
definitive Proxy Statement on Schedule 14A filed on April 21, 2017, but only to the extent
that such information was incorporated by reference into our Annual Report on Form 10-K
for the year ended December 31, 2016;
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●
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our
Current Reports on Form 8-K filed on February 3, 2017 and on May 2, 2017;
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the
description of our common stock as set forth in our registration statement filed on Form
8-A under the Exchange Act on May 8, 1984, as amended by reports on:
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o
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Form
8-K filed with the SEC on May 26, 1988;
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o
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Form
8-K filed with the SEC on June 2, 1992;
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o
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Form
8-K filed with the SEC on May 18, 1999; and
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o
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Annual
Report on Form 10-K for the year ended December 31, 2003, filed on November 2, 2004.
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We
also incorporate by reference all additional documents that we file with the Commission pursuant to Sections 13(a), 13(c), 14
or 15(d) of the Exchange Act, which are filed after the effective date of the registration statement and prior to the termination
of the offering of securities offered pursuant to this prospectus supplement and the accompanying prospectus. We are not, however,
incorporating, in each case, any documents or information that we “furnish” to, and not file with, the Commission
in accordance with its rules and regulations.
Any
statement contained in a document incorporated or deemed to be incorporated by reference into this prospectus supplement will
be deemed to be modified or superseded for purposes of this prospectus to the extent that a statement contained in this prospectus
supplement or any other subsequently filed document that is deemed to be incorporated by reference into this prospectus supplement
modifies or supersedes the statement. Any statement so modified or superseded will not be deemed, except as so modified or superseded,
to constitute a part of this prospectus supplement.
Our
filings with the Commission, including our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form
8-K, and definitive proxy statement, and any amendments to those filings, are available free of charge on our website (www.cadizinc.com)
as soon as reasonably practicable after they are filed with, or furnished to, the Commission. Our website and the information
contained on that site, or connected to that site, are not incorporated into and are not a part of this prospectus supplement.
You may also obtain a copy of these filings at no cost by writing or telephoning us at the following address:
Cadiz
Inc.
550
S. Hope Street
Suite
2850
Los
Angeles, California 90071
Attention:
Investor Relations
Telephone:
(213) 271-1600
We
will provide without charge upon written or oral request to each person, including any beneficial owner, to whom a prospectus
is delivered, a copy of any and all of the documents which are incorporated by reference in this prospectus but not delivered
with this prospectus (other than exhibits unless such exhibits are specifically incorporated by reference in such documents).
You may request a copy of these documents by writing or telephoning us at the above address.
No
person has been authorized to give any information or to make any representation not contained in this prospectus supplement,
and, if given or made, such information and representation should not be relied upon as having been authorized by us. Neither
this prospectus supplement nor the accompanying prospectus constitute an offer to sell or a solicitation of an offer to buy any
of the securities offered hereby in any jurisdiction or to any person to whom it is unlawful to make such offer or solicitation.
Neither the delivery of this prospectus supplement or the accompanying prospectus nor any sale made hereunder will under any circumstances
create an implication that there has been no change in the facts set forth in this prospectus supplement or the accompanying prospectus
or in our business, financial condition or affairs since the date hereof.
PROSPECTUS
$40,000,000
Cadiz
Inc.
DEBT
SECURITIES
COMMON
STOCK
PREFERRED
STOCK
Warrants
SUBSCRIPTION
RIGHTS
Units
By
this prospectus and an accompanying prospectus supplement, we may from time to time offer and sell, in one or more offerings,
up to $40,000,000 in any combination of debt securities, common stock, preferred stock, warrants, subscription rights and units.
We
will provide you with more specific terms of these securities in one or more supplements to this prospectus. You should read this
prospectus and the applicable prospectus supplement carefully before you invest.
We
may offer these securities from time to time in amounts, at prices and on other terms to be determined at the time of the offering.
We may offer and sell these securities to or through underwriters, dealers or agents, or directly to investors, on a continuous
or delayed basis. The supplements to this prospectus will provide the specific terms of the plan of distribution. The price to
the public of such securities and the net proceeds we expect to receive from such sale will also be set forth in the applicable
prospectus supplement.
Our
common stock is listed on the Nasdaq Global Market under the symbol “CDZI”. On October 28, 2016, the closing price
of our common stock as reported by the Nasdaq Global Market was $7.40 per share.
Investing
in these securities involves certain risks. See “Risk Factors” beginning on page 2.
NEITHER
THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR
PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Prospectus
dated November 14, 2016
TABLE
OF CONTENTS
ABOUT
THIS PROSPECTUS
This
prospectus is part of a registration statement we filed with the Securities and Exchange Commission, or the “Commission”,
using the “shelf” registration process. Under the shelf registration process, using this prospectus, together with
a prospectus supplement, we may sell from time to time any combination of the securities described in this prospectus in one or
more offerings. This prospectus provides you with a general description of the securities that may be offered. Each time we sell
securities pursuant to this prospectus, we will provide a prospectus supplement that will contain specific information about the
terms of the securities being offered. A prospectus supplement may include a discussion of any risk factors or other special considerations
applicable to those securities or to us. The prospectus supplement may also add to, update or change information contained in
this prospectus and, accordingly, to the extent inconsistent, the information in this prospectus will be superseded by the information
in the prospectus supplement. You should read this prospectus, any applicable prospectus supplement and the additional information
incorporated by reference in this prospectus described below under “Available Information” and “Information
Incorporated by Reference” before making an investment in our securities.
This
prospectus contains summaries of certain provisions contained in some of the documents described herein, but reference is made
to the actual documents for complete information. All of the summaries are qualified in their entirety by the actual documents.
Copies of the documents referred to herein have been filed, or will be filed or incorporated by reference as exhibits to the registration
statement of which this prospectus is a part, and you may obtain copies of those documents as described below under “Available
Information.”
Neither
the delivery of this prospectus nor any sale made under it implies that there has been no change in our affairs or that the information
in this prospectus is correct as of any date after the date of this prospectus. You should not assume that the information in
this prospectus, including any information incorporated in this prospectus by reference, the accompanying prospectus supplement
or any free writing prospectus prepared by us, is accurate as of any date other than the date on the front of those documents.
Our business, financial condition, results of operations and prospects may have changed since that date.
We
have not authorized anyone to provide any information other than that contained or incorporated by reference in this prospectus,
a prospectus supplement or in any free writing prospectus prepared by or on behalf of us or to which we have referred you. We
take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give
you. We are not making an offer to sell securities in any jurisdiction where the offer or sale of such securities is not permitted.
Unless
the context otherwise requires, the terms “we,” “us,” “our,” “Cadiz,” and “the
Company” refer to Cadiz Inc., a Delaware corporation.
Special
Note Regarding Forward-Looking Statements
All
statements in this prospectus and the documents incorporated by reference that are not historical facts should be considered “Forward
Looking Statements” within the meaning of the “Safe Harbor” provisions of the Private Securities Litigation
Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results,
performance or achievements of the Company to be materially different from any future results, performance or achievements expressed
or implied by the forward-looking statements. Although we believe that our plans, intentions and expectations reflected in, or
suggested by, such forward-looking statements are reasonable, we can give no assurance that such plans, intentions, or expectations
will be achieved.
Certain
risks, uncertainties, and other factors are incorporated herein by reference to our most recent Annual Report on Form 10-K
and our subsequent Quarterly Reports on Form 10-Q, along with the other information contained in this prospectus, as updated
by our subsequent filings under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Except as otherwise
required by applicable securities laws, we undertake no obligation to publicly update or revise any forward-looking statements,
whether as a result of new information, future events, changed circumstances, or any other reason, after the date of this prospectus.
Available
Information
We
are subject to the informational requirements of the Exchange Act, and file reports, proxy statements and other information with
the Securities and Exchange Commission (the “Commission” or the “SEC”). We have also filed a registration
statement on Form S-3 with the Commission. This prospectus, which forms part of the registration statement, does not have all
of the information contained in the registration statement. You may read, free of charge, and copy, at the prescribed rates, any
reports, proxy statements and other information, including the registration statement, at the Commission’s Public Reference
Room at 100 F Street, N.E., Washington, D.C. 20549. The public may obtain information concerning the operation of the Public Reference
Room by calling the Commission at 1-800-SEC-0330. The Commission also maintains a website that contains reports, proxy statements
and other information, including the registration statement. The website address is: http://www.sec.gov.
Information
Incorporated by Reference
The
Commission allows us to “incorporate by reference” into this prospectus the information we file with them. The information
we incorporate by reference into this prospectus is an important part of this prospectus. Any statement in a document we have
filed with the Commission prior to the date of this prospectus and which is incorporated by reference into this prospectus will
be considered to be modified or superseded to the extent a statement contained in the prospectus or any other subsequently filed
document that is incorporated by reference into this prospectus modifies or supersedes that statement. The modified or superseded
statement will not be considered to be a part of this prospectus, except as modified or superseded.
We
incorporate by reference into this prospectus the information contained in the following documents, which is considered to be
a part of this prospectus:
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our
Annual Report on Form 10-K for the year ended December 31, 2015, filed on March
14, 2016;
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our
Current Reports on Form 8-K filed on February 12, 2016, March 10, 2016, April 29,
2016, May 11, 2016, May 26, 2016, June 14, 2016 and June 23, 2016;
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our
Quarterly Reports on Form 10-Q for the quarters ended March 31, 2016 and June
30, 2016, filed on May 9, 2016 and August 8, 2016, respectively;
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the
description of our common stock as set forth in our registration statement filed on Form 8-A
under the Exchange Act on May 8, 1984, as amended by reports on:
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Form 8-K
filed with the SEC on May 26, 1988;
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Form 8-K
filed with the SEC on June 2, 1992;
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Form 8-K
filed with the SEC on May 18, 1999; and
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Annual
Report on Form 10-K for the year ended December 31, 2003, filed on November 2,
2004
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We
also incorporate by reference all additional documents that we file with the Commission pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act that are filed after the date of the initial registration statement and prior to the effectiveness
of the registration statement or that are filed after the effective date of the registration statement of which this prospectus
is a part and prior to the termination of the offering of securities offered pursuant to this prospectus. We are not, however,
incorporating in each case, any documents or information that we are deemed to “furnish” and not file in accordance
with the Commission rules.
You
may obtain a copy of these filings, without charge, by writing or calling us at:
Cadiz
Inc.
550 South Hope Street
Suite 2850
Los Angeles, California 90071
Attention: Investor Relations
(213) 271-1600
No
dealer, salesperson, or other person has been authorized to give any information or to make any representation not contained in
this prospectus, and, if given or made, such information and representation should not be relied upon as having been authorized
by us or any selling shareholder. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any
of the securities offered by this prospectus in any jurisdiction or to any person to whom it is unlawful to make such offer or
solicitation. Neither the delivery of this prospectus nor any sale made hereunder shall under any circumstances create an implication
that there has been no change in the facts set forth in this prospectus or in our affairs since the date hereof.
The
Company
About
Cadiz
We
are a land and water resource development company with 45,000 acres of land in three areas of eastern San Bernardino County, California. Virtually
all of this land is underlain with high-quality, naturally recharging groundwater resources, and is situated in proximity to the
Colorado River and the Colorado River Aqueduct (“CRA”), a major source of imported water for Southern California. Our
properties are suitable for various uses, including large-scale agricultural development, groundwater storage and water supply
projects. Our main objective is to realize the highest and best use of our land and water resources in an environmentally responsible
way.
We
believe that the long-term highest and best use of our land and water assets can best be realized through the development of a
combination of water supply and storage projects at our properties. Therefore, the Company has been primarily focused on the development
of the Cadiz Valley Water Conservation, Recovery and Storage Project (“Water Project” or “Project”), which
will capture and conserve millions of acre-feet
2
of native groundwater currently
being lost to evaporation from the aquifer system beneath our 34,000-acre property in the Cadiz and Fenner valleys of eastern
San Bernardino County (the “Cadiz/Fenner Property”), and deliver it to water providers throughout Southern California
(see “Water Resource Development”). We believe that the ultimate implementation of this Water Project will
provide a significant source of future cash flow.
The
primary factor driving the value of such projects is ongoing pressure on water supplies throughout California, which has led Southern
California water providers to actively seek new, reliable supply solutions to plan for both short and long-term water needs. Available
supply is constrained by environmental and regulatory restrictions on each of the State’s three main water sources: the
State Water Project, which provides water supplies from Northern California to the central and southern parts of the state, the
CRA and the Los Angeles Aqueduct. Southern California’s water providers rely on imports from these systems for
a majority of their water supplies, but deliveries from all three into the region have been below capacity over the last several
years.
Availability
of supplies in California also differs greatly from year to year due to natural hydrological variability. Over the
last several years, California has struggled through a historic drought featuring record-low winter precipitation and reservoir
storage levels. In 2015, for the first time in the state’s history, California Governor Jerry Brown mandated rationing of
25% statewide in an effort to curtail urban demand. An “El Nino” weather pattern developed at the end of
2015 and brought wet conditions to California, yet snowpack and precipitation remain average for the year, especially in Southern
California. According to the US Drought Monitor, as of February 2016, more than 99% of California remains abnormally dry.
The Water Project is one of the few nearly “shovel-ready” supply options in Southern California that could help alleviate
the region’s water supply challenges. (See “Water Resource Development” below.) In addition to our water resource
development activities, we also continue to explore additional uses of our land and water resource assets, including new agricultural
opportunities, the development of a land conservation bank on our properties outside the Water Project area and other long-term
legacy uses of our properties, such as habitat conservation and cultural uses.
In
addition to an urgent need in California for new, reliable water supplies, demand for agricultural land with water rights is also
at an all-time high. Therefore, in addition to our Water Project proposal, we are pursuing ways in which the groundwater currently
being lost to evaporation from the aquifer system at the Cadiz/Fenner property can be immediately put to beneficial use through
sales, leasing, or agricultural joint ventures that are complementary to the Water Project.
2
One acre-foot is equal to approximately 326,000 gallons or the
volume of water that will cover an area of one acre to a depth of one-foot. An acre-foot is generally considered to be enough
water to meet the annual water needs of one average California household.
We
have farmed portions of the Cadiz/Fenner Property since the late 1980s relying on groundwater from the aquifer system for irrigation
and we believe the site is well suited for various permanent and seasonal crops. In 1993, we secured permits to develop agriculture
on up to 9,600 acres of the property and withdraw groundwater from the underlying aquifer system for irrigation. We
initially developed 1,900 acres of agriculture at the Property, including a well-field and manifold system and since have maintained
various levels of agriculture at the Property as we focused on developing the Water Project. In February 2016 we completed
arrangements to lease 2,100 acres of the Cadiz/Fenner Property for agricultural development as a result of significant interest
from third parties in expanding agricultural activity at the Cadiz/Fenner Property.
As
part of the agricultural expansion to be conducted under the lease arrangements, the groundwater production capacity of the property’s
existing well-field is expected to be increased, which will provide additional infrastructure that is complementary to the Water
Project. Through work completed in 2015, including the drilling of three additional exploratory wells, we have now
identified suitable locations for the drilling of high-production wells powered by natural gas that could produce all of the water
allowable under our existing permit for implementation of the Water Project or alternatively to supply irrigation water for all
of the agricultural land. While any additional well-field development for agricultural use would be financed by our
agricultural partners as provided under our agricultural arrangements, the Company retained a call feature that allows us, at
any time in the initial 20 years, to acquire the well-field and integrate any new agricultural well-field infrastructure developed
into the Water Project’s facilities.
Our
2016 working capital requirements relate largely to the final development activities associated with the Water Project and those
activities consistent with the Water Project related to further development of our land and agricultural assets. While
we continue to believe that the ultimate implementation of the Water Project will provide the primary source of our future cash
flow, we also believe there is significant additional value in our underlying agricultural assets.
We
also continue to explore additional uses of our land and water resource assets, including the marketing of our approved desert
tortoise land conservation bank, which is located on our properties outside the Water Project area, and other long-term legacy
uses of our properties, such as habitat conservation and cultural development.
Corporate
Information
We
are a Delaware corporation with our principal executive offices located at 550 South Hope Street, Suite 2850, Los Angeles, California
90071. Our telephone number is (213) 271-1600. We maintain a corporate website at www.cadizinc.com. The information contained
in, or that can be accessed through, our website is not a part of this prospectus.
Risk
Factors
An
investment in our securities involves a high degree of risk. Certain risks relating to us and our business are described under
the headings “Business” and “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31,
2015, filed with the Commission on March 14, 2016, which is incorporated by reference into this prospectus and which you
should carefully review and consider, along with the other information contained in this prospectus or incorporated by reference
herein, as updated by our subsequent filings under the Exchange Act, before making an investment in any of our securities. Additional
risks, as well as updates or changes to the risks described in the documents incorporated by reference herein, may be included
in any applicable prospectus supplement. Our business, financial condition or results of operations could be materially adversely
affected by any of these risks. The market or trading price of our securities could decline due to any of these risks, and you
may lose all or part of your investment. In addition, please read the section of this prospectus captioned “Special Note
Regarding Forward-Looking Statements”, in which we describe additional uncertainties associated with our business and the
forward-looking statements included or incorporated by reference in this prospectus. Please note that additional risks not presently
known to us or that we currently deem immaterial may also impair our business and operations.
Investment
in any securities offered pursuant to this prospectus involves risks and uncertainties. If one or more of the events discussed
in the risk factors were to occur, our business, financial condition, results of operations or liquidity, as well as the value
of an investment in our securities, could be materially adversely affected.
You
should carefully consider the risk factors as well as the other information contained and incorporated by reference in this prospectus
before deciding to invest.
Use
of Proceeds
Unless
otherwise provided in the applicable prospectus supplement, the net proceeds from the sale of the securities offered by this prospectus
and each prospectus supplement, the “offered securities”, will be used for general corporate purposes, which may include
working capital needs, the refinancing or repayment of existing indebtedness, capital expenditures, expansion of the business
and acquisitions. If any of the net proceeds from the offered securities will be used for acquisitions, we will identify the acquisition
in the applicable prospectus supplement. The net proceeds may be invested temporarily in short-term securities or to repay short-term
debt until they are used for their stated purpose.
Ratios
of Earnings to Fixed Charges
and Combined Fixed Charges and Preferred Dividends
The
ratios of earnings to fixed charges and earnings to combined fixed charges and preferred stock dividend requirements are set forth
below for the periods indicated.
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Six
months ended
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Year
Ended December 31,
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June
30, 2016
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2015
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2014
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2013
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2012
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2011
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Ratio of Earnings to Fixed
Charges
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(a
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(a)
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(a
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(a
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(a
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(a
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)
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(a
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Ratio of Earnings to Combined Fixed
Charges and Preferred Stock Dividend Requirements
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(a
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(a
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)
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(a
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(a
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)
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(a
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(a
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)
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(a
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)
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(a)
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Both
(1) fixed charges and (2) combined fixed charges and preferred stock dividend
requirements exceeded our earnings (loss) for the six months ended June 30, 2016 by $14.4
million and for the years ended December 31, 2015, 2014, 2013, 2012 and 2011 by $24.0
million, $18.9 million, $22.7 million, $19.9 million, and $16.8 million, respectively.
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For
the purpose of calculating both the ratios of earnings to fixed charges and earnings to combined fixed charges and preferred stock
dividend requirements, earnings represent net income from continuing operations before the cumulative effect of change in accounting
principles, less undistributed equity earnings, plus applicable income taxes plus fixed charges. Fixed charges, excluding interest
on deposits, include interest expense (other than on deposits) and the proportion deemed representative of the interest factor
of rent expense, net of income from subleases. Fixed charges, including interest on deposits, include all interest expense and
the proportion deemed representative of the interest factor of rent expense, net of income from subleases.
Description
of Debt Securities
This
prospectus describes certain general terms and provisions of the debt securities. The debt securities may constitute either senior
or subordinated debt securities, and in either case will be unsecured, and may also include convertible debt securities. We will
issue any debt securities that will be senior debt under an Indenture between us and U.S. Bank National Association, as trustee
(the “Senior Indenture”). We will issue any debt securities that will be subordinated debt under an Indenture between
us and U.S. Bank National Association, as trustee (the “Subordinated Indenture”). We may also issue debt securities
under the Indentures between Cadiz Inc., as Issuer, and U.S. Bank National Association, as Trustee, dated as of March 5, 2013
and December 10, 2015 (the “Existing Indentures”). This prospectus refers to the Senior Indenture and the Subordinated
Indenture individually as the “Indenture” and collectively as the “Indentures.” The form of Senior Indenture
and the form of Subordinated Indenture are included as exhibits to the registration statement of which this prospectus forms a
part while the Existing Indentures are incorporated by reference as exhibits to the registration statement. The term “trustee”
refers to the trustee under each Indenture, as appropriate.
The
Indentures are subject to and governed by the Trust Indenture Act of 1939, as amended. The Indentures are substantially identical,
except for the provisions relating to subordination, which are included only in the Subordinated Indenture. The following summary
of the material provisions of the Indentures and the debt securities is not complete and is subject to, and is qualified in its
entirety by reference to, all of the provisions of the Indentures, each of which has been filed as an exhibit to the registration
statement of which this prospectus is a part. We urge you to read the Indenture that is applicable to you because it, and not
the summary below, defines your rights as a holder of debt securities. You can obtain copies of the Indentures by following the
directions described under the heading “Available Information.”
The
senior debt securities will rank equally with all of our other unsecured and unsubordinated debt. The subordinated debt securities
will be subordinated in right of payment to our “Senior Indebtedness”, as defined below in the section titled “Subordination”.
As of June 30, 2016, all of our $118,891,459 aggregate principal amount of existing debt would have ranked senior to the subordinated
debt securities and $76,223,279 aggregate principal amount of our debt would have ranked equally with the senior debt securities.
The Indentures do not limit the amount of debt, either secured or unsecured, which may be issued by us under the Indentures or
otherwise. We may limit the maximum total principal amount for the debt securities of any series. However, any limit under the
Indentures may be increased by resolution of our Board of Directors. We will establish the terms of each series of debt securities
under the Indentures in a supplemental Indenture, board resolution or company order. The debt securities under the Indentures
may be issued in one or more series with the same or various maturities and may be sold at par, a premium or an original issue
discount. Debt securities sold at an original issue discount may bear no interest or interest at a rate which is below market
rates.
The
Indentures do not prohibit us or our subsidiaries from incurring debt or agreeing to limitations on our subsidiaries’ ability
to pay dividends or make other distributions to us, although the terms of specific debt securities may include such limitations.
The agreements governing our indebtedness, including the Existing Indentures, contain limitations on our ability to incur debt
or liens, conduct asset sales and pay dividends.
Unless
we inform you otherwise in a prospectus supplement, we may issue additional debt securities of a particular series under the Indentures
without the consent of the holders of the debt securities of such series outstanding at the time of issuance. Any such additional
debt securities, together with all other outstanding debt securities of that series, will constitute a single series of securities
under the applicable Indenture.
Unless
we inform you otherwise in a prospectus supplement, each series of our senior debt securities will rank equally in right of payment
with all of our other unsubordinated debt. The subordinated debt securities will rank junior in right of payment and be subordinate
to all of our unsubordinated debt.
We
may issue debt securities from time to time in one or more series under the Indentures or under the Existing Indentures. We will
describe the particular terms of each series of debt securities we offer in a supplement to this prospectus or other offering
material. The prospectus supplement and other offering material relating to a series of debt securities will describe the terms
of such debt securities being offered, including (to the extent such terms are applicable to such debt securities):
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the
title of the debt securities;
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designation,
aggregate principal amount, denomination and currency or currency unit;
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the
price or prices at which we sell the debt securities and the percentage of the principal
amount at which the debt securities will be issued;
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whether
the debt securities are senior debt securities or subordinated debt securities and applicable
subordination provisions, if any;
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any
limit on the total principal amount of the debt securities and the ability to issue additional
debt securities of the same series;
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currency
or currency units for which such debt securities may be purchased and in which principal
of, premium, if any, and any interest will or may be payable;
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interest
rate or rates (or the manner of calculation thereof), if any;
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the
times at which any such interest will be payable;
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the
date or dates from which interest will accrue on the debt securities, or the method used
for determining those dates;
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the
place or places where the principal and interest, if any, will be payable;
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any
redemption, sinking fund, satisfaction and discharge, or defeasance provisions;
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whether
such debt securities will be issuable in registered form or bearer form or both and,
if issuable in bearer form, restrictions applicable to the exchange of one form for another
and to the offer, sale and delivery of certificates in bearer form;
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whether
and under what circumstances we may from time to time, without the consent of holders
of debt securities, issue additional debt securities, having the same ranking and the
same interest rate, maturity and other terms as the debt securities being offered, except
for the issue price and issue date and, in some cases, the first interest payment date,
whereby such additional securities will, together with the then outstanding debt securities,
constitute a single class of debt securities under the Indentures, and will vote together
on matters under the Senior Indenture;
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if
material, federal income tax consequences;
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whether
and under what circumstances we will issue the debt securities in whole or in part as
Global Securities as described below under “Global Securities”;
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applicable
conversion or exchange privileges;
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any
defaults and events of defaults applicable to the debt securities to be issued;
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securities
exchange(s) on which the securities will be listed, if any;
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whether
any underwriter(s) will act as market maker(s) for the securities;
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extent
to which a secondary market for the securities is expected to develop;
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provisions
relating to covenant defeasance and legal defeasance;
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provisions
relating to satisfaction and discharge of the Indenture;
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any
covenants or restrictions on us or our subsidiaries; and
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any
other specific terms of the offered debt securities, including any terms in lieu of those
described in this prospectus and any terms which may be required by or advisable under
United States laws or regulations such as those made a part of the applicable Indenture
by the Trust Indenture Act of 1939.
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Material
United States federal income tax consequences and special considerations, if any, applicable to any such securities will be described
in the applicable prospectus supplement.
Debt
securities may be presented for exchange, and registered debt securities may be presented for transfer, in the manner, at the
places and subject to the restrictions set forth in the debt securities and as summarized in the applicable prospectus supplement.
Such services will be provided without charge, other than any tax or other governmental charge payable in connection with such
exchange or transfer, but subject to the limitations provided in the applicable Indenture. Debt securities in bearer form and
the coupons, if any, appertaining to such debt securities will be transferable by delivery.
The
indebtedness represented by the subordinated debt securities will be subordinated in right of payment to existing and future “Senior
Indebtedness,” as described in the Subordinated Indenture and any accompanying prospectus supplement. The term “Senior
Indebtedness” means:
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all
indebtedness for money borrowed incurred by us, unless the terms of the instrument or
instruments by which such indebtedness is incurred or created expressly provide that
such indebtedness is subordinate to the subordinated debt securities or that such indebtedness
is not superior in right of payment to the subordinated debt securities,
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any
other indebtedness, obligation or liability incurred by us (including any guaranty, endorsement
or other contingent obligation of ours in respect of, or to purchase, or otherwise acquire,
any obligation of another), direct or indirect, absolute or contingent, or matured or
unmatured, which is specifically designated by us as Senior Indebtedness in the instruments
evidencing such indebtedness, obligation or liability at the time of its issuance or
incurrence, or
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any
deferral, renewal or extension of any of the foregoing.
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“Senior
Indebtedness” does not include:
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our
debt to any of our subsidiaries;
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any
series of subordinated debt securities issued under the Subordinated Indenture, unless
otherwise specified by the terms of any such series;
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any
of our other debt which by the terms of the instrument creating or evidencing it is specifically
designated as being subordinated to or pari passu with the subordinated debt securities;
and
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The
Subordinated Indenture does not limit our ability to incur additional indebtedness, including indebtedness that ranks senior in
priority of payment to the subordinated debt securities. A prospectus supplement relating to each series of subordinated debt
securities will describe any subordination provisions applicable to such series in addition to or different from those described
above.
By
reason of such subordination, in the event of dissolution, insolvency, bankruptcy or other similar proceedings, upon any distribution
of assets, (i) the holders of subordinated debt securities will be required to pay over their share of such distribution
in respect of the subordinated debt securities to the holders of Senior Indebtedness until such Senior Indebtedness is paid in
full and (ii) creditors of ours who are not holders of Senior Indebtedness may recover less, ratably, than holders of Senior
Indebtedness and may recover more, ratably, than holders of subordinated debt securities.
Conversion
and Exchange
The
terms, if any, on which debt securities of any series will be convertible into or exchangeable for our common stock, our preferred
stock, another series of our debt securities, other securities, property or cash, or a combination of any of the foregoing, will
be summarized in the prospectus supplement relating to such series of debt securities. Such terms may include provisions for conversion
or exchange, either on a mandatory basis, at the option of the holder, or at our option, in which the number of shares or amount
of our common stock, our preferred stock, another series of our debt securities, other securities, property or cash to be received
by the holders of the debt securities would be calculated according to the factors and at such time as summarized in the related
prospectus supplement.
Global
Securities
The
debt securities of a series may be issued in whole or in part in the form of one or more global securities that will be deposited
with, or on behalf of, a depositary identified in the prospectus supplement. Global securities will be issued in registered form
and in either temporary or definitive form. Unless and until it is exchanged in whole or in part for the individual debt securities,
a global security may not be transferred except as a whole by the depositary for such global security to a nominee of such depositary
or by a nominee of such depositary to such depositary or another nominee of such depositary or by such depositary or any such
nominee to a successor of such depositary or a nominee of such successor. The specific terms of the depositary arrangement with
respect to any debt securities of a series and the rights of and limitations upon owners of beneficial interests in a global security
will be described in the applicable prospectus supplement.
Restrictive
Covenants
We
will describe any restrictive covenants, including restrictions on any subsidiary, for any series of debt securities in a prospectus
supplement.
At
our option, either (a) we will be Discharged (as defined below) from any and all obligations in respect of any series of
debt securities under the Indenture or (b) we will cease to be under any obligation to comply with the restriction on our
ability to merge, consolidate or sell assets set forth in the applicable Indenture, the requirement that we maintain our existence
or certain other restrictions, in either case if we deposit irrevocably with the trustee, in trust, specifically for the benefit
of the holders of such series, money or U.S. Government Obligations (as defined below) which through the payment of interest thereon
and principal thereof in accordance with their terms will provide money in an amount sufficient (in the written opinion of a nationally
recognized firm of independent public accountants in the case of U.S. Government Obligations or a combination of money and U.S.
Government Obligations) to pay all the principal of (including any sinking fund payments or analogous obligations), and interest
on, the debt securities of such series on the dates such payments are due in accordance with the terms of such series of debt
securities. To exercise such option, we are required to deliver to the trustee an opinion of tax counsel to the effect that holders
of the debt securities of such series will not recognize income, gain or loss for federal income tax purposes as a result of such
deposit and discharge and will be subject to federal income tax in the same amount and in the same manner and at the same times
as would have been the case if such deposit and discharge had not occurred.
The
term “Discharged” is defined to mean that we are deemed to have paid and discharged the entire indebtedness represented
by, and obligations under, the debt securities of such series and to have satisfied all the obligations under the Indenture relating
to the debt securities of such series, except for
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the
rights of holders of the debt securities of such series to receive, from the trust fund
described above, payment of the principal of and the interest on the debt securities
of such series when such payments are due;
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our
obligations with respect to the debt securities of such series with respect to temporary
debt securities, registration, transfer, exchange, replacement of mutilated, destroyed,
lost and stolen certificates, maintenance of a paying office and holding money in trust;
and
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the
rights, powers, trusts, duties and immunities of the trustee under the applicable Indenture.
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The
term “U.S. Government Obligations” is defined to mean securities that are (i) direct obligations of the United
States of America for the payment of which its full faith and credit is pledged or (ii) obligations of a Person controlled
or supervised by and acting as an agency or instrumentality of the United States of America the payment of which is unconditionally
guaranteed as a full faith and credit obligation by the United States of America, which, in either case under clauses (i)
or (ii) are not callable or redeemable at the option of the issuer thereof, and also includes a depositary receipt issued by a
bank or trust company, as custodian with respect to any such U.S. Government Obligation held by such custodian for the account
of the holder of a depository receipt, provided that (except as required by law) such custodian is not authorized to make any
deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect
of the U.S. Government Obligation or the specific payment of interest on or principal of the U.S. Government Obligations evidenced
by such depository receipt.
Satisfaction
and Discharge
In
addition, an Indenture will cease to be of further effect with respect to the debt securities of a series issued under that Indenture,
subject to certain exceptions generally relating to compensation and indemnity of the trustee, when either:
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all
outstanding debt securities of that series have been delivered to the trustee for cancellation
and we have paid all sums payable by us under the Indenture with respect to such series,
or
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all
outstanding debt securities of that series not delivered to the trustee for cancellation
either: (i) have become due and payable, (ii) will become due and payable at
their stated maturity within one year, or (iii) are to be called for redemption
within one year; and we have deposited irrevocably with the trustee, in trust, specifically
for the benefit of the holders of such series, money or U.S. Government Obligations which
through the payment of interest thereon and principal thereof in accordance with their
terms will provide money in an amount sufficient (in the written opinion of a nationally
recognized firm of independent public accountants in the case of U.S. Government Obligations
or a combination of money and U.S. Government Obligations) to pay all the principal of
(including any sinking fund payments or analogous obligations), and interest on, the
debt securities of such series on the dates such payments are due in accordance with
the terms of such series of debt securities.
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Modification
of the Indentures
Modifications
and amendments of each Indenture may be made by us and the trustee without the consent of the holders of the debt securities or
with the consent of the holders of not less than a majority in principal amount of all outstanding debt securities affected by
such modification or amendment; provided however, that no such modification or amendment may, without the consent of the holder
of each outstanding debt security affected thereby:
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change
the stated maturity of the principal of, or any installment of principal of or interest
on, any debt security;
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reduce
the principal amount of or interest on, or any premium payable upon redemption of, any
debt security;
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change
certain other terms related to waiver of past defaults or covenants (such as covenants
and provisions of the Indenture that may not be amended without the consent of the holder
of each outstanding debt security of the series affected); or
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reduce
the percentage of the principal amount of the outstanding debt security of any series,
the consent of whose holders is required to modify or amend the applicable Indenture
or waive compliance with, or consent to certain defaults under, the provisions of such
Indenture.
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Our
Board of Directors does not have the power to waive any of the covenants of each Indenture, including those relating to consolidation,
merger or sale of assets.
Events
of Default, Notice and Waiver
The
following will be “Events of Default” with respect to any particular series of the debt securities under the Indentures:
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default
in any payment of interest on such series when due, continued for 30 days;
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default
in any payment of principal and premium, if any, of, or sinking fund installment on,
such series when due;
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default
in the performance, or breach, of any covenant or warranty of ours applicable to such
series continued for 60 days after written notice to us by the trustee or the holders
of at least 25% in principal amount of such series;
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certain
events of bankruptcy, insolvency or reorganization; and
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any
other event of default we may provide for that series.
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No
Event of Default with respect to a particular series of debt securities necessarily constitutes an Event of Default with respect
to any other series of debt securities.
The
trustee will, within 90 days after the occurrence of any default with respect to any series of the debt securities, give to the
holders thereof notice of such default known to the trustee, unless such default has been cured or waived (the term default for
this purpose means any event which is, or after notice or lapse of time, or both, would become, an Event of Default); provided
that, except in the case of a default in the payment of principal of (or premium, if any) or interest on any of such series of
debt securities or in the payment of any sinking fund installments, the trustee will be protected in withholding such notice if
and so long as it in good faith determines that the withholding of such notice is in the interest of the holders of the debt securities
of that series.
We
will be required to furnish to the trustee each year a statement as to the fulfillment by us of our obligations under the applicable
Indenture.
The
holders of a majority in principal amount of the outstanding debt securities of any series may, in respect of such series, waive
certain defaults and may direct the time, method and place of conducting any proceeding for any remedy available to the trustee
or exercising any trust or power conferred on the trustee, provided that such direction shall not be in conflict with any rule
of law or with the applicable Indenture. The trustee has the right to decline to follow any such direction if the trustee in good
faith determines that the proceeding so directed would be unjustly prejudicial to the holders of debt securities of such series
not joining in any such direction or would involve the trustee in personal liability. Each Indenture provides that in case an
Event of Default occurs and is continuing with respect to any series of the debt securities, the trustee will be required to exercise
any of its rights and powers under such Indenture with the degree of care and skill such as a prudent man would exercise in the
conduct of his own affairs. Subject to such provisions, the trustee will be under no obligation to exercise any of its rights
or powers under the applicable Indenture at the direction of any of the holders of such debt securities unless such holders have
offered to the trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by
the trustee in complying with such direction.
If
an Event of Default occurs and is continuing with respect to the debt securities of any series, the trustee or the holders of
at least 25% in principal amount of such series may declare such series due and payable.
Each
Indenture provides that no holder of debt securities of any series may institute any action against us under such Indenture (except
actions for payment of overdue principal or interest or premium, if any) unless the holders of at least 25% in principal amount
of such series have requested the trustee to institute such action and have offered the trustee reasonable indemnity, and the
trustee has not instituted such action within 60 days of such request.
Consolidation,
Merger or Sale of Assets
We
may not consolidate with or merge into any other corporation or sell our assets substantially as an entirety, unless:
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the
corporation formed by such consolidation or into which we are merged or the corporation
which acquires our assets is organized in the United States and expressly assumes the
due and punctual payment of the principal of (and premium, if any) and interest on all
the debt securities, if any, issued under the applicable Indenture and the performance
of every covenant of such Indenture to be performed by us; and
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immediately
after giving effect to such transaction, no Event of Default, and no event which after
notice or lapse of time or both would become an Event of Default, has happened and is
continuing.
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Upon
any such consolidation, merger or sale, the successor corporation formed by such consolidation, or into which we are merged or
to which such sale is made, will succeed to, and be substituted for, us under such Indenture.
Other
than the covenants described above, or as set forth in any accompanying prospectus supplement, the Indentures and the debt securities
do not contain any covenants or other provisions designed to afford holders of the debt securities protection in the event of
a takeover, recapitalization or a highly leveraged transaction involving us.
Governing
Law
New
York Law will govern the Indentures and the debt securities, without regard to its conflicts of law principles.
Description
of Capital Stock
The
following statements relating to our capital stock do not purport to be complete, and are subject to, and are qualified in their
entirety by reference to, the provisions of the Certificate of Incorporation, as amended (the “Certificate”) and By-Laws,
as amended (the “By-Laws”) which are incorporated by reference as exhibits to the registration statement of which
this prospectus is a part.
The
Certificate authorizes a total of 70,100,000 shares of capital stock, of which 70,000,000 may be shares of common stock and 100,000
may be shares of preferred stock.
As
of June 30, 2016, 18,677,053 shares of common stock were issued and outstanding and options and warrants to purchase 507,500 shares
of common stock issued to directors, employees, consultants and lenders remain outstanding. As of June 30, 2016, the number of
stockholders of record of our common stock was 93.
Common
Stock
Subject
to the rights of the holders of any shares of preferred stock that may at the time be outstanding, record holders of common stock
are entitled to such dividends as the Board of Directors may declare. Holders of common stock are entitled to one vote for each
share held in their name on all matters submitted to a vote of shareowners and do not have preemptive rights or cumulative voting
rights. Holders of common stock are not subject to further calls or assessments as a result of their holding shares of common
stock.
If
Cadiz is liquidated, the holders of shares of common stock are entitled to share ratably in the distribution remaining after payment
of debts and expenses and of the amounts to be paid on liquidation to the holders of shares of preferred stock.
The
transfer agent for our common stock is Continental Stock Transfer & Trust Company, New York, New York.
Certain
Other Provisions of the Certificate
Delaware
law permits a corporation to eliminate the personal liability of its directors to the corporation or to any of its shareowners
for monetary damages for a breach of fiduciary duty as a director, except (i) for breach of the director’s duty of
loyalty, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law,
(iii) for certain unlawful dividends and stock repurchases or (iv) for any transaction from which the director derived
an improper personal benefit. The Certificate provides for such limitation of liability.
The
Certificate does not permit stockholder action by written consent in lieu of a meeting of stockholders. In addition, special meetings
of stockholders may be called only by the Board of Directors, the Chief Executive Officer or the President.
Limitations
on Directors’ Liability
Our
Certificate of Incorporation eliminates the personal liability of a director to us and our shareowners for monetary damages for
certain breaches of his or her fiduciary duty as a director to the fullest extent permitted under the General Corporation Law
of the State of Delaware.
This
provision offers persons who serve on our Board of Directors protection against awards of monetary damages resulting from certain
breaches of their fiduciary duty, including grossly negligent business decisions made in connection with takeover proposals for
us, and limits our ability or the ability of one of our shareowners to prosecute an action against a director for a breach of
fiduciary duty.
Indemnification
of Directors and Officers
Our
By-Laws and Certificate provide that we will indemnify any of our directors, officers or employees to the fullest extent permitted
by the General Corporation Law of the State of Delaware against all expenses, liability and loss incurred in connection with any
action, suit or proceeding in which any such person may be involved by reason of the fact that he or she is or was our director,
officer or employee. We carry insurance policies in standard form indemnifying our directors and officers against liabilities
arising from certain acts performed by them in their capacities as our directors and officers. These policies also indemnify us
for any sums we may be required or permitted to pay by law to our directors and officers as indemnification for expenses they
may have incurred.
Exchange
Listing
Our
common stock is listed on the Nasdaq Global Market under the symbol “CDZI”.
Anti-Takeover
Effects of Delaware Law
Cadiz
is subject to the “business combination” provisions of Section 203 of Delaware law. In general, such provisions
prohibit a publicly held Delaware corporation from engaging in various “business combination” transactions with any
interested stockholder for a period of three years after the date of the transaction in which the person became an interested
stockholder, unless
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prior
to the date the interested stockholder obtained such status, the Board of Directors of
the corporation approved either the business combination or the transaction that resulted
in the stockholder becoming an interested stockholder;
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upon
consummation of the transaction which resulted in the stockholder becoming an interested
stockholder, the stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced; or
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on
or subsequent to such date, the business combination is approved by the Board of Directors
of the corporation and authorized at an annual or special meeting of shareowners by the
affirmative vote of at least 66 2/3% of the outstanding voting stock which is not owned
by the interested stockholder.
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A
“business combination” is defined to include mergers, asset sales and other transactions resulting in financial benefit
to an interested stockholder. In general, an “interested stockholder” is a person who, together with affiliates and
associates, owns (or within three years, did own) 15% or more of a corporation’s voting stock. The statute could prohibit
or delay mergers or other takeover or change in control attempts with respect to Cadiz and, accordingly, may discourage attempts
to acquire Cadiz even though such a transaction may offer Cadiz’s shareowners the opportunity to sell their stock at a price
above the prevailing market price.
Description of Offered Preferred Stock
This prospectus describes certain
general terms and provisions of our preferred stock. When we offer to sell a particular series of preferred stock, we will describe
the specific terms of the securities in a supplement to this prospectus. The prospectus supplement will also indicate whether the
general terms and provisions described in this prospectus apply to the particular series of preferred stock. The preferred stock
will be issued under a certificate of designations relating to each series of preferred stock and is also subject to our Certificate
of Incorporation. The certificate of designations will be filed with the SEC in connection with an offering of preferred stock.
Under the Certificate of Incorporation,
our Board of Directors has the authority to
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create one or more series of preferred stock,
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issue shares of preferred stock in any series up to the maximum number of shares of preferred stock authorized, and
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determine the preferences, rights, privileges and restrictions of any series.
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Our Board may issue authorized shares
of preferred stock, as well as authorized but unissued shares of common stock, without further shareholder action, unless shareholder
action is required by applicable law or by the rules of a stock exchange or quotation system on which any series of our stock may
be listed or quoted.
The prospectus supplement will describe
the terms of any preferred stock being offered, including:
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the number of shares and designation or title of the shares;
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any liquidation preference per share;
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any redemption, repayment or sinking fund provisions;
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any dividend rate or rates and the dates of payment (or the method for determining the dividend rates or dates of payment);
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if other than the currency of the United States, the currency or currencies including composite currencies in which the preferred stock is denominated and/or in which payments will or may be payable;
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the method by which amounts in respect of the preferred stock may be calculated and any commodities, currencies or indices, or value, rate or price, relevant to such calculation;
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whether the preferred stock is convertible or exchangeable and, if so, the securities or rights into which the preferred stock is convertible or exchangeable, and the terms and conditions of conversion or exchange;
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the place or places where dividends and other payments on the preferred stock will be payable; and
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any additional voting, dividend, liquidation, redemption and other rights, preferences, privileges, limitations and restrictions.
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All shares of preferred stock offered
will be fully paid and non-assessable. Any shares of preferred stock that are issued will have priority over the common stock with
respect to dividend or liquidation rights or both.
Our Board of Directors could create
and issue a series of preferred stock with rights, privileges or restrictions which effectively discriminates against an existing
or prospective holder of preferred stock as a result of the holder beneficially owning or commencing a tender offer for a substantial
amount of common stock. One of the effects of authorized but unissued and unreserved shares of capital stock may be to make it
more difficult or discourage an attempt by a potential acquirer to obtain control of our company by means of a merger, tender offer,
proxy contest or otherwise. This protects the continuity of our management. The issuance of these shares of capital stock may defer
or prevent a change in control of our company without any further shareholder action.
The transfer agent for each series
of preferred stock will be described in the prospectus supplement.
Description
of Warrants
We may issue warrants for the purchase
of common stock, preferred stock or debt securities. We may issue warrants independently or together with any offered securities.
The warrants may be attached to or separate from those offered securities. We may issue the warrants under warrant agreements to
be entered into between us and a bank or trust company to be named in the applicable prospectus supplement, as warrant agent, all
as described in the applicable prospectus supplement. The warrant agent will act solely as our agent in connection with the warrants
and will not assume any obligation or relationship of agency or trust for or with any holders or beneficial owners of warrants.
If we offer warrants, we will file the warrant agreement relating to the offered warrants as an exhibit to, or incorporate it by
reference in, the registration statement of which this prospectus is a part.
The prospectus supplement relating
to any warrants that we may offer will contain the specific terms of the warrants. These terms may include the following:
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the title of the warrants;
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the price or prices at which the warrants will be issued;
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the designation, amount and terms of the securities for which the warrants are exercisable;
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the designation and terms of the other securities, if any, with which the warrants are to be issued and the number of warrants issued with each other security;
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the aggregate number of warrants;
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any provisions for adjustment of the number or amount of securities receivable upon exercise of the warrants or the exercise price of the warrants;
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the price or prices at which the securities purchasable upon exercise of the warrants may be purchased;
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if applicable, the date on and after which the warrants and the securities purchasable upon exercise of the warrants will be separately transferable;
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a discussion of any material U.S. federal income tax considerations applicable to the exercise of the warrants;
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the date on which the right to exercise the warrants will commence, and the date on which the right will expire;
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the maximum or minimum number of warrants that may be exercised at any time;
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information with respect to book-entry procedures, if any; and
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any other terms of the warrants, including terms, procedures and limitations relating to the exchange and exercise of the warrants.
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Exercise of Warrants
Each warrant will entitle the holder
of warrants to purchase for cash the amount of common stock, preferred stock or debt securities, at the exercise price stated or
determinable in the prospectus supplement for the warrants. Warrants may be exercised at any time up to the close of business on
the expiration date shown in the applicable prospectus supplement, unless otherwise specified in such prospectus supplement. After
the close of business on the expiration date, if applicable, unexercised warrants will become void. Warrants may be exercised as
described in the applicable prospectus supplement. When the warrant holder makes the payment and properly completes and signs the
warrant certificate at the corporate trust office of the warrant agent or any other office indicated in the prospectus supplement,
we will, as soon as possible, forward the common stock, preferred stock or debt securities that the warrant holder has purchased.
If the warrant holder exercises the warrant for less than all of the warrants represented by the warrant certificate, we will issue
a new warrant certificate for the remaining warrants.
Description
of Subscription Rights
We may issue subscription rights
to purchase shares of our common stock or preferred stock. These subscription rights may be issued independently or together with
any other security offered hereby and may or may not be transferable by the stockholder receiving the subscription rights in such
offering. In connection with any offering of subscription rights, we may enter into a standby arrangement with one or more underwriters
or other purchasers pursuant to which the underwriters or other purchasers may be required to purchase any securities remaining
unsubscribed for after such offering.
The applicable prospectus supplement
will describe the specific terms of any offering of subscription rights for which this prospectus is being delivered, including
the following:
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the price, if any, for the subscription rights;
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the exercise price payable for each share of common stock or preferred stock upon the exercise of the subscription rights;
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the number of subscription rights issued to each stockholder;
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the number and terms of the shares of common stock or preferred stock which may be purchased per each subscription right;
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the extent to which the subscription rights are transferable;
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any other terms of the subscription rights, including the terms, procedures and limitations relating to the exchange and exercise of the subscription rights;
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the date on which the right to exercise the subscription rights shall commence, and the date on which the subscription rights shall expire;
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the extent to which the subscription rights may include an over-subscription privilege with respect to unsubscribed securities; and
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if applicable, the material terms of any standby underwriting or purchase arrangement entered into by us in connection with the offering of subscription rights.
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The description in the applicable
prospectus supplement of any subscription rights we offer will not necessarily be complete and will be qualified in its entirety
by reference to the applicable subscription rights certificate, which will be filed with the SEC if we offer subscription rights.
Description
of Units
As specified in the applicable prospectus
supplement, we may issue units consisting of one or more subscription rights, warrants, debt securities, shares of preferred stock,
shares of common stock or any combination of such securities issued by us or by third parties. The applicable prospectus supplement
will describe:
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the terms of the units and of the subscription rights, warrants, debt securities, preferred stock and common stock comprising the units, including whether and under what circumstances the securities comprising the units may be traded separately;
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a description of the terms of any unit agreement governing the units; and
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a description of the provisions for the payment, settlement, transfer or exchange or the units.
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Plan of Distribution
We may sell the securities offered
by this prospectus from time to time in one or more transactions;
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directly to purchasers;
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to or through underwriters or dealers; or
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through a combination of these methods.
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A distribution of the securities
offered by this prospectus may also be effected through the issuance of derivative securities, including without limitation, warrants
and subscriptions.
In addition, the manner in which
we may sell some or all of the securities covered by this prospectus includes, without limitation, through:
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a block trade in which a broker-dealer will attempt to sell as agent, but may position or resell a portion of the block, as principal, in order to facilitate the transaction;
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purchases by a broker-dealer, as principal, and resale by the broker-dealer for its account; or
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ordinary brokerage transactions and transactions in which a broker solicits purchasers.
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In addition, we may enter into derivative
or hedging transactions with third parties, or sell securities not covered by this prospectus to third parties in privately negotiated
transactions. In connection with such a transaction, the third parties may sell securities covered by and pursuant to this prospectus
and an applicable prospectus supplement or other offering materials, as the case may be. If so, the third party may use securities
borrowed from us or others to settle such sales and may use securities received from us to close out any related short positions.
We may also loan or pledge securities covered by this prospectus and an applicable prospectus supplement to third parties, who
may sell the loaned securities or, in an event of default in the case of a pledge, sell the pledged securities pursuant to this
prospectus and the applicable prospectus supplement or other offering materials, as the case may be.
A prospectus supplement with respect
to each series of securities will state the terms of the offering of the securities, including:
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the terms of the offering;
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the name or names of any underwriters or agents and the amounts of securities underwritten or purchased by each of them, if any;
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the public offering price or purchase price of the securities and the net proceeds to be received by us from the sale;
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any delayed delivery arrangements;
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any initial public offering price;
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any underwriting discounts or agency fees and other items constituting underwriters’ or agents’ compensation;
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any discounts or concessions allowed or reallowed or paid to dealers; and
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any securities exchange on which the securities may be listed.
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The offer and sale of the securities
described in this prospectus by us, the underwriters or the third parties described above may be effected from time to time in
one or more transactions, including privately negotiated transactions, either:
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at a fixed price or prices, which may be changed;
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in an “at the market” offering within the meaning of Rule 415(a)(4) of the Securities Act;
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at prices related to the prevailing market prices; or
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General
Underwriters, dealers, agents and
remarketing firms that participate in the distribution of the offered securities may be “underwriters” as defined in
the Securities Act of 1933. Any discounts or commissions they receive from us and any profits they receive on the resale of the
offered securities may be treated as underwriting discounts and commissions under the Securities Act. We will identify any underwriters,
agents or dealers and describe their commissions, fees or discounts in the applicable prospectus supplement, as the case may be.
Underwriters and Agents
If underwriters are used in a sale,
they will acquire the offered securities for their own account. The underwriters may resell the offered securities in one or more
transactions, including negotiated transactions. These sales will be made at a fixed public offering price or at varying prices
determined at the time of the sale. We may offer the securities to the public through an underwriting syndicate or through a single
underwriter. The underwriters in any particular offering will be named in the applicable prospectus supplement or other offering
materials, as the case may be.
Unless the applicable prospectus
supplement states otherwise, the obligations of the underwriters to purchase the offered securities will be subject to certain
conditions contained in an underwriting agreement that we will enter into with the underwriters at the time of the sale to them.
The underwriters will be obligated to purchase all of the securities of the series offered if any of the securities are purchased,
unless the applicable prospectus supplement says otherwise. Any initial public offering price and any discounts or concessions
allowed, reallowed or paid to dealers may be changed from time to time.
We may designate agents to sell
the offered securities. Unless the applicable prospectus supplement states otherwise, the agents will agree to use their best efforts
to solicit purchases for the period of their appointment. We may also sell the offered securities to one or more remarketing firms,
acting as principals for their own accounts or as agents for us. These firms will remarket the offered securities upon purchasing
them in accordance with a redemption or repayment pursuant to the terms of the offered securities. A prospectus supplement or other
offering materials, as the case may be, will identify any remarketing firm and will describe the terms of its agreement, if any,
with us and its compensation.
In connection with offerings made
through underwriters or agents, we may enter into agreements with such underwriters or agents pursuant to which we receive our
outstanding securities in consideration for the securities being offered to the public for cash. In connection with these arrangements,
the underwriters or agents may also sell securities covered by this prospectus to hedge their positions in these outstanding securities,
including in short sale transactions. If so, the underwriters or agents may use the securities received from us under these arrangements
to close out any related open borrowings of securities.
Dealers
We may sell the offered securities
to dealers as principals. The dealer may then resell such securities to the public either at varying prices to be determined by
the dealer or at a fixed offering price agreed to with us at the time of resale.
Direct Sales
We may choose to sell the offered
securities directly. In this case, no underwriters or agents would be involved.
Institutional Purchasers
We may authorize agents, dealers
or underwriters to solicit certain institutional investors to purchase offered securities on a delayed delivery basis pursuant
to delayed delivery contracts providing for payment and delivery on a specified future date. The applicable prospectus supplement
or other offering materials, as the case may be, will provide the details of any such arrangement, including the offering price
and commissions payable on the solicitations.
We will enter into such delayed
contracts only with institutional purchasers that we approve. These institutions may include commercial and savings banks, insurance
companies, pension funds, investment companies and educational and charitable institutions.
Indemnification; Other Relationships
We may have agreements with agents,
underwriters, dealers and remarketing firms to indemnify them against certain civil liabilities, including liabilities under the
Securities Act. Agents, underwriters, dealers and remarketing firms, and their affiliates, may engage in transactions with, or
perform services for, us in the ordinary course of business. This includes commercial banking and investment banking transactions.
Market-Making, Stabilization and Other Transactions
There is currently no market for
any of the offered securities, other than our common stock which is traded on the Nasdaq Global Market. If the offered securities
are traded after their initial issuance, they may trade at a discount from their initial offering price, depending upon prevailing
interest rates, the market for similar securities and other factors. While it is possible that an underwriter could inform us that
it intends to make a market in the offered securities, any such underwriter would not be obligated to do so, and any such market-making
could be discontinued at any time without notice. Therefore, no assurance can be given as to whether an active trading market will
develop for the offered securities. We have no current plans for listing of the debt securities, preferred stock, warrants or subscription
rights on any securities exchange or quotation system. Any such listing with respect to any particular debt securities, preferred
stock, warrants or subscription rights will be described in the applicable prospectus supplement or other offering materials, as
the case may be.
Any underwriter may engage in stabilizing
transactions, syndicate covering transactions and penalty bids in accordance with Rule 104 under the Securities Exchange Act
of 1934. Stabilizing transactions involve bids to purchase the underlying security in the open market for the purpose of pegging,
fixing or maintaining the price of the securities. Syndicate covering transactions involve purchases of the securities in the open
market after the distribution has been completed in order to cover syndicate short positions.
Penalty bids permit the underwriters
to reclaim a selling concession from a syndicate member when the securities originally sold by the syndicate member are purchased
in a syndicate covering transaction to cover syndicate short positions. Stabilizing transactions, syndicate covering transactions
and penalty bids may cause the price of the securities to be higher than it would be in the absence of these transactions. The
underwriters may, if they commence these transactions, discontinue them at any time.
Legal Matters
Unless otherwise specified in the
applicable prospectus supplement, the validity of the securities offered by this prospectus will be passed upon for us by Mitchell
Silberberg & Knupp LLP, Los Angeles, California. If legal matters in connection with offerings made by this prospectus are
passed on by counsel for the underwriters, dealers or agents, if any, that counsel will be named in the applicable prospectus supplement.
Experts
The financial statements and management’s
assessment of the effectiveness of internal control over financial reporting (which is included in Management’s Report on
Internal Control over Financial Reporting) incorporated in this Prospectus by reference to the Annual Report on Form 10-K
for the year ended December 31, 2015 have been so incorporated in reliance on the report (which contains an explanatory paragraph
relating to the Company’s ability to continue as a going concern as described in Note 2 to the financial statements) of
PricewaterhouseCoopers LLP, an independent registered public accounting firm, given on the authority of said firm as experts in
auditing and accounting.
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