UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K/A
Amendment No. 1
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[ ] Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934 for the fiscal
year ended December 31, 2005
OR
[ ] Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 for the
transition period from .. to ...
Commission File Number 0-12114
Cadiz Inc.
(Exact name of registrant specified in its charter)
DELAWARE 77-0313235
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
777 S. FIGUEROA STREET, SUITE 4250
LOS ANGELES, CA 90017
(Address of principal executive offices) (Zip Code)
(213) 271-1600
(Registrant's telephone number, including area code)
Securities Registered Pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which Registered
------------------- -----------------------------------------
None None
Securities Registered Pursuant to Section 12(g) of the Act:
COMMON STOCK, PAR VALUE $0.01 PER SHARE
(Title of Class)
Indicate by check mark if the Registrant is a well-known seasoned
issuer, as defined in rule 405 under the Securities Act of 1933.
YES NO X
--- ---
Indicate by a check mark if the Registrant is not required to
file reports pursuant to Section 13 or Section 15(d) of the
Exchange Act.
YES NO X
--- ---
Indicate by check mark whether the Registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the Registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
--- ---
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K (220.405 of this chapter)
is not contained herein, and will not be contained to the best of
Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-
K or any amendment of this Form 10-K. [ ]
Indicate by check mark whether the Registrant is a large
accelerated filer, an accelerated filer, or a non-accelerated
filer (as defined in Exchange Act Rule 12b-2).
LARGE ACCELERATED FILER ACCELERATED FILER X NON-ACCELERATED FILER
--- --- ---
Page i
Indicate by check mark whether the Registrant is a shell company
(as defined in Exchange Act Rule 12b-2).
YES NO X
--- ---
As of Feb 28, 2006, the Registrant had 11,330,402 shares of
common stock outstanding. The aggregate market value of the
common stock held by nonaffiliates as of June 30, 2005 was
approximately $86,942,138 based on 4,575,902 shares of common
stock outstanding held by nonaffiliates and the closing price on
that date. Shares of common stock held by each executive officer
and director and by each entity that owns more than 5% of the
outstanding common stock have been excluded in that such persons
may be deemed to be affiliates. This determination of affiliate
status is not necessarily a conclusive determination for other
purposes.
As of March 29, 2006, there were 11,330,402 shares of the
registrant's Common Stock issued and outstanding.
Page ii
TABLE OF CONTENTS
EXPLANATORY NOTE. . . . . . . . . . . . . . . . . . . . . . . . .1
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS. . . . . . .1
Part III
Item 10. Directors and Executive Officers of the Registrant. . .2
Item 11. Executive Compensation. . . . . . . . . . . . . . . . .4
Item 12. Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters. . . . . . 10
Item 13. Certain Relationships and Related Transactions. . . . 14
Item 14. Principal Accountant Fees and Services. . . . . . . . 14
PART IV
Item 15. Exhibits and Financial Statement Schedules. . . . . . 16
SIGNATURE
EXHIBIT INDEX
Page iii
EXPLANATORY NOTE
This Amendment No. 1 on Form 10-K/A to the Annual Report on
Form 10-K of Cadiz, Inc. (the "Company", "our" or "we") for the
year ended December 31, 2005 that was originally filed with the
Securities and Exchange Commission on March 16, 2006 is being
filed to provide additional information required by Items 10, 11,
12, 13 and 14 of Part III. This Amendment No. 1 on Form 10-K/A
does not change our previously reported financial statements and
other financial disclosure.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements relating to
future events and our future performance within the meaning of
Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). Stockholders are cautioned that such
statements involve risks and uncertainties. These forward-looking
statements are based on current expectations, estimates,
forecasts and projections about the industry and markets in which
we operate and management's beliefs and assumptions. Any
statements contained herein, including without limitation,
statements to the effect that we or our management "believes",
"expects", "could", "may", "estimates", "will", "anticipates",
"plans", or similar expressions that are not statements of
historical fact should be considered forward-looking statements.
These statements are not guarantees of future performance and
involve certain risks, uncertainties and assumptions that are
difficult to predict. Our actual results and timing of certain
events could differ materially from those anticipated in these
forward-looking statements as a result of certain factors,
including, but not limited to, those set forth under "Risk
Factors" and elsewhere in our Annual Report on Form 10-K filed on
March 16, 2006 with the Securities and Exchange Commission. It is
routine for internal projections and expectations to change as
the year or each quarter in the year progresses, and therefore it
should be clearly understood that the internal projections and
beliefs upon which we base our expectations are made as of the
date of this Amendment No. 1 on Form 10-K/A and may change prior
to the end of each quarter or the year. While we may elect to
update forward-looking statements at some point in the future, we
do not undertake any obligation to update any forward-looking
statements whether as a result of new information, future events
or otherwise. The forward-looking statements and risk factors
discussed herein do not reflect the potential impact of any
mergers, acquisitions or dispositions.
Page 1
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
DIRECTORS
Our Board of Directors currently consists of five directors.
Set forth below is certain biographical information, the present
occupation and the business experience for the past five years or
more of each director:
NAME AGE POSITION WITH CADIZ
---- --- -------------------
Keith Brackpool 48 Chairman of the Board,
President and Chief
Executive Officer
Murray H. Hutchison 67 Director
Timothy J. Shaheen 46 Director
Raymond J. Pacini 50 Director
Gregory W. Preston 50 Director
Keith Brackpool is a founder of Cadiz, has served as a
member of Cadiz' Board of Directors since September 1986, and has
served as President and Chief Executive Officer of Cadiz since
December 1991. Mr. Brackpool assumed the role of Chairman of the
Board of Cadiz on May 14, 2001, and was the Chief Financial
Officer from May 19, 2003 until the appointment of Mr. Iselin to
that position in October 2005. Mr. Brackpool has also been a
principal of 1334 Partners L.P., a partnership that owns
commercial real
estate from 1989 to present.
Murray H. Hutchison was appointed a director of Cadiz in
June 1997. He is also a member of the Board of Managers (an LLC's
functional equivalent of a Board of Directors) of Cadiz'
subsidiary, Cadiz Real Estate LLC. In his capacity as a manager
of the LLC he performs essentially the same duties on behalf of
the LLC as he would as an outside director for a corporation.
Since his retirement in 1996 from International Technology
Corporation, a publicly traded diversified environmental
management company, Mr. Hutchison has been self-employed with his
business activities involving primarily the management of an
investment portfolio. From 1976 to 1996, Mr. Hutchison served as
Chief Executive Officer and Chairman of International Technology.
Mr. Hutchison currently serves as Chairman of the Board of TEPPCO
Partners, L.P., a publicly traded partnership operating in
refined petroleum products, liquefied petroleum gases and
petrochemical transportation and storage. Mr. Hutchison serves
as a director on the boards of Jack in the Box, Inc., a publicly
traded fast food restaurant chain; and Cardium Therapeutics,
Inc., a publicly traded medical technology company. Additionally,
Mr. Hutchison serves as Chairman of the Huntington Hotel
Corporation, a privately owned hotel and office building, and as
a director of several other non-publicly traded U.S. companies.
Timothy J. Shaheen was appointed a director of Cadiz in
March 1999. Mr. Shaheen is a private investor and principal of
Difinity Capital Partners LLP. From September 1996 to April
2005, Mr. Shaheen served as the President, Chief Executive
Officer and a director of Sun World International. Prior to
joining Sun World, Mr. Shaheen served as a senior executive with
Albert Fisher North America, a publicly traded domestic and
international produce company from 1989 to 1996. While with
Albert Fisher, Mr. Shaheen
Page 2
also served as director of its Canadian produce operations and
as a director of Fresh Western Marketing, one of the largest
growers and shippers of fresh vegetables in the Salinas Valley of
California. Prior to his employment with Albert Fisher, Mr. Shaheen
has seven years of experience with the accounting firm of Ernst &
Young LLP. Mr. Shaheen is a certified public accountant.
Raymond J. Pacini was appointed a director of Cadiz
effective June 16, 2005 as a nominee of ING pursuant to the
rights of ING as holder of Cadiz' Series F preferred stock.
Since May 1998, Mr. Pacini has been the President, Chief
Executive Officer and a Director of California Coastal
Communities, Inc. (CALC), a publicly traded (NASDAQ:CALC)
residential land development and homebuilding company operating
in Southern California. From June 1990 until May 1998, Mr.
Pacini was the Chief Financial Officer of CALC (formerly known as
Koll Real Estate Group, Inc. and Henley Properties, Inc.).
Gregory W. Preston was appointed a director of Cadiz
effective January 6, 2006 as a nominee of ING pursuant to the
rights of ING as holder of Cadiz' Series F preferred stock.
Since January 2002, Mr. Preston has served as the Founder and
Managing Director of Corporate Law Solutions, a Professional Law
Corporation. Previously, Mr. Preston was a senior partner of the
law firms, Brobeck, Phleger & Harrison; McDermott, Will & Emery;
and Allen Matkins, Leck, Gamble & Mallory.
The certificate of designation for our Series F preferred
stock provides that the holder(s) of the Series F preferred stock
(currently ING) have the right to elect two members of the Board
of Directors.
EXECUTIVE OFFICERS
The following is a list of our current executive officers
and their principal positions:
NAME AGE POSITION WITH CADIZ
---- --- -------------------
Keith Brackpool 48 Chairman of the Board,
President and Chief
Executive Officer
O'Donnell Iselin II 52 Chief Financial Officer
and Secretary
Richard E. Stoddard 55 Chairman of the Board of
Managers and CEO of Cadiz
Real Estate LLC
O'Donnell Iselin II joined Cadiz as its Chief Financial
Officer in October 2005. From October 2004 until his appointment
as Cadiz' Chief Financial Officer, Mr. Iselin served as Treasurer
of Southwest Water Company, a NASDAQ listed water utility and
services company. From 1989 to 2004, Mr. Iselin was employed in
various capacities by Hughes Electronics Corporation, now The
DIRECTV Group, Inc., serving since 2000 as Director of Treasury.
Richard E. Stoddard serves as Chairman and CEO of the Board
of Managers of Cadiz Real Estate LLC, a wholly-owned subsidiary
of Cadiz, directing the development of the Cadiz Groundwater
Storage Program and the other Cadiz real estate assets. In
addition, since 1988, Mr. Stoddard has served as the Chairman and
CEO of Kaiser Ventures LLC, an unrelated company involved in real
estate development and waste management projects in southern
California. Kaiser Ventures LLC was previously involved in water
development projects in Southern California.
Page 3
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934
requires Cadiz' directors and executive officers, and persons who
beneficially own more than 10% of a registered class of Cadiz'
equity securities ("reporting persons"), to file with the
Securities and Exchange Commission initial reports of ownership
and reports of changes in ownership of common stock and other
equity securities of Cadiz. Reporting persons are required by
Commission regulations to furnish Cadiz with copies of all
Section 16(a)forms they file.
To Cadiz' knowledge, based solely on a review of the copies
of reports and amendments thereto on Forms 3, 4 and 5 furnished
to us by reporting persons and forms that we filed on behalf of
certain directors and officers, during, and with respect to,
Cadiz' fiscal year ended December 31, 2005, and on a review of
written representations from reporting persons to Cadiz that no
other reports were required to be filed for such fiscal year, the
Form 3 filed on February 17, 2006 by O'Donnell Iselin II which
reported Mr. Iselin's appointment as our Chief Financial Officer
on October 3, 2005 was inadvertently filed late, the Form 3 filed
on January 25, 2006 by Morgan Stanley, which reported
transactions by which it became a 10% owner on April 12,
2005, was inadvertently filed late and the Forms 4 filed by
Morgan Stanley on January 25, 2006, which reported 125 purchases
of an aggregate of 519,181 shares and 7 sales of an aggregate of
37,442 shares executed between April 15, 2005 and December 9,
2005 were inadvertently filed late, and all other Section 16(a)
filing requirements applicable to Cadiz' directors, executive
officers and greater than 10% beneficial owners during such
period were satisfied in a timely manner.
AUDIT COMMITTEE
The Audit Committee of our Board of Directors currently
consists of Messrs. Preston, Pacini and Hutchison. Our Board of
Directors has determined that each of the members of the Audit
Committee are independent as defined under the rules of the
NASDAQ Stock Market and the independence requirements
contemplated by Rule 10A-3 under the Exchange Act.
The Board of Directors has determined that Mr. Hutchison is
an "audit committee financial expert" as that term is defined in
Item 401(h) of Regulation S-K.
CODE OF ETHICS
We adopted a code of ethics that applies to all of our
employees, including its chief executive officer and chief
financial officer. A copy of the code of ethics may be found
on our website at http://www.cadizinc.com. Any employee who
becomes aware of any existing or potential violation of the code
of ethics is required to report it. Any waivers from the code of
ethics granted to directors or executive officers will be
promptly disclosed on the Company's website at
http://www.cadizinc.com.
ITEM 11. EXECUTIVE COMPENSATION
The tables and discussion below set forth information about
the compensation awarded to, earned by, or paid to our executive
officers during the years ended December 31, 2005, 2004 and 2003
and to the chief executive of our subsidiary, Cadiz Real Estate
LLC, during the years ended December 31, 2005 and 2004.
Page 4
SUMMARY COMPENSATION TABLE
LONG-TERM
ANNUAL COMPENSATION
COMPENSATION (1)(2) AWARDS
------------------- ------------
NAME AND RESTRICTED SECURITIES ALL OTHER
PRINCIPAL STOCK UNDERLYING COMPEN-
POSITION YEAR SALARY($) BONUS($) AWARDS($)(3) OPTIONS(#) SATION($)
---------------- ---- --------- -------- ------------ ----------- ---------
Keith Brackpool 2005 $250,000 - $5,489,960(4) 100,000(5) $ -
President and 2004 250,000 240,000(6) - - -
Chief Executive 2003 188,461 200,000(7) - - 850,000(8)
Officer
O'Donnell
Iselin II 2005 41,589 - - 40,000(9) -
Chief Financial 2004 - - - - -
Officer and 2003 - - - - -
Secretary
Richard E. 2005 250,000(10) - $5,489,960(11) 100,000(12) -
Stoddard 2004 250,000(10) - - - -
Chief Executive 2003 - - - - -
Officer, Cadiz
Real Estate LLC
---------------------
(1) The information presented in this table is for the
years ended December 31, 2005, 2004 and 2004. The executive
officers for whom compensation has been disclosed for the year
ended December 31, 2005, are the only executive officers of Cadiz
or its subsidiaries as of December 31, 2005. Mr. Iselin was
appointed Chief Financial Officer of Cadiz effective October 3,
2005. Mr. Stoddard was appointed chief executive officer of
Cadiz Real Estate LLC effective October 29, 2004. No other
executive officer received total salary or bonus exceeding
$100,000 during the year ended December 31, 2005.
(2) No column for "Other Annual Compensation" has been
included to show compensation not properly categorized as salary
or bonus, which consisted entirely during each fiscal year of
perquisites and other personal benefits, because the aggregate
amounts did not exceed the lesser of either $50,000 or 10% of the
total of annual salary and bonus reported for Mr. Brackpool for
each fiscal year, Mr. Iselin for 2005 and for Mr. Stoddard for
2005 or 2004. See "Employment Arrangements" below.
(3) The stock awards are from the Company's Management
Equity Incentive Plan. Mr. Brackpool and Mr. Stoddard were each
awarded 354,191 shares on May 4, 2005. The value is based on the
closing price of the Company's common stock as reported by the
NASDAQ National Market of $15.50 on May 4, 2005 multiplied by the
number of shares awarded. The 2005 stock awards vest in
installments from the award date. On May 5, 2005, Mr. Brackpool
and Mr. Stoddard sold 144,850 and 128,000 shares, respectively,
for tax purposes. The value of the remaining shares held
pursuant
Page 5
to these awards on December 31, 2005 is $4,500,831.50
for Mr. Brackpool and $4,863,106.50 for Mr. Stoddard, taking into
account their ownership of 209,341 and 226,191 shares,
respectively, as of that date. The value is calculated by
multiplying the closing price of $21.50 for the Company's common
stock as reported by NASDAQ National Market on December 30, 2005
by the number of shares held on December 31, 2005.
(4) Mr. Brackpool was awarded an aggregate of 354,191
shares of stock in 2005 under our Management Incentive Plan, of
which 185,816 vested on May 4, 2005, 50,312 vested on December 7,
2005, 67,752 vested on December 11, 2005, and of which 50,311
will vest on December 7, 2006.
(5) Mr. Brackpool was awarded options from our Management
Incentive Plan to purchase 100,000 shares of the Company's common
stock at an exercise price of $12.00 per share on May 4, 2005.
The options vest in installments of 33,334 on May 4, 2005, 33,333
on December 7, 2005 and 33,333 on December 7, 2006.
(6) This amount represents a bonus awarded to Mr.
Brackpool under the Incentive Plan consisting of $120,000 in cash
which was paid during the year ended December 31, 2004 and 10,000
shares of common stock valued at $120,000 which were issued in
2005 immediately following the effectiveness of our S-8
Registration Statement registering these shares and shares issued
under our Management Equity Incentive Plan.
(7) This bonus was paid to Mr. Brackpool in February 2004
for services completed in the preceding calendar year. Mr.
Brackpool was provided the opportunity to receive the bonus in
cash or an equivalent amount in common stock valued at $2.50 per
share. Mr. Brackpool elected to receive his compensation in
stock.
(8) Mr. Brackpool received an aggregate $850,000 in
compensation for the termination of his previous employment
agreement without cause and foregone salary.
(9) Under the terms of Mr. Iselin's employment contract,
on October 3, 2005 he was granted options under the Company's
Management Incentive Plan to purchase 40,000 shares of the
Company's common stock at an exercise price of $17.25 per share.
The options vest in installments of 13,334 on October 3, 2005,
13,333 on October 3, 2006 and 13,333 on October 3, 2007.
(10) Mr. Stoddard receives $20,833 monthly in accordance
with a consulting agreement dated August 1, 2002 and revised and
extended on January 1, 2004.
(11) Mr. Stoddard was awarded an aggregate of 354,191
shares of stock in 2005 under the Management Incentive Plan, of
which 185,816 vested on May 4, 2005, 50,312 vested on December 7,
2005, 67,752 vested on December 11, 2005, and of which 50,311
will vest on December 7, 2006.
(12) Mr. Stoddard was awarded options from our Management
Incentive Plan to purchase 100,000 shares of the Company's common
stock at an exercise price of $12.00 per share on May 4, 2005.
The options vest in installments of 33,334 on May 4, 2005, 33,333
on December 7, 2005 and 33,333 on December 7, 2006.
Page 6
OPTION GRANTS IN LAST FISCAL YEAR
The table below sets forth information about option grants to
our Chief Executive Officer and our other named executive
officers during the last fiscal year ended December 31, 2005.
POTENTIAL
REALIZABLE
VALUE AT
PERCENT ASSUMED ANNUAL
OF TOTAL (COMPOUNDED)
OPTIONS RATES OF STOCK
NUMBER OF GRANTED TO GRANT PRICE
SECURITIES EMPLOYEES EXCER- DATE APPRECITION
UNDERLYING IN LAST CISE MARKET EXPIR- FOR THE
OPTIONS FISCAL PRICE PRICE ATION OPTION TERM
GRANTED(#) YEAR ($/SH) ($/SH) DATE 5%($) 10%($)
---------- --------- ------ ------ ------ ----- ------
Keith Brackpool 100,000 27% 12.00 15.50 5/4/15 1,324,787 2,820,301
President and
Chief Executive
Officer
O'Donnell 40,000 11% 17.25 17.25 10/3/15 433,937 1,099,682
Iselin II(1)
Chief Financial
Officer
Richard Stoddard 100,000 27% 12.00 15.50 5/4/15 1,324,787 2,820,301
----------------
(1) Mr. Iselin was appointed Chief Financial Officer in October 2005.
Page 7
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
The following table shows, as to the individuals named in the
Summary Compensation Table above, information about the year-end
value of options and the value of unexercised options at that
date. No options were exercised by these officers during the
fiscal year ended December 31, 2005.
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
DECEMBER 31, 2005(#) DECEMBER 31, 2005($)(1)
--------------------------- ---------------------------
(EXERCISABLE/UNEXERCISABLE) (EXERCISABLE/UNEXERCISABLE)
--------------------------- ---------------------------
Keith Brackpool 66,667 / 33,333 $633,337 / $316,664
President and
Chief Executive
Officer
O'Donnell Iselin II 13,334 / 26,666 $ 56,670 / $113,331
Chief Financial
Officer and
Secretary
Richard Stoddard 66,667 / 33,333 $633,337 / $316,664
Chief Executive
Officer Cadiz
Real Estate LLC
---------------------
(1) Using a stock price of $21.50 at December 31, 2005. This
number is calculated by:
* subtracting the option exercise price from our December 31,
2005 closing market price ($21.50 per share, as reported on
the NASDAQ National Market) to get the "average value per
option," and
* multiplying the average value per option by the number of
exercisable and unexercisable options.
The amounts in this column may not represent amounts that will
actually be realized by the named executive officers.
EMPLOYMENT ARRANGEMENTS
Mr. Brackpool is compensated under an Agreement Regarding
Employment pursuant to which Mr. Brackpool receives base
compensation of $250,000 per year, plus certain fringe benefits
including the use of a leased automobile and life and disability
insurance benefits funded by us. While this Agreement requires
Mr. Brackpool to perform his services in a satisfactory manner,
it does not require that his services be provided on a full-time
basis. Although the initial term of the Agreement Regarding
Employment ended September 30, 2003, Mr. Brackpool continues to
provide services to us upon the terms and conditions set forth in
this Agreement.
Mr. Stoddard is compensated in accordance with a Consulting
Agreement dated August 1, 2002, and extended on January 1, 2004,
pursuant to which he receives $20,833.00 per month and which
continues on a month to month basis until terminated by either
party. Under this agreement Mr. Stoddard serves as the Chairman
and CEO of the Board of Managers of Cadiz Real Estate LLC, the
subsidiary of Cadiz. The agreement also provides that Mr.
Stoddard will participate in the Management Equity Incentive Plan
and as a member of the key management team in any further equity
grants considered by the compensation committee of the Board of
Directors of Cadiz.
Mr. Iselin is compensated under an Employment Agreement
pursuant to which he receives an annual base salary of $165,000.
Mr. Iselin is entitled to receive additional compensation in the
form of
Page 8
bonuses at the sole discretion of the Board of Directors
based on Mr. Iselin's performance. Mr. Iselin also received
options from Cadiz' Management Equity Incentive Plan to purchase
40,000 shares of Cadiz' common stock at an exercise price of
$17.25 per share, representing the fair market value of the
Company's common stock as of the date of the Employment
Agreement. 13,334 of the stock options vested upon commencement
of employment with 13,333 vesting upon the first anniversary of
Mr. Iselin's employment with the Company and 13,333 vesting upon
the second anniversary of his employment.
Mr. Iselin's Employment Agreement further provides that in
the event of a termination of Mr. Iselin's employment by reason
of death or permanent disability (as defined in the agreement),
Mr. Iselin (or his estate, as applicable) would be entitled to
continued payments of base salary for 90 days in addition to, and
not in lieu of, any payments made pursuant to any Company
provided death or disability benefit plans.
Mr. Iselin's Employment Agreement also provides that if his
employment is terminated due to a change of control of the
Company which occurs within 24 months of the commencement of his
employment, he is entitled to receive his base compensation and
all fringe benefits he received prior to such change of control
(to the extent such benefits can then be lawfully be made
available by the Company or the Company's successor in interest)
for a period of 12 months following the effective date of
termination as though he was continuing to provide services to
the Company.
Mr. Iselin's Employment Agreement also provides that in the
event he terminates the Employment Agreement due to a material
breach by the Company of any term or condition of his Employment
Agreement or upon a material change in his job title or material
reduction in his duties and responsibilities, he is entitled to
receive his base compensation and all fringe benefits he received
prior to the termination (to the extent such benefits can then be
lawfully be made available by the Company) for a period of 180
days following the effective date of termination as though he was
continuing to provide services to the Company.
COMPENSATION OF DIRECTORS
In the fiscal year 2005, Murray H. Hutchison received cash
compensation for his services as a director of Cadiz in the
amount of $32,500. $2,500 of this amount was for services
rendered in fiscal year 2004.
In the fiscal year 2005, Tim Shaheen received cash
compensation for his services as a director of Cadiz in the
amount of $45,000, $15,000 of this
amount was for services rendered in fiscal year 2004.
In the fiscal year 2005, Raymond J. Pacini received cash
compensation for his services as a director of Cadiz in the
amount of $15,000.
Mr. Brackpool does not receive any compensation for serving
as a director of Cadiz. Mr. Arens and Mr. Ritchie did not
receive any compensation from Cadiz for serving as directors of
Cadiz during 2005.
In fiscal year 2005, the Company commenced compensating its
non-employee directors for their services as directors for each
12 month period ending June 30 of each year, the amount of
$30,000, prorated for directors serving less than the full 12
months. Payments are made in 4 installments of $7,500, or such
lesser prorated amount for directors serving less than a full 12
months.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of our Board of Directors
consists of Messrs. Preston, Pacini and Hutchison. No member of
the Compensation Committee was at any time during 2005, or
formerly, one of
Page 9
our officers or employees or an officer of employee of our
subsidiary. None of our executive officers has served as a
member of the Compensation Committee (or other equivalent function)
of any other entity while an executive officer of the other entity
served as a director of or a member of the Compensation Committee.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership of
Cadiz voting securities, as of March 29, 2006, by each
stockholder who we know to own beneficially more than five
percent of each class, and by each director, each named executive
officer and all directors and executive officers as a group,
excluding, in each case, rights under options or warrants not
exercisable within 60 days. All persons named have sole voting
power and investment power over their shares except as otherwise
noted.
CLASS OF COMMON STOCK
AMOUNT AND NATURE OF PERCENT
NAME AND ADDRESS BENEFICIAL OWNERSHIP OF CLASS
---------------- -------------------- --------
ING Groep N.V. 1,502,770(1) 13.2%
ING Capital LLC
Amstelveenseweg 500
1081 KL Amsterdam
FMR Corp. 1,140,226(2) 9.9%
82 Devonshire Street
Boston MA 02109
Bedford Oak Partners, L.P. 866,950(3) 7.6%
Bedford Oak Capital, L.P.
Bedford Oak Offshore
100 South Bedford Road
Mt. Kisco, NY 10549
Peloton Partners, LLP 796,926(4) 7.0%
17 Broadwick Street
London X0 W1F 0DJ
Morgan Stanley & Co. 622,184(5) 5.5%
International Limited
1585 Broadway
New York, NY 10036
Keith Brackpool 237,436(6) 2.1%
c/o 777 S. Figueroa St.,
Suite 4250
Los Angeles, CA 90017
Richard E. Stoddard 171,191 1.5%
c/o 777 S. Figueroa St.,
Suite 4250
Los Angeles, CA 90017
Timothy J. Shaheen 57,290 *
c/o 777 S. Figueroa St.,
Suite 4250
Los Angeles, CA 90017
Page 10
Murray Hutchison 6,490(7) *
c/o 777 S. Figueroa St.,
Suite 4250
Los Angeles, CA 90017
O'Donnell Iselin 0 *
c/o 777 S. Figueroa St.,
Suite 4250
Los Angeles, CA 90017
Raymond J. Pacini 0 *
c/o 777 S. Figueroa St.,
Suite 4250
Los Angeles, CA 90017
Gregory W. Preston 0 *
c/o 777 S. Figueroa St.,
Suite 4250
Los Angeles, CA 90017
All directors and officers 472,407(6)(7) 4.7%
as a group
(six individuals)
-----------------------------------
* Represents less than one percent of the 11,330,402
outstanding shares of common stock of Cadiz as of March 29,
2006.
CLASS OF SERIES F PREFERRED STOCK
AMOUNT AND NATURE OF PERCENT
NAME AND ADDRESS BENEFICIAL OWNERSHIP OF CLASS
---------------- -------------------- --------
ING Groep N.V. 1,000(1) 100%
ING Capital LLC
Amstelveenseweg 500
1081 KL Amsterdam
(1) Based upon Schedule 13D filed with the SEC on March 29,
2006 by ING Groep N.V. on behalf of its wholly-owned
subsidiary ING Capital LLC, and based on Cadiz corporate
records, the ING entities beneficially own 1,000 shares of
Cadiz Series F Preferred Stock and have sole voting and
dispositive power as to all of the shares. The preferred
stock held by ING is initially convertible into 17,289
shares of Cadiz common stock. In addition to the preferred
stock, ING holds 1,445,481 shares of Cadiz common stock, and
ING has sole voting and dispositive power as to the common
stock. In addition to the common and preferred stock, ING
holds 40,000 warrants, each exercisable into one share of
Cadiz common stock, and ING has sole voting and dispositive
power as to the warrants. The principal office of ING
Capital LLC is located at 1325 Avenue of the Americas, New
York, NY 10019.
(2) Based upon S3 Prospectus Supplement filed with the SEC on
February 10, 2006 by Cadiz, Cadiz corporate records of stock
issuances and correspondence with FMR Corp. and its
affiliated entities, FMR Corp. and its affiliated entities
beneficially own an aggregate of 1,067,726 shares of Cadiz
common stock, and have sole voting and dispositive power of
the stock. In addition, FMR Corp. holds 72,500 warrants,
each exercisable into one share of Cadiz common stock.
(3) Based upon a Schedule 13G filed on February 14, 2005 with
the SEC, Cadiz corporate records of stock issuances and
correspondence with Bedford Oak, the listed related funds
beneficially own an aggregate of 866,950 shares of Cadiz
common stock, and 17,000 warrants, each exercisable into one
share of Cadiz common stock.
Page 11
(4) Based upon a Schedule 13G filed on February 3, 2006 with the
SEC, Peloton Partners LLP beneficially owns an aggregate of
796,926 shares of Cadiz common stock.
(5) Based upon Schedule 13G/D filed by Morgan Stanley & Co.
International on March 10, 2006, Cadiz corporate records of
stock issuances and correspondence with Morgan Stanley,
Morgan Stanley has shared voting rights and shared
dispositive power over an aggregate of 562,184 shares of
Cadiz common stock and 60,000 warrants, each exercisable
into one share of Cadiz common stock.
(6) Includes 50,311 shares allocated to Mr. Brackpool under
the Issuer's 2003 Management Equity Incentive Plan which
will vest December 7, 2006.
(7) Includes 1,490 shares underlying presently exercisable
options.
EQUITY COMPENSATION PLAN INFORMATION
The following table provides information as of December 31,
2005 with respect to shares of our common stock that may be
issued under our existing compensation plans. As required by
Securities and Exchange Commission rules, we include in footnote
(3) to this table a brief description of the material features of
our option issuances that have not been approved by our
stockholders:
NUMBER OF
SECURITIES
NUMBER OF REMAINING
SECURITIES TO WEIGHTED- AVAILABLE FOR
BE ISSUED AVERAGE FUTURE ISSUANCE
UPON EXERCISE EXERCISE UNDER EQUITY
OF PRICE OF COMPENSATION PLANS
OUTSTANDING OUTSTANDING (EXCLUDING
OPTIONS OPTIONS, SECURITIES
WARRANTS AND WARRANTS AND REFLECTED IN
PLAN RIGHTS RIGHTS COLUMN (A))
CATEGORY (A) (B) (C)
----------------------------------------------------------------
Equity 0 $ 0 0
compensation
plans approved
by stockholders
Equity 365,000(1) $ 12.71 12,339(2)
compensation
plans not
approved by
stockholders(3)
Total 365,000 $ 12.71 12,339
------------------
(1) Represents 365,000 options outstanding as of 12/31/05 under
Cadiz' Management Equity Incentive Plan.
(2) Represents 12,339 shares underlying options under the
Management Equity Incentive Plan.
Page 12
(3) In December 2003 the Company's Board of Directors authorized
the adoption of a Management Equity Incentive Plan (the
"Incentive Plan"), under which a total of 1,472,051 shares
were authorized for issuance to key personnel at the
direction of the Company's allocation committee. Under the
terms of the Incentive Plan, 1,094,712 shares were authorized
for issuance by direct grant and 377,339 shares were
authorized for issuance by way of the grant of stock options.
Both the direct grants and option grants are subject to
vesting schedules. All awards will be subject to continued
employment or immediate vesting upon termination without
cause. The Board formed allocation committees made up of
Messrs. Brackpool, Hutchison, and Stoddard, to direct the
allocation of these shares.
In light of the nature of the Company's resource development
activities, the Company's compensation program for management is
weighted more heavily towards long-term incentives than is
typical of other companies with similarly sized asset portfolios.
Accordingly, the base salary component of the compensation
program is lower than that typically provided by similarly sized
companies, and the Incentive Plan is used by the Company to
provide long-term incentives and to incentivize management in a
manner that
further aligns the interests of management with those of the
Company's stockholders.
The Company's allocation committee has to date allocated
1,094,712 shares and 365,000 options under the Incentive Plan.
354,191 shares and 100,000 options were allocated to each of
Keith Brackpool, the Chief Executive Officer of the Company, and
Richard Stoddard, the Chief Executive Officer of the Company's
subsidiary, Cadiz Real Estate LLC. 107,605 shares were allocated
to Timothy Shaheen, a director of the Company, 40,000 options
were allocated to O'Donnell Iselin II, the Company's Chief
Financial Officer upon his appointment as Chief Financial
Officer, and 278,725 shares
and 125,000 options were allocated to other employees of the
Company.
On May 4, 2005, the Company filed a Registration Statement
on Form S-8 pursuant to which it registered for issuance all of
the shares and options authorized under the Incentive Plan. The
issuances of the shares and options allocated under the Incentive
Plan as described above followed the effectiveness of this
Registration Statement on Form S-8.
The Company also registered for issuance in the Form S- 8
10,000 shares of common stock issuable under the Cadiz Inc. 2004
Management Bonus Plan. These shares were immediately thereafter
issued to Keith Brackpool as a
performance bonus.
In December 2004, our Compensation Committee, with board
approval, adopted the Cadiz Inc. 2004 Management Bonus Plan (the
"Bonus Plan") pursuant to which a total of 10,000 shares of our
common stock, valued at $12 per share, were authorized for
issuance to Mr. Brackpool as a performance bonus along with a
cash bonus of $120,000. As described above, these shares were
issued in 2005 immediately following the effectiveness of our S-8
Registration Statement.
The Board previously approved a 1996 Stock Option Plan (the
"1996 Plan"), a 1998 Stock Option Plan (the "1998 Plan") and a
2000 Stock Option Plan (the "2000 Plan)to provide grants of stock
options and stock awards
to certain employees, consultants, independent contractors,
advisors of Cadiz or its subsidiaries and affiliates, and
directors of Cadiz.
In fiscal year 2005, the Board terminated the 1996 Plan, the
1998 Plan and the 2000 Plan (collectively, the "Plans").
Immediately prior to termination of the Plans, there were 26,750
options issued and outstanding under the Plans, all held by one
holder, at an exercise price determined by the Board to be
substantially above fair market value and therefore with no
reasonable prospect of being exercised. The holder and the
Company entered into an agreement to terminate such holder's
options effective immediately. The Plans were terminated
concurrent with the termination of such holder's options.
Page 13
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Between August 2005 and February 2006 one of our
stockholders, Morgan Stanley, engaged in numerous public
purchases and sales of our common stock. Subsequent to these
trades Morgan Stanley determined that it was, at the time of the
trades, the beneficial holder of more than 10% of our outstanding
equity securities and therefore subject to the requirements of
Section 16(b) of the Securities Exchange Act of 1934. Several of
these trades resulted in automatic short swing profit liability
pursuant to Section 16(b). Following the determination of its
liability Morgan Stanley paid to us the sum of $349,625.40,
representing all short swing profit liability owed as a
consequence of these trades.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM'S FEES AND
OTHER MATTERS
For the fiscal years ended December 31, 2005 and 2004,
professional services were performed by PricewaterhouseCoopers
LLP. Cadiz' audit committee annually approves the engagement of
outside auditors for audit services in advance. The audit
committee has also established complementary procedures to
require pre-approval of all audit-related, tax and permitted non-
audit services provided by PricewaterhouseCoopers LLP, and to
consider whether the outside auditors' provision of non-audit
services to Cadiz is compatible with maintaining the independence
of the outside auditors. The audit committee may delegate pre-
approval authority to one or more of its members. Any such fees
pre-approved in this manner shall be reported to the audit
committee at its next scheduled meeting. All services described
below were pre-approved
by the audit committee.
All fees for services rendered by PricewaterhouseCoopers LLP
aggregated $242,900 and $313,000 during the fiscal years ended
December 31, 2005 and 2004, respectively, and were composed of
the following:
Audit Fees. The aggregate fees billed for the audit of the
annual financial statements during the fiscal years ended
December 31, 2005 and 2004, for reviews of the financial
statements included in the Company's Quarterly Reports on Form
10Q, and for assistance with and review of documents filed with
the SEC were $232,900 for 2005 and $313,000 for 2004.
Audit Related Fees. No audit-related fees were billed by
PricewaterhouseCoopers LLP to Cadiz during the fiscal years ended
December 31, 2005 and 2004.
Tax Fees. Fees billed for tax services during the fiscal
years ended December 31, 2005 and 2004 were $10,000 and $0,
respectively.
All Other Fees. No other fees were billed by
PricewaterhouseCoopers LLP to Cadiz for services other than as
discussed above during the fiscal years ended December 31, 2005
and 2004.
POLICY ON AUDIT COMMITTEE PRE-APPROVAL OF AUDIT AND PERMISSIBLE
NON-AUDIT SERVICES OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
Consistent with policies of the Securities and Exchange
Commission regarding independent registered public accounting
firm independence and the Audit Committee Charter, our Audit
Committee has the responsibility for appointing, retaining,
setting compensation and overseeing the work of the independent
registered public accounting firm. The Audit Committee's policy
is to pre-approve all audit and permitted non-audit services
performed by Cadiz' independent registered public accounting
firm. In assessing requests for services by the independent
registered public accounting firm, the Audit Committee considers
whether such services are consistent with the independent
registered public
Page 14
accounting firm's independence, whether the
independent registered public accounting firm is likely to
provide the most effective and efficient service based upon their
familiarity with us, and whether the service could enhance our
ability to manage or control risk or improve audit quality.
All of the audit related, tax and other services provided by
PricewaterhouseCoopers LLP in fiscal year 2005 and related fees
were approved in advance by the Audit Committee.
The Audit Committee has considered whether the provision of
the non-audit services above is compatible with maintaining the
independent registered public accounting firm's independence.
Page 15
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) The exhibits listed in the accompanying Exhibit Index
are filed as part of this Amendment No. 1 to Annual Report on
Form 10-K.
Page 16
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereto duly authorized.
CADIZ INC.
By: /s/ Keith Brackpool
----------------------------
Keith Brackpool,
Chairman and Chief Executive
Officer
Date: April 27, 2006
--------------------------
EXHIBIT INDEX
The following exhibits are filed or incorporated by
reference.
3.1 Cadiz Certificate of Incorporation, as amended(1)
3.2 Amendment to Cadiz Certificate of Incorporation
dated November 8, 1996(2)
3.3 Amendment to Cadiz Certificate of Incorporation
dated September 1, 1998(3)
3.4 Amendment to Cadiz Certificate of Incorporation
dated December 15, 2003(7)
3.5 Certificate of Elimination of Series D Preferred
Stock, Series E-1 Preferred Stock and Series E-2
Preferred Stock of Cadiz Inc. dated December 15,
2003(7)
3.6 Certificate of Elimination of Series A Junior
Participating Preferred Stock of Cadiz Inc., dated
March 25, 2004(7)
3.7 Amended and Restated Certificate of Designations of
Series F Preferred Stock of Cadiz Inc.(8)
3.8 Cadiz Bylaws, as amended (4)
10.1 Agreement Regarding Employment Between Cadiz Inc.
and Keith Brackpool dated July 5, 2003(6)
10.2 Sixth Amended and Restated Credit Agreement, dated
as of December 15, 2003, among Cadiz Inc., Cadiz
Real Estate LLC, and ING Capital LLC, as
Administrative Agent, and the lenders party
thereto(7)
10.3 First Amendment to 2003 Restated Credit Agreement
and Consent to Offering, dated as of November 30,
2004, among Cadiz Inc., Cadiz Real Estate LLC, and
ING Capital LLC, as Administrative Agent, and the
lenders party thereto.(9)
10.4 ING Capital LLC Second Amended and Restated Tranche
A Note, dated as of November 30, 2004, in principal
amount of $15 million.(9)
10.5 ING Capital LLC Second Amended and Restated Tranche
B Note, dated as of November 30, 2004, in principal
amount of $10 million.(9)
10.6 Limited Liability Company Agreement of Cadiz
Real Estate LLC dated December 11, 2003(7)
10.7 Amendment No. 1, dated October 29, 2004, to Limited
Liability Company Agreement of Cadiz Real Estate
LLC.(9)
10.8 The Cadiz Groundwater Storage and Dry-Year Supply
Program Definitive Economic Terms and
Responsibilities between Metropolitan Water
District of Southern California and Cadiz dated
March 6, 2001(5)
10.9 Resolution of the Directors of Cadiz Inc.,
authorizing the Management Equity Incentive Plan.(7)
10.10 Supplemental Resolutions of the Compensation
Committee of the Board of Directors of Cadiz Inc.,
regarding the Management Equity Incentive Plan.(9)
10.11 Form of Incentive Plan Stock Option Agreement(10)
10.12 2004 Management Bonus Plan.(9)
10.13 Consulting Agreement dated August 1, 2002 by and
between Richard Stoddard and Cadiz Inc., and
Extension of Consulting Agreement dated January 1,
2004 by and between Richard Stoddard and Cadiz
Inc.(9)
10.14 Employment Agreement dated September 12, 2005
between O'Donnell Iselin II and Cadiz Inc.(11)
10.15 Settlement Agreement dated as of August 11, 2005 by
and between Cadiz Inc., on the one hand, and Sun
World International, Inc., Sun Desert, Inc.,
Coachella Growers and Sun World/Rayo, on the other
hand(12)
21.1 Subsidiaries of the Registrant(13)
23.1 Consent of Independent Registered Public Accounting
Firm(13)
31.1 Certification of Keith Brackpool, Chairman and
Chief Executive Officer of Cadiz Inc. pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
31.2 Certification of O'Donnell Iselin II, Chief
Financial Officer and Secretary of Cadiz Inc.
pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002
-------------------------
(1) Previously filed as an Exhibit to our Registration
Statement of Form S-1 (Registration No. 33-75642)
declared effective May 16, 1994 filed on February
23, 1994
(2) Previously filed as an Exhibit to our Report on
Form 10-Q for the quarter ended September 30, 1996
filed on November 14, 1996
(3) Previously filed as an Exhibit to our Quarterly
Report on Form 10-Q for the quarter ended
September 30, 1998 filed on November 13, 1998
(4) Previously filed as an Exhibit to our Quarterly
Report on Form 10-Q for the quarter ended June 30,
1999 filed on August 13, 1999
(5) Previously filed as an exhibit to our Annual
Report on Form 10-K for the fiscal year ended
December 31, 2001 filed on March 28, 2002
(6) Previously filed as an Exhibit to our Report on
Form 10-Q for the quarter ended September 30, 2003
filed on November 2, 2004
(7) Previously filed as an Exhibit to our Annual
Report on Form 10-K for the year ended December
31, 2003 filed on November 2, 2004.
(8) Previously filed as an Exhibit to our Current
Report on Form 8-K dated November 30, 2004 filed
on December 2, 2004.
(9) Previously filed as an Exhibit to our Annual
Report on Form 10-K for the fiscal year ended
December 31, 2004 filed on March 31, 2005
(10) Previously filed as an Exhibit to our Form S-8
Registration Statement No. 333-124626 filed on May
4, 2005
(11) Previously filed as an Exhibit to our Current
Report on Form 8-K dated October 3, 2005 filed on
October 3, 2005
(12) Previously filed as an Exhibit to our Report on
Form 10-Q for the quarter ended September 30, 2005
filed on November 14, 2005
(13) Previously filed as an Exhibit to our Report on
Form 10-K for the year ended December 31, 2005
filed on March 16, 2005