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Filed Pursuant
to
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Prospectus Supplement to
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Rule 424(b)(2)
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Prospectus Dated December 23, 2015
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Registration No. 333-208715
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Willamette Valley Vineyards, Inc.
$10,000,000
Series A Redeemable Preferred Stock
This
prospectus relates to the offer and sale of up to 2,298,851 shares
of our Series A Redeemable Preferred Stock, to be issued during one
or more offering periods described in this prospectus supplement.
Sale prices of the shares to be issued in each period will increase
incrementally to reflect what we believe is a reduction in
investment risk that occurs with the passage of time. The minimum
subscription in this offering is for 350 shares, and unless waived
by the Company in its sole discretion, the maximum subscription is
2,300 shares. This offering is not subject to a minimum-proceeds
closing condition, and the proceeds from sales of shares will be
made available to the Company as the stock is sold, as described
below. We also may accept amounts less than those requested in your
subscription, although we generally will not accept subscriptions
for fewer than 350 shares. If we do accept less than a
subscriber’s full purchase commitment, we will make every
effort to manage under-allotments on a basis we believe to be
equitable and reasonable. This prospectus supplement sets forth the
specific terms of this offering and describes the terms of the
Series A Redeemable Preferred Stock. You should read this
prospectus supplement and any future prospectus supplements
carefully, including the information incorporated by reference
herein and therein, before making your investment decision. The
amount of securities offered pursuant to General Instruction I.B.6
of Form S-3 during the twelve (12) calendar month period ending on
and including the date of this prospectus supplement is $1,726,689.
Based upon the aggregate value of the Registrant’s voting and
nonvoting common equity as of the date hereof, which is
$53,145,300, the amount of securities to be sold pursuant to this
prospectus supplement may
not exceed $15,988,411 and, under this prospectus
supplement, will
not exceed $10,000,000.
Our
Series A Redeemable Preferred Stock is listed on the Nasdaq Capital
Market under the trading symbol WVVIP. However, as of the date of
this prospectus supplement, trading of these shares has been
extremely limited since we listed the shares on November 2, 2015,
and you should not presume that the listing of our preferred shares
on that exchange provides a liquid market. You should be prepared
to withstand the risks of your investment indefinitely and to bear
the complete loss of the amount invested.
Our
common stock is listed on the Nasdaq Capital Market under the
symbol “WVVI”. On May 2, 2017, the last reported sales
price of our common stock as reported on the Nasdaq Capital Market
was $8.00 per share. Our Series A
Redeemable Preferred Stock is not convertible into or exchangeable
for shares of our common stock. We are a smaller reporting
company and as such are entitled to certain reduced public company
reporting requirements.
1
Investing in our preferred stock involves risks; for more
information please see “Risk Factors” beginning on
page 11 of this prospectus supplement, and the risk factors
incorporated herein from time to time by reference from our most
recent Annual Report on Form 10-K and our most recent Quarterly
Report on Form 10-Q.
Neither
the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or
determined if this prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
The date of this prospectus supplement is May 3, 2017.
2
TABLE OF CONTENTS
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3
ABOUT THIS PROSPECTUS
SUPPLEMENT
This
prospectus supplement provides additional information for inclusion
in the prospectus filed as a part of a shelf registration statement
on Form S-3 that has been declared effective by the SEC. The shelf
registration statement permits us to offer, and to issue and sell
from time to time, various classes and series of equity and debt
securities, including additional shares of our Series A Redeemable
Preferred Stock. This prospectus supplement does not include all of
the information contained in the registration statement, and in
addition to reading this prospectus supplement in its entirety, you
should carefully read the registration statement, including the
prospectus contained therein and the exhibits filed therewith,
before making an investment decision. The registration statement
and other applicable documents can be read at the SEC website or at
the SEC office mentioned under the heading “Where You Can
Find More Information” below.
Under
this prospectus supplement and the registration statement of which
it forms a part, we intend to sell up to 2,298,851 shares of our
Series A Redeemable Preferred Stock, no par value, for an aggregate
offering price of not more than $10,000,000. This offering will be
conducted directly by us, without the participation of an
underwriter or selling group, through our executive officers and
certain other officers. These individuals will not be compensated
for their participation in this offering. The number of shares
offered hereby represents less than one-third of the aggregate
market value of our common equity measured as of the date of this
prospectus supplement, and reduced by $1,726,689, which represents
the aggregate sale price of all securities offered and sold by us
during the preceding twelve months.
This
prospectus supplement only provides you with a summary of the terms
of the offering, a discussion of certain risk factors, a
description of the Series A Redeemable Preferred Stock, the
expected use of proceeds of this offering, and plan of
distribution. From time to time we may provide additional
information about this offering and the preferred stock in one or
more supplements to the base prospectus included in the
registration statement. A prospectus supplement may include a
discussion or update of any risk factors or other special
considerations applicable to our company or to the preferred stock.
The supplement also may add, update or change information contained
in this prospectus supplement. If there is any inconsistency
between the information in this prospectus supplement and any
prospectus supplement filed after the date hereof, you should rely
on the information in the subsequent prospectus
supplement.
You
should carefully read this prospectus supplement, the registration
statement and prospectus to which it applies, all documents that we
incorporate by reference in the prospectus and in this and any
other prospectus supplement, and the additional information
described below under “Where You Can Find More
Information” and “Incorporation of Certain Documents by
Reference” before deciding to invest in our Series A
Redeemable Preferred Stock. You should rely only on the information
contained in or incorporated by reference into this prospectus
supplement. We have not authorized any person to provide you with
different information. If anyone provides you with different or
inconsistent information, you should not rely on it. This
prospectus supplement is not an offer to sell these securities, and
we are not soliciting an offer to buy these securities, in any
jurisdiction where the offer or sale is not permitted.
4
You
should not assume that the information in the prospectus, this or
any other prospectus supplement, or any documents we incorporate by
reference herein or therein 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 those dates.
Unless
the context requires otherwise, references to “Willamette
Valley Vineyards,” the “Company,”
“we,” “our,” “ours” and
“us” are to Willamette Valley Vineyards, Inc. and its
subsidiaries. Where these statements reflect knowledge, intentions,
expectations or beliefs, first-person pronouns refer to our
executive management, and are based upon facts known and matters
believed by those persons to be accurate as of the date on the
cover of the prospectus, prospectus supplement or other document,
and not to any subsequent date. You should not construe these
statements as assurances of a given outcome or promises of an
expected course of action.
WHERE YOU CAN FIND MORE
INFORMATION
We are
subject to the information requirements of the Securities Exchange
Act of 1934, as amended, or the “Exchange Act.” In
accordance with the Exchange Act, we file and furnish certain
reports, proxy statements and other information with the SEC. These
documents and other information that we file with or furnish to the
SEC are available to the public free of charge at www.sec.gov. You
may also read and copy any document we file with the SEC, including
the registration statement on Form S-3 of which this prospectus
supplement forms a part, and the exhibits thereto, at the public
reference facilities maintained by the SEC at 100 F Street, N.E.,
Washington, D.C. 20549. You may obtain information on the operation
of the public reference facilities by calling the SEC at
1-800-SEC-0330. Copies of certain information that we file with or
furnish to the SEC are also available on our website at
www.wvv.com; however, none of the information contained in or
linked through or from our website is incorporated by reference
into this prospectus supplement.
INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE
SEC
rules allow us to incorporate by reference into this prospectus
supplement much of the information we file with the SEC, which
means that we can disclose important information to you by
referring you to publicly available documents. The information that
we incorporate by reference into this prospectus supplement is
considered to be part of this prospectus supplement and the related
prospectus. This prospectus supplement incorporates by reference
the documents listed below and any future filings we make with the
SEC under Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act
(in each case, other than those documents or the portions of those
documents deemed to be furnished and not filed in accordance with
SEC rules) until the offering of the securities under the
registration statement of which this prospectus supplement forms a
part is terminated or completed:
●
our Annual Report
on Form 10-K for the fiscal year ended December 31, 2016
filed with the SEC on March 23, 2017.
Because
we are incorporating by reference future filings with the SEC, this
prospectus supplement is continually updated and later information
filed with the SEC may update and supersede some of the information
included or incorporated by reference in this prospectus
supplement. This means that you must look at all of the SEC filings
that we incorporate by reference to determine if any of the
statements in this prospectus supplement or in any document
previously incorporated by reference have been modified or
superseded.
5
We will
provide without charge to each person to whom this prospectus
supplement is delivered, upon his or her written or oral request, a
copy of any or all documents referred to above which have been or
may be incorporated by reference into this prospectus supplement
but not delivered herewith, excluding exhibits to those documents
unless the exhibits are specifically incorporated by reference into
those documents. You may request a copy of these documents by
writing or telephoning us at the following address:
Willamette Valley Vineyards, Inc.
8800 Enchanted Way SE
Turner, Oregon 97392
(503) 588-9463
Attention: Investor Relations (info@wvv.com)
SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
prospectus supplement contains “forward-looking
statements” that represent our beliefs, expectations,
projections and predictions about future events. These statements
are necessarily subjective and involve known and unknown risks,
uncertainties and other important factors that could cause our
actual results, performance or achievements, or industry results,
to differ materially from any future results, performance or
achievement described in or implied by such statements. Actual
results may differ materially from the expected results described
in our forward-looking statements, including with respect to the
correct measurement and identification of factors affecting our
business or the extent of their likely impact, the accuracy and
completeness of publicly available information relating to the
factors upon which our business strategy is based or the success of
our business.
In some cases, forward-looking statements can be identified by
terms such as “anticipates,” “believes,”
“continue,” “could,”
“estimates,” “expects,”
“intends,” “may,” “plans,”
“potential,” “predicts,”
“projects,” “should” or “will”
or the negative thereof, variations thereof and similar
expressions. Such statements are based on management’s
current expectations and are subject to risks and uncertainties
which may cause actual results to differ materially from those set
forth in the forward-looking statements. There can be no assurance
that such expectations or any of the forward-looking statements
will prove to be correct, and actual results could differ
materially from those projected or assumed in the forward-looking
statements. We urge you to carefully review the disclosures we make
concerning risks and other factors that may affect our business and
operating results, including those made in the section of this
Prospectus Supplement entitled “Risk Factors,” and in
“Item 1A. Risk Factors” in our Annual Report on
Form 10-K for the year ended December 31, 2016, as such risk
factors may be updated in subsequent SEC filings, as well as our
other reports filed with the SEC and in any later prospectus
supplement. We caution you not to place undue reliance on
forward-looking statements, which speak only as of the date of this
prospectus supplement or any subsequent prospectus
supplement. We do not intend, and we undertake no obligation, to
update any forward-looking information to reflect events or
circumstances after the date of this prospectus supplement or to
reflect the occurrence of unanticipated events, unless required by
law to do so.
6
SUMMARY
This
summary contains a brief description of information about this
offering. It does not contain all the information you might deem
important in deciding whether to invest in our Series A Redeemable
Preferred Stock, and you should carefully review this entire
prospectus supplement, including the documents incorporated herein
by reference and particularly including the section below entitled
“Risk Factors,” before making an investment decision.
Further, where this summary or other sections of this prospectus
supplement purport to describe other instruments or documents,
particularly including but without limitation the provisions of our
articles of incorporation and the description of the designations,
preferences, limitations and relative rights of our preferred
stock, readers should recognize that those summaries are
necessarily incomplete, and in each case they are qualified in
their entirety by reference to the actual text of such
documents.
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The Offering
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This
offering relates to the proposed issuance and sale of up to
2,298,851 shares of our Series A Redeemable Preferred Stock, no par
value. The securities are being offered directly by the Company
through its officers, none of whom will be compensated for their
selling efforts. These securities will be issued in up to four
offering periods, which will close on each of June 30, 2017;
September 30, 2017; December 31, 2017; and March 31, 2018. We will
issue shares of Series A Redeemable Preferred Stock on the first
business day following the expiry of each offering period based on
subscriptions we have accepted prior to that date. We will sell
shares in this offering until we have reached the maximum number of
shares authorized for sale. If, at the end of the expiry of any
offering period, the shares subscribed exceed the number of shares
remaining to be sold in this offering, we will allocate the
remaining shares to subscribers on a basis we believe to be
equitable and reasonable, and we will stop accepting further
subscriptions. Certain financial rights are based upon the
“original issue price” of the Series A Redeemable
Preferred Stock, and that price has been set at $4.15 per share,
regardless of the date purchased or the price paid for such
shares.
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Offering Dates and Pricing
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We
believe that with the passage of time and the investments we expect
to raise in this offering, the risk attendant to an investment in
our Series A Redeemable Preferred Stock will decrease and,
correspondingly, the value will increase. We are a small company
and there is not, and there may never be, a market for these
securities. Further, although our Series A Redeemable Preferred
Stock is listed for trading on the Nasdaq Capital Market, trading
of these shares has been extremely limited since the November 2,
2015 listing date, and you should not consider this a liquid
market. As a result, we have arbitrarily established a time-based
pricing schedule for such shares. However, our Series A Redeemable
Preferred Stock has certain dividend and redemption features that
necessarily implicate the original issue price of such shares, and
we have established the original issue price for such purposes as
$4.15 per share, regardless of the issue date or the actual
purchase price of such shares.
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7
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Dates Offered
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Offering Price
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May 3,
2017 to June 30, 2017
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$4.35
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July
1, 2017 to September 30, 2017
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$4.45
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October 1, 2017 to
December 31, 2017
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$4.55
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January 1, 2018 to
March 31, 2018
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$4.65
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We
will sell shares in this offering until we have reached the maximum
number of shares authorized for sale. If, at the end of the expiry
of any offering period, the shares subscribed exceed the number of
shares remaining to be sold in this offering, we will allocate the
remaining shares to subscribers on a basis we believe to be
equitable and reasonable, and we will stop accepting further
subscriptions.
Dividends on
shares issued at the end of each offering period will be calculated
from the date of issuance (which will coincide with the first day
following the end of the offering period).
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Ranking
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The
Series A Redeemable Preferred Stock will rank senior in rights and
preferences to our common stock and to any other class or series of
our capital stock that does not indicate that it is on par with or
senior to our Series A Redeemable Preferred Stock. Our Series A
Redeemable Preferred Stock will rank junior in rights and
preferences to any series of preferred stock issued in the future
which provides that it is senior to our Series A Redeemable
Preferred Stock.
Prospective
investors should note that our articles of incorporation permit our
board of directors to designate one or more classes or series of
preferred stock from time to time in the future, and to establish
the rights, preferences and limitations of each such class or
series. Should our board of directors determine that it is in the
best interests of the Company or our shareholders to designate and
issue shares of preferred stock that have rights and preferences
senior to those of the Series A Redeemable Preferred Stock, the
board may establish such rights and may issue such capital stock
without the approval of holders of the Series A Redeemable
Preferred Stock or any other class or series of our capital
stock.
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Dividends
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The
Series A Redeemable Preferred Stock will be entitled to receive
dividends when and as declared by our board of directors out of
funds legally available therefor, at a rate equal to $0.22 per
share per year. Dividends will run from the issue date for the
relevant shares, which will occur on the first business day
following that offering period. Dividends accrued but not paid will
not bear interest or dividends but will be added to the liquidation
preference of the Series A Redeemable Preferred Stock until
declared and paid. If dividends are declared and paid, such
declaration will occur annually in the month of November. If
declared, the dividend record date and payment will be in December
for dividends accrued in that calendar year. Accumulated dividends
will be paid in advance of any currently accrued
dividends.
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8
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Payment Support
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The
Series A Redeemable Preferred Stock will not be supported by a
sinking fund or any other form of payment support, nor will they be
entitled to participate specially in any aspect of our operations
or assets.
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Liquidation Preference
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Upon
any merger, consolidation, sale of all or substantially all of the
Company’s assets, reorganization (with certain exceptions for
recapitalizations and similar events that do not affect the
relative rights of the holders of our capital stock), or any other
business combination, the effects of which include the liquidation
or termination of the Series A Redeemable Preferred Stock, and
following distributions to any class of senior securities, the
holders of our Series A Redeemable Preferred Stock will be entitled
to receive, prior and in preference to the holders of shares of
common stock and any other junior class of securities, an amount in
cash or other property equal to the original issue price, plus any
dividends theretofore accrued but not paid. Thereafter, the Series
A Redeemable Preferred Stock will have no rights to further assets
or distributions.
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Redemption
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At any
time after June 1, 2021, the Company has the option, but not the
obligation, to redeem all, but not less than all, of the
then-outstanding shares of Series A Redeemable Preferred Stock by
delivering written notice to the holders of record thereof. That
notice will state a “record date” for the redemption,
after which no further transfers of the Series A Redeemable
Preferred Stock will be recorded on the Company’s stock
transfer books, and after which no future dividends will accrue.
Thereafter, upon surrender of the shares as so redeemed, the holder
thereof will be entitled to receive an amount equal to (i) the
original issue price; plus (ii) all accrued but unpaid dividends
(prorated to reflect any partial periods); plus (iii) a redemption
premium equal to 3% of the original issue price. From and after the
record date for a redemption, if any, the holders thereof will not
be entitled to interest or other earnings of any sort, whether or
not the shares are promptly tendered.
The
redemption rights described above do not preclude the Company from
purchasing from time to time in open-market transactions or in a
tender offer or other arrangement.
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9
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Voting Rights
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The
Series A Redeemable Preferred Stock have very limited voting rights
and generally apply only to matters for which class voting is
applicable under the Oregon Business Corporation Act. Without
limiting the generality of the foregoing, such shares are not
entitled to vote in the election of directors. Holders of Series A
Redeemable Preferred Stock voted on February 28, 2016, to eliminate
the provision of our designation of rights, preferences and
limitations of preferred stock that previously required the
approval of those holders prior to the issuance of additional
shares of Series A Redeemable Preferred Stock.
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Protective Provisions
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Prospective
investors are advised that the Company’s articles of
incorporation permit our board of directors to designate and issue
shares of preferred stock in one or more series having rights and
preferences senior to the Series A Redeemable Preferred Stock,
without the approval of the holders of any class of our capital
stock.
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Market Listing
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We
have listed the Series A Redeemable Preferred Stock on the Nasdaq
Capital Market under the trading symbol WVVIP. However, even though
we have listed the securities on the Nasdaq Capital Market, the
number of shares and the market capitalization of the Series A
Redeemable Preferred Stock is relatively small, and trading of
these shares has been extremely limited since the shares were
listed on November 2, 2015. You should not presume that the
Nasdaq listing will assure that an investment in the preferred
stock will be liquid.
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10
RISK
FACTORS
An
investment in our Series A Redeemable Preferred Stock involves a
variety of risks and uncertainties, any of which, if occurring
alone or in combination, could cause material harm to our business,
could materially and adversely affect our financial condition,
results of operations, and cash flows, or could otherwise
materially diminish the value of our capital stock. A list of the
known risk factors that relate to our Series A Redeemable Preferred
Stock in particular are set forth immediately below under the
heading, “Risks that Affect an Investment in Our Preferred
Stock.” Risks relating to the Company as a whole are
included, and updated from time to time, in Item 1A (“Risk
Factors”) of our Annual Reports on Form 10-K and our
Quarterly Reports on Form 10-Q. Such updates are incorporated
herein by reference; however, readers should note that as with
other disclosures appearing in such reports and incorporated by
reference into this prospectus supplement, such risk factors are
accurate only as of the date on the cover of the report, and the
related events and circumstances are subject to change
thereafter.
Risks that Affect an Investment in Our Preferred Stock
There is no established market for the Series A Redeemable
Preferred Stock, and such a market may never develop
The Series A Redeemable Preferred Stock is listed on the Nasdaq
Capital Market. However, since the shares were listed on November
2, 2015, trading of these shares has been extremely limited. There
is therefore no established trading market for these securities and
we cannot offer assurances that any such market will ever develop.
Further, even assuming the full subscription of this offering at
the lowest permissible offering price (thus yielding the highest
possible number of shares issued), the maximum number of shares
eligible for trading would be 4,695,805. Further, there is no
minimum number of shares that must be sold in order for us to
complete this offering. As a result, there will remain a very
limited trading market for shares of our Series A Redeemable
Preferred Stock, and we therefore expect that the trading market
will be very thin or substantially nonexistent. Accordingly,
shareholders may find it difficult or impossible to sell their
shares for a price equal to or greater than the original purchase
price, at a price that they would consider reasonable, or at all.
You should therefore not invest in our Series A Redeemable
Preferred Stock unless you can bear the risk of a complete loss of
your investment, and unless you can withstand a partial or complete
lack of liquidity in your investment.
There may be times at which you can purchase Series A Redeemable
Preferred Stock from existing shareholders at prices less than the
then-applicable offering price
As
noted elsewhere in this prospectus, the offering price for the
Series A Redeemable Preferred Stock sold in this offering will
increase over time and the corresponding dividend rate will
decrease over time because the 5.3% dividend rate will always be
based on the initial issue price of $4.15 regardless of the
purchase price paid for the Series A Redeemable Preferred Stock.
The dividend rate at $.22 per share will not change regardless of
the purchase price of the stock. The purpose of this increase in
the price of the Series A Redeemable Preferred Stock is to reflect
an increase in value that our board of directors believes will
accompany a reduction in risk as time passes. That is, over time we
expect to raise capital in this offering that will accelerate the
completion of the projects that form the primary purpose of this
offering. We also expect to work toward completion of those
projects using the proceeds of this offering and, if management
deems it appropriate, using additional funds from working capital.
We have thus established a time-based pricing schedule as a means
we believe is a reasonably proportionate, but still arbitrary,
basis for estimating the appropriate prices of our stock. As a
result, it is possible that existing shareholders who have
purchased shares in this offering may be willing to sell such
shares at a price less than the then-applicable offering price. We
cannot make assurances that you could not buy shares of Series A
Redeemable Preferred Stock from another person at a price less than
the offering price.
11
The offering price for, and the dividend rates of, the Series A
Redeemable Preferred Stock have been arbitrarily
determined
The
offering price for the Series A Redeemable Preferred Stock, as well
as the dividend rate, have been determined arbitrarily by our board
of directors based on qualitative factors, such as a diminishing
risk profile over time, which our board of directors believes are
reasonable and appropriate. The Company has not undertaken a
detailed quantitative or qualitative analysis of these factors, nor
has the Company or any investment banker or other advisor made a
determination as to the qualitative appropriateness of the dividend
rate.
Further,
the purchase price of the Series A Redeemable Preferred Stock in
this offering will be greater than the original issue price, and
that price will increase further over time, again based upon
qualitative factors that our board of directors believes are
appropriate. Indeed, the purchase price for shares purchased in
this offering will increase even if you might purchase shares of
Series A Redeemable Preferred Stock from existing shareholders at a
lower price on the Nasdaq Capital Market or elsewhere. As such, you
should not rely upon the offering price or the dividend rate as an
effective measure of the fair market value of such
shares.
The Company may be unable to pay accumulated dividends on the
Series A Redeemable Preferred Stock
The
Series A Redeemable Preferred Stock bears a cumulative dividend of
$0.22 per share per annum. However, prior to the declaration and
payment of dividends our board of directors must determine, among
other things, that funds are available out of the surplus of the
Company and that the payment would not render us insolvent or
compromise our ability to pay our obligations as they come due in
the ordinary course of business. Additionally, although the Company
has no express contractual restrictions to pay dividends, our
existing credit facility limits, and future debt obligations may
limit, both our legal and our practical ability to declare and pay
dividends in certain circumstances. As a result, although the
Series A Redeemable Preferred Stock will continue to earn a right
to receive dividends, the Company’s ability to pay dividends
will depend, among other things, upon our ability to generate
excess cash. Further, although shares of our Series A Redeemable
Preferred Stock will earn cumulative dividends, unpaid dividends
will not, themselves, accumulate (as might compounding interest on
a debt security, for example).
We may issue securities that have rights and preferences senior to
the Series A Redeemable Preferred Stock
Our
articles of incorporation permit our board of directors, with the
approval of a majority of our outside directors, to designate one
or more classes or series of preferred stock from time to time in
the future, and to establish the rights, preferences and
limitations of each such class or series. Should our board of
directors determine that it is in the best interests of the Company
or our shareholders to designate and issue shares of preferred
stock that have rights and preferences senior to those of the
Series A Redeemable Preferred Stock, the board, with the approval
of our outside directors, may establish such rights and may issue
such capital stock without the approval of holders of the Series A
Redeemable Preferred Stock or any other class or series of our
capital stock. Such rights and preferences may include dividend,
sinking-fund, redemption and liquidation features that may increase
the risk that we will be unable to meet all our obligations to the
holders of Series A Redeemable Preferred Stock. They may also
include a wide variety of other rights and preferences, such as
voting rights, protective provisions, and other governance rights
that are not available to the holders of the Series A Redeemable
Preferred Stock. Any such actions may adversely affect the value or
the price of the Series A Redeemable Preferred Stock.
12
We have the right, but not the obligation, to redeem shares of
Series A Redeemable Preferred Stock
We are
entitled, but we are not required, to redeem the shares of Series A
Redeemable Preferred Stock at any time after June 1, 2021. If we
decide to redeem these shares, we will do so by issuing a
redemption notice that will include a record date for the
redemption, and thereafter the Series A Redeemable Preferred Stock
will no longer bear dividends and will represent only the right to
receive, upon delivery of such shares, an amount equal to the
original issue price of $4.15 per share, plus accrued and unpaid
dividends, plus a redemption premium of 3% of the original issue
price. There can be no assurance the Company will have the
financial resources to redeem the Series A Redeemable Preferred
Stock following this date or at any future time. Although the
Company has no lending agreements, at this time, requiring outside
approval or restricting redemption, there can be no assurance that
a future restriction not would arise. Investors should not expect
that they have a right to perpetual payment of dividends, and
should be aware that a proposed redemption of the shares may make
it difficult or impossible to sell the shares for a higher price,
even if the market price for such shares had previously been
higher. Further, an actual notice of redemption will state a
“record date” for the redemption, after which no
further transfers of the Series A Redeemable Preferred Stock will
be recorded on the Company’s stock transfer books, thus
making it impossible to transfer record ownership of the stock even
if the redemption payment has not yet been made.
We may use the proceeds of this offering as working capital rather
than for our planned uses
We are
presently planning to use capital raised in this offering to
support the Company’s vineyard and winery developments;
however we may also use these funds to fund inventory, working
capital needs, repurchase Common Stock and any other business
purpose. Accordingly, the use of proceeds in this offering is not
restricted to use in these projects, and funds received from this
offering will be made available to the Company as general working
capital, to be used as our board of directors determines. If the
proceeds of this offering are insufficient to allow us to complete
the projects, we may fund completion with working capital, or we
may borrow additional funds under available lines of credit or may
seek alternative debt financing. Further, we may abandon the winery
projects, or may delay the timing or modify the scope of those
projects as the board determines is appropriate. Moreover, an
investment in our Series A Redeemable Preferred Stock represents an
investment in the Company as a whole, and not in this specific
project or in any other aspect of our operations.
Shares of our Series A Redeemable Preferred Stock are not
convertible into common stock
Our
Series A Redeemable Preferred Stock is not convertible into or
exchangeable for shares of our common stock, nor will it be so
convertible or exchangeable at any time in the future. You should
invest in our Series A Redeemable Preferred Stock, if at all, based
upon the value you believe is attendant to an investment in that
class and series of securities. Fluctuations in the value of our
common stock will not directly affect the value of our preferred
shares.
13
Our Series A Redeemable Preferred Stock will participate only to a
limited extent in the distribution of our assets upon liquidation
or upon a merger, consolidation, sale of assets, or other business
combination transaction
Because
our Series A Redeemable Preferred Stock is not convertible into or
exchangeable for shares of our common stock, its rights upon a
liquidation of the Company are limited. Although such preferred
stock will receive a preferential return of capital and accrued but
unpaid dividends (and, in the case of a liquidation during the
redemption period, the redemption premium) prior to any payments or
distributions to the holders of common stock, once those
preferential amounts are paid, holders of the Series A Redeemable
Preferred Stock will not have a right to participate in the
remainder of the Company’s assets available for
distribution.
Shares of our Series A Redeemable Preferred Stock have very limited
voting rights and, among other things, do not have the right to
vote for the election of directors
Our
Series A Redeemable Preferred Stock is nonvoting except as required
by the Oregon Business Corporation Act. As a holder of such
preferred stock, you would not have the right to attend meetings of
the holders of common stock or to vote upon matters such as the
election of directors, the approval of equity incentive plans, or
other arrangements which are subject to a vote of the common
shareholders.
Our Series A Redeemable Preferred Stock is not a debt
instrument
Although
our Series A Redeemable Preferred Stock is senior in preference to
our common stock, it will be subordinated to all our debt
obligations, both secured and unsecured. Our Series A Redeemable
Preferred Stock is not insured, is not guaranteed, is not supported
by a sinking fund, and is not backed by any collateral of any
sort.
Certain of the rights applicable to owners of our Series A
Redeemable Preferred Stock do not have a quantifiable market value
and cannot be sold or otherwise transferred separately from shares
of such stock
Owners
of our Series A Redeemable Preferred Stock are entitled, by virtue
of their ownership, to certain intangible benefits associated with
an investment in our company. These benefits include rights to
participate in various discount programs, marketing incentives, and
other rights. The value of these benefits, if any, is
indeterminable and is not associated with the number of shares of
Series A Redeemable Preferred Stock one owns. Similarly, these
rights may not be transferred separately from our Series A
Redeemable Preferred Stock (although a transfer of fewer than all
of an investor’s preferred shares will allow both the
transferor and the transferee to participate in such intangible
rights). We have not attempted to establish a value for these
benefits, and we do not consider them material to the determination
of the price or value of our Series A Redeemable Preferred
Stock.
USE OF
PROCEEDS
The
primary purpose of this offering is to raise up to an additional
$10,000,000 of capital (before offering expenses) to support the
Company’s continuing vineyard development and winery
development efforts. Additionally, these funds will be generally
available as working capital and may be used for general business
purposes including the retirement of any Company debt and the
purchase of the Company’s Common Stock.
14
Shares
of our Series A Redeemable Preferred Stock are being sold in four
offering periods, one of which will close at the end of each of the
first four quarters following the commencement of this offering.
Funds from accepted subscriptions will be immediately available to
the Company without restriction. Investors should not expect that
the Company will receive any minimum amount of capital from this
offering, or that any minimum number or value of shares will be
sold in this offering.
DIVIDEND POLICY
The
Series A Redeemable Preferred Stock is entitled to cumulative
dividends accruing annually each year, at a rate of $0.22 per
share, beginning on the first calendar day of the quarter following
the applicable offering period for such shares, payable out of
funds legally available therefor, when and as approved by our board
of directors. Dividends will accrue on an established original
issue price of such shares, which is equal to $4.15 per share
regardless of the price actually paid to the Company upon original
issuance of the shares, and regardless of the price paid in the
aftermarket, if any. Dividends accrued but not paid will not bear
interest or dividends but will be added to the liquidation
preference of the Series A Redeemable Preferred Stock until
declared and paid. The payment of dividends will depend upon a
number of factors, including our liquidity, financial condition and
results of operations, strategic growth plans, tax considerations,
statutory and regulatory limitations and general economic
conditions. For the foregoing reasons, there can be no assurance
that we will pay any dividends in any future period. Accrued but
unpaid dividends, whether or not declared, will be added to the
liquidation preference until paid, but will not bear additional
dividends or earn interest or similar returns.
We have
never paid dividends on our common stock and we have no expectation
to pay such dividends in the foreseeable future. We are not
permitted to declare or pay dividends on our common stock unless
and until we have paid all accrued but unpaid dividends, and any
redemption premium, owing on our Series A Redeemable Preferred
Stock.
Under
certain circumstances, the Company is entitled to redeem all, but
not less than all, of the Series A Redeemable Preferred Stock
then outstanding. Any such redemption may occur at any time after
June 1, 2021. If a redemption occurs, we will notify shareholders
of record of the redemption (including the redemption date)
electronically or by mail not less than thirty (30) days prior to
the record date for such redemption. As of the record date, shares
of Series A Redeemable Preferred Stock will be ineligible for
future transfers and will represent only the right to receive, upon
tender of the shares, an amount in cash equal to the original issue
price of $4.15 per share, together with (i) all theretofore accrued
but unpaid dividends; and (ii) a redemption premium amounting to 3%
of the original issue price. The redemption premium also will be
payable upon the occurrence of any liquidation event that occurs
during the redemption period. The Series A Redeemable Preferred
Stock will not earn dividends after the record date for redemption.
As with other financial rights of the Series A Redeemable Preferred
Stock, the redemption price is equal to the original issue price,
$4.15 per share, regardless of the actual purchase price or the
amount paid.
15
We are
authorized under our articles of incorporation, as amended, to
issue up to 10,000,000 shares of preferred stock, in one or more
series as designated from time to time by our board of directors,
and up to 10,000,000 shares of common stock. As of May 3, 2017
there were 5,001,627 shares of our common stock outstanding
and 2,396,954 shares of preferred stock outstanding. Assuming the
full subscription of this offering, and assuming no additional
issuances of common stock during the pendency hereof, upon
completion this offering we would have outstanding a total of
5,001,627 shares of common stock, no par value, and 4,695,805
shares of preferred stock, no par value.
Preferred Stock
Our
articles of incorporation authorize our board of directors to issue
from time to time up to 10,000,000 shares of preferred stock in one
or more series with the preferences, limitations and relative
rights thereof as may be fixed from time to time by the board of
directors for each series before the issuance of any shares of that
series. In addition, after the board of directors has established a
series of preferred stock, the board of directors may increase or
decrease the number of shares contained in the series, but not
below the number of shares then issued, or eliminate the series
where no shares have been issued. Actions taken by our board of
directors with regard to the authorization and issuance of
preferred stock require the approval of a majority of our outside
directors. Our board of directors has determined that each of our
directors other than Mr. Bernau and Mr. Ellis is an “outside
director” for purposes of authorizing the Series A Redeemable
Preferred Stock and setting forth the preferences, limitations and
relative rights thereto.
Series A Redeemable Preferred Shares
Dividends. Holders of the Series A Redeemable Preferred
Stock are entitled to receive, when, as and if declared by the
board of directors, out of funds legally available for the payment
of dividends, cumulative cash dividends at the rate of $0.22 per
share. Dividends on the Series A Redeemable Preferred Stock accrue
daily and are cumulative beginning on the first calendar day of the
quarter following the applicable offering period for such shares
until the record date for redemption on the basis of such price.
Accumulated dividends on our Series A Redeemable Preferred Stock
will not bear interest or further dividends, and holders of our
Series A Redeemable Preferred Stock will not, except in the
case of the Company’s optional redemption of the
Series A Redeemable Preferred Stock, be entitled to any
dividends in excess of full cumulative dividends.
Our
board of directors will not authorize and we will not declare, pay
or set apart funds for the payment of any dividend or other
distribution with respect to any junior stock (defined below)
(other than in shares of junior stock) unless all cumulative
dividends with respect to our Series A Redeemable Preferred
Stock have been paid or funds have been set apart for payment of
such dividends.
Optional Redemption. We may redeem all, but not less than
all, of the Series A Redeemable Preferred Stock on or after June 1,
2021, at a redemption price equal to the original issue price of
such shares ($4.15 per share regardless of the price paid for such
shares), plus all accrued and unpaid dividends (whether or not
earned or declared) to the redemption date, plus a redemption
premium equal to 3% of the liquidation preference for the
Series A Redeemable Preferred Stock. A redemption in
connection with a liquidation event (such as a merger, sale of all
or substantially all of the Company’s assets, or similar
reorganization) would result in the payment of the redemption
premium in addition to theretofore accrued but unpaid
dividends.
16
Ranking. The Series A Redeemable Preferred Stock ranks:
(i) senior to the common stock and any other shares of stock that
we may issue in the future, the terms of which specifically provide
that such stock ranks junior to the Series A Redeemable
Preferred Stock, in each case with respect to payment of dividends
and amounts upon liquidation, dissolution or winding up
(“junior shares”); (ii) equal to any shares of stock
that we may issue in the future, the terms of which specifically
provide that such stock ranks on parity with the Series A
Redeemable Preferred Stock, in each case with respect to payment of
dividends and amounts upon liquidation, dissolution or winding up
(“parity shares”); (iii) junior to all other shares of
stock issued by us, the terms of which specifically provide that
such stock ranks senior to the Series A Redeemable Preferred Stock,
in each case with respect to payment of dividends and amounts upon
liquidation, dissolution or winding up (“senior
shares”); and (iv) junior to all our existing and future
indebtedness.
Liquidation Preference. If we merge, consolidate, sell all or
substantially all of our assets, reorganize (with certain
exceptions for recapitalizations and similar events that do not
affect the relative rights of the holders of our capital stock), or
effect any other business combination, the effects of which include
the liquidation or termination of the Series A Redeemable Preferred
Stock, then the holders of the Series A Redeemable Preferred
Stock will have the right to receive the original issue price per
share, plus all accrued and unpaid dividends (whether or not earned
or declared) to, but excluding, the date of payment, before any
payments are made to the holders of the common stock and any other
junior shares, if any. In addition, if the liquidation occurs
during the redemption period, the holders of the Series A
Redeemable Preferred Stock would receive a redemption premium equal
to 3% of the original issue price of $4.15 per share. The rights of
the holders of the Series A Redeemable Preferred Stock to receive
the liquidation preference are subject to the proportionate rights
of holders of each other future series or class of parity shares
and subordinate to the rights of senior shares.
Voting Rights. Holders of the Series A Redeemable
Preferred Stock do not have any voting rights, except as otherwise
required by the Oregon Business Corporation Act.
No Maturity. The Series A Redeemable Preferred Stock does
not have any stated maturity and is not subject to any sinking fund
or mandatory redemption. Accordingly, the shares of the Series
A Redeemable Preferred Stock will remain outstanding
indefinitely unless we decide to redeem them.
No Conversion. The Series A Redeemable Preferred Stock is
not, pursuant to its terms, convertible into or exchangeable for
any other securities or property.
Special Benefits for Holders of Series A Redeemable Preferred
Stock. Each holder of Series A Redeemable Preferred Stock
will be entitled to receive the following additional
benefits:
●
priority wine
allocations from the three new estate vineyards partially funded by
this offering beginning with the 2017 release;
●
rights to purchase
a portion of the Founders’ Block Pinot Noir beginning with
the 2018 release;
17
●
a 25% discount on
wine purchases made directly from the winery;
●
priority access to
winery suite reservations;
●
reports on winery
developments seeking shareholder feedback and
involvement;
●
priority access to
appointment only vineyard tasting experiences; and
●
certain other items
of nominal value.
The
value of these benefits, if any, is indeterminable and is not
associated with the number of shares of Series A Redeemable
Preferred Stock one owns. Similarly, these rights may not be
transferred separately from our Series A Redeemable Preferred Stock
(although a transfer of fewer than all of an investor’s
preferred shares will allow both the transferor and the transferee
to participate in such intangible rights). We have not attempted to
establish a value for these benefits, and we do not consider them
material to the determination of the price or value of our Series A
Redeemable Preferred Stock.
Common Stock
Voting Rights. Holders of the common stock are entitled to
one vote for each share of common stock held of record on the
applicable record date on all matters submitted to a vote of
shareholders. A corporate action voted on by shareholders generally
is approved, provided a quorum is present, if the votes cast within
the voting group favoring the action exceed the votes cast opposing
the action. Holders of the common stock are not entitled to
cumulate their votes in the election of directors.
Dividend Rights. Holders of the common stock are entitled to
receive ratably such dividends, if any, as may be declared from
time to time by the Board of Directors out of funds legally
available for that purpose, subject to any preferential dividend
rights or other preferences granted to the holders of any of the
then-outstanding shares of preferred stock.
Rights Upon Liquidation. In the event of our liquidation,
dissolution or winding up, whether voluntary or involuntary, the
holders of the common stock are entitled to share ratably in all
remaining assets available for distribution to shareholders after
payment of, or provision for, our liabilities, subject to prior
distribution rights of shares of the preferred stock, if any, then
outstanding.
Preemptive Rights. Holders of the common stock do not have
any preemptive rights to purchase, subscribe for or otherwise
acquire any unissued or treasury shares or other of our
securities.
Transfer Agent and Registrar
The
Transfer Agent and Registrar for our Series A Redeemable Preferred
Stock and for our common stock is OTR, Inc. Its address is 1001 SW Fifth Avenue, Suite 1550, Portland,
Oregon 97201, and its telephone number is (503) 225-0375.
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Nasdaq
Listing
The
Series A Redeemable Preferred Stock is presently listed on the
Nasdaq Capital market under the symbol “WVVIP”.
However, this is a new listing and there is therefore no
established trading market for these securities and we cannot offer
assurances that any such market will ever develop. Moreover, the
public float, number of shares and market capitalization of this
class of securities will continue to be relatively limited, and it
is unlikely a liquid market will develop for these
shares.
Our
common stock is listed on the Nasdaq Capital Market under the
symbol “WVVI.” Shares of our Series A Redeemable
Preferred Stock are not convertible into or exchangeable for shares
of our common stock, now or at any time in the future.
Anti-Takeover Effects of our Articles of Incorporation and Bylaws
and of Oregon Law
Our
charter documents and the Oregon Business Corporation Act (the
“Act”), contain provisions that may have the effect of
discouraging, delaying or preventing a change in control or an
unsolicited acquisition proposal that a shareholder might consider
favorable, including a proposal that might result in the payment of
a premium over the market price for the shares held by our
shareholders. Certain of these provisions are summarized in the
following paragraphs.
Authorized but Unissued Shares of Common Stock and Preferred
Stock
We are
authorized under our articles of incorporation, as amended, to
issue up to 10,000,000 shares of preferred stock, in one or more
series as designated from time to time by our board of directors,
with the approval of a majority of our outside directors, and up to
10,000,000 shares of common stock.
Cumulative Voting
No
cumulative voting for directors is permitted.
Increase in the Number of Directors
The
number of directors of the corporation shall be a minimum of two
(2) and a maximum of eleven (11) as determined from time to time by
the Board of Directors. The number of directors may be increased or
decreased from time to time by amendment of the Bylaws, but no
decrease shall have the effect of shortening the term of any
incumbent director.
Staggered Board of Directors; Removal of Directors
We have
a staggered Board of Directors. The Board of Directors is divided
into three groups with each director holding office until the next
annual meeting of shareholders, following the end of their three
year term, and until her or his successors has been elected and
qualified. All or any number of the directors may be removed, for
cause, at a meeting expressly called for that purpose by a vote of
the holders of the majority of the shares then entitled to vote at
an election of directors.
19
Advance
Notice Requirements for Shareholder Proposals and Director
Nominations
To be
timely, a shareholder’s notice relating to the annual meeting
shall be delivered to our Secretary at our principal executive
offices not less than 90 nor more than 120 days prior to the first
anniversary of the date on which we first mailed our proxy
materials for the preceding year’s annual meeting of
shareholders. However, if the date of the annual meeting is
advanced by more than 30 days prior to or delayed by more than 30
days after the anniversary of the preceding year’s annual
meeting, then notice by the shareholder to be timely must be
delivered to our Secretary at our principal executive offices not
later than the close of business on the later of (i) the
90th day
prior to such annual meeting or (ii) the 15th day following the day
on which public announcement of the date of such meeting is first
made.
Special
meetings of the shareholders may be called by the President or by
the Board of Directors and shall be called by the President (or in
the event of absence, incapacity, or refusal of the President, by
the Secretary or any other officer) at the request of the holders
of not less than one-half of all the outstanding shares of the
Company’s common stock entitled to vote at the meeting.
Prospective investors should note that because the Series A
Redeemable Preferred Stock has no voting rights except as required
by law, the holders thereof, separately or in the aggregate, have
no right to call a special meeting of shareholders.
Anti-Takeover Effects of Oregon Law
Oregon
law contains certain provisions that may have the effect of
delaying, deterring or preventing a change in control of the
Company. ORS 60.801 et seq. imposes certain restrictions upon the
voting of shares acquired in “control share
acquisitions” and limits a shareholder’s ability to
vote in favor of a business combination when that shareholder has
acquired shares of voting stock in excess of a specified percentage
of the voting stock of a public company. ORS 60.825 et seq.
prohibits us, with certain exceptions, from engaging in certain
significant business transactions with an “interested
person” (including a person who owns 15% or more of the
voting stock of a public company) for a period of three years
following such person’s share acquisition date. The
prohibited business combinations include, among others, a merger or
consolidation with, disposition of assets to, or issuance or
redemption of stock to or from, the acquiring person, or otherwise
allowing the acquiring person to receive a disproportionate benefit
as a shareholder. Exceptions to this statutory prohibition include
approval of the transaction at a shareholders meeting by holders of
not less than a two-thirds of the shares held by each voting group
entitled to vote on the transaction, not counting shares as to
which the acquiring person has beneficial ownership or voting
control, transactions approved by the board of directors prior to
the acquiring person first becoming an acquiring person, or, with
respect to a merger, share exchange, consolidation, liquidation or
distribution entered into with the acquiring person, transactions
where certain other requirements regarding the fairness of the
consideration to be received by the shareholders have been met. We
may not exempt ourselves from coverage of this statute. These
statutory provisions may have the effect of delaying, deterring or
preventing a change in control of the Company.
After
giving effect to the designation of the Series A Redeemable
Preferred Stock, as amended, our articles of incorporation entitle
us to issue additional shares of preferred stock in one or more
series upon the approval of our board of directors, with the
approval of a majority of our outside directors but in certain
instances without the approval of the holders of the Series A
Redeemable Preferred Stock. The following outlines the general
provisions of the shares of currently undesignated preferred stock
that we may offer from time to time. The specific terms of a series
of preferred stock will be described in the applicable prospectus
supplement relating to that series of preferred stock. The
following description of the preferred stock and any description of
preferred stock in a prospectus supplement is only a summary and is
subject to and qualified in its entirety by reference to the
articles of amendment to our articles of incorporation, as amended,
relating to the particular series of preferred stock, a copy of
which we will file with the SEC in connection with the sale of any
series of preferred stock.
20
General
Under
our articles of incorporation, as amended, our board of directors
is authorized, without shareholder approval, to adopt resolutions
providing for the issuance of up to 10,000,000 shares of preferred
stock, no par value, in one or more series. As of the date of this
prospectus supplement, 2,396,954 shares of our Series A Redeemable
Preferred Stock are issued and outstanding, and other than for the
Series A Redeemable Preferred Stock, no other class or series of
preferred stock has been designated or authorized for
issuance.
Our
board of directors may fix the voting powers, designations,
preferences, rights, qualifications, limitations and restrictions
of any future series of preferred stock that we may
offer.
The
specific terms of that series may include:
●
the title,
designation, number of shares and stated or liquidation value of
the preferred stock;
●
the dividend amount
or rate or method of calculation, the payment dates for dividends
and the place or places where the dividends will be paid, whether
dividends will be cumulative or noncumulative, and, if cumulative,
the dates from which dividends will begin to accrue;
●
any conversion or
exchange rights;
●
whether the
preferred stock will be subject to redemption and the redemption
price and other terms and conditions relative to the redemption
rights;
●
any liquidation
rights;
●
any sinking fund
provisions;
●
any voting
rights;
●
the exchange or
market, if any, where the preferred stock will be listed or traded;
and
●
any other rights,
preferences, privileges, limitations and restrictions that are not
inconsistent with the terms of our articles of incorporation, as
amended.
Upon
the issuance and payment for shares of preferred stock, the shares
will be fully paid and nonassessable. Except as otherwise may be
specified in the prospectus supplement relating to a particular
series of preferred stock, holders of preferred stock will not have
any preemptive or subscription rights to acquire any class or
series of our capital stock and each series of preferred stock will
rank on a parity in all respects with each other series of our
preferred stock and prior to our common stock as to dividends and
any distribution of our assets.
21
The
authorization of the preferred stock could have the effect of
making it more difficult or time consuming for a third party to
acquire a majority of our outstanding voting stock or otherwise
effect a change of control. Shares of the preferred stock may also
be sold to third parties that indicate that they would support the
board of directors in opposing a hostile takeover bid. The
availability of the preferred stock could have the effect of
delaying a change of control and of increasing the consideration
ultimately paid to our shareholders.
The
board of directors may authorize the issuance of preferred stock
for capital-raising activities, acquisitions, joint ventures or
other corporate purposes that have the effect of making an
acquisition of Willamette Valley Vineyards more difficult or
costly, as could also be the case if the board of directors were to
issue additional common stock for such purposes. See
“Description of Common Stock – Anti-Takeover
Effects of our Articles of Incorporation and Bylaws and of Oregon
Law.”
Redemption
If so
specified in the applicable prospectus supplement, a series of
preferred stock may be redeemable at any time, in whole or in part,
at our option, and may be mandatorily redeemable or convertible.
Restrictions, if any, on the repurchase or redemption by us of any
series of our preferred stock will be described in the applicable
prospectus supplement relating to that series. Any partial
redemption of a series of preferred stock would be made in the
manner described in the applicable prospectus supplement relating
to that series.
Upon
the redemption date of shares of preferred stock called for
redemption or upon our earlier call and deposit of the redemption
price, all rights of holders of the preferred stock called for
redemption will terminate, except for the right to receive the
redemption price.
Dividends
Holders
of each series of preferred stock will be entitled to receive cash
dividends only when, as and if declared by our board of directors
out of funds legally available for dividends. The rates or amounts
and dates of payment of dividends will be described in the
applicable prospectus supplement relating to each series of
preferred stock. Dividends will be payable to holders of record of
preferred stock on the record dates fixed by our board of
directors. Dividends on any series of preferred stock may be
cumulative or noncumulative, as described in the applicable
prospectus supplement.
Our
board of directors may not declare, pay or set apart funds for
payment of dividends on a particular series of preferred stock
unless full dividends on any other series of preferred stock that
ranks equally with or senior to such series of preferred stock with
respect to the payments of dividends have been paid or sufficient
funds have been set apart for payment for either of the
following:
●
all prior dividend
periods of each such series of preferred stock that pay dividends
on a cumulative basis; or
●
the immediately
preceding dividend period of each such series of preferred stock
that pays dividends on a noncumulative basis.
22
Partial
dividends declared on shares of any series of preferred stock and
other series of preferred stock ranking on an equal basis as to
dividends will be declared pro rata. A pro rata declaration means
that the ratio of dividends declared per share to accrued dividends
per share will be the same for all series of preferred stock of
equal priority.
Liquidation Preference
In the
event of the liquidation, dissolution or winding-up of us, holders
of each series of preferred stock will have the right to receive
distributions upon liquidation in the amount described in the
applicable prospectus supplement relating to each series of
preferred stock, plus an amount equal to any accrued but unpaid
dividends. These distributions will be made before any distribution
is made on our common stock or on any securities ranking junior to
such preferred stock upon liquidation, dissolution or
winding-up.
However,
holders of the shares of preferred stock will not be entitled to
receive the liquidation price of their shares until we have paid or
set aside an amount sufficient to pay in full the liquidation
preference of any class or series of our capital stock ranking
senior as to rights upon liquidation, dissolution or winding up.
Unless otherwise provided in the applicable prospectus supplement,
neither a consolidation or merger of Willamette Valley Vineyards
with or into another corporation nor a merger of another
corporation with or into Willamette Valley Vineyards nor a sale or
transfer of all or part of Willamette Valley Vineyards’
assets for cash or securities will be considered a liquidation,
dissolution or winding up of Willamette Valley
Vineyards.
If the
liquidation amounts payable to holders of preferred stock of all
series ranking on a parity regarding liquidation are not paid in
full, the holders of the preferred stock of these series will have
the right to a ratable portion of our available assets up to the
full liquidation preference. Holders of these series of preferred
stock or such other securities will not be entitled to any other
amounts from us after they have received their full liquidation
preference.
Conversion and Exchange
The
prospectus supplement will indicate whether and on what terms the
shares of any future series of preferred stock will be convertible
into or exchangeable for shares of any other class, series or
security of Willamette Valley Vineyards or any other corporation or
any other property (including whether the conversion or exchange is
mandatory, at the option of the holder or our option, the period
during which conversion or exchange may occur, the initial
conversion or exchange price or rate and the circumstances or
manner in which the amount of common or preferred stock or other
securities issuable upon conversion or exchange may be adjusted).
It will also indicate for preferred stock convertible into common
stock, the number of shares of common stock to be reserved in
connection with, and issued upon conversion of, the preferred stock
(including whether the conversion or exchange is mandatory, the
initial conversion or exchange price or rate and the circumstances
or manner in which the amount of common stock issuable upon
conversion or exchange may be adjusted) at the option of the holder
or our option and the period during which conversion or exchange
may occur.
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Voting Rights
The
holders of shares of preferred stock will have no voting rights,
except:
●
as otherwise stated
in the applicable prospectus supplement;
●
as otherwise stated
in the articles of amendment to our articles of incorporation
establishing the series of such preferred stock; and
●
as otherwise
required by applicable law.
Transfer Agent and Registrar
The
transfer agent, registrar, dividend paying agent and depositary, if
any, for any preferred stock offering will be stated in the
applicable prospectus supplement.
We may
sell the Series A Redeemable Preferred Stock offered pursuant to
this prospectus supplement and any subsequent prospectus
supplements from time to time in one or more transactions through
our officers and directors, none of whom will be compensated for
their participation in this offering. There will be no sales
through underwriters, placement agents or broker-dealers in
connection with this offering.
Our
Series A Redeemable Preferred Stock will be offered at prices that
will depend upon the date of one’s purchase as indicated in
the following table:
|
Beginning Date
|
Ending Date
|
Price per Share(*)
|
|
May 3,
2017
|
June
30, 2017
|
$4.35
|
|
July
1, 2017
|
September 30,
2017
|
$4.45
|
|
October 1,
2017
|
December 31,
2017
|
$4.55
|
|
January 1,
2018
|
March
31, 2018
|
$4.65
|
(*)
The “Original
Issue Price” for purposes of dividend and redemption
computations will be $4.15 per share, which is the price paid in
the initial offering of this series, regardless of the price
paid.
The
purpose of the increase in price over time is intended to reflect
the reduction in risk over time. Our board of directors believes
that investors who invest earlier in this offering will bear
modestly greater risk than those who invest later; however, this
belief is not readily quantifiable and depends, among other things,
upon the amount invested in each period. Further, there is no
readily ascertainable value for the Series A Redeemable Preferred
Stock, nor is there any market criteria by which such a value could
be established. Accordingly, prospective investors should recognize
that the prices of each series of the Series A Redeemable Preferred
Stock have been determined arbitrarily, and there can be no
assurance that an investor purchasing such shares could sell the
shares at a price equal to or greater than the prices listed above,
or at all.
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Funds
Funds
received in this offering will be delivered directly to the Company
without restriction. On the first business day following each of
the closing dates indicated in the table above, the transfer agent
will, within fifteen business days thereafter, cause the issuance
and delivery of the number of Series A Redeemable Preferred
Shares to be made with respect to each such subscription. For
purposes of determining entitlement to dividends, liquidation
preference, and related matters, the initial issue date for shares
so issued will be the first calendar day following the expiry of
the relevant offering period, notwithstanding that the availability
of funds or the actual issuance of shares may occur on an earlier
or later date.
Indemnification; Exculpation
Our
officers and directors who act as issuer salespersons in connection
with this offering are entitled to indemnification for any action
or claim brought against them in connection with their service on
behalf of the Company, including without limitation their
participation in this offering. Our articles of incorporation also
contain provisions that exculpate our officers, directors and
agents from liabilities to the Company except in cases of gross
negligence or willful misconduct, subject to certain limitations
arising under federal and state securities laws. In addition, our
chief executive officer, Mr. Bernau, is a party to an
indemnification agreement pursuant to which the Company is required
to extend broad-based indemnification to him and certain of his
affiliates and immediate family members. These arrangements entitle
these individuals to indemnification against and contribution
toward certain civil liabilities, including liabilities under the
Securities Act, or to contribute with respect to payments that
these persons may be required to make.
Stabilization
In
connection with many public offerings of securities, underwriters
and selling group members and their respective affiliates may
engage in transactions that stabilize, maintain or otherwise affect
the market price of the applicable securities. These transactions
are intended to have the effect of limiting the volatility of
securities sold during a specified period following the completion
of an underwritten offering.
Investors
in this offering are cautioned that this offering will not include
the participation of an underwriter or selling group, and there
will be no stabilizing transactions in the aftermarket for the
Series A Redeemable Preferred Stock. As a result, any events that
might promote a relative excess of sales (in comparison to a market
for purchases) may have a more significant adverse impact upon
prospective selling prices and, in fact, on opportunities to sell
regardless of price, than might a firmly underwritten
offering.
Certain
legal matters in connection with the securities offered hereby will
be passed upon for us by Davis Wright Tremaine LLP, Portland,
Oregon.
Moss
Adams LLP, an independent registered public accounting firm, has
audited our financial statements at December 31, 2016 and
2015, and for each of the fiscal years then ended, included in our
Annual Report on Form 10-K for the year ended
December 31, 2016, as set forth in its report, which is
incorporated by reference in this prospectus and elsewhere in the
registration statement of which this prospectus forms a part. Such
financial statements are incorporated herein by reference in
reliance upon such report given on the authority of such firm as
experts in accounting and auditing.
25