6
SECURITIES AND EXCHANGE COMMISSION Washington, D.C.
20559
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For Quarter Ended June 30, 1994 Commission file number: 0-
10533
MAGMA POWER COMPANY
(Exact name of registrant as specified in its charter)
NEVADA 95-3694478
(State or other jurisdiction of (I.R.S.Employer
incorporation or organization)
Identification No.)
4365 Executive Drive, Suite 900, San Diego, CA.
92121
(Address of principal executive offices) (Zip
Code)
Registrant's telephone number, including area code: (619)622-7800
Not applicable
(Former name, former address and former fiscal year if changed since last
report.)
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 .
24,027,080 shares of Magma Power Company common stock, par value $.10 per
share, were outstanding at June 30, 1994.
The total number of pages in this report is 17.
(This Page Intentionally Blank)
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The consolidated balance sheets of Magma Power Company and its
subsidiaries as of June 30, 1994 and December 31, 1993, the
consolidated statements of operations for the six months ended June 30,
1994 and 1993, and cash flows for the six months ended June 30, 1994 and
1993, and the notes thereto, appear on page 4 through 8 of this report.
The unaudited interim financial statements reflect all adjustments
(consisting of normal recurring accruals) which, in the opinion of
management, are considered necessary for a fair presentation of the
results of the periods covered.
MAGMA
POWER
COMPAN
Y AND
SUBSID
IARIES
CONSOL
IDATED
BALANC
E
SHEETS
(Dolla
rs in
thousa
nds)
June Dece
30, mber
31,
1994 1993 (Una
udit
ed)
ASSETS
Curren
t
Assets
Cash $ 2,71 $ 18,0
7 17
36,3 32,0 Market
67 86
able
securi
ties
25,0 22,9 Partne
69 19
rship
cash
and
market
able
securi
ties
Accoun
ts
receiv
able:
29,0 18,1
Trade 24 99
18,4 14,0
Other 49 73
11,6 11,9
Prepai 15 22
d
expens
es and
other
assets
Total Current Assets 123, 117,
241 216
Land 6,30 6,22
8 5
Proper
ty
plant
and
equipm
ent,
net of
accumu
lated
deprec
iation
of 259, 265,
$61,58 256 215
6 and
$53,16
6,
respec
tively
Explor
ation
and
develo
pment
costs,
net of
accumu
lated
106, 107,
amorti 308 069
zation
of
$16,20
7 and
$13,68
2,
respec
tively
Acquis 22,5 13,7
ition 75 21
and
new
projec
t
costs
Other 44,8 47,6
invest 92 42
ments
Power
purcha
se
contra
cts,
net of
accumu
lated
amorti
zation
of 21,6 22,1
$1,527 04 85
and
$946,
respec
tively
Other 25,7 22,7
assets 73 62
and
deferr
ed
charge
s
Goodwi 9,09 9,27
ll, 5 6
net of
accumu
lated
amorti
zation
of
$2,326
and
$2,122
,
respec
tively
$ 619, $ 611, 052
311
LIABIL
ITIES
AND
SHAREH
OLDERS
'
EQUITY
Curren
t
Liabil
ities
$ 8,65 $ 7,23
Trade 5 5
accoun
ts
payabl
e
1,81 3,46 Accrue
6 3
d and
other
liabil
ities
39,6 36,7
Curren 68 99
t
portio
n of
loans
payabl
e
Total Current Liabilities 50,1 47,4
39 97
Loans 169, 189,
payabl 880 209
e
Deferr 11,7 11,3
ed 84 87
income
taxes
Other 11,8 11,3
long- 34 00
term
liabil
ities
Total Non-Current Liabilities 193, 211,
498 896
Shareh
olders
'
Equity
Prefer
red
stock,
$.10
par
value,
1,000,
000
shares
author
ized,
none
issued
and
outsta
nding
Common
stock,
$.10
par
value,
30,000
,000
shares
author
ized,
2,40 2,39 issued
0 9
and
outsta
nding
24,027
,080
and
23,989
,763
shares
,
respec
tively
145, 144, Additi
457 996
onal
paid-
in
capita
l
(378 583 Unreal
)
ized
gains
(losse
s)
from
market
able
securi
ties
227, 203, Retain
936 940
ed
earnin
gs
Total Shareholders' Equity 375, 351,
415 918
$ 619, $ 611, 052
311
The
accomp
anying
notes
are an
integr
al
part
of
these
statem
ents.
MAGMA POWER COMPANY AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
OPERATIONS
(In thousands except per
share amounts)
(Unaudited)
For For
the the
Thre Six
e Mont
Mont hs
hs
Ende Ende
d d
June June
30, 30,
1994 1993 1994 1993
REVENUES
Sales of electricity $ 39,9 $ 38,3 $ 73,4 $ 53,6
02 32 94 45
Royalties 4,56 4,98 9,43 9,31
1 9 4 6
Interest and other income 1,38 733 2,46 2,72
1 6 9
Management services 958 954 1,82 1,77
7 6
46,8 45,0 87,2 67,4
02 08 21 66
COSTS AND EXPENSES
Plant operating costs 13,4 14,2 28,4 22,2
94 99 85 18
Depreciation and 5,95 6,01 11,8 9,07
amortization 2 7 62 5
Other non-plant costs 114 113 265 283
General and administrative 2,99 2,52 5,87 4,55
8 0 2 9
Interest incurred 3,12 2,71 5,96 4,15
5 1 1 7
25,6 25,6 52,4 40,2
83 60 45 92
Income from operations 21,1 19,3 34,7 27,1
19 48 76 74
Provision for income taxes 6,48 5,80 10,7 8,15
0 9 82 8
Net income $ 14,6 $ 13,5 $ 23,9 $ 19,0
39 39 94 16
INCOME PER COMMON SHARE
Assuming no dilution $ 0.61 $ 0.56 $ 1.00 $ 0.79
AVERAGE COMMON SHARES
OUTSTANDING
Assuming no dilution 24,0 24,0 24,0 24,0
22 76 11 07
The accompanying notes are an
integral part of these
statements.
MAGMA POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH
FLOWS
Increase (Decrease) in Cash
(Dollars in thousands)
(Unaudited)
For the Six
Month s
Ended June
30,
1993 1994
Cash Flows From Operating Activities
Net income $23,99 $19,01 4 6
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization 11,86 9,075
2 Transmission credits realized
1,469 1,053
Other, net 2,782 (806)
Changes in components of
working capital:
Accounts receivable (15,2 (16,9
01) 18)
Partnership cash and (2,15 2,265
marketable securities 0)
Prepaid expenses and other (1,48 (3,09
assets 5) 6)
Accounts payable and accrued 4,068 5,997
liabilities
Accrued interest payable (746) 778
Income taxes payable (3,54 4,579
9) Deferred taxes from
820 1,566
operations
Total adjustments (2,13 4,493
0)
Net cash provided by 21,86 23,50
operating activities 4 9
Cash Flows From Investing Activities
Proceeds from the sale of 113,5 160,5
investments 86 77
Purchase of investments (118, (89,8
231) 16)
Capital expenditures (6,45 (4,63
3) 2)
Power plant acquisition costs (215,
-- 274)
New project development costs (6,88 (5,46
7) 8)
Other, net (916) (3,27
5) Net cash used in
(18,9 (157,
investing activities 01) 888)
Cash Flows From Financing Activities
Repayment of loans payable (145, (5,48
750) 6)
Borrowing from banks 130,0 140,0
00 00
Loan fees (3,22
5) --
Proceeds from the issuance of 462 2,519
common stock
Other, net 250 191
Net cash provided (18,2 137,2
(used) by financing activities 63) 24
Net increase (decrease) in cash (15,3 2,845
00)
Cash at beginning of period 18,01 2,106
7
Cash at end of period $2,717 $4,951
The accompanying notes are an
integral part of these statements.
MAGMA POWER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in
Thousands)
(Unaudited)
Note 1. Summary of Significant Accounting Policies:
Basis of Consolidation - The consolidated financial statements
present the assets, liabilities, revenues, costs and expenses of
Magma Power Company (the "Company"), its 100%-owned subsidiaries
and its proportionate share of partnerships in which the Company
has invested.
All significant intercompany transactions and accounts have been
eliminated.
Note 2. Loans Payable:
Loans payable consisted of the following:
June Decembe
30, r 31,
1994 1993
Pro-rata share of partnership
non-recourse debt $ 69,991 $ 75,149
Bridge loan 140,000
--
Salton Sea debt 130,00
0 --
Other loans 9,557 10,859
209,54 226,008 8
Less amounts due within one year 39,668 36,799
Loans payable due after one year $ 169,88 $ 189,209 0
Loans payable at June 30, 1994 and December 31, 1993 included the
Company's pro-rata share of the debt of the Del Ranch, L.P.,
Elmore, L.P., and Leathers, L.P. partnerships. The partnership
loans are non-recourse to Magma Power Company and subsidiaries,
however, it is collateralized by substantially all of the assets
of these partnerships.
On March 19, 1993, Magma entered into a $140 million unsecured
one-year term loan ("Bridge Loan") with a group of commercial
banks. Proceeds from the loan were used to finance the
acquisition of the Salton Sea Plants from Unocal. On February
28, 1994, the Company replaced the Bridge Loan with a
$130,000,000 non-recourse project level loan which is
collateralized by substantially all of the assets and power
purchase contracts of the newly acquired Salton Sea Plants. A
secured credit agreement with a group of international banks,
with Credit Suisse as the agent bank, provides for direct loans
at LIBOR plus 1.25%. Restrictions in the secured credit
agreement place limits on distribution of cash from the Salton
Sea Plants to the Company.
Note 3 . Deferred Income Taxes:
Deferred income taxes as of June 30, 1994 and December 31, 1993
represent estimated income taxes payable in the future years as
determined in accordance with SFAS 109 "Accounting for Income
Taxes."
Note 4. Net Income per Common Share:
The calculation of primary earnings per common share is based on
the weighted average number of outstanding common shares. In
computing primary earnings per common share, adjustment has been
made for common shares issuable for shares under option.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
Operations and development activities have been financed with working
capital, the sale of Company Common Stock for cash and services, and loans
from commercial banks.
The Company has geothermal projects in the development stage, both domestic
and international, which it intends to finance with a combination of
Company supplied equity and non-recourse project debt. These development
stage projects will require significant equity contributions from the
Company during the next five years. The Company believes that its cash
reserves, augmented by cash flow from its current operations, and unsecured
corporate loans will be sufficient to fund these equity contributions.
On February 28, 1994 the Company repaid a $140,000,000 Bridge Loan used in
acquiring assets from Unocal, utilizing both Company cash and the proceeds
from a non-recourse project level six-year term loan of $130,000,000 (the
"Term Loan") collateralized by substantially all of the assets and power
purchase contracts of the three Salton Sea Plants acquired from Unocal. In
addition, a $5,000,000 working capital line of credit has been provided to
the subsidiaries owning the plants by two of the banks participating in the
Term Loan. No loans against the working capital line of credit have been
made.
Cash and marketable securities at June 30, 1994 totaled $64,153,000 of
which $39,084,000 was available for general corporate use. The remainder
of $25,069,000 is Magma's share of the cash and marketable securities of
the four separate partnerships which are jointly owned by the Company and
Mission Energy Company (the "Magma Partnerships") which own the Vulcan,
Hoch, Elmore and Leathers geothermal power plants (the "Partnership
Plants"), and the cash and marketable securities of the Company's "Salton
Sea Partnerships" which own the three Salton Sea plants acquired from
Unocal (the "Salton Sea Plants"). Certain portions of these funds are
earmarked for the working capital needs of the plants. In addition, the
secured credit agreements for three of the Magma Partnerships and the Term
Loan for the Salton Sea Plants place limits on distributions of cash.
Non-current investments at June 30, 1994, totaled $44,892,000 consisting of
$31,468,000 in marketable securities with maturities greater than one year
and $13,424,000 of other investments, which are not liquid.
At June 30, 1994, long-term obligations (including amounts currently due)
were $209,548,000, a $16,460,000 decrease over year end 1993. The decrease
reflects the $10,000,000 debt reduction that occurred on February 28, 1994
when the $140,000,000 Bridge Loan was replaced with the Term Loan and the
principal reduction of $5,158,00 in the Company's pro-rata share of
partnership debt. Magma Partnership debt and the Term Loan are non-recourse
to Magma Power Company and its subsidiaries. The ratio of debt to debt
plus-equity at June 30, 1994 (inclusive of non-recourse debt) was 37
percent compared to 40 percent at December 31, 1993. The Company has an
unused and available line of credit with Morgan Guaranty Trust Company of
$25,000,000 at June 30, 1994.
Six of the seven geothermal power plants operated by the Company sell
electricity to Southern California Edison ("SCE") under Interim Standard
Offer No.4 "ISO4" long-term power purchase contracts. Each ISO4 contract
provides for both capacity payments and energy payments. The capacity
payments remain constant throughout the life of each ISO4 contract. During
the first 10 years of operation (the "Initial Term"), the energy payments
are fixed pursuant to the terms of the ISO4 contract. Thereafter, the
energy payments are SCE's then-current published avoided cost of energy.
In 1994 the time period weighted average price for energy for the six
plants combined is approximately 10.6 cents per kWh. For June 1994,
SCE's
avoided cost of energy was 2.4 cents per kWh. Estimates of SCE's future
avoided
cost of energy vary substantially, but it is expected to remain
substantially below such contract energy prices. Thus, the revenues
generated by each of the Company's six plants operating under ISO4
contracts are likely to decline significantly after their respective
initial terms expire. Such decline could have a material adverse effect on
the Company's results of operation. The initial terms expire in 1996 as to
34 megawatts of nameplate generation, in 1999 for 126 megawatts of
nameplate generation and in 2000 for the remaining 58 megawatts of
nameplate generation under ISO4 contracts.
The seventh and smallest plant (approximately 10 megawatts) sells
electricity to SCE under a negotiated power purchase contract (the
"Negotiated Contract"). The energy payment under the Negotiated Contract
was 4.8 cents per kWh in the second quarter of 1994. The capacity payment
was
approximately 1.7 cents per kWh in the second quarter of 1994. Both the
energy
and capacity payments escalate quarterly based on a basket of indices for
the 30-year term of the Negotiated Contract.
The Company's strategy is to mitigate the adverse impact of future lower
energy pricing through expansion of its core business of producing
electricity with geothermal resources, both through development of new
projects in the United States and abroad, through strategic acquisitions
and cost reduction strategies. However, competition for power purchase
contracts is intense and any contracts the Company is able to secure in the
future, whether in the United States or abroad, are likely to be on terms
and conditions that are less favorable than those provided in the Company's
current ISO4 contracts.
Other than as described above, the Company is not aware of any trends or
demands, events or uncertainties that would result in or that are
reasonably likely to result in, a material change in the Company's
liquidity or capital resources.
Results of Operations
Second Quarter 1994 Compared to Second Quarter 1993.
Revenues
Total revenues for the second quarter of 1994 were up $1,794,000 or 4% to
$46,802,000 as compared to $45,008,000 for the same period last year. This
increase was made up primarily of an increase in the sales of electricity.
Sales of Electricity
Revenues from the sale of electricity increased $1,570,000 in the second
quarter of 1994 to $39,902,000. The revenue gain was due to an increase
in "energy" payments reflecting a 7.9% increase in the price paid for
"energy" under four of the Company's six ISO4 contracts and a 4% increase
in the number of kilowatts produced. The "capacity" payments received by
all plants were essentially unchanged during the period.
During the second quarter of 1994 and 1993, the combined "contract" and
"nameplate" capacity factors of the Magma Partnership Plants are shown in
the table below:
Second Quarter
1994 1993
Total Kilowatt Hours
produced 345,217 330,58
(kWh amounts in 0
000s)
Contract Capacity 120.2% 115.1%
Factor(1)
Nameplate Capacity 106.8% 102.3%
Factor(1)
(1) Does not exclude scheduled maintenance hours. Calculation is based on
a 91 day (2,184 hour) second quarter.
During the second quarter of 1994, the "contract" and "nameplate" capacity
factors of the three Salton Sea Plants combined are as shown in the table
below:
Second Quarter 1994
1993
Total Kilowatt Hours
produced 156,700 160,22
(kWh amounts in 2
000s)
Contract Capacity 99.0% 101.2%
Factor(1)
Nameplate Capacity 90.0% 91.9%
Factor(1)
(1) Does not exclude scheduled maintenance hours. Calculation is based on
a 91-day (2,184 hours) second quarter.
Interest and Other Income
Interest and other income increased $648,000, an 88% increase compared to
interest and other income for the same period of the prior year, primarily
due to higher investment earnings, reflecting the significantly higher cash
balances available for investment. Cash available for investment during
the same period of the prior year was low due to the use of cash in
connection with the acquisition of the Salton Sea Plants from Unocal.
Costs and Expenses
In the second quarter of 1994, total costs and expenses were $25,683,000
compared to costs and expenses for the same period in 1993 of $25,660,000.
While total costs and expenses were virtually the same in both periods, the
component of total costs were different. A decrease in plant operating
costs of $805,000 was offset by increases of $478,000 in general and
administrative expense and $414,000 in interest expense.
The decrease in plant operating costs primarily reflects the increased
efficiencies resulting from the integration of the Magma and Unocal
operations.
The $478,000 increase in general and administrative costs reflects the
Company's continued devotion of more of its resources towards expansion of
business development activities by increasing staff and support services to
facilitate the planned growth of the Company.
The $414,000 increase in interest expense reflects the effect of higher
borrowing costs due to higher market interest rates. Currently,
approximately 83% of the company's consolidated debt is floating rate debt.
Net Income
Net income was 8% higher at $14,639,000 in the second quarter of 1994 as
compared to $13,539,000 in the corresponding period of the prior year. The
increase in net income reflects the higher ISO4 electricity revenues
received by the Partnership Plants, increased interest income, and the
decrease in plant operating costs which was offset, in part, by increases
in general and administrative expense and interest expense.
Six Months Ended June 30, 1994 Compared to
Six Months Ended June 30, 1993
Revenues
Total revenues for the first six months of 1994 were up $19,755,000 or 29%
to $87,221,000 as compared to $67,466,000 for the same period of the prior
year. This increase was made up of an increase in the sales of electricity
and an increase in royalties received offset by a decrease in interest and
other income.
Sales of Electricity
Revenues from the sale of electricity increased $19,849,000 in the first
six months of 1994 to $73,494,000 primarily due to the inclusion of the
revenues of the Salton Sea Plants for the full six months of 1994. The
Salton Sea Plants contributed $15,899,000 of the revenue gain. The balance
of the revenue gain of $3,950,000 was produced by the four Partnership
Plants and consisted of a 7% increase in the megawatt hours delivered and
an increase in the price paid for "energy" under their ISO4s with SEC. The
annual time period weighted average price of "energy" under the Partnership
Plants ISO4s increased 7.9% in 1994 to 10.9 cents per kWh. The "capacity"
payments received by all plants were essentially unchanged during the first
half of 1994 compared to 1993.
The combined "contract" and "nameplate" capacity factors of the
Partnership Plants are shown in the table below:
Fiscal
First Six Year
Months
1993
1994 1993
Total Kilowatt Hours
produced 665,100 619,700 1,305,70
(kWh amounts in 000s) 0
Contract Capacity 116.4% 108.5%
Factor(1) 113.3%
Nameplate Capacity 103.5% 96.4%
Factor(1) 100.7%
(1) Does not exclude scheduled maintenance hours. Calculation is based on
a 181 day (4,344 hour) first half in 1994 and 1993.
The combined "contract" and "nameplate" capacity factors of the three
Salton Sea Plants during the period are shown in the table below:
Six Months Nine Months
1993
1994
Total Kilowatt Hours
produced 495,800
(kWh amounts in 000s) 312,645
Contract Capacity Factor 103.6%
(1) 99.3%
Nameplate Capacity Factor 94.1%
(1) 90.2%
(1) Does not exclude scheduled maintenance hours. Calculation is based on
a 181-day (4,344 hours) first half in 1994 and a nine month period (6600
hours) ended December 31, 1993.
Interest and Other Income
Interest and other income decreased $263,000, a 10% decrease compared to
interest income for the same period of the prior year, primarily due to
lower investment earnings, reflecting the lower short-term interest rate
environment.
Costs and Expenses
In the first six months of 1994, total costs and expenses increased
$12,153,000, a 30% increase, compared to costs for the same period in 1993.
This increase was composed primarily of a $6,267,000 increase in plant
operating costs, a $2,787,000 increase in depreciation, a $1,313,000
increase in general and administrative expense, and a $1,804,000 increase
in interest expense. The increase in plant operating costs and depreciation
primarily reflects the cost of operating the Salton Sea Plants for six
months in 1994 compared to three months in 1993.
The $1,313,000 increase in general and administrative costs reflects the
Company's continued devotion of more of its resources towards expansion of
business development activities by increasing staff and support services to
facilitate the planned growth at the Company.
The $1,804,000 increase in interest expense over the corresponding period
of 1994 reflects the increased cost of borrowings to finance the
acquisition of the Salton Sea Plants. Interest expense related to the
Partnership Plants declined as a result of lower partnership weighted
average borrowings during the first six months of 1994 as compared to the
same period of the prior year .
Provision for Income Taxes
The Company's effective tax rate in the first six months of 1994 increased
to 31 percent from the 1993 rate of 30 percent due to higher profitability
in 1994, as a result of the acquired Salton Sea Plants. In addition, the
tax effect of permanent differences, which include depletion deductions,
are diluted relative to higher operating profits.
Net Income
Net income was 26% higher at $23,994,000 for the first six months of 1994
as compared to $19,016,000 in the corresponding period of the prior year.
The increase in net income reflects the addition of the earnings of the
Salton Sea Plants for six months in 1994 compared to three months in 1993
as well as the higher ISO4 electricity revenues received by the Partnership
Plants.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Richard Antunez v. Magma Power Company, et al. On December 11, 1992, a law
suit was filed against Magma, Dow Engineering Company ("DEC"), Gulf States,
Inc. and Coastal Conveyor Systems, Inc. by Richard Antunez, a former
employee of Red Hill Geothermal, Inc. (now Magma Operating Company) who was
injured while working at the plant owned by Leathers, L.P. The primary
contention of plaintiff is that the conveyor belt equipment he was working
on when injured was designed and/or constructed in violation of OSHA
requirements and/or without regard to the safety of the individuals
required to use the equipment. Coastal Conveyor Systems, Inc.
manufactured the conveyor belt system. Gulf States, Inc. erected the
conveyor belt system at the Leathers Facility, and DEC designed the
facility and supervised construction under contract with Magma. The
plaintiff alleges that Magma participated in the design and construction of
the facility. In a statement filed with the court in mid-1993 the plaintiff
claimed special damages of $750,000 and general damages of $3.5 million.
However, Mr. Antunez's attorneys have indicated an intention to increase
the total of such claimed damages to $10 million. At the time of the
incident, Magma was insured under a policy of general liability insurance
issued by Lloyd's Underwriters but Lloyd's has denied coverage. The Company
is contesting this denial. In the event Magma is found to have any
liability to Mr. Antunez, it is possible Magma Power Company will be
entitled to be indemnified by DEC or others. The Company believes that
the complaint against Magma is without merit but no assurances can be given
as to the resolution of this matter.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The 1994 Annual Meeting of Stockholders of Magma Power Company was held
on June 21, 1994 at 10:30 a.m. at the Marriott-La Jolla, 4250 La Jolla
Village Drive, San Diego, California.
The record date for the meeting was April 25, 1994 and there were a total
number of 24,011,379 shares of the Company's common stock issued and
outstanding and entitled to vote at the meeting. There were present at the
meeting, in person or by proxy, the holders of 20,426,386 common shares,
representing 85% of the total number of shares outstanding and entitled to
vote at the meeting, such percentage representing a quorum.
PROPOSAL ONE: The election of the Directors of the Company
The results of the voting for each of the proposals are as follows:
Total Shares Total Shares
Name Voted For Withheld
Lester L. 20,297,137 129,249
Coleman (99%)
William R. 20,287,137 139,249
Knee (99%)
John D. 20,304,482 121,904
Roach (99%)
PROPOSAL TWO: Approval of the adoption of the 1994 Equity
Participation Plan of the Company
For: 16,264,65
0
Against: 3,627,422
Abstain: 347,492
Percent of Votes 81.8
Cast:
Broker Non-Votes: 186,822
PROPOSAL THREE: Ratification of the selection of Coopers & Lybrand
as the Company's auditors for the fiscal year
ending December 31, 1994
For: 20,359,189
Against: 17,122
Abstain: 50,075
Percent of Votes 99.9
Cast
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits:
10.104 The 1994 Equity Participation Plan.
(b) Reports on Form 8-K: There were no Form 8-K's filed during the three
months ended June 30, 1994.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MAGMA POWER COMPANY
(Registrant)
Date: August 5, 1994 s/Jon R. Peele,
Jon R. Peele,
Executive Vice President,
Secretary and General Counsel
Date: August 5, 1994 s/Wallace C. Dieckmann
Wallace C. Dieckmann
Vice President, Chief Financial Officer
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MAGMA POWER COMPANY
(Registrant)
Date: August 5, 1994
Jon R. Peele,
Executive Vice President, Secretary and General Counsel
Date: August 5, 1994
Wallace C. Dieckmann
Vice President, Chief Financial Officer
THE 1994 EQUITY PARTICIPATION PLAN
OF
MAGMA POWER COMPANY
Magma Power Company, a Nevada corporation, has adopted
the 1994 Equity Participation Plan of Magma Power Company
(the "Plan"), effective April 19, 1994, for the benefit of
its eligible employees, consultants and directors. The Plan
consists of two plans, one for the benefit of key Employees
(as such term is defined below) and consultants and one for
the benefit of Outside Directors (as such term is defined
below).
The purposes of this Plan are as follows:
(1) To provide an additional incentive for directors,
key Employees and consultants to further the growth,
development and financial success of the Company by
personally benefiting through the ownership of Company stock
and/or rights which recognize such growth, development and
financial success.
(2) To enable the Company to obtain and retain the
services of directors, key Employees and consultants
considered essential to the long range success of the
Company by offering them an opportunity to own stock in the
Company and/or rights which will reflect the growth,
development and financial success of the Company.
ARTICLE I
DEFINITIONS
1.1 General. Wherever the following terms are used in
this Plan they shall have the meaning specified below,
unless the context clearly indicates otherwise.
1.2 Board. "Board" shall mean the Board of Directors
of the Company.
1.3 Code. "Code" shall mean the Internal Revenue Code
of 1986, as amended.
1.4 Committee. "Committee" shall mean the Compensation
Committee of the Board, or a subcommittee of the Board,
appointed as provided in Section 9.1.
1.5 Common Stock. "Common Stock" shall mean the common
stock of the Company, par value $.10 per share, and any
equity security of the Company issued or authorized to be
issued in the future, but excluding any warrants, options or
other rights to purchase Common Stock. Debt securities of
the Company convertible into Common Stock shall be deemed
equity securities of the Company.
1.6 Company. "Company" shall mean Magma Power Company,
a Nevada corporation.
1.7 Deferred Stock. "Deferred Stock" shall mean Common
Stock awarded under Article VII of this Plan.
1.8 Director. "Director" shall mean a member of the
Board.
1.9 Director Fees. "Director Fees" shall mean the
annual retainer fee and regular meeting fees, including
Committee chairperson fees, if any, paid by the Company to
an Outside Director.
1.10 Dividend Equivalent. "Dividend Equivalent" shall
mean a right to receive the equivalent value (in cash or
Common Stock) of dividends paid on Common Stock, awarded
under Article VII of this Plan.
1.11 Employee. "Employee" shall mean any officer or
other employee (as defined in accordance with Section
3401(c) of the Code) of the Company, or of any corporation
which is a Subsidiary.
1.12 Exchange Act. "Exchange Act" shall mean the
Securities Exchange Act of 1934, as amended.
1.13 Fair Market Value. "Fair Market Value" of a share
of Common Stock as of a given date shall be (i) the mean
between the highest and lowest selling price of a share of
Common Stock on the principal exchange on which shares of
Common Stock are then trading, if any, on such date, or if
shares were not traded on such date, then on the closest
preceding date on which a trade occurred, or (ii) if Common
Stock is not traded on an exchange, the mean between the
closing representative bid and asked prices for the Common
Stock on such date as reported by NASDAQ or, if NASDAQ is
not then in existence, by its successor quotation system; or
(iii) if Common Stock is not publicly traded, the Fair
Market Value of a share of Common Stock as established by
the Committee acting in good faith.
1.14 Grantee. "Grantee" shall mean an Employee or
consultant granted a Performance Award, Dividend Equivalent,
Stock Payment or Stock Appreciation Right, or an award of
Deferred Stock, under this Plan.
1.15 Incentive Stock Option. "Incentive Stock Option"
shall mean an option which conforms to the applicable
provisions of Section 422 of the Code and which is
designated as an Incentive Stock Option by the Committee.
1.16 Non-Qualified Stock Option. "Non-Qualified Stock
Option" shall mean an Option which is not designated as an
Incentive Stock Option by the Committee.
1.17 Option. "Option" shall mean a stock option
granted under Article III of this Plan. An Option granted
under this Plan shall, as determined by the Committee, be
either a Non-Qualified Stock Option or an Incentive Stock
Option; provided, however, that Options granted to Outside
Directors and consultants shall be Non-Qualified Stock
Options.
1.18 Optionee. "Optionee" shall mean an Employee,
consultant or Outside Director granted an Option under this
Plan.
1.19 Outside Director. "Outside Director" shall mean a
member of the Board who is not an Employee of the Company
nor affiliated with a major stockholder of the Company.
1.20 Performance Award. "Performance Award" shall mean
a cash bonus, stock bonus or other performance or incentive
award that is paid in cash, Common Stock or a combination of
both, awarded under Article VII of this Plan.
1.21 Plan. "Plan" shall mean the 1994 Equity
Participation Plan of Magma Power Company.
1.22 Restricted Stock. "Restricted Stock" shall mean
Common Stock awarded under Article VI of this Plan.
1.23 Restricted Stockholder. "Restricted Stockholder"
shall mean an Employee or consultant granted an award of
Restricted Stock under Article VI of this Plan.
1.24 Rule 16b-3. "Rule 16b-3" shall mean that certain
Rule 16b-3 under the Exchange Act, as such Rule may be
amended from time to time.
1.25 Stock Appreciation Right. "Stock Appreciation
Right" shall mean a stock appreciation right granted under
Article VIII of this Plan.
1.26 Stock Payment. "Stock Payment" shall mean (i) a
payment in the form of shares of Common Stock, or (ii) an
option or other right to purchase shares of Common Stock, as
part of a deferred compensation arrangement, made in lieu of
all or any portion of the compensation, including without
limitation, salary, bonuses and commissions, that would
otherwise become payable to a key Employee or consultant in
cash, awarded under Article VII of this Plan.
1.27 Subsidiary. "Subsidiary" shall mean any
corporation in an unbroken chain of corporations beginning
with the Company if each of the corporations other than the
last corporation in the unbroken chain then owns stock
possessing 50 percent or more of the total combined voting
power of all classes of stock in one of the other
corporations in such chain.
1.28 Termination of Directorship. "Termination of
Directorship" shall mean the time when an Optionee who is an
Outside Director ceases to be a Director for any reason,
including, but not by way of limitation, a termination by
resignation, failure to be elected, death or retirement.
The Board, in its sole and absolute discretion, shall
determine the effect of all matters and questions relating
to Termination of Directorship.
1.29 Termination of Employment. "Termination of
Employment" shall mean the time when the employee-employer
relationship between the Optionee, Grantee or Restricted
Stockholder and the Company or any Subsidiary is terminated
for any reason, including, but not by way of limitation, a
termination by resignation, discharge, death, disability or
retirement; but excluding (i) terminations where there is a
simultaneous reemployment or continuing employment of an
Optionee, Grantee or Restricted Stockholder by the Company
or any Subsidiary, (ii) at the discretion of the Committee,
terminations which result in a temporary severance of the
employee-employer relationship, and (iii) at the discretion
of the Committee, terminations which are followed by the
simultaneous establishment of a consulting relationship by
the Company or a Subsidiary with the former employee. The
Committee, in its absolute discretion, shall determine the
effect of all matters and questions relating to Termination
of Employment, including, but not by way of limitation, the
question of whether a Termination of Employment resulted
from a discharge for good cause, and all questions of
whether particular leaves of absence constitute Terminations
of Employment; provided, however, that, with respect to
Incentive Stock Options, a leave of absence or other change
in the employee-employer relationship shall constitute a
Termination of Employment if, and to the extent that, such
leave of absence or other change interrupts employment for
the purposes of Section 422(a)(2) of the Code and the then
applicable regulations and revenue rulings under said
Section. Notwithstanding any other provision of this Plan,
the Company or any Subsidiary has an absolute and
unrestricted right to terminate an Employee's employment at
any time for any reason whatsoever, with or without cause,
except to the extent expressly provided otherwise in
writing.
ARTICLE II
SHARES SUBJECT TO PLAN
2.1 Shares Subject to Plan. The shares of stock
subject to Options, awards of Restricted Stock, Performance
Awards, Dividend Equivalents, awards of Deferred Stock,
Stock Payments or Stock Appreciation Rights shall be Common
Stock, initially shares of the Company's Common Stock, par
value $.10 per share. The aggregate number of such shares
which may be issued upon exercise of such options or rights
or upon any such awards under the Plan shall not exceed one
million (1,000,000). The shares of Common Stock issuable
upon exercise of such options or rights or upon any such
awards may be either previously authorized but unissued
shares or treasury shares.
2.2 Unexercised Options and Other Rights. If any
Option, or other right to acquire shares of Common Stock
under any other award under this Plan, expires or is
canceled without having been fully exercised, the number of
shares subject to such Option or other right but as to which
such Option or other right was not exercised prior to its
expiration or cancellation may again be optioned, granted or
awarded hereunder, subject to the limitations of Section
2.1.
ARTICLE III
GRANTING OF OPTIONS
3.1 Eligibility. Any Employee or consultant selected
by the Committee pursuant to Section 3.4(a)(i) shall be
eligible to be granted an Option. Each Outside Director of
the Company shall be eligible to be granted Options at the
times and in the manner set forth in Section 3.4(d).
3.2 Disqualification for Stock Ownership. No person
may be granted an Incentive Stock Option under this Plan if
such person, at the time the Incentive Stock Option is
granted, owns stock possessing more than ten percent (10%)
of the total combined voting power of all classes of stock
of the Company or any then existing Subsidiary unless such
Incentive Stock Option conforms to the applicable provisions
of Section 422 of the Code.
3.3 Qualification of Incentive Stock Options. No
Incentive Stock Option shall be granted unless such Option,
when granted, qualifies as an "incentive stock option" under
Section 422 of the Code. No Incentive Stock Option shall be
granted to any person who is not an Employee.
3.4 Granting of Options
(a) The Committee shall from time to time, in its absolute
discretion:
(i) Determine which Employees are key Employees and select
from among the key Employees or consultants (including
Employees or consultants who have previously received
Options or other awards under this Plan) such of them as in
its opinion should be granted Options;
(ii) Determine the number of shares to be subject to such
Options granted to the selected key Employees or
consultants;
(iii) Determine whether such Options are to be Incentive
Stock Options or Non-Qualified Stock Options; and
(iv) Determine the terms and conditions of such Options,
consistent with this Plan.
(b) Upon the selection of a key Employee or consultant
to be granted an Option, the Committee shall instruct the
Secretary of the Company to issue the Option and may impose
such conditions on the grant of the Option as it deems
appropriate. Without limiting the generality of the
preceding sentence, the Committee may, in its discretion and
on such terms as it deems appropriate, require as a
condition on the grant of an Option to an Employee or
consultant that the Employee or consultant surrender for
cancellation some or all of the unexercised Options, awards
of Restricted Stock or Deferred Stock, Performance Awards,
Stock Appreciation Rights, Dividend Equivalents or Stock
Payments or other rights which have been previously granted
to him under this Plan or otherwise. An Option, the grant
of which is conditioned upon such surrender, may have an
option price lower (or higher) than the exercise price of
such surrendered Option or other award, may cover the same
(or a lesser or greater) number of shares as such
surrendered Option or other award, may contain such other
terms as the Committee deems appropriate, and shall be
exercisable in accordance with its terms, without regard to
the number of shares, price, exercise period or any other
term or condition of such surrendered Option or other award.
(c) Any Incentive Stock Option granted under this Plan
may be modified by the Committee to disqualify such option
from treatment as an "incentive stock option" under Section
422 of the Code.
(d) Each Outside Director may elect to forego cash
payment of all or any portion of his or her Director Fees
(the fees subject to such election are hereinafter referred
to as "Discount Fees") and receive, on the date such
Discount Fees otherwise would be paid, or such other date
specified by the Board, either (i) with the consent of the
Board, shares of Common Stock or (ii) a Non-Qualified Stock
Option with a price per share which shall be fixed by the
Board as a percentage (the "Exercise Price Percentage") of
the Fair Market Value per share of Common Stock as of the
grant date. If the Outside Director elects (with the
consent of the Board) to receive shares of Common Stock, the
number of shares issuable shall equal the amount of the
Discount Fees divided by the Fair Market Value per share of
Common Stock as of the issue date. If the Outside Director
elects to receive an Option, the number of shares subject to
such Option shall be the number determined by (i)
multiplying the Fair Market Value per share of Common Stock
as of the grant date by an amount equal to one minus the
Exercise Price Percentage, and (ii) dividing the product
into the amount of the Discount Fees. An election pursuant
to this Section 3.4(d) shall be made at least six months
prior to the scheduled payment of the Discount Fees and such
election shall be irrevocable.
ARTICLE IV
TERMS OF OPTIONS
4.1 Option Agreement. Each Option shall be evidenced
by a written Stock Option Agreement, which shall be executed
by the Optionee and an authorized officer of the Company and
which shall contain such terms and conditions as the
Committee (or the Board, in the case of Options granted to
Outside Directors) shall determine, consistent with this
Plan. Stock Option Agreements evidencing Incentive Stock
Options shall contain such terms and conditions as may be
necessary to meet the applicable provisions of Section 422
of the Code.
4.2 Option Price. The price per share of the shares
subject to each Option shall be set by the Committee;
provided, however, that such price shall be no less than the
par value of a share of Common Stock and in the case of
Incentive Stock Options such price shall not be less than
the greater of: (i) 100% of the Fair Market Value of a share
of Common Stock on the date the Option is granted, or (ii)
110% of the fair market value of a share of Common Stock on
the date such Option is granted in the case of an individual
then owning (within the meaning of Section 424(d) of the
Code) more than 10% of the total combined voting power of
all classes of stock of the Company or any Subsidiary.
4.3 Option Term. The term of an Option shall be set by
the Committee (or the Board, in the case of Options granted
to Outside Directors) in its discretion; provided, however,
that, in the case of Incentive Stock Options, the term shall
not be more than ten (10) years from the date the Incentive
Stock Option is granted, or five (5) years from such date if
the Incentive Stock Option is granted to an individual then
owning (within the meaning of Section 424(d) of the Code)
more than 10% of the total combined voting power of all
classes of stock of the Company or any Subsidiary.
4.4 Option Vesting
(a) The period during which the right to exercise an
Option in whole or in part vests in the Optionee shall be
set by the Committee (or the Board, in the case of Options
granted to Outside Directors) and the Committee (or the
Board) may determine that an Option may not be exercised in
whole or in part for a specified period after it is granted.
At any time after grant of an Option, the Committee (or the
Board) may, in its sole discretion and subject to whatever
terms and conditions it selects, accelerate the period
during which an Option vests.
(b) No portion of an Option which is unexercisable at
Termination of Employment, Termination of Directorship or
termination of a consultancy, as applicable, shall
thereafter become exercisable, except as may be otherwise
provided by the Committee (or the Board, in the case of
Options granted to Outside Directors) either in the Stock
Option Agreement or in a resolution adopted following the
grant of the Option.
(c) To the extent that the aggregate Fair Market Value
of stock with respect to which "incentive stock options"
(within the meaning of Section 422 of the Code, but without
regard to Section 422(d) of the Code) are exercisable for
the first time by an Optionee during any calendar year
(under the Plan and all other incentive stock option plans
of the Company and any Subsidiary) exceeds $100,000, such
Options shall be treated as Non-Qualified Options to the
extent required by Section 422 of the Code. The rule set
forth in the preceding sentence shall be applied by taking
Options into account in the order in which they were
granted. For purposes of this Section 4.4(c), the Fair
Market Value of stock shall be determined as of the time the
Option with respect to such stock is granted.
4.5 Consideration. In consideration of the granting of
an Option, the Optionee shall agree, in the written Stock
Option Agreement, to remain in the employ of (or to consult
for or to serve as an Outside Director of, as applicable)
the Company or any Subsidiary for a period of at least one
year after the Option is granted (or until the next annual
meeting of stockholders of the Company, in the case of an
Outside Director). Nothing in this Plan or in any Stock
Option Agreement hereunder shall confer upon any Optionee
any right to continue in the employ of, or as a consultant
for, the Company or any Subsidiary, or as a director of the
Company, or shall interfere with or restrict in any way the
rights of the Company and any Subsidiary, which are hereby
expressly reserved, to discharge any Optionee at any time
for any reason whatsoever, with or without good cause.
ARTICLE V
EXERCISE OF OPTIONS
5.1 Partial Exercise. An exercisable Option may be
exercised in whole or in part. However, an Option shall not
be exercisable with respect to fractional shares and the
Committee (or the Board, in the case of Options granted to
Outside Directors) may require that, by the terms of the
Option, a partial exercise be with respect to a minimum
number of shares.
5.2 Manner of Exercise. All or a portion of an
exercisable Option shall be deemed exercised upon delivery
of all of the following to the Secretary of the Company or
his office:
(a) A written notice complying with the applicable rules
established by the Committee or the Board stating that the
Option, or a portion thereof, is exercised. The notice
shall be signed by the Optionee or other person then
entitled to exercise the Option or such portion;
(b) Such representations and documents as the Committee or
the Board, in its absolute discretion, deems necessary or
advisable to effect compliance with all applicable
provisions of the Securities Act of 1933, as amended, and
any other federal or state securities laws or regulations.
The Committee or Board may, in its absolute discretion, also
take whatever additional actions it deems appropriate to
effect such compliance including, without limitation,
placing legends on share certificates and issuing stop-
transfer notices to agents and registrars;
(c) In the event that the Option shall be exercised
pursuant to Section 10.1 by any person or persons other than
the Optionee, appropriate proof of the right of such person
or persons to exercise the Option; and
(d) Full cash payment to the Secretary of the Company
for the shares with respect to which the Option, or portion
thereof, is exercised. However, at the discretion of the
Committee (or the Board, in the case of Options granted to
Outside Directors), the terms of the Option may (i) allow a
delay in payment up to thirty (30) days from the date the
Option, or portion thereof, is exercised; (ii) allow
payment, in whole or in part, through the delivery of shares
of Common Stock owned by the Optionee, duly endorsed for
transfer to the Company with a Fair Market Value on the date
of delivery equal to the aggregate exercise price of the
Option or exercised portion thereof; (iii) subject to the
timing requirements of Section 5.3, allow payment, in whole
or in part, through the surrender of shares of Common Stock
then issuable upon exercise of the Option having a Fair
Market Value on the date of Option exercise equal to the
aggregate exercise price of the Option or exercised portion
thereof; (iv) allow payment, in whole or in part, through
the delivery of property of any kind which constitutes good
and valuable consideration; or (v) allow payment through any
combination of the consideration provided in the foregoing
subparagraphs (ii), (iii) and (iv).
5.3 Certain Timing Requirements. At the discretion of
the Committee (or Board, in the case of Options granted to
Outside Directors), shares of Common Stock issuable to the
Optionee upon exercise of the Option may be used to satisfy
the Option exercise price or the tax withholding
consequences of such exercise, in the case of persons
subject to Section 16 of the Exchange Act, only (i) during
the period beginning on the third business day following the
date of release of the quarterly or annual summary statement
of sales and earnings of the Company and ending on the
twelfth business day following such date or (ii) pursuant to
an irrevocable written election by the Optionee to use
shares of Common Stock issuable to the Optionee upon
exercise of the Option to pay all or part of the Option
price or the withholding taxes made at least six months
prior to the payment of such Option price or withholding
taxes.
5.4 Conditions to Issuance of Stock Certificates. The
Company shall not be required to issue or deliver any
certificate or certificates for shares of stock purchased
upon the exercise of any Option or portion thereof prior to
fulfillment of all of the following conditions:
(a) The admission of such shares to listing on all stock
exchanges on which such class of stock is then listed;
(b) The completion of any registration or other
qualification of such shares under any state or federal law,
or under the rulings or regulations of the Securities and
Exchange Commission or any other governmental regulatory
body which the Committee or Board shall, in its absolute
discretion, deem necessary or advisable;
(c) The obtaining of any approval or other clearance from
any state or federal governmental agency which the Committee
or Board shall, in its absolute discretion, determine to be
necessary or advisable;
(d) The lapse of such reasonable period of time following
the exercise of the Option as the Committee or Board may
establish from time to time for reasons of administrative
convenience; and
(e) The receipt by the Company of full payment for such
shares, including payment of any applicable withholding tax.
5.5 Rights as Stockholders. The holders of Options
shall not be, nor have any of the rights or privileges of,
stockholders of the Company in respect of any shares
purchasable upon the exercise of any part of an Option
unless and until certificates representing such shares have
been issued by the Company to such holders.
5.6 Ownership and Transfer Restrictions. The Committee
(or Board, in the case of Options granted to Outside
Directors), in its absolute discretion, may impose such
restrictions on the ownership and transferability of the
shares purchasable upon the exercise of an Option as it
deems appropriate. Any such restriction shall be set forth
in the respective Stock Option Agreement and may be referred
to on the certificates evidencing such shares. The
Committee may require the Employee to give the Company
prompt notice of any disposition of shares of Common Stock
acquired by exercise of an Incentive Stock Option within (i)
two years from the date of granting such Option to such
Employee or (ii) one year after the transfer of such shares
to such Employee. The Committee may direct that the
certificates evidencing shares acquired by exercise of an
Option refer to such requirement to give prompt notice of
disposition.
ARTICLE VI
AWARD OF RESTRICTED STOCK
6.1 Award of Restricted Stock
(a) The Committee shall from time to time, in its absolute
discretion:
(i) Select from among the key Employees or consultants
(including Employees or consultants who have previously
received other awards under this Plan) such of them as in
its opinion should be awarded Restricted Stock; and
(ii) Determine the purchase price, if any, and other terms
and conditions applicable to such Restricted Stock,
consistent with this Plan.
(b) The Committee shall establish the purchase price,
if any, and form of payment for Restricted Stock; provided,
however, that such purchase price shall be no less than the
par value of the Common Stock to be purchased. In all
cases, legal consideration shall be required for each
issuance of Restricted Stock.
(c) Upon the selection of a key Employee or consultant
to be awarded Restricted Stock, the Committee shall instruct
the Secretary of the Company to issue such Restricted Stock
and may impose such conditions on the issuance of such
Restricted Stock as it deems appropriate.
6.2 Restricted Stock Agreement. Restricted Stock shall
be issued only pursuant to a written Restricted Stock
Agreement, which shall be executed by the selected key
Employee or consultant and an authorized officer of the
Company and which shall contain such terms and conditions as
the Committee shall determine, consistent with this Plan.
6.3 Consideration. As consideration for the issuance
of Restricted Stock, in addition to payment of any purchase
price, the Restricted Stockholder shall agree, in the
written Restricted Stock Agreement, to remain in the employ
of, or to consult for, the Company or any Subsidiary for a
period of at least one year after the Restricted Stock is
issued. Nothing in this Plan or in any Restricted Stock
Agreement hereunder shall confer on any Restricted
Stockholder any right to continue in the employ of, or as a
consultant for, the Company or any Subsidiary or shall
interfere with or restrict in any way the rights of the
Company and any Subsidiary, which are hereby expressly
reserved, to discharge any Restricted Stockholder at any
time for any reason whatsoever, with or without good cause.
6.4 Rights as Stockholders. Upon delivery of the
shares of Restricted Stock to the escrow holder pursuant to
Section 6.7, the Restricted Stockholder shall have, unless
otherwise provided by the Committee, all the rights of a
stockholder with respect to said shares, subject to the
restrictions in his Restricted Stock Agreement, including
the right to receive all dividends and other distributions
paid or made with respect to the shares; provided, however,
that in the discretion of the Committee, any extraordinary
distributions with respect to the Common Stock shall be
subject to the restrictions set forth in Section 6.5.
6.5 Restriction. All shares of Restricted Stock issued
under this Plan (including any shares received by holders
thereof with respect to shares of Restricted Stock as a
result of stock dividends, stock splits or any other form of
recapitalization) shall, in the terms of each individual
Restricted Stock Agreement, be subject to such restrictions
as the Committee shall provide, which restrictions may
include, without limitation, restrictions concerning voting
rights and transferability and restrictions based on
duration of employment with the Company, Company performance
and individual performance; provided, however, that by a
resolution adopted after the Restricted Stock is issued, the
Committee may, on such terms and conditions as it may
determine to be appropriate, remove any or all of the
restrictions imposed by the terms of the Restricted Stock
Agreement. Restricted Stock may not be sold or encumbered
until all restrictions are terminated or expire. Unless
provided otherwise by the Committee, if no consideration was
paid by the Restricted Stockholder upon issuance, a
Restricted Stockholder's rights in unvested Restricted Stock
shall lapse upon Termination of Employment or, if
applicable, upon the termination of his consulting
relationship with the Company.
6.6 Repurchase of Restricted Stock. The Committee
shall provide in the terms of each individual Restricted
Stock Agreement that the Company shall have the right to
repurchase from the Restricted Stockholder the Restricted
Stock then subject to restrictions under the Restricted
Stock Agreement immediately upon a Termination of Employment
or, if applicable, upon a termination of any consulting
relationship between the Restricted Stockholder and the
Company, at a cash price per share equal to the price paid
by the Restricted Stockholder for such Restricted Stock;
provided, however, that provision may be made that no such
right of repurchase shall exist in the event of a
Termination of Employment or termination of consultancy
without cause, or following a change in control of the
Company or because of the Restricted Stockholder's
retirement, death or disability, or otherwise.
6.7 Escrow. The Secretary of the Company or such other
escrow holder as the Committee may appoint shall retain
physical custody of each certificate representing Restricted
Stock until all of the restrictions imposed under the
Restricted Stock Agreement with respect to the shares
evidenced by such certificate expire or shall have been
removed.
6.8 Legend. In order to enforce the restrictions
imposed upon shares of Restricted Stock hereunder, the
Committee shall cause a legend or legends to be placed on
certificates representing all shares of Restricted Stock
that are still subject to restrictions under Restricted
Stock Agreements, which legend or legends shall make
appropriate reference to the conditions imposed thereby.
ARTICLE VII
PERFORMANCE AWARDS, DIVIDEND EQUIVALENTS,
DEFERRED STOCK, STOCK PAYMENTS
7.1 Performance Awards. Any key Employee or consultant
selected by the Committee may be granted one or more
Performance Awards. The value of such Performance Awards
may be linked to the market value, book value, net profits
or other measure of the value of Common Stock or other
specific performance criteria determined appropriate by the
Committee, in each case on a specified date or dates or over
any period or periods determined by the Committee, or may be
based upon the appreciation in the market value, book value,
net profits or other measure of the value of a specified
number of shares of Common Stock over a fixed period or
periods determined by the Committee. In making such
determinations, the Committee shall consider (among such
other factors as it deems relevant in light of the specific
type of award) the contributions, responsibilities and other
compensation of the particular key Employee or consultant.
7.2 Dividend Equivalents. Any key Employee or
consultant selected by the Committee may be granted Dividend
Equivalents based on the dividends declared on Common Stock,
to be credited as of dividend payment dates, during the
period between the date an Option, Stock Appreciation Right,
Deferred Stock or Performance Award is granted, and the date
such Option, Stock Appreciation Right, Deferred Stock or
Performance Award is exercised, vests or expires, as
determined by the Committee. Such Dividend Equivalents
shall be converted to cash or additional shares of Common
Stock by such formula and at such time and subject to such
limitations as may be determined by the Committee.
7.3 Stock Payments. Any key Employee or consultant
selected by the Committee may receive Stock Payments in the
manner determined from time to time by the Committee. The
number of shares shall be determined by the Committee and
may be based upon the Fair Market Value, book value, net
profits or other measure of the value of Common Stock on the
date such Stock Payment is made or on any date thereafter.
7.4 Deferred Stock. Any key Employee or consultant
selected by the Committee may be granted an award of
Deferred Stock in the manner determined from time to time by
the Committee. The number of shares of Deferred Stock shall
be determined by the Committee and may be linked to the
market value, book value, net profits or other measure of
the value of Common Stock or other specific performance
criteria, in each case on a specified date or dates or over
any period or periods determined by the Committee. Common
Stock underlying a Deferred Stock award will not be issued
until the Deferred Stock award has vested, pursuant to a
vesting schedule or performance criteria set by the
Committee. Unless otherwise provided by the Committee, a
Grantee of Deferred Stock shall have no rights as a Company
stockholder with respect to such Deferred Stock until such
time as the award has vested and the Common Stock underlying
the award has been issued.
7.5 Performance Award Agreement, Dividend Equivalent
Agreement, Deferred Stock Agreement, Stock Payment
Agreement. Each Performance Award, Dividend Equivalent,
award of Deferred Stock and/or Stock Payment shall be
evidenced by a written agreement, which shall be executed by
the Grantee and an authorized Officer of the Company and
which shall contain such terms and conditions as the
Committee shall determine, consistent with this Plan.
7.6 Term. The term of a Performance Award, Dividend
Equivalent, award of Deferred Stock and/or Stock Payment
shall be set by the Committee in its discretion.
7.7 Exercise Upon Termination of Employment. A
Performance Award, Dividend Equivalent, award of Deferred
Stock and/or Stock Payment is exercisable only while the
Grantee is an Employee or consultant; provided that the
Committee may determine that the Performance Award, Dividend
Equivalent, award of Deferred Stock and/or Stock Payment may
be exercised subsequent to Termination of Employment or
termination of consultancy without cause, or following a
change in control of the Company, or because of the
Grantee's retirement, death or disability, or otherwise.
7.8 Payment on Exercise. Payment of the amount
determined under Section 7.1 or 7.2 above shall be in cash,
in Common Stock or a combination of both, as determined by
the Committee. To the extent any payment under this Article
VII is effected in Common Stock, it shall be made subject to
satisfaction of all provisions of Section 5.4.
7.9 Consideration. In consideration of the granting of
a Performance Award, Dividend Equivalent, award of Deferred
Stock and/or Stock Payment, the Grantee shall agree, in a
written agreement, to remain in the employ of, or to consult
for, the Company or any Subsidiary for a period of at least
one year after such Performance Award, Dividend Equivalent,
award of Deferred Stock and/or Stock Payment is granted.
Nothing in this Plan or in any agreement hereunder shall
confer on any Grantee any right to continue in the employ
of, or as a consultant for, the Company or any Subsidiary or
shall interfere with or restrict in any way the rights of
the Company and any Subsidiary, which are hereby expressly
reserved, to discharge any Grantee at any time for any
reason whatsoever, with or without good cause.
ARTICLE VIII
STOCK APPRECIATION RIGHTS
8.1 Grant of Stock Appreciation Rights. A Stock
Appreciation Right may be granted to any key Employee or
consultant selected by the Committee. A Stock Appreciation
Right may be granted (i) in connection and simultaneously
with the grant of an Option, (ii) with respect to a
previously granted Option, or (iii) independent of an
Option. A Stock Appreciation Right shall be subject to such
terms and conditions not inconsistent with this Plan as the
Committee shall impose and shall be evidenced by a written
Stock Appreciation Right Agreement, which shall be executed
by the Grantee and an authorized officer of the Company.
Without limiting the generality of the preceding sentence,
the Committee may, in its discretion and on such terms as it
deems appropriate, require as a condition of the grant of a
Stock Appreciation Right to an Employee or consultant that
the Employee or consultant surrender for cancellation some
or all of the unexercised Options, awards of Restricted
Stock or Deferred Stock, Performance Awards, Stock
Appreciation Rights, Dividend Equivalents or Stock Payments,
or other rights which have been previously granted to him
under this Plan or otherwise. A Stock Appreciation Right,
the grant of which is conditioned upon such surrender, may
have an exercise price lower (or higher) than the exercise
price of the surrendered Option or other award, may cover
the same (or a lesser or greater) number of shares as such
surrendered Option or other award, may contain such other
terms as the Committee deems appropriate, and shall be
exercisable in accordance with its terms, without regard to
the number of shares, price, exercise period or any other
term or condition of such surrendered Option or other award.
8.2 Coupled Stock Appreciation Rights
(a) A Coupled Stock Appreciation Right ("CSAR") shall
be related to a particular Option and shall be exercisable
only when and to the extent the related Option is
exercisable.
(b) A CSAR may be granted to the Grantee for no more
than the number of shares subject to the simultaneously or
previously granted Option to which it is coupled.
(c) A CSAR shall entitle the Grantee (or other person
entitled to exercise the Option pursuant to this Plan) to
surrender to the Company unexercised a portion of the Option
to which the CSAR relates (to the extent then exercisable
pursuant to its terms) and to receive from the Company in
exchange therefor an amount determined by multiplying the
difference obtained by subtracting the Option exercise price
from the Fair Market Value of a share of Common Stock on the
date of exercise of the CSAR by the number of shares of
Common Stock with respect to which the CSAR shall have been
exercised, subject to any limitations the Committee may
impose.
8.3 Independent Stock Appreciation Rights
(a) An Independent Stock Appreciation Right ("ISAR")
shall be unrelated to any Option and shall have a term set
by the Committee. An ISAR shall be exercisable in such
installments as the Committee may determine. An ISAR shall
cover such number of shares of Common Stock as the Committee
may determine. The exercise price per share of Common Stock
subject to each ISAR shall be set by the Committee. An ISAR
is exercisable only while the Grantee is an Employee or
consultant; provided that the Committee may determine that
the ISAR may be exercised subsequent to Termination of
Employment or termination of consultancy without cause, or
following a change in control of the Company, or because of
the Grantee's retirement, death or disability, or otherwise.
(b) An ISAR shall entitle the Grantee (or other person
entitled to exercise the ISAR pursuant to this Plan) to
exercise all or a specified portion of the ISAR (to the
extent then exercisable pursuant to its terms) and to
receive from the Company an amount determined by multiplying
the difference obtained by subtracting the exercise price
per share of the ISAR from the Fair Market Value of a share
of Common Stock on the date of exercise of the ISAR by the
number of shares of Common Stock with respect to which the
ISAR shall have been exercised, subject to any limitations
the Committee may impose.
8.4 Payment and Limitations on Exercise
(a) Payment of the amount determined under Section
8.2(c) and 8.3(b) above shall be in cash, in Common Stock
(based on its Fair Market Value as of the date the Stock
Appreciation Right is exercised) or a combination of both,
as determined by the Committee. To the extent such payment
is effected in Common Stock it shall be made subject to
satisfaction of all provisions of Section 5.4 hereinabove
pertaining to Options.
(b) Grantees of Stock Appreciation Rights who are
subject to Section 16 of the Exchange Act may, in the
discretion of the Board or Committee, be required to comply
with any timing or other restrictions under Rule 16b-3
applicable to the settlement or exercise of a Stock
Appreciation Right.
8.5 Consideration. In consideration of the granting of
a Stock Appreciation Right, the Grantee shall agree, in the
written Stock Appreciation Right Agreement, to remain in the
employ of, or to consult for, the Company or any Subsidiary
for a period of at least one year after the Stock
Appreciation Right is granted. Nothing in this Plan or in
any Stock Appreciation Right Agreement hereunder shall
confer on any Grantee any right to continue in the employ
of, or as a consultant for, the Company or any Subsidiary or
shall interfere with or restrict in any way the rights of
the Company and any Subsidiary, which are hereby expressly
reserved, to discharge any Grantee at any time for any
reason whatsoever, with or without good cause.
ARTICLE IX
ADMINISTRATION
9.1 Compensation Committee. The Compensation Committee
(or a subcommittee of the Board assuming the functions of
the Committee under this Plan) shall consist of two or more
Directors appointed by and holding office at the pleasure of
the Board, each of whom is a "disinterested person" as
defined by Rule 16b-3. Appointment of Committee members
shall be effective upon acceptance of appointment.
Committee members may resign at any time by delivering
written notice to the Board. Vacancies in the Committee may
be filled by the Board.
9.2 Duties and Powers of Committee. It shall be the
duty of the Committee to conduct the general administration
of this Plan in accordance with its provisions. The
Committee shall have the power to interpret this Plan and
the agreements pursuant to which Options, awards of
Restricted Stock or Deferred Stock, Performance Awards,
Stock Appreciation Rights, Dividend Equivalents or Stock
Payments are granted or awarded, and to adopt such rules for
the administration, interpretation, and application of this
Plan as are consistent therewith and to interpret, amend or
revoke any such rules. Any such grant or award under this
Plan need not be the same with respect to each Optionee,
Grantee or Restricted Stockholder. Any such interpretations
and rules with respect to Incentive Stock Options shall be
consistent with the provisions of Section 422 of the Code.
In its absolute discretion, the Board may at any time and
from time to time exercise any and all rights and duties of
the Committee under this Plan except with respect to matters
which under Rule 16b-3 are required to be determined in the
sole discretion of the Committee.
9.3 Majority Rule. The Committee shall act by a
majority of its members in attendance at a meeting at which
a quorum is present or by a memorandum or other written
instrument signed by all members of the Committee.
9.4 Compensation; Professional Assistance; Good Faith
Actions. Members of the Committee shall receive such
compensation for their services as members as may be
determined by the Board. All expenses and liabilities which
members of the Committee incur in connection with the
administration of this Plan shall be borne by the Company.
The Committee may, with the approval of the Board, employ
attorneys, consultants, accountants, appraisers, brokers, or
other persons. The Committee, the Company and the Company's
officers and Directors shall be entitled to rely upon the
advice, opinions or valuations of any such persons. All
actions taken and all interpretations and determinations
made by the Committee in good faith shall be final and
binding upon all Optionees, Grantees, Restricted
Stockholders, the Company and all other interested persons.
No members of the Committee or Board shall be personally
liable for any action, determination or interpretation made
in good faith with respect to this Plan, Options, awards of
Restricted Stock or Deferred Stock, Performance Awards,
Stock Appreciation Rights, Dividend Equivalents or Stock
Payments, and all members of the Committee shall be fully
protected by the Company in respect of any such action,
determination or interpretation.
ARTICLE X
MISCELLANEOUS PROVISIONS
10.1 Not Transferable. Options, Restricted Stock
awards, Deferred Stock awards, Performance Awards, Stock
Appreciation Rights, Dividend Equivalents or Stock Payments
under this Plan may not be sold, pledged, assigned, or
transferred in any manner other than by will or the laws of
descent and distribution, unless and until such rights or
awards have been exercised, or the shares underlying such
rights or awards have been issued, and all restrictions
applicable to such shares have lapsed. No Option,
Restricted Stock award, Deferred Stock award, Performance
Award, Stock Appreciation Right, Dividend Equivalent or
Stock Payment or interest or right therein shall be liable
for the debts, contracts or engagements of the Optionee,
Grantee or Restricted Stockholder or his successors in
interest or shall be subject to disposition by transfer,
alienation, anticipation, pledge, encumbrance, assignment or
any other means whether such disposition be voluntary or
involuntary or by operation of law by judgment, levy,
attachment, garnishment or any other legal or equitable
proceedings (including bankruptcy), and any attempted
disposition thereof shall be null and void and of no effect.
During the lifetime of the Optionee or Grantee, only he
may exercise an Option or other right or award (or any
portion thereof) granted to him under the Plan. After the
death of the Optionee or Grantee, any exercisable portion of
an Option or other right or award may, prior to the time
when such portion becomes unexercisable under the Plan or
the applicable Stock Option Agreement or other agreement, be
exercised by his personal representative or by any person
empowered to do so under the deceased Optionee's or
Grantee's will or under the then applicable laws of descent
and distribution.
10.2 Amendment, Suspension or Termination of this Plan.
This Plan may be wholly or partially amended or otherwise
modified, suspended or terminated at any time or from time
to time by the Committee. However, without approval of the
Company's stockholders given within twelve months before or
after the action by the Committee, no action of the
Committee may, except as provided in Section 10.3, increase
the limits imposed in Section 2.1 on the maximum number of
shares which may be issued under this Plan, and no action of
the Committee may be taken that would otherwise require
stockholder approval as a matter of applicable law,
regulation or rule. No amendment, suspension or termination
of this Plan shall, without the consent of the holder of
Options, Restricted Stock awards, Deferred Stock awards,
Performance Awards, Stock Appreciation Rights, Dividend
Equivalents or Stock Payments, alter or impair any rights or
obligations under any Options, Restricted Stock awards,
Deferred Stock awards, Performance Awards, Stock
Appreciation Rights, Dividend Equivalents or Stock Payments
theretofore granted or awarded, unless the award itself
otherwise expressly so provides. No Options, Restricted
Stock, Deferred Stock, Performance Awards, Stock
Appreciation Rights, Dividend Equivalents or Stock Payments
may be granted or awarded during any period of suspension or
after termination of this Plan, and in no event may any
Incentive Stock Option be granted under this Plan after the
first to occur of the following events:
(a) The expiration of ten years from the date the Plan is
adopted by the Board; or
(b) The expiration of ten years from the date the Plan is
approved by the Company's stockholders under Section 10.5.
10.3 Changes in Common Stock or Assets of the Company.
In the event that the outstanding shares of Common Stock are
hereafter changed into or exchanged for cash or a different
number or kind of shares or other securities of the Company,
or of another corporation, by reason of reorganization,
merger, consolidation, recapitalization, reclassification,
stock splitup, stock dividend, or combination of shares,
appropriate adjustments shall be made by the Committee in
the number and kind of shares for which Options, Restricted
Stock awards, Performance Awards, Stock Appreciation Rights,
Dividend Equivalents, Deferred Stock awards or Stock
Payments may be granted, including adjustments of the
limitation in Section 2.1 on the maximum number and kind of
shares which may be issued.
In the event of such a change or exchange, other than
for shares or securities of another corporation or by reason
of reorganization, the Committee shall also make an
appropriate and equitable adjustment in the number and kind
of shares as to which all outstanding Options, Performance
Awards, Stock Appreciation Rights, Dividend Equivalents or
Stock Payments, or portions thereof then unexercised, shall
be exercisable and in the number and kind of shares of
outstanding Restricted Stock or Deferred Stock. Such
adjustment shall be made with the intent that after the
change or exchange of shares, each Optionee's and each
Grantee's and each Restricted Stockholder's proportionate
interest shall be maintained as before the occurrence of
such event. Such adjustment in an outstanding Option,
Performance Award, Stock Appreciation Right, Dividend
Equivalent or Stock Payment may include a necessary or
appropriate corresponding adjustment in Option, Performance
Award, Stock Appreciation Right, Dividend Equivalent or
Stock Payment exercise price, but shall be made without
change in the total price applicable to the Option,
Performance Award, Stock Appreciation Right, Dividend
Equivalent or Stock Payment, or the unexercised portion
thereof (except for any change in the aggregate price
resulting from rounding-off of share quantities or prices).
Where an adjustment of the type described above is made
to an Incentive Stock Option under this Section, the
adjustment will be made in a manner which will not be
considered a "modification" under the provisions of
subsection 424(h)(3) of the Code.
Notwithstanding the foregoing, in the event of such a
reorganization, merger, consolidation, recapitalization,
reclassification, stock splitup, stock dividend or
combination, or other adjustment or event which results in
shares of Common Stock being exchanged for or converted into
cash, securities or other property, the Company will have
the right to terminate this Plan as of the date of the
exchange or conversion, in which case all options, rights
and other awards under this Plan shall become the right to
receive such cash, securities or other property, net of any
applicable exercise price.
In the event of a "spin-off" or other substantial
distribution of assets of the Company which has a material
diminutive effect upon the Fair Market Value of the
Company's Common Stock, the Committee (or the Board, in the
case of Options granted to Outside Directors) may in its
discretion make an appropriate and equitable adjustment to
the Option, Performance Award, Stock Appreciation Right,
Dividend Equivalent or Stock Payment exercise price to
reflect such diminution.
10.4 Merger of the Company. In the event of the merger or
consolidation of the Company with or into another
corporation, the exchange of all or substantially all of the
assets of the Company for the securities of another
corporation, the acquisition by another corporation or
person of all or substantially all of the Company's assets
or 80% or more of the Company's then outstanding voting
stock, or the liquidation or dissolution of the Company:
(a) At the discretion of the Committee, the terms of an
Option, Performance Award, Stock Appreciation Right,
Dividend Equivalent or Stock Payment may provide that it
cannot be exercised after such event.
(b) In its discretion, and on such terms and conditions
as it deems appropriate, the Committee may provide either by
the terms of such Option, Performance Award, Stock
Appreciation Right, Dividend Equivalent or Stock Payment or
by a resolution adopted prior to the occurrence of such
event that, for a specified period of time prior to such
event, such Option, Performance Award, Stock Appreciation
Right, Dividend Equivalent or Stock Payment shall be
exercisable as to all shares covered thereby,
notwithstanding anything to the contrary in this Plan or in
the provisions of such Option, Performance Award, Stock
Appreciation Right, Dividend Equivalent or Stock Payment.
(c) In its discretion, and on such terms and conditions
as it deems appropriate, the Committee may provide either by
the terms of such Option, Performance Award, Stock
Appreciation Right, Dividend Equivalent or Stock Payment or
by a resolution adopted prior to the occurrence of such
event that upon such event, such Option, Performance Award,
Stock Appreciation Right, Dividend Equivalent or Stock
Payment shall be assumed by the successor corporation, or a
parent or subsidiary thereof, or shall be substituted for by
similar options, rights or awards covering the stock of the
successor corporation, or a parent or subsidiary thereof,
with appropriate adjustments as to the number and kind of
shares and prices.
(d) In its discretion, and on such terms and conditions
as it deems appropriate, the Committee may provide either by
the terms of a Restricted Stock award or Deferred Stock
award or by a resolution adopted prior to the occurrence of
such event that, for a specified period of time prior to
such event, the restrictions imposed under a Restricted
Stock Agreement or a Deferred Stock Agreement upon some or
all shares of Restricted Stock or Deferred Stock may be
terminated, and, in the case of Restricted Stock, some or
all shares of such Restricted Stock may cease to be subject
to repurchase under Section 6.6 after such event.
10.5 Approval of Plan by Stockholders. This Plan will
be submitted for the approval of the Company's stockholders
within twelve months after the date of the Board's initial
adoption of this Plan. Options, Performance Awards, Stock
Appreciation Rights, Dividend Equivalents or Stock Payments
may be granted and Restricted Stock or Deferred Stock may be
awarded prior to such stockholder approval, provided that
such Options, Performance Awards, Stock Appreciation Rights,
Dividend Equivalents or Stock Payments shall not be
exercisable and such Restricted Stock or Deferred Stock
shall not vest prior to the time when this Plan is approved
by the stockholders, and provided further that if such
approval has not been obtained at the end of said twelve-
month period, all Options, Performance Awards, Stock
Appreciation Rights, Dividend Equivalents or Stock Payments
previously granted and all Restricted Stock or Deferred
Stock previously awarded under this Plan shall thereupon be
canceled and become null and void.
10.6 Tax Withholding. The Company shall be entitled to
require payment in cash or deduction from other compensation
payable to each Optionee, Grantee or Restricted Stockholder
of any sums required by federal, state or local tax law to
be withheld with respect to the issuance, vesting or
exercise of any Option, Restricted Stock, Deferred Stock,
Performance Award, Stock Appreciation Right, Dividend
Equivalent or Stock Payment. Subject to the timing
requirements of Section 5.3, the Committee (or the Board, in
the case of Options granted to Outside Directors) may in its
discretion and in satisfaction of the foregoing requirement
allow such Optionee, Grantee or Restricted Stockholder to
elect to have the Company withhold shares of Common Stock
(or allow the return of shares of Common Stock) having a
Fair Market Value equal to the sums required to be withheld.
10.7 Limitations Applicable to Section 16 Persons.
Notwithstanding any other provision of this Plan, any
Option, Performance Award, Stock Appreciation Right,
Dividend Equivalent or Stock Payment granted, or Restricted
Stock or Deferred Stock awarded, to a key Employee or
Director who is then subject to Section 16 of the Exchange
Act, shall be subject to any additional limitations set
forth in any applicable exemptive rule under Section 16 of
the Exchange Act (including any amendment to Rule 16b-3 of
the Exchange Act) that are requirements for the application
of such exemptive rule, and this Plan shall be deemed
amended to the extent necessary to conform to such
limitations.
10.8 Effect of Plan Upon Options and Compensation
Plans. The adoption of this Plan shall not affect any other
compensation or incentive plans in effect for the Company or
any Subsidiary. Nothing in this Plan shall be construed to
limit the right of the Company (i) to establish any other
forms of incentives or compensation for Employees of the
Company or any Subsidiary or (ii) to grant or assume options
or other rights otherwise than under this Plan in connection
with any proper corporate purpose including but not by way
of limitation, the grant or assumption of options in
connection with the acquisition by purchase, lease, merger,
consolidation or otherwise, of the business, stock or assets
of any corporation, partnership, firm or association.
10.9 Compliance with Laws. This Plan, the granting and
vesting of Options, Restricted Stock awards, Deferred Stock
awards, Performance Awards, Stock Appreciation Rights,
Dividend Equivalents or Stock Payments under this Plan and
the issuance and delivery of shares of Common Stock and the
payment of money under this Plan or under Options,
Performance Awards, Stock Appreciation Rights, Dividend
Equivalents or Stock Payments granted or Restricted Stock or
Deferred Stock awarded hereunder are subject to compliance
with all applicable federal and state laws, rules and
regulations (including but not limited to state and federal
securities law and federal margin requirements) and to such
approvals by any listing, regulatory or governmental
authority as may, in the opinion of counsel for the Company,
be necessary or advisable in connection therewith. Any
securities delivered under this Plan shall be subject to
such restrictions, and the person acquiring such securities
shall, if requested by the Company, provide such assurances
and representations to the Company as the Company may deem
necessary or desirable to assure compliance with all
applicable legal requirements. To the extent permitted by
applicable law, the Plan, Options, Restricted Stock awards,
Deferred Stock awards, Performance Awards, Stock
Appreciation Rights, Dividend Equivalents or Stock Payments
granted or awarded hereunder shall be deemed amended to the
extent necessary to conform to such laws, rules and
regulations.
10.10 Titles. Titles are provided herein for
convenience only and are not to serve as a basis for
interpretation or construction of this Plan.
10.11 Governing Law. This Plan and any agreements
hereunder shall be administered, interpreted and enforced
under the internal laws of the State of California without
regard to conflicts of laws thereof.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed by their officers duly authorized
on this 21st day of June, 1994.
Magma Power Company,
a Nevada corporation
By
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