UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark one)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to___________
Commission file number 0-25748
GREAT BAY POWER CORPORATION
(Exact name of registrant as specified in its charter)
New Hampshire 02-0396811
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
20 Ladd Street, Portsmouth, New Hampshire 03801-4080
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (603) 433-8822
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes X No
Indicate by check mark whether the registrant has filed all
documents required to be filed by
Section 12, 13 or 15(d) of the Securities Exchange Act of 1934
subsequent to the distribution of securities under a plan confirmed
by a court.
Yes X No
Class Outstanding at August 11, 1995
Common Shares, $0.01 Par Value 7,999,998
Page 1 of 33 pages.
Exhibit Index appears on page 16.
INDEX
Part I. Financial Information:
Item 1 - Financial Information:
Statements of Income and Loss - Three and Six
Months Ended June 30, 1995 and 1994........................... 3
Balance Sheets at June 30, 1995
and December 31, 1994......................................... 4-5
Statements of Cash Flow - Six
Months Ended June 30, 1995 and 1994........................... 6
Notes to Financial
Statements.................................................... 7-8
Item 2 - Financial Discussion:
Management's Discussion and Analysis of
Results of Operations......................................... 9-13
Part II. Other Information:
Item 6 - Exhibits and Reports in Form 8-K:
Signature...................................................... 15
Exhibit Index.................................................. 16
GREAT BAY POWER CORPORATION
STATEMENTS OF INCOME AND LOSS
(UNAUDITED)
SUCCESSOR COMPANY PREDECESSOR COMPANY
Three Six Three Six
Months Months Months Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
1995 1995 1994 1994
Operating Revenues $6,628 $14,409 $(548) $4,859
Operating Expenses:
Production 4,096 8,302 5,609 10,210
Transmission 233 474 304 553
Administrative & 1,537 2,939 1,155 2,316
General
Depreciation and 784 1,520 2,275 4,551
Amortization
Taxes Other than 1,000 2,022 1,223 2,439
Income
Total Operating 7,650 15,257 10,566 20,069
Expenses
Operating Income (1,022) (848) (11,114) (15,210)
(Loss)
Other (Income)
Deductions:
Interest Expense (2) -- 185 159
Other (412) (801) (8) (152)
Total Other
(Income)
Deductions (414) (801) 177 7
Income Before Taxes (608) (47) (11,291) (15,217)
Income Taxes (4) (3) (3,786) (4,949)
Net Income (Loss) $(604) $(44) $(7,505) $(10,268)
Shares Outstanding 7,999,998 7,999,998
Earnings (Loss) Per ($0.08) ($0.01)
Share
(The accompanying notes are an integral part of these
statements.)
GREAT BAY POWER CORPORATION
BALANCE SHEET
(UNAUDITED)
(Dollars in Thousands)
June 30, December31,
1995 1994
ASSETS:
Net Utility Plant $100,636 $101,213
Nuclear Fuel 11,651 10,556
Less: Accumulated (4,523) (2,118)
Depreciation
Net Nuclear Fuel 7,128 8,438
Total Utility Plant and 107,764 109,651
Nuclear Fuel
Other Property &
Investments:
Decommissioning Trust Fund 4,197 3,290
Current Assets:
Cash & Cash Equivalents 14,642 18,533
Short-term Investments, at 8,715 3,684
market
Accounts Receivable 1,516 2,598
Materials & Supplies 4,914 4,846
Prepayments & Other Assets 2,261 2,976
Total Current Assets 32,048 32,637
Deferred Debits & Other 98 88
TOTAL ASSETS $144,107 $145,666
(The accompanying notes are an integral part of these
statements.)
GREAT BAY POWER CORPORATION
BALANCE SHEET
(UNAUDITED)
(Dollars in Thousands)
June 30, December31,
1995 1994
LIABILITIES & STOCKHOLDERS' EQUITY:
Stockholders' Equity:
Common Stock Issued $80 $80
Paid in Capital 88,030 88,030
Retained earnings 138 182
Total Capitalization 88,248 88,292
Operating Reserves:
Misc. Other Liability 719 719
Decommissioning Liability 49,622 48,530
Total Operating provisions 50,341 49,249
Current & Accrued Liabilities:
Accounts Payable & Accrued 75 303
Expenses
Taxes Accrued 16 1,166
Reorganization Expenses 271 2,653
Misc. Current Liabilities 2,389 1,346
Total Current & Accrued 2,751 5,468
Liabilities
Other Liabilities & Deferred
Credits
Deferred Taxes 94 94
Other Liabilties & Deferred 2,673 2,563
Credits
Total Other Liabilities & 2,767 2,657
Deferred Credits
Total Liabilities & Capital $144,107 $145,666
(The accompanying notes are an integral part of these
statements.)
GREAT BAY POWER CORPORATION
CASH FLOW STATEMENT
(UNAUDITED)
(Dollars in Thousands)
Successor Predeccessor
Company Company
Six Months Six Months
Ended Ended
June 30, 1995 June 30, 1994
Cash Flows From Operating
Activities:
Net Income (Loss) $(44) $(10,268)
Adjustments to reconcile net
income to
net cash provided by operating
activities:
Depreciation and 1,520 4,087
amortization
Nuclear Fuel Amortization 2,378 1,209
Investment Tax Credit - Net -- (93)
Deferred Taxes -- (4,856)
Change in assets and
liabilities:
(Increase) Decrease in:
Accounts receivable 1,082 2,426
Materials and supplies (68) ---
Prepayments 715 786
Increase (Decrease) in:
Accounts payable (228) 6
Taxes accrued (1,150) (581)
Other (1,240) 956
Net Cash Provided From 2,965 (6,328)
Operating Activities
Cash Flows From Investment
Activities:
Gross Additions to Utility Plant (329) (1,402)
Gross Additions to Nuclear Fuel (1,094) ---
Decommissioning Fund Payments (402) ---
Decrease (Increase) in (5,031) ---
Short-term Investments
Net Cash (Used In) (6,856) (1,402)
Investment Activities
Cash Flow From Financing
Activities:
Debtor-in-Possession Financing --- 7,683
Net Cash Provided From 0 7,683
Financing Activities
Net Increase (Decrease) in Cash (3,891) (47)
and Equivalents
Cash and Equivalents at Beginning 18,533 138
of Period
Cash and Equivalents at End of $14,642 $91
Period
Cash paid for:
Interest --- ---
Income Taxes --- ---
(The accompanying notes are an integral part of these
statements.)
GREAT BAY POWER CORPORATION
NOTES TO FINANCIAL STATEMENTS
Note A - THE COMPANY
Great Bay Power Corporation (the "Company") is a New Hampshire
corporation which emerged from bankruptcy on November 23, 1994. The
predecessor company, EUA Power Corporation ( the "Predecessor"), was
incorporated in 1986. The Company is authorized by the New Hampshire
Public Utilities Commission ("NHPUC") to engage in business as a
public utility for the purposes of acquiring its 12.1% interest in the
Seabrook Nuclear Power Project (the "Seabrook Project"), participating
as a joint owner in the Seabrook Project and selling its share of the
electricity produced by Seabrook Project for resale. The Seabrook
Project consists of the Seabrook Unit 1 reactor ("Seabrook Unit 1"), a
nuclear-fueled, steam electricity generating plant located in
Seabrook, New Hampshire. The Predecessor became a wholesale
generating company when Seabrook Unit 1 commenced commercial operation
on August 19, 1990. In 1993, the Predecessor became an Exempt
Wholesale Generator under the Energy Policy Act of 1992.
The Company currently has two employees, and substantially all
the Company's power marketing and administrative functions are
performed on the Company's behalf by third parties pursuant to
contractual agreements.
Note B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The unaudited financial statements included herein have been
prepared on behalf of the Company, without audit, pursuant to the
rules and regulations of the Securities and Exchange Commission and
include, in the opinion of management, all adjustments, consisting of
normal recurring adjustments, necessary for a fair presentation of
interim period results. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with
generally accepted accounting principles have been omitted or
condensed pursuant to such rules and regulations. The Company
believes, however, its disclosures herein, when read in conjunction
with the Company's audited financial statements for the year ended
December 31, 1994, are adequate to make the information presented not
misleading. As further discussed in the Management Discussion and
Analysis, the results for the interim periods are not necessarily
indicative of the results to be expected for the full fiscal
year.
Note C - COMMITMENTS AND CONTINGENCIES
Nuclear Issues
Like other nuclear generating facilities, the Seabrook Project is
subject to extensive regulation by the Nuclear Regulatory Commission
("NRC"). The NRC is empowered to authorize the siting, construction
and operation of nuclear reactors after consideration of public
health, safety, environmental and anti-trust matters.
The NRC has promulgated numerous requirements affecting safety
systems, fire protection, emergency response planning and notification
systems, and other aspects of nuclear plant construction, equipment
and operation. The Company has been, and may be, affected to the
extent of its proportionate share by the cost of any such requirements
for Seabrook Unit 1.
Nuclear units in the United States have been subject to
widespread criticism and opposition. Some nuclear projects have been
canceled following substantial construction delays and cost overruns
as the result of licensing problems, unanticipated construction
defects and other difficulties. Various groups have by litigation,
legislation and participation in administrative proceedings sought to
prohibit the completion and operation of nuclear units and the
disposal of nuclear waste. In the event of a shutdown of any unit,
NRC regulations require that it be completely decontaminated of any
residual radioactivity. The cost of such decommissioning, depending
on the circumstances, could substantially exceed the owners'
investment at the time of cancellation.
Public controversy concerning nuclear power could adversely
affect the operating license of Seabrook Unit 1. While the Company
cannot predict the ultimate effect of such controversy, it is possible
that it could result in a premature shutdown of the unit.
Liquidity and Capital Expenditures
The Company anticipates that its share of the Seabrook Project's
capital expenditures for the 1995 fiscal year, including reactor
refueling scheduled for November 1995, will total approximately $7.9
million. The majority of these capital expenditures are for nuclear
fuel. This scheduled outage is expected to last approximately 45
days, during which time the plant will not generate any electricity
for its owners.
The Seabrook Project experienced an unscheduled outage from June
18, 1995 to July 5, 1995. During this period the Seabrook Project did
not produce electricity and the Company did not earn any revenue.
During unscheduled outages, in addition to the expenses of routine
operation and maintenance, the Company is responsible for its pro rata
share of expenses related to the outage. In addition, as a result of
the June 18, 1995 to July 5, 1995 unscheduled outage, the operation of
Seabrook Unit 1 will be limited to 94% of maximum capacity until the
next scheduled refueling outage in November 1995, resulting in a
reduction of approximately 6% in the energy Great Bay has available
for sale.
Note D - COMMON STOCK
The Company's authorized capital stock consists of 8,000,000
shares of common stock, with a par value of $0.01 per share. A total
of 7,999,998 shares of common stock were outstanding on August 11,
1995.
The Company has never paid cash dividends on the Common Stock.
The Company currently intends to retain all of its future earnings and
does not anticipate paying a dividend in the foreseeable future.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Overview
Great Bay Power Corporation (formerly known as EUA Power
Corporation) is a New Hampshire public utility whose principal asset
is its 12.1% joint ownership interest in the Seabrook Nuclear Power
Project in Seabrook, New Hampshire (the "Seabrook Project"). The
Company's share of the Seabrook Project capacity is approximately 140
megawatts ("MW"). The Company sells its share of the electricity
produced by the Seabrook Project in the wholesale electricity market,
primarily in the Northeast United States. Great Bay does not have
operational responsibility for the Seabrook Project. Instead, the
daily operational and management responsibilities of the Seabrook
Project are carried out by a Managing Agent, which is currently North
Atlantic Energy Service Corporation ("NAESCO"), a wholly-owned
subsidiary of Northeast Utilities.
The Company's operating results and the comparability of these
results on an interim and annual basis are directly impacted by the
operations of the Seabrook Project, including the cyclical refueling
outages (generally scheduled 18-24 months apart) as well as any
unscheduled outages. During outage periods at the Seabrook Project,
the Company has no electricity available for resale and consequently
no revenues.
The Company accrues reserves for the incremental costs of the
scheduled outages over the periods between such scheduled outages.
However, during outages, the Company continues to record the normal
operating and maintenance expenses of the Seabrook Project as
incurred. Accordingly, the Company will incur losses during scheduled
outage periods as a result of the combination of a lack of revenues
and the recognition of normal recurring operating and maintenance
costs, as well as the continuing depreciation of the utility
plant.
The next scheduled refueling outage for the Seabrook Project is
estimated to begin on November 4, 1995 and extend to December 18,
1995. Based on the Seabrook Project budget for this scheduled outage,
assuming that the duration of the outage is forty-five days and
assuming that only refueling and routine maintenance is performed, the
Company anticipates incurring a loss in the range of $3,500,000 in
the fourth quarter of 1995 resulting from decreased revenues coupled
with continuing operationing and maintenance expenses and
depreciation, as discussed above.
The Company also incurs losses during unscheduled outage periods
due to decreased revenues and additional costs associated with
unscheduled outages, as well as continuing operating and maintenance
expenses and depreciation. As a result of the June 18 to July 5, 1995
unscheduled outage, and the reduced maximum capacity of the Seabrook
Project, the Company expects to incur a loss in the range of
$1,000,000 in the third quarter of 1995. It is not possible for the
Company to predict the frequency or duration of future unscheduled
outages; however, such outages will most likely occur.
SECOND QUARTER OF FISCAL 1995 COMPARED TO THE SECOND QUARTER OF
FISCAL 1994
Results of Operations
The second quarter of 1995 was the Company's second full quarter
of operations since it emerged from bankruptcy on November 23, 1994.
During this period the Company recorded a net loss of $604,000, as
compared to a loss of $7,505,000 recorded by the Predecessor Company
during the second quarter of 1994. The net loss recorded for the
quarter ended June 30, 1995 was due in part to an unscheduled outage
at the Seabrook Project, from June 18, 1995 to July 5, 1995, which
resulted in a decrease in anticipated revenues for the quarter of
approximately $1,240,000. In contrast the net loss for the quarter
ended June 30, 1994 was primarily due to an extended outage, from
April 5, 1994 to July 31, 1994, a period which included all but five
days of the second quarter. The decreased loss in the 1995 quarter,
as compared with the 1994 quarter, was also the result of decreased
operating expenses, primarily lower depreciation due to the write-down
of the Company's Seabrook Project assets to fair value upon its
emergence from bankruptcy.
Operating Revenues
Operating revenues increased by approximately $7,176,000 in the
second quarter of 1995 compared with the second quarter of 1994. The
increase was primarily due to higher availability and production at
the Seabrook Project resulting from a reduction in the duration of
outage time during the second quarter of 1995 compared with the same
period during 1994. During the second quarter of 1995, the average
capacity factor at the Seabrook Project was 87.4% of the rated
capacity versus an average capacity factor of 7.8% for the same period
in 1994. The increase in second quarter revenue in 1995 was also due
to a 13.2% increase in sales price per kWh to 2.48 cents per kWh in
1995, compared with 2.19 cents per kWh in the 1994 period. Revenues
for the second quarter of 1994 also were reduced by approximately
$1,100,000 due to a one-time accounting adjustment recorded by the
Predecessor Company in connection with the UNITIL Contract, which
deferred revenues recognized in a prior period.
Expenses
Production expenses for the second quarter of 1995 decreased by
$1,513,000, or 27.0%, compared with the second quarter of 1994,
despite increased power production during the 1995 period. This
decrease was primarily the result of reduced maintenance expenses at
the Seabrook Project during the 1995 period compared with the 1994
period, during which the extended outage increased maintenance costs.
The reduction in production expenses during the 1995 quarter was also
the result of reduced nuclear fuel costs, due to a revision in the
fuel amortization rate adopted upon reorganization.
Administrative and General expenses increased by $382,000, or
33.1%, during the second quarter of 1995, primarily as a result of the
normal costs associated with the ongoing management of the Company
after its emergence from bankruptcy.
Depreciation and amortization expenses decreased by $1,491,000,
or 65.5%, in the second quarter of 1995. This decrease was the result
of the a reduction in the depreciable value of the Company's
investment in the Seabrook Project due to the write-down to fair value
of all the Company's assets following its emergence from bankruptcy in
November 1994.
Taxes Other Than Income decreased by approximately $223,000, or
18.2%, in the second quarter of 1995 as compared with the 1994 period,
primarily due to higher property tax accruals during the 1994
period.
Other
Other income increased by $404,000 during the second quarter of
1995 as compared with the second quarter of 1994. This increase
primarily reflects increased interest income as a result of the
Company's significantly higher cash and investment balances in the
current year.
FIRST SIX MONTHS OF FISCAL 1995 COMPARED TO THE FIRST SIX MONTHS
OF
FISCAL 1994
Results of Operations
The Company's recorded a net loss of $44,000 for the first six
months of 1995, as compared to a loss of $10,268,000 recorded by the
Predecessor Company during the first six months of 1994. The net loss
recorded for the 1995 period was due in part to an unscheduled outage
at the Seabrook Project, from June 18, 1995 to July 5, 1995, which
resulted in a decrease in anticipated revenues for the period of
approximately $1,240,000. In contrast the net loss for the six months
ended June 30, 1994 was primarily due to an extended outage, from
April 5, 1994 to July 31, 1994. The decreased loss in the first six
months of 1995, as compared with the same period of 1994, was also the
result of decreased operating expenses, primarily lower depreciation
due to the write-down of the Company's Seabrook Project assets to fair
value upon its emergence from bankruptcy.
Operating Revenues
Operating revenues increased by approximately $9,550,000 in the
first six months of 1995 compared with the first six months of 1994.
The increase was primarily due to higher availability and production
at the Seabrook Project resulting from a reduction in the amount of
outage time during the first half of 1995 compared with the same
period during 1994. During the first six months of 1995, the average
capacity factor at the Seabrook Project was 94.0% of the rated
capacity versus an average capacity factor of 40.6% for the same
period in 1994. The increase in revenue for the first six months of
1995 was also due to a 5.0% increase in sales price per kWh to 2.53
cents per kWh in 1995, compared with 2.41 cents per kWh in the 1994
period.
Expenses
Production expenses for the first six months of 1995 decreased by
$1,908,000, or 18.7%, from the comparable 1994 period, despite
increased power production during the 1995 period. This decrease was
primarily the result of reduced maintenance expenses at the Seabrook
Project during the 1995 period compared with the 1994 period, during
which an extended outage increased maintenance costs. The reduction
in production expenses was also the result of reduced nuclear fuel
costs during the first six months of 1995, due to a revision in the
fuel amortization rate adopted upon reorganization.
Administrative and General expenses increased by $623,000, or
26.9%, during the first six months of 1995, primarily as a result of
the normal costs associated with the ongoing management of the Company
after its emergence from bankruptcy.
Depreciation and amortization expenses decreased by $3,031,000,
or 66.6%, in the first half of 1995. This decrease was the result of
a reduction in the depreciable value of the Company's investment in
the Seabrook Project due to the write-down to fair value of all the
Company's assets following its emergence from bankruptcy in November,
1994.
Taxes Other Than Income decreased by approximately $417,000, or
17.1%, in the first six months of 1995 as compared with the 1994
period, primarily due to higher property tax accruals during the year
earlier period.
Other
Other income increased by $649,000 during the first six months of
1995 as compared with the first six months of 1994. This increase
primarily reflects increased interest income as a result of the
Company's significantly higher cash and investment balances in the
current year.
Net Operating Losses
For federal income tax purposes, as of December 31, 1994, the
Company had net operating loss carryforwards ("NOLs") of approximately
$102,000,000 which are scheduled to expire between 2005 and 2008.
Because the Company has experienced one or more ownership changes
within the meaning of Section 382 of the Internal Revenue Code of
1986, as amended, an annual limitation has been imposed on the ability
of the Company to deduct the NOLs it generated prior to any date on
which it experienced an ownership change. The Company believes that
such annual limitation is approximately $5,500,000 and, accordingly,
that the ability of the Company annually to utilize annually its NOLs
and depreciation deductions attributable to its property and/or
equipment will be substantially restricted.
Liquidity
The Company's cash and short-term investments increased approximately
$1,140,000 during the first half of 1995. Principal factors affecting
liquidity during the six months ended June 30, 1995 included noncash
charges to income of $3,898,000 for depreciation and amortization and
$1,059,000 for accrued outage costs. Partially offsetting the noncash
charges during the period were the operating loss discussed above plus
$1,423,000 of capital expenditures for plant and nuclear fuel,
payments of $402,000 to the decommissioning trust fund and payments of
$2,382,000 for bankruptcy-related reorganization expenses.
For the quarter ending December 31, 1995, the Company expects to
use a significant amount of its cash and equivalents to fund its share
of a planned refueling outage of approximately 45 days (assuming that
the duration of the outage is forty-five days and assuming that only
refueling and routine maintenance is performed, estimated to be in the
range of $8,500,000). This outage will reduce revenues for such
quarter and increase operating expenses and capital expenditures,
primarily for nuclear fuel.
The cash generated from electricity sales by the Company is and
has been less than the Company's ongoing cash requirements. The
Company expects that it will continue to incur cash deficits until the
prices at which it is able to sell its share of the electricity
generated by the Seabrook Project increase, which may be a number of
years, if ever. The Company intends to cover such deficits with its
cash reserves, which totalled approximately $23,393,000 at June 30,
1995.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) See Exhibit Index
(b) There were no reports on Form 8-K submitted for the
three months ended June 30, 1995
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.
GREAT BAY POWER CORPORATION
/s/ John A. Tillinghast
John A. Tillinghast
President
(Principal Financial Officer)
Dated: August 14, 1995
EXHIBIT INDEX
Exhibit No. Description Page Number
10.1 Employment Agreement, dated July 31, 17
1995, by and between Frank W. Getman,
Jr. and the Registrant. (1)
10.2 Incentive Stock Option Agreement, dated 26
as of August 1, 1995, by and between Frank W.
Getman, Jr. and the Registrant. (1)
27 Financial Data Schedule 33
_________________
(1) Management contract or compensatory plan or
arrangement required to be filed as an exhibit
pursuant to Item 6(a) of Form 10-Q
EMPLOYMENT AGREEMENT
AGREEMENT made as of this 31st day of July, 1995, by and between
Great Bay Power Corporation, a New Hampshire corporation with its
principal place of business located at 20 Ladd Street, Portsmouth New
Hampshire 03801 (the "Company"), and Frank W. Getman, Jr., residing at
14 Hemenway Drive, Canton, Massachusetts 02021 ("Executive").
1. Employment.
The Company hereby employs Executive, and Executive hereby
accept such employment, in accordance with the terms and subject to
the conditions set forth in this Agreement.
2. Position and Duties.
a. Subject to the provisions of this Agreement, the
Company shall employ Executive, and Executive shall serve the Company,
as Vice President, General Counsel and Secretary and/or any other
titles as may be designated from time to time by the Board of
Directors (the "Board") of the Company. Executive shall report to the
Chief Executive Officer of the Company (the "CE0"). If at any time the
Board shall not have designated a chief executive officer, the term
"CEO" as used herein shall refer to the President of the Company.
b. Executive shall have responsibility in various legal,
regulatory and general business matters of the Company and shall
perform such executive duties and responsibilities on behalf of the
Company and its Affiliates (as defined below) as may be prescribed
from time to time by the CEO and the Board. Executive shall devote his
full-time best efforts to the business of the Company so as to
increase the profitability and shareholder value of the Company; and
Executive shall not during the term of this Agreement be engaged in
any other business activity, unless written approval is first secured
from the CEO. The preceding sentence shall not be deemed to prohibit
Executive's activities relating to his ownership and management of a
certain residential apartment building located in Oneonta, New York
and a certain condominium located in Brighton Massachusetts, provided
that the ownership and management of such building and condominium
does not interfere with Executive duties hereunder. As used herein,
"Affiliates" shall mean entities controlling, controlled by or under
common control with the Company.
3. Term of Employment. Unless sooner terminated as provided in
Section 6 below, the term of this Agreement shall be three (3) years,
commencing on August 2, 1995 (the "Commencement Date") and ending on
August l, 1998 (the "Expiration Date"). Thereafter, this Agreement
shall be automatically extended from year to year on the same terms
contained in this Agreement unless and until either party hereto
elects to terminate this Agreement at any time upon three (3) months'
prior written notice. As used herein, the word "Term" shall refer to
the period beginning on the Commencement Date and ending on the
effective date of the termination of Executive's employment with the
Company as provided in this Agreement.
4. Compensation; Benefits. For all services rendered by
Executive pursuant to this Agreement, the Company shall compensate
Executive, during the Term of Executive's employment hereunder,as
follows:
a. Annual Salary. Commencing the date hereof, Executive
shall be paid an annual salary of $100,000 per year (unless increased
by the Board in its sole discretion), which shall be payable in equal
bi-weekly installments. A11 salary payments to Executive shall be
subject to payroll tax and related deductions as required by law.
b. Loan. The Company shall lend to Executive the sum of
$75,000 (the "Loan Amount"), which sum shall be paid to Executive
promptly after the Commencement Date. One-third (1/3) of the Loan
Amount (or $25,000) shall be forgiven, and Executive shall have no
obligation to repay the Company with respect to such forgiven amount
(a "Forgiven Loan Amount"), on each anniversary of the Commencement
Date. Notwithstanding the foregoing sentence, in the event that the
employment of Executive is terminated by the Company for "Cause" (as
defined in Section 6.c. below) or by Executive in violation of the
terms of this Agreement prior to the Expiration Date, Executive shall,
within thirty (30) days following such termination, repay to the
Company the Loan Amount, less any Forgiven Loan Amount (the "Adjusted
Loan Amount"), together with interest accrued on the Adjusted Loan
Amount, as calculated from the Commencement Date through the date of
such termination, at the rate of six percent (6%) per annum.
c. Stock Options. Pursuant to the Great Bay Power
Corporation 1995 Stock Option Plan (the "Plan") and subject to the
provisions of this Section 4.c., the Company shall grant to Executive
on the Commencement Date stock options ("Options") to purchase 75,000
shares (the "Option Shares") of the Company's common stock, $.01 par
value (the "Common Shares"), at a purchase price per share of $8.50.
The number of option Shares underlying the Options shall be
proportionately adjusted for any stock split, stock dividend or other
reclassification or recapitalization of the Common Shares in
accordance with the Plan. The Options are personal to Executive and
are not transferable by him. The Options shall be governed by and
subject to the terms and conditions set forth in the Incentive Stock
Option Agreement to be entered into simultaneously herewith, in the
form annexed hereto as Exhibit A (the "Option Agreement").
d. Executive Benefits: Vacation. During the term of his
employment hereunder, Executive shall be entitled to participate in
a11 employee pension and welfare benefit plans and programs made
available to executive employees of the Company, as such plans or
programs may be in effect from time to time and as determined by the
Board, including without limitation, health insurance, life insurance
and 401(k) plans. Executive shall be entitled to three (3) weeks of
paid vacation per calendar year or a pro rata number of vacation days
for a period that is less than a complete calendar year in accordance
with the Company's vacation policy in effect from time to time.
e. Relocation Expenses. Executive shall be reimbursed for
the reasonable out-of-pocket costs associated with moving himself and
his family and necessary and usual household goods from their present
primary location to the Portsmouth, New Hampshire area where the
Company's principal place of business is located, upon submission of
appropriate documentation.
f. Reimbursement of Expenses. Executive shall be
reimbursed for reasonable business expenses incurred in connection
with carrying out the business of the Company, subject to
authorization and documentation in accordance with the Company's
policies in effect from time to time.
5. Confidential Information; Non-Competition: Anti-Raiding.
a. Executive agrees that all operating and/or financial
data and projections, plans, contracts, agreements, literature,
manuals, brochures, books, schedules, correspondence and other
materials furnished, disclosed or otherwise made available to
Executive by the Company or its Affiliates or secured through the
efforts of Executive, relating to the business conducted by the
Company and/or its Affiliates, are and shall remain the property of
the Company and/or its Affiliates, and Executive agrees to deliver all
such materials, including all copies or abstracts thereof, to the
Company upon the termination of Executive's employment hereunder, or
at any other time at the Company's request.
b. Executive agrees that, except in the good faith
performance of his duties and responsibilities under this Agreement or
as required by order of a court or governmental agency having
jurisdiction, he will not at any time during or after his employment
with the Company use, reveal, divulge or make known to any person or
entity any confidential or proprietary knowledge or information
concerning the Company or its Affiliates, including without limitation
any such information concerning any equipment facilities, contracts,
leases, operating and/or financial data and projections, processes,
developments, schedules, lists, plans or other matters relating to the
business of the Company or its Affiliates and will retain all
knowledge and information Executive acquired during his employment
therewith relating to the business of the Company or its Affiliates in
trust in a fiduciary capacity for the sole benefit of the Company, its
Affiliates and their respective successors and assigns. Executive's
obligations under this Section 5.b. shall not apply to any information
that (i) is or becomes known to the general public under circumstances
involving no breach by Executive of this Agreement, (ii) is generally
disclosed to third parties (excluding counsel, accountants, financial
advisors, employees, agents and material creditors of the Company) by
the Company without restriction on such third parties, or (iii) is
approved for release by written authorization of the Board.
c. During the Term and for a period of two (2) years
thereafter, Executive shall not (i) enter into the employment of, or
act as a consultant, director, officer, or employee of, or render any
service or advice to, any other business, partnership, association,
corporation or other entity engaged in the "public utility" industry
within one or more of the six New England States, New York,
Pennsylvania or New Jersey, other than the Company or any Affiliate (a
"Competing Business"), or (ii) invest or otherwise acquire any
interest, whether as a shareholder, lender, partner, proprietor,
vendor or otherwise, in any Competing Business (excluding ownership of
less than 2% of a class of securities of a publicly-traded company).
"Public utility" shall mean for the purposes of this Section 5.c. any
company which directly or indirectly owns or operates facilities used
for (i) the generation, transmission, or distribution of electric
energy for sale; or (ii) if engaged in at any time by the Company
prior to the expiration of the Term, the distribution of natural or
manufactured gas for heat, light or power.
d. During the Term and for a period of two (2) years
thereafter, Executive will not, directly or indirectly, entice, induce
or in any manner influence any person who is, or shall have been
during such period, in the service of the Company, to leave such
service for the purpose of engaging in a Competing Business, or being
employed or engaged by or otherwise associated with any person or
entity which is a Competing Business.
e. The provisions of this Section 5 shall survive the
termination of this Agreement and the termination of Executive's
employment with the Company and shall run to and inure to the benefit
of the Company and its successors and assigns. Executive represents,
warrants and acknowledges that he has carefully read this Section 5,
that he has had an opportunity to have the provisions contained herein
explained to him by his attorney, and that he understands the
provisions contained herein. Executive further acknowledges that by
reason of his training, skills, experience and employment hereunder,
the services to be rendered by him under the provisions of this
Agreement and their value to the Company are of a special, unique and
extraordinary character and that it would be difficult or impossible
to replace such services, and he further acknowledges that a violation
by him of any of the provisions of this Section 5 could cause
continuing material and irreparable injury to the Company and that in
such event money damages would not be readily calculable and the
Company would not have an adequate remedy at law. Executive
acknowledges and agrees that (i) the restrictions under this Section 5
are reasonable and will not interfere with Executive's ability to earn
a livelihood or impose upon him any undue hardship, and (ii) any
breach of the covenants, provisions and restrictions contained in this
Section 5 shall cause, and shall be deemed to be, a fundamental and
material breach of Executive's fiduciary and contractual obligations
to Employer. Therefore, Executive agrees that the Company shall be
authorized and entitled to obtain from any court of competent
jurisdiction, interim and permanent equitable relief, including
without limitation, injunctive relief, in the event of any such breach
or threatened breach, together with payment of reasonable attorneys'
fees and disbursements and any other costs of enforcement incurred in
connection with such breach or threatened breach. These rights and
remedies shall be cumulative and shall be in addition to any other
rights or remedies whatsoever to which the Company shall otherwise be
entitled hereunder, at law or otherwise, including the right to seek
damages (including any consequential damages) which any court of
competent jurisdiction may deem appropriate.
6. Termination of Employment. The term of employment may
terminate upon the occurrence of any of the following events:
a. Termination Due to Death. Executive's employment
hereunder shall terminate upon his death. In such event his estate or
his beneficiaries, as the case may be, shall be entitled to:
(1)
Salary accrued through the date of death; and
(2)
The right to exercise his Options subject to the terms of the
Option Agreement and the Plan.
b. Termination Due to Disability. The Company may
terminate Executive's employment at any time on written notice after
his "disability." "Disability" shall mean Executive's inability by
reason of illness or injury substantially to perform his duties and
responsibilities under this Agreement, as reasonably determined by a
majority of the Board based upon the report of a reputable physician
designated by the Board (whom Executive shall permit to examine him),
for a period of eight-four (84) consecutive days or one hundred (100)
days in any twelve (12) month period. In the event Executive's
employment is terminated due to his Disability, he shall be entitled
to receive the following
(1) The amount of any disability or retirement
benefits provided to Executive by the Company under the provisions of any
Company plan for its employees with respect to which Executive is
qualified; and
(2) Any accrued and unpaid salary through the
effective date of termination.
c. Involuntary Termination for Cause: The Company may
terminate Executive's employment at any time for "Cause" on written
notice. "Cause" shall mean (i) Executive is convicted of a felony, or
a misdemeanor involving moral turpitude; or (ii) the Board determines
in good faith, after reasonable notice to Executive and an opportunity
for Executive to present his views of the relevant facts and
circumstances, that Executive has (A) materially failed or refused to
perform competently his duties and responsibilities (after notice and
opportunity to cure if such material failure or refusal can be cured)
as provided in this Agreement; (B) has breached his duty of loyalty
to, or committed any act of fraud, theft or dishonesty against he
Company or any of its Affiliates; or (C) has violated any of his
material obligations under this Agreement after written notice and a
reasonable opportunity (not to be less than ten (10) days) to cure
such default. In the event of such termination for Cause, all rights
and benefits of Executive under this agreement (including without
limitation all unexercised Options) shall immediately terminate and in
no event shall the Company be obligated to pay Executive any
compensation (other than salary and accrued and vested benefits
through the date of termination) with respect to any period before or
after the date of such termination.
d. Voluntary Termination by Executive. Executive may
terminate this Agreement in a "Qualifying Termination" (as defined in
Section 7.d. below).
e. Other Termination. In the event of the termination of
Executive's employment (i) by the Company other than pursuant to the
provisions of Subsection 6.a., b, or c. above, or (ii) by Executive
following a material breach by the Company of its obligations under
this Agreement which remains uncured after written notice to the
Company and a reasonable opportunity (not to be less than ten (10)
days) to cure such breach:
(1) Executive shall be entitled to receive in cash an
amount equal to his annual salary (excluding loan
forgiveness) from the effective date of such
termination through the Expiration Date;
provided, however, that such sum shall be offset
by the amount of any compensation earned by
Executive through other employment from the
effective date of such termination through the
Expiration Date (it being understood that
Executive shall be under no obligation to
mitigate his damages in such event);
(2) The Loan Amount (to the extent not then forgiven,
together with any interest thereon, shall be
immediately forgiven, and Executive shall have no
obligation to repay the same;
(3) All options previously issued to Executive shall
immediately become exercisable (as provided in
the Option Agreement); and
(4) The covenants contained in Subsections 5.e.and
5.d. shall not apply.
7. Change of Control.
a. In the event that Executive's employment by the Company
terminates in a Qualifying Termination (as defined in Subsection
7.d. below):
(1) Executive shall be entitled to receive in cash upon
the Qualifying Termination an amount equal to the
greater of (a) the sum of his annual salary (excluding
loan forgiveness) from the date of the Qualifying
Termination through the Expiration Date or (b) twice
his annual salary (excluding loan forgiveness)
immediately prior to the date of the Change in
Control;
(2) The Loan Amount (to the extent not then forgiven),
together with any interest thereon, shall be
immediately forgiven, and Executive shall have no
obligation to repay the same;
(3) All Options previously issued to Executive shall
become immediately exercisable in accordance with the
Option Agreement: and
(4) The covenants contained in Subsections 5.c and 5.d.
shall not apply;
Provided, however that the total consideration (including the fair
value of previously unvested Options) to be received by the Executive
pursuant to this Subsection 7.a. shall not exceed $1,000,000.
b. Payments under this Subsection 7.a. shall be made
without regard to whether the deductibility of such payments (or any
other "parachute payments," as that term is defined in Section 280G of
the Internal Revenue Code of 1986, as amended (the "Code"'), to or for
the Executive's benefit) would be limited or precluded by Section 280G
and without regard to whether such payments (or any other "parachute
payments" as so defined) would subject the Executive to the federal
excise tax levied on certain "excess parachute payments" under Section
4999 of the Code; provided that if the total of all "parachute
payments" to or for the Executive's benefit, after reduction for all
federal, state and local taxes (including the tax described in Section
4999 of the Code, if applicable) with respect to such payments (the
"Total After-Tax Payments"), would be increased by the limitation or
elimination of any payment under this Subsection 7.a., amounts payable
under this Subsection 7.a. shall be reduced to the extent, and only to
the extent, necessary to maximize the Total After-Tax Payments. The
determination as to whether and to what extent payments under this
Subsection 7.a. are required to be reduced in accordance with the
preceding sentence shall be made at the Company's expense by Arthur
Andersen or by such other certified public accounting or law firm as
the Board may designate prior to a Change of Control of the company.
In the event of any underpayment or overpayment under this Subsection
7.a. as determined by Arthur Andersen (or such other firm as may have
been designated in accordance with the preceding sentence the amount
of such underpayment or overpayment shall forthwith be paid to the
Executive or refunded to the Company as the case may be, with interest
at the applicable federal rate provided for in Section 7872 of the
code.
c. For purposes of this Agreement, a " Change of Control"
occurs upon the occurrence prior to the Expiration Date of any event
specified below:
(1) any corporation, person or other entity (other
than the Company, a majority-owned subsidiary of the
Company, any employee benefit plan maintained by the
Company or any subsidiary or one of the three largest
shareholders as of the Commencement Date (any such
person, a "Permitted Acquiror") acquires or becomes
the holder of more than fifty percent (50%) of the
Company's voting equity securities, or
(2) the stockholders of the Company approve a
definitive agreement to merge or consolidate the
Company with or into another corporation (other than a
subsidiary of the Company) or to sell or otherwise
dispose of all or substantially all of its assets.
d. For purposes of this Agreement, a "Qualifying
Termination" occurs i.e., prior to the second anniversary of a Change
of Control, (a) the employment of Executive is terminated other than
for Cause or (b) Executive resigns following any material impairment
or material adverse change in his working conditions, authority,
autonomy, compensation or benefit, immediately prior to the Change of
Control, as the same may from time to time have been improved, or
otherwise altered with the written consent of Executive such that his
position within the Company or its successor is no longer reasonably
comparable (a "Material Adverse Change"). An assignment by the
Company of all rights and obligations hereunder to an entity into or
with which the Company merges or consolidates or to which the Company
transfers substantially all of its assets shall not constitute a
Material Adverse Change in and of itself so0 long as such entity
fully assumes the Company's obligations under this Agreement. In the
event that both Subsection 6.e. and this subsection 7.d. are
applicable, the provisions of this Section shall exclusively govern
Executive's rights and remedies.
8. Miscellaneous:
a. This Agreement shall be governed by and construed and
interpreted in accordance with the laws of the State of New Hampshire
without reference to principles of conflict of laws. Any dispute,
action or proceeding arising hereunder shall be maintained in the
state or federal courts located in New Hampshire and each party hereto
consents to service of process in the manner provided in Subsection b.
of this Section 8 (which shall constitute "personal service").
b. Any notice given to a party shall be in writing and
shall be deemed to have been given when delivered personally or sent
by certified or registered mail, postage prepaid, return receipt
requested, duly addressed to the party concerned at the address
indicated below or to such other address as to which such party may
subsequently give such notice:
If to the Company:
Great Bay Power Corporation
20 Ladd Street
Portsmouth, New Hampshire 03801
Attention: John Tillinghast, President
If to Executive: 17A Becker Lane
New Castle, New Hampshire 03854
Copies of all notices to the Company shall be sent to Martin D. Sklar,
Esq., Kleinberg, Kaplan, Wolff & Cohen, P.C., 551 Fifth Avenue, 18th
Floor, New York, New York 10176. Copies of all notices to Executive
shall be sent to Andrew R. Menard, Esq.. Peabody & Arnold, 50 Rowes
Wharf, Boston, Massachusetts 02110.
c. This Agreement is personal to Executive and shall not
be assignable by Executive, except that Executive's rights to
compensation and benefits may be transferred in the event of death or
Disability by will or operation of law (subject to the terms hereof
and of the applicable plans). Subject to the provisions of Section
7.d. above, the Company may assign (without Executive's consent) all
rights and obligations hereunder to an entity into or with which the
Company merges or consolidates or to which the Company transfers
substantially all of its assets. This Agreement shall be binding upon
and inure to the benefit of Executive's heirs and legal
representatives and shall be binding upon and inure to thebenefit of
the Company and its successors and assigns.
d. Executive and the Company each represents and warrants
to the other that such party is fully authorized and empowered to
enter into this Agreement and that the entry into and performance of
such party's obligations hereunder will not violate any agreement
between such party and any other person or entity. Executive
represents and warrants that he has made a thorough investigation of
and is knowledgeable about the facts and circumstances affecting the
business and prospects of the Company.
e. This Agreement contains the entire understanding and
agreement between the parties concerning the subject matter hereof and
supersedes all prior agreements, understandings, discussions,
negotiations and undertakings, whether written or oral, between the
parties with respect thereto. No provision hereof may be amended
unless such amendment is agreed to in writing and signed by Executive
and an authorized officer of the Company acting at the direction of
the Board. No waiver by either party of any breach by the other party
of any condition or provision contained herein to be performed by such
other party shall be deemed a waiver of a similar or dissimilar
condition or provision at the same or any prior or subsequent time.
Any waiver must be in writing and signed by Executive or an authorized
officer of the Company, as the case may be.
f. Any provision of this Agreement that may be prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability
without invalidating the remaining provisions thereof. Any such
prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction. To the extent permitted by law, the parties hereby waive
any provision of law that renders any provision of this Agreement
prohibited or unenforceable in any respect. In addition, in the event
of any such prohibition or unenforceability, the parties agree that it
is their intention and agreement that any such provision, as written,
in any jurisdiction shall nonetheless be in force and binding to the
fullest extent permitted by the law of such jurisdiction as though
such provision had been written in such a manner and to such an extent
as to be enforceable therein under the circumstances Without
limitation of the foregoing, with respect to the restrictive covenant
contained herein, if it is determined that any such provision is
excessive as to duration, scope or area, it is intended that it
nonetheless be enforced for such shorter duration or with such
narrower scope or area as will render it enforceable, and the court
making such determination shall have the power to modify such
duration, scope or area, or a11 of them, and/or to delete specific
words or phrases, and such provision shall then be applicable and
enforceable in such modified form.
The parties hereto have signed this Employment Agreement this
31st day of July, 1995.
GREAT BAY POWER CORPORATION
By: /s/ John A. Tillinghast
President.
/s/ Frank W. Getman, Jr.
Frank W. Getman, Jr.
GREAT BAY POWER CORPORATION
INCENTIVE STOCK OPTION AGREEMENT
1. Grant of Option. Great Bay Power Corporation, a New
Hampshire corporation (the "Company"), hereby grants to Frank W.
Getman Jr. (the "Optionee"), an option, pursuant to the Company's 1995
Stock Option Plan (the "Plan"), to purchase an aggregate of 75,000
shares of Common Stock ("Common Stock") of the Company at a price of
$8.50 per share, purchasable as set forth in and subject to the terms
and conditions of this option and the Plan. Except where the context
otherwise requires, the term "Company" shall include the parent and
all present and future subsidiaries of the Company as defined in
Sections 424(e) and 424(f) of the Internal Revenue Code of 1986, as
amended or replaced from time to time (the "Code").
2. Incentive Stock Option. This option is intended to qualify
as an incentive stock option ("Incentive Stock Option") within the
meaning of Section 422 of the Code.
3. Exercise the Option and Provisions for Termination.
(a) Vesting Schedule. Except as otherwise provided in this
Agreement, this option may be exercised prior to the seventh
anniversary of the date of grant (hereinafter the "Expiration Date")
in installments as to not more than the number of shares set forth in
the table below during the respective installment periods set forth in
the table below.
Number of
Shares as to which
Exercise Period Option is Exercisable
On or after August 1, 1996 35,000
On or after August 1, 1997 20,000
On or after August 1, 1998 20,000
The right of exercise shall be cumulative so that if the option is not
exercised to the maximum extent permissible during any exercise
period, it shall be exercisable, in whole or in part, with respect to
all shares not so purchased at any time prior to the Expiration Date
or the earlier termination of this option. Notwithstanding the
foregoing, this option may be exercised in full in the event of (i) a
Qualifying Termination (as defined in the Employment Agreement dated
July 31,1995 (the "Employment Agreement") between the Company and the
Optionee, subject to the limitation contained in Section 7.a of the
Employment Agreement) or (ii) a termination covered by Section 6.e of
the Employment Agreement. This option may not be exercised at any
time on or after the Expiration Date. With respect to a Qualifying
Termination, the provisions of Section 7 of the Employment Agreement
shall apply in lieu of Section 12(d) of the Plan.
(b) Exercise Procedure. Subject to the conditions set
forth in this Agreement, this option shall be exercised by the
Optionee's delivery of written notice of exercise to the Treasurer of
the Company, specifying the number of shares to be purchased and the
purchase of price to be paid therefor and accompanied by payment in
full in accordance with Section 4. Such exercise shall be effective
upon receipt by the Treasurer of the Company of such written notice
together with the required payment. The Optionee may purchase less
than the number of shares covered hereby, provided that no partial
exercise of this option may be for any fractional share or for fewer
than ten whole shares.
(c) Continuous Employment Required. Except as otherwise
provided in this Section 3, this option may not be exercised unless
the Optionee, at the time he or she exercises this option, is, and has
been at all times since the date of grant of this option, an employee
of the Company. For all purposes of this option, (i) "Employment"
shall be defined in accordance with the provisions of Section
1.421-7(h) of the Income Tax Regulations or any successor regulations,
and (ii) if this option shall be assumed or a new option substituted
therefor in a transaction to which Section 424(a) of the Code applies,
employment by such assuming or substituting corporation (hereinafter
called the "successor Corporation") shall be considered for all
purposes of this option to be employment by the Company.
(d) Exercise Period Upon Termination of Employment. If the
Optionee ceases to be employed by the Company for any reason,then,
except as provided in paragraphs (e) and (f) below, the right to
exercise this option shall terminate one year after such cessation
(but in no event after the Expiration Date), provided that this option
shall be exercisable only to the extent that the Optionee was entitled
to exercise this option on the date of such cessation, except as
provided in paragraph 3(a) above, and provided, further, that if such
exercise is subsequent to the period of three months after such
cessation, this option shall be treated as a non-statutory option
which does not meet the requirements of Section 422 of the Code. The
Company's obligation to deliver shares upon the exercise of this
option shall be subject to the satisfaction of all applicable federal,
state and local income and employment tax withholding requirements,
arising by reason of this option being treated as a non-statutory
option or otherwise. Notwithstanding the foregoing, if the Optionee,
prior to the Expiration Date, materially violates the noncompetition
or confidentiality provisions of any employment contract,
confidentiality and nondisclosure agreement or other agreement between
the Optionee and the Company, the right to exercise this option shall
terminate immediately upon written notice to the Optionee from the
Company describing such violation.
(e) Exercise Period Upon Death or Disability. If the
Optionee dies or becomes disabled (within the meaning of Section
422(e) (3) of the Code) prior to the Expiration Date while he or she
is an employee of the Company, or if the Optionee dies within three
months after the Optionee ceases to be an employee of the Company
(other than as the result of a discharge for "cause" as specified in
paragraph (f) below), this option shall be exercisable, within the
period of one year following the date of death or disability of the
Optionee (but in no event after the Expiration Date), by the Optionee
or by the person to whom this option is transferred by will or the
laws of descent and distribution, provided that this option shall be
exercisable only to the extent that this option was exercisable by the
Optionee on the date of his or her death or disability. Except as
otherwise indicated by the context, the term "Optionee", as used in
this option, shall be deemed to include the estate of the Optionee or
any person who acquires the right to exercise this option by bequest
or inheritance or otherwise by reason of the death of the
Optionee.
(f) Discharge for Cause. If the Optionee, prior to the
Expiration Date, is discharged by the Company for "cause" (as defined
in the Employment Agreement), the right to exercise this option shall
terminate immediately upon such cessation of employment.
(g) Stock Appreciation Right. The Company and the Optionee
recognize that as of the date hereof, all of the authorized Common
Stock of the Company has been issued, leaving no stock to be issued
upon the exercise of this option by the Optionee. If the shareholders
of the Company do not on or before April 26, 1996 approve the Plan and
authorize sufficient shares of Common Stock to satisfy an exercise by
the Optionee of this option, then the Company shall pay to the
Optionee in case the excess, if any, of (a) the fair market value per
share of the Common Stock determined as of April 24, 1996 multiplied
by the number of shares for which this option was granted over (b) the
exercise price per share for this option multiplied by the number of
shares of Common Stock for which this option was granted (the "Option
Cash Payment"). The Option Cash Payment is in complete substitution
of the Optionee's option rights under this Agreement and upon payment
of the option Cash Payment, Optionee's option rights under this
Agreement shall terminate.
4. Payment of Purchase Price
(a) Method of Payment. Payment of the purchase price for
shares purchased upon exercise of this option shall be made (i) by
delivery to the Company of cash or a check to the order of the Company
in an amount equal to the purchase price of such shares, (ii) subject
to the consent of the Company (which may be withheld in its
discretion), by delivery to the Company of shares of Common Stock of
the Company then owned by the Optionee having a fair market value
equal in amount to the purchase price of such shares, (iii) by any
other means which the Board of Directors determines are consistent
with the purpose of the Plan and with applicable laws and regulations
(including, without limitation, the provisions of Rule 16b-3 under the
Securities Exchange Act of 1934 and Regulation T promulgated by the
Federal Reserve Board), or (iv) by any combination of such methods of
payment.
(b) Valuation of Shares or Other Non-Cash Consideration
Tendered in Payment of Purchase Price. For the purposes hereof, the
fairmarket value of any share of the Company's Common Stock or other
non-cash consideration which may be delivered to the Company in
exercise of this option shall be determined in good faith by the Board
of Directors of the Company.
(c) Delivery of Shares Tendered in Payment of Purchase
Price. If the Optionee exercises options by delivery of shares of
Common Stock of the Company, the certificate or certificates
representing the shares of Common Stock of the Company to be delivered
shall be duly executed in blank by the Optionee or shall be
accompanied by a stock power duly executed in blank suitable for
purposes of transferring such shares to the Company. Fractional
shares of Common Stock of the Company will not be accepted in payment
of the purchase price of shares acquired upon exercise of this
option.
(d) Restrictions on Use of Option Stock. Notwithstanding
the foregoing, no shares of Common Stock of the Company may be
tendered in payment of the purchase price of shares purchased upon
exercise of this option if the shares to be so tendered were acquired
within twelve (12) months before the date of such tender, through the
exercise of an option granted under the Plan or any other stock option
or restricted stock plan of the Company.
5. Delivery of Shares; Compliance with Securities Laws, Etc.
(a) General. The Company shall, upon payment of the option
price for the number of shares purchased and paid for, make prompt
delivery of such shares to the Optionee, provided that if any law or
regulation requires the Company to take any action with respect to
such shares before the issuance thereof, then the date of delivery of
such shares shall be extended for the period necessary to complete
such action.
(b) Listing, Qualification, Etc. This option shall be
subject to the requirement that if, at any time, counsel to the
Company shall determine that the listing, registration or
qualification of the shares subject hereto upon any securities
exchange or under any state or federal law, or the consent or approval
of any governmental or regulatory body, or that the disclosure of
non-public information or the satisfaction of any other condition is
necessary as a condition of, or in connection with, the issuance or
purchase of shares hereunder, this option may not be exercised, in
whole or in part, unless such listing, registration, qualification,
consent or approval, disclosure or satisfaction of such other
condition shall have been effected or obtained on terms acceptable to
the Board of Directors. Nothing herein shall be deemed to require the
Company to apply for, effect or obtain such listing, registration,
qualification, or disclosure, or to satisfy such other condition.
6. Nontransferability of Option. Except as provided in
paragraph (e) of Section 3, this option is personal and no rights
granted hereunder may be transferred, assigned, pledged or
hypothecated in any way (whether by operation of law or otherwise) nor
shall any such rights be subject to execution, attachment or similar
process. Upon any attempt to transfer, assign, pledge, hypothecate or
otherwise dispose of this option or of such rights contrary to the
provisions hereof, or upon the levy of any attachment or similar
process upon this option or such rights, this option and such rights
shall, at the election of the Company, become null and void.
7. No Special Employment Rights. Nothing contained in the Plan
or this option shall be construed or deemed by any person under any
circumstances to bind the Company to continue the employment of the
Optionee for the period within which this option may be
exercised.
8. Rights as a Shareholder. The Optionee shall have no rights
as a shareholder with respect to any shares which may be purchased by
exercise of this option (including, without limitation, any rights to
receive dividends or non-cash distributions with respect to such
shares) unless and until a certificate representing such shares is
duly issued and delivered to the Optionee. No adjustment shall be
made for dividends or other rights for which the record date is prior
to the date such stock certificate is issued.
9. Adjustment Provisions
(a) General. If, through, or as a result of, any merger,
consolidation, sale of all or substantially all of the assets of the
Company, reorganization, recapitalization, reclassification, stock
dividend, stock split, reverse stock split or other similar
transaction, (i) the outstanding shares of Common Stock are increased
or decreased or are exchanged for a different number or kind of shares
or other securities of the Company, or (ii) additional shares or new
or different shares or other securities of the Company or other
non-cash assets are distributed with respect to such shares of Common
Stock or other securities, the Optionee shall, with respect to this
option or any unexercised portion hereof, be entitled to the rights
and benefits, and be subject to the limitations, set forth in Section
15(a) of the Plan.
(b) Board Authority to Make Adjustments. Any adjustments
under this Section 9 will be made by the Board of Directors, whose
determination as to what adjustments, if any, will be made and the
extent thereof will be final, binding and conclusive. No fractional
shares will be issued pursuant to this option on account of any such
adjustments.
(c) Limits on Adjustments. No adjustment shall be made
under this Section 9 which would , within the meaning of any
applicable provision of the Code, constitute a modification, extension
or renewal of this option or a grant of additional benefits to the
Optionee.
10. Mergers, Consolidation, Distributions, Liquidations, Etc.
In the event of a consolidation or merger or sale of all or
substantially all of the assets of the Company in which outstanding
shares of Common Stock are exchanged for securities, cash or other
property of any other corporation or business entity, or in the event
of a liquidation of the Company, prior to the Expiration Date or
termination of this option, the Optionee shall, with respect to this
option or any unexercised portion hereof, be entitled to the rights
and benefits, and be subject to the limitations, set forth in Section
16(a) of the Plan.
11. Withholding Taxes. The Company's obligation to deliver
shares upon the exercise of this option shall be subject to the
Optionee's satisfaction of all applicable federal, state and local
income and employment tax withholding requirements.
12. Limitations on Disposition of Incentive Stock Option Shares.
It is understood and intended that this option shall qualify as an
"incentive stock option" as defined in Section 422 of the Code.
Accordingly, the Optionee understands that in order to obtain the
benefits of an incentive stock option under Section 421 of the Code,
no sale or other disposition may be made of any shares acquired upon
exercise of the option within one year after the day of the transfer
of such shares to him, nor within two years after the grant of the
option. If the Optionee intends to dispose, or does dispose (whether
by sale, exchange, gift, transfer or otherwise), of any such shares
within said periods, he or she will notify the Company in writing
within ten days after such disposition.
13. Investment Representation; Legends.
(a) Representations. The Optionee represents, warrants and
covenants that:
(i) Any shares purchased upon exercise of this option
shall be acquired for the Optionee's account for investment
only and not with a view to, or for sale in connection
with, any distribution of the shares in violation of the
Securities Act of 1933 (The "Securities Act") or any rule
or regulation under the Securities Act.
(ii) The Optionee has had such opportunity as he or
she has deemed adequate to obtain from representatives of
the Company such information as is necessary to permit the
Optionee to evaluate the merits and risks of his or her
investment in the Company.
(iii) The Optionee is able to bear the economic
risk of holding shares acquired pursuant to the exercise of
this option for an indefinite period.
(iv) The Optionee understands that (A) the shares
acquired pursuant to the exercise of this option will not
be registered under the Securities Act and are "restricted
securities" within the meaning of Rule 144 under the
Securities Act; (B) such shares cannot be sold,
transferred or otherwise disposed of unless they are
subsequently registered under the Securities Act or an
exemption from registration is then available; (C) in any
event, an exemption from registration under Rule 144 or
otherwise under the Securities Act may not be available for
at least two years and even then will not be available
unless a public market then exists for the Common Stock,
adequate information concerning the Company is then
available to the public and other terms and conditions of
Rule 144 are complied with; and (D) there is now no
registration statement on file with the Securities and
Exchange Commission with respect to any stock of the
Company and the Company has no obligation or current
intention to register any shares acquired pursuant to the
exercise of this option under the Securities Act.
(v) The Optionee agrees that, if the Company offers
any of its Common Stock for sale pursuant to a registration
statement under the Securities Act, the Optionee will not,
without the prior written consent of the Company, publicly
offer, sell, contract to sell or otherwise dispose of,
directly or indirectly, any shared purchased upon exercise
of this option for a period of 90 days after the effective
date of such registration statement.
By making payment upon exercise of this option, the Optionee shall be
deemed to have reaffirmed, as of the date of such payment, the
representations made in this Section 13.
(b) Legends on Stock Certificates. All stock certificates
representing shares of Common Stock issued to the Optionee upon
exercise of this option shall have affixed thereto legends
substantially in the following forms, in addition to any other legends
required by applicable state law:
"The shares of stock represented by this certificate have
not been registered under the Securities Act of 1933 and
may not be transferred, sold or otherwise disposed of in
the absence of an effective registration statement with
respect to the shares evidenced by this certificate, filed
and made effective under the Securities Act of 1933, or an
option of counsel satisfactory to the Company to the effect
that registration under such Act is not required."
"The shares of stock represented by this certificate are
subject to certain restrictions on transfer contained in an
Option Agreement, a copy of which will be furnished upon
request by the issuer."
14. Miscellaneous.
(a) Except as provided herein, this option may not be
amended or otherwise modified unless evidence in writing and signed by
the Company and Optionee.
(b) All notices under this option shall be mailed or
delivered by hand to the parties and their respective addresses set
forth beneath their names below or at such other address as may be
designated in writing by either of the parties to one another.
(c) This option shall be governed by and construed in
accordance with the laws of the State of New Hampshire.
Date of Grant: GREAT BAY POWER CORPORATION
August 1, 1995
By: /s/ John A. Tillinghast
Name: John A.Tillinghast
Title: President
OPTIONEE'S ACCEPTANCE
The undersigned hereby accepts the foregoing option and agrees to
the terms and conditions thereof. The undersigned hereby acknowledges
receipt of a copy of the Company's 1995 Stock Option Plan.
OPTIONEE
/s/ Frank W. Getman, Jr.
Name: Frank W.Getman, Jr.
Address: 14 Hemenway Drive
Canton, MA 02021
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