EXHIBIT 99.9
Case No.: CV94-06160
Dept. No.: 8
Jackson
IN THE SECOND JUDICIAL DISTRICT COURT FOR THE STATE OF NEVADA
IN AND FOR THE COUNTY OF WASHOE
MAGMA POWER COMPANY, )
a Nevada corporation, )
)
Plaintiff, )
)
v. ) COMPLAINT FOR
) DECLARATORY RELIEF
CALIFORNIA ENERGY COMPANY, INC., ) ------------------
a Delaware corporation, )
)
Defendant. )
)
)
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Plaintiff Magma Power Co. ("Magma"), through its undersigned counsel,
alleges as follows:
NATURE OF THE CASE
------------------
1. This is a Complaint for declaratory relief pursuant to the Declaratory
Judgments Uniform Act, Nev. Rev. Stat. (SS) 30.010-.160, seeking to uphold the
constitutionality of provisions of the Nevada General Corporation Law applicable
to unsolicited takeover bids for Nevada corporations, and to uphold the
measured, carefully considered action of Magma and its Board of Directors (the
"Board") to protect Magma's shareholders in response to an unsolicited offer
made by defendant California Energy Company, Inc. ("California Energy") and the
partial tender offer California Energy has threatened to commence.
2. The Nevada statutory provisions pertaining to business combinations,
Nev. Rev. Stat. (ss) 78.411-.444 ("Combinations with Interested Shareholders")
(hereinafter the "Business Combination Law"), reflect the Nevada Legislature's
intent to protect the shareholders of Nevada corporations from combinations with
persons or entities who have not obtained the advance approval of a
corporation's board. The Business Combination Law prohibits certain combinations
between a Nevada corporation and any "interested shareholder," defined in
general to include any person who acquires 10% of a Nevada corporation's stock,
for a three-year period unless the "interested shareholder" has obtained the
advance approval of the corporation's board of directors. These provisions are
intended, among other things, to prevent bidders from effectuating combinations
that the Board has determined are not in the best interests of the company and
its shareholders, as well as in the interests of the company's employees,
customers, suppliers and other constituents.
JURISDICTION AND VENUE
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3. This Court has jurisdiction over this action pursuant to Nev. Const.
Art. 6, (S) 6. Declaratory relief is authorized by the Declaratory Judgments
Uniform Act.
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Nev. Rev. Stat. (SS) 30.010-.160. Venne is proper in Washoe County pursuant to
Nev. Rev. Stat (S) 13.040.
PARTIES
4. Plaintiff Magma is a Nevada corporation doing business in, among other
locations, the states of Nevada and California and in certain foreign countries,
including those along the Pacific Rim. Magma is principally engaged in the
generation of electricity from geothermal resources, and in the acquisition of,
exploration for and development of geothermal resources. Geothermal energy is a
clean, renewable and sustainable energy source compared to fossil fuel-based
energy sources. Magma's common stock is traded on the NASDAQ Stock Exchange
under the symbol "MGMA." In the recent past, Magma's common stock has traded
at $41.50 per share, and certain analysts have placed values on Magma's common
stock in excess of that amount. Magma's principal executive offices are located
at 4365 Executive Drive, Suite 900, San Diego, California 92121.
5. Defendant California Energy is a Delaware corporation doing business in
Nevada, Utah and California, among other states, and in certain Pacific Rim
countries. California Energy is primarily engaged in the ownership and operation
of geothermal resources, and the ownership and operation of independent power
production facilities utilizing geothermal resources and other energy sources.
California Energy's common stock is traded on the New York Stock Exchange.
Pacific Stock and London Stock Exchange under the symbol "CE." California
Energy's principal executive offices are located at 10831 Old Mill Road, Omaha,
Nebraska 68154.
THE UNSOLICITED OFFER TO ACQUIRE MAGMA
6. On September 19, 1994, California Energy delivered to Magma an unsolicited
"bear hug" letter declaring its intention to acquire the outstanding shares of
Magma common stock for a purported figure of $35 per share, consisting of $25 in
cash and
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securities of California Energy supposedly valued at $10 per share. While
purportedly expressing California Energy's desire that the proposed transaction
be consummated amicably. California Energy warned that it was reserving its
right to approach Magma's shareholders directly with a tender offer and/or a
consent solicitation if Magma failed to "respond to this proposal promptly." At
that time, California Energy provided no other information concerning its
unsolicited offer, including the effect a combination of the two entities would
have on Magma, its shareholders, employees and operations, the effect it would
have on Magma's long-term strategic plan and the benefits to shareholders
flowing from such plan, the impact the proposed transaction would have on
Magma's existing business and prospects, both domestically and overseas, the
sources of information upon which California Energy had relied in making its
proposal, and the sources and certainty of California Energy's ability to
finance its proposal, among many other materials facts necessary to evaluate
California Energy's offer.
7. Promptly after receipt of the unsolicited offer, Magma retained the
investment banking firm of Goldman Sachs & Co. as well as outside legal advisors
to assist it and its Board in analyzing the proposal and its impact on Magma,
its shareholders and other constituencies. As that analysis was being
undertaken, California Energy repeated its intentions and sought to rush Magma
into making a rushed and indiscriminate decision concerning California Energy's
unsolicited bid. While purporting to reiterate California Energy's desire to
proceed amicably, California Energy unequivocally stated its intention to "move
forward" and to "take this matter directly to Magma's shareholders." California
Energy also repeated its threat to commence a tender offer for Magma's shares
during the week of October 3, 1994 regardless of Magma's Board's evaluation and
regardless of the best interests of Magma's shareholders, employees, business
operations and strategic plan.
8. The members of Magma's Board, who have been in consultation with Magma's
senior management and its financial and legal advisors since California Energy's
September 19 "bear hug" letter, convened a special meeting of the Board on
October 2 and October 3, 1994. The Board engaged in extensive discussion and
consideration of California
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Energy's proposal, and received thorough presentations from its financial and
legal advisors. In light of that evaluation, the threats posed to Magma and its
shareholders by California Energy's partial tender offer proposal, the need to
have the opportunity to evaluate properly and fully the best interests of Magma
and its shareholders under various alternatives, including remaining independent
and managing Magma in accordance with its long-term business plan, the Board
took steps carefully designed to protect shareholders from inappropriate or
coercive partial tender offers, such as the one California Energy has
threatened to commence, as well as other abusive tactics that might be used in
an attempt to gain control of Magma without paying all shareholders a fair price
for their shares.
9. First, the Board adopted a Stockholder Rights Plan which provides for
the distribution of rights to Magma's shareholders. Under the Plan, if a person
or group acquires beneficial ownership of 10% or more of Magma's outstanding
common stock, or commences a tender offer for 20% or more of Magma's shares, the
holders of the rights (generally all Magma shareholders except the person or
group acquiring beneficial ownership of 10% or more of Magma's outstanding
common stock or who has commenced the tender offer) will be, unless the Board
within ten days thereafter otherwise determines, entitled to purchase Magma
securities (a newly issued share of Series A Preferred Stock) in an amount equal
to twice the exercise price of the rights ($125). In a subsequent merger with
the 10% stockholder, holders of rights would be entitled to purchase common
stock of the 10% stockholder in an amount equal to twice the exercise price of
the rights ($125). The rights, which are redeemable under certain circumstances,
including Board approval of a transaction, are designed to provide the Board, in
the discharge of its fiduciary duties, with sufficient time to evaluate the
alternatives and to guard against coercive, partial tender offers and other
abusive tactics that might be used in an attempt to gain control of Magma.
Because the Stockholder Rights Plan makes any hostile acquisition of Magma
substantially more expensive if the rights are triggered, the effect of the
Stockholder Rights Plan is to encourage suitors to negotiate with Magma's Board,
and to discourage suitors who make coercive or abusive bids that are contrary to
Magma's long-term interests and that of its shareholders. In
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short, the Stockholder Rights Plan will not prevent takeovers, but is designed
to deter coercive takeover tactics. A Stockholder Rights Plan is expressly
authorized and permitted by Nevada Corporate Law, e.g., Nevada General
Corporation Law (S) 78.350(3).
10. Second, the Board voted to amend Magma's by-laws to require that
shareholder action occur only at a regular or special meeting of shareholders
rather than by way of written consent solicitation (the "By-Law Amendment").
The purpose of this provision is to ensure that shareholders take action only
on a fully-informed basis; the provision does not eliminate the power of Magma's
shareholders to call a special meeting.
11. Because the Nevada Business Combination Law and the actions of Magma's
Board may serve as an obstacle to California Energy's forthcoming partial tender
offer, Magma anticipates that California Energy will seek to nullify the actions
taken by the Board and to attack the constitutionality of Nevada's Business
Combination Law.
FIRST CLAIM FOR RELIEF
(Declaratory Relief)
12. Magma incorporates by reference paragraphs 1 through 11 inclusive, as
though fully set forth herein.
13. Magma is informed and believes that California Energy will imminently
file suit seeking declaratory and injunctive relief against the application and
enforcement of the Business Combination Law, the provisions of which would,
inter alia, otherwise prohibit any combination of Magma with California Energy
not approved by Magma's Board for a period of three years from the date such
tender offer is consummated, on the ground that the Nevada statute constitutes
an undue burden upon interstate commerce and is therefore in conflict with the
Commerce Clause of the United States Constitution, Art. I, (S) 8 cl. 3. Magma
contends that the Nevada statute is--like similar statutes that have been upheld
in other states--valid and binding upon California Energy with respect to the
proposed transaction.
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14. An actual controversy has arisen and therefore now exists between Magma
and California Energy concerning the validity of Nev. Rev. Stat.
(S)(S) 78.411-.444.
SECOND CLAIM FOR RELIEF
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(Declaratory Relief)
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15. Magma incorporates by reference paragraphs 1 through 14 inclusive, as
though fully set forth herein.
16. Magma is informed and believes that California Energy will imminently
file suit seeking declaratory and injunctive relief against the application and
enforcement of the Business Combination Law on the ground that the Nevada
statute conflicts with the purposes of a federal statute regulating tender
offers, the Williams Act, 15 U.S.C. (S)(S) 78m(d)-(e), 78n(d)-(f), and alleging
that the Nevada statute is therefore invalid under the Supremacy Clause of the
United States Constitution, Art. VI, cl. 2. Magma contends that the Nevada
statute is -- like similar statutes that have been upheld in other states --
valid and binding upon California Energy with respect to the proposed
transaction.
17. An actual controversy has arisen and therefore now exists between Magma
and California Energy concerning the validity of Nev. Rev. Stat.
(S)(S) 78.411-.444.
THIRD CLAIM FOR RELIEF
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(Declaratory Relief)
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18. Magma incorporates by reference paragraphs 1 through 17 inclusive, as
though fully set forth herein.
19. Magma is informed and believes that California Energy will imminently
file suit seeking declaratory and injunctive relief against the application and
enforcement of the Stockholder Rights Plan and By-Law Amendment adopted by
Magma's Board, or seeking to require Magma to redeem the Stockholder Rights
Plan, on the ground that they were adopted and/or not redeemed by the Board in
violation of its fiduciary obligations to Magma. Magma contends that the
Stockholder Rights Plan and By-Law Amendment have been adopted and will be used
consistent with its Board's fiduciary duties to act in the best
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interests of the shareholders of Magma, as well as in the interests of other
constituencies, including employees, customers and suppliers, which the Board
may consider under Nev. Rev. Stat. (S) 78.138.
20. An actual controversy has arisen and therefore now exists between
Magma and California Energy concerning the Stockholder Rights Plan and the
By-Law Amendment.
PRAYER FOR RELIEF
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WHEREFORE, plaintiff prays for judgment against defendant as follows:
(a) For a declaratory judgment that the Stockholder Rights Plan and
By-Law Amendment are valid and binding;
(b) For a declaratory judgment that the Business Combination Law,
Nev. Rev. Stat. (SS) 78.411-.444, is valid and not in violation of the
Commerce Clause of the United States Constitution, Art. I, (S) 8, cl. 3;
(c) For a declaratory judgment that the Business Combination Law,
Nev. Rev. Stat. (SS) 78.411-.444, is valid and not in violation of the
Supremacy Clause of the United States Constitution, Art. VI, cl. 2;
(e) For costs of suit and reasonable attorneys' fees; and
COMPLAINT FOR -7-
DECLARATORY RELIEF
(e) For such other relief as the Court may deem just and proper.
Dated: October 3, 1994 Respectfully submitted,
JONES, JONES, CLOSE & BROWN,
CHTD.
/s/ M. CELESTE LUCE
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M. CELESTE LUCE
290 South Arlington Avenue, #200
Reno, Nevada 89501
Telephone: (702) 322-3811
Dean S. Krystowski
Patrick D. Robbins
David L. Anderson
M.J. Tony Paikeday
SHEARMAN & STERLING
555 California Street, 20th Floor
San Francisco, California 94104
Telephone: (415) 616-1100
Attorneys for Plaintiff Magma
Power Company
COMPLAINT FOR -8-
DECLARATORY RELIEF