Case No. OW94-06432
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Dept. No. 5
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IN THE SECOND JUDICIAL DISTRICT COURT FOR THE STATE OF NEVADA
IN AND FOR THE COUNTY OF WASHOE
BEN HOLT, an individual
and shareholder of
Magma Power Company,
Plaintiff,
vs. COMPLAINT TO COMPEL
ACCESS TO SHAREHOLDER
LIST PURSUANT
TO NRS 78.105(3)
MAGMA POWER COMPANY, a
Nevada corporation,
Defendant.
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BEN HOLT, by and through his attorneys, Lionel Sawyer & Collins, complains
of defendant and alleges as follows:
1. BEN HOLT ("Holt") is an individual residing in Pasadena, California.
2. Holt is, and has been for a period of more than six months prior to
September 27, 1994, the holder of record of 3,000 outstanding shares of common
stock of defendant Magma Power Company. The stock is registered in the name of
"Ben Holt" and is represented by certificate numbers NLS22478, NLS17635,
NLS16143 and NLS22188.
3. Magma Power Company ("Magma") is and was at all relevant times, a
corporation organized and existing under the laws of the State of Nevada.
4. On October 5, 1994, Holt, through his attorneys, Willkie Farr &
Gallagher, sent by facsimile a letter to Magma and its attorneys, demanding
access to certain information concerning shareholders of Magma, pursuant to NRS
78.105(3). On October 6, 1994, the original of the same letter was delivered
during usual business hours, to Magma at Magma's executive headquarters in San
Diego, California. The demand letter, which seeks not only a list of the
company's shareholders, but certain additional information necessary to
communicate with the Magma shareholders, is annexed hereto as Exhibit A.
5. Receipt of the letter by Magma was acknowledged by Jon R. Peele,
Magma's General Counsel who, retaining the letter, stated in words or in
substance that Magma did not intend to comply with the demand.
6. On October 7, 1994, Holt received a letter from Magma's attorneys
requesting that Holt submit an affidavit to Magma pursuant to NRS 78.105(4). On
October 7, 1994, Holt, through his attorneys, sent by facsimile an affidavit
complying with the requirements of NRS 78.105(4) to Magma's attorney Michael
Kennedy, of Shearman & Sterling. A copy of Holt's Affidavit is annexed hereto as
Exhibit B. The original of the affidavit was delivered to Mr. Kennedy by Federal
Express the next day.
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7. On October 12, 1994, counsel for Holt received a letter from Dean
Krystowski, also of Shearman & Sterling, a copy of which is annexed as Exhibit
C, stating that Magma would not provide the information requested in plaintiff's
demand.
8. Pursuant to NRS 78.105(3) plaintiff is entitled to inspect and copy, in
person or by agent or attorney, during usual business hours, the stock ledger or
duplicate stock ledger of Magma and to make copies thereof and extracts
therefrom. Plaintiff also is entitled to inspect and/or receive the additional
shareholder information contained in his demand, which is regularly used by
large corporations such as Magma to communicate with their shareholders, and is
believed to be easily accessible by Magma.
9. On October 6, 1994, California Energy Company, Inc. ("California
Energy") commenced a tender offer for a majority of the common stock of Magma.
Magma's Board of Directors has refused to properly consider the offer.
Notwithstanding the substantial value that the offer represents to Magma
shareholders, the Board has taken steps aimed at thwarting the offer and further
entrenching itself. These steps include the enactment of a purported Shareholder
Rights Plan, commonly called a "Poison Pill", certain amendments to the
company's Bylaws purportedly preventing the shareholders from taking certain
actions by written consent and the approval of "golden parachute" severance
arrangements with fifteen of the most highly compensated members of management.
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10. On October 11, 1994, the Magma Board issued a
Solicitation/Recommendation Statement on Schedule 14D-9 wherein it recommended
that the shareholders reject the California Energy tender offer. In view of the
hostile climate for the offer created by the Magma Board of Directors, it is
believed that the Magma Board has not seriously considered the offer, and has
taken and intends to take other steps to prevent consideration of the offer by
the Magma shareholders. It is thus imperative that the merits of the offer be
communicated to the Magma shareholders, and that the Magma shareholders be
permitted to express their support for the offer.
11. The purpose of plaintiff's request for shareholder information is for
the valid corporate purpose of permitting a request solicitation to go forward
which relates to, among other things, the election of directors who will be
committed to permitting the Magma shareholders to freely consider California
Energy's offer. The request solicitation will seek written requests from the
requisite number of shareholders to schedule a special meeting of the Magma
shareholders at which certain proposed actions will be taken in support of the
offer. It is intended that proxies will be solicited with respect to the meeting
seeking the shareholders' support for certain actions to be taken at the meeting
aimed at sending a clear signal that the shareholders support the offer.
12. By reason of Magma's unjustified refusal to allow plaintiff access to
Magma's shareholder information, plaintiff has been prevented from communicating
directly with other
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shareholders of Magma, and it has been necessary for plaintiff to retain
attorneys to prosecute this action.
13. The request solicitation is scheduled to begin as soon as
possible, and thus, it is essential that immediate relief be granted in the form
of an order compelling Magma to comply with its statutory obligation to provide
the shareholder information requested in plaintiff's demand letter.
14. Unless injunctive relief is granted on an expedited basis, plaintiff
and other Magma shareholders will be irreparably harmed in that they will lose
the opportunity to communicate with other shareholders concerning the offer and
to voice their support for the offer to Magma's management and the Magma
shareholders.
15. Plaintiff has no adequate remedy at law and thus requires an order of
this Court compelling Magma to provide plaintiff with access to the information
sought in the demand letter.
WHEREFORE, plaintiff prays for the following relief:
1. For an order enjoining and commanding Magma Power Company to provide
plaintiff or his agents or attorneys with the information contained in the
demand letter, a copy of which is annexed hereto as Exhibit A, concerning the
shareholders of Magma Power Company;
2. For costs of suit;
3. For a reasonable attorney's fees; and
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4. For such other and further relief as the Court deems just and proper in
the premises.
DATED this 14 day of October, 1994.
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LIONEL SAWYER & COLLINS
By /s/ RICHARD W. HORTON
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Richard W. Horton
50 W. Liberty Street, #1100
Reno, Nevada 89501
(702) 788-8666
Attorneys for Plaintiff
Of Counsel:
Stephen W. Greiner
Jeanne M. Luboja
Michael Bailey
WILLKIE FARR & GALLAGHER
One Citicorp Center
153 East 53rd Street
New York, New York 10022
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