EXHIBIT 99.3
MAGMA POWER COMPANY
CHANGE IN CONTROL AGREEMENT
This AGREEMENT, date September __, 1994, is made by and between,
_________________, (hereinafter referred to as the "Executive") and MAGMA POWER
COMPANY (the "Company"), a Nevada corporation.
RECITALS
A. The Board of Directors of the Company (the "Board of Directors") has
determined that it is in the best interest of the Company's shareholders that
appropriate steps should be taken to reinforce and encourage the continued
dedication of the Executive to the Executive's assigned duties without
distraction in case of potentially disturbing circumstances arising from the
possibility of a Change in Control of the Company.
B. In order to induce the Executive to remain in the employ of the Company
and to induce the Executive to give the Executive's continued attention and
dedication to the Executive's assigned duties in the event of a Change in
Control of the Company, the Company desires to provide the Executive with
certain benefits and inducements, as set forth herein.
C. The Executive covenants to perform the Executive's assigned duties with
continued attention, zeal and dedication in the event of a Change in Control of
the Company.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, receipt of which is hereby
acknowledged, the Company and the Executive do hereby agree as follows:
ARTICLE I
DEFINITIONS
Whenever the following terms are used below in this Agreement, they shall
have the meaning specified below, and no other, unless the context clearly
indicates to the contrary. The masculine pronoun shall include the feminine and
neuter, and the singular the plural, where the context so indicates.
Section 1.1-Auditors.
"Auditors" shall mean Coopers & Lybrand, or an independent certified public
accounting firm that is duly selected by the Board of Directors and is
acceptable to the Executive.
Section 1.2-Board of Directors.
"Board of Directors" shall have the meaning provided in the first recital of
this Agreement.
Section 1.3-Cause.
"Cause" shall mean termination of employment with the Company because of (i)
conviction of a crime involving moral turpitude, (ii) theft or embezzlement of
property from the Company or (iii) willful misconduct or willful failure
substantially to perform the duties of his or her position, provided that the
individual shall have received written notice from the Board of the specific
acts of misconduct or failures to perform and such acts or failure shall have
continued after receipt of such notice.
Section 1.4-Change in Control.
A "Change in Control" shall be deemed to have occurred in the event of (i)
the acquisition by any person, together with its affiliates, of beneficial
ownership of capital stock of the Company possessing 30% or more of the combined
voting power of the Company's outstanding capital stock, (ii) within any
two-year period, the majority of the members of the Board were to be comprised
of individuals other than those who were members at the beginning of such
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period, unless the members elected during such period were approved by a
majority of the Board in office immediately prior to the beginning of such
period, (iii) all or substantially all of the Company's assets are sold as an
entirety to any person or related group of persons or (iv) the Company is merged
with or into another corporation or another corporation is merged into the
Company with the effect that immediately after such transaction the shareholders
of the Company immediately prior to such transaction hold less than a majority
in interest of the total voting power entitled to vote in the election of
directors, managers or trustees of the entity surviving such transaction.
Section 1.5-Code.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
Section 1.6-Company.
"Company" shall mean Magma Power Company, a Nevada corporation, its
subsidiaries and affiliates, and any successor to its business, whether direct
or indirect, by purchase of securities, merger, consolidation, purchase of all
or substantially all of the Company's assets or otherwise.
Section 1.7-Date of Termination.
"Date of Termination" shall mean (i) in the case of the Executive's
termination of employment by the Company for Disability, thirty days after
Notice of Termination is given, provided that the Executive shall not have
returned to the performance of the Executive's assigned duties on a full-time
basis during such thirty-day period; or (ii) in the case of termination of the
Executive's employment by the Company for Cause or termination by the Executive
for Good Reason or termination for any other reason, the date specified in the
Notice of Termination, which date shall not be less than thirty days after the
date such Notice of Termination is given.
Section 1.8-Disability.
"Disability" shall mean absence from performance of assigned duties for the
Company on a full-time basis for six consecutive calendar months as a result of
incapacity due to
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medically documented physical or mental illness; provided that the Executive
shall not have returned to the full-time performance of the Executive's duties
within 30 calendar days of actual receipt of written Notice of Termination for
the reason of Disability. Such Notice of Termination may not be given prior to
the expiration of the six month period of Disability.
Section 1.9-Executive.
"Executive" shall have the meaning provided in the first paragraph of this
Agreement.
Section 1.10-Good Reason.
"Good Reason" shall mean the occurrence of any of the following events
without the Executive's express written consent:
(a) the assignment to the Executive of duties inconsistent with the
Executive's position and status as an executive of the Company immediately
prior to a Change in Control, or a substantial adverse alteration in the
nature or status of the Executive's responsibilities as _______________ of
the Company from those in effect immediately prior to a Change in Control
(other than any such alteration primarily attributable to the fact that the
Company, at the time of such alteration, is no longer a publicly-held
company); or
(b) a reduction by the Company in the Executive's base salary or
targeted bonuses payable under the Company's Management Incentive Plan
("MIP") or other executive bonus plan or arrangement as in effect
immediately prior to the occurrence of a Change in Control or as the same
may be increased from time to time during the term of this Agreement; or
(c) any purported termination of the employment of the Executive by the
Company which is not effected according to the requirements of a Notice of
Termination as defined in Section 1.11 herein; or
(d) in the case that Executive is assigned to the Company's principal
executive office immediately prior to the Change in Control, a relocation of
the Company's principal executive office more than 50 miles from its prior
location or the assignment of
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the Executive to a location other than the Company's principal executive
office; in the case that Executive is assigned to a location other than the
Company's principal executive office immediately prior to the Change in
Control, assignment of the Executive to a location more than 50 miles from
the Executive's prior location.
Section 1.11-Notice of Termination.
"Notice of Termination" shall mean a notice, in writing, to the Executive
from the Company or to the Company from the Executive, which indicates the
specific termination provision enumerated in this Agreement relied upon, and
which sets forth in reasonable detail the facts and circumstances alleged to
provide a basis for termination of the Executive's employment by the Company or
by the Executive. Such notice must be communicated to the Executive in
accordance with Section 4.3 herein.
Section 1.12-Retirement.
"Retirement" shall mean termination of the Executive's employment on or
after the date on which the Executive terminates in accordance with any
retirement agreement/plan entered into between the Executive and the Company.
Section 1.13-Tax Counsel.
"Tax Counsel" shall mean legal counsel, selected by the Auditors and which
is acceptable to the Executive, for the purpose of rendering legal advice and
services on tax issues arising under this Agreement.
Section 1.14-Termination Period.
"Termination Period" shall mean the period beginning fifteen days prior to
the occurrence of a Change in Control and ending twenty-four (24) months
following the date of any such occurrence.
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ARTICLE II
TERM
This Agreement shall be effective commencing on the date indicated in the
first paragraph of this Agreement and shall continue in effect through December
31, 1997; provided, however, that this initial term may be extended in the sole
discretion of the Compensation Committee of the Board of Directors; and
provided, further, that if a Change in Control shall have occurred during the
term of this Agreement, then this Agreement shall continue in effect for the
lesser of (i) the end of the Termination Period, or (ii) a period ending on the
date of the Retirement of the Executive.
ARTICLE III
BENEFITS AND COMPENSATION
Section 3.1-When Benefits Payable.
No benefits shall be payable under this Agreement and the provisions of this
Agreement shall be of no force or effect unless there shall have been a Change
in Control, and the Executive's employment with the Company shall have been
terminated within two year after the Change in Control during the term of this
Agreement. If such a Change in Control has occurred and the Executive's
employment with the Company is terminated within two years after the Change in
Control during the term of this Agreement, unless such termination is (i)
because of the death of the Executive, or (ii) by the Executive other than for
Good Reason, the Executive shall be entitled to the benefits enumerated in this
Article 3 no later than 30 days from the Date of Termination, under the
conditions imposed herein. The Executive's rights to the benefits enumerated
under this Article III, and the specific type of benefits to be received, shall
be determined and shall vest upon delivery of the applicable Notice of
Termination, and no event that occurs thereafter (including Executive's death or
disability) shall affect Executive's entitlement to, or the type of, benefits
hereunder. All benefits under this Article III shall be paid within thirty days
of the applicable Date of Termination.
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Section 3.2-Benefits Upon Disability.
During any period within the term of this Agreement that the Executive is or
becomes subject to a Disability, the Executive shall continue to receive the
Executive's full base compensation and other benefits at the rate then in effect
until the Executive's employment is terminated pursuant to Section 1.11 herein.
After termination for Disability, benefits accruing to the Executive shall be
determined in accordance with the Company's disability policy as in effect
immediately prior to any Change in Control.
Section 3.3-Benefits Upon Termination for Cause.
In the event that the Executive's employment with the Company is terminated
for Cause, the Executive shall receive the Executive's full base compensation as
earned through the Date of Termination at the rate in effect at the time Notice
of Termination is given. Following payment of said amount, the Company shall
have no further obligations to the Executive under this Agreement.
Section 3.4-Benefits Upon Retirement.
In the event that the Executive's employment with the Company is terminated
by reason of the Executive's Retirement, the Executive shall be entitled to the
benefits under the Company's regular retirement program, or, if a separate
retirement agreement has been entered into between the Executive and the
Company, benefits shall be provided according to the terms of that agreement.
Section 3.5-Benefits Upon Termination Other Than For Cause, Retirement or
Disability; or Termination For Good Reason.
In the event that the employment of the Executive shall be terminated during
the term of this Agreement (i) by the Company for any reason other than for
Cause, Disability or Retirement within two years after the occurrence of such
Change in Control or (ii) by the Executive for Good Reason within two years
after the occurrence of such Change in Control, then
(a) the Executive shall be entitled to receive: (I) the Executive's full
base compensation as earned through the Date of Termination at the rate in
effect at the time
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Notice of Termination is given; (II) for a 12-month period after such
termination (or such lesser number of months up to the date of the
Executive's Retirement), group health insurance coverage for the Executive
and his or her dependents substantially the same as that in effect
immediately prior to the Change in Control but increased to the extent that
such benefits were increased following the Change in Control; and (III) a
lump sum payment (the "Severance Payment") from the Company to the Executive
of a dollar amount equal to 100% of the sum of (x) base salary of the
Executive for the twelve month period immediately preceding the Change in
Control (if the Executive has not been employed by the Company for twelve
months, this portion of the Severance Payment shall be equal to 100% of the
annualized base compensation of the Executive during the period for which
the Executive has been employed with the Company) and (y) 100% of both
halves of his or her targeted bonus payable under the Company's MIP or other
executive bonus plan then in effect; and
(b) all deferred shares or similar securities of the Company and all
options to purchase securities of the Company then held by the Executive
shall be immediately vested and exercisable, without regard to whether such
shares or options are vested or exercisable at such time pursuant to the
terms of the documents under which such shares or options were granted;
provided that if such Change in Control is to be accomplished through a
tender offer or an exchange offer, such shares or options shall be vested
and exercisable for a period of time that shall permit the Executive to
tender such shares and/or the shares received upon the exercise of the
options in such tender or exchange offer.
Section 3.6-Tax Deductibility of Benefit Payments.
In the event that any payment or benefit received or to be received by the
Executive in connection with the termination of the Executive's employment
pursuant to the terms of this Agreement would not be deductible (in whole or in
part) by the Company as a result of the operation of Section 280G of the Code,
the amount of the Severance Payment shall be reduced (but not below zero) until
no portion of the Severance Payment is not deductible as a result of Section
280G of the Code. For purposes of this section, the value of any non-cash
benefit or any deferred cash payment to which the Executive is entitled
hereunder shall be determined by the Auditors in
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accordance with Sections 280G(d)(3) and 280G(d)(4) of the Code. If such a
reduction is deemed necessary, the nature and extent of such reductions shall be
determined by the Auditors with the advice and assistance of the Tax Counsel,
and such determination shall be binding and conclusive, provided that the
Auditors and Tax Counsel consult with the Executive prior to the final
determination, and use their best efforts to ensure that the final determination
comports with the Executive's wishes to the greatest extent possible. In
connection with such determinations, the Executive shall be entitled to waive
any benefit the receipt of which otherwise would require a reduction in the
amount of the Severance Payment under this Section 3.5.
Section 3.7-Underpayment of the Severance Payment.
In the event that the initial determination of the Auditors and Tax Counsel
results in a payment to the Executive of a smaller Severance Payment than the
Executive was actually entitled to receive (as determined by the Auditors and
Tax Counsel based on controlling precedent), such underpayment shall be promptly
disbursed to the Executive or for the Executive's benefit together with interest
at the highest rate that will not cause such interest payments not to be
deductible as a result of Section 280G of the Code.
Section 3.8-Legal Fees and Expenses.
If, following termination of the employment of the Executive within two
years after a Change in Control, the Executive shall incur any legal fees or
expenses as a result of the termination of the Executive's employment
(including any such fees or expenses incurred in contesting or disputing any
such termination or in seeking to obtain or enforce any right or benefit
provided by this Agreement), the Company shall pay or reimburse the Executive
for all such fees or expenses.
Section 3.9-No Mitigation.
The Executive shall not be required to mitigate the amount of any payment
provided for in this Agreement by seeking other employment or otherwise, nor
shall the amount of any payment or benefit provided for in this Agreement be
reduced or offset by any compensation
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earned by the Executive as a result of employment by another or by retirement
benefits after the Date of Termination or otherwise.
ARTICLE IV
MISCELLANEOUS
Section 4.1-Successors: Binding Agreement.
The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company to expressly assume and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place. The failure of
the Company to obtain such assumption agreement prior to the effectiveness of
any such succession shall be a breach of this Agreement and shall entitle the
Executive to compensation from the Company in the same amount and on the same
terms as the Executive would be entitled to hereunder if the Executive had
terminated the Executive's employment for Good Reason, except that for purposes
of implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination.
Section 4.2-Successors and Assigns.
This Agreement shall inure to the benefit of, and be enforceable by, the
personal or legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees of the Executive. If the Executive should
die within two years after a Change in Control and during the term of this
Agreement and while any amount would still be payable to the Executive hereunder
if the Executive had continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this Agreement to
the Executive's devisee, legatee or other designee or if there is no such
designee, to the Executive's estate.
Section 4.3-Notice.
Notices and all communications provided for in this Agreement shall be in
writing and shall be deemed to have been received when delivered or mailed by
United States registered
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mail, return receipt requested, postage prepaid, addressed to the respective
addresses set forth at the end of this Agreement, provided that all notices to
the Company shall be directed to the attention of the Board of Directors with a
copy to the Secretary of the Company, or to such other address as either party
may have furnished to the other in writing in accordance herewith, except that
notice of change of address shall be effective only upon receipt.
Section 4.4-No Waiver.
No provision of this Agreement may be modified, waived or discharged unless
in writing and signed by the Executive and such officer of the Company as may be
specifically designated or authorized by the Board of Directors or by a
Committee of the Board of Directors. No waiver by either party hereto at any
time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time.
Section 4.5-Entire Agreement.
No agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by either party which
are not expressly set forth in this Agreement and this Agreement constitutes the
entire agreement of the parties.
Section 4.6-Controlling Law.
The validity, interpretation, construction and performance of this Agreement
shall be governed by the laws of the State of California.
Section 4.7-Invalid Provision.
The invalidity or unenforceability of any provisions of this Agreement shall
not affect the validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect.
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Section 4.8-Counterparts.
This Agreement may be executed in several counterparts, each of which shall
be deemed to be an original, and all such counterparts together shall constitute
but one and the same instrument.
Section 4.9-The Executive's Employment by the Company.
Nothing contained in this Agreement (i) obligates the Company or any
subsidiary of the Company to employ the Executive in any capacity whatsoever, or
(ii) prohibits or restricts the Company (or any such subsidiary) from
terminating the employment, if any, of the Executive at any time or for any
reason whatsoever, with or without cause.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first set forth above.
MAGMA POWER COMPANY, a Nevada Corporation
By:______________________________________
President and Chief Executive Officer
By:______________________________________
Secretary of the Corporation
Address:
4365 Executive Drive, Suite 900
San Diego, California 92121
EXECUTIVE
_________________________________________
Address:
_________________________________________
_________________________________________
_________________________________________
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