EXHIBIT 10.7(c)
AMENDMENT NO. 2
TO
VASTAR RESOURCES, INC.
SPECIAL TERMINATION ALLOWANCE PLAN
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The Vastar Resources, Inc. Special Termination Allowance Plan (the "Plan") is
hereby amended effective as of March 10, 1999.
1. Paragraph 3.1 of the Plan is amended to read as follows:
"3.1 "Administrator" means (i) prior to the earlier to occur of a Change
of Control or an Anticipatory Change of Control, Vastar Resources,
Inc., and (ii) on and after the earlier to occur of a Change of
Control or an Anticipatory Change of Control, the Special Plan
Administrator, which shall also assume all delegations of the
Administrator described in Paragraph 7.1 of the Plan. Upon a written
determination by the Chief Financial Officer and the General Counsel
of the Company, approved by either the Board of Directors of the
Company (the "Board"), the Outside Directors or the Executive
Committee of the Board, that an Anticipatory Change of Control has
ended without concluding in a Change of Control (an "Anticipatory
Change Termination"), Vastar Resources, Inc. will again become the
Administrator. For purposes of this definition, a Change of Control
shall not include an ARCO Acquisition as defined in Section 6.4."
2. New Paragraphs 3.13, 3.14, 3.15, 3.16, 3.17, 3.18, 3.19, 3.20, 3.21, 3.22,
3.23, 3.24, 3.25, 3.26, 3.27 and 3.28 are added to Paragraph 3 of the Plan
to read as follows:
"3.13 "AIP Award" means the award paid to the Participant for a Plan Year
under the Vastar Resources, Inc. Annual Incentive Plan.
3.14 The term "Anticipatory Change of Control" shall be ascribed the
meaning set forth for such term on Annex A attached hereto.
3.15 The term "ARCO" means Atlantic Richfield Company and its subsidiaries
and affiliates.
3.16 "Base Pay" means the greater of the Employee's annualized rate of Pay
on (i) the date of the Change of Control or (ii) the date immediately
before the date the Employee became a Terminated Employee (as defined
in Paragraph 6.1).
3.17 "Basic STAP" for this purpose means the cash benefit payment
(including the cash payment payable under the Special Termination
Allowance Policy in lieu of allowing the Employee to work during the
60-day notice period described therein) which would otherwise be
payable to the Employee under this Plan upon termination of
employment, had no Change of Control occurred.
3.18 "Benefit Trigger Window" means the 24-month period commencing on the
date that a Change of Control occurs.
3.19 "Cause" shall mean (i) the conviction of the Employee for any felony
involving dishonesty, fraud or breach of trust or (ii) the willful
engagement by the Employee in gross misconduct in the performance of
his or her duties that materially injures the Surviving Entity.
3.20 The term "Change of Control" shall be ascribed the meaning set forth
for such term on Annex A attached hereto.
3.21 "Change of Control Trust" means the trust established by the Company
to provide for the payment of any benefits, in whatever form is
required, under the Plan on and after a Change of Control.
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3.22 "Covered Amount" is equal to the sum of (i) the Participant's Base
Pay and (ii) the greater of (A) the average of the total AIP Awards
paid to the Participant with respect to the three Plan Years ended
prior to the Change of Control (or if less, the number of years in
which the employee has received AIP Awards, if the Participant has
not participated in the Plan during each of such three years) or (B)
the Participant's Final Target AIP Award.
3.23 "Final Target AIP Award" means the target award determined by the
Committee under the Vastar Resources, Inc. Annual Incentive Plan for
the Plan Year beginning immediately prior to the Change of Control,
or if none was determined for that Plan Year, the most recent target
award determined.
3.24 The term "Outside Director" shall be ascribed the meaning set forth
for such term on Annex A attached hereto.
3.25 "Qualifying Pay" means the Employee's annualized rate of regular
wages or salary, excluding all extra pay such as overtime, premiums,
bonuses, living or other allowances, determined as of the relevant
date.
3.26 The term "Special Plan Administrator" shall be ascribed the meaning
set forth for such term on Annex A attached hereto.
3.27 "Surviving Entity" means the Company, or 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 after a Change of Control, and its affiliates.
3.28 "Target Award" means the annual target performance bonus award
applicable to the Employee for the relevant period."
3. Paragraphs 5.1, 5.2 and 5.3 of the Plan are amended to read as follows:
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"5.1 (a) For a Regular Full-Time Employee, the payments made to a
Participant under this subparagraph shall be computed by
reference to the Attachment 1 matrix, provided, however, that
upon a Change of Control, notwithstanding anything to the
contrary on Attachment 1, Terminated Employees with less than one
year of service shall be entitled to a minimum cash payment equal
to 12.00 weeks of Pay.
(b) For a Regular Part-Time Employee, payments made to a Participant
under this subparagraph shall be computed by reference to the
Attachment 3 worksheet.
(c) Attachment 2 is hereby deleted from the Plan.
5.2 The Company reserves the right to offset the allowance described in
Paragraph 5.1, above, by any monies the Employee owes the Company and
by the amount of any statutory benefits attributable to termination of
employment or disability, provided, however, that the Company shall
not have such offset right after a Change of Control.
5.3 Notwithstanding anything in this Plan to the contrary, the total
allowance paid under this Plan shall not exceed the equivalent of
twice the Employee's annual compensation as defined in ERISA
Regulation (S) 2510.3.2(b)(a)(i) during the year immediately preceding
the Employee's termination of employment, provided, however, this
limitation shall not apply to Tier 1 and 2 Employees and any other
person who is a member of a select group of management or highly
compensated employees as such terms are used in Section 201(a) of
ERISA.
4. Sections 6, 7 and 8 of the Plan are renumbered as Sections 7, 8 and 9 and a
new Section 6 is added to the Plan to read as follows:
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"SECTION 6
ALLOWANCES PAYABLE FOLLOWING A CHANGE OF CONTROL
6.1 Notwithstanding any other provision of the Plan, if an Employee
terminates employment during the Benefit Trigger Window under the
circumstances described in Paragraph 6.2 (a "Terminated Employee"),
the Terminated Employee will be paid a single cash allowance as
described in Paragraph 6.3 and, if applicable, Paragraph 6.6, within
60 days following such termination in lieu of any other benefit to
which the Employee is entitled under this Plan.
6.2 For the purposes of Paragraph 6.1 above, termination of employment
shall mean:
(a) a termination of employment during the Benefit Trigger Window by
the Surviving Entity, other than for Cause, or
(b) the Employee's voluntary termination within the Benefit Trigger
Window as a result of the Surviving Entity's implementation of:
(i) a ten percent or more reduction of such Employee's
Qualifying Pay from the Qualifying Pay determined as of the
date immediately prior to the date of the Change of Control
or a ten percent or more reduction (based on dollar value)
in the Employee's aggregate Qualifying Pay plus Target Award
("Total Pay") from the Employee's Total Pay determined as of
the date immediately prior to the date of the Change of
Control; or
(ii) a required relocation of the Employee's principal place of
work to a location which would satisfy the conditions
specified in (S) 217(c)(1) of the Internal Revenue Code of
1986, as amended (the "Code"), for
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a deduction by such Employee of moving expenses under (S)
217 of the Code.
(c) No Employee shall be deemed to have a termination of employment
solely due to a transfer of employment directly between the
Company, a Surviving Entity or any of their affiliates.
6.3 Following termination of employment of an Employee, as defined in
Paragraph 6.2, a cash payment shall be made to the Terminated Employee
as prescribed under the following payment schedule, in lieu of any
other benefit to which the Employee is entitled under this Plan
(except for the benefit described in Section 6.6 hereof):
EMPLOYEE
LEVEL CASH PAYMENTS
------------------------------------------------------
Tier 1 3 times the Covered Amount
------------------------------------------------------
Tier 2 2 times the Covered Amount
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Tier 3 The greater of 1 times the
Covered Amount or Basic STAP
------------------------------------------------------
All others Basic STAP
======================================================
6.4 Notwithstanding anything to the contrary in this Plan, if a Change of
Control as described under paragraph (3) of the definition of such term
on Annex A attached hereto (an "ARCO Acquisition") occurs, no person
shall be entitled to benefits under Paragraphs 6.3 or 6.6 of this Plan
as a result of such a Change of Control, but shall instead receive the
benefits to which the person may otherwise be entitled, whether under
this Plan or any other employee welfare benefit plan, as determined in
the sole discretion of Atlantic Richfield Company; provided that
benefits accrued under this
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Plan due to a termination of employment prior to a Change of Control,
but not yet paid, shall be paid in accordance with the terms of this
Plan in existence immediately prior to the Change of Control.
6.5 Upon the earlier to occur of an Anticipatory Change of Control or a
Change of Control (excluding an ARCO Acquisition), the Company or any
successor to the obligations of the Company shall fund the Change of
Control Trust in accordance with its terms.
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6.6 Special Tax Allowance and Tax Mitigation.
(a) If a Participant in Tier 1 (or who was in Tier 1 immediately
prior to an ARCO Acquisition) is liable for the payment of any
excise tax (the "Basic Excise Tax") because of Section 4999 of
the Code, or any successor or similar provision relating to a
Change of Control, with respect to any payments or benefits
received or to be received from the Company or its affiliates, or
any successor to the Company or its affiliates, whether provided
under this Plan or otherwise, the Company or any successor to the
obligations of the Company will pay the Participant an amount
(the "Special Reimbursement") which, after payment by such
Participant (or on the Participant's behalf) of any federal,
state and local taxes applicable thereto, including, without
limitation, any further excise tax under such Section 4999 of the
Code, on, with respect to or resulting from the Special
Reimbursement, equals the net amount of the Basic Excise Tax.
The Special Reimbursement will be paid upon receipt by the
Participant of any payment or benefit that will result in the
Basic Excise Tax.
(b) Notwithstanding anything in this Plan to the contrary, if any
amounts due to a Participant other than a Tier 1 Participant
under this Plan and any other plan or program of the Company or
its affiliates constitute a "parachute payment," as such term is
defined in Section 280G(b)(2) of the Code, and the amount of the
parachute payment, reduced by all federal, state and local taxes
applicable thereto, including the excise tax imposed pursuant to
Section 4999 of the Code, is less than the amount the Employee
would receive if he were
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paid three times his "base amount," as defined in Section
280G(b)(3) of the Code, less one dollar, reduced by all federal,
state and local taxes applicable thereto, then the aggregate of
the amounts constituting the parachute payment shall be reduced
to an amount that will equal three times his base amount less one
dollar.
(c) The determinations to be made with respect to this Paragraph 6.6
will be made by the Special Plan Administrator."
5. Paragraphs 8.2 and 8.3 of the Plan are amended to read as follows:
"8.2 The cost of this Plan shall be paid by the Company out of its general
assets provided that any benefits due from the Company under Section 6
of the Plan shall be paid from the Change of Control Trust, and if not
paid from the Change of Control Trust shall be paid by the Company or
any successor to the obligations of the Company.
8.3 This Plan is intended to be an employee welfare benefit plan, as
defined in (S) 3(1), Subtitle A of Title I of Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), except that
payments to any Employee who is a member of a select group of
management or is highly compensated shall be deemed to be made under a
plan which is unfunded and maintained primarily for the purpose of
providing deferred compensation for a select group of management or
highly compensated employees within the meaning of (S) 201(2) of
ERISA."
5. Section 8 of the Plan is amended by adding the following Paragraph 8.4
thereto to read as follows:
"8.4 Any action required to be taken under this Plan by the Chief
Financial Officer and the General Counsel of the Company may be taken
by either individual if the other
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position is then vacant, and if both positions are vacant, such action
may be taken by any other officer of the Company with a position of
vice president or above. Any action required to be taken by the Vice
President, Human Resources of the Company may, if such position is
vacant, be taken by any other officer of the Company with a position
of vice president or above."
6. Section 9 of the Plan is amended to read as follows:
"SECTION 9
AMENDMENT AND TERMINATION
9.1 Amendment or Termination Generally. Except as provided in Paragraphs
9.2 and 9.3, the Plan may be amended for any reason and at any time by
the Vice President, Human Resources of the Company. Except as
provided in Paragraphs 9.2 and 9.3, the Plan and payments thereunder
may be terminated at any time by the Vice President, Human Resources
of the Company; provided, however, that no amendment may deprive a
Participant of benefits that have previously accrued.
9.2 Amendment or Termination during Anticipatory Change of Control. The
Plan may not be terminated or amended during the period after the
occurrence of an Anticipatory Change of Control and prior to a Change
of Control or an Anticipatory Change Termination (as defined in
Section 3.1), except that the Board of Directors of the Company may
amend the Plan during such a period as it may deem reasonably
necessary, provided that, if any such amendment reduces, or could
reduce, the value of any benefit of a Participant, as determined in
the sole discretion of the Special Plan Administrator, the Company or
any successor to the obligations of the Company shall, prior to, and
as a condition precedent to, such amendment going into effect,
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provide substantially equivalent value in replacement thereof to the
Participant in the reasonable determination of the Special Plan
Administrator.
9.3 Amendment or Termination On or After a Change of Control. The Plan
may not be terminated or amended on or after a Change of Control in
any manner that would negatively affect Employee's rights arising as a
result of the Change of Control under Section 6 without the consent of
all of the Participants or, in the alternative, the Participants whose
Plan benefits are affected by such termination or amendment. The Plan
will terminate at the expiration of the Benefit Trigger Window,
provided, however, that such termination shall not affect any right of
a Participant which shall have accrued prior to such termination.
9.4 Acquisition by ARCO. An ARCO Acquisition shall not be treated as a
Change of Control for purposes of this Section 9."
Executed as of the 10th day of March, 1999.
ATTEST VASTAR RESOURCES, INC.
By: /s/ Jonathan D. Edelfelt By: /s/ Jeffrey M. Bender
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JONATHAN D. EDELFELT JEFFREY M. BENDER
Associate Secretary Vice President
Human Resources
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