EXHIBIT 10.7
FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
▇▇▇▇ ▇▇▇▇▇▇ ("Executive") and Ultramar Diamond Shamrock Corporation, a Delaware
corporation (the "Company"), hereby enter into this First Amendment to the
Employment Agreement between Executive and the Company, dated as of September
22, 1996 and effective as of December 3, 1996 (the "Agreement").
WHEREAS, the Executive serves as Chairman of the Board of Directors of the
Company and as the Chief Executive Officer and President of the Company; and
WHEREAS, the Executive and the Company entered into the Agreement as of the date
stated above; and
WHEREAS, Section 12.8 of the Agreement provides that it may be amended only by
an instrument in writing approved by the Company and signed by the Executive and
the Company; and
WHEREAS, the Company considers it in the best interests of its stockholders to
▇▇▇▇▇▇ the continued employment of certain key management personnel; and
WHEREAS, the Company wishes to amend the Agreement to add certain provisions
approved by the Compensation Committee of the Board of Directors of the Company
at a meeting held on May 1, 2000.
NOW, THEREFORE, in consideration of the promises and mutual covenants contained
herein and in the Agreement, it is agreed that, effective as of May 1, 2000, the
Agreement shall be amended as follows:
I.
A new final sentence is added to Section 4.2 of the Agreement as follows:
Notwithstanding any other provision of the Agreement, or the terms of
the Ultramar Diamond Shamrock Corporation Retirement Restoration Plan
(the "RRP"), to the contrary, Executive (and Executive's beneficiaries)
shall be entitled to no benefits under, or with respect to, the RRP, in
acknowledgment of the fact that such benefits will be provided under
the supplemental executive retirement plan of the Company in which
Executive participates.
II.
Section 5.2(i) of the Agreement is hereby deleted and substituted with the
following:
(i) If the Company determines in good faith that the Executive
has incurred a Disability (as defined below) during the Term, the
Company may give the Executive written notice of its intention to
terminate its obligations under this Agreement, which notice may, but
need not, include a statement of the Company's intent to terminate the
Executive's employment. In such event, the Company's obligations under
this Agreement, and the Executive's employment (if applicable), will
terminate effective on the 30th day after receipt of such notice by
the Executive (the "Disability Termination Date"), provided that
within the 30 days after such receipt, the Executive will not have
returned to full-time performance of his duties. The Executive will
continue to receive his annual base salary until the Disability
Termination Date. The Executive will continue to receive benefits
until the Disability Termination Date, provided that if the Company
has not elected to terminate the Executive's employment under this
provision (but rather to terminate only its obligations under this
Agreement), the Executive's right to continue to receive benefits
following the Disability Termination Date will be governed by the
policies and procedures of the Company generally applicable to
disabled employees. In that event, the Executive will be considered an
"employee at will" following the Disability Termination Date, and
either the Executive or the Company may thereafter terminate the
Executive's employment for any reason or for no reason, and the rights
and obligations of the Executive and the Company upon such termination
will be governed by the policies and procedures of the Company
applicable to employees at will, and by applicable law.
In the event of the Executive's disability, the Company will pay
the Executive, promptly after the Disability Termination Date, (a) the
unpaid annual base salary to which he is entitled, pursuant to Section
4.1, through the Disability Termination Date, (b) for any accrued but
unused vacation days, to the extent and in the amounts, if any,
provided under the Company's usual policies and arrangements, and (c)
a lump sum in cash in an amount equal to 50% of his annual base salary
at the Disability Termination Date. This Section 5.2 will not limit
the entitlement of the Executive, the Executive's estate or
beneficiaries to any disability or other benefits then available to
the Executive under any disability insurance or other benefit plan or
policy that is maintained by the Company for the Executive's benefit;
provided that (i) any amounts paid as base salary shall offset, on a
dollar-for-dollar basis (but not below zero), the Company's obligation
to pay the Executive short-term disability benefits under any
short-term disability plan, program or arrangement of the Company, in
respect of the same period for which such base salary is paid, and
(ii) any benefits paid pursuant to the Company's long-term disability
plan shall reduce, on a dollar-for-dollar basis (but not below zero),
the Company's obligation to pay the Executive base salary in respect
of the same period for which such benefits are paid; provided,
however, that any such offset or reduction shall not affect, or be
affected by, the payments provided to be made in accordance with
clauses (a), (b), or (c) of this Section 5.2(i).
III.
Section 5.5(i)(a) of the Agreement shall be revised to read as follows:
(i) Form and Amount. Upon Executive's involuntary termination, other
than for Cause, the Company shall:
(a) subject to Section 5.5(iii), pay or provide Executive
(1) his annual salary and benefits until the date of
termination,
(2) within five business days after any revocation period in
the release described in Section 5.5(iii) has expired, a lump sum
cash payment equal to three multiplied by the sum of (x) and (y),
where (x) is Executive's highest annual base salary in effect
during the three years prior to his date of termination, and (y)
is the highest annual incentive compensation earned by Executive
during the three years prior to his termination; provided,
however, that all amounts received by Executive pursuant to the
Ultramar Diamond Shamrock Corporation Intermediate Incentive and
Performance-Based Restricted Stock Plan shall not be considered
"annual incentive compensation" for purposes of this Section
5.5(i)(2),
(3) three additional years of age and service credit under
all Company-sponsored employee benefit plans, including all
retirement income plans and welfare benefit plans, policies or
programs or arrangements in which Executive participates,
including any savings, pension, supplemental executive retirement
or other retirement income or welfare benefit, short or long-term
disability, and any other deferred compensation, group and/or
executive life, health, retiree health, medical/hospital, or
other insurance (whether funded by actual insurance or
self-insured by the Company), expense reimbursement or other
employee benefit plans, policies, programs or arrangements or any
equivalent successor plans, policies, programs or arrangements
that may not now exist or may be adopted hereafter by the Company
(but only to the extent that eligibility, vesting, or the timing
or amount of the benefit are dependent upon age and service);
provided, however, that in the case of a qualified defined
benefit pension plan (hereafter, the "Qualified Plan"), (i) if
such aforementioned involuntary termination occurs prior to, or
contemporaneous with, the occurrence of an event entitling
Executive to a lump sum payment under the provisions of either
the Ultramar Corporation Supplemental Executive Retirement Plan
(or any equivalent successor plan, policy, program or
arrangement) (collectively, the "Ultramar SERP") or the Diamond
Shamrock, Inc. Supplemental Executive Retirement Plan (or any
equivalent successor plan, policy, program or arrangement)
(collectively, the "DS SERP") pertaining to "Change in Control"
(as defined in either the Ultramar SERP or the DS SERP, as the
case may be), disregarding for this purpose, any "Change in
Control" occurring prior to December 4, 1996 (collectively, a
"SERP Lump Sum Payment"), in lieu of granting any such actual
additional years of age and service credit under the Qualified
Plan, an amount equal to the present value of the additional
benefit Executive would have accrued if he had been credited for
all purposes with the three additional years of age and service
under the Qualified Plan as of his date of termination with the
Company will be paid in a lump sum in cash within five business
days after any revocation period in the release described in
Section 5.5(iii) has expired and (ii) if such aforementioned
involuntary termination occurs following the occurrence of an
event entitling Executive to a SERP Lump Sum Payment, in lieu of
granting any such additional years of age and service credit
under the Qualified Plan, an amount equal to the excess of (A)
the present value of the additional benefit Executive would have
accrued if he had been credited for all purposes with the three
additional years of age and service under the Qualified Plan as
of his date of termination with the Company over (B) the amount
by which the SERP Lump Sum Payment would, under the terms of the
Ultramar SERP or DS SERP (as the case may be), have been reduced
had the aforementioned involuntary termination instead occurred
contemporaneous with the occurrence of the event entitling
Executive to the SERP Lump Sum Payment, will be paid in a lump
sum in cash within five business days after any revocation period
in the release described in Section 5.5(iii) has expired, with
(i) in the event that Executive's aforementioned involuntary
termination occurs on or after a "Change in Control" of the
Company, as defined in Section 6.2 (or prior to, but in
anticipation of, such a "Change in Control"), such present value
being determined, in each such case, using the interest rate and
mortality table set forth in Section 4.1(m)(i) and 4.1(n)(i),
respectively, of the Ultramar SERP and (ii) in the event that
Executive's aforementioned involuntary termination occurs prior
to such a "Change in Control" of the Company (other than such a
termination in anticipation of such a "Change in Control"), such
present value being determined, in each such case, using the
interest rate and mortality table set forth in Section 4.1(m)(ii)
and 4.1(n)(ii), respectively, of the Ultramar SERP, and further,
provided, in crediting the three additional years of age and
service for purposes of calculating current and unused vacation
such additional years shall be applied in determining the amount
of annual vacation to which Executive is entitled, but shall not
be deemed to cause Executive to have earned three additional
years worth of unused vacation,
(4) within five business days after any revocation period in
the release described in Section 5.5(iii) has expired, a lump sum
cash payment equal to three times the maximum amount the Company
could have contributed on behalf of Executive to all of the
Company-sponsored qualified and nonqualified defined contribution
retirement plans in which Executive participated for any of the
three years ending on the date of the Executive's termination of
employment, assuming that the Executive made the maximum
voluntary contributions thereto,
(5) for a period of three years after the date of
Executive's termination of employment, the continuation of the
employee welfare benefits set forth in Section 4.2 (other than
short-term or long-term disability benefits), except as offset by
benefits paid by other sources as set forth in Section 8.2, or as
provided in Section 5.5(ii) (provided, however, that in the event
that any such continued coverage is not permitted under the terms
of any applicable welfare plan or policy, the Company shall
provide Executive with the after-tax economic equivalent of any
coverage foregone, such economic equivalent to be deemed to be no
less than the total cost to Executive of obtaining such coverage
on an individual basis and to be paid quarterly in advance
without discount);
IV.
Section 5.5(i)(c) of the Agreement shall be revised to read as follows:
(c) shall provide Executive with outplacement services for a
period of one year commencing on the date his employment is
terminated in accordance with the Company's executive
outplacement policy in effect at the time his employment is
terminated or immediately prior to a Change in Control (if prior
to his termination of employment), whichever is more generous.
V.
Section 5.5(ii) of the Agreement shall be amended by striking the reference to
"Section 5.5(i)(a)(4)" and inserting "Section 5.5(i)(a)(5)" in lieu thereof and
adding a new sentence to the end thereof, which shall read as follows:
Notwithstanding the above, if Executive's continued
participation in any of the benefits referenced in Section
5.5(i)(a)(5) would violate any applicable law or cause any
benefits plan, policy, or arrangement of the Company to fail to
qualify for tax-favored status, the Company shall not be required
to provide such benefits to Executive through the Company's
plans, policies, or arrangements, but instead shall either (A)
arrange to make a substantially similar benefit available to
Executive at not cost to the Executive or (B) pay Executive a
sufficient amount of cash to allow Executive to purchase, on an
after-tax basis, a substantially similar benefit on the open
market at no incremental cost to Executive.
VI.
Section 5.5 of the Agreement shall be amended by adding a new subsection (iv) to
the end thereof which shall read as follows:
(iv) Other Severance Benefits. Notwithstanding any provision
of this Agreement to the contrary, Executive shall be entitled to
receive the greater of (a) the termination payments and benefits
provided under Section 5.5 of this Agreement, or (b) the
termination payments and benefits provided by any other
Company-sponsored plan, program or policy which has as its
primary purpose the provision of severance benefits, but in no
event shall Executive be eligible to receive termination payments
and benefits provided under both this Agreement and any such
plan, program or policy.
VII.
Section 6.1 of the Agreement shall be amended to add a new subsection (c), which
shall read as follows:
(c) Upon 30 days prior notice to the Company, for any
reason, or without reason, at any time during the period
commencing on the date of the Change in Control and ending on the
second anniversary of such Change in Control.
VIII.
Section 8 of the Agreement shall be revised to read as follows:
8. Mitigation and Offset.
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8.1 Executive's right to receive when due the payments and other
benefits provided for under and in accordance with the terms of this
Agreement is absolute, unconditional and subject to no set-off,
counterclaim or legal equitable defense. Any claim which the Company
may have against Executive, whether for breach of this Agreement or
otherwise, shall be brought in a separate action or proceeding and not
part of any action or proceeding brought by Executive to enforce the
rights against the Company under this Agreement.
8.2 Executive shall not have any duty to mitigate the amounts
payable by the Company under this Agreement upon any termination of
employment by seeking new employment following termination. All
amounts payable pursuant to this Agreement shall be paid without
reduction regardless of any amount of salary, compensation or other
amounts which may be paid or payable to Executive as the result of
Executive's employment by another employer; provided, however, that
Executive's coverage under the Company's welfare benefit plans will be
reduced to the extent that Executive becomes covered under any
comparable employee benefit plan made available by another employer
and covering the same type of benefits. Executive shall report to the
Company any such benefits actually received by him.
IX.
Section 12.5(i) of the Agreement shall be amended to read as follows:
(i) To The Company. If to the Company, addressed to the attention of
the General Counsel at ▇.▇. ▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇-▇▇▇▇.
X.
Section 12 of the Agreement shall be amended to add a new Subsection 12.12 which
shall read as follows:
12.12 Dialogue. Unless Executive otherwise consents by the execution
of an instrument in writing that specifically refers to Section 12.12 of
this Agreement, no claim or dispute arising out of or related to this
Agreement or any other agreement, policy, plan, program or arrangement,
including without limitation, any qualified or nonqualified retirement
plan, stock option plan or agreement, or any other equity incentive plan in
which Executive participated prior to his termination, shall be subject to
the Company's Dialogue Dispute Resolution Program.
XI.
The model release attached to this First Amendment as "Exhibit A" shall be
substituted for the exhibit referred to in Section 5.5(iii) of the Agreement.
XII.
Except as otherwise provided herein, the Agreement shall remain in full force
and effect.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the first day
of May, 2000.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇▇
ULTRAMAR DIAMOND SHAMROCK CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Title: Executive Vice President
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