FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from to
Commission File Number 1-3939
KERR-McGEE CORPORATION
(Exact Name of Registrant as Specified in its Charter)
73-0311467 A Delaware Corporation
(I.R.S. Employer (State or Other Jurisdiction of
Identification No.) Incorporation or Organization)
Kerr-McGee Center, Oklahoma City, Oklahoma 73125
(Address of Principal Executive Offices and Zip Code)
(405) 270-1313
Registrant's telephone number, including area code
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes X No
Number of shares of common stock, $1.00 par value, outstanding as
of April 30, 1994: 51,658,219
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
<TABLE>
KERR-McGEE CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
<CAPTION>
Three Months Ended
March 31,
(Millions of dollars, except per-share amounts) 1994 1993
<S> <C> <C>
Sales $ 800.9 $ 783.5
Costs and Expenses
Costs and operating expenses 600.3 599.7
Selling, general, and administrative expenses 37.2 35.0
Depreciation and depletion 79.1 72.7
Exploration, including dry holes and
amortization of undeveloped leases 23.1 13.9
Taxes, other than income taxes 21.2 20.6
Interest and debt expense 12.9 12.4
Total Costs and Expenses 773.8 754.3
27.1 29.2
Other Income 5.3 6.8
Income before Income Taxes 32.4 36.0
Provision for Income Taxes 10.8 11.6
Net Income $ 21.6 $ 24.4
Net Income per Common Share $ .42 $ .50
Cash Dividends Declared per Common Share $ .38 $ .38
Average Number of Shares Outstanding (thousands) 51,656 48,294
The accompanying notes are an integral part of this statement.
</TABLE>
<PAGE>
<TABLE>
KERR-McGEE CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
<CAPTION>
March 31, December 31,
(Millions of dollars) 1994 1993
<S> <C> <C>
ASSETS
Current Assets
Cash $ 100.4 $ 94.4
Notes and accounts receivable 367.0 373.2
Inventories 392.9 348.9
Deposits and prepaid expenses 45.7 49.3
Total Current Assets 906.0 865.8
Property, Plant, and Equipment 5,936.9 5,852.3
Less reserves for depreciation,
depletion, and amortization 3,391.6 3,338.9
2,545.3 2,513.4
Investments and Other Assets 232.7 168.2
$ 3,684.0 $ 3,547.4
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Short-term borrowings and accounts payable $ 639.5 $ 593.8
Other current liabilities 158.7 193.7
Total Current Liabilities 798.2 787.5
Long-Term Debt 686.8 589.9
Deferred Credits and Other Liabilities 666.7 657.8
Stockholders' Equity
Common stock, par value $1 - 150,000,000
shares authorized, 53,268,181 shares issued
at 3-31-94 and at 12-31-93 53.3 53.3
Capital in excess of par value 308.1 308.0
Preferred stock purchase rights .5 .5
Retained earnings 1,310.7 1,308.8
Unrealized gain on securities available-for-sale 14.7 -
Common shares in treasury, at cost - 1,611,688
shares at 3-31-94 and 1,612,688 at 12-31-93 (62.7) (62.7)
Deferred compensation (92.3) (95.7)
Total Stockholders' Equity 1,532.3 1,512.2
$ 3,684.0 $ 3,547.4
The "successful efforts" method of accounting for oil and gas exploration and production activities has been followed in preparing
this balance sheet.
The accompanying notes are an integral part of this statement.
</TABLE>
<PAGE>
<TABLE>
KERR-McGEE CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Three Months Ended
March 31,
(Millions of dollars) 1994 1993
<S> <C> <C>
Operating Activities
Net income $ 21.6 $ 24.4
Adjustments to reconcile to net cash
provided by operating activities -
Depreciation, depletion, and amortization 83.2 77.2
Deferred income taxes (5.8) 1.4
Noncash items affecting net income 17.9 6.6
Other net cash provided (used) in operating activities (50.6) 52.6
Net Cash Provided by Operating Activities 66.3 162.2
Investing Activities
Capital expenditures (129.4) (151.9)
Purchase of long-term investments (35.2) (15.7)
Other investing activities 11.1 9.3
Net Cash Used in Investing Activities (153.5) (158.3)
Financing Activities
Increase in short-term borrowings 148.9 54.6
Repayment of debt (36.1) (.9)
Dividends paid (19.6) (18.3)
Other financing activities - .5
Net Cash Provided by Financing Activities 93.2 35.9
Net Increase in Cash and Cash Equivalents 6.0 39.8
Cash and Cash Equivalents at Beginning of Period 94.4 57.3
Cash and Cash Equivalents at End of Period $ 100.4 $ 97.1
The accompanying notes are an integral part of this statement.
</TABLE>
<PAGE>
KERR-McGEE CORPORATION AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1994
A. The condensed financial statements included herein
have been prepared by the company, without audit,
pursuant to the rules and regulations of the
Securities and Exchange Commission and, in the
opinion of management, include all adjustments,
consisting only of normal recurring accruals,
necessary to present fairly the resulting operations
for the indicated periods. Certain information and
footnote disclosures normally included in financial
statements prepared in accordance with generally
accepted accounting principles have been
condensed or omitted pursuant to such rules and
regulations, although the company believes that the
disclosures are adequate to make the information
presented not misleading. It is suggested that these
condensed financial statements be read in
conjunction with the financial statements and the
notes thereto included in the company's latest
annual report on Form 10-K.
B. After adding the dilutive effect of the conversion of
options to the weighted average number of shares
outstanding, the shares used to compute net income
per common share were 51,731,887 and 48,386,565
for the three months ended March 31, 1994 and
1993, respectively.
C. The company's crude oil and refined petroleum
products inventories are priced at cost under the
LIFO method. Since the carrying values of
inventories under the LIFO method are based on an
annual determination of quantities and costs as of
the last day of the fiscal year, the carrying values of
inventories at March 31, 1994, were based on
certain estimates relating to quantities and costs
expected to exist at December 31, 1994.
D. Net cash provided by operating activities reflects
cash payments for income taxes and interest as
follows:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
(Millions of dollars) 1994 1993
<S> <C> <C>
Income taxes $ 20.7 $ 11.2
Interest 19.5 13.2
</TABLE>
E. The Kerr-McGee Corporation Employee Stock
Ownership Plan (ESOP) was established in 1989.
A leveraged employee stock ownership plan, the
ESOP invests only in the common stock of the
company. Most of the company's employees are
eligible to participate in both the ESOP and the
Kerr-McGee Savings Investment Plan (SIP).
Participants' contributions to the SIP are matched by
company contributions to the ESOP. Although the
SIP and the ESOP are separate plans, matching
contributions to the ESOP are contingent upon
participants' contributions to the SIP.
In 1989, the ESOP purchased 2.7 million shares of
the company's common stock at market value. To
finance the purchase, the ESOP incurred
indebtedness to a group of institutional investors in
the aggregate principal amount of $125 million. The
borrowings are guaranteed by the company.
Company stock acquired with the proceeds of the
loan is held by the ESOP trust in a suspense
account. The company's matching contributions and
dividends paid on the common stock held in the loan
suspense account are used to repay the loan.
Stock is released from the loan suspense account
as the principal and interest are paid. The stock is
then allocated to participants' accounts at market
value as the participants' contributions are made to
the SIP.
Dividends paid on the common stock held in
participants' accounts are also used to repay the
loan. Stock with a market value equal to the
amount of the dividend is allocated to the
participants' accounts.
At March 31, 1994, the ESOP held 918,877 shares
of company stock allocated to participants' accounts
and 1,755,844 shares in the loan suspense account.
An additional 8,704 shares had been released from
the loan suspense account but not yet allocated to
participants' accounts.
All ESOP shares are considered outstanding for
earnings per share calculations. Dividends on
ESOP shares are charged to retained earnings.
Compensation expense, recognized by the cash
method, is reduced for dividends paid on the ESOP
shares. Total expenses recognized in connection
with the ESOP (which includes interest expense
incurred on the ESOP debt guaranteed by the
company) are set forth below:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
(Millions of dollars) 1994 1993
<S> <C> <C>
Total expenses recognized $ 4.0 $ 4.1
Interest expense (included in above total) 2.2 2.3
</TABLE>
The company's total cash contribution to the ESOP
for the first quarter of 1994 was $6.2 million, net of
$2 million for dividends paid on the company's stock
held by the ESOP. For the 1993 first quarter, the
company's cash contribution was $5.6 million, net of
$2 million for dividends.
F. The company adopted Statement of Financial
Accounting Standards 115, "Accounting for
Investments in Certain Debt and Equity Securities,"
in the first quarter of 1994. Net income was not
affected by this change in accounting principle. At
March 31, 1994, the company held equity securities
considered to be available-for-sale. These
securities are carried as Investments and Other
Assets in the Consolidated Balance Sheet at fair
value of $35.8 million (cost of $12 million). Gross
unrealized holding gains of $23.8 million are
classified as a separate component of Stockholder's
Equity, net of income taxes of $9.1 million.
G. Since August 1979, when the company filed a plan
with the Nuclear Regulatory Commission to
decommission a former operation in West Chicago,
Illinois, a number of judicial and administrative
proceedings have been filed. The operation, which
was closed in 1973, processed thorium ores, leaving
ore residues, process buildings, and equipment with
some low-level radioactivity on site. While a number
of these proceedings have been settled or resolved,
several proceedings remain pending, and a license
to decommission has not been received. Currently,
the State of Illinois has jurisdiction of this site and
continues to require offsite disposal of the material.
In March 1992, the company entered into an
agreement with a third party to provide for the
disposal of such waste material at a permanent
disposal facility in Utah, and the third party received
a disposal license from the Nuclear Regulatory
Commission in 1993. The agreement covers an
estimated 13.5 million cubic feet of thorium mill
tailings and other related materials. Removal of the
waste material is subject to additional regulatory
approvals being obtained.
In September 1992, the Governor of Illinois signed
the Uranium and Thorium Mill Tailings Control Act,
which imposes on the company, beginning January
1, 1994, an annual fee of $2.00 per cubic foot of
byproduct material stored at the former West
Chicago mill site. The act also provides that the
assessed fee may be used as reimbursement for
removal expenses. In February 1993, the company
filed suit in the Northern District of Illinois
challenging this act on federal constitutional grounds
and seeking to enjoin state officials from assessing
such a fee. This suit is still pending. In early 1994,
the company paid an assessed fee of $33 million
under protest and filed suit in the Cook County
Circuit Court protesting the amount of the fee.
In May 1994, the company, the City of West
Chicago (the City), and the State of Illinois (the
State) finalized an agreement regarding the
decommissioning of the closed West Chicago facility
subject to formal approval and execution by all
parties. The company plans to initiate construction
as soon as licenses and permits are issued and is
scheduled to commence shipments of material from
the site by October 1, 1994. Subject to the
company moving certain amounts of material by
specified dates, the State has agreed that the fee
applies only to byproduct material onsite and has
further agreed to a cap on the storage fee of $26
million per annum which results in a refund of $7
million of the 1994 payment. The agreement also
assures storage fee amounts paid will be promptly
reimbursed to the company for removing the
material. Subject to the City and State performing
its obligations under the contract, the company has
agreed to pay $2.8 million to the City for public
works projects and will pay $800,000 to the State for
response costs. Upon all the parties completing
their obligations under the agreement, the company
has agreed to stay the pending litigation described
in the preceding paragraph and ultimately dismiss
such litigation.
The aggregate decommissioning and relocation
costs to the company are difficult to estimate
because of the many contingencies. These
contingencies include the absence of regulatory
approval of a relocation plan. It is presently
estimated, however, that the total remaining
decommissioning costs, including the relocation
costs that may be expended pursuant to the
agreement referred to above, will approximate $150
million, payable over the time necessary to relocate
the materials, presently estimated at between four
and seven years. The company has established
reserves for offsite disposal of the material. The
costs to the company for removal will be reduced by
any amounts recovered pursuant to the Energy
Policy Act of 1992 (which could be up to $40
million). As discussed in the preceding two
paragraphs, all the amounts paid to the State of
Illinois pursuant to the Uranium and Thorium Mill
Tailings Control Act will be reimbursed to the
company as relocation expenditures are incurred.
Almost all of the company's plants and facilities are
subject to various environmental laws and
regulations. In addition to the West Chicago site
discussed above, the company has been notified
that it may be responsible in varying degrees for a
portion of the costs to clean up certain waste
disposal sites and former plant sites. It was
reported in the most recent Form 10-K that the total
aggregate estimated cost to investigate and/or
remediate all presently identified sites of former or
current operations was $443 million of which $165
million was spent through December 31, 1993, and
that reserves for future expenditures totaled $278
million at December 31, 1993. No material changes
in the expenditures or reserves was incurred during
the first quarter of 1994.
The company is also a party to a number of other
legal proceedings pending in various courts or
agencies in which it or a subsidiary appears as
plaintiff or defendant.
Because of continually changing environmental laws
and regulations, the nature of the company's
businesses, the large number of other potentially
responsible parties, and pending legal proceedings,
it is not possible to reliably estimate the amount or
timing of all future expenditures relating to these
contingencies. The company provides for costs
related to contingencies when a loss is probable,
and the amount is reasonably estimable. Although
management believes, after consultation with
general counsel, that adequate reserves have been
provided for all known contingencies, it is possible,
due to the above-noted uncertainties, additional
reserves could be required in the future that could
have a material effect on results of operations in a
particular quarter or annual period. However, the
ultimate resolution of these commitments and
contingencies, to the extent not previously provided
for, should not have a material adverse effect on the
company's financial position.
<PAGE>
Item 2. Management's Discussion and Analysis of Results
of Operations and Financial Condition.
Comparison of 1994 Results with 1993 Results
CONSOLIDATED OPERATIONS
First-quarter 1994 net income totaled $21.6 million, compared with
$24.4 million for the same 1993 period. The lower net income was
due principally to higher net nonoperating expenses.
Operating profit of $54.8 million was approximately the same as in the
1993 first quarter, despite a 25% decline in oil prices. Refining and
marketing had operating profit of $22.6 million, compared with a loss
of $9.2 million in the first quarter of 1993. The improvement was due
primarily to higher margins resulting from lower refined-product costs,
partially offset by lower sales prices. Chemicals operating profit
totaled $16.9 million, up from $14.8 million for first quarter 1993, due
primarily to higher pigment sales volumes and higher forest product
sales prices and volumes. Coal operating profit totaled $12.6 million
for the first 1994 quarter, down from $20.7 million last year as lower
sales prices more than offset lower per-unit production cost and
higher sales volumes. Exploration and production operating profit was
$4.9 million, significantly lower than last year's operating profit of
$29.7 million. Lower crude oil sales prices, lower natural gas sales
volumes, and increased exploration expense more than offset a 35%
increase in crude oil sales volumes and a 17% increase in natural gas
sales prices.
Net nonoperating expenses totaled $22.4 million, up from $19 million
last year. Adversely affecting the 1994 quarter were lower gains on
sales of assets.
SEGMENT OPERATIONS
Following is a summary of sales and operating profit and a discussion
of major factors influencing the results of each of the company's
business segments for the first quarter of 1994, compared with the
same period last year.
<TABLE>
<CAPTION>
Three Months Ended
March 31,
(Millions of dollars) 1994 1993
<S> <C> <C> <C>
Sales
Exploration and production(1) $ 110.0 $ 88.3
Refining and marketing 461.6 486.0
Chemicals 145.3 121.1
Coal 74.0 78.9
Other 10.0 9.2
Total Sales $ 800.9 $ 783.5
Operating Profit (Loss)
Exploration and production $ 4.9 $ 29.7
Refining and marketing 22.6 (9.2)
Chemicals 16.9 14.8
Coal 12.6 20.7
Other (2.2) (1.0)
Total Operating Profit 54.8 55.0
Net Nonoperating Expense (22.4) (19.0)
Income before Income Taxes 32.4 36.0
Provision for Income Taxes 10.8 11.6
Net Income $ 21.6 $ 24.4
(1)Excludes intersegment sales, primarily crude oil sales, of $34 million and $46.2 million for the three months ended
March 31, 1994 and 1993, respectively.
</TABLE>
Exploration and Production -
Exploration and production operating profit for the first quarter of 1994
was $4.9 million, down from $29.7 million last year. Compared with
the first quarter of 1993, the company's average crude oil price
declined $4.25 per barrel, or 25%, and natural gas sales volumes
declined 29 MMCF per day, or 10%. Also adversely affecting the
1994 first quarter were higher operating expenses due primarily to
production from the Gryphon, Scott, and East Brae fields in the North
Sea; and higher exploration expense due primarily to dry hole costs
in the Gulf of Mexico, the North Sea, and other international areas.
Partially offsetting were higher crude oil sales volumes and higher
natural gas sales prices.
Revenues, including intersegment sales, were $144 million and $134.5
million for the first quarter of 1994 and 1993, respectively. The
following table shows the company's average crude oil and natural
gas sales prices and volumes by geographic area for the first quarters
of 1994 and 1993.
<TABLE>
<CAPTION>
Three Months Ended Percent
March 31, Increase
1994 1993 (Decrease)
<S> <C> <C> <C>
Crude oil sales (thousands of bbls/day)
United States 25.5 27.5 (7)
Canada 4.9 4.9 -
North Sea 31.0 11.8 163
Other international 4.0 4.3 (7)
Total 65.4 48.5 35
Average crude oil sales price (per barrel)
United States $ 12.19 $ 17.30 (30)
Canada 11.47 15.59 (26)
North Sea 13.18 17.17 (23)
Other international 13.71 15.72 (13)
Average $ 12.70 $ 16.95 (25)
Natural gas sales (MMCF per day) 264 293 (10)
Average natural gas sales price (per MCF) $ 2.04 $ 1.74 17
</TABLE>
Refining and Marketing -
Lower refined-product cost, partially offset by lower sales prices,
resulted in refining and marketing operating profit of $22.6 million for
the first quarter of 1994, compared with the $9.2 million operating loss
for the same 1993 quarter. Lower sales prices also adversely affected
first-quarter 1994 revenues of $461.6 million, compared with $486
million for the same period last year. For the first three months of
1994 and 1993, refinery runs averaged 147,100 and 129,000 barrels
per day, respectively.
Chemicals -
Chemicals' first-quarter 1994 operating profit of $16.9 million on
revenues of $145.3 million, compared with operating profit of $14.8
million on revenues of $121.1 million for the 1993 first quarter.
Revenues improved due primarily to higher pigment sales volumes
and higher forest product sales prices and volumes. Operating profit
improved primarily due to the higher revenues.
Coal -
First-quarter 1994 operating profit and revenues were $12.6 million
and $74 million, respectively, down from $20.7 million and $78.9
million, respectively, for the same 1993 quarter. Revenues declined
due to lower average sales prices resulting primarily from a late-1993
contract renegotiation, partially offset by higher sales volumes. The
operating profit decline resulted principally from the lower revenues,
partially offset by lower per-unit production costs.
Net Nonoperating Expense -
Net nonoperating expense was $22.4 million for the first three months
of 1994, compared with $19 million for the same 1993 period. The
increase was principally due to lower gains on sales of assets.
Provision for Income Taxes -
The provision for income taxes was $10.8 for the first three months of
1994, approximately the same as for the 1993 period.
FINANCIAL CONDITION
At March 31, 1994, the company's net working capital position was
$107.8 million, compared with $78.3 million at December 31, 1993.
Working capital increased due principally to additional commercial
paper borrowings classified as long-term debt, partially offset by net
property, plant and equipment additions.
The company had unused lines of credit and revolving credit facilities
of $331 million at March 31, 1994. Of this amount, $250 million and
$50 million can be used to support the commercial paper borrowings
of Kerr-McGee Credit Corporation and Kerr-McGee Oil (U.K.) PLC,
respectively.
For the first three months of 1994, net cash provided by operating
activities of $66.3 million was comprised principally of net income of
$21.6 million and depreciation, depletion, and amortization of $83.2
million. Partially offsetting was a net increase in current assets,
excluding cash and marketable securities, of $39.2 million. Net cash
provided by operating activities for the same 1993 period was $162.2
million.
First-quarter 1994 capital expenditures totaled $119.4 million,
approximately the same as for the 1993 first quarter. Petroleum-
related expenditures, principally in the Gulf of Mexico, North Sea, and
offshore China, were 86% of the 1994 amount. Chemicals
expenditures were 10% of the total. Management anticipates that the
cash requirements for the next several years can be provided through
internally generated funds and selective long- and/or short-term
borrowings.
The company continues to evaluate strategic alternatives for the
refining and marketing operations, as announced in June 1992.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
Reference is made to the West Chicago matter on
page 23 of the company's Form 10-K for the year
ended December 31, 1993. For the report on the
current status of this matter, reference is made to
Note G to the Consolidated Financial Statements
beginning on page 6 of this Form 10-Q.
Item 4. Submission of Matters to a Vote of Security Holders.
(a) The 1994 annual meeting of stockholders was
held on May 3, 1994.
(b) The following matters were voted upon at the
annual meeting:
(1) Following are the directors elected at the
1994 annual meeting and the tabulation
of votes related to each nominee.
<TABLE>
<CAPTION>
Votes
Nominee Affirmative Withheld
<S> <C> <C>
Bennett E. Bidwell 45,119,968 347,351
Earnest H. Clark, Jr. 45,101,302 366,017
Martin C. Jischke 45,117,698 349,621
Robert S. Kerr, Jr. 45,130,733 336,586
Frank A. McPherson 45,126,634 340,685
William C. Morris 45,149,348 317,971
John J. Murphy 45,132,917 334,402
John J. Nevin 45,128,332 338,987
Farah M. Walters 45,106,501 360,818
</TABLE>
(2) The stockholders ratified the
appointment of Arthur Andersen & Co.
as independent public accountants for
1994. Affirmative votes were
45,185,836; negative votes were
212,925; and abstentions were 68,558.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibit
10.7 Kerr-McGee Corporation Executive Deferred
Compensation Plan as amended and
restated effective January 1, 1994.
(b) Reports on Form 8-K
None
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
KERR-McGEE CORPORATION
Date: May 13, 1994 By (JOHN M. RAUH)
J. Michael Rauh
Vice President and Controller
and Chief Accounting Officer
KERR-McGEE CORPORATION
EXECUTIVE DEFERRED COMPENSATION PLAN
(Amended and Restated effective February 1, 1994)
KERR-McGEE CORPORATION
EXECUTIVE DEFERRED COMPENSATION PLAN
(Amended and Restated effective February 1, 1994)
TABLE OF CONTENTS
I. Establishment and Purpose
1.1 Establishment. . . . . . . . . . . . . . . . 1
1.2 Purpose. . . . . . . . . . . . . . . . . . . 1
1.3 Effective Date of Plan . . . . . . . . . . . 1
II. Definitions
2.1 Account. . . . . . . . . . . . . . . . . . . 1
2.2 Affiliate. . . . . . . . . . . . . . . . . . 1
2.3 Base Salary. . . . . . . . . . . . . . . . . 2
2.4 Beneficiary. . . . . . . . . . . . . . . . . 2
2.5 Committee. . . . . . . . . . . . . . . . . . 2
2.6 Company. . . . . . . . . . . . . . . . . . . 2
2.7 Credited Interest. . . . . . . . . . . . . . 2
2.8 Deferral Amount. . . . . . . . . . . . . . . 2
2.9 Deferral Payment Date. . . . . . . . . . . . 2
2.10 Deferral Year. . . . . . . . . . . . . . . . 2
2.11 Disability or Disabled . . . . . . . . . . . 2
2.12 Eligible Employee. . . . . . . . . . . . . . 3
2.13 Employee . . . . . . . . . . . . . . . . . . 3
2.14 ERISA. . . . . . . . . . . . . . . . . . . . 3
2.15 Incentive Award. . . . . . . . . . . . . . . 3
2.16 Participant. . . . . . . . . . . . . . . . . 3
2.17 Plan . . . . . . . . . . . . . . . . . . . . 3
2.18 Plan Year. . . . . . . . . . . . . . . . . . 3
III. Eligibility and Participation
3.1 Eligibility. . . . . . . . . . . . . . . . . 3
3.2 Participation and Classification
of Participants . . . . . . . . . . . . . . 3
IV. Deferral Amount Elections
4.1 Deferral Amount. . . . . . . . . . . . . . . 3
4.2 Election of Deferral Amount. . . . . . . . . 4
4.3 Deferral Amount Election Forms . . . . . . . 4
V. Payment of Benefits
5.1 Time of Payment. . . . . . . . . . . . . . . 4
5.2 Method of Payment. . . . . . . . . . . . . . 5
5.3 Death Benefit. . . . . . . . . . . . . . . . 5
5.4 Consolidation of Payments. . . . . . . . . . 5
5.5 Beneficiary Designations . . . . . . . . . . 6
VI. Accounts and Credited Interest
6.1 Participant Accounts . . . . . . . . . . . . 6
6.2 Adjustment of Accounts . . . . . . . . . . . 6
6.3 Credited Interest. . . . . . . . . . . . . . 7
6.4 Vesting. . . . . . . . . . . . . . . . . . . 7
6.5 Account Statements . . . . . . . . . . . . . 7
VII. Administration of the Plan
7.1 Administration . . . . . . . . . . . . . . . 8
7.2 Compensation and Expenses. . . . . . . . . . 8
7.3 Claims Review Procedures . . . . . . . . . . 8
7.4 Finality of Determinations . . . . . . . . . 9
7.5 Indemnification. . . . . . . . . . . . . . . 9
VIII. Provision For Benefits
8.1 Provision For Benefits . . . . . . . . . . . 9
IX. Amendment, Termination, or Merger
9.1 Amendment and Termination. . . . . . . . . . 10
9.2 Merger, Consolidation or Acquisition . . . . 10
X. General Provisions
10.1 Effect on Other Plans. . . . . . . . . . . . 10
10.2 Nonalienation. . . . . . . . . . . . . . . . 10
10.3 Incompetency . . . . . . . . . . . . . . . . 11
10.4 Effect of Mistake. . . . . . . . . . . . . . 11
10.5 Plan Not an Employment Contract. . . . . . . 11
10.6 Tax Withholding. . . . . . . . . . . . . . . 11
10.7 Severability . . . . . . . . . . . . . . . . 11
10.8 Applicable Law . . . . . . . . . . . . . . . 11
KERR-McGEE CORPORATION
EXECUTIVE DEFERRED COMPENSATION PLAN
(Amended and Restated effective February 1, 1994)
Article I
Establishment and Purpose
1.1 Establishment. Kerr-McGee Corporation, a
corporation organized under the laws of the state of Delaware
("Company"), hereby establishes a deferred compensation plan for
Eligible Employees to be known as the Kerr-McGee Corporation
Executive Deferred Compensation Plan ("Plan").
1.2 Purpose. The Plan shall provide Eligible Employees
the ability to defer payment of Base Salary and Incentive Awards
granted by the Company. The Plan is intended to provide such
Eligible Employees with a degree of flexibility in their financial
planning.
1.3 Effective Date of Plan. The Plan is effective as of
January 1, 1991, and is applicable only to the Eligible Employees
who are actively employed by the Company on or after December 31,
1990.
Article II
Definitions
Pronouns and other similar words used herein in the
masculine or neuter gender shall be read in the appropriate gender.
The singular form of words shall be read as plural where
appropriate. Where capitalized words or phrases appear in the
Plan, they shall have the meaning set forth below.
2.1 "Account" means the recordkeeping account maintained
in the name of a Participant to which Deferral Amounts and Credited
Interest are recorded pursuant to the provisions of Article VI.
2.2 "Affiliate" means:
(a) any corporation other than the Company (i.e., either
a subsidiary corporation or an affiliated or associated
corporation of the Company), which together with the Company
is a member of a "controlled group of corporations" within the
meaning of Section 414(b) of the Internal Revenue Code;
(b) any organization that is under "common control" with
the Company as determined under Section 414(c) of the Internal
Revenue Code; or
(c) any organization which together with the Company is
a member of an "affiliated service group" within the meaning
of Section 414(m) of the Internal Revenue Code.
2.3 "Base Salary" means the salary, excluding any
extraordinary compensation, an Eligible Employee is paid from the
Company beginning on and after March 27, 1994.
2.4 "Beneficiary" means the person, persons, trust, or
other entity designated by a Participant to receive benefits, if
any, under this Plan at such Participant's death pursuant to
Section 5.5.
2.5 "Committee" means the Executive Compensation
Committee or such other Committee as may be appointed by the Board
of Directors of Kerr-McGee Corporation from time to time.
2.6 "Company" means Kerr-McGee Corporation and its
Affiliates.
2.7 "Credited Interest" means the amounts credited to a
Participant's Account pursuant to Section 6.3.
2.8 "Deferral Amount" means the portion of an Eligible
Employee's Incentive Award and Base Salary which he elects to defer
pursuant to Ar4icle VI. Deferral Amounts shall be referred to by
reference to the Plan Year in which the Incentive Award and Base
Salary deferred under this Plan would otherwise have been paid.
2.9 "Deferral Payment Date" means the date, specified by
an Eligible Employee on his Deferral Amount election form, on which
a Deferral Amount shall be paid or commence being paid. An
Eligible Employee shall designate from the following Deferral
Payment Dates on his Deferral Amount election form with respect to
each Deferral Year:
(a) "Early Distribution Date" means the first business
day of February of the fifth Plan Year following the
applicable Deferral Year; and
(b) "Normal Distribution Commencement Date" means as
soon as administratively feasible following the earlier of the
date on which the Participant terminates employment as an
Employee for any reason or the date the Participant is
determined by the Committee to be Disabled.
2.10 "Deferral Year" means the Plan Year in which an
Incentive Award or Base Salary for which an Eligible Employee makes
a Deferral Amount election which would have been paid absent such
election.
2.11 "Disability or Disabled" means a mental or physical
condition which qualifies the Participant as being disabled for
purposes of any of the plans or programs of the employer that
employs the Participant under which benefits, compensation, or
awards are contingent upon a finding of disability or, in the
opinion of the Committee, causes the Participant to be unable to
perform his usual duties for the employer.
2.12 "Eligible Employee" means an Employee who is
designated by the Committee as belonging to a "select group of
management or highly compensated employees", as such phrase is
defined under ERISA; is an executive of the Company employed in
salary grade 28 or above; is a resident of the United States; is
paid on the Company's United States payroll; and is employed by the
Company on December 31 preceding the applicable Deferral Year.
2.13 "Employee" means an individual who is an employee of
the Company or an Affiliate.
2.14 "ERISA" means the Employee Retirement Income
Security Act of 1974, as amended.
2.15 "Incentive Award" means any award to an Eligible
Employee under the Company's Annual Incentive Compensation Plan as
it may be amended or modified from time to time or any successor
plan ("AICP").
2.16 "Participant" means an Eligible Employee who has
become a Participant under the Plan pursuant to Section 3.2.
2.17 "Plan" means this Kerr-McGee Corporation Executive
Deferred Compensation Plan, as amended from time to time.
2.18 "Plan Year" means the 12-month period beginning each
January 1 and ending on the succeeding December.
Eligibility and Participation
3.1 Eligibility. All Eligible Employees shall be
eligible to participate in the Plan. All determinations as to an
Employee's status as an Eligible Employee shall be made by the
Committee. The determinations of the Committee shall be final and
binding on all Employees. The Committee shall provide each
Eligible Employee with notice of his status as an Eligible Employee
under this Plan and permit such Eligible Employee the opportunity
to make the Deferral Amount election pursuant to Article IV. Such
notice may be given at such time and in such manner as the
Committee may determine.
3.2 Participation and Classification of Participants.
Each Eligible Employee who has a Deferral Amount credited to his
Account under this Plan shall be a Participant. An Eligible
Employee shall continue as a Participant as long as there is a
balance credited to his Account.
Article IV
Deferral Amount Elections
4.1 Deferral Amount. An Eligible Employee shall elect
to defer none, all, or any portion of any Incentive Award that may
be awarded by the Company. The amount deferred shall be specified
as a percentage of any Incentive Award granted to an Eligible
Employee in a Deferral Year; provided, no Deferral Amount shall be
less than $5,000. Effective March 27, 1994, an Eligible Employee
may also elect to defer none or any portion of his biweekly Base
Salary up to 25% as long as such deferral is in 1% increments,
rounded to the nearest dollar, and provided further that the amount
of such deferral shall not reduce such Eligible Employee's Base
Salary to an amount less than the amount which is permitted under
Section 401(a)(17) of the Internal Revenue Code of 1986, as amended from
time to time.
4.2 Election of Deferral Amount. An Eligible Employee
must file a Deferral Amount election form each Plan Year. Except
as may be permitted by the Internal Revenue Code or the regulations
adopted thereunder, the election shall apply to the Deferral Year
which commences immediately following the Plan Year in which the
election is made and to the Base Salary and all Incentive Awards
granted to the Eligible Employee by the Company with respect to
such Deferral Year. Incentive Awards made with respect to a
Deferral Year must be awarded by the Company during such Deferral
Year and be designated by the Company having been made with respect
to such Deferral Year.
If an Eligible Employee does not file a Deferral Amount
election form during a Plan Year, such Eligible Employee will be
deemed to have elected not to defer receipt of any Incentive Awards
or Base Salary attributable to the Deferral Year immediately
following the Plan Year.
4.3 Deferral Amount Election Forms. All Deferral Amount
elections shall be made on the Deferral Amount election form. The
Deferral Amount election form shall specify the Deferral Amount,
Deferral Payment Date, the form of payment, if applicable, and the
Eligible Employee's designated Beneficiary to receive any death
benefit applicable to such Deferral Amounts. Other than the
designation of Beneficiary and the method of payment to
Beneficiaries, all Deferral Amount elections shall be irrevocable
once the Deferral Year has commenced.
Article V
Payment of Benefits
5.1 Time of Payment. Each Deferral Amount election form
filed by an Eligible Employee shall specify the Deferral Payment
Date on which benefit payments are to be made or commence with
respect to the Deferral Amount covered by such election. An
Eligible Employee shall have the option of designating an Early
Distribution Date that will apply if employment continues until the
Early Distribution Date. If an Eligible Employee fails to make an
effective Deferral Payment Date designation or terminates
employment, his Deferral Payment Date for the Deferral Amount
subject to the election shall be the Eligible Employee's Normal
Distribution Commencement Date. Except as provided in Section 5.3,
all benefit payments shall be made to the Participant on the
Deferral Payment Date specified in his applicable Deferral Amount
election form.
5.2 Method of Payment. If an Eligible Employee elects
an Early Distribution Date, the method of payment is in the form of
a lump sum. However, if an Eligible Employee elects Normal
Distribution Commencement Date on a Deferral Amount election form,
such Eligible Employee must specify on the Deferral Amount election
form the method of payment for the Deferral Amount covered by such
election. An Eligible Employee may designate payment in the form
of a single lump sum payment or in the form of annual installment
payments payable for 5, 10 or 15 years. Annual installment
payments shall be paid once a year, with the first annual
installment payment being paid on the Participant's Normal
Distribution Commencement Date and each subsequent annual
installment paid on the first business day of February of each
subsequent year until all installment payments have been paid.
Annual installment payment amounts shall be determined by reference
to the balance, as of the Participant's Normal Distribution
Commencement Date, in the subaccount of the Participant's Account
which represents the Deferral Amount to be paid in installments.
After commencement of installment payments, a Participant's Account
and subaccounts comprising such Account shall continue to be
adjusted in the same manner as set forth at Section 6.3.
If the Eligible Employee fails to make an effective
designation as to the method of payment, payment shall be made in
the form of a single lump sum payment on the Participant's Normal
Distribution Commencement Date.
The Committee, in its sole discretion, may elect to
accelerate any installment payment if a Participant's Normal
Distribution Commencement Date is determined with reference to the
date the Participant is deemed Disabled, or a Participant is deemed
Disabled but had previously elected an Early Distribution Date.
5.3 Death Benefit. If a Participant dies with a balance
credited to his Account, such balance shall be paid to his
Beneficiary designated on the applicable Deferral Amount election
form. The then current balance of each Account or subaccount
payable to a designated Beneficiary shall be paid under the method
of payment designated for the payment of such amount or under the
method of payment separately designated for payment of benefits to
such Beneficiary, as provided in Section 5.5. The Committee, in
its sole discretion, may elect to accelerate payment of any portion
of the unpaid balance of any Account. Each Beneficiary of a
deceased Participant who is eligible to receive death benefit
payments under this Section shall have the amounts to be paid to
such Beneficiary allocated to a subaccount in the name of the
Beneficiary under the deceased Participant's Account. Such
subaccount shall be adjusted from time to time as provided in
Article VI.
5.4 Consolidation of Payments. In any case where a
Participant or Beneficiary is receiving more than one benefit
payment during a Plan Year, the Committee may, in its sole
discretion, elect to consolidate such payments into a lesser number
of payments.
5.5 Beneficiary Designations. A Participant shall
designate a Beneficiary who, upon his death, shall receive payments
that otherwise would have been paid to him under the Plan. All
Beneficiary designations shall be in writing. Any such designation
shall be effective only if and when delivered to the Committee
during the lifetime of the Participant. The Participant may
specify on the Beneficiary designation form the method of payment
to the designated Beneficiary. The designated method of payment
must be a method permitted under Section 5.3. A Participant may
change a designated Beneficiary or Beneficiaries or change a
designated method of payment to a Beneficiary by filing a new
Beneficiary designation form.
If a designated Beneficiary of a Participant predeceases
the Participant, the designation of such Beneficiary shall be void.
If a designated Beneficiary to whom benefits under the Plan remain
unpaid dies after the Participant and the Participant failed to
specify a contingent Beneficiary on the appropriate Beneficiary
designation form, the remainder of such death benefit payments
shall be paid to such Beneficiary's estate. If a Participant fails
to designate a Beneficiary with respect to any death benefit
payments or if such designation is ineffective, in whole or in
part, any payment that otherwise would have been paid to such
Participant shall be paid to his surviving spouse or, if none, to
his estate.
Article VI
Accounts and Credited Interest
6.1 Participant Accounts. The Committee shall maintain,
or cause to be maintained, a bookkeeping Account for each
Participant for the purpose of accounting for the Participant's
interest under the Plan. The Committee shall maintain within each
Participant's Account such Deferral Amount subaccounts as may be
necessary to identify each separate Deferral Amount, and Credited
Interest allowable thereto, by reference to the Deferral Year to
which each Deferral Amount relates. The combination of the
subaccounts maintained in the name of a Participant shall comprise
the Participant's Account. In addition to the foregoing
bookkeeping subaccounts maintained for each Participant, the
Committee shall maintain, or cause to be maintained, such other
accounts, subaccounts, records or books as it deems necessary to
properly provide for the maintenance of Accounts and to carry out
the intent and purposes of the Plan.
6.2 Adjustment of Accounts. Each Participant's Account
shall be adjusted to reflect all Deferral Amounts credited to his
Account, all Credited Interest and other earnings credited to his
Account as provided by Section 6.3, and all benefit payments
charged to his Account. A Participant's Deferral Amount shall be
credited to such Participant's Account as of the date on which the
amount being deferred would have become payable to the Participant
absent the deferral election, or on such other date as the
Committee specifies, and shall be credited to the applicable
subaccount within such Account by reference to the applicable
Deferral Year. Credited Interest and other earnings shall be
credited to Participant Accounts pursuant to Section 6.3. Charges
to a Participant's Account to reflect benefit payments shall be
made as of the date of any such payment and shall be charged to the
applicable subaccount within such Account. As of any relevant
date, the balance standing to the credit of a Participant's
Account, and each separate subaccount comprising such Account,
shall be the respective balance in such Account and the component
subaccounts as of the close of business on such date after all
applicable credits and charges have been posted.
6.3 Credited Interest. Each Participant's Account shall
be credited with Credited Interest on the balance in such Account.
Credited Interest shall be allocated to the appropriate subaccount
balances within such Account. Credited Interest shall be credited
to Accounts on a quarterly basis as of February 1, May 1, August 1
and November 1 of each Plan Year. Credited Interest shall be
adjusted each Plan Year. The Credited Interest rate for each
quarterly date during a Plan Year shall be the highest of the
twelve month certificate of deposit rates quoted by Chase Manhattan
Bank, Citibank, or Morgan Guaranty Bank on December 1 immediately
preceding the Plan Year for which Credited Interest is to be
computed. The Committee shall make all determinations with respect
to the applicable Credited Interest rate in effect from time to
time and the crediting of such Credited Interest to Accounts. Such
determinations shall be final and binding on all interested
parties.
On February 1, 1994, 50% of the cumulative earnings in
the Plan through January 31, 1994, that exceed the cumulative
Credited Interest stipulated above shall be allocated to
Participant Accounts on a prorata basis. Beginning February 1,
1995, and on each February 1st thereafter, 50% of any earnings in
the Plan for the prior twelve months that exceed the Credited
Interest stipulated above for the prior twelve months shall be
allocated to Participant Accounts on a prorata basis.
6.4 Vesting. Subject to the conditions and limitations
on payment of benefits under the Plan, a Participant shall have a
fully vested and nonforfeitable beneficial interest in the balance
standing to the credit of his Account as of any relevant date.
6.5 Account Statements. The Committee shall provide
each Participant with a statement of the status of his Account
under the Plan. The Committee shall provide such statement
annually or at such other times as the Committee may determine.
Such statement shall be in the format prescribed by the Committee.
Article VII
Administration of the Plan
7.1 Administration. The Plan shall be administered by
the Committee. A majority of the members of the Committee shall
constitute a quorum. The acts of a majority of a quorum of the
Committee at a meeting or acts approved in writing by a majority of
the Committee without a meeting shall be the acts of the Committee.
The Committee shall have the authority to make such rules as it
deems necessary to administer the Plan, to interpret the Plan, to
decide questions arising under the Plan, and to take such other
action as may be appropriate to carry out the purposes of the Plan.
The Committee is authorized to employ attorneys, accountants or any
other agents or delegate specified duties to employees of the
Company as it shall deem proper in the discharge of its duties. The
Committee shall be the "plan administrator", and the Company shall
be the "named fiduciary" as such terms are defined in ERISA.
7.2 Compensation and Expenses. A member of the
Committee may receive compensation from the Company for services as
a member of the Committee. Any member of the Committee may
receive reimbursement by the Company for expenses properly and
actually incurred. All expenses of the Committee shall be paid by
the Company. Such expenses shall include any expenses incident to
the functioning of the Committee or the Plan, including, but not
limited to, fees of actuaries, accountants, legal counsel and other
specialists, and other costs of administering the Plan.
7.3 Claims Review Procedures.
(a) Denial of Claim. If a claim for benefits is
wholly or partially denied, the claimant shall be given notice
in writing of the denial within a reasonable time after the
receipt of the claim, but not later than 90 days after the
receipt of the claim. However, if special circumstances
require an extension, written notice of the extension shall be
furnished to the claimant before the termination of the 90-day
period. In no event shall the extension exceed a period of 90
days after the expiration of the initial 90-day period. The
notice of the denial shall contain the following information
written in a manner that may be understood by a claimant:
(1) the specific reasons for the denial;
(2) specific reference to pertinent Plan
provisions on which the denial is based;
(3) a description of any additional material
or information necessary for the claimant to perfect his
claim and an explanation of why such material or
information is necessary;
(4) an explanation that a full and fair review
by the Committee of the denial may be requested by the
claimant or his authorized representative by filing a
written request for a review with the Committee within 60
days after the notice of the denial is received; and
(5) if a request for a review is filed, the
claimant or his authorized representative may review
pertinent documents and submit issues and comments in
writing within the 60-day period described in Section
7.3(a) (4).
(b) Decision After Review. The decision of the
Committee with respect to the review of the denial shall be
made promptly, but not later than 60 days after the Committee
receives the request for the review. However, if special
circumstances require an extension of time, a decision shall
be rendered not later than 120 days after the receipt of the
request for review. A written notice of the extension shall
be furnished to the claimant prior to the expiration of the
initial 60-day period. The claimant shall be given a copy of
the decision, which shall state, in a manner calculated to be
understood by the claimant, the specific reasons for the
decision and specific references to the pertinent Plan
provisions on which the decision is based.
7.4 Finality of Determinations. All determinations of
the Committee as to any matter arising under the Plan, including
questions of construction and interpretation shall be final,
binding and conclusive upon all interested parties.
7.5 Indemnification. To the extent permitted by law and
the Company's bylaws, the members of the Committee, its agents, and
the officers, directors and employees of the Company shall be
indemnified and held harmless by the Company from and against any
and all loss, cost, liability or expense that may be imposed upon
or may be reasonably incurred by them in connection with or
resulting from any claim, action, suit or proceeding to which they
may be a party or in which they may be involved by reason of any
action taken or failure to act under the Plan and against and from
any and all amounts paid by them in settlement with the Company's
written approval or paid by them in satisfaction of a judgment in
any such action, suit or proceeding. The foregoing provision shall
not be applicable to any person if the loss, cost, liability or
expense is due to such person's gross negligence or willful
misconduct.
Article VIII
Provision For Benefits
8.1 Provision For Benefits. Benefits provided by this
Plan shall constitute general obligations of the Company. No
amount of any benefit under this Plan shall be set aside or held in
trust, and no recipient shall have a right to be paid from any
particular asset of the Company; provided, this Section shall not
be construed to prevent the Committee from directing a transfer of
funds to a grantor trust as defined at Sections 671 through 679 of
the Internal Revenue Code of 1986, as amended, for the purpose of
paying all or any part of a Plan benefit.
Article IX
Amendment, Termination, or Merger
9.1 Amendment and Termination. The Board of Directors
of the Company may amend, modify or terminate the Plan at any time
and in any manner. In the event of a termination of the Plan, no
further Deferral Amount elections shall be made under the Plan.
Amounts which are then payable or which become payable under the
terms of the Plan shall be paid as scheduled under the provisions
of the Plan.
9.2 Merger, Consolidation or Acquisition. In the event
of a merger, consolidation or acquisition where the Company is not
the surviving corporation and unless the successor or acquiring
corporation elects to continue and carry on the Plan, the Plan
shall terminate at the time of such event. Any successor or
acquiring corporation may elect to accelerate payments under the
Plan.
Article X
General Provisions
10.1 Effect on Other Plans. Deferred Amounts shall not
be considered as part of a Participant's compensation for the
purpose of any qualified employee pension plans maintained by the
Company. However, such amounts may be taken into account under all
other employee benefit plans maintained by the Company in the year
in which such amounts would have been payable absent the deferral
election; provided, such amounts shall not be taken into account if
their inclusion would jeopardize the tax-qualified status of the
plan to which they relate.
10.2 Nonalienation. Except as provided in Section 206(d)
of ERISA, no benefit payable at any time under the Plan shall be
subject in any manner to alienation, sale, transfer, assignment,
pledge, attachment, garnishment, or encumbrance of any kind. Any
attempt to alienate, sell, transfer, assign, pledge, or otherwise
encumber any such benefit, whether presently or hereafter payable,
shall be void. No benefit payable under the Plan shall in any
manner be liable for or subject to the debts or liabilities of any
Participant or Beneficiary entitled to any benefit, except as may
be provided in a qualified domestic relations order under Section
206(d) of ERISA. The Committee shall establish procedures to
determine whether an order is a qualified domestic relations order
and to administer distributions under such qualified domestic
relations orders.
10.3 Incompetency. Any person receiving or claiming
benefits under the Plan shall be conclusively presumed to be
mentally competent until the date on which the Committee receives
a written notice, in an acceptable form and manner, that such
person is incompetent and a guardian or other person legally vested
with the care of his estate has been appointed. If the Committee
finds that any person to whom a benefit is payable under the Plan
is unable to care for his affairs because of any disability or
infirmity and no legal guardian of such person's estate has been
appointed, any payment due may be paid to the spouse, a child, a
parent, a sibling, or to any person deemed by the Committee to have
incurred expense for such person otherwise entitled to payment.
Any such payment so made shall be a complete discharge of any
liability therefor under the Plan. If a guardian of the estate of
any person receiving or claiming benefits under the Plan shall be
appointed by a court of competent jurisdiction, benefit payments
shall be made to such guardian, provided proper proof of
appointment and continuing qualification is furnished in the form
and manner acceptable to the Committee. Any such payment so made
shall be a complete discharge of any liability therefor under the
Plan.
10.4 Effect of Mistake. If, in the sole opinion of the
Committee, a material mistake or misstatement as to the eligibility
of a Participant or the amount of benefit payments made or to be
made to or with respect to a Participant occurs, the Committee
shall, if possible, cause an adjustment to be made so as to correct
such mistake and provide the correct amount of benefit payments
with respect to such Participant.
10.5 Plan Not an Employment Contract. This Plan is not
an employment contract and does not confer on any person the right
to be continued in employment. All Employees remain subject to
change of salary, transfer, change of job, discipline, layoff,
discharge or any other change of employment status.
10.6 Tax Withholding. The Company or other payor may
withhold from a benefit payment or Deferral Amount any federal,
state or local taxes required by law to be withheld with respect to
such payment or Deferral Amount.
10.7 Severability. If any provision of the Plan is held
invalid or illegal for any reason, any illegality or invalidity
shall not affect the remaining provisions of the Plan, and the Plan
shall be construed and enforced as if the illegal or invalid
provision had never been contained therein. The Company shall have
the privilege and opportunity to correct and remedy such questions
of illegality or invalidity by amendment.
10.8 Applicable Law. The Plan shall be governed and
construed in accordance with the laws of the State of Oklahoma,
except to the extent such laws are preempted by any applicable
federal law. No reference to ERISA in the Plan shall be construed
to mean that the Plan is subject to any particular provisions of
ERISA.
IN WITNESS WHEREOF, the Company has caused this
instrument to be executed by its duly authorized officers,
effective as of February 1, 1994.
KERR-McGEE CORPORATION
By:(JOHN C. LINEHAN)
John C. Linehan
Senior Vice President and
Chief Financial Officer
