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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
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(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED March 31, 1999
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OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
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COMMISSION FILE NUMBER 1-7573
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PARKER DRILLING COMPANY
(Exact name of registrant as specified in its charter)
Delaware 73-0618660
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Parker Building, Eight East Third Street, Tulsa, Oklahoma 74103
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(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code (918) 585-8221
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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
--- ---
As of April 30, 1999, 77,085,531 common shares were outstanding.
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<TABLE>
PARKER DRILLING COMPANY
INDEX
<CAPTION>
<S>
<C>
Part I. Financial Information Page No.
Consolidated Condensed Balance Sheets (Unaudited) -
March 31, 1999 and December 31, 1998 2
Consolidated Condensed Statements of Operations (Unaudited) -
Three Months Ended March 31, 1999 and 1998
3
Consolidated Condensed Statements of Cash Flows (Unaudited) -
Three Months Ended March 31, 1999 and 1998 4
Notes to Unaudited Consolidated Condensed
Financial Statements 5 - 8
Report of Independent Accountants 9
Management's Discussion and Analysis of Financial
Condition and Results of Operations 10 - 15
Part II. Other Information
Item 6, Exhibits and Reports on Form 8-K 16
Signatures 17
Exhibit 10(a) Parker Drilling Company Stock Bonus Plan
Exhibit 15, Letter Re Unaudited Interim
Financial Information
Exhibit 27, Financial Data Schedule [Edgar Version Only]
</TABLE>
<PAGE>
<PAGE>
<TABLE>
PART 1. FINANCIAL INFORMATION
PARKER DRILLING COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in Thousands)
(Unaudited)
<CAPTION> March 31, December 31
1999 1998
-------------- ------------
ASSETS
------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 24,798 $ 24,314
Accounts and notes receivable 97,967 105,810
Rig materials and supplies 14,728 18,755
Other current assets 10,704 13,224
---------- ----------
Total current assets 148,197 162,103
Property, plant and equipment less accumulated
depreciation and amortization of $458,941 at
March 31, 1999 and $445,464 at December 31,
1998 725,162 729,873
Goodwill, net of accumulated amortization
of $14,920 at March 31, 1999 and $13,025
at December 31, 1998 212,337 214,232
Other noncurrent assets 56,739 53,118
---------- ----------
Total assets $1,142,435 $1,159,326
---------- ----------
---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<S> <C> <C>
Current liabilities:
Current portion of long-term debt $ 31,151 $ 31,404
Accounts payable and accrued liabilities 75,287 72,437
Accrued income taxes 6,771 7,576
---------- ----------
Total current liabilities 113,209 111,417
---------- ----------
Long-term debt 629,318 630,479
Deferred income tax 35,553 41,253
Other long-term liabilities 12,719 12,227
Stockholders' equity:
Common stock, $.16 2/3 par value 12,842 12,815
Capital in excess of par value 342,154 341,699
Retained earnings (accumulated deficit) (3,360) 9,436
---------- ----------
Total stockholders' equity 351,636 363,950
---------- ----------
Total liabilities and
stockholders' equity $1,142,435 $1,159,326
---------- ----------
---------- ----------
See accompanying notes to consolidated condensed financial statements.
</TABLE>
<PAGE>
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<TABLE>
PARKER DRILLING COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Dollars in Thousands Except Per Share Amounts)
(Unaudited)
<CAPTION>
Three Months Ended
--------------------
March 31, March 31,
1999 1998
-------- ---------
<S> <C> <C>
Revenues:
Domestic drilling $ 28,417 $ 55,642
International drilling 50,941 62,934
Rental tools 7,267 8,671
Other 221 467
-------- --------
Total revenues 86,846 127,714
-------- --------
Operating expenses:
Domestic drilling 27,845 36,083
International drilling 35,018 39,748
Rental tools 2,557 3,718
Other 97 508
Depreciation and
amortization 19,976 18,409
General and administrative 4,404 4,667
Restructuring charges (Note 6) 2,200 -
Provision for reduction in
carrying value of certain
assets (Note 5) 1,500 -
-------- --------
Total operating expenses 93,597 103,133
-------- --------
Operating income (loss) (6,751) 24,581
-------- --------
Other income and (expense):
Interest expense (13,264) (12,908)
Interest income 387 562
Other income - net 4,124 (379)
-------- --------
Total other income and (expense) (8,753) (12,725)
-------- --------
Income (loss) before
income taxes (15,504) 11,856
-------- --------
Income tax expense (benefit):
Current tax expense-foreign 2,992 5,859
Deferred tax benefit (5,700) -
-------- --------
(2,708) 5,859
-------- --------
Net income (loss) $(12,796) $ 5,997
-------- --------
-------- --------
Earnings (loss) per share,
Basic $ (.17) $ .08
-------- --------
Diluted $ (.17) $ .08
-------- --------
Number of common shares used
in computing earnings per share:
Basic 76,959,672 76,701,670
---------- ----------
Diluted 76,959,672 77,880,396
---------- ----------
See accompanying notes to consolidated condensed financial statements.
</TABLE>
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<TABLE>
PARKER DRILLING COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
Increase (Decrease) in Cash and Cash Equivalents
(Dollars in Thousands)
(Unaudited)
<CAPTION>
Three Months Ended
March 31,
--------------------
1999 1998
-------- -------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (12,796) $ 5,997
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization 19,976 18,409
Expenses not requiring cash 1,064 1,486
Deferred income taxes (5,700) -
Provision for reduction in carrying
value of certain assets 1,500 -
Change in operating assets and liabilities 11,163 31,121
Other-net (2,440) (571)
--------- ----------
Net cash provided by operating
activities 12,767 56,442
--------- ---------
Cash flows from investing activities:
Capital expenditures (15,263) (56,279)
Acquisition of Hercules - (1,100)
Proceeds from the sale of equipment 4,355 1,710
Other-net - (801)
--------- ---------
Net cash used in investing activities (10,908) (56,470)
--------- ---------
Cash flows from financing activities:
Proceeds from issuance of debt - 153,739
Principal payments under debt obligations (1,309) (119,193)
Other (66) (157)
--------- ---------
Net cash provided by (used in)
financing activities (1,375) 34,389
--------- ---------
Net change in cash and cash equivalents 484 34,361
Cash and cash equivalents at
beginning of period 24,314 32,444
--------- ---------
Cash and cash equivalents at
end of period $ 24,798 $ 66,805
--------- ---------
--------- ---------
Supplemental cash flow information:
Interest paid $ 5,711 $ 6,950
Taxes paid $ 3,797 $ 3,570
See accompanying notes to consolidated condensed financial statements.
</TABLE>
<PAGE>
<PAGE>
PARKER DRILLING COMPANY AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. The Company has changed its fiscal year end from August 31 to December 31,
effective for the fiscal year beginning January 1, 1999. The consolidated
condensed financial statements included in this Form 10-Q represent the
period from January 1, 1999 through March 31, 1999, the first quarterly
period under the Company's new fiscal year.
In the opinion of the Company, the accompanying unaudited consolidated
condensed financial statements reflect all adjustments (of a normally
recurring nature) which are necessary for a fair presentation of (1) the
financial position as of March 31, 1999 and December 31, 1998, (2) the
results of operations for the three months ended March 31, 1999 and March
31, 1998, and (3) cash flows for the three months ended March 31, 1999 and
March 31, 1998. Results for the three months ended March 31, 1999 are not
necessarily indicative of the results which will be realized for the year
ending December 31, 1999. The financial statements should be read in
conjunction with the Company's Form 10-K for the year ended August 31,
1998.
2. In February 1997, Statement of Financial Accounting Standards No. 128,
"Earnings per Share," was issued. This statement replaced the previously
required presentation of primary earnings per share (EPS) with a
presentation of basic EPS that excludes dilutive securities from the
computation. It also requires a presentation of diluted EPS that is
computed similarly to the fully diluted EPS calculation previously
required. The requirements of this statement have been followed for all
earnings per share figures included in this Form 10-Q.
<TABLE>
RECONCILIATION OF INCOME AND NUMBER OF SHARES USED
TO CALCULATE BASIC AND DILUTED EARNINGS PER SHARE (EPS)
<CAPTION>
For the Three Months Ended
March 31, 1999
-----------------------------------------
<S> <C> <C> <C>
Income Shares Per-Share
(Numerator) (Denominator) Amount
----------- ------------- ---------
Basic EPS:
Income available to
common stockholders $(12,796,000) 76,959,672 $(.17)
Effect of Dilutive Securities:
Stock options and grants -
Diluted EPS:
Income available to common
stockholders + assumed
conversions $(12,796,000) 76,959,672 $(.17)
------------ ----------- -----
------------ ----------- -----
</TABLE>
<PAGE>
<PAGE>
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (continued)
RECONCILIATION OF INCOME AND NUMBER OF SHARES USED
TO CALCULATE BASIC AND DILUTED EARNINGS PER SHARE (EPS)
<TABLE>
For the Three Months Ended
March 31, 1998
-----------------------------------------
<S> <C> <C> <C>
Income Shares Per-Share
(Numerator) (Denominator) Amount
----------- ------------- ---------
Basic EPS:
Income available to
common stockholders $ 5,997,000 76,701,670 $ .08
Effect of Dilutive Securities:
Stock options and grants 1,178,726
Diluted EPS:
Income available to common
stockholders + assumed
conversions $ 5,997,000 77,880,396 $ .08
------------ ------------ -----
------------ ------------ -----
</TABLE>
The Company has outstanding $175,000,000 of Convertible Subordinated Notes
which are convertible into 11,371,020 shares of common stock at $15.39 per
share. The notes were outstanding during the three months ended March 31,
1999 but were not included in the computation of diluted EPS because the
assumed conversion of the notes would have had an anti-dilutive effect on
EPS. In addition, at March 31, 1999, options to purchase 5,605,000 shares
of common stock at prices ranging from $2.25 to $12.1875, were outstanding
but not included in the computation of diluted EPS because the assumed
exercise of the options would have had an anti-dilutive effect on EPS due
to the net loss in the current period.
<PAGE>
<PAGE>
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (continued)
3. During the three months ended March 31, 1999 the Company has restructured
its worldwide drilling operations into two primary business units,
"Domestic Operations" and "International Operations." The Company makes
operating decisions and assesses performance based on these geographic
segments and based on services provided: land drilling, offshore drilling
and rental tools. Information regarding the Company's operations by
industry segment for the three months ended March 31, 1999 and 1998 is as
follows (dollars in thousands):
<TABLE>
<CAPTION>
March 31, March 31,
1999 1998
---------- -----------
<S> <C> <C>
Revenues:
Domestic drilling
Land $ 7,060 $ 12,753
Offshore 21,357 42,889
International drilling
Land 38,436 54,450
Offshore 12,505 8,484
Rental tools 7,267 8,671
Other 221 467
--------- ---------
Net revenues $ 86,846 $ 127,714
--------- ---------
Operating income (loss):
Domestic drilling
Land 290 2,912
Offshore (10,027) 7,962
International drilling
Land 5,343 13,077
Offshore 3,486 2,820
Rental tools 2,564 3,254
Other (303) (777)
--------- ---------
Total operating income
by segment <1> 1,353 29,248
--------- ---------
Provision for reduction in
carrying value of certain
assets (1,500) -
Restructuring charges (2,200) -
General and administrative (4,404) (4,667)
--------- ---------
Total operating income (loss) (6,751) 24,581
Interest expense (13,264) (12,908)
Other income (expense)-net 4,511 183
--------- ---------
Income (loss) before income taxes $ (15,504) $ 11,856
--------- ---------
--------- ---------
<PAGE>
<PAGE>
<FN1>
<1> Total operating income (loss) by segment is calculated by
excluding General and administrative expense, Restructuring charges
and Provision for reduction in carrying value of certain assets from
Operating income (loss), as reported in the Consolidated Condensed
Statements of Operations.
</TABLE>
4. In the third quarter of fiscal year 1998, ended May 31, 1998, the Company
reviewed the estimated useful life of its land drilling fleet used for
financial depreciation purposes. As a result, the estimated life was
extended from 10 to 15 years with a 5% salvage value for most of the major
rig components, resulting in a reduction in depreciation expense of
approximately $1.3 million for the three months ended March 31, 1999. The
Company's historical experience and a comparison with other firms in the
industry indicates that its land drilling equipment has a useful life of
at least 15 years. The depreciable lives for certain equipment, including
drill pipe, were not extended.
5. In December 1998, the Company determined that its operations in Argentina
do not meet its strategic objectives and that such assets would be
actively marketed for disposition. The assets in Argentina consist of 13
drilling rigs and inventories related to these rigs. The Company had
previously recognized six of the thirteen rigs as held for sale. The
current decision includes all Argentina assets. Due to depressed industry
conditions an impairment loss of $4,055,000 was recognized in December
1998. The net realizable value of the Argentina assets is included in
other non-current assets.
In March 1999, the Company increased its allowance for doubtful accounts
by $1,500,000. Several of the Company's customers have encountered
financial difficulties, including the filing of bankruptcy, which has
resulted in their reduced ability to pay the Company for previously
provided services.
6. During the three months ended March 31, 1999 the Company has restructured
its worldwide drilling operations into two primary business units,
"Domestic Operations" and "International Operations". In connection with
this restructuring, certain duplicative administrative and operating
functions have been eliminated, resulting in $2.2 million in severance
costs. It is anticipated that substantially all incurred but unpaid
amounts ($2.0 million at March 31, 1999) will be paid in the current
calendar year.
7. The Company has received and anticipates receiving additional prepayments
from the operator to offset a substantial portion of the expenditures
required to modify barge Rig 257 for a contract in the Caspian Sea. These
prepayments, $41.8 million as of March 31, 1999, are being accounted for
similar to mobilization fees and, accordingly, have been reflected as a
reduction of capital expenditures in the Statements of Cash Flows and as a
reduction of property, plant and equipment in the Consolidated Condensed
Balance Sheets. Prepayments received as of December 31, 1998, $20.3
million, were previously included in other long-term liabilities and have
been reclassified on the Consolidated Condensed Balance Sheets to reflect
the above described accounting treatment.
<PAGE>
<PAGE>
Report of Independent Accountants
To the Board of Directors and Shareholders
Parker Drilling Company
We have reviewed the consolidated condensed balance sheets of Parker
Drilling Company and subsidiaries as of March 31, 1999 and December 31, 1998,
and the related consolidated condensed statement of operations for the three
month period ended March 31, 1999 and consolidated condensed statement of cash
flows for the three month period ended March 31, 1999. These financial
statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the condensed consolidated financial statements referred to
above for them to be in conformity with generally accepted accounting
principles.
By: /s/ PricewaterhouseCoopers LLP
------------------------------
PricewaterhouseCoopers LLP
Tulsa, Oklahoma
May 14, 1999
<PAGE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Form 10-Q contains certain statements that are "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933,
as amended, and Section 21E of the Securities Exchange Act of 1934. These
statements may be made directly in this document, referring to the Company, or
in other documents filed by the Company with the Securities and Exchange
Commission, and referred to in this Form 10-Q. All statements included in
this document, other than statements of historical facts, that address
activities, events or developments that the Company expects, projects,
believes or anticipates will or may occur in the future, including future
operating results, future capital expenditures and investments in the
acquisition and refurbishment of rigs and equipment, repayment of debt,
expansion and growth of operations, anticipated cost savings, Year 2000
issues, and other such matters, are forward-looking statements.
Forward-looking statements are based on certain assumptions and analyses
made by the management of the Company in light of their experience and
perception of historical trends, current conditions, expected future
developments and other factors they believe are relevant. Although management
of the Company believes that their assumptions are reasonable based on current
information available, they are subject to certain risks and uncertainties,
many of which are outside the control of the Company. These risks include
worldwide economic and business conditions, oil and gas market prices,
industry conditions, international trade restrictions and political
instability, operating hazards and uninsured risks, governmental regulations
and environmental matters, substantial leverage, seasonality and adverse
weather conditions, concentration of customer and supplier relationships,
upgrade and refurbishment projects, competition, integration of operations,
acquisition strategy, and other similar factors (some of which are discussed
in documents referred to in this Form 10-Q.) Because the forward-looking
statements are subject to risks and uncertainties, the actual results of
operations and actions taken by the Company may differ materially from those
expressed or implied by such forward-looking statements.
OUTLOOK AND OVERVIEW
- --------------------
The loss recognized for the three months ended March 31, 1999 reflects
the continued weakness in most of the Company's drilling markets which has
resulted in a significant decrease in rig utilization and in dayrates since
the third quarter of fiscal year 1998. Lower crude oil prices have negatively
impacted the revenue and profits of oil operators, who have responded by
reducing exploration and development expenditures. This decline in spending
has adversely affected the level of oilfield activity, and in turn, the
revenue of most companies in the oilfield service industry. Although crude
oil and natural gas prices have increased recently, management is unable to
predict when and to what extent spending by operators and rig dayrates and
utilization will be affected.
If the depressed level of oilfield activity persists, the Company
anticipates that it will continue to incur losses. Management believes that
cash provided by operations and funds available under the Company's revolving
credit facility will be adequate to meet working capital needs. Management's
projections regarding the sufficiency of cash is contingent upon the
continuation of current rig utilization and dayrates, the commencement of
operations under two significant barge rig contracts in mid-1999, current
projected levels of capital expenditures and the timely receipt of prepayments
to offset construction and related costs for the modification of a barge rig.
<PAGE>
<PAGE>
RESULTS OF OPERATIONS (continued)
- ---------------------
In order to conserve cash, management has taken steps to reduce certain
discretionary capital expenditures, has reorganized its worldwide drilling
operations to reduce operating and overhead costs, and is considering the sale
of certain assets, the latter of which will be accelerated as needed in the
event assumptions to meet cash requirements are not realized. In addition,
the Company is pursuing project financing on the newly built Rig 75 destined
for Nigeria, which financing would provide an additional $25 million in
available funds. Management is unable to predict whether the financing can be
completed on terms acceptable to the Company.
Three Months Ended March 31, 1999 Compared with Three Months Ended March 31,
1998
- ----------------------------------------------------------------------------
The Company changed its fiscal year end from August 31 to December 31,
effective for the year beginning January 1, 1999. The consolidated condensed
financial statements included in this Form 10-Q represent the period from
January 1, 1999 through March 31, 1999, the first quarterly period under the
Company's new fiscal year, and the comparable period in the prior year.
The Company recorded a net loss of $12.8 million for the three months
ended March 31, 1999 compared to net income of $6.0 million recorded for the
three month period ended March 31, 1998. The depressed drilling market
conditions which began to affect the Company's utilization and dayrates in the
second half of fiscal 1998 continued to negatively impact the Company's
results in the current period. Each of the Company's primary operating
segments--domestic drilling, international drilling and rental tools--
experienced a reduction of profit margin (revenue less direct operating
expense) when comparing the two periods. In addition, in the current quarter,
the Company recorded a $1.5 million provision for doubtful accounts receivable
(classified as 'Provision for reduction in carrying value of certain assets'
in the Statement of Operations) and recorded restructuring charges
attributable to its worldwide reorganization of $2.2 million. The reorganized
worldwide drilling operations will have two primary business units, "Domestic
Operations" and "International Operations". In connection with this
restructuring, certain duplicative administrative and operating functions have
been eliminated. The Company anticipates the reorganization and other
consolidation efforts will result in annual cost savings of approximately $8.5
million.
Revenue decreased $40.9 million from $127.7 million in the three months
ended March 31, 1998 to $86.8 million in the current year's first quarter.
Domestic drilling revenue decreased from $55.6 million to $28.4 million, a
decrease of 48.9%. Domestic land drilling revenue decreased $5.7 million due
primarily to lower utilization in the lower 48 states. The Company's sole rig
in Alaska, Rig 245, was released from its contract during the current quarter,
also contributing to the reduced revenue from land operations in the United
States. Domestic offshore drilling revenue decreased $21.5 million,
reflecting continued weakness in barge, jackup and platform markets.
International drilling revenue declined $12.0 million from $62.9 million
in the calendar 1998 first quarter to $50.9 million in the current quarter.
International land drilling revenues decreased $16.0 million while offshore
drilling revenues increased $4.0 million. Primarily responsible for the land
drilling revenue decrease was reduced revenue in the Asia Pacific region,
<PAGE>
<PAGE>
RESULTS OF OPERATIONS (continued)
- ---------------------
including the countries of Pakistan, Papua New Guinea, New Zealand and
Indonesia. Land drilling revenues from operations in Latin America and the
independent states of the former Soviet Union were comparable when comparing
the two periods as markets in Colombia, Bolivia and Kazakhstan have not been
negatively impacted to the same degree as the Asia Pacific countries mentioned
previously. The increase of $4.0 million in international offshore drilling
revenue was due to the commencement of operations of barge Rig 76 in Venezuela
in September 1998. Revenue of $8.5 million contributed by three barge rigs
located in Nigeria was equal to the amount earned in 1998. In Nigeria, an
increase in dayrates on one of the barge rigs was offset by reduced revenue
from one barge rig placed on a standby rate in the current quarter.
Rental tool revenue declined $1.4 million or approximately 16%, due
primarily to reduced drilling activity in the Gulf of Mexico.
The Company's overall profit margin, excluding the $1.5 million provision
for reduction in carrying value of certain assets and $2.2 million in
reorganization charges, was $21.3 million or 24.6% of revenue in the current
quarter as compared to $47.7 million or 37.3% of revenue in the three months
ended March 31, 1998. The reduced profit margin and profit margin percentages
are due to revenue decreasing to a greater degree than direct operating costs.
Although dayrates have decreased in a number of the Company's markets, direct
operating costs have not decreased by a corresponding percentage.
Domestically, profit margins have been negatively impacted particularly in the
Company's offshore operations, in both shallow water jackup and barge
operations. Jackup dayrates have declined materially due to the lower number
of rigs operating in the Gulf of Mexico and also due to increased competition
for available contracts from rigs capable of operating in deeper waters, as
fewer deep water contract opportunities have been available. The Company's
transition zone barge drilling and workover rigs operating in the Gulf of
Mexico also experienced lower utilization and earned lower average dayrates in
the current period when compared to the same period of the prior year.
Domestic land drilling profit margins declined primarily due to lower
utilization and due to the release of Rig 245 from its contract in Alaska
during the current quarter.
International drilling profit margins declined $7.3 million due primarily
to the lower utilization in the Company's land drilling operations discussed
previously. The Company's international offshore barge drilling operations
had an increase in profit margin of $.9 million, due to the commencement of
operations of Rig 76 in Venezuela in September 1998.
Depreciation and amortization expense increased $1.6 million to $20.0
million in the current quarter. Depreciation expense recorded on 1998 capital
additions was the primary reason for the increase, which was offset by a
reduction of approximately $1.3 million due to the extension of the
depreciable lives of the Company's land drilling fleet from 10 to 15 years in
the third quarter of fiscal 1998.
Interest expense increased $.4 million due to higher debt levels
outstanding in the current quarter when compared to the prior year period,
offset by a $1.5 million increase in interest capitalized to construction
projects. The increase in Other income - net, $4.5 million, was primarily due
to gains recorded on the disposition of property, plant and equipment and from
a $2.1 million payment received from Superior Energy Services, Inc.
("Superior") as part of the agreement to terminate the Agreement and Plan of
Merger with Superior.
<PAGE>
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Income tax expense consists of foreign tax expense and deferred tax
benefit. Lower international drilling revenues and operating income has
resulted in a decrease in foreign tax expense when comparing the two periods.
The deferred tax benefit is due to the net loss incurred during the three
months ended March 31, 1999.
The Company had cash, cash equivalents and other short-term investments
of $24.8 million at March 31, 1999, an increase of $.5 million from the
December 31, 1998 balance. The primary sources of cash during the three month
period were $12.8 million provided by operating activities, as reflected on
the Consolidated Statements of Cash Flows, and prepayments from the operator
to offset a portion of the expenditures to modify Rig 257 for service in the
Caspian Sea. A decrease in accounts receivable due to collections was the
primary source of cash provided by operating activities.
Capital expenditures of $15.3 million were the Company's primary use of
cash during the quarter ended March 31, 1999. Major capital projects on-going
during the period included the modification of barge Rig 257, which is being
modified for a contract in the Caspian Sea and the construction of new barge
Rig 75 for a contract in Nigeria. Payments received from the operator to
offset a portion of the expenditures to modify Rig 257 are reflected as a
reduction in capital expenditures in the Consolidated Statements of Cash
Flows. It is anticipated that drilling operations under both contracts will
begin in mid-1999. Other major expenditures included the modification of two
barge rigs for a contract with Texaco in the transition zones of the Gulf
Coast and the completion of construction of a new support facility in New
Iberia, Louisiana.
To finance the Company's 1996 and 1997 acquisitions and the significant
capital expenditures made in fiscal year 1998 and during the four months ended
December 31, 1998, the Company has issued various debt instruments. The
Company has total long-term debt, including the current portion, of $660.5
million at March 31, 1999. The Company has a $75.0 million revolving credit
facility which is available for working capital requirements, general
corporate purposes and to support letters of credit. Availability under the
revolving credit facility is subject to certain borrowing base limitations
based on 80% of eligible accounts receivable plus 50% of supplies in
inventory. At March 31, 1999, $30.0 million was outstanding under the
revolving credit facility and $9.2 million in letters of credit had been
issued. Due to a decline in the amount of eligible accounts receivable, the
borrowing base as of March 31, 1999 was reduced to $68.5 million, leaving
$29.3 million available for borrowing. Subsequent to March 31, 1999, $10.0
million was drawn on the revolving credit facility, reducing the amount
available for borrowing to $19.3 million. It is possible that the borrowing
base could fall further, depending upon future business activity and resulting
accounts receivable balances. The revolving credit facility terminates on
December 31, 2000.
Both the Company's long-term debt indenture and the revolving credit
facility contain customary affirmative and negative covenants, including
restrictions on incurrence of debt and sales of assets. The revolving credit
facility prohibits, among other things, payment of dividends and the indenture
for the Senior Notes restricts the payment of dividends. Effective October 1,
1999 the covenant related to the Company's debt to total capital ratio will be
reduced from 70% to 65%. Although the Company is currently in compliance,
based on management's current financial projections, the Company will not be
in compliance with the covenant at October 1, 1999. The Company anticipates
receiving a waiver from this covenant. If a waiver is not received, the
Company will pursue other financing alternatives.
<PAGE>
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES (continued)
- -------------------------------
The Company anticipates cash requirements for capital spending will be
substantially less in calendar year 1999 ($40.0 million projected, net of
anticipated receipts to offset capital expenditures) than in fiscal year 1998
($180.0 million, net of receipts to offset capital expenditures). The
Company's two most significant on-going construction projects, the
modification of barge Rig 257 for service in the Caspian Sea and the
construction of barge Rig 75 for service in Nigeria, are scheduled for
completion in mid-1999.
If the depressed level of oilfield activity persists, the Company
anticipates that it will continue to incur losses. Management believes that
cash provided by operations and funds available under the Company's revolving
credit facility will be adequate to meet working capital needs. Management's
projections regarding the sufficiency of cash is contingent upon the
continuation of current rig utilization and dayrates, the commencement of
operations under two significant barge rig contracts in mid-1999, current
projected levels of capital expenditures and the timely receipt of prepayments
to offset construction and related costs for the modification of a barge rig.
In order to conserve cash, management has taken steps to reduce certain
discretionary capital expenditures, has reorganized its worldwide drilling
operations to reduce operating and overhead costs and is considering the sale
of certain assets, the latter of which will be accelerated as needed in the
event assumptions to meet cash requirements are not realized. In addition,
the Company is pursuing project financing on the newly built Rig 75 destined
for Nigeria, which financing would provide an additional $25 million in
available funds. Management is unable to predict whether the financing can be
completed on terms acceptable to the Company. Although crude oil and natural
gas prices have increased recently, management is unable to predict when and
to what extent spending by operators and rig dayrates and utilization will be
affected.
<PAGE>
<PAGE>
OTHER MATTERS
- -------------
Indonesian Operations
- ---------------------
The current economic conditions in Indonesia have created uncertainty
regarding the Company's Indonesian operations. The Company provides
management, technical and training support to an Indonesian-owned drilling
contractor, whose services include the drilling of geothermal wells related to
power plant projects. Due to the uncertain economic conditions in Indonesia,
certain of these power plant projects, and the drilling of wells in support
thereof, have been postponed or delayed. As a result, payments from a
significant customer for services provided by the Indonesian contractor have
been delayed. The Indonesian contractor has initiated an arbitration against
its customer for payment of outstanding receivables. The Company believes
that resolution of this matter will not have a material adverse effect on the
Company's results of operations or financial position.
Year 2000
- ---------
The Company plans to achieve and maintain Year 2000 compliance with a
project consisting of seven phases. The phases include awareness, inventory,
assessment, detailed analysis, compliance testing, remediation and monitoring
compliance. Prior to establishing the Year 2000 project, the Company made a
decision to replace most of its outdated systems with commercial off the shelf
systems and standardized desktop systems. The Company spent much of 1997
replacing critical financial, human resources and payroll systems with new
purchased software that is Year 2000 certified by the Information Technology
Association of America. The Year 2000 problem was not the main reason for
upgrading the information technology platform, however it will be beneficial
in achieving Year 2000 compliance.
The Company has completed the initial awareness phase, inventory,
assessment and testing of its core information technology systems. The
inventory, assessment and testing of non-information technology systems
including telecommunication systems, business machines, security systems,
premise equipment, rig equipment and other embedded chip technology is
partially completed. The inventory and assessment of drilling rig components
containing imbedded chips indicates that most do not have date related logic.
Testing is being conducted on components with date sensitive chips to
determine if a date related problem could occur. The Company is surveying its
critical supply chain and business partners to establish their state of
readiness. It is expected that all critical systems testing and necessary
remediation will be completed by June 30, 1999. The remainder of 1999 will be
devoted to monitoring compliance and contingency planning.
At this time no system replacement dates were accelerated because of the
Year 2000 problem. The cost to date for the project has been in internal
salaries and purchasing some testing software. The software costs to date are
not deemed material. Approximately $400,000 has been budgeted for the Year
2000 project in calendar year 1999.
The Company believes that its most likely worst-case scenario would be a
disruption of the supply chain. It is impossible for the Company to predict
the likelihood of such an occurrence or the extent of the impact on our
operations. As part of the contingency planning process to help mitigate
these risks the Company is looking at alternative suppliers. Contingency
plans will be customized as required for international locations to cover
personnel safety, rigs, division offices, crew rotations and rig supplies.
<PAGE>
<PAGE>
PART II. OTHER INFORMATION
<TABLE>
<CAPTION>
<S> <C> <C>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Page
Exhibit 10(a) Amended and Restated Parker Drilling Company
Stock Bonus Plan, effective as of January 1, 1999.
Exhibit 15 Letter re Unaudited Interim Financial Information 18
Exhibit 27 Financial Data Schedule [Edgar Version Only]
(b) Reports on Form 8-K - Parker Drilling Company ("Parker") filed a
report on Form 8-K on January 11, 1999 in which the Company
announced that it had jointly agreed with Superior Energy
Services, Inc. ("Superior"), to terminate the previously announced
Agreement and Plan of Merger under which "Superior" would become a
wholly owned subsidiary of Parker. Under the termination
agreement, Superior agreed to make a cash payment to Parker in
settlement of certain obligations under the merger agreement.
</TABLE>
<PAGE>
<PAGE>
SIGNATURES
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.
Parker Drilling Company
-----------------------
Registrant
Date: May 14, 1999
By: /s/ James J. Davis
-----------------------------------------
James J. Davis
Senior Vice President-Finance and
Chief Financial Officer
By: /s/ W. Kirk Brassfield
-----------------------------------------
W. Kirk Brassfield
Controller and
Chief Accounting Officer
<PAGE>
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description
- ------- -----------
10(a) Amended and Restated Parker Drilling Company Stock Bonus Plan,
effective as of January 1, 1999.
15 Letter re Unaudited Interim Financial Information
27 Financial Data Schedule [Edgar Version Only]
<PAGE>
<PAGE>
<PAGE>
Exhibit 15
May 14, 1999
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 10549
Re: Parker Drilling Company
Registration on Form S-8
We are aware that our report dated May 11, 1999, on our review of the interim
financial information of Parker Drilling Company for the period ended March
31, 1999 and included in this Form 10-Q is incorporated by reference in the
Company's registration statements on Form S-8 (File No. 2-87944, 33-24155,
33-56698 and 33-57345).
By:/s/PricewaterhouseCoopers LLP
--------------------------------
PricewaterhouseCoopers LLP
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED CONDENSED BALANCE SHEET AS OF MARCH 31, 1999 AND THE
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED
MARCH 31,1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 24798
<SECURITIES> 0
<RECEIVABLES> 102749
<ALLOWANCES> 4782
<INVENTORY> 0
<CURRENT-ASSETS> 148197
<PP&E> 1184103
<DEPRECIATION> 458941
<TOTAL-ASSETS> 1142435
<CURRENT-LIABILITIES> 113209
<BONDS> 629318
0
0
<COMMON> 12842
<OTHER-SE> 338794
<TOTAL-LIABILITY-AND-EQUITY> 1142435
<SALES> 0
<TOTAL-REVENUES> 86846
<CGS> 0
<TOTAL-COSTS> 65517
<OTHER-EXPENSES> 2200
<LOSS-PROVISION> 1500
<INTEREST-EXPENSE> 13264
<INCOME-PRETAX> (15504)
<INCOME-TAX> (2708)
<INCOME-CONTINUING> (12796)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (12796)
<EPS-PRIMARY> (.17)
<EPS-DILUTED> (.17)
</TABLE>
<PAGE>
<PAGE>
Exhibit 10(a)
Parker Drilling Company
PARKER DRILLING COMPANY STOCK
BONUS PLAN
AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 1999
<PAGE>
<PAGE>
Parker Drilling Company Stock Bonus Plan
PARKER DRILLING COMPANY established the PARKER DRILLING COMPANY STOCK BONUS
PLAN for the benefit of eligible employees of the Company and its
participating affiliates. The Plan is intended to constitute a qualified
profit sharing plan, as described in Code Section 401(a), which includes a
qualified cash or deferred arrangement, as described in Code Section 401(k).
The Plan constitutes an amendment and restatement of the PARKER DRILLING
COMPANY STOCK BONUS PLAN which was originally established effective as of
September 1, 1980, and subsequently amended and restated effective April 1,
1996.
<PAGE>
<PAGE>
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.1 "Accounting Period". . . . . . . . . . . . . . . . . . . .1
1.2 "Accounts" . . . . . . . . . . . . . . . . . . . . . . . .1
1.3 "Accrued Benefit". . . . . . . . . . . . . . . . . . . . .2
1.4 "Appendix" . . . . . . . . . . . . . . . . . . . . . . . .2
1.5 "Applicable Named Fiduciary" . . . . . . . . . . . . . . .2
1.6 "Authorized Leave of Absence". . . . . . . . . . . . . . .2
1.7 "Beneficiary". . . . . . . . . . . . . . . . . . . . . . .3
1.8 "Board of Directors" . . . . . . . . . . . . . . . . . . .3
1.9 "Break in Service" . . . . . . . . . . . . . . . . . . . .3
1.10 "Change Date". . . . . . . . . . . . . . . . . . . . . . .3
1.11 "Committee". . . . . . . . . . . . . . . . . . . . . . . .3
1.11 "Commonly Controlled Entity" . . . . . . . . . . . . . . .3
1.12 "Company". . . . . . . . . . . . . . . . . . . . . . . . .3
1.13 "Company Stock". . . . . . . . . . . . . . . . . . . . . .4
1.14 "Compensation" . . . . . . . . . . . . . . . . . . . . . .4
1.15 "Continuous Service" . . . . . . . . . . . . . . . . . . .5
1.16 "Contributions". . . . . . . . . . . . . . . . . . . . . .5
1.17 "Contribution Dollar Limit". . . . . . . . . . . . . . . .5
1.18 "Contribution Election" or "Election". . . . . . . . . . .5
1.19 "Contribution Percentage". . . . . . . . . . . . . . . . .6
1.20 "Conversion Election". . . . . . . . . . . . . . . . . . .6
1.21 "Custodial Agreement". . . . . . . . . . . . . . . . . . .6
1.22 "Custodian". . . . . . . . . . . . . . . . . . . . . . . .6
1.23 "Direct Rollover". . . . . . . . . . . . . . . . . . . . .6
1.24 "Disability or Disabled" . . . . . . . . . . . . . . . . .6
1.25 "Distributee". . . . . . . . . . . . . . . . . . . . . . .6
1.26 "Effective Date" . . . . . . . . . . . . . . . . . . . . .6
1.27 "Elective Deferral". . . . . . . . . . . . . . . . . . . .6
1.28 "Eligible Employee". . . . . . . . . . . . . . . . . . . .6
1.29 "Eligibility Service". . . . . . . . . . . . . . . . . . .7
1.30 "Eligible Retirement Plan" . . . . . . . . . . . . . . . .7
1.31 "Eligible Rollover Distribution" . . . . . . . . . . . . .8
1.32 "Employee" . . . . . . . . . . . . . . . . . . . . . . . .8
1.33 "Employer" . . . . . . . . . . . . . . . . . . . . . . . .8
1.34 "Employment Date". . . . . . . . . . . . . . . . . . . . .8
1.35 "ERISA". . . . . . . . . . . . . . . . . . . . . . . . . .8
<PAGE>
<PAGE>
1.36 "Fair Market Value". . . . . . . . . . . . . . . . . . . .9
1.37 "Family Member". . . . . . . . . . . . . . . . . . . . . .9
1.38 "Forfeiture" . . . . . . . . . . . . . . . . . . . . . . .9
1.39 "Forfeiture Account" . . . . . . . . . . . . . . . . . . .9
1.40 "Highly Compensated Eligible Employee" or "HCE". . . . . .9
1.41 "Hour of Service". . . . . . . . . . . . . . . . . . . . 11
1.42 "Integration Level". . . . . . . . . . . . . . . . . . . 11
1.43 "Internal Revenue Code" or "Code". . . . . . . . . . . . 11
1.44 "Investment Election". . . . . . . . . . . . . . . . . . 11
1.45 "Investment Fund" or "Fund". . . . . . . . . . . . . . . 11
1.46 "Limited Deferrals". . . . . . . . . . . . . . . . . . . 11
1.47 "Maternity/Paternity Absence". . . . . . . . . . . . . . 11
1.48 "Non-Highly Compensated Employee" or "NHCE". . . . . . . 12
1.49 "Normal Retirement Date" . . . . . . . . . . . . . . . . 12
1.50 "Notice Date". . . . . . . . . . . . . . . . . . . . . . 12
1.51 "Participant". . . . . . . . . . . . . . . . . . . . . . 12
1.52 "Payment Date" . . . . . . . . . . . . . . . . . . . . . 12
1.53 "Period of Severance". . . . . . . . . . . . . . . . . . 12
1.54 "Plan" . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.55 "Plan Year". . . . . . . . . . . . . . . . . . . . . . . 12
1.56 "QDRO" . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.57 "Qualified Matching Contribution". . . . . . . . . . . . 13
1.58 "Related Plan" . . . . . . . . . . . . . . . . . . . . . 13
1.59 "Retirement Policy Committee". . . . . . . . . . . . . . 13
1.60 "Rollover Contribution". . . . . . . . . . . . . . . . . 13
1.61 "Settlement Date". . . . . . . . . . . . . . . . . . . . 13
1.62 "Spousal Consent". . . . . . . . . . . . . . . . . . . . 13
1.63 "Spouse" . . . . . . . . . . . . . . . . . . . . . . . . 14
1.64 "Sweep Date" . . . . . . . . . . . . . . . . . . . . . . 14
1.65 "Termination of Employment". . . . . . . . . . . . . . . 14
1.66 "Trade Date" . . . . . . . . . . . . . . . . . . . . . . 14
1.67 "Trust". . . . . . . . . . . . . . . . . . . . . . . . . 14
1.68 "Trust Agreement". . . . . . . . . . . . . . . . . . . . 14
1.69 "Trust Fund" . . . . . . . . . . . . . . . . . . . . . . 14
1.70 "Trustee". . . . . . . . . . . . . . . . . . . . . . . . 15
1.71 "Valuation Date" . . . . . . . . . . . . . . . . . . . . 15
1.72 "Vesting Service". . . . . . . . . . . . . . . . . . . . 15
1.73 "Year of Service". . . . . . . . . . . . . . . . . . . . 15
<PAGE>
<PAGE>
ARTICLE II
PARTICIPATION . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.1 Eligibility. . . . . . . . . . . . . . . . . . . . . . . 16
2.2 Reemployment . . . . . . . . . . . . . . . . . . . . . . 16
2.3 Participation Upon Change of Job Status. . . . . . . . . 16
ARTICLE III
PARTICIPANT CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . 17
3.1 Pre-Tax Contribution Election. . . . . . . . . . . . . . 17
3.2 Election Procedures. . . . . . . . . . . . . . . . . . . 17
3.3 Limitation of Elective Deferrals for all Participants. . 18
ARTICLE IV
EMPLOYER CONTRIBUTIONS AND ALLOCATIONS. . . . . . . . . . . . . . 20
4.1 Pre-Tax Contributions. . . . . . . . . . . . . . . . . . 20
4.2 Matching Contributions . . . . . . . . . . . . . . . . . 20
4.3 Special Contributions. . . . . . . . . . . . . . . . . . 21
4.4 Base and Excess Contributions. . . . . . . . . . . . . . 21
4.5 Miscellaneous. . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE V
ROLLOVERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.1 Rollovers. . . . . . . . . . . . . . . . . . . . . . . . 24
5.2 Rollovers From Other Qualified Plans . . . . . . . . . . 24
ARTICLE VI
ACCOUNTING FOR PARTICIPANTS'
ACCOUNTS AND FOR INVESTMENT FUNDS . . . . . . . . . . . . . . . . 25
6.1 Individual Participant Accounting. . . . . . . . . . . . 25
6.2 Accounting for Investment Funds. . . . . . . . . . . . . 26
6.3 Accounts for QDRO Beneficiaries. . . . . . . . . . . . . 27
6.4 Special Accounting During Conversion Period. . . . . . . 27
<PAGE>
<PAGE>
ARTICLE VII
INVESTMENT FUNDS AND ELECTIONS. . . . . . . . . . . . . . . . . . 28
7.1 Investment Funds . . . . . . . . . . . . . . . . . . . . 28
7.2 Investment of Contributions. . . . . . . . . . . . . . . 28
7.3 Investment of Accounts . . . . . . . . . . . . . . . . . 29
7.4 Establishment of Investment Funds. . . . . . . . . . . . 29
7.5 Transition Rules . . . . . . . . . . . . . . . . . . . . 30
7.6 Special Rules for Schwab Personal Choice Retirement Account30
ARTICLE VIII
VESTING AND FORFEITURES . . . . . . . . . . . . . . . . . . . . . 32
8.1 Fully Vested Contribution Accounts . . . . . . . . . . . 32
8.2 Full Vesting Upon Attainment of Event. . . . . . . . . . 32
8.3 Vesting Schedule . . . . . . . . . . . . . . . . . . . . 32
8.4 Forfeitures. . . . . . . . . . . . . . . . . . . . . . . 33
8.5 Forfeiture Account . . . . . . . . . . . . . . . . . . . 33
ARTICLE IX
PARTICIPANT LOANS . . . . . . . . . . . . . . . . . . . . . . . . 35
9.1 Participant Loans Permitted. . . . . . . . . . . . . . . 35
9.2 Loan Funding Limits. . . . . . . . . . . . . . . . . . . 35
9.3 Maximum Number of Loans. . . . . . . . . . . . . . . . . 35
9.4 Source of Loan Funding . . . . . . . . . . . . . . . . . 36
9.5 Interest Rate. . . . . . . . . . . . . . . . . . . . . . 36
9.6 Repayment. . . . . . . . . . . . . . . . . . . . . . . . 36
9.7 Repayment Hierarchy. . . . . . . . . . . . . . . . . . . 36
9.8 Loan Application, Note and Security. . . . . . . . . . . 36
9.9 Default, Suspension and Acceleration Feature . . . . . . 37
9.10 Pre-August 14, 1982 Loans. . . . . . . . . . . . . . . . 37
9.11 Mallard Loans. . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE X
IN-SERVICE WITHDRAWALS. . . . . . . . . . . . . . . . . . . . . . 38
10.1 Withdrawals for 401(k) Hardship. . . . . . . . . . . . . 38
10.2 Post-Tax Account Withdrawals . . . . . . . . . . . . . . 39
<PAGE>
<PAGE>
10.3 Withdrawals After Attainment of Age 59-1/2 . . . . . . . 40
10.4 Withdrawal Processing. . . . . . . . . . . . . . . . . . 40
ARTICLE XI
DISTRIBUTIONS ON AND AFTER
TERMINATION OF EMPLOYMENT . . . . . . . . . . . . . . . . . . . . 42
11.1 Request for Distribution of Benefits . . . . . . . . . . 42
11.2 Deadline for Distribution. . . . . . . . . . . . . . . . 42
11.3 Payment Form and Medium. . . . . . . . . . . . . . . . . 43
11.4 Small Amounts Paid Immediately . . . . . . . . . . . . . 43
11.5 Direct Rollover. . . . . . . . . . . . . . . . . . . . . 43
ARTICLE XII
DISTRIBUTION OF ACCRUED BENEFITS ON DEATH . . . . . . . . . . . . 44
12.1 Payment to Beneficiary . . . . . . . . . . . . . . . . . 44
12.2 Beneficiary Designation. . . . . . . . . . . . . . . . . 44
12.3 Benefit Election . . . . . . . . . . . . . . . . . . . . 44
12.4 Payment Form . . . . . . . . . . . . . . . . . . . . . . 45
12.5 Time Limit for Payment to Beneficiary. . . . . . . . . . 45
12.6 Direct Rollover. . . . . . . . . . . . . . . . . . . . . 45
ARTICLE XIII
MAXIMUM CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . 46
13.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . 46
13.2 Avoiding an Annual Excess. . . . . . . . . . . . . . . . 47
13.3 Correcting an Annual Excess. . . . . . . . . . . . . . . 47
13.4 Correcting a Multiple Plan Excess. . . . . . . . . . . . 48
13.5 Two-Plan Limit . . . . . . . . . . . . . . . . . . . . . 48
13.6 Short Plan Year. . . . . . . . . . . . . . . . . . . . . 49
13.7 Grandfathering of Applicable Limitations . . . . . . . . 49
ARTICLE XIV
ADP AND ACP TESTS . . . . . . . . . . . . . . . . . . . . . . . . 50
14.1 Contribution Limitation Definitions. . . . . . . . . . . 50
14.2 ADP and ACP Tests. . . . . . . . . . . . . . . . . . . . 51
14.3 Correction of ADP and ACP Tests. . . . . . . . . . . . . 52
<PAGE>
<PAGE>
14.4 Method of Calculation. . . . . . . . . . . . . . . . . . 53
14.5 Multiple Use Test. . . . . . . . . . . . . . . . . . . . 53
14.6 Adjustment for Investment Gain or Loss . . . . . . . . . 54
14.7 Required Records . . . . . . . . . . . . . . . . . . . . 54
14.8 Incorporation by Reference . . . . . . . . . . . . . . . 55
14.9 Collectively Bargained Employees . . . . . . . . . . . . 55
14.10 QSLOB. . . . . . . . . . . . . . . . . . . . . . . . . . 55
ARTICLE XV
CUSTODIAL ARRANGEMENTS. . . . . . . . . . . . . . . . . . . . . . 56
15.1 Custodial Agreement. . . . . . . . . . . . . . . . . . . 56
15.2 Selection of Custodian . . . . . . . . . . . . . . . . . 56
15.3 Custodian's Duties . . . . . . . . . . . . . . . . . . . 56
15.4 Separate Entity. . . . . . . . . . . . . . . . . . . . . 56
15.5 Plan Asset Valuation . . . . . . . . . . . . . . . . . . 57
15.6 Right of Employers to Plan Assets. . . . . . . . . . . . 57
ARTICLE XVI
ADMINISTRATION AND INVESTMENT MANAGEMENT. . . . . . . . . . . . . 58
16.1 General. . . . . . . . . . . . . . . . . . . . . . . . . 58
16.2 Retirement Policy Committee Acting as Employer . . . . . 58
16.3 Committee as Applicable Named Fiduciary for Plan . . . . 59
16.4 Committee as Applicable Named Fiduciary for Trust. . . . 59
16.5 Membership . . . . . . . . . . . . . . . . . . . . . . . 60
16.6 Structure. . . . . . . . . . . . . . . . . . . . . . . . 60
16.7 Actions. . . . . . . . . . . . . . . . . . . . . . . . . 60
16.8 Procedures for Designation of an Applicable Named Fiduciary61
16.9 Compensation . . . . . . . . . . . . . . . . . . . . . . 62
16.10 Discretionary Authority of each Applicable Named Fiduciary62
16.11 Responsibility and Powers of the Committee Regarding
Administration of the Plan . . . . . . . . . . . . . . . 62
16.12 Allocations and Delegations of Responsibility. . . . . . 63
16.13 Committee Bonding. . . . . . . . . . . . . . . . . . . . 65
16.14 Information to be Supplied by Employer . . . . . . . . . 65
16.15 Information to be Supplied by Applicable Named Fiduciary 65
16.16 Misrepresentations . . . . . . . . . . . . . . . . . . . 65
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16.17 Records. . . . . . . . . . . . . . . . . . . . . . . . . 65
16.18 Plan Expenses. . . . . . . . . . . . . . . . . . . . . . 66
16.19 Fiduciary Capacity . . . . . . . . . . . . . . . . . . . 66
16.20 Employer's Agent . . . . . . . . . . . . . . . . . . . . 66
16.21 Plan Administrator . . . . . . . . . . . . . . . . . . . 66
16.22 Plan Administrator Duties and Power. . . . . . . . . . . 66
16.23 Applicable Named Fiduciary Decisions Final.. . . . . . . 67
16.24 No Agency. . . . . . . . . . . . . . . . . . . . . . . . 67
ARTICLE XVII
CLAIMS PROCEDURE. . . . . . . . . . . . . . . . . . . . . . . . . 68
17.1 Initial Claim for Benefits . . . . . . . . . . . . . . . 68
17.2 Review of Claim Denial . . . . . . . . . . . . . . . . . 68
ARTICLE XVIII
ADOPTION AND WITHDRAWAL FROM PLAN . . . . . . . . . . . . . . . . 70
18.1 Procedure for Adoption . . . . . . . . . . . . . . . . . 70
18.2 Procedure for Withdrawal . . . . . . . . . . . . . . . . 70
ARTICLE XIX
AMENDMENT, TERMINATION AND MERGER . . . . . . . . . . . . . . . . 71
19.1 Amendments . . . . . . . . . . . . . . . . . . . . . . . 71
19.2 Plan Termination . . . . . . . . . . . . . . . . . . . . 73
19.3 Plan Merger. . . . . . . . . . . . . . . . . . . . . . . 73
ARTICLE XX
SPECIAL TOP-HEAVY RULES . . . . . . . . . . . . . . . . . . . . . 74
20.1 Application. . . . . . . . . . . . . . . . . . . . . . . 74
20.2 Special Terms. . . . . . . . . . . . . . . . . . . . . . 74
20.3 Minimum Contribution . . . . . . . . . . . . . . . . . . 78
20.4 Maximum Benefit Accrual. . . . . . . . . . . . . . . . . 78
20.5 Special Vesting. . . . . . . . . . . . . . . . . . . . . 78
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ARTICLE XXI
MISCELLANEOUS PROVISIONS. . . . . . . . . . . . . . . . . . . . . 80
21.1 Assignment and Alienation. . . . . . . . . . . . . . . . 80
21.2 Protected Benefits . . . . . . . . . . . . . . . . . . . 80
21.3 Plan Does Not Affect Employment Rights . . . . . . . . . 80
21.4 Deduction of Taxes from Amounts Payable. . . . . . . . . 80
21.5 Facility of Payment. . . . . . . . . . . . . . . . . . . 80
21.6 Source of Benefits . . . . . . . . . . . . . . . . . . . 81
21.7 Indemnification. . . . . . . . . . . . . . . . . . . . . 81
21.8 Reduction for Overpayment. . . . . . . . . . . . . . . . 81
21.9 Limitation on Liability. . . . . . . . . . . . . . . . . 81
21.10 Company Merger . . . . . . . . . . . . . . . . . . . . . 81
21.11 Employees' Trust . . . . . . . . . . . . . . . . . . . . 81
21.12 Gender and Number. . . . . . . . . . . . . . . . . . . . 82
21.13 Invalidity of Certain Provisions . . . . . . . . . . . . 82
21.14 Headings . . . . . . . . . . . . . . . . . . . . . . . . 82
21.15 Uniform and Nondiscriminatory Treatment. . . . . . . . . 82
21.16 Law Governing. . . . . . . . . . . . . . . . . . . . . . 82
21.17 Notice and Information Requirements. . . . . . . . . . . 82
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ARTICLE I
DEFINITIONS
The following sections of this Article I provide basic definitions of
terms used throughout the Plan, and whenever used herein in a capitalized
form, except as otherwise expressly provided, the terms shall be deemed to
have the following meanings:
1.1 "ACCOUNTING PERIOD" means the periods designated by the Committee
with respect to each Investment Fund not to exceed one year in duration.
1.2 "ACCOUNTS" means the record of a Participant's interest in the
Plan's assets represented by his or her:
(a) "MATCHING ACCOUNT" which means a Participant's interest in
the Plan's assets composed of Matching Contributions allocated on or
after January 1, 1999 to the Participant under the Plan, the amount
allocated under the Plan, as of January 1, 1999, if any (as identified
by the Committee), plus all income and gains credited to, and minus all
losses, expenses, withdrawals and distributions charged to, such
Account.
(b) "POST-TAX ACCOUNT" which means a Participant's interest in
the Plan's assets composed of post-tax contributions made prior to
January 1, 1999 the amount allocated under the Plan, as of January 1,
1999, if any (as identified by the Committee), plus all income and gains
credited to, and minus all losses, expenses, withdrawals and
distributions charged to, such Account.
(c) "PRE-TAX ACCOUNT" which means a Participant's interest in
the Plan's assets composed of Pre-Tax Contributions allocated on or
after January 1, 1999 to the Participant under the Plan, the amount
allocated under the Plan, as of January 1, 1999, if any (as identified
by the Committee), plus all income and gains credited to, and minus all
losses, expenses, withdrawals and distributions charged to, such
Account.
(d) "PROFIT SHARING ACCOUNT" which means a Participant's
interest in the Plan's assets composed of Base Contributions and Excess
Contributions allocated on or after January 1, 1999 to the Participant
under the Plan, the amount allocated under the Plan, as of January 1,
1999, if any (as identified by the Committee), plus all income and gains
credited to, and minus all losses, expenses, withdrawals and
distributions charged to, such Account.
(e) "ROLLOVER ACCOUNT" which means a Participant's interest in
the Plan's assets composed of Rollover Contributions allocated on or
after January 1, 1999 to the Participant under the Plan, the amount
allocated under the Plan, as of January 1, 1999, if any (as identified
by the Committee), plus all income and gains credited to, and minus all
losses, expenses, withdrawals and distributions charged to, such
Account.
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(f) "SPECIAL ACCOUNT" which means a Participant's interest in
the Plan's assets composed of Special Contributions allocated on or
after January 1, 1999 to the Participant under the Plan, the amount
allocated under the Plan, as of January 1, 1999, if any (as identified
by the Committee), plus all income and gains credited to, and minus all
losses, expenses, withdrawals and distributions charged to, such
Account.
(g) "TRASOP ACCOUNT" which means a Participant's interest in the
Plan's assets composed of the Parker Drilling Company Employee Stock
Ownership Plan amount allocated under the Plan, as of January 1, 1999,
if any (as identified by the Committee), plus all income and gains
credited to, and minus all losses, expenses, withdrawals and
distributions charged to, such Account.
1.3 "ACCRUED BENEFIT" means the shares held in or posted to Accounts
on the Settlement Date.
1.4 "APPENDIX" means a written supplement attached to this Plan and
made a part hereof which has been added in accordance with the provisions of
the Plan.
1.5 "APPLICABLE NAMED FIDUCIARY" means:
(a) with respect to the authority each has over management and
operation of the Plan's administration and operation or discretionary
authority and control it may have with respect to the Plan, the
Committee, Twentieth Century Services, Inc., Charles Schwab & Co., Inc.,
and such other person (other than a person acting as an Investment
Manager or Trustee) who may be designated to be an Applicable Named
Fiduciary pursuant to Article XVI;
(b) with respect to the management and control of the Plan's
assets or the discretionary authority it may have with respect to the
Plan's assets, the Committee, Twentieth Century Services, Inc., Charles
Schwab & Co., Inc., and other such person (other than a person acting as
an Investment Manager or Trustee) who may be designated to be an
Applicable Named Fiduciary pursuant to Article XVI.
1.6 "AUTHORIZED LEAVE OF ABSENCE" means an absence, with or without
Compensation, authorized on a nondiscriminatory basis by a Commonly Controlled
Entity under its standard personnel practices applicable to the Employee,
including any period of time during which such person is covered by a
short-term disability plan of his or her Employer. An Employee who leaves the
service of a Commonly Controlled Entity to enter the Armed Forces of the
United States of America and who reenters the service of the Commonly
Controlled Entity with reemployment rights under any statute granting
reemployment rights to persons in the Armed Forces shall be deemed to have
been on an Authorized Leave of Absence. The date that an Employee's
Authorized Leave of Absence ends shall be determined in accordance with the
personnel policies of such Commonly Controlled Entity, which ending date shall
be no earlier than the date that the Authorized Leave of Absence is scheduled
to end, unless the Employee communicates to such Commonly Controlled Entity
that he or she is to have a Termination of Employment as of an earlier date.
1.7 "BENEFICIARY" means any person designated by a Participant to
receive any benefits which shall be payable with respect to the death of a
Participant under the Plan or as a result of a QDRO.
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1.8 "BOARD OF DIRECTORS" means the board of directors of the Company.
1.9 "BREAK IN SERVICE" means with respect to Continuous Service, the
fifth anniversary (or sixth anniversary if absence from employment was due to
a Maternity/Paternity Absence) of the date of the Participant's termination of
employment.
1.10 "CHANGE DATE" means the one or more dates during the Plan Year
designated by the Committee as the dates available for implementing or
changing a Participant's Contribution Election.
1.11 "COMMITTEE" means the committee appointed pursuant to the terms of
the Plan to manage and control the operation and administration of the Plan.
1.11 "COMMONLY CONTROLLED ENTITY" means (1) an Employer and any
corporation, trade or business, but only for so long as it and the Employer
are members of a controlled group of corporations as defined in Section 414(b)
of the Code or under common control as defined in Section 414(c) of the Code;
provided, however, that solely for purposes of the limitations of Code Section
415, the standard of control under Sections 414(b) and 414(c) of the Code
shall be deemed to be "more than 50%" rather than "at least 80%," (2) an
Employer and an organization, but only for so long as it and the Employer are,
on and after the Effective Date, members of an affiliated service group as
defined in Section 414(m) of the Code, (3) an Employer and an organization,
but only for so long as the employees of it and the Employer are required to
be aggregated, on and after the Effective Date, under Section 414(o) of the
Code, or (4) any other organization designated as such by the Committee.
1.12 "COMPANY" means PARKER DRILLING COMPANY or any successor
corporation by merger, consolidation, purchase, or otherwise, which elects to
adopt the Plan and the Trust.
1.13 "COMPANY STOCK" means common stock issued by PARKER DRILLING
COMPANY.
1.14 "COMPENSATION" means for purposes of allocating Contributions,
such compensation which satisfies the requirements of Section 414(s) of the
Code, excluding reimbursements or other allowances, fringe benefits (cash and
non-cash), moving expenses, deferred compensation and welfare benefits;
for purposes of applying Section 415 of the Code to the Plan and its
Participants for any limitation year, such compensation as determined by the
Committee and satisfying the definition of compensation under Section 415 of
the Code; and
for any determination period with respect to an applicable provision of the
Code other than Section 415, such compensation as determined by the Committee
and which satisfies the requirements of Section 414(s) of the Code.
Notwithstanding the foregoing provisions, Compensation shall include elective
amounts excludible from gross income under Code Sections 125 and 402(e)(3)
(other than for Code Section 415 purposes) and in no event shall the annual
compensation of any Employee taken into account under the Plan for any Plan
Year exceed two hundred thousand dollars ($200,000) (adjusted at the same time
and manner as under Section 415(d) of the Code, prorated for any Plan Year of
less than twelve (12) months, and increased for family members as provided in
Section 401(a)(17) of the Code).
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In addition to other applicable limitations set forth in the Plan, and
notwithstanding any other provision of the Plan to the contrary, for Plan
Years beginning on or after January 1, 1994, the annual Compensation of each
Employee taken into account under the Plan shall not exceed the OBRA '93
annual compensation limit. The OBRA '93 annual compensation limit is
$150,000, as adjusted by the Commissioner of Internal Revenue for increases in
the cost-of-living in accordance with Section 401(a)(17)(B) of the Code. The
cost-of-living adjustment in effect for a calendar year applies to any period,
not exceeding twelve (12) months, over which Compensation is determined
(determination period) beginning in such calendar year. If a determination
period consists of fewer than twelve (12) months, the OBRA '93 annual
compensation limit will be multiplied by a fraction, the numerator of which is
the number of months in the determination period, and the denominator of which
is twelve (12).
For Plan Years beginning on or after January 1, 1994, any reference in
this Plan to the limitation under Section 401(a)(17) of the Code shall mean
the OBRA '93 annual compensation limit set forth in this provision.
If Compensation for any prior determination period is taken into account
in determining an Employee's benefits accruing in the current Plan Year, the
Compensation for that prior determination period is subject to the OBRA '93
annual compensation limit in effect for that prior determination period. For
this purpose, for determination periods beginning before the first day of the
first Plan Year beginning on or after January 1, 1994, the OBRA '93 annual
compensation limit is $150,000.
1.15 "CONTINUOUS SERVICE" means the sum of the years (and fractions of
years) measured from an Employee's Employment Date to his or her date of
Termination of Employment first to occur after his or her Employment Date;
provided, that if an Employee has a Period of Severance of less than twelve
(12) consecutive months after a Termination of Employment, such Termination of
Employment shall be disregarded and such Employee's Continuous Service shall
include such period when he or she is not employed by a Commonly Controlled
Entity.
1.16 "CONTRIBUTIONS" means amounts contributed to the Plan by the
Employer or an Eligible Employee. Specific types of contributions include:
(a) "Base". A contribution allocated with respect to a
percentage of Compensation of any Participant not in excess
of the Integration Level.
(b) "Excess". A contribution allocated with respect to a
percentage of Compensation of any Participant in excess of
the Integration Level.
(c) "Matching". An amount contributed by the Employer based
upon the amount contributed by the eligible Participant.
(d) "Pre-Tax". An amount contributed on a pre-tax basis in
conjunction with a Participant's Code Section 401(k) salary
deferral agreement.
(e) "Special". An amount contributed by the Employer to avoid
prohibited discrimination under Section 401(a)(4) of the
Code.
1.17 "CONTRIBUTION DOLLAR LIMIT" means the annual limit imposed on each
Participant pursuant to Section 402(g) of the Code, which shall be seven
thousand dollars ($7,000) per calendar year (as indexed for cost-of-living
adjustments pursuant to Code Section 402(g)(5) and 415(d)).
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1.18 "CONTRIBUTION ELECTION" OR "ELECTION" means the election made by a
Participant to reduce his or her Compensation by an amount equal to the
product of his or her Contribution Percentage and such Compensation subject to
the Contribution Election.
1.19 "CONTRIBUTION PERCENTAGE" means the percentage of a Participant's
Compensation which is to be contributed to the Plan by his or her Employer as
a Contribution.
1.20 "CONVERSION ELECTION" means an election by a Participant to change
the investment of all or some specified portion of such Participant's Accounts
by voice response to the telephone number provided by the Named Fiduciary, or
on such form that may be required by the Named Fiduciary to whom it is
delivered. No Conversion Election shall be deemed to have been given to the
Named Fiduciary unless it is complete and delivered in accordance with the
procedures established by such Named Fiduciary for this purpose.
1.21 "CUSTODIAL AGREEMENT" means the Trust Agreement or an insurance
contract to provide for the holding of the assets of the Plan.
1.22 "CUSTODIAN" means the Trustee or an insurance company if the
contract issued by such company is not held by the Trustee.
1.23 "DIRECT ROLLOVER" means a payment by the Plan to the Eligible
Retirement Plan specified by the Distributee.
1.24 "DISABILITY OR DISABLED" means the inability of a Participant to
engage in any substantial gainful activity by reason of a physical or mental
impairment which can be expected to result in death or to be of indefinite
duration. Such determination shall be made by a physician chosen by the
Committee.
1.25 "DISTRIBUTEE" includes an Employee or former Employee. In
addition, the Employee's or former Employee's surviving Spouse and the
Employee's or former Employee's Spouse or former Spouse who is the alternate
payee under a QDRO are Distributees with regard to the interest of the Spouse
or former Spouse.
1.26 "EFFECTIVE DATE" means January 1, 1999, the date upon which the
provisions of this document become effective. In general, the provisions of
this document only apply to Participants who are Employees on or after the
Effective Date. However, investment and distribution provisions apply to all
Participants with Account balances to be invested or distributed after the
Effective Date.
1.27 "ELECTIVE DEFERRAL" means amounts subject to the Contribution
Dollar Limit.
1.28 "ELIGIBLE EMPLOYEE" means any Employee (including an Employee on
an Authorized Leave of Absence) of an Employer or an Employee who is receiving
remuneration for personal services rendered to a foreign affiliate, as defined
in Section 3121(1)(8) of the Code ("Foreign Affiliate"), of an Employer
("Domestic Parent"), if the Domestic Parent has entered into an agreement with
the Secretary of the Treasury of the United States of America under Section
3121(1) of the Code to have the insurance system established by Title II of
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the Social Security Act extended to service performed outside the United
States of America in the employ of the Foreign Affiliate and if such person's
service with the Foreign Affiliate is performed during the effective period of
such agreement on and after the Effective Date of the adoption of this Plan by
the Employer, excluding any Employee:
(a) who is a member of a group of Employees represented by a
collective bargaining representative, unless a currently effective
collective bargaining agreement between his or her Employer and the
collective bargaining representative of the group of Employees of which
he or she is a member provides for coverage by the Plan;
(b) who is considered an Employee solely because of the
application of Section 414(n) of the Code;
(c) who is a nonresident alien who receives no earned income,
within the meaning of Code Section 911(d)(2), from sources within the
United States within the meaning of Code Section 861(a)(3); or
(d) who has had a Period of Severance of twelve (12) months
prior to the date the Employee completes a twelve (12) month period of
Continuous Service.
1.29 "ELIGIBILITY SERVICE" means the sum of an Employee's Years of
Service; provided, however:
(a) if the Employee had no vested interest in his or her
Contributions by an Employer, Years of Service earned before a Break in
Service shall be disregarded; or
(b) Years of Service shall be disregarded if such Years of
Service were earned prior to the date the Employee's Employer became a
Commonly Controlled Entity, unless the Committee makes such a
determination not to apply this exclusion with respect to each such
Employee in a uniform and nondiscriminatory manner.
1.30 "ELIGIBLE RETIREMENT PLAN" means an individual retirement account
described in Section 408(a) of the Code, an individual retirement annuity
described in Section 408(b) of the Code, an annuity plan described in Section
403(a) of the Code, or a qualified trust described in Section 401(a) of the
Code, that accepts the Distributee's Eligible Rollover Distribution. However,
in the case of an Eligible Rollover Distribution to the surviving Spouse, an
Eligible Retirement Plan is an individual retirement account or individual
retirement annuity.
1.31 "ELIGIBLE ROLLOVER DISTRIBUTION" means any distribution of all or
any portion of the balance to the credit of the Distributee, except that an
Eligible Rollover Distribution does not include any distribution that is one
of a series of substantially equal periodic payments (not less frequently than
annually) made for the life (or life expectancy) of the Distributee or the
joint lives (or joint life expectancies) of the Distributee and the
Distributee's designated Beneficiary, or for a specified period of ten years
or more; any distribution to the extent such distribution is required under
Section 401(a)(9) of the Code; and the portion of any distribution that is not
includible in gross income (determined without regard to the exclusion for net
unrealized appreciation with respect to employer securities).
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1.32 "EMPLOYEE" means any person who renders services as a common law
employee to a Commonly Controlled Entity or is on an Authorized Leave of
Absence, including the period of time before which the trade or business
became a Commonly Controlled Entity, but excluding the period of time after
which it ceases to be a Commonly Controlled Entity. No person who was hired
through a temporary agency (including but not limited to any leased Employee)
shall be considered an Employee and no person, the terms of whose services are
governed by an independent contractor or consulting agreement with an
Employer, shall be considered an Employee except to the extent explicitly
provided to the contrary in such agreement; provided, however, any individual
considered an Employee of a Commonly Controlled Entity under Section 414(n) of
the Code shall be deemed employed by the Commonly Controlled Entity for which
the individual performed services.
1.33 "EMPLOYER" means the Company and any Commonly Controlled Entity
which has adopted the Plan; provided, that an entity will cease to be an
Employer when it ceases to be a Commonly Controlled Entity.
1.34 "EMPLOYMENT DATE" means the day an Employee first earns an Hour of
Service; provided, however, with respect to an Employee who incurs a Period of
Severance of twelve (12) consecutive months or more, the Employment Date for
such Employee shall be adjusted forward in time by a period of days equal to
the number of days in the Period of Severance, and for purposes of becoming an
Eligible Employee, such person shall be considered to have an Employment Date
on the first day he or she earns an Hour of Service as of their reemployment
as an Employee.
1.35 "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended. Reference to any specific Section shall include such Section, any
valid regulation promulgated thereunder, and any comparable provision of any
future legislation amending, supplementing or superseding such Section.
1.36 "FAIR MARKET VALUE" means:
(a) with respect to a security for which there is a generally
recognized market, the price of the security prevailing on a national
securities exchange which is registered under Section 6 of the
Securities Exchange Act of 1934;
(b) unless determined otherwise by the Committee, with respect
to any guaranteed income contract, the value reported by the issuing
company or bank;
(c) with respect to a Participant loan, the unpaid principal and
accrued interest; and
(d) for any other asset, the fair market value of the asset, as
determined in good faith by the Trustee or the Applicable Named
Fiduciary in accordance with regulations promulgated under Section 3(18)
of ERISA.
1.37 "FAMILY MEMBER" shall mean an individual described in Code Section
414(q)(6)(B).
1.38 "FORFEITURE" means the portion of the Participant's Accrued
Benefit which is forfeited pursuant to the terms of the Plan.
1.39 "FORFEITURE ACCOUNT" means an account holding amounts forfeited by
Participants.
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1.40 "HIGHLY COMPENSATED ELIGIBLE EMPLOYEE" or "HCE" means a highly
compensated active employee or a highly compensated former employee.
This amendment is effective beginning on the first day of the following
Plan Year: 1995.
The group of highly compensated employees ("HCEs") includes any Employee
who is employed by the Employer on the snapshot day and who (i) is a 5-percent
owner on the snapshot day, (ii) receives Compensation for the Plan Year in
excess of the Section 414(q)(1)(B) amount for the Plan Year, (iii) receives
Compensation for the Plan Year in excess of the Section 414(q)(1)(C) amount
for the Plan Year and is a member of the top paid group of Employees within
the meaning of Section 414(q)(4), or (iv) is an officer on the snapshot day
and receives Compensation during the Plan Year that is greater than 50 percent
of the dollar limitation in effect under Section 415(b)(1)(A). If no officer
satisfies the Compensation requirement of (iv) above, the highest paid officer
for such Plan Year shall be treated as a HCE.
For purposes of determining who is a HCE, Compensation means
Compensation within the meaning of Section 415(c)(3) as set forth in the Plan
for purposes of determining the Section 415 limits, except that amounts
excluded pursuant to Sections 125, 402(e)(3), 402(h)(1)(B) and 403(b) are
included. If compensation used for purposes of determining the Section 415
limits under the Plan is not defined as total Compensation as provided under
Section 415(c)(3) and the regulations thereunder, then for purposes of
determining who is a HCE, Compensation means Compensation within the meaning
of Section 1.415-2(d)(11)(i) of the Income Tax Regulations, except that
amounts excluded pursuant to Sections 125, 402(e)(3), 402(h)(1)(B) and 403(b)
are included.
If, as of the snapshot day, an Employee is a Family Member of either a
5-percent owner (whether active or former) or a HCE who is one of the 10 most
HCEs ranked on the basis of Compensation paid by the Employer during such
year, then the Family Member and the 5-percent owner or top-ten HCE shall be
aggregated. In such case, the family member and 5-percent owner or top-ten
HCE shall be treated as a single Employee receiving Compensation and Plan
contributions or benefits equal to the sum of the Compensation and
contributions and benefits of the Family Member and 5-percent owner or top-ten
HCE. For purposes of this section, Family Member includes the spouse, lineal
ascendants and descendants of the Employee or former Employee, and the spouses
of such ascendants and descendants.
The snapshot day will be September 1.
The group of HCEs will also include any Employee who during the Plan
Year:
(a) terminated employment prior to the snapshot day and was a HCE in
the prior Plan Year;
(b) terminated employment prior to the snapshot day and (i) was a 5-
percent owner, or (ii) has Compensation for the Plan Year which is greater
than or equal to the Compensation of any Employee who is treated as a HCE on
the snapshot day (except for Employees who are HCEs solely because they are 5-
percent owners or officers), or (iii) was an officer and has Compensation
greater than or equal to the Compensation of any other officer who is a HCE on
the snapshot day solely because that person is an officer; or
(c) becomes employed subsequent to the snapshot day during the Plan
Year and (i) is a 5-percent owner, or (ii) has Compensation for the Plan Year
that is greater than or equal to the Compensation of any Employee who is
treated as a HCE on the snapshot day (except Employees who are HCEs solely
because they are 5-percent owners or officers), or (iii) is an officer and has
Compensation that is greater than or equal to the Compensation of any other
officer who is a HCE on the snapshot day solely because that person is an
officer.
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The determination of who is a HCE, including the determination of the
number and identity of Employees in the top paid group, the number of
Employees treated as officers and the Compensation that is taken into account,
will be made in accordance with Section 414(q) and Section 1.414(q)-1T of the
temporary Income Tax Regulations to the extent they are not inconsistent with
the method established above.
1.41 "HOUR OF SERVICE" means, for purposes of determining Continuous
Service, each hour for which an Employee is directly or indirectly paid or
entitled to payment by a Commonly Controlled Entity for the performance of
duties for purposes of determining Continuous Service, each hour for which an
Employee is directly or indirectly paid or entitled to payment by a Commonly
Controlled Entity for the performance of duties.
1.42 "INTEGRATION LEVEL" means the taxable wage base in effect as of
the beginning of the Plan Year and for a short Plan Year such amount
multiplied by a fraction, the numerator of which is the number of months in
the short Plan Year and the denominator of which is twelve (12).
1.43 "INTERNAL REVENUE CODE" OR "CODE" means the Internal Revenue Code
of 1986, as amended, any subsequent Internal Revenue Code and final Treasury
Regulations. If there is a subsequent Internal Revenue Code, any references
herein to Internal Revenue Code Sections shall be deemed to refer to
comparable Sections of any subsequent Internal Revenue Code.
1.44 "INVESTMENT ELECTION" means an election by which a Participant
directs the investment of his or her Contributions and Rollover Contributions
by voice response to the telephone number provided by the Named Fiduciary, or
on such form that may be required by the Named Fiduciary to whom it is
delivered. No Investment Election shall be deemed to have been given to the
Named Fiduciary unless it is complete and delivered in accordance with the
procedures established by such Named Fiduciary for this purpose.
1.45 "INVESTMENT FUND" OR "FUND" means one or more collective
investment funds, a pool of assets, or deposits with the Custodian, a mutual
fund, insurance contract, or managed pool of assets. The Investment Funds
authorized by the Committee are listed in an Appendix.
1.46 "LIMITED DEFERRALS" means Elective Deferrals subject to the limits
of Code Section 401(a)(30).
1.47 "MATERNITY/PATERNITY ABSENCE" means a paid or unpaid and
unapproved absence from employment with a Commonly Controlled Entity (1) by
reason of the pregnancy of the Employee; (2) by reason of the birth of a child
of the Employee; (3) by reason of the placement of a child under age eighteen
(18) in connection with the adoption of such child by the Employee (including
a trial period prior to adoption); and (4) for the purpose of caring for a
child of the Employee immediately following the birth or adoption of such
child. The Employee must prove to the satisfaction of the Committee or its
agent that the absence meets the above requirements and must supply
information concerning the length of the absence unless the Committee has
access to relevant information without the Employee submitting it.
1.48 "NON-HIGHLY COMPENSATED EMPLOYEE" OR "NHCE" means an Employee who
is neither an HCE nor a Family Member.
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1.49 "NORMAL RETIREMENT DATE" means the date a Participant attains
sixty-five (65) years of age.
1.50 "NOTICE DATE" means the date established by the Applicable Named
Fiduciary as the deadline for it to receive notification with respect to an
administrative matter in order to be processed as of a Change Date designated
by the Committee.
1.51 "PARTICIPANT" means an Eligible Employee who begins to participate
in the Plan after completing the eligibility requirements. A Participant's
participation continues until his or her Termination of Employment and his or
her Accrued Benefit is distributed or forfeited.
1.52 "PAYMENT DATE" means the date on or after the Settlement Date on
which a Participant's Accrued Benefit is distributed or commences to be
distributed, which date shall be at least the minimum number of days required
by law, if any, after the date the Participant has received any notice
required by law, if any.
If a distribution is one to which Sections 401(a)(11) and 417 of
the Internal Revenue Code do not apply, such distribution may commence less
than thirty (30) days after the notice required under Section 1.401(a)-11(c)
of the Income Tax Regulations is given, provided that:
(a) the plan administrator clearly informs the Participant that
the Participant has a right to a period of at least thirty (30) days
after receiving the notice to consider the decision of whether or not to
elect a distribution (and, if applicable, a particular distribution
option), and
(b) the Participant, after receiving the notice, affirmatively
elects a distribution.
1.53 "PERIOD OF SEVERANCE" means the period of time measured from the
later of (a) an Employee's Termination of Employment, and (b) the conclusion
of a Maternity/Paternity Absence of no longer than twelve (12) consecutive
months, to the date thereafter he or she first earns an Hour of Service.
1.54 "PLAN" means the PARKER DRILLING COMPANY STOCK BONUS PLAN, as set
forth herein and as hereafter may be amended from time to time.
1.55 "PLAN YEAR" means the calendar year.
1.56 "QDRO" means a domestic relations order which the Committee has
determined to be a qualified domestic relations order within the meaning of
Section 414(p) of the Code.
1.57 "QUALIFIED MATCHING CONTRIBUTION" means a Matching Contribution
that is treated as a Pre-Tax Contribution and posted to the Pre-Tax Account.
1.58 "RELATED PLAN" means:
(a) with respect to Section 401(k) and 401(m) of the Code, any
plan or plans maintained by a Commonly Controlled Entity which is
treated with this Plan as a single plan for purposes of Sections
401(a)(4) or 410(b) of the Code; and
(b) with respect to Section 415 of the Code, any other defined
contribution plan or a defined benefit plan (as defined in Section
415(k) of the Code) maintained by a Commonly Controlled Entity,
respectively called a "Related Defined Contribution Plan" and a "Related
Defined Benefit Plan".
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1.59 "RETIREMENT POLICY COMMITTEE" means the Retirement Policy
Committee created by the Board of Directors which is authorized to act on
behalf of each Employer as provided in Article XVI.
1.60 "ROLLOVER CONTRIBUTION" means a Trustee Transfer (1) to the
Custodian of an amount by the custodian of a retirement plan qualified for
tax-favored treatment under Code Section 401(a), which plan provides for such
transfer; (2) with respect to which the benefits otherwise protected by Code
Section 411 in such transferor plan are no longer required by Code Section 411
to be protected in this Plan; and (3) which does not include amounts subject
to Code Section 401(k).
1.61 "SETTLEMENT DATE" means the date on which the transactions from
the most recent Trade Date are settled.
1.62 "SPOUSAL CONSENT" means the written consent given by a Spouse to a
Participant's election (or waiver) of a specified form of benefit or
Beneficiary designation. The Spouse's consent must acknowledge the effect on
the Spouse of the Participant's election, waiver or designation and be duly
witnessed by a Plan representative or notary public. Spousal Consent shall be
valid only with respect to the spouse who signs the Spousal Consent and only
for the particular choice made by the Participant which requires Spousal
Consent. A Participant may revoke (without Spousal Consent) a prior election,
waiver or designation that required Spousal Consent at any time before the
Sweep Date associated with the Settlement Date upon which payments will begin.
Spousal Consent also means a determination by the Administrator that there is
no Spouse, the Spouse cannot be located or such other circumstances as may be
established by applicable law.
1.63 "SPOUSE" means a person who, as of the earlier of a Participant's
Payment Date and death, is alive and married to the Participant within the
meaning of the laws of the State of the Participant's residence as evidenced
by a valid marriage certificate or other proof acceptable to the Committee. A
spouse who was the Spouse on the Payment Date but who is divorced from the
Participant at the Participant's death shall still be the Spouse at the date
of the Participant's death, except as otherwise provided in a QDRO.
1.64 "SWEEP DATE" means the date established by the Applicable Named
Fiduciary as the cutoff date and time for the responsible Named Fiduciary to
receive notification with respect to a financial transaction for an Accounting
Period in order to be processed with respect to a Trade Date designated by the
Applicable Named Fiduciary.
1.65 "TERMINATION OF EMPLOYMENT" occurs when a person ceases to be an
Employee or if earlier, the first anniversary of the date his or her
Authorized Leave of Absence commenced, as determined by the personnel policies
of the Commonly Controlled Entity to whom he or she rendered services;
provided, however, where a Commonly Controlled Entity ceases to be such with
respect to an Employee as a result of either an asset sale or stock sale an
Employee of the Commonly Controlled Entity shall be deemed not to have
incurred a Termination of Employment: (a) unless the Committee shall make a
determination that the transaction satisfies Section 401(k) of the Code, or if
no such determination is made, until such Employee ceases to be employed by
the successor to the Commonly Controlled Entity; or (b) if the Committee shall
make a Trustee Transfer of his or her Accrued Benefit. Transfer of employment
from one Commonly Controlled Entity to another Commonly Controlled Entity
shall not constitute a Termination of Employment for purposes of the Plan.
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1.66 "TRADE DATE" means the date as of which a financial transaction
occurs, however with respect to a transaction involving Investment Funds
maintained on a share accounting methodology, the transaction shall be
executed based upon the daily average of the proceeds or purchase price of
sales and purchases, respectively, of a share.
1.67 "TRUST" means the legal entity resulting from the agreement
between the Company and the Trustee and all amendments thereto, in which some
or all of the assets of this Plan will be received, held, invested and
distributed to or for the benefit of Participants and Beneficiaries.
1.68 "TRUST AGREEMENT" means the agreement between the Company and the
Trustee establishing the Trust, and any amendments thereto.
1.69 "TRUST FUND" means any property, real or personal, received by and
held by the Trustee, plus all income and gains and minus all losses, expenses,
withdrawals and distributions chargeable thereto.
1.70 "TRUSTEE" means any corporation, individual or individuals
designated in the Trust Agreement who shall accept the appointment as Trustee
to execute the duties of the Trustee as set forth in the Trust Agreement.
1.71 "TRUSTEE TRANSFER" means (a) a transfer to the Custodian of an
amount by the custodian of a retirement plan qualified for tax-favored
treatment under Section 401(a) of the Code or by the trustee(s) of a trust
forming part of such a plan, which plan provides for such transfer; or (b) a
Direct Rollover within the meaning of Section 402(c)(8)(B) of the Code;
provided that with respect to any withdrawal or distribution from the Plan, a
Participant may elect a transfer to only one eligible retirement plan, except
as may otherwise be determined by the Committee, in a uniform and
nondiscriminatory manner.
1.71 "VALUATION RATE" means the close of business on each business day.
1.72 "VESTING SERVICE" means the sum of the Years of Service of an
Employee; provided however, Years of Service shall be disregarded:
(a) if the Employee had no vested interest in his or her
Contributions by an Employer, Years of Service earned before the Break
in Service; or
(b) if such Years of Service were earned prior to a Period of
Severance of at least twelve (12) months, unless and until the
Participant has completed a Year of Service; or
(c) if such Years of Service were earned after a Break in
Service, for purposes of determining the nonforfeitable percentage of
his or her Accrued Benefit earned before such Break in Service; or
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(d) if such Years of Service were earned prior to the date the
Employee's Employer became a Commonly Controlled Entity shall be
disregarded, unless the Committee makes such a determination not to
apply this exclusion with respect to each such Employee in a uniform and
nondiscriminatory manner.
1.73 "YEAR OF SERVICE" means a twelve (12) consecutive month period of
Continuous Service.
An Employee's service with a company, the assets of which are acquired
by a Commonly Controlled Entity, shall only be counted as employment with such
Commonly Controlled Entity in the determination of his or her Years of Service
if (1) the Committee directs that credit for such service be granted, or (2) a
qualified plan of the acquired company is subsequently maintained by any
Employer or Commonly Controlled Entity.
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ARTICLE II
PARTICIPATION
2.1 ELIGIBILITY. On or after the Effective Date, as to each Employer:
(a) PARTICIPANT ON JANUARY 1, 1999. Each person who has an
Accrued Benefit on January 1, 1999 shall become a Participant as of
January 1, 1999.
(b) OTHER ELIGIBLE EMPLOYEE. Each other Eligible Employee shall
become a Participant on the first day of the month on or after the date
he or she completes at least three months of Eligibility Service;
provided however, each Eligible Employee who becomes an Eligible
Employee as a result of the agreement between the Company and Amoco
Exploration and Production Technical Group shall become a Participant on
October 1, 1996; and provided further, each Eligible Employee who became
an Employee of Mallard Bay Drilling, Inc. ("Mallard") prior to the date
Mallard becomes a Commonly Controlled Entity shall become a Participant
on the date Mallard becomes an Employer if such Eligible Employee has at
least six (6) months of Eligibility Service with Mallard on such date,
or, if such person does not have sufficient Eligibility Service, on the
first day of the month next following the date he or she completes at
least six (6) months of Eligibility Service.
2.2 REEMPLOYMENT.
(a) ELIGIBLE EMPLOYEE WAS PREVIOUSLY A PARTICIPANT. An Eligible
Employee who has at least three months of Eligibility Service and
previously was a Participant prior to his or her Termination of
Employment shall become a Participant on the first day he or she earns
an Hour of Service.
(b) ELIGIBLE EMPLOYEE HAD A TERMINATION. An Eligible Employee
who previously completed the service requirement to become a Participant
and who had a Termination of Employment before he or she became a
Participant shall be eligible to become a Participant on the later of
(1) the date he or she would have become a Participant but for his or
her Termination of Employment, or (2) the date he or she again earns an
Hour of Service.
2.3 PARTICIPATION UPON CHANGE OF JOB STATUS. An Employee who is not
an Eligible Employee shall become a Participant on the later of (1) the date
he or she would have become a Participant had he or she always been an
Eligible Employee, or (2) the date he or she becomes an Eligible Employee.
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ARTICLE III
PARTICIPANT CONTRIBUTIONS
3.1 PRE-TAX CONTRIBUTION ELECTION.
(a) A Participant who is an Eligible Employee and who desires to
have Pre-Tax Contributions made on his or her behalf by his or her
Employer shall file a Contribution Election pursuant to procedures
specified by the Applicable Named Fiduciary specifying his or her
Contribution Percentage of not less than one percent (1.00%) nor more
than fifteen percent (15%) (stated as a whole integer percentage) and
authorizing the Compensation otherwise payable to him or her to be
reduced. Notwithstanding the foregoing, a Participant who is an
Eligible Employee and who is a member of a group designated by the
Retirement Policy Committee as eligible for a "negative election" shall
be deemed to have elected to make a 1.00% Pre-Tax Contribution to the
Plan, unless such Eligible Employee files a Contribution Election,
pursuant to procedures specified by the Applicable Named Fiduciary,
indicating a different Pre-Tax Contribution amount (including 0.00%).
A Contribution Election reduced to 0.00% under the preceding sentence
at any time for Compensation which has not been earned, including prior
to the time the Individual becomes an Eligible Employee.
(b) Notwithstanding Subsection (a) hereof, for any Plan Year the
Committee may determine that the maximum Contribution Percentage shall
be greater or lesser than the percentages set forth in Subsection (a)
hereof. Otherwise, the maximum Contribution Percentage as provided in
Subsection (a) hereof shall apply.
(c) A Participant's Contribution Election shall be effective
only with respect to Compensation not yet paid as of the date the
Contribution Election is effective. A Contribution Election received on
or before a Notice Date shall become initially effective with respect to
payroll cycles ended after the applicable Change Date or if participants
are reemployed when they Hour of Service. However, the Committee, in
its sole discretion, may declare an additional window period to
Participants. Any Contribution Election which has not been properly
completed or which does not have a valid Investment Election will be
deemed not to have been received and be void.
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3.2 ELECTION PROCEDURES. A Participant's Contribution Election shall
continue in effect (with automatic adjustment for any change in his or her
Compensation) until the earliest of the date (1) his or her Contribution
Election is changed in accordance with paragraph (a) hereof; (2) he or she
ceases to be paid as an Eligible Employee; or (3) his or her Contribution
Election is cancelled in accordance with paragraph (b) hereof.
(a) CHANGING THE ELECTION. A Participant may increase or
decrease his or her Contribution Percentage (subject to the percentage
limits stated above) only once each Change Date by making a new
Contribution Election, pursuant to procedures specified by the
Applicable Named Fiduciary, on which is specified the amount of the
Contribution Percentage.
(1) If such Contribution Election is received by the
Notice Date, the change shall be effective with
respect to the first payroll cycle ended after the
Change Date.
(2) However, if the Committee deems it necessary, the
Committee may specify an additional window period to
Participants.
(3) The amount of increase or decrease of such
Contribution Percentage shall be effective only with
respect to Compensation not yet paid.
(4) Any Contribution Election which has not been properly
completed or which does not have a valid Investment
Election will be deemed not to have been received and
be void.
(b) CANCELING THE ELECTION. A Participant desiring to cancel
his or her existing Contribution Election and reduce his or her
Contribution Percentage to zero must make a new Contribution Election,
pursuant to procedures specified by the Applicable Named Fiduciary. The
Applicable Named Fiduciary will establish procedures, to be administered
in a uniform and nondiscriminatory manner, for allowing a Participant to
cancel his or her Contribution Election. Any Contribution Election
received on or before a Notice Date shall become effective with respect
to the payroll cycle ended after the next Change Date. A Participant
who is an Eligible Employee and who has cancelled his or her Election
may again make a Contribution Election at any time. If such
Contribution Election is received by the Notice Date, it shall become
effective with respect to the first payroll cycle ended after the next
Change Date. Any Participant who has improperly completed a
Contribution Election will be deemed not to have made an Election.
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3.3 LIMITATION OF ELECTIVE DEFERRALS FOR ALL PARTICIPANTS. A
Participant's Limited Deferrals for any calendar year shall not exceed the
Contribution Dollar Limit. If a Participant advises the Committee that he or
she has Elective Deferrals (reduced by Elective Deferrals previously
distributed or which are recharacterized as a result of the application of
Code Section 401(k)(3) to such Participant) in excess of the Contribution
Dollar Limit ("Excess Deferral"), the Committee shall return such Excess
Deferrals for the taxable year to the Participant. To the extent the
Participant's Limited Deferrals exceed the Contribution Dollar Limit, the
Employer may notify the Plan on behalf of the Participant (and "Excess
Deferral" shall be calculated by taking into account only Limited Deferrals).
If such advice was received by the Committee during the taxable year, the Plan
shall distribute the Excess Deferral as soon as administratively feasible. If
such advice was received by the Committee after the taxable year but no later
than March 1 (or as late as April 14, if allowed by the Committee) following
the close of the taxable year, the Committee shall cause the Plan to return
such Excess Deferral no later than April 15 immediately following the end of
such taxable year, adjusted by income allocable to that amount.
If the application of the limitations in this Section results in a reduction
of previously contributed Pre-Tax Contributions on behalf of a Participant,
Matching Contributions allocable with respect thereto (prior to such
reduction) which are not distributed under the ACP Test shall be forfeited.
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ARTICLE IV
EMPLOYER CONTRIBUTIONS AND ALLOCATIONS
4.1 PRE-TAX CONTRIBUTIONS.
(a) FREQUENCY AND ELIGIBILITY. Subject to the limits of the
Plan and to the Committee's authority to limit Contributions under the
terms of this Plan, for each period for which a Contribution Election is
in effect, the Employer shall contribute to the Plan on behalf of each
Participant an amount equal to the amount designated by the Participant
as a Pre-Tax Contribution on his or her Contribution Election.
(b) ALLOCATION. The Pre-Tax Contribution shall be allocated to
the Pre-Tax Account of the Participant with respect to whom the amount
is paid.
(c) TIMING, MEDIUM AND POSTING. Pre-Tax Contributions shall be
paid to the Custodian in cash and posted to each Participant's Pre-Tax
Account by the Applicable Named Fiduciary as soon as such amounts can
reasonably be balanced against the specific amount made on behalf of
each Participant. Pre-Tax Contributions shall be paid to the Custodian
not more than ninety (90) days after the date amounts are deducted from
the Participant's Compensation.
4.2 MATCHING CONTRIBUTIONS.
(a) FREQUENCY AND ELIGIBILITY. Subject to the limits of the
Plan and to the Committee's authority to limit Contributions under the
Plan, for each calendar month for which Participants' Contributions are
made, the Employer shall make Matching Contributions as described in the
following Allocation Method paragraph on behalf of each Participant who
contributed during the period and was an Eligible Employee at any time
during such calendar month.
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(b) ALLOCATION METHOD. The Matching Contributions, together
with any available Forfeiture Account amounts to be applied as Matching
Contributions, for each period shall total (1) one hundred percent
(100%) of each eligible Participant's Pre-Tax Contributions for the
period, up to three percent (3%) of such Participant's Compensation, and
(2) fifty percent (50%) of such Participant's Pre-Tax Contributions for
the period, in excess of three percent (3%) of such Participant's
Compensation; provided that no Matching Contributions and Forfeiture
Account amounts shall be made based upon a Participant's Contributions
in excess of five percent (5%) of his or her Compensation. The Employer
may change the one hundred percent (100%) and fifty percent (50%)
matching rates or the three percent (3%) and five percent (5%) of
considered Compensation to any other percentages, including zero (0%).
(c) TIMING, MEDIUM AND POSTING. The Employer shall make each
period's Matching Contribution in cash or Company Stock as soon as is
feasible, and not later than the Employer's federal tax filing date,
including extensions, for deducting such Contribution. The Applicable
Named Fiduciary shall post such amount to each Participant's Matching
Account once the total Contribution received by the Custodian has been
balanced against the specific amount to be credited to each
Participant's Matching Account.
(d) COMPENSATION. Compensation shall be measured by the period
(not to exceed the Plan Year) for which the Contribution is being made
provided the Eligible Employee is a Participant during such period.
4.3 SPECIAL CONTRIBUTIONS.
(a) FREQUENCY AND ELIGIBILITY. Subject to the limits of the
Plan and to the Committee's authority to limit Contributions under the
Plan, for each Plan Year, the Employer may make a Special Contribution
in an amount determined by the Committee on behalf of each Non-Highly
Compensated Employee Participant who was an Eligible Employee at any
time during the Plan Year.
(b) ALLOCATION METHOD. The Special Contribution for each period
shall be allocated among eligible Participants as determined by the
Committee, subject to a maximum dollar amount which may be contributed
on behalf of any Participant as determined by the Committee.
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(c) TIMING, MEDIUM AND POSTING. The Employer shall make each
period's Special Contribution in cash or Company Stock as soon as is
feasible, but no later than twelve (12) months after the end of the Plan
Year to which it is allocated. The Applicable Named Fiduciary shall
post such amount to each Participant's Special Account once the total
Contribution received by the Custodian has been balanced against the
specific amount to be credited to each Participant's Special Account.
(d) COMPENSATION. Compensation shall be measured by the period
(not to exceed the Plan Year) for which the Contribution is being made,
provided the Eligible Employee is a Participant during such period.
4.4 BASE AND EXCESS CONTRIBUTIONS.
(a) FREQUENCY AND ELIGIBILITY. Subject to the limits of the
Plan and to the Committee's authority to limit Contributions under the
Plan, for each Plan Year the Employer may make an aggregate Base
Contribution and Excess Contribution in an amount determined by the
Board on behalf of each Participant who was an Eligible Employee on the
last day of each Plan Year. In addition, such Contribution shall be
made on behalf of each Participant who ceased being an Employee during
the period after having attained his or her Normal Retirement Date, or
by reason of his or her Disability or death.
(b) ALLOCATION METHOD. The Base Contribution for each period
shall be allocated among eligible Participants in direct proportion to
their Compensation, provided that no Base Contributions amounts shall be
made based upon a Participant's Compensation in excess of the
Integration Level. The Excess Contribution for each period shall be a
percentage of the Participant's Compensation in excess of the
Integration Level equal to the percentage determined for such
Participant by adding (1) the percentage determined by dividing the Base
Contribution by the Participant's Compensation not in excess of the
Integration Level plus (2) the maximum excess allowance permitted by
Code Section 401(l). If any Base Contribution or Excess Contribution
remains unallocated, it shall be allocated among eligible Participants
in direct proportion to their Compensation.
(c) TIMING, MEDIUM AND POSTING. Each Employer shall make each
period's Base and Excess Contribution in cash or Company Stock as soon
as is feasible, and not later than the Employer's federal tax filing
date, including extensions, for deducting such Contribution. The
Applicable Named Fiduciary shall post such amount to each Participant's
Profit Sharing Account once the total Contribution received has been
balanced against the specific amount to be credited to each
Participant's Profit Sharing Account.
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(d) COMPENSATION. Compensation shall be measured by the period
(not to exceed the Plan Year) for which the Contribution is being made,
provided the Eligible Employee is a Participant during such period.
4.5 MISCELLANEOUS.
(a) DEDUCTION LIMITS. In no event shall the Employer
Contributions for a Plan Year exceed the maximum the Company estimates
will be deductible (or which would be deductible if the Employers had
taxable income) by any Employer or Commonly Controlled Entity under
Section 404 of the Code ("Deductible Amount"). Any amount in excess of
the Deductible Amount shall not be contributed in the following order of
Contribution type, to the extent needed to eliminate the excess:
(1) Each Participant's allocable share of Pre-Tax
Contributions for the Plan Year will be reduced by an
amount equal to the excess of the Participant's
Pre-Tax Contributions over an amount which bears the
same ratio to the amount of Pre-Tax Contributions made
to the Plan on behalf of such Participant during the
Plan Year as the Deductible Amount available for the
Plan Year (reduced by the total amount of other types
of Employer Contributions for the Plan Year) bears to
the aggregate Pre-Tax Contributions made to the Plan
on behalf of all Participants subject to such
Deductible Amount during the Plan Year (before the
application of this provision).
(2) If the application of Section (a)(1) would result in a
reduction of a Participant's Pre-Tax Contributions
which are matched by Matching Contributions, the rate
at which Pre-Tax Contributions are reduced shall be
offset by a reduction for each Matching Contribution
not made as a result.
(3) Excess and Base Contributions.
(b) STOCK BONUS PLAN. Notwithstanding anything herein to the
contrary, the Plan shall constitute a stock bonus plan for all purposes
of the Code.
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ARTICLE V
ROLLOVERS
5.1 ROLLOVERS. The Applicable Named Fiduciary may authorize the
Custodian to accept a Rollover Contribution from an Eligible Employee in cash,
even if he or she is not yet a Participant. The Employee shall furnish
satisfactory evidence to the Applicable Named Fiduciary that the amount is
eligible for rollover treatment. Such amount shall be posted to the
Employee's Rollover Account by the Applicable Named Fiduciary as of the date
received by the Custodian.
If it is later determined that an amount transferred pursuant to the
above paragraph did not in fact qualify as a Rollover Contribution, the
balance credited to the Employee's Rollover Account shall immediately be (1)
segregated from all other Plan assets, (2) treated as a non-qualified trust
established by and for the benefit of the Employee, and (3) distributed to the
Employee. Any such nonqualifying rollover shall be deemed never to have been
a part of the Plan.
5.2 ROLLOVERS FROM OTHER QUALIFIED PLANS. The Committee may instruct
the Custodian to receive assets in cash or in kind from another qualified
plan. The Committee may refuse the receipt of any transfer if:
(a) the Committee finds the in-kind assets unacceptable,
(b) instructions for posting amounts to Participants' Accounts
are incomplete,
(c) any amounts are not exempted by Code Section 401(a)(11)(B)
from the annuity requirements of Code Section 417, or
(d) any amounts include benefits protected by Code Section
411(d)(6) which would not be preserved under applicable Plan provisions.
Such amounts shall be posted to the appropriate Accounts of Participants
as of the date received by the Custodian.
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ARTICLE VI
ACCOUNTING FOR PARTICIPANTS'
ACCOUNTS AND FOR INVESTMENT FUNDS
6.1 INDIVIDUAL PARTICIPANT ACCOUNTING.
(a) ACCOUNT MAINTENANCE. The Applicable Named Fiduciary shall
cause the Accounts for each Participant to reflect transactions
involving assets of the Accounts in accordance with this Article.
Financial transactions during or with respect to an Accounting Period
shall be accounted for at the individual Account level by "posting" each
transaction to the appropriate Account of each affected Participant.
Participant Account values shall be maintained in shares. At any point
in time, the value of a Participant's Accrued Benefit shall be equal to
the Fair Market Value of his or her Account determined by using the most
recent Trade Date values provided by the Custodian.
(b) TRADE DATE ACCOUNTING AND INVESTMENT CYCLE. For any
transaction to be processed as of a Trade Date, the Applicable Named
Fiduciary must receive instructions by the Sweep Date and such
instructions shall apply only to amounts held in or posted to the
Accounts as of the Trade Date. Financial transactions in an Investment
Fund shall be posted to a Participant's Account as of the Trade Date and
based upon the Trade Date values provided by the Custodian. All
transactions shall be effected on the Settlement Date relating to the
Trade Date (or as soon as is administratively feasible).
(c) SUSPENSION OF TRANSACTIONS. Whenever the Applicable Named
Fiduciary considers such action to be in the best interest of the
Participants, the Applicable Named Fiduciary in its discretion may
suspend from time to time the Trade Date.
(d) TEMPORARY INVESTMENT. To the extent practicable, the
Applicable Named Fiduciary shall direct the Custodian to make temporary
investments in a short term interest fund of assets in an Account held
pending a Trade Date.
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(e) HOW FEES AND EXPENSES ARE CHARGED TO PARTICIPANTS. Account
maintenance fees to the extent not paid by the Employer shall be charged
prorata to each Participant's Account on the basis of each Participant's
Accrued Benefit, provided that no fee shall reduce a Participant's
Account balance below zero. Transaction type fees (such as special
asset fees, Conversion Election change fees, etc.) shall be charged to
the Accounts involved in the transaction. Fees and expenses incurred
for the management and maintenance of Investment Funds shall be charged
at the Investment Fund level and reflected in the net gain or loss of
each Fund.
(f) ERROR CORRECTION. The Committee may correct any errors or
omissions in the administration of the Plan by restoring or charging any
Participant's Accrued Benefit with the amount that would be credited or
charged to the Account had no error or omission been made. Funds
necessary for any such restoration shall be provided through payment
made by the Employer.
(g) ACCOUNTING FOR PARTICIPANT LOANS. Participant loans shall
be held in a separate Fund for investment only by such Participant and
accounted for in dollars as an earmarked asset of the borrowing
Participant's Account.
6.2 ACCOUNTING FOR INVESTMENT FUNDS.
The investments in each Investment Fund designated in the
Appendix shall be maintained in full and fractional shares. The
Applicable Named Fiduciary is responsible for determining the number of
full and fractional shares of each such Fund. To the extent an
Investment Fund is comprised of a collective investment fund of the
Custodian, the net asset and unit values shall be determined in
accordance with the rules governing such collective investment funds,
which are incorporated herein by reference. Fees and expenses incurred
for the management and maintenance of Investment Funds shall be charged
at the Investment Fund level and reflected in the net gain or loss of
each Fund. The following additional rules shall apply to the Company
Stock Fund:
(a) VOTING RIGHTS. All Company Stock in an Account shall be
voted by the Custodian in accordance with directions from the
Participant pursuant to the procedures of the Trust Agreement.
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(b) TENDER OFFER. If a tender offer is commenced for Company
Stock, the provisions of the Trust Agreement regarding the response to
such tender offer, the holding and investment of proceeds derived from
such tender offer and the substitution of new securities for such
proceeds shall be followed.
(c) DIVIDENDS AND INCOME. Dividends (whether in cash or in
property) and other income received by the Custodian in respect of
Company Stock shall be reinvested in Company Stock and shall constitute
income and be recognized on an accrual basis for the Accounting Period
in which occurs the record date with respect to such dividend; provided
that, with respect to any dividend which is reflected in the market
price of the underlying stock, the Applicable Named Fiduciary shall
direct the Custodian during such trading period to trade such stock the
regular way to reflect the value of the dividend, and all Fund transfers
and cash distributions shall be transacted accordingly with no accrual
of such dividend, other than as reflected in such market price.
(d) TRANSACTION COSTS. Any brokerage commissions, transfer
taxes, transaction charges, and other charges and expenses in connection
with the purchase or sale of Company Stock shall be added to the cost
thereof in the case of a purchase or deducted from the proceeds thereof
in the case of a sale; provided, however, where the purchase or sale of
Company Stock is with a "disqualified person" as defined in Section
4975(e)(2) of the Code or a "party in interest" as defined in Section
3(14) of ERISA, no commissions may be charged with respect thereto.
6.3 ACCOUNTS FOR QDRO BENEFICIARIES. A separate Account shall be
established for a Beneficiary entitled to any portion of a Participant's
Account under a QDRO as of the date and in accordance with the directions
specified in the QDRO. Such Account shall be valued and accounted for in the
same manner as any other Account.
(a) INVESTMENT DIRECTION. A QDRO Beneficiary may direct the
investment of such Account in the same manner as any other Participant;
provided however, a QDRO Beneficiary may not acquire Company Stock.
(b) DISTRIBUTIONS. A QDRO Beneficiary shall be entitled to
payment as provided in the QDRO and permissible under the otherwise
applicable terms of this Plan, regardless of whether the Participant is
an Employee, and to name a Beneficiary as specified in the QDRO.
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(c) PARTICIPANT LOANS. A QDRO Beneficiary shall not be entitled
to borrow from his or her Account. If a QDRO specifies that the QDRO
Beneficiary is entitled to any portion of the Account of a Participant
who has an outstanding loan balance, all outstanding loans shall
continue to be held in the Participant's Account and shall not be
divided between the Participant's and QDRO Beneficiary's Accounts.
6.4 SPECIAL ACCOUNTING DURING CONVERSION PERIOD. The Applicable Named
Fiduciary and Custodian may use any reasonable accounting methods in
performing their respective duties during the period of converting the prior
accounting system of the Plan and Trust to conform to the individual
Participant accounting system described in this Section. This includes, but
is not limited to, the method for allocating net investment gains or losses
and the extent, if any, to which contributions received by and distributions
paid from the Trust during this period share in such allocation. All or a
portion of the Trust assets may be held, if necessary, in a short term
interest bearing vehicle, which may include deposits of the Trustee, during
the conversion period for establishing such individual Participant Accounts.
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ARTICLE VII
INVESTMENT FUNDS AND ELECTIONS
7.1 INVESTMENT FUNDS. Except for a Participant's loan Account, the
Trust shall be maintained in various Investment Funds. The Committee may
change the number or composition of the Investment Funds, subject to the terms
and conditions agreed to with the Custodian.
7.2 INVESTMENT OF CONTRIBUTIONS.
(a) INVESTMENT ELECTION. Each Participant may direct the
Trustee, by submission to the responsible Named Fiduciary of a completed
Investment Election provided for that purpose by the Applicable Named
Fiduciary, to invest Contributions posted to his or her Accounts in one
or more Investment Funds (other than the Schwab Personal Choice
Retirement Account Investment Fund), except for Matching Contributions
which shall be entirely invested in the Company Stock Fund. If the
Committee directs, for any Accounting Period, Contributions with respect
to which the Participant has investment control may be invested
separately in Funds. If the Participant elects to have any such
Contributions made on his or her behalf invested in more than one
Investment Fund, he or she must designate in whole multiples of one
percent (1%) what percentage of the Contribution is to be invested in
each such Investment Fund. If the Committee directs, for any Accounting
Period, Contributions with respect to which the Participant has
investment control may be invested separately in Funds. If a
Participant who is eligible for a "negative election" Pre-Tax
Contribution under Section 3.1(a) of the Plan, fails to provide a
completed Investment Election, his or her Account will be invested in
the Strategic Asset Allocation-Moderate Fund.
(b) EFFECTIVE DATE OF INVESTMENT ELECTION; CHANGE OF INVESTMENT
ELECTION. A Participant's initial Investment Election will be effective
with respect to a Fund on the Trade Date which relates to the Sweep Date
on which or prior to which the Investment Election is received by the
Applicable Named Fiduciary pursuant to procedures specified by the
Applicable Named Fiduciary. Any Investment Election which has not been
properly completed will be deemed not to have been received. A
Participant's Investment Election shall continue in effect,
notwithstanding any change in his or her Compensation or his or her
Contribution Percentage,
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until the earliest of (1) the effective date of a new Investment
Election, or (2) the date he or she ceases to be paid as an Eligible
Employee. A change in Investment Election shall be effective with
respect to a Fund on the Trade Date which relates to the Sweep Date on
which or prior to which the Participant's new Investment Election is
received pursuant to procedures specified by the Committee. Any
Investment Election which has not been properly completed will be deemed
not to have been received.
(c) SWITCHING FEES. A reasonable processing fee may be charged
directly to a Participant's Account for Investment Election changes in
excess of a specified number per Plan Year as determined by the
Committee.
7.3 INVESTMENT OF ACCOUNTS.
(a) CONVERSION ELECTION. Notwithstanding a Participant's
Investment Election, a Participant or Beneficiary may direct the
Trustee, by completing a Conversion Election in accordance with such
procedures as are adopted by the Applicable Named Fiduciary, to change
the interest his or her Accrued Benefit has in one or more Investment
Funds; provided however, no Conversion Election may result in more than
fifty percent (50%) of the Participant's Accrued Benefit being invested
in the Schwab Personal Choice Retirement Account Investment Fund as of
the Trade Date the Conversion Election is implemented and, provided
further, his or her TRASOP Account shall be invested in the Company
Stock Investment Fund. If the Participant or Beneficiary elects to
invest his or her Accrued Benefit in more than one (1) Investment Fund,
he or she must designate in whole multiples of one percent (1%) what
percentage of his or her Accounts is to be invested in such Investment
Fund. If the Committee directs, for any Accounting Period, Accounts may
be invested separately in Funds.
(b) EFFECTIVE DATE OF CONVERSION ELECTION. A Conversion
Election to change a Participant's or Beneficiary's investment of his or
her Accrued Benefit in one Investment Fund to another Fund shall be
effective with respect to such Funds on the Trade Date(s) which relates
to the Sweep Date on which or prior to which the Election is received by
the Applicable Named Fiduciary pursuant to procedures specified by the
Applicable Named Fiduciary. Notwithstanding the foregoing, to the
extent required by any provisions of an Investment Fund, the effective
date of any Conversion Election may be delayed or the amount of any
permissible Conversion Election may be reduced. Any Conversion Election
which has not been properly completed will be deemed not to have been
received.
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(c) SWITCHING FEES. A reasonable processing fee may be charged
directly to a Participant's Account for Conversion Election changes in
excess of a specified number per Plan Year as determined by the
Committee.
7.4 ESTABLISHMENT OF INVESTMENT FUNDS. The Committee shall cause to
be established one or more Investment Funds set forth in the Appendix. In
addition, the Committee may, from time to time, in its discretion:
(a) limit investments in or transfers from an Investment Fund;
(b) add funding vehicles thereunder;
(c) liquidate, consolidate or otherwise reorganize an existing
Investment Fund; or
(d) add a new Investment Fund to the Appendix.
7.5 TRANSITION RULES. Effective as of the date any Investment Fund is
added or deleted, each Participant and Beneficiary shall have the opportunity
to submit new Investment Elections and Conversion Elections to the responsible
Named Fiduciary no later than the applicable Sweep Date. The Committee and
Custodian may use any reasonable accounting methods in performing their
respective duties during the period of transition from one Investment Fund to
another, including, but not limited to:
(a) designating into which Investment Fund a Participant's
Accrued Benefit will be invested if the Participant fails to submit a
proper Conversion Election;
(b) the method for allocating net investment gains or losses and
the extent, if any, to which amounts received by and distributions paid
from the Trust during this period share in such allocation; or
(c) investing all or a portion of the Trust's assets in a
short-term, interest-bearing Fund during such transition period.
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7.6 SPECIAL RULES FOR SCHWAB PERSONAL CHOICE RETIREMENT ACCOUNT.
Notwithstanding provisions of the Plan to the contrary, the following rules
will apply to the Schwab Personal Choice Retirement Account Investment Fund:
(a) Investment Elections cannot be used to invest in the Schawb
Personal Choice Investment Fund;
(b) An initial Conversion Election used to invest in the Schwab
Personal Choice Retirement Account Investment Fund must be for at least
$2,500 and no Conversion Election can cause more than fifty percent
(50%) of the aggregate Fair Market Value of the Participant's Account on
the Trade Date as of which his or her Conversion Election is effective
to be invested in the Schwab Personal Choice Retirement Account;
(c) A Conversion Election can only be made after the Participant
has a 100% nonforfeitable right to all of his or her Accounts;
(d) No Withdrawals or Loans will be funded from the Schwab
Personal Choice Retirement Account Investment Fund; and
(e) A Participant's rights and obligations to manage his or her
Schwab Personal Choice Retirement Account Investment Fund and the fees
or expenses charged to the Schwab Personal Choice Retirement Account
Investment Fund shall be governed by the terms and conditions of the
Participant's written agreement with Charles Schwab & Co., Inc.
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ARTICLE ATA\
VESTING AND FORFEITURES
8.1 FULLY VESTED CONTRIBUTION ACCOUNTS.
A Participant shall be fully vested and have a nonforfeitable
right to his or her Accrued Benefit in these Accounts at all times:
Pre-Tax Account
Post-Tax Account
Rollover Account
Special Account
TRASOP Account.
8.2 FULL VESTING UPON ATTAINMENT OF EVENT. A Participant's Accrued
Benefit shall be fully vested and nonforfeitable upon the occurrence of any
one or more of the following events:
(a) completion of at least one Hour of Service on or after
September 1, 1996 or at least the minimum number of years of
Vesting Service in the Vesting Schedule for a 100% nonforfeitable
percentage;
(b) attainment of Normal Retirement Date;
(c) his or her Termination of Employment for reason of a
Disability; or
(d) he or she dies while an Employee.
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8.3 VESTING SCHEDULE. If a Participant had a Termination of
Employment prior to September 1, 1996 and has not completed at least one Hour
of Service on or after September 1, 1996, the Participant shall be vested and
have a nonforfeitable right to his or her Accrued Benefit in his or her
Matching and Profit Sharing Accounts, determined in accordance with the
following vesting schedule:
YEARS OF VESTING SERVICE NONFORFEITABLE PERCENTAGE
Less than 5 years 0%
5 years or more 100%"
8.4 FORFEITURES.
(a) FORFEITURE WHERE PAYMENT COMMENCES AFTER A BREAK IN SERVICE.
If no Payment Date of a Participant's nonforfeitable Accrued Benefit
occurs before having incurred a Break in Service, that portion of the
Participant's Accrued Benefit (which is Employer-derived) which is
forfeitable as of his or her Termination of Employment shall be
forfeited as of the completion of a Break in Service. If the
Participant is reemployed as an Employee prior to having incurred a
Break in Service, the Forfeiture shall not occur. If the Participant is
reemployed as an Employee after incurring a Break in Service, the
Participant shall be fully vested and have a nonforfeitable interest in
that portion of his or her Accounts accrued prior to the Break in
Service and not forfeited as a result of such Break in Service.
(b) FORFEITURE WHERE PAYMENT COMMENCES PRIOR TO A BREAK IN
SERVICE. If the Payment Date of a Participant's nonforfeitable
percentage of his or her Accrued Benefit occurs prior to having incurred
a Break in Service, that portion of his or her Accrued Benefit which is
forfeitable shall be forfeited as of the Payment Date. Thereafter, if
such person is rehired as an Employee prior to incurring a Break in
Service, he or she shall be entitled to make repayment to the Plan of
the full amount distributed to him or her on or after the Payment Date
no later than (1) the date he or she incurs a Break in Service, and
(2) the last day of the 5-year period commencing on or after his or her
date of reemployment. Upon making repayment in a single payment of the
amount distributed to him or her, the amount repaid shall be credited to
the Participant's Account from which paid and the Forfeiture shall be
reinstated to his or her Accounts and invested in the same manner as the
Account to which it is posted. The amount required to restore such
Participant's Accounts shall be charged against the Plan's Forfeitures,
and if insufficient, be made up from additional Employer Contributions.
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If the Employee makes the above-described repayment, such
repayment shall be considered to be the "investment in the contract" for
purposes of Sections 72(c)(1)(A), 72(f) and 402(e)(4)(D)(i) of the Code
in relation to the amount reinstated in his or her Account on account of
the repayment.
8.5 FORFEITURE ACCOUNT.
A Forfeiture will be posted, no later than the end of the Plan Year in
which the Forfeiture arises, to the Forfeiture Account on the Settlement Date
for the Trade Date on which the Custodian, at the direction of the Committee,
has converted the Forfeiture to cash. The Forfeiture Account shall be
invested in interest bearing deposits of the Custodian or short term money
market instruments. The Forfeiture Account attributable to Forfeitures from
Matching Accounts (other than under Section 11.4) shall be used to supplement
Matching Contributions. The Forfeiture Account attributable to Forfeitures
from Profit Sharing Accounts or under Section 11.4 shall be used first to
reinstate Accrued Benefit under Sections 11.1(b) or 11.4 and next to pay Plan
or Trust expenses.
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ARTICLE IX
PARTICIPANT LOANS
9.1 PARTICIPANT LOANS PERMITTED. There is available a loan program
for a Participant who is an Eligible Employee or a former Eligible Employee
who is a "party in interest" under ERISA pursuant to the terms and conditions
set forth in this Article. All loan limits are determined as of the Trade
Date the Trustee reserves funds for the loan. The funds will be disbursed to
the Participant as soon as is administratively feasible after the next
following Settlement Date.
9.2 LOAN FUNDING LIMITS.
The loan amount must meet the following limits:
(a) PLAN MINIMUM LIMIT. The minimum amount for any loan is
$1,000.00.
(b) PLAN MAXIMUM LIMIT. Subject to the legal limit described in
(c) below, the maximum a Participant may borrow, including the
outstanding balance of existing Plan loans, is fifty percent (50%) of
his or her following Accounts which are fully vested:
Pre-Tax Account
Special Account
Matching Account
Profit Sharing Account
Rollover Account
TRASOP Account
Post-Tax Account.
(c) LEGAL MAXIMUM LIMIT. The maximum a Participant may borrow,
including the outstanding balance of existing loans, is based upon the
value of his or her vested interest in this Plan and all other qualified
plans maintained by a Commonly Controlled Entity (the "Vested
Interest"). The maximum amount is equal to fifty percent (50%) of his
or her Vested Interest, not to exceed $50,000. However, the $50,000
amount is reduced by the Participant's highest outstanding balance of
all loans from any Commonly Controlled Entity's qualified plans during
the 12-month period ending on the day before the Trade Date on which the
loan is made.
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9.3 MAXIMUM NUMBER OF LOANS. A Participant may have only one loan
outstanding at any given time.
9.4 SOURCE OF LOAN FUNDING. A loan to a Participant shall be made
solely from the assets of his or her following Accounts which are fully
vested:
Pre-Tax Account
Special Account
Matching Account
Profit Sharing Account
Rollover Account
TRASOP Account
Post-Tax Account.
The available assets shall be determined first by Contribution Account and
then by investment type within each type of Contribution Account. The
hierarchy for loan funding by type of Contribution Account shall be the order
listed in the preceding Plan Maximum Limit paragraph. Within each Account
used for funding, amounts shall first be taken from the available cash in the
Account and then taken by type of Investment Fund in direct proportion to the
market value of the Participant's interest in each Investment Fund as of the
Sweep Date on which the loan is made; provided however, no loan may be made
from the Schwab Personal Choice Retirement Account Investment Fund and further
that no amounts shall be funded from the Company Stock Investment Fund until
all other Investment Funds have been used.
9.5 INTEREST RATE. The interest rate charged on Participant loans
shall be fixed and equal to the prime rate published in the WALL STREET
JOURNAL on the day the Applicable Named Fiduciary processes the loan request,
plus 1%.
9.6 REPAYMENT. Substantially level amortization shall be required of
each loan with payments made at least monthly, through payroll deduction,
provided that payment can be made by check for advance loan payments, or when
a Participant is on an Authorized Leave of Absence or transferred to the
employ of a Commonly Controlled Entity which is not participating in the Plan.
Loans may be prepaid in full or in part at any time. The loan repayment
period shall be as mutually agreed upon by the Participant and the Applicable
Named Fiduciary, not to exceed five (5) years. However, the term may be for
any period not to exceed ten (10) years if the purpose of the loan is to
acquire the Participant's principal residence.
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9.7 REPAYMENT HIERARCHY. Loan principal repayments shall be credited
to the Participant's Contribution Accounts in the inverse of the order used to
fund the loan. Loan interest shall be credited to the Contribution Accounts
in direct proportion to the principal repayment. Loan payments are credited
by investment type based upon the Participant's current Conversion Election
for that Account.
9.8 LOAN APPLICATION, NOTE AND SECURITY. A Participant shall apply
for any loan in accordance with a procedure established by the Applicable
Named Fiduciary. The Applicable Named Fiduciary shall administer Participant
loans and shall specify the time frame for approving loan applications. All
loans shall be evidenced by a promissory note and security agreement and
secured only by a Participant's vested Account balance. The Plan shall have a
lien on a Participant's Account to the extent of any outstanding loan balance.
EIP DEFAULT, SUSPENSION AND ACCELERATION FEATURE.
(a) DEFAULT. A loan is treated as a default on the earlier of
(i) the date any scheduled loan payment is more than sixty (60) days
late, provided that the Committee may agree to a suspension of loan
payments for up to twelve (12) months for a Participant who is on an
Authorized Leave of Absence or (ii) thirty (30) days from the time the
Participant receives written notice of the note being due and payable
and a demand for past due amounts.
(b) ACTIONS UPON DEFAULT. In the event of default, the
Applicable Named Fiduciary will direct the Trustee to execute upon its
security interest in the Participant's Account by segregating the unpaid
loan balance from the Account, including interest to the date of
default, and report the default as a taxable distribution as soon as a
Plan withdrawal or distribution to such Participant would otherwise be
permitted.
(c) ACCELERATION. A loan shall become due and payable in full
once the Participant incurs a Termination of Employment.
9.10 PRE-AUGUST 14, 1982 LOANS. Loans made to Participants under the
terms of this Plan prior to August 14, 1982, shall be governed by the terms
then in effect.
9.11 MALLARD LOANS. Notwithstanding any term or provision of this
Article IX to the contrary, if (a) a Rollover Contribution is made from the
Energy Ventures, Inc. 401(k) Retirement Plan to the Plan, (b) such Rollover
Contribution qualifies under Code Section 401(a)(31), and (c) such Rollover
Contribution contains a loan outstanding to the Participant, then the terms of
such loan shall be deemed to satisfy the requirements of this Article IX.
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ARTICLE X
IN-SERVICE WITHDRAWALS
10.1 WITHDRAWALS FOR 401(K) HARDSHIP.
(a) REQUIREMENTS. A Participant may request the withdrawal of
any amount from the portion of his or her Pre-Tax Account to the extent
vested needed to satisfy a financial need by making a withdrawal request
in accordance with a procedure established by the Applicable Named
Fiduciary. The Applicable Named Fiduciary shall only approve those
requests for withdrawals (1) on account of a Participant's "Deemed
Financial Need", and (2) which are "Deemed Necessary" to satisfy the
financial need.
(b) "DEEMED FINANCIAL NEED". Financial commitments relating
to:
(1) costs directly related to the purchase or
construction (excluding mortgage payments or balloon
payments) of a Participant's principal residence;
(2) the payment of expenses for medical care described
in Section 213(d) of the Code previously incurred by
the Participant, the Participant's Spouse, or any
dependents of the Participant (as defined in Section
152 of the Code) or necessary for those persons to
obtain medical care described in Section 213(d) of
the Code;
(3) payment of tuition and related educational fees and
room and board expenses for the next twelve (12)
months of post-secondary education for the
Participant, his or her Spouse, children or
dependents (as defined in Section 152 of the Code);
or
(4) necessary payments to prevent the eviction of the
Participant from his or her principal residence or
the foreclosure on the mortgage of the Participant's
principal residence.
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(c) "DEEMED NECESSARY". A withdrawal is "deemed necessary" to
satisfy the financial need only if all of these conditions are met:
(1) the withdrawal may not exceed the dollar amount
needed to satisfy the Participant's documented
Financial Hardship, plus an amount necessary to pay
federal, state, or local income taxes or penalties
reasonably anticipated to result from such
withdrawal;
(2) the Participant must have obtained all
distributions, other than Financial Hardship
distributions, and all nontaxable loans under all
plans maintained by the Company or any Commonly
Controlled Entity;
(3) the Participant will be suspended from making
Pre-Tax Contributions, post-tax contributions, (or
similar contributions under any other qualified or
nonqualified plan of deferred compensation
maintained by a Commonly Controlled Entity) for at
least twelve (12) months from the date the
withdrawal is received; and
(4) the Contribution Dollar Limit for the taxable year
immediately following the taxable year in which the
Financial Hardship withdrawal is received shall be
reduced by the Elective Deferrals for the taxable
year in which the Financial Hardship withdrawal is
received.
(d) ACCOUNT SOURCES FOR WITHDRAWAL. All available amounts
must first be withdrawn from a Participant's Post-Tax Account. The
remaining withdrawal amount shall come only from his or her Pre-Tax
Account. The amount that may be withdrawn from a Participant's Pre-Tax
Account shall not include earnings and Qualified Matching Contributions
posted to his or her Pre-Tax Account after the end of the Plan Year
which ends before July 1, 1989.
10.2 POST-TAX ACCOUNT WITHDRAWALS.
(a) AMOUNT PERMITTED. A Participant may withdraw up to the
entire balance from his or her Post-Tax Account for any reason. There
is no hardship requirement.
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(b) PERMITTED FREQUENCY. There is no restriction on the
number of times a Participant may withdraw from this Account.
(c) ORDERING. To the extent of the outstanding principal
amount (excluding earnings) as of December 31, 1986 attributable to his
or her Post-Tax Account, any withdrawal hereunder shall be deemed first
to be made therefrom, second from Post-Tax Contributions, if any, made
after December 31, 1986, plus earnings thereon in the same pro rata
manner as required by Code Section 72(e), and, thirdly, from earnings on
such principal amount as of December 31, 1986.
10.3 WITHDRAWALS AFTER ATTAINMENT OF AGE 59-1/2.
(a) REQUIREMENTS. A Participant who is over age 59 1/2 may
withdraw from his or her Accounts to the extent vested listed in
paragraph (b) below.
(b) ACCOUNT SOURCES FOR WITHDRAWAL. When requesting a
withdrawal, a Participant shall first choose whether or not to have
amounts taken from his or her Post-Tax Account. Any remaining
withdrawal amount shall come only from his or her Accounts, in the
following priority order of Accounts:
Rollover Account
Pre-Tax Account
Special Account
Profit Sharing Account
Matching Account
TRASOP Account.
(c) PERMITTED FREQUENCY. A Participant who is over age 59 1/2
may withdraw from his or her Accounts in the priority order specified
above as frequently as such Participant shall deem necessary or
appropriate.
10.4 WITHDRAWAL PROCESSING.
(a) MINIMUM AMOUNT. There is no minimum payment for any type
of withdrawal.
(b) APPLICATION BY PARTICIPANT. A Participant must submit a
withdrawal request in accordance with a procedure established by the
Applicable Named Fiduciary to the Applicable Named Fiduciary to apply
for any type of withdrawal. Only a Participant who is an Employee may
make a withdrawal request.
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(c) APPROVAL BY APPLICABLE NAMED FIDUCIARY. The Applicable
Named Fiduciary is responsible for determining that a withdrawal request
conforms to the requirements described in this Section and notifying the
Custodian of any payments to be made in a timely manner.
(d) TIME OF PROCESSING. The Custodian shall process all
withdrawal requests which it receives by a Sweep Date, based on the
value as of the Trade Date to which it relates, and fund them on the
next Settlement Date. The Custodian shall then make payment to the
Participant as soon thereafter as is administratively feasible.
(e) MEDIUM AND FORM OF PAYMENT. The medium of payment for
withdrawals is either cash or direct deposit. The form of payment for
withdrawals shall be a single installment.
(f) INVESTMENT FUND SOURCES. Within each Account used for
funding a withdrawal, amounts shall be taken by type of investment in
direct proportion to the market value of the Participant's interest in
each Investment Fund (which excludes Participant's loans) at the time
the withdrawal is made, other than the Company Stock fund, which shall
be the last source of funds.
(g) DIRECT ROLLOVER. With respect to any payment hereunder in
excess of $200 which constitutes an Eligible Rollover Distribution, a
Distributee may direct the Applicable Named Fiduciary to have all or
some portion of such payment (other than from a Post-Tax Account) paid
in the form of a Trustee Transfer, in accordance with procedures
established by the Applicable Named Fiduciary, provided the Applicable
Named Fiduciary receives written notice of such direction with specific
instructions as to the Eligible Retirement Plan on or prior to the
applicable Sweep Date for payment. If the Participant does not transfer
all of such payment, the minimum amount which can be transferred is
$500.
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ARTICLE XI
DISTRIBUTIONS ON AND AFTER
TERMINATION OF EMPLOYMENT
11.1 REQUEST FOR DISTRIBUTION OF BENEFITS.
(a) REQUEST FOR DISTRIBUTION. Subject to the other
requirements of this Article, a Participant may elect to have his or her
vested Accrued Benefit paid to him or her beginning upon any Settlement
Date following his or her Termination of Employment by submitting a
completed distribution election in accordance with a procedure
established by the Applicable Named Fiduciary. Such election form shall
include or be accompanied by a notice which provides the Participant
with information regarding all optional times and forms of payment
available. The election must be submitted to the Applicable Named
Fiduciary by the Sweep Date that relates to the Payment Date.
(b) FAILURE TO REQUEST DISTRIBUTION. If a Participant has a
Termination of Employment and fails to submit a distribution request in
accordance with a procedure established by the Applicable Named
Fiduciary by the last Payment Date permitted under this Article, his or
her vested Accrued Benefit shall be valued as of the Valuation Date
which immediately precedes such latest date of distribution (called the
"Default Valuation Date") and a notice of such deemed distribution shall
be issued to his or her last known address as soon as administratively
possible. If the Participant does not respond to the notice or cannot
be located, his or her vested Accrued Benefit determined on the Default
Valuation Date shall be treated as a Forfeiture. If the Participant
subsequently files a claim, the amount forfeited (unadjusted for gains
and losses) shall be reinstated to his or her Accounts and distributed
as soon as administratively feasible, and such payment shall be
accounted for by charging it against the Forfeiture Account or by a
contribution from the Employer of the affected Participant.
11.2 DEADLINE FOR DISTRIBUTION. In addition to any other Plan
requirements and unless the Participant elects otherwise, or cannot be
located, the Payment Date of a Participant's vested Accrued Benefit shall be
not later than sixty (60) days after the latest of the close of the Plan Year
in which (i) the Participant attains the earlier of age sixty-five (65) or his
or her Normal Retirement Date, (ii) occurs the tenth (10th) anniversary of the
Plan Year in which the Participant commenced participation, or (iii) the
Participant had a Termination of Employment.
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However, if the amount of the payment or the location of the Participant
(after a reasonable search) cannot be ascertained by that deadline, payment
shall be made no later than sixty (60) days after the earliest date on which
such amount or location is ascertained. In any case, the Payment Date of a
Participant's vested Accrued Benefit shall not be later than April 1 following
the calendar year in which the Participant attains age sixty-five (65) and
each December 31 thereafter and shall comply with the requirements of Section
401(a)(9) of the Code and the Treasury Regulations promulgated thereunder, as
if such requirements applied at age sixty-five (65) rather than age seventy
and one-half (70 1/2).
11.3 PAYMENT FORM AND MEDIUM. A Participant's vested Accrued Benefit
shall be paid in the form of a single sum. Payments will generally be made in
cash (generally by check), alternatively, if the Participant elects an in-kind
distribution, a single sum payment will be made in a combination of cash and
whole shares of Company Stock.
11.4 SMALL AMOUNTS PAID IMMEDIATELY. If a Participant has a
Termination of Employment and does not become an Employee before the 6-month
anniversary of his or her date of Termination of Employment and the
Participant's vested Accrued Benefit is $5,000 or less, the Participant's
Accrued Benefit shall be paid as a single sum as soon as administratively
feasible after his or her Termination of Employment. If such Participant
cannot be located by the 12-month anniversary of his or her date of
Termination of Employment, his or her Accrued Benefit shall be treated as a
Forfeiture posted to the Forfeiture Account under Section 8.5; provided
however, if the Participant makes a claim for a distribution of his or her
Accrued Benefit on or prior to the end of the procedure set forth in
Section 11.1(b) hereof, such Accrued Benefit shall be reinstated (with the
best estimate by the Applicable Named Fiduciary of gains or losses) and
distributed hereunder as soon as administratively practical. If such a
Participant makes a claim for his or her Accrued Benefit after the end of the
procedure set forth in Section 11.1(b), the provisions of Section 11.1(b)
shall apply.
11.5 DIRECT ROLLOVER. With respect to any payment in excess of $200
hereunder which constitutes an Eligible Rollover Distribution, a Distributee
may direct the Applicable Named Fiduciary to have such payment (other than
from a Post-Tax Account) paid in the form of a Trustee Transfer, in accordance
with procedures established by the Applicable Named Fiduciary, provided the
Applicable Named Fiduciary receives written notice of such direction with
specific instructions as to the Eligible Retirement Plan on or prior to the
applicable Sweep Date for payment. If the Participant does not transfer all
of such payment, the minimum amount which can be transferred is $500.
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ARTICLE XII
DISTRIBUTION OF ACCRUED BENEFITS ON DEATH
12.1 PAYMENT TO BENEFICIARY. On the death of a Participant, his or
her vested Accrued Benefit shall be paid to the Beneficiary or Beneficiaries
designated by the Participant in accordance with the procedure established by
the Applicable Named Fiduciary.
12.2 BENEFICIARY DESIGNATION. Each Participant shall complete a
beneficiary designation indicating the Beneficiary who is to receive the
Participant's remaining Plan interest at the time of his or her death. The
Participant may change such designation of Beneficiary from time to time by
filing a new beneficiary designation with the Committee. No designation of
Beneficiary or change of Beneficiary shall be effective until properly filed
with the Committee. Notwithstanding any designation to the contrary, if a
Participant has earned an Hour of Service on or after August 23, 1984, the
Participant's Beneficiary shall be the Participant's Spouse to whom the
Participant is legally married under the laws of the State of the
Participant's residence on the date of the Participant's death and surviving
him or her on such date, unless such designation includes Spousal Consent. If
the Participant dies leaving no Spouse and either (1) the Participant shall
have failed to file a valid beneficiary designation, or (2) all persons
designated on the beneficiary designation shall have predeceased the
Participant, the Committee shall have the Custodian distribute such
Participant's Accrued Benefit in a single sum to his or her estate.
12.3 BENEFIT ELECTION.
(a) REQUEST FOR DISTRIBUTION. In the event of a Participant's
death, a Beneficiary may elect to have the vested Accrued Benefit of a
deceased Participant paid to him or her beginning upon any Settlement
Date following the Participant's date of death by submitting a completed
distribution election in accordance with the procedure established by
the Committee. The election must be submitted to the Applicable Named
Fiduciary by the Sweep Date that relates to the Settlement Date upon
which payments are to begin.
(b) FAILURE TO REQUEST DISTRIBUTION. In the event a
Beneficiary fails to submit a timely distribution request, his or her
vested Accrued Benefit shall be valued as of the Valuation Date which
immediately precedes such latest date of distribution (called the
"Default Valuation
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Date") and a notice of such deemed distribution shall be issued to his or her
last known address as soon as administratively possible. If the Beneficiary
does not respond to the notice or cannot be located, his or her vested Accrued
Benefit determined on the Default Valuation Date shall be treated as a
Forfeiture. If the Beneficiary subsequently files a claim, the amount
forfeited (unadjusted for gains and losses) shall be reinstated to his or her
Accounts and distributed as soon as administratively feasible, and such
payment shall be accounted for by charging it against the Forfeiture or by a
Contribution from the Employer of the affected Beneficiary.
12.4 PAYMENT FORM. A Beneficiary shall only be paid in a single sum.
Payments will generally be made in cash (by check); alternatively, if the
Beneficiary elects an in-kind distribution, a single sum payment will be made
in a combination of cash and whole shares of Company Stock.
12.5 TIME LIMIT FOR PAYMENT TO BENEFICIARY. Payment to a Beneficiary
must either:
(a) be completed within five (5) years of the Participant's
death; or
(b) begin within one year of his or her death, except that:
(1) If the surviving Spouse is the Beneficiary, payments
need not begin until the date on which the
Participant would have attained age seventy and
one-half (70 1/2) and must be completed within the
Spouse's lifetime; and
(2) If the Participant and the surviving Spouse who is
the Beneficiary die (A) before the April 1
immediately following the end of the calendar year
in which the Participant would have attained age
seventy and one-half (70 1/2); and (B) before
payments have begun to the Spouse, the Spouse will
be treated as the Participant in applying these
rules.
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12.6 DIRECT ROLLOVER. With respect to any payment in excess of $200
hereunder which constitutes an Eligible Rollover Distribution, a Distributee
may direct the Applicable Named Fiduciary to have such payment (other than
from a Post-Tax Account) paid in the form of a Trustee Transfer, in accordance
with the procedure established by the Applicable Named Fiduciary, provided the
Applicable amed Fiduciary receives written Notice of such direction with
specific instructions
as to the Eligible Retirement Plan on or prior to the applicable Sweep Date
for payment. If the Participant does not transfer all of such payment, the
minimum amount which can be transferred is $500.
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ARTICLE XIII
MAXIMUM CONTRIBUTIONS
13.1 DEFINITIONS.
(a) "ANNUAL ADDITIONS" means with respect to a Participant for
any Plan Year the sum of:
(1) Contributions and Forfeitures (and any earnings
thereon) allocated as of a date within the Plan
Year;
(2) All contributions, forfeitures and suspended amounts
(and income thereon) for such Plan Year, allocated
to such Participant's account(s) under any Related
Defined Contribution Plan as of a date within such
Plan Year;
(3) The sum of all after-tax contributions of the
Participant to Related Plans for the Plan Year and
allocated to such Participant's accounts under such
Related Plan as of a date within such Plan Year
("Aggregate Employee Contributions");
(4) Solely for purposes of this Section, all
contributions to any "separate account" (as defined
in Section 419A(d) of the Code) allocated to such
Participant as of a date within the Plan Year if
such Participant is a "Key Employee" within the
meaning of Code Section 416(i); and
(5) Solely for purposes of this Section, all
contributions to any "individual medical benefit
account" (as defined in Section 415(l) of the Code)
allocated to such Participant as of a date within
the Plan Year.
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(b) "MAXIMUM ANNUAL ADDITIONS" of a Participant for a Plan
Year means the lesser of:
(1) twenty-five percent (25%) of the Participant's
Compensation, or
(2) the greater of thirty thousand dollars ($30,000) or
one-quarter of the dollar limitation in Code Section
415(b)(1)(A) as adjusted for cost of living
increases (determined in accordance with regulations
prescribed by the Secretary of the Treasury or his
or her delegate pursuant to the provisions of
Section 415(d) of the Code).
(c) "ANNUAL EXCESS" means, for each Participant affected, the
amount by which the allocable Annual Additions for such Participant
exceeds or would exceed the Maximum Annual Addition for such
Participant.
13.2 AVOIDING AN ANNUAL EXCESS. Notwithstanding any other provision
of this Plan, a Participant's "Annual Additions" for any Plan Year, which is
hereby designated as the "limitation year" for the Plan, as that term is used
in Section 415 of the Code, shall not exceed his or her "Maximum Annual
Additions." If, at any time during a Plan Year, the allocation of additional
Contributions for a Plan Year would produce an Annual Excess, the affected
Participant shall receive only the Maximum Annual Addition from Contributions,
and, at the direction of the Committee, for the remainder of the Plan Year
Contributions will be reduced, if possible, to the amount needed for each
affected Participant to receive only the Maximum Annual Addition.
13.3 CORRECTING AN ANNUAL EXCESS. If for any Plan Year as a result
of a reasonable error in estimating a person's Compensation, Elective
Deferrals, or such other facts and circumstances which the Internal Revenue
Service will permit, a Participant's Annual Excess shall be treated in the
following manner:
(a) Aggregate Employee Contributions allocable under a Related
Plan shall be distributed to the Participant, if permitted, by the
amount of the Annual Excess.
(b) If any Annual Excess remains, Pre-Tax Contributions (and
earnings thereon) shall be distributed to such Participant.
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(c) If any Annual Excess (adjusted for investment gains and
losses) remains, Contributions shall be a Forfeiture for such
Participant in the following order:
(1) Matching Contributions;
(2) Excess and Base Contributions.
(d) Any Forfeiture of a Participant's allocations of
Contributions under subparagraph 13.3(c) above shall be held in the
Forfeiture Account and shall be used for the Plan Year to reduce or
applied as Contributions. If any such amount remains in the Forfeiture
Account, it shall again be held in suspense in the Forfeiture Account
and be utilized to reduce future Contributions for succeeding Plan
Years.
(e) Any amounts held in suspense in the Forfeiture Account
pursuant to Paragraph 13.3(d) above remaining upon Plan termination
shall be returned to the Employers in such proportions as shall be
determined by the Committee.
(f) INVESTMENT FUND SOURCES. Once the amount of Annual Excess
to be refunded is determined, amounts shall then be taken by type of
investment in direct proportion to the market value of the Participant's
interest in each Investment Fund (which excludes Participant loans) as
of the Trade Date as of which the correction is processed; provided
however, the Company Stock Investment Fund shall not be used until after
all Investment Funds in which the Participant has an interest, other
than the Schwab Personal Choice Retirement Account, have been exhausted
and, provided further, the Schwab Personal Choice Retirement Account
shall not be used until after all Investment Funds in which the
Participant has an interest have been exhausted.
13.4 CORRECTING A MULTIPLE PLAN EXCESS. If a Participant's Accounts
have or would have an Annual Excess, the Annual Excess shall be corrected by
reducing the Annual Addition to this Plan before reductions have been made to
other Related Defined Contribution Plans.
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13.5 TWO-PLAN LIMIT. If a Participant participates in any Related
Defined Benefit Plan, the sum of the "Defined Benefit Plan Fraction" (as
defined below) and the "Defined Contribution Plan Fraction" (as defined below)
for such Participant shall not exceed one (called the "Combined Fraction").
:\D "DEFINED BENEFIT PLAN FRACTION" means, for any Plan Year,
a fraction, the numerator of which is the projected benefit payable
pursuant to Code Section 415(e)(2)(A) under all Related Defined Benefit
Plans and the denominator of which is the lesser of: (i) the product of
1.25 and the dollar limit in effect for the Plan Year under Code Section
415(b)(1)(A), and (ii) the product of 1.4 and one hundred percent (100%)
of the Participant's average Compensation for his or her high three (3)
years.
(b) "DEFINED CONTRIBUTION PLAN FRACTION" means, for any Plan
Year, a fraction, the numerator of which is the sum of the Annual
Additions (as determined pursuant to Section 415(c) of the Code in
effect for such Plan Year) to a Participant's Accounts as of the end of
the Plan Year under the Plan or any Related Defined Contribution Plan,
and the denominator of which is the lesser of:
(1) The sum of the products of 1.25 and the dollar limit
under Code Section 415(c)(1)(A) for such Plan Year
and for each prior year of service with a Commonly
Controlled Entity and its predecessor, and
(2) the sum of the products of 1.4 and twenty-five
percent (25%) of the Participant's Compensation for
such Plan Year and for each prior year of service
with a Commonly Controlled Entity and its
predecessor.
If the Combined Fraction of such Participant exceeds one and if the
Related Defined Benefit Plan permits it, the Participant's Defined
Benefit Plan Fraction shall be reduced by limiting the Participant's
annual benefits payable from the Related Defined Benefit Plan in which
he or she participates to the extent necessary to reduce the Combined
Fraction of such Participant to one.
13.6 SHORT PLAN YEAR. With respect to any change of the Plan Year
(and co-existent limitation year), the dollar limitation of the Maximum Annual
Addition for such Plan Year shall be determined by multiplying such dollar
amount by a fraction, the numerator of which is the number of months
(including fractional parts of a month) in the short Plan Year, and the
denominator of which is twelve (12).
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13.7 GRANDFATHERING OF APPLICABLE LIMITATIONS. The Plan shall
recognize and apply any grandfathering of applicable benefits and
contributions limitations which are permitted under ERISA, the Tax Equity and
Fiscal Responsibility Act of 1982 and the Tax Reform Act of 1986.
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ARTICLE XIV
ADP AND ACP TESTS
14.1 CONTRIBUTION LIMITATION DEFINITIONS. For purposes of this
Article, the following terms are defined as follows:
(a) "AVERAGE CONTRIBUTION PERCENTAGE" OR "ACP" means,
separately, the average of the Calculated Percentage for Participants
within the HCE Group and the NHCE Group, respectively, for a Plan Year.
(b) "AVERAGE DEFERRAL PERCENTAGE" OR "ADP" means, separately,
the average of the Calculated Percentage calculated for Participants
within the HCE Group and the NHCE Group, respectively, for a Plan Year.
(c) "CALCULATED PERCENTAGE" means the calculated percentage
for a Participant. The calculated percentage refers to either the
K-Contributions (including amounts distributed because they exceeded the
Contribution Dollar Limit) with respect to Compensation which would have
been received by the Participant in the Plan Year but for his or her
Contribution Election, or M-Contributions allocated to the Participant's
Account as of a date within the Plan Year, divided by his or her
Compensation for such Plan Year.
(d) "M-CONTRIBUTIONS" shall include Matching Contributions
(excluding Qualified Matching Contributions). In addition,
M-Contributions may include Pre-Tax Contributions and Special
Contributions treated as Matching Contributions, but only to the extent
that (1) the Committee elects to use them; and (2) they meet the
requirements of Code Section 401(m) to be regarded as Matching
Contributions. M-Contributions shall not include Matching Contributions
which become a Forfeiture because the Contribution to which it relates
is in excess of the ADP Test, ACP Test or the Contribution Dollar Limit.
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(e) "K-CONTRIBUITONS" shall include Pre-Tax Contributions
(excluding Pre-Tax Contributions treated as Matching Contributions), but
shall exclude Limited Deferrals to this Plan made on behalf of any NHCE
in excess of the Contribution Dollar Limit. In addition, Deferrals may
include Qualified Matching Contributions and Special Contributions, but
only to the extent that (1) the Committee elects to use them and
(2) they meet the requirements of Code Section 401(k) to be regarded as
elective contributions.
(f) "HCE GROUP" AND "NHCE GROUP" means, with respect to each
Employer and its Commonly Controlled Entities, the respective group of
HCEs and NHCEs who are eligible to have amounts contributed on their
behalf for the Plan Year, including Employees who would be eligible but
for their election not to participate or to contribute, or because their
pay is greater than zero but does not exceed a stated minimum, but
subject to the following:
(1) If the Related Plans are subject to the ADP or ACP
Test, and are considered as one plan for purposes
of Code Sections 401(a)(4) or 410(b) (other than
410(b)(2)), all such plans shall be aggregated and
treated as one plan for purposes of meeting the ADP
and ACP Tests provided that, for Plan Years
beginning after December 31, 1989, plans may only
be aggregated if they have the same Plan Year.
(2) If an HCE who is a five-percent owner (within the
meaning of Code Section 416) or one of the ten HCE
most highly compensated during the Plan Year has
any Family Members, the K-Contributions,
M-Contributions and Compensation of such HCE and
his or her Family Members shall be combined and
treated as a single HCE. In addition, such amounts
for all other Family Members shall be removed from
the NHCE Group percentage calculation.
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(3) If an HCE is covered by more than one cash or
deferred arrangement maintained by the Related
Plans, all such arrangements (other than
arrangements in plans that are not required to be
aggregated for this purpose under Treas. Reg.
Section 1.401(k)-1(g)(l)(ii)(B)) with respect to
the Plan Years ending with or within the same
calendar year shall be aggregated and treated as
one arrangement for purposes of calculating the
separate percentage for the HCE which is used in
the determination of the Average Percentage.
14.2 ADP AND ACP TESTS. For each Plan Year, the ADP and ACP for the
HCE Group must meet either the Basic or Alternative Limitation when compared
to the respective ADP and ACP for the NHCE Group:
(a) BASIC LIMITATION. The ADP or ACP for the HCE Group may
not exceed 1.25 times the ADP or ACP, respectively, for the NHCE Group.
(b) ALTERNATIVE LIMITATION. The ADP or ACP for the HCE Group
is limited by reference to the ADP or ACP, respectively, for the NHCE
Group as follows:
If the NHCE Group Then the Maximum HCE
PERCENTAGE IS : GROUP PERCENTAGE IS:
Less than 2% 2 times ADP or ACP for the NHCE
Group
2% to 8% ADP or ACP for the NHCE Group plus
2%
More than 8% Basic Limitation applies
14.3 CORRECTION OF ADP AND ACP TESTS.
(a) REDUCTION OF K-CONTRIBUITONS OR M-CONTRIBUTIONS. If the
ADP or ACP are not met or will not be met, the Committee shall
determine a maximum percentage to be used in place of the Calculated
Percentage for each HCE that would reduce the ADP or ACP of the HCE
Group by a sufficient amount to meet the ADP and ACP Tests. For any
HCE Group who has a Family Member, the reduction amount shall be
prorated among Family Members as provided in Code Sections 401(k) and
(m).
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(b) ADP CORRECTION. Pre-Tax Contributions (including amounts
previously refunded because they exceeded the Contribution Dollar
Limit) shall be refunded to the Participant by the end of the next
Plan Year in an amount equal to the actual K-Contribution minus the
product of the maximum percentage for that HCE and the HCE's
Compensation. Matching Contributions with respect to such distributed
Pre-Tax Contributions shall be forfeited (unless paid to the
Participant due to an ACP Correction).
(c) ACP CORRECTION. Matching Contribution amounts in excess
of the maximum percentage of an HCE's Compensation shall, by the end
of the next Plan Year, be refunded to the Participant to the extent
vested, and forfeited to the extent such amounts were not vested as of
the end of the Plan Year being tested.
(d) INVESTMENT FUND SOURCES. Once the amount of Pre-Tax and
Matching Contributions to be refunded is determined, amounts shall
then be taken by type of investment in direct proportion to the market
value of the Participant's interest in each Investment Fund (which
excludes Participant loans) as of the Trade Date as of which the
correction is processed; provided however, the Company Stock
Investment Fund shall not be used until after all Investment Funds in
which the Participant has an interest, other than the Schwab Personal
Choice Retirement Account, have been exhausted and, provided further,
the Schwab Personal Choice Retirement Account shall not be used until
after all Investment Funds in which the Participant has an interest
have been exhausted.
(e) FAMILY MEMBER CORRECTION. To the extent any reduction is
necessary with respect to an HCE and his or her Family Members that
have been combined and treated for testing purposes as a single
Employee, the excess K-Contributions and/or M-Contributions from the
ADP and/or ACP Test shall be prorated among each such Participant in
direct proportion to his or her K-Contributions and/or M-Contributions
included in each test.
14.4 METHOD OF CALCULATION. The Committee shall determine the
maximum percentage for each HCE whose Calculated Percentage(s) is(are) the
highest at any one time by reducing his or her Calculated Percentage in the
following manner until the ADP and/or ACP Test is satisfied:
(a) The Calculated Percentage for each HCE under a Related
Plan shall be reduced to the extent permitted under such Related Plan.
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(b) If more reduction is needed, the Calculated Percentage of
each HCE whose Calculated Percentage (stated in absolute terms) is the
greatest shall be reduced by one-hundredth (1/100) of one percentage
point.
(c) If more reduction is needed, the Calculated Percentage of
each HCE whose Calculated Percentage (stated in absolute terms) is the
greatest (including the Calculated Percentage of any HCE whose
Calculated Percentage was adjusted under Paragraph (b) shall be
reduced by one-hundredth (1/100) of one percentage point.
(d) If more reduction is needed, the procedures of Paragraph
(c) shall be repeated.
14.5 MULTIPLE USE TEST. If the Average Contribution Percentage and
the Average Deferral Percentage for the HCE Group exceeds the Basic Limitation
in both the ADP or the ACP Tests (after correction of the ADP and ACP Test),
the ADP and ACP (as corrected) for the HCE Group must also comply with the
requirements of Code Section 401(m)(9), which as of the Effective Date require
that the sum of these two percentages (as determined after any corrections
needed to meet the ADP or ACP Tests have been made) must not exceed the
greater of:
(a) the sum of
(1) the larger of the ADP or ACP for the NHCE Group
times 1.25; and
(2) the smaller of the ADP or ACP for the NHCE Group,
times two (2) if the NHCE Average Percentage is
less than two percent (2%), or plus two percent
(2%) if it is two percent (2%) or more; or
(b) the sum of
(1) the lesser of the ADP or ACP for the NHCE Group
times 1.25; and
(2) the greater of the ADP or ACP for the NHCE Group,
times two (2) if the NHCE Average Percentage is
less than two percent (2%), or plus two percent
(2%) if it is two percent (2%) or more.
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If the multiple use limit is exceeded, the Committee shall determine a
maximum ADP or ACP for the HCE Group and shall reduce the ADP or ACP
for each HCE in the same manner as would be used to correct to ADP or
ACP.
14.6 ADJUSTMENT FOR INVESTMENT GAIN OR LOSS. The net investment
gain or loss associated with the K-Contributions and/or M-Contributions to be
distributed shall be distributed or charged against a distribution within two
and one-half (2 1/2) months but no later than twelve (12) months following the
close of the applicable Plan Year. Such gain or loss is calculated as
follows:
G
E x ------ x (1 + (10% x M))
(AB-G)
where:
E = the total excess Deferrals or Contributions,
G = the net gain or loss for the Plan Year from all of an
HCE's affected Accounts,
AB = the total value of an HCE's affected Accounts,
determined as of the end of the Plan Year being
corrected,
M = the number of full months from the Plan Year end to
the date excess amounts are paid, plus one for the
month during which payment is to be made if payment
will occur after the fifteenth (15th) of the month.
14.7 REQUIRED RECORDS. The Applicable Named Fiduciary shall
maintain records which are sufficient to demonstrate that the ADP, ACP and
Multiple Use Test has been met for each Plan Year for at least as long as the
Employer's corresponding tax year is open to audit.
14.8 INCORPORATION BY REFERENCE. The provisions of this Section are
intended to satisfy the requirements of Code Sections 401(k)(3), (m)(2),
(m)(9) and Treas. Reg. Sections 1.401(k)-1(b), 1.401(m)-1(b) and 1.401(m)-2
and, to the extent not otherwise stated in this Section, those Code Sections
and Treasury Regulations are incorporated herein by reference.
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14.9 COLLECTIVELY BARGAINED EMPLOYEES. The provisions of this
Article shall apply separately to Participants who are collectively bargained
employees within the meaning of Treas. Reg. Section 1.410(b)-6(d)(2) and for
Participants who are not collectively bargained employees.
14.10 QSLOB. The Committee in its sole discretion may apply the
provisions of this Article separately with respect to each qualified separate
line of business, as defined in Section 414(r) of the Code.
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ARTICLE XV
CUSTODIAL ARRANGEMENTS
15.1 CUSTODIAL AGREEMENT. The Committee may enter into one or more
Custodial Agreements to provide for the holding, investment and payment of
Plan assets, or direct by execution of an insurance contract that all or a
specified portion of the Plan's assets be held, invested and paid under such a
contract. All Custodial Agreements, as from time to time amended, shall
continue in force and shall be deemed to form a part of the Plan. Subject to
the requirements of the Code and ERISA, the Committee may cause assets of the
Plan which are securities to be held in the name of a nominee or in street
name provided such securities are held on behalf of the Plan by:
(a) a bank or trust company that is subject to supervision by
the United States or a State, or a nominee of such bank or trust
company;
(b) a broker or dealer registered under the Securities
Exchange Act of 1934, or a nominee of such broker or dealer; or
(c) a "clearing agency" as defined in Section 3(a)(23) of the
Securities Exchange Act of 1934, or its nominee.
15.2 SELECTION OF CUSTODIAN. The Committee shall select, remove or
replace the Custodian in accordance with the Custodial Agreement. The
subsequent resignation or removal of a Custodian and the approval of its
accounts shall all be accomplished in the manner provided in the Custodial
Agreement.
15.3 CUSTODIAN'S DUTIES. Except as provided in ERISA, the powers,
duties and responsibilities of the Custodian shall be as stated in the
Custodial Agreement, and unless expressly stated or delegated to the Custodian
(with the Custodian's acceptance), nothing contained in this Plan shall be
deemed by implication to impose any additional powers, duties or
responsibilities upon the Custodian. All Employer Contributions and Rollover
Contributions shall be paid into the Trust, and all benefits payable under the
Plan shall be paid from the Trust, except to the extent such amounts are paid
to a Custodian other than the Trustee. An Employer shall have no rights or
claims of any nature in or to the assets of the Plan except the right to
require the Custodian to hold, use, apply and pay such assets in its hands, in
accordance with the directions of the Committee, for the exclusive benefit of
the Participants and their Beneficiaries, except as hereinafter provided.
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15.4 SEPARATE ENTITY. The Custodial Agreement under this Plan from
its inception shall be a separate entity aside and apart from Employers or
their assets, and the corpus and income thereof shall in no event and in no
manner whatsoever be subject to the rights or claims of any creditor of any
Employer.
15.5 PLAN ASSET VALUATION. As of each Valuation Date, the Fair
Market Value of the Plan's assets held or posted to an Investment Fund shall
be determined by the Applicable Named Fiduciary or the Custodian, as
appropriate.
15.6 RIGHT OF EMPLOYERS TO PLAN ASSETS. The Employers shall have no
right or claim of any nature in or to the assets of the Plan except the right
to require the Custodian to hold, use, apply, and pay such assets in its
possession in accordance with the Plan for the exclusive benefit of the
Participants or their Beneficiaries and for defraying the reasonable expenses
of administering the Plan; provided, that:
(a) if the Plan receives an adverse determination with respect
to its initial qualification under Sections 401(a), 401(k) and 401(m) of
the Code, Contributions conditioned upon the qualification of the Plan
shall be returned to the appropriate Employer within one (1) year of
such denial of qualification; provided, that the application for
determination of initial qualification is made by the time prescribed by
law for filing the respective Employer's return for the taxable year in
which the Plan is adopted, or by such later date as is prescribed by the
Secretary of the Treasury under Section 403(c)(2)(B) of ERISA;
(b) if, and to the extent that, deduction for a Contribution
under Section 404 of the Code is disallowed, Contributions conditioned
upon deductibility shall be returned to the appropriate Employer within
one (1) year after the disallowance of the deduction;
(c) if, and to the extent that, a Contribution is made through
mistake of fact, such Contribution shall be returned to the appropriate
Employer within one year of the payment of the Contribution; and
(d) any amounts held suspended pursuant to the limitations of
Code Section 415 shall be returned to the Employers upon termination of
the Plan.
All Contributions made hereunder are conditioned upon the Plan being
qualified under Sections 401(a) or 401(k) and 401(m) of the Code and a
deduction being allowed for such contributions under Section 404 of the
Code. Pre-Tax Contributions returned to an Employer pursuant to this
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(e) Section shall be paid to the Participant for whom
contributed as soon as administratively convenient. If these provisions
result in the return of Contributions after such amounts have been allocated
to Accounts, such Accounts shall be reduced by the amount of the allocation
attributable to such amount, adjusted for any losses or expenses.
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ARTICLE XVI
ADMINISTRATION AND INVESTMENT MANAGEMENT
16.1 GENERAL. The Company, through the authority vested in the
Board of Directors, has established, by separate documentation, the Retirement
Policy Committee, and has enabled such Retirement Policy Committee to have the
power and authority to act, to the extent delegated to such Retirement Policy
Committee, on behalf of the Company (and therefore all Employers), with
respect to matters which relate to the Plan and Trust, but not on behalf of
the Plan and Trust. Furthermore, the Company has adopted the Plan and Trust,
thereby:
(a) establishing a separate Committee to have the power and
authority to act, to the extent provided in the Plan or Trust, on behalf
of the Plan or Trust, but not on behalf of the Company; and
(b) enabling the Retirement Policy Committee to have the
power and authority to act, to the extent provided in and the manner
provided in the Plan or Trust, on behalf of the Company, but not on
behalf of the Plan or Trust.
16.2 RETIREMENT POLICY COMMITTEE ACTING AS EMPLOYER. The Retirement
Policy Committee has such authority and control as shall be granted to it,
from time to time, to act on behalf of the Company, including but not limited
to the power to:
(a) amend or terminate the Plan in part or completely to the
extent provided in Article XIX;
(b) designate which employee groups are eligible to
participate in the Plan;
(c) select, monitor and remove, as necessary, consultants,
actuaries, underwriters, insurance companies, third party
administrators, or other service providers, and to appoint and remove
any such person as an Applicable Named Fiduciary, and determine and
delegate to them their duties and responsibilities as provided herein;
(d) appoint and consult with legal counsel, independent
consulting or evaluation firms, accountants, actuaries, or other
advisors, as necessary, to perform its functions;
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(e) determine what expenses, if any, related to the operation
and administration of the Plan and the investment of Plan assets, shall
be paid by the Employer;
(f) establish such policies and make such other delegations
or designations necessary or incidental to the Company's sponsorship of
the Plan;
(g) adopt, amend or terminate, in part or completely, a Trust
document, provided such action is consistent with the Plan for which the
Trust is established;
(h) determine the funding policy of the Plan's benefits and
related matters, including the designation of a responsible person as an
Applicable Named Fiduciary with respect to the liquidity requirements of
any Fund;
(i) take any other actions necessary or incidental to the
performance of the above-stated powers and duties.
16.3 COMMITTEE AS APPLICABLE NAMED FIDUCIARY FOR PLAN. The
Committee, acting on behalf of the Plan and subject to subparagraph (b)
hereof, shall be an Applicable Named Fiduciary with respect to the authority
to manage and control the administration and operation of the Plan, including
without limitation, the management and control with respect to some portions
of the operation and administration of the Plan contained in an agreement with
an Applicable Named Fiduciary but only to the extent it has been specifically
designated in such agreement as being the responsibility of the Committee, an
Employer, the Company, or any employee, member or delegate of any of them.
16.4 COMMITTEE AS APPLICABLE NAMED FIDUCIARY FOR TRUST. The
Committee, acting on behalf of the Trust and subject to subparagraph (b)
hereof, shall be an Applicable Named Fiduciary with respect to its authority
to manage and control the Trust or the Trust's assets, but only to the extent
not inconsistent with the Trust, including without limitation, the following:
(1) to appoint and remove the Trustee;
(2) to selectively direct the Trustee as to the
investment and reinvestment of the assets of the Trust Fund;
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(3) to appoint an Investment Manager, by written notice
in writing to the Trustee, to manage, acquire or dispose of
that portion of the Trust Fund which is assigned to it by the
Committee;
(4) to direct the Trustee, by notice in writing to the
Trustee, to enter into an agreement with an Investment Manager;
(5) to require that the Trustee is subject to the
direction of the Committee with respect to a portion of the
Trust Fund;
(6) to appoint any other person or entity which handles
Trust assets, including insurance companies and custodians;
(7) to establish written investment policies as to the
Trust and ensure compliance with such policies and applicable
law, including monitoring the diversification of investments
and avoidance of prohibited transactions, as well as monitoring
investment performance; and
(8) to manage and control with respect to some portions
of the operation and administration of the Plan contained in an
agreement with an Applicable Named Fiduciary but only to the
extent it has been specifically designated in such agreement as
being the responsibility of the Committee, an Employer, the
Company, or any employee, member or delegate of any of them.
16.5 MEMBERSHIP.
(a) The Committee shall consist of not less than 3 persons,
who shall be appointed by the Chief Executive Officer. Members shall
remain in office at the will of the Chief Executive Officer and the
Chief Executive Officer may from time to time remove any of said members
with or without cause and shall appoint their successors.
(b) The Retirement Policy Committee shall consist of not less
than 3 persons, who shall be appointed by the Chief Executive Officer.
Members shall remain in office at the will of the Chief Executive
Officer and the Chief Executive Officer may from time to time remove any
of said members with or without cause and shall appoint their
successors.
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16.6 STRUCTURE. Any individual may be a member of the Committee or
the Retirement Policy Committee. Any member may resign by delivering his or
her written resignation to the Chief Executive Officer, and such resignation
shall become effective upon the date specified therein. A member who is an
Employee shall automatically cease to be a member upon his or her Termination
of Employment. In the event of a vacancy in membership, the remaining members
shall constitute the Committee or the Retirement Policy Committee with full
power to act until said vacancy is filled.
16.7 ACTIONS. The Committee may act as an Applicable Named
Fiduciary on behalf of the Plan or the Retirement Policy Committee on behalf
of the Company, as follows:
(a) The members may act at a meeting (including a meeting at
different locations by telephone conference) or in writing without a
meeting (through the use of a single document or concurrent document).
(b) Any member by writing may delegate any or all of his or
her rights, powers, duties and discretions to any other member with the
consent of such other member.
(c) Action shall be by majority decision, which action shall
be effective as if such action had been taken by all members; provided
that by majority action one or more members or other persons may be
authorized to act with respect to particular matters on behalf of all
members.
(d) Subject to applicable law, no member shall be liable for
an act or omission of the other members of the same committee in which
the former had not concurred.
(e) Any action by the Committee on behalf of this Plan or
Trust involving its authority to manage and control the operation and
administration of the Plan or Trust or the Plan's assets shall be
treated as an action of an Applicable Named Fiduciary under this Plan.
(f) Except as provided in Section 16.24, the Committee may,
in writing delivered to the Trustee, empower a representative to act on
its behalf and such person shall have the authority to act within the
scope of such empowerment to the full extent the Committee could have
acted.
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16.8 PROCEDURES FOR DESIGNATION OF AN APPLICABLE NAMED FIDUCIARY.
The Retirement Policy Committee, acting on behalf of the Company, may from
time to time, designate a person to be an Applicable Named Fiduciary with
respect to some portion of the authority it may have with respect to
management and control of the operation and administration of the Plan or the
management and control of the Plan's assets. Such designation shall specify
the person designated by name and either (a) specify the management and
control authority with respect to which the person will be an Applicable Named
Fiduciary; or (b) incorporate by reference an agreement with such Applicable
Named Fiduciary to provide services to or on behalf of the Plan or Trust and
use such agreement as a means for specifying the management and control
authority with respect to which such person will be an Applicable Named
Fiduciary. No person who is designated as an Applicable Named Fiduciary
hereunder must consent to such designation nor shall it be necessary for the
Retirement Policy Committee to seek such person's acquiescence. The authority
to manage and control, which any person who is designated to be an Applicable
Named Fiduciary hereunder may have, shall be several and not joint with the
Retirement Policy Committee and shall result in the Committee no longer being
an Applicable Named Fiduciary with respect to, nor having any longer, such
authority to manage and control. On and after the designation of a person as
an Applicable Named Fiduciary, the Employer and the Committee shall have no
liability for the acts (or failure to act) of any such Applicable Named
Fiduciary except to the extent of its co-fiduciary duty under ERISA.
16.9 COMPENSATION. The members of the Committee, acting on behalf
of the Plan or Trust, shall serve without compensation for their services as
such.
16.10 DISCRETIONARY AUTHORITY OF EACH APPLICABLE NAMED FIDUCIARY.
Each Applicable Named Fiduciary on behalf of the Plan and Trust will enforce
the Plan and Trust in accordance with their terms. Each Applicable Named
Fiduciary shall have full and complete authority, responsibility and control
(unless an allocation has been made to another Applicable Named Fiduciary in
which case such Applicable Named Fiduciary shall have such authority,
responsibility and control) over that portion of the management,
administration and operation of the Plan or Trust allocated to such Applicable
Named Fiduciary, including, but not limited to, the authority and discretion
to:
(a) Formulate, adopt, issue and apply procedures and rules
and change, alter or amend such procedures and rules in accordance with
law and as may be consistent with the terms of the Plan or Trust;
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(b) Specify the basis upon which payments are to be made
under the Plan and, as the final appeals fiduciary under ERISA Section
503, to make a final determination, based upon the information known to
the Applicable Named Fiduciary within the scope of its authority and
control as an Applicable Named Fiduciary, based upon determinations made
and such other information made available from an Employer plus such
final determinations made by each other Applicable Named Fiduciary
within the scope of its authority and control, as are determined to be
relevant to the final appeals fiduciary;
(c) Exercise such discretion as may be required to construe
and apply the provisions of the Plan or Trust, subject only to the terms
and conditions of the Plan or Trust; and
(d) Take all necessary and proper acts as are required for
such Applicable Named Fiduciary to fulfill its duties and obligations
under the Plan or Trust.
16.11 RESPONSIBILITY AND POWERS OF THE COMMITTEE REGARDING
ADMINISTRATION OF THE PLAN. The Committee shall have full and complete
authority, responsibility and control (unless an allocation has been made to
another Applicable Named Fiduciary in which case such Applicable Named
Fiduciary shall have such authority, responsibility and control only if
specifically provided) over that portion of the management, administration,
and operation of the Plan or Trust allocated to the Committee and the power to
act on behalf of the Plan or Trust, including, but not limited to, the
authority and discretion:
(a) to execute contracts on behalf of the Plan or Trust;
(b) to appoint and compensate such specialists (including
attorneys, actuaries and accountants) to aid it in the administration of
the Plan, and arrange for such other services, as the Committee
considers necessary or appropriate in carrying out the provisions of the
Plan;
(c) to determine the Accounting Period, Change Date, Notice
Date and Sweep Date, and define other Plan terms as may be needed by
adoption of a summary plan description;
(d) to be agent for service of legal process on the Plan or
Trust;
(e) to appoint and compensate an independent outside
accountant to conduct such audits of the financial statements of the
Trust as the Committee considers necessary or appropriate;
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(f) to settle or compromise any litigation against the Plan,
Trust or an Applicable Named Fiduciary with respect to which the Plan or
Trust has an indemnity obligation;
(g) to appoint the Plan Administrator to act within the
duties and responsibilities set forth in Section 16.22;
(h) to create a legal remedy to the Plan with respect to a
Participant or Beneficiary, or to a Participant or Beneficiary, for any
loss incurred (whether restitution or opportunity losses) by the Plan on
behalf of such Participant or Beneficiary, or by such Participant or
Beneficiary, due to a breach of fiduciary duty to the Plan by an
Applicable Named Fiduciary or other error (whether negligent or willful)
which the Committee determines is a substantial contributing factor to
such loss (or a portion of such loss); and
(i) to take all necessary and proper acts as are required for
the Committee to fulfill its duties and obligations under the Plan or
Trust.
16.12 ALLOCATIONS AND DELEGATIONS OF RESPONSIBILITY.
(a) DELEGATIONS. Each Applicable Named Fiduciary may
designate persons (other than an Applicable Named Fiduciary) to carry
out fiduciary responsibilities (other than trustee responsibilities as
described in Section 405(c)(3) of ERISA) it may have with respect to the
Plan or Trust and make a change of delegated responsibilities. Such
delegation shall specify the delegated person by name and either
(a) specify the discretionary authority with respect to which the person
will be a fiduciary; or (b) incorporate by reference an agreement with
such Applicable Named Fiduciary to provide services to the Plan or Trust
on behalf of the delegating Applicable Named Fiduciary as a means of
specifying the discretionary authority with respect to which such person
will be a fiduciary. No person (other than an investment manager (as
defined in Section 3(38) of ERISA) to whom fiduciary responsibility has
been delegated must consent to being a fiduciary nor shall it be
necessary for the Applicable Named Fiduciary to seek such person's
acquiescence; however, where such person has not contractually accepted
the responsibility delegated, he or she must be given notification of
the services to be performed and, in either case, will be deemed to have
accepted such fiduciary responsibility if he or she performs the
services described for thirty (30) days or more without specific
objection thereto. The liability any person, who is delegated fiduciary
responsibilities hereunder, may have shall be several and not joint with
the Applicable
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Named Fiduciary delegating and each other Named Fiduciaries. A
delegation of fiduciary responsibility to a person which is not
implemented in the manner set forth herein shall not be void; however,
whether the delegating Applicable Named Fiduciary shall have joint
liability for acts of such person shall be determined by applicable law.
(b) ALLOCATIONS. The Retirement Policy Committee, acting on
behalf of the Company, may allocate fiduciary responsibilities (other
than trustee responsibilities described in Section 405(c)(3) of ERISA)
among Named Fiduciaries when it designates an Applicable Named Fiduciary
in the manner described in Section 16.8, or the Committee acting on
behalf of the Plan or Trust, may reallocate fiduciary responsibilities
among existing Named Fiduciaries by action of such Committee in
accordance with Section 16.7; provided each such Applicable Named
Fiduciary is given notice of the services, management and control
authority allocated to it either by way of an amendment to the Plan,
Trust or a contract with such person, or by way of correspondence from
the Retirement Policy Committee or Committee, respectively. Each
Applicable Named Fiduciary, by signing its contract or by accepting such
amendment or correspondence and rendering the services requested without
objection for thirty (30) days, shall be conclusively bound to have
assumed such fiduciary responsibility as an Applicable Named Fiduciary.
The liability any person, who is allocated fiduciary responsibilities
hereunder, may have shall be several and not joint with the Committee
and each other Named Fiduciaries. An allocation of fiduciary
responsibility to a person which is not implemented in the manner set
forth herein shall not be void; however, whether another Applicable
Named Fiduciary shall have joint liability for acts of such person shall
be determined by applicable law.
(c) LIMIT ON LIABILITY. Fiduciary duties and
responsibilities which have been allocated or delegated pursuant to the
terms of the Plan or the Trust, are intended to limit the liability of
the Company, the Retirement Policy Committee, the Committee, and each
Applicable Named Fiduciary, as appropriate, in accordance with the
provisions of Section 405(c) of ERISA.
16.13 COMMITTEE BONDING. The members of the Committee, acting on
behalf of the Plan and Trust, shall serve without bond (except as otherwise
required by federal law).
16.14 INFORMATION TO BE SUPPLIED BY EMPLOYER. Each Employer shall
supply to the Committee, acting on behalf of the Plan and Trust, within a
reasonable time of its request, the names of all Employees, their age, their
date of hire, the names and dates of all Employees who incurred a Termination
of
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Employment during the Plan Year, and such other information in the Employer's
possession as the Committee shall from time to time need in the discharge of
its duties. The Committee and each Applicable Named Fiduciary may rely
conclusively on the information certified to the Committee by an Employer.
16.15 INFORMATION TO BE SUPPLIED BY APPLICABLE NAMED FIDUCIARY.
Whenever a term, definition, standard, protocol or other, basis for
determining whether an Accrued Benefit exists or whether an Accrued Benefit
will be paid under the terms of the Plan, or which has been incorporated by
reference into this Plan, the Applicable Named Fiduciary who has the authority
to manage and control the administration and operation of the Plan with
respect to all or any basis specified for the payment of such Accrued Benefit
(including the authority to establish or amend such term, definition, standard
protocol or other basis) shall provide a copy thereof either (1) to the
Committee, upon its request, (2) to a Participant or Beneficiary but only to
the extent required by law, or (3) to the extent required in any proceeding
involving the Plan or any Applicable Named Fiduciary with respect to the Plan.
16.16 MISREPRESENTATIONS. The Committee, acting on behalf of the
Plan and Trust, may, but shall not be required to, rely upon any certificate,
statement or other representation made to it by an Employee, Participant,
other Applicable Named Fiduciary, or other individual with respect to any fact
regarding any of the provisions of the Plan. Any such certificate, statement
or other representation shall be conclusively binding upon such Employee,
Participant, other Applicable Named Fiduciary, or other individual or personal
representative thereof, heir, or assignee (but not upon the Committee), and
any such person shall thereafter be estopped from disputing the truth of any
such certificate, statement or other representation.
16.17 RECORDS. The regularly kept records of the designated
Applicable Named Fiduciary (or, where applicable, the Trustee) and any
Employer shall be conclusive evidence of a person's age, his or her status as
an Eligible Employee, and all other matters contained therein applicable to
this Plan.
16.18 PLAN EXPENSES. All expenses of the Plan which have been
approved by the Committee, acting on behalf of the Plan and Trust, shall be
paid by the Trust except to the extent paid by the Employers; and if paid by
the Employers, such Employers may, if authorized by the Retirement Policy
Committee acting on behalf of the Company, seek reimbursement of such expenses
from the Trust and the Trust shall reimburse the Employers. If borne by the
Employers, expenses of administering the Plan shall be borne by the Employers
in such proportions as the Retirement Policy Committee, acting on behalf of
the Company, shall determine.
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16.19 FIDUCIARY CAPACITY. Any person or group of persons may serve
in more than one fiduciary capacity with respect to the Plan.
16.20 EMPLOYER'S AGENT. The Retirement Policy Committee shall act as
agent for the Company when acting on behalf of the Company and the Company
shall act as agent for each Employer.
16.21 PLAN ADMINISTRATOR. The Plan Administrator (within the meaning
of Section 3(16)(A)) shall be appointed by the Committee, acting on behalf of
the Company, and may (but need not) be a member of the Committee; and in the
absence of such appointment, the Committee, acting on behalf of the Plan and
Trust, shall be the Plan Administrator.
16.22 PLAN ADMINISTRATOR DUTIES AND POWER. The Plan Administrator
will have full and complete authority, responsibility and control over the
management, administration and operation of the Plan with respect to the
following:
(a) satisfy all reporting and disclosure requirements
applicable to the Plan, Trust or Plan Administrator under ERISA, the
Code or other applicable law;
(b) provide and deliver all written forms used by
Participants and Beneficiaries, give notices required by law, and seek a
favorable determination letter for the Plan and Trust;
(c) withhold any amounts required by the Code to be withheld
at the source and to transmit funds withheld and any and all necessary
reports with respect to such withholding to the Internal Revenue
Service;
(d) respond to a QDRO;
(e) make available for inspection and to provide upon request
at such charge as may be permitted and determined by it, documents and
instruments required to be disclosed by ERISA;
(f) take such actions as are necessary to establish and
maintain in full and timely compliance with any law or regulation having
pertinence to this Plan;
(g) whatever responsibilities are delegated to the Plan
Administrator by the Committee;
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(h) delegate to the Trust any tax withholding or tax
reporting obligations the Plan Administrator may have by law; and
(i) take all necessary and proper acts as are required for
the Plan Administrator to fulfill its duties and obligations under
applicable law and the Plan.
16.23 APPLICABLE NAMED FIDUCIARY DECISIONS FINAL. The decision of
the Committee or an Applicable Named Fiduciary in matters within its
jurisdiction shall be final, binding, and conclusive upon the Employers and
the Trustee and upon each Employee, Participant, Spouse, Beneficiary, and
every other person or party interested or concerned.
16.24 NO AGENCY. Each Applicable Named Fiduciary shall perform (or
fail to perform) its responsibilities and duties or discretionary authority
with respect to the Plan and Trust as an independent contractor and not as an
agent of the Company, any Employer, the Retirement Policy Committee or the
Committee. No agency is intended to be created nor is the Committee empowered
to create an agency relationship with an Applicable Named Fiduciary.
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ARTICLE XVII
CLAIMS PROCEDURE
17.1 INITIAL CLAIM FOR BENEFITS. Each person entitled to benefits
under this Plan (a "Claimant") must sign and submit his or her claim for
benefits to the Committee or its agent in writing in such form as is provided
or approved by such Committee. A Claimant shall have no right to seek review
of a denial of benefits, or to bring any action in any court to enforce a
claim for benefits prior to his or her filing a claim for benefits and
exhausting his or her rights under this Section. When a claim for benefits
has been filed properly, such claim for benefits shall be evaluated and the
Claimant shall be notified by the Committee or agent of its approval or denial
within ninety (90) days after the receipt of such claim unless special
circumstances require an extension of time for processing the claim. If such
an extension of time for processing is required, written notice of the
extension shall be furnished to the Claimant by the Committee or agent prior
to the termination of the initial ninety (90) day period which shall specify
the special circumstances requiring an extension and the date by which a final
decision will be reached (which date shall not be later than one hundred
eighty (180) days after the date on which the claim was filed). A Claimant
shall be given a written notice in which the Claimant shall be advised as to
whether the claim is granted or denied, in whole or in part. If a claim is
denied, in whole or in part, the Claimant shall be given written notice which
shall contain (1) the specific reasons for the denial, (2) references to
pertinent Plan provisions upon which the denial is based, (3) a description of
any additional material or information necessary to perfect the claim and an
explanation of why such material or information is necessary, and (4) the
Claimant's rights to seek review of the denial.
17.2 REVIEW OF CLAIM DENIAL. If a claim is denied, in whole or in
part (or if within the time periods prescribed for in the initial claim, the
Committee or agent has not furnished the Claimant with a denial and the claim
is therefore deemed denied), the Claimant shall have the right to request that
the Committee review the denial, provided that the Claimant files a written
request for review with the Committee within sixty (60) days after the date on
which the Claimant received written notification of the denial. A Claimant
(or his or her duly authorized representative) may review pertinent documents
and submit issues and comments in writing to the Committee. Within sixty (60)
days after a request for review is received, the review shall be made and the
Claimant shall be advised in writing by the Committee of the decision on
review, unless special circumstances require an extension of time for
processing the review, in which case the Claimant shall be given a written
notification by the Committee within such initial sixty (60)
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day period specifying the reasons for the extension and when such review shall
be completed (provided that such review shall be completed within one hundred
and twenty (120) days after the date on which the request for review was
filed). The decision on review shall be forwarded to the Claimant by the
Committee in writing and shall include specific reasons for the decision and
references to Plan provisions upon which the decision is based. A decision on
review shall be final and binding on all persons for all purposes. If a
Claimant shall fail to file a request for review in accordance with the
procedures described in this Section, such Claimant shall have no right to
review and shall have no right to bring action in any court and the denial of
the claim shall become final and binding on all persons for all purposes.
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ARTICLE XVIII
ADOPTION AND WITHDRAWAL FROM PLAN
18.1 PROCEDURE FOR ADOPTION. Any Commonly Controlled Entity may by
resolution of such Commonly Controlled Entity's board of directors adopt the
Plan for the benefit of its employees as of the date specified in the board
resolution. No such adoption shall be effective until such adoption has been
approved by the Committee.
18.2 PROCEDURE FOR WITHDRAWAL. Any Employer (other than the Company)
may, by resolution of the board of directors of such Employer, with the
consent of the Committee and subject to such conditions as may be imposed by
the Committee, terminate its adoption of the Plan. Notwithstanding the
foregoing, an Employer will be deemed to have terminated its adoption of the
Plan when it ceases to be a Commonly Controlled Entity. With respect to any
Participant whose Employer is deemed to have withdrawn from the Plan because
it ceases to be a Commonly Controlled Entity, such Participant's Account shall
be fully vested to the extent required by law.
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ARTICLE XIX
AMENDMENT, TERMINATION AND MERGER
19.1 AMENDMENTS.
P51 POWER TO AMEND. The Board of Directors on behalf of all
Employers, or the Retirement Policy Committee as provided in
Subsection (c) below, may amend, modify, change, revise or discontinue
this Plan by amendment at any time; provided, however, that no amendment
shall:
(1) increase the duties or liabilities of the Custodian
or the Committee without its written consent;
(2) have the effect of vesting in any Employer any
interest in any funds, securities or other property,
subject to the terms of this Plan and the Custodial
Agreement;
(3) authorize or permit at any time any part of the
corpus or income of the Plan's assets to be used or
diverted to purposes other than for the exclusive
benefit of Participants and Beneficiaries;
(4) except to the extent permissible under ERISA and the
Code, make it possible for any portion of the Trust
assets to revert to an Employer to be used for, or
diverted to, any purpose other than for the
exclusive benefit of Participants and Beneficiaries
entitled to Plan benefits and to defray reasonable
expenses of administering the Plan;
(5) amend the provisions of this Plan which either (1)
state the amount and price of Company Stock to be
awarded to designated officers or categories of
officers and, specifically, the timing of such
awards, or (2) set forth a formula that determines
the amount, price and timing of such awards, shall
not be amended more than once every six (6) months,
other than to comport with changes in the Code,
ERISA or the rules thereunder;
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(6) permit an Employee to be paid the balance of his or
her Pre-Tax Account unless the payment would
otherwise be permitted under Code Section 401(k);
and
(7) have any retroactive effect as to deprive any such
person of any benefit already accrued, except that
no amendment made in order to conform the Plan as a
plan described in Section 401(a) of the Code of
which amendments are permitted by the Code or are
required or permitted by any other statute relating
to employees' trusts, or any official regulations or
ruling issued pursuant thereto, shall be considered
prejudicial to the rights of any such person.
(b) RESTRICTION ON AMENDMENT. No amendment to the Plan shall
deprive a Participant of his or her nonforfeitable rights to benefits
accrued to the date of the amendment. Further, if the vesting schedule
of the Plan is amended, each Participant with at least three (3) years
of Vesting Service with the Employer may elect, within a reasonable
period after the adoption of the amendment, to have his or her
nonforfeitable percentage computed under the Plan without regard to such
amendment. The period during which the election may be made shall
commence with the date the amendment is adopted and shall end on the
latest of:
(1) sixty (60) days after the amendment is adopted;
(2) sixty (60) days after the amendment becomes
effective; or
(3) sixty (60) days after the Participant is issued
written notice of the amendment by the Employer or
the Committee.
The preceding language concerning an amendment to the Plan's vesting
schedule shall also apply when a Plan with a different vesting schedule
is merged into this Plan. In addition to the foregoing, the Plan shall
not be amended so as to eliminate an optional form of payment of an
Accrued Benefit attributable to employment prior to the date of the
amendment. The foregoing limitations do not apply to benefit accrual
occurring after the date of the amendment.
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(c) THE RETIREMENT POLICY COMMITTEE. The Retirement Policy
Committee may amend, modify, change, discontinue, or revise the Plan by
amendment if such amendment could have been adopted under this Section
and it does not cause a change in the level or type of contributions to
be made to the Plan or otherwise materially increase the duties and
obligations of any or all Employers with respect to the Plans.
19.2 PLAN TERMINATION. It is the expectation of the Company that it
will continue the Plan and the payment of Contributions hereunder
indefinitely, but the continuation of the Plan and the payment of
Contributions hereunder is not assumed as a contractual obligation of the
Company or any other Employer. The right is reserved by the Company to
terminate the Plan at any time, and the right is reserved by the Company and
any other Employer at any time to reduce, suspend or discontinue its
Contributions hereunder, provided, however, that the Contributions for any
Plan Year accrued or determined prior to the end of said year shall not after
the end of said year be retroactively reduced, suspended or discontinued
except as may be permitted by law. Upon termination of the Plan or complete
discontinuance of Contributions hereunder (other than for the reason that the
Employer has had no net profits or accumulated net profits), each
Participant's Accrued Benefit shall be fully vested. Upon termination of the
Plan or a complete discontinuance of Contributions, unclaimed amounts shall be
applied as Forfeitures and any unallocated amounts shall be allocated to
Participants who are Eligible Employees as of the date of such termination or
discontinuance on the basis of Compensation for the Plan Year (or short Plan
Year). Upon a partial termination of the Plan, the Accrued Benefit of each
affected Participant shall be fully vested. In the event of termination of
the Plan, the Committee shall direct the Custodian to distribute to each
Participant the entire amount of his or her Accrued Benefit as soon as
administratively possible, but not earlier than would be permitted in order to
retain the Plan's qualified status under Sections 401(a), (k) and (m) of the
Code, as if all Participants who are Employees had incurred a Termination of
Employment on the Plan's termination date. Should a Participant or a
Beneficiary) not elect immediate payment of a nonforfeitable Accrued Benefit
in excess of five thousand dollars ($5,000), the Committee shall direct the
Custodian to continue the Plan and Custodial Agreement for the sole purpose of
paying to such Participant his or her Accrued Benefit or death benefit,
respectively, unless in the opinion of the Committee, to make immediate single
sum payments to such Participant or Beneficiary would not adversely affect the
tax qualified status of the Plan upon termination and would not impose
additional liability upon any Employer or the Custodian.
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19.3 PLAN MERGER. The Plan shall not merge or consolidate with, or
transfer any assets or liabilities to any other plan, unless each person
entitled to benefits would receive a benefit immediately after the merger,
consolidation or transfer (if the Plan were then terminated) which is equal to
or greater than the benefit he or she would have been entitled to immediately
before the merger, consolidation or transfer (if the Plan were then
terminated). The Committee shall amend or take such other action as is
necessary to amend the Plan in order to satisfy the requirements applicable to
any merger, consolidation or transfer of assets and liabilities.
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ARTICLE EC
SPECIAL TOP-HEAVY RULES
20.1 APPLICATION. Notwithstanding any provisions of this Plan to the
contrary, the provisions of this Article shall apply and be effective for any
Plan Year for which the Plan shall be determined to be a "Top-Heavy Plan" as
provided and defined herein.
20.2 SPECIAL TERMS. For purposes of this Article, the following
terms shall have the following meanings:
(a) "AGGREGATE BENEFIT" means the sum of:
(1) the present value of the accrued benefit under each
and all defined benefit plans in the Aggregation
Group determined on each plan's individual
Determination Date as if there were a termination of
employment on the most recent date the plan is
valued by an actuary for purposes of computing plan
costs under Section 412 of the Code within the
twelve (12) month period ending on the Determination
Date of each such plan, but with respect to the
first plan year of any such plan determined by
taking into account the estimated accrued benefit as
of the Determination Date; provided (A) the method
of accrual used for the purpose of this
Paragraph (1) shall be the same as that used under
all plans maintained by all Employers and Commonly
Controlled Entities if a single method is used by
all stock plans or, otherwise, the slowest accrual
method permitted under Section 411(b)(1)(C) of the
Code, and (B) the actuarial assumptions to be
applied for purposes of this Paragraph (1) shall be
the same assumptions as those applied for purposes
of determining the actuarial equivalents of optional
benefits under the particular plan, except that the
interest rate assumption shall be five percent (5%);
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(2) the present value of the accrued benefit (i.e.,
account balances) under each and all defined
contribution plans in the Aggregation Group, valued
as of the valuation date coinciding with or
immediately preceding the Determination Date of each
such plan, including (A) contributions made after
the valuation date but on or prior to the
Determination Date, (B) with respect to the first
plan year of any plan, any contribution made
subsequent to the Determination Date but allocable
as of any date in the first plan year, or (C) with
respect to any defined contribution plan subject to
Section 412 of the Code, any contribution made after
the Determination Date that is allocable as of a
date on or prior to the Determination Date; and
(3) the sum of each and all amounts distributed (other
than a rollover or plan-to-plan transfer) from any
Aggregation Group Plan, plus a rollover or
plan-to-plan transfer initiated by the Employee and
made to a plan which is not an Aggregation Group
Plan within the Current Plan Year or within the
preceding four (4) plan years of any such plan,
provided such amounts are not already included in
the present value of the accrued benefits as of the
valuation date coincident with or immediately
preceding the Determination Date.
The Aggregate Benefit shall not include the value of any rollover or
plan-to-plan transfer to an Aggregation Group Plan, which rollover or
transfer was initiated by a Participant, was from a plan which was not
maintained by an Employer or a Commonly Controlled Entity, and was made
after December 31, 1983, nor shall the Aggregate Benefit include the
value of employee contributions which are deductible pursuant to Section
219 of the Code.
(b) "AGGREGATION GROUP" means the Plan and one or more plans
(including plans that terminated) which is described in Section 401(a)
of the Code, is an annuity contract described in Section 403(a) of the
Code or is a simplified employee pension described in Section 408(k) of
the Code maintained or adopted by an Employer or a Commonly Controlled
Entity in
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the Current Plan Year or one of the four preceding Plan Years which is
either a "Required Aggregation Group" or a "Permissive Aggregation
Group".
(1) A "REQUIRED AGGREGATION GROUP" means all Aggregation
Group Plans in which either (1) a Key Employee
participates or (2) which enables any Aggregation
Group Plan in which a Key Employee participates to
satisfy the requirements of Sections 401(a)(4) and
410 of the Code.
(2) A "PERMISSIVE AGGREGATION GROUP" means Aggregation
Group Plans included in the Required Aggregation
Group, plus one or more other Aggregation Group
Plans, as designated by the Committee in its sole
discretion, which satisfy the requirements of
Sections 401(a)(4) and 410 of the Code, when
considered with the other component plans of the
Required Aggregation Group.
(c) "AGGREGATION GROUP PLAN" means the Plan and each other
plan in the Aggregation Group.
(d) "CURRENT PLAN YEAR" means (1) with respect to the Plan,
the Plan Year in which the Determination Date occurs, and (2) with
respect to each other Aggregation Group Plan, the plan year of such
other plan in which occurs the Determination Date of such other plan.
(e) "DETERMINATION DATE" means (1) with respect to the Plan
and its Plan Year, the last day of the preceding Plan Year; or (2) with
respect to any other Aggregation Group Plan in any calendar year during
which the Plan is not the only component plan of an Aggregation Group,
the determination date of each plan in such Aggregation Group to occur
during the calendar year as determined under the provisions of each such
plan.
(f) "FORMER KEY EMPLOYEE" means an Employee (including a
terminated Employee) who is not a Key Employee but who was a Key
Employee.
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(g) "KEY EMPLOYEE" means an Employee (or a terminated
Employee) who at any time during the Current Plan Year or at any time
during the four preceding Plan Years is:
(1) an officer of a Commonly Controlled Entity whose
compensation from a Commonly Controlled Entity
during the Plan Year is greater than fifty percent
(50%) of the amount specified in Section
415(b)(1)(A) of the Code (as adjusted for
cost-of-living increases by the Secretary of the
Treasury) for the calendar year in which the Plan
Year ends; provided, however, that no more than the
lesser of (A) fifty (50) Employees, or (B) the
greater of (i) three (3) Employees or (ii) ten
percent (10%) (rounded to the next whole integer) of
the greatest number of Employees during the Current
Plan Year or any of the preceding four Plan Years
shall be considered as officers for this purpose.
Such officers considered will be those with the
greatest annual compensation as an officer during
the five (5) year period ending on the Determination
Date;
(2) One of the ten employees who owns (or is considered
to own within the meaning of Section 318 of the
Code) more than a one half percent (1/2%) interest
in value and the largest percentage ownership
interest in value in a Commonly Controlled Entity
and whose total annual compensation from a Commonly
Controlled Entity is not less than the amount
specified in Section 415(b)(1)(A) of the Code (as
adjusted for cost-of-living increases by the
Secretary of the Treasury) for the calendar year in
which the Plan Year ends;
(3) A person who owns more than five percent (5%) of the
value of the outstanding stock of any Commonly
Controlled Entity or more than five percent (5%) of
the total combined voting power of all stock of any
Commonly Controlled Entity (considered separately)
or;
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(4) A person who owns more than one percent (1%) of the
value of the outstanding stock of a Commonly
Controlled Entity or more than one percent (1%) of
the total combined voting power of all stock of a
Commonly Controlled Entity (considered separately)
and whose total annual compensation (as defined in
Section 1.415-2(d) of the Treasury Regulations) from
the Employer or a Commonly Controlled Entity is in
excess of one hundred and fifty thousand dollars
($150,000).
The rules of Section 416 (i)(1)(B) and (C) of the Code shall be applied
for purposes of determining an Employee's ownership interest in a
Commonly Controlled Entity for purposes of Paragraphs (3) and (4)
herein. A Beneficiary (who would not otherwise be considered a Key
Employee) of a deceased Key Employee shall be deemed to be a Key
Employee in substitution for such deceased Key Employee. Any person who
is a Key Employee under more than one of the four Paragraphs of this
Section shall have his or her Aggregate Benefit under the Aggregation
Group Plans counted only once with respect to computing the Aggregate
Benefit of Key Employees as of any Determination Date. Any Employee who
is not a Key Employee shall be a Non-Key Employee.
(h) "TOP-HEAVY PLAN" means the Plan with respect to any Plan
Year if the Aggregate Benefit of all Key Employees or the Beneficiaries
of Key Employees determined on the Determination Date is an amount in
excess of sixty percent (60%) of the Aggregate Benefit of all persons
who are Employees within the Current Plan Year; provided, that if an
individual has not performed services for an Employer or a Commonly
Controlled Entity at any time during the five (5) year period ending on
the Determination Date, the individuals's Accrued Benefit shall not be
taken into account. With respect to any calendar year during which the
Plan is not the only Aggregation Group Plan, the ratio determined under
the preceding sentence shall be computed based on the sum of the
Aggregate Benefits of each Aggregation Group Plan totaled as of the last
Determination Date of any Aggregation Group Plan to occur during the
calendar year.
20.3 MINIMUM CONTRIBUTION. For any Plan Year that the Plan shall be
a Top-Heavy Plan, each Participant who is an Eligible Employee but who is
neither a Key Employee nor a Former Key Employee on the last day of the Plan
Year shall have allocated to his or her Matching Account on the last day of
the Plan Year a Pay Based Contribution in an amount equal to three percent
(3%) of such Participant's Compensation; provided, however, in no event shall
such contribution
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on behalf of such Participant be less than five percent (5%) of such
Compensation if any Aggregation Group Plan is a defined benefit plan which
does not satisfy the minimum benefit requirements with respect to such
Participant. The amount of Pay Based Contributions required to be allocated
under this Section for any Plan Year shall be reduced by the amount of
Employer Contributions and Forfeitures allocated under this Plan on behalf of
the Participant and employer contributions and forfeitures allocated on behalf
of the Participant under any other defined contribution plan in the
Aggregation Group for the Plan Year. Elective Deferrals to any Aggregation
Group Plan made on behalf of a Participant in Plan Years beginning after
December 31, 1984 but before January 1, 1989 shall be deemed to be Employer
Contributions for the purpose of this Section. Elective Deferrals and
matching contributions to Aggregation Group Plans in Plan Years beginning on
or after January 1, 1989 shall not be used to meet the minimum contribution
requirements of this Section. Where Employer Contributions and Forfeitures
allocated on behalf of a Participant are insufficient to satisfy the minimum
contribution otherwise required by this Section, an additional employer
contribution shall be made and allocated to the Matching or Profit Sharing
Account of such Participant.
20.4 MAXIMUM BENEFIT ACCRUAL. For any Plan Year that the Plan is a
Top-Heavy Plan, the denominator of the "defined benefit plan fraction" and the
denominator of the "defined contribution plan fraction" shall be determined by
substituting "1.0" for "1.25"; provided, however, this limit shall not apply
with respect to an Employee for any Plan Year during which he or she accrues
no benefit under any plan of the Aggregation Group. The preceding sentence
shall not apply if, within this Article, there is substituted "four percent
(4%)" for "three percent (3%)" and "seven and one-half percent (7.5%)" for
"five percent (5%)" and "ninety percent (90%)" for "sixty percent (60%)."
20.5 SPECIAL VESTING. If the Plan becomes a Top-Heavy Plan after the
Effective Date, vesting for all Employees shall thereafter be accelerated to
the extent the following vesting schedule produces a greater vested percentage
for the Employee than the normal vesting schedule at any relevant time:
YEARS OF VESTING SERVICE VESTED PERCENTAGE
Less than 3 years 0%
3 years or more 100%
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ARTICLE XXI
MISCELLANEOUS PROVISIONS
21.1 ASSIGNMENT AND ALIENATION. As provided by Code Section
401(a)(13) and to the extent not otherwise required by law, no benefit
provided by the Plan may be anticipated, assigned or alienated, except:
(a) to create, assign or recognize a right to any benefit
with respect to a Participant pursuant to a QDRO, or
(b) to use a Participant's vested Account balance as security
for a loan from the Plan which is permitted pursuant to Code Section
4975.
21.2 PROTECTED BENEFITS. All benefits which are protected by the
terms of Code Section 411(d)(6) and ERISA Section 204(g), which cannot be
eliminated without adversely affecting the qualified status of the Plan on and
after January 1, 1999, shall be provided under this Plan to Participants for
whom such benefits are protected. The Committee shall cause such benefits to
be determined and the terms and provisions of the Plan and transferor plan
immediately prior to January 1, 1999 are incorporated herein by reference and
made a part hereof, but only to the extent such terms and provisions are so
protected. Otherwise, they shall operate within the terms and provisions of
this Plan, as determined by the Committee.
21.3 PLAN DOES NOT AFFECT EMPLOYMENT RIGHTS. The Plan does not
provide any employment rights to any Employee. The Employer expressly
reserves the right to discharge an Employee at any time, with or without
Cause, without regard to the effect such discharge would have upon the
Employee's interest in the Plan.
21.4 DEDUCTION OF TAXES FROM AMOUNTS PAYABLE. The Custodian shall
deduct from the amount to be distributed such amount as the Custodian, in its
sole discretion, deems proper to protect the Custodian and the Plan's assets
held under the Custodial Agreement against liability for the payment of death,
succession, inheritance, income, or other taxes, and out of money so deducted,
the Custodian may discharge any such liability and pay the amount remaining to
the Participant, the Beneficiary or the deceased Participant's estate, as the
case may be.
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21.5 FACILITY OF PAYMENT. If a Participant or Beneficiary is
declared an incompetent or is a minor and a conservator, guardian, or other
person legally charged with his or her care has been appointed, any benefits
to which such Participant or Beneficiary is entitled shall be payable to such
conservator, guardian, or other person legally charged with his or her care.
The decision of the Committee in such matters shall be final, binding, and
conclusive upon the Employer and the Custodian and upon each Employee,
Participant, Beneficiary, and every other person or party interested or
concerned. An Employer, the Custodian and the Committee shall not be under
any duty to see to the proper application of such payments.
21.6 SOURCE OF BENEFITS. All benefits payable under the Plan shall
be paid or provided for solely from the Plan's assets held under the Custodial
Agreement and the Employers assume no liability or responsibility therefor.
21.7 INDEMNIFICATION. To the extent permitted by law each Employer
shall indemnify and hold harmless each member (and former member) of the Board
of Directors, each member (and former member) of the Retirement Policy
Committee and the Committee, and each officer and employee (and each former
officer and employee) of an Employer to whom are (or were) delegated duties,
responsibilities, and authority with respect to the Plan against all claims,
liabilities, fines and penalties, and all expenses reasonably incurred by or
imposed upon him or her (including but not limited to reasonable attorney fees
and amounts paid in any settlement relating to the Plan) by reason of his or
her service under the Plan if he or she did not act dishonestly, with gross
negligence, or otherwise in knowing violation of the law under which such
liability, loss, cost or expense arises. This indemnity shall not preclude
such other indemnities as may be available under insurance purchased or
provided by an Employer under any by-law, agreement, or otherwise, to the
extent permitted by law. Payments of any indemnity, expenses or fees under
this Section shall be made solely from assets of the Employer and shall not be
made directly or indirectly from the assets of the Plan.
21.8 REDUCTION FOR OVERPAYMENT. The Applicable Named Fiduciary
shall, whenever it determines that a person has received benefit payments
under this Plan in excess of the amount to which the person is entitled under
the terms of the Plan, make two reasonable attempts to collect such
overpayment from the person.
21.9 LIMITATION ON LIABILITY. No Employer nor any agent or
representative of any Employer who is an employee, officer, or director of an
Employer in any manner guarantees the assets of the Plan against loss or
depreciation, and to the extent not prohibited by federal law, none of them
shall be
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liable (except for his or her own gross negligence or willful misconduct), for
any act or failure to act, done or omitted in good faith, with respect to the
Plan. No Employer shall be responsible for any act or failure to act of any
Custodian appointed to administer the assets of the Plan.
21.10 COMPANY MERGER. In the event any successor corporation to the
Company, by merger, consolidation, purchase or otherwise, shall elect to adopt
the Plan, such successor corporation shall be substituted hereunder for the
Company upon filing in writing with the Custodian its election so to do.
21.11 EMPLOYEES' TRUST. The Plan and Custodial Agreement are created
for the exclusive purpose of providing benefits to the Participants in the
Plan and their Beneficiaries and defraying reasonable expenses of
administering the Plan, and the Plan and Custodial Agreement shall be
interpreted in a manner consistent with their being, respectively, a Plan
described in Sections 401(a), 401(k) and 401(m) of the Code and Custodial
Agreements exempt under Section 501(a) of the Code. At no time shall the
assets of the Plan be diverted from the above purpose.
21.12 GENDER AND NUMBER. Except when the context indicates to the
contrary, when used herein, masculine terms shall be deemed to include the
feminine, and singular the plural.
21.13 INVALIDITY OF CERTAIN PROVISIONS. If any provision of this
Plan shall be held invalid or unenforceable, such invalidity or
unenforceability shall not affect any other provisions hereof and the Plan
shall be construed and enforced as if such provisions, to the extent invalid
or unenforceable, had not been included.
21.14 HEADINGS. The headings or articles are included solely for
convenience of reference, and if there is any conflict between such headings
and the text of this Plan, the text shall control.
21.15 UNIFORM AND NONDISCRIMINATORY TREATMENT. Any discretion
exercisable hereunder by an Employer or the Applicable Named Fiduciary shall
be exercised in a uniform and nondiscriminatory manner.
21.16 LAW GOVERNING. The Plan shall be construed and enforced
according to the laws of the state in which the Trust is located, to the
extent not preempted by ERISA.
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21.17 NOTICE AND INFORMATION REQUIREMENTS. Except as otherwise
provided in this Plan or in the Custodial Agreement or as otherwise required
by law, the Employer shall have no duty or obligation to affirmatively
disclose to any Participant or Beneficiary, nor shall any Participant or
Beneficiary have any right to be advised of, any material information
regarding the Employer, at any time prior to, upon or in connection with the
Employer's purchase, or any other distribution or transfer (or decision to
defer any such distribution) of any Company Stock or any other stock held
under the Plan.
Executed in 1 counterpart originals this 11th day of May , 1999,
------ ----- -----
but effective as of the Effective Date.
Parker Drilling Company
By: /s/ James J. Davis
-----------------------------------
Title: Senior Vice President-Finance and
Chief Financial Officer
-----------------------------------
<PAGE>
APPENDIX A
Investment Funds
The Investment Funds offered to Participants and Beneficiaries as of
January 1, 1999, based upon share accounting, are:
INVESTMENT FUND
Stable Value
Fixed Income
Strategic Asset Allocation - Conservative
Strategic Asset Allocation - Moderate
Strategic Asset Allocation - Aggressive
S & P Index
Growth Equity
Aggressive Equity
Company Stock
Schwab Personal Choice Retirement Account
The Investment Funds prior to January 1, 1999 are those Investment Funds
that were in the Plan on the business day prior to January 1, 1999.
<PAGE>
