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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
__________________
Form 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ________TO _______
Commission File Number 000-27261
CH2M Hill Companies, Ltd.
(Exact name of registrant as specified in its charter)
Oregon 93-0549963
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
6060 South Willow Drive,
Greenwood Village, CO 80111-5142
(Address of principal executive offices) (Zip Code)
(303) 771-0900
(Registrant's telephone number, including area code)
_______________________
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: CH2M HILL common
stock, Par Value $.01 per share
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 [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
As of March 24, 2000, the aggregate market value of the voting and non-voting
common equity held by non-affiliates of the registrant was $193.4 million.
DOCUMENTS INCORPORATED BY REFERENCE
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Portions of the definitive Proxy Statement for the 2000 Annual Meeting of
Shareholders are incorporated by reference in Part III of this Form 10-K Report.
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CH2M HILL COMPANIES, LTD.
ANNUAL REPORT ON FORM 10-K
TABLE OF CONTENTS
Page
Part I.
Item 1. Business....................................................... 2
Item 2. Properties..................................................... 9
Item 3. Legal Proceedings.............................................. 9
Item 4. Submission of Matters to a Vote of Security Holders............ 9
Part II.
Item 5. Market for Registrant's Common Equity and Related
Shareholder Matters........................................... 10
Item 6. Selected Financial Data........................................ 13
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations........................... 13
Item 7A. Quantitative and Qualitative Disclosures About Market Risk..... 21
Item 8. Financial Statements and Supplementary Data.................... 21
Item 9. Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure........................... 21
Part III.
Item 10. Directors and Executive Officers of the Registrant............. 22
Item 11. Executive Compensation......................................... 22
Item 12. Security Ownership of Certain Beneficial Owners
and Management................................................ 22
Item 13. Certain Relationships and Related Transactions................. 22
Part IV.
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K........................................... 23
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PART I
Item 1. Business
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Overview
CH2M HILL is a project delivery firm founded in 1946. We provide engineering,
consulting, design, construction, procurement, operations and maintenance, and
program and project management services to clients in the private and public
sector in the United States and abroad. We are an employee-owned Oregon
corporation with approximately 9,200 employees working in 66 offices throughout
the United States and 33 offices abroad.
Business Strategy
Our business strategy is to grow domestically and internationally by increasing
market share in each of our operating segments. The key elements of this
strategy are:
. Increasing the number and the dollar value of our contracts
. Expanding and diversifying our client base by attracting new private
and public sector clients and developing a diversified mix of
projects
. Increasing the number of large, longer-term projects with the
potential for higher profit margins
. Encouraging ownership in our CH2M HILL common stock across a greater
proportion of our workforce
Operating Segments
We provide services to our clients through three operating segments:
. Environmental, Energy and Infrastructure
. Water
. Industrial
Environmental, Energy and Infrastructure
Our Environmental, Energy and Infrastructure (``EE&I'') operating segment
consists of two businesses: Environmental, Nuclear, Energy & Systems (``ENE&S'')
and Transportation. These two businesses are described below.
EE&I's business strategy is to grow by increasing market share in each of its
two businesses, expanding its client base and obtaining large, longer-term
projects with the potential for higher profit margins. While maintaining its
focus on its traditional services, EE&I is expanding its expertise into related
industries such as telecommunications, and into related business concepts such
as ``sustainable development.'' Sustainable development is a design approach
that addresses environmental issues throughout the life of a project, from
design and construction to decommissioning and seeks to minimize total
environmental impact.
ENE&S. ENE&S provides integrated environmental and waste management
consulting and engineering services, and performs design and build,
remediation, construction and implementation of infrastructure and
telecommunications systems for a variety of public and private clients.
1. Environmental. Our Environmental group provides environmental
consulting for remedial construction projects, ecological and
natural resource damage assessments, strategic environmental
management and permitting services, environmental liability
management services, site investigations, remedial design,
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implementation and construction services, treatment systems for
hazardous, toxic and radioactive waste contaminated properties,
and sustainable development planning, design and construction
services. Representative Environmental projects include:
. Environmental consulting, engineering and remedial
activities for the U.S. Air Force Center for
Environmental Excellence
. Remediation of contaminated sites on Naval and
Marine Corps installations in 26 states and several
foreign countries
. Program management and remedial design of a
refinery for a large oil company
. Environmental impact studies for a number of
proposed industrial projects and municipal programs
on behalf of the Beijing city government in China
2. Nuclear. Our Nuclear group provides program management,
integration, engineering, construction and operations and
maintenance services for the U.S. Department of Energy and
commercial nuclear power plants. We manage decommissioning and
closure of weapons production facilities and design nuclear
waste treatment and handling facilities in the United States,
Western, Central and Eastern Europe and the former Soviet
Union. Representative Nuclear projects include:
. Management and integration of decontamination,
decommissioning, and closure of the nuclear weapons
production facility at Rocky Flats in Golden,
Colorado, on behalf of the U.S. Department of
Energy
. Engineering, design and technical services to
support decontamination, decommissioning and
remedial activities at the U.S. Department of
Energy Hanford Reservation in Richland, Washington
formerly known as Lockheed Martin Hanford
Corporation
. Decontamination and decommission planning and
engineering for a university research center in
Atlanta, Georgia
3. Energy. Our Energy group provides full lifecycle energy
services for power projects around the world. The Energy
group's services range from design to decommissioning,
including consulting, engineering, construction, operations and
maintenance services. Representative Energy projects include:
. Expert consulting on utility deregulation
. Consulting and design for photovoltaic
manufacturing process
. The design and construction of energy efficiency
upgrades
. Development of generation services in renewable
energy
. Carbon and other greenhouse gasses management
projects
4. Systems. For the communications industry, our Systems group
provides program management, planning, design, and construction
management of local and regional fiber optic and hybrid
fiber/coaxial systems for voice, video and data communications.
In other markets, our Systems group develops and implements
environmental management information systems, total energy
management and information technology systems, and industrial
process design/build. It provides military base operation
services for government agencies, and other outsourcing
services for industrial and government clients. Representative
Systems projects include:
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. Program management, design and construction
management of voice, video and data networks for a
large telecommunications company in Europe
. Design, construction and installation of an
industrial process system for metal plating
facility
. Program management for the upgrade of a hybrid
fiber/coaxial network for voice, video and high-
speed data services in several U.S. cities
Transportation. Transportation provides planning, siting, permitting,
design, program and construction management, intermodal transportation
planning and consulting services for aviation, ports, highways, bridges and
transit systems. Representative Transportation projects include:
. Master planning and program management for a large
international airport in the northwest region of the U.S.,
including terminal, financial and airport environmental
planning
. Developing lighting control systems for large international
airport in the U.S., including touch-screen controls, runway
incursion protection and automatic safety measures
. Designing and providing project management and engineering
services for the expansion of a container shipping terminal in
the Eastern U.S., including berths, wharf and cranes
. Seismic retrofit design of seven bridges along an interstate
highway in California
. Design of the Eastern Transportation Corridor for the Orange
County, California transportation authority including 27 miles
of highway and 58 bridges
. Designing parking structure and bridge for major U.S. airport
Water
Our Water operating segment consists of two businesses: Water & Wastewater and
Operations & Maintenance. The business strategy of the Water operating segment
is to grow through increasing market share in each of its businesses, both
domestically and internationally, to diversify its client base, and to pursue
larger projects. We seek to attract new clients by leveraging our reputation for
providing quality services, and by taking advantage of the current trends for
outsourcing operations and maintenance activities to specialized service
providers.
Water & Wastewater. Our Water & Wastewater business focuses on the
planning, design, construction and implementation of water supply systems
and wastewater treatment facilities. Representative Water & Wastewater
projects include:
. Design and construction of a water treatment plant expansion in
Tampa, Florida
. Design, construction and commissioning of a wastewater
treatment facility in Manakau, New Zealand
. Program management for design and construction of a deep tunnel
sewage project in the Republic of Singapore
. Design, construction and commissioning of a water treatment
plant in Halifax, Nova Scotia
Operations & Maintenance. Our Operations & Maintenance business provides
water, wastewater and public works operations and maintenance services to
water and wastewater facility operators, including startup and performance
testing, consulting, facility operations, on-going maintenance and
management. The facility management services include water and wastewater
treatment, collection, and distribution, equipment and process maintenance,
and site grounds maintenance. Representative Operations & Maintenance
projects include:
. Operations and maintenance of a water reclamation center in
Fairfield, California
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. Operations of the wastewater facilities in Hoboken, New
Jersey
. Operations of the wastewater plant for a large brewery in
Jacarei, Brazil
Industrial
Our Industrial operating segment provides design, construction, specialized
precision manufacturing support and facility services support to high-technology
manufacturing companies, food and beverage processing businesses, and fine
chemical and pharmaceutical manufacturers.
The business strategy of the Industrial operating segment is to diversify its
client base beyond the microelectronics industry, capitalizing on a strong
professional reputation in project delivery of complex manufacturing facilities
and leadership in the area of single-source design, engineering and construction
of industrial manufacturing facilities.
The Industrial operating segment built its reputation primarily in the micro-
electronics industry, where it offers a single source for a broad range of
integrated design and construction services. The Industrial segment's clients
typically require design and installation services for complex systems that
comprise many of their facilities, including clean rooms, ultrapure water and
wastewater treatment systems, chemical and gas systems, and production tools.
Representative Industrial projects include:
. Design and construction services for the development of
multiple U.S. and foreign production facilities for a major
microelectronics manufacturer
. Design and construction services for a soy sauce production
facility in California for a Japanese food processing
manufacturer
. Complete engineering and construction services for an ultrapure
water system for a multi-national pharmaceutical manufacturer
. Continuous facility engineering, maintenance and operations
support services for several microelectronics manufacturers
under multi-year contracts
Clients
Our clients include:
. Companies in the energy, transportation, chemical, steel,
aluminum, mining, forest products, electronics, food,
pharmaceuticals and manufacturing industries in the United
States and more than 20 foreign countries
. The U.S. Agency for International Development, U.S. Department
of Defense, U.S. Department of Energy and U.S. Environmental
Protection Agency
. A variety of state and local government agencies in the United
States and abroad
Kaiser-Hill
In 1995, through Kaiser-Hill, we won the U.S. Department of Energy's Performance
Based Integrating Management Contract for the Rocky Flats Closure Project in
Golden, Colorado. Kaiser-Hill is a joint venture with ICF Kaiser International,
Inc. CH2M HILL holds a 50 percent interest in the joint venture. Rocky Flats is
a former U.S. Department of Energy nuclear weapons production facility. Under
the contract, Kaiser-Hill oversees plutonium stabilization and storage,
environmental restoration, waste management, decontamination and
decommissioning, site safety and security, and construction activities of
subcontractor companies.
Under the initial performance-based contract signed by Kaiser-Hill, a concept
that was developed in the U.S. Department of Energy's 1994 Contract Reform
Initiative, 85% of Kaiser-Hill's fees are based on performance, while only 15%
are fixed. Kaiser-Hill's contract commits it to dealing with urgent risks first.
Achievement of measurable results in the following ``urgent risk'' areas
determines Kaiser-Hill's incentive fee: stabilize plutonium and plutonium
residues for specific time frames; consolidate plutonium in a single building;
and clean up and remove all high-risk "hot spot" contamination.
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Effective February 1, 2000, the U.S. Department of Energy extended Kaiser-Hill's
Rocky Flats contract. Although the new contract is a closure contract and does
not have a defined term, we anticipate that closure of the site would be in
2006. Under the new contract, Kaiser-Hill is compensated through a base fee
affected, up or down, by its performance against the agreed site target closure
costs. Outside a negotiated range, for every dollar that the U.S. Department of
Energy saves with earlier clean-up, Kaiser-Hill receives a 30 cent increase in
fee. At the same time, for every dollar the clean-up is over budget, the fee is
reduced by 30 cents up to an agreed minimum. The ultimate fee will also be
impacted by the project schedule and safety of our performance to achieve the
site closure.
Backlog
At December 31, 1999, our backlog was approximately $2,292 million, compared to
a backlog of approximately $1,337 million at December 31, 1998. We define
backlog as contracted task orders less previously recognized revenue on such
task orders. U.S. government agencies operate under annual fiscal appropriations
by Congress and fund various federal contracts only on an incremental basis.
The same is true of many state, local and foreign contracts. Our ability to earn
revenues from our backlog depends on the availability of funding for various
U.S., state, local and foreign government agencies.
Government Contracting
Overall, we received 17% of our revenues in 1999 from U.S. federal government
contracts. Typically, a federal contract has an initial term of one year
combined with two to five one-year renewal periods, exercisable at the
discretion of the federal government. The government is not obligated to
exercise its option to renew a federal contract. At the expiration of the term
of a federal contract, the contract in its entirety is resubmitted for
competitive bids by all interested service providers. The government's failure
to renew, or the early termination of, any significant portion of our federal
contracts would adversely affect our business and prospects.
Contracts with the federal government and its prime contractors usually contain
standard provisions for termination at the convenience of the government or such
prime contractors. Upon such a termination, we are generally entitled to recover
costs incurred, settlement expenses and profit on work completed prior to
termination. Terminations of federal contracts may occur, and such terminations
could adversely affect our business and prospects.
Federal contract payments we receive in excess of allowable direct and indirect
costs are subject to adjustment and repayment after audit by government
auditors. The U.S. government has completed audits on our incurred contract
costs through December 31, 1995, and audits are continuing for subsequent
periods.
As a U.S. government contractor, we are subject to federal regulations under
which our right to receive future awards of new federal contracts, or extensions
of existing federal contracts, may be unilaterally suspended or barred if CH2M
HILL is convicted of a crime or indicted based on allegations of a violation of
specific federal statutes. Suspensions or debarment actions, even if temporary,
can result in the loss of valuable contract awards for which we would otherwise
be eligible. While suspension and debarment actions may be limited to that
division or subsidiary of a company engaged in the improper activity, government
agencies have authority to impose debarment and suspension on affiliated
entities that were not involved in the improper activity.
Many similar regulations are also applicable to our contracts with state, local
and foreign governments.
Our Environmental Activities and Potential Liabilities
A substantial portion of our business has been generated either directly or
indirectly as a
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result of federal, state, local and foreign laws and programs related to
protection of the environment. Our environmental activities are conducted in the
context of a rapidly developing and changing statutory and regulatory framework.
Such activities are subject to regulation by a number of federal agencies,
including the U.S. Environmental Protection Agency ("EPA"), the U.S. Nuclear
Regulatory Commission and the U.S. Occupational Safety and Health
Administration, as well as similar state, local and foreign regulatory agencies.
Several federal statutes govern our environmental activities. The Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA") established
the "superfund" program to clean up hazardous waste sites, and provides for
penalties and punitive damages for noncompliance with EPA orders. CERCLA may
impose strict liability (joint and several as well as individual) on hazardous
substance waste owners, operators, disposal arrangers, transporters and disposal
facility owners and operators (collectively, "Potentially Responsible Parties"
or "PRPs"). Liabilities under CERCLA may include payment of the costs of removal
or remedial action, for other necessary response costs, for damages for injury,
destruction or loss of natural resources, and for the cost of health effects
studies.
Although the liabilities imposed by environmental legislation are generally
intended to remedy and prohibit pollution by industrial companies, we could face
liability under environmental laws in some circumstances. Increasingly, there
are efforts to expand the reach of CERCLA to make environmental contractors
responsible for cleanup costs by claiming that environmental contractors are
owners or operators of hazardous waste facilities or that they arranged for
treatment, transportation, or disposal of hazardous substances. Should we be
held responsible under CERCLA for damages caused while performing services or
otherwise, CH2M HILL could be forced to bear such liability by itself, if
contribution or indemnification is not available from other parties. The
Resources Conservation and Recovery Act ("RCRA") governs hazardous waste
generation, treatment, transportation, storage, and disposal. RCRA, or similar
EPA-approved state programs, govern waste-handling activities involving wastes
classified as "hazardous." Substantial fees and penalties may be imposed under
RCRA and similar state statutes for any violation.
In addition to civil and criminal liabilities under environmental laws, we could
face liabilities to clients and other private parties for property damage,
personal injury and other claims. Such claims could arise in a number of ways,
including:
. An accidental release of pollutants during our performance of
services
. The inability of one of our remedial plans to contain or correct an
ongoing seepage or release of pollutants
. The inadvertent exacerbation by us of an existing contamination
problem
. Reliance by others on reports or recommendations we prepare that turn
out to be incorrect
In the environmental field, personal injury claims may arise in connection with
our work while it is being done or long after completion of the project. In
addition, claimants may assert that we should be strictly liable for performing
environmental remediation services -- that is, liable for damages even though
our services may have been performed using reasonable care -- on the grounds
that such services involve "abnormally dangerous activities."
Our Contractual Obligations and Potential Liabilities
We operate under a number of different types of contracts with our private and
public sector clients, including cost reimbursement contracts, time-and-
materials contracts, and fixed price contracts. Fixed price contracts accounted
for approximately 30% of our revenues in 1999. Under fixed price contracts, we
are paid a predetermined amount for all services provided as determined at the
project's inception. Under time-and-materials contracts, we are paid at a
specified fixed hourly rate for direct labor hours worked. Under cost
reimbursement contracts, our costs are reimbursed, often with a negotiated cost
ceiling and also with an incentive fee to provide inducement for effective
project management. We
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assume the greatest financial risk on fixed price contracts because we assume
the risk of performing those contracts at the stipulated prices regardless of
actual costs incurred. We also incur some financial risks under time-and-
materials contracts because we contract to complete the work at negotiated
hourly rates. The failure to accurately estimate ultimate costs or to control
costs during performance of the work could result in losses or reduced
anticipated profits.
When we perform services for our clients, we can become liable for breach of
contract, personal injury, property damage, and negligence. Such claims could
include improper or negligent performance or design, failure to meet
specifications, and breaches of express or implied warranties. Because our
projects are typically large enough to affect the lives of many people, the
damages available to a client or third parties are potentially large and could
include punitive and consequential damages. For example, our transportation
projects and manufacturing facility projects involve services and products that
affect not only our client, but also the many end users of those services and
products. In addition, our clients often require us to be responsible for
liabilities through contractual indemnities. Such provisions typically require
us to assume liabilities for damage or personal injury to the client, third
parties and their property, and also for fines and penalties.
We seek to protect CH2M HILL from potential liabilities by obtaining
indemnification where possible from our private sector clients. Under most of
our private sector contracts, we have been successful in obtaining such
indemnification, but such indemnification generally is not available if we fail
to satisfy specified standards of care in performing our services or if the
indemnifying party has insufficient assets to cover the liability.
We also try to obtain available indemnities from our public sector clients. For
example, some of our clients, including some U.S. government agencies, are
Potentially Responsible Parties under CERCLA. Under our contracts with these
clients, we usually try to seek contribution from the client for liability
imposed on us in connection with our work at these clients' CERCLA sites. In
addition, when we perform superfund related work for our U.S. government
clients, CERCLA generally permits us to limit our potential liabilities.
However, the EPA recently has significantly narrowed the circumstances under
which it will indemnify contractors against liabilities incurred in connection
with CERCLA projects. There are also proposals both in Congress and at various
regulatory agencies to further restrict indemnification of contractors from
third-party claims. In connection with services at the Rocky Flats closure
project, Kaiser-Hill is indemnified by its U.S. government client against
liability claims arising out of contractual activities involving a nuclear
incident.
International Operations Pose Risks and Complexities
We routinely conduct operations outside of the United States. Overall, we
derived approximately $114 million or 10% of our service revenues in 1999 from
such operations. International operations entail additional business risks and
complexities such as foreign currency exchange fluctuations, different taxation
methods, restrictions on financial and business practices and political
instability. Our international clients include both private sector firms and
foreign government agencies in more than 20 countries, with significant projects
in Egypt, Italy, New Zealand, Singapore, and Spain.
Our Industry Is Highly Competitive
The market for the design, consulting, engineering and construction services
that we offer is highly competitive. We compete with many firms, including large
multinational firms having substantially greater financial, management, and
marketing resources. Some of the competitors are small firms with lower cost
structures enabling them to offer lower prices for particular services. We also
compete with government agencies, including our own clients, that can utilize
their internal resources to perform services that we might otherwise perform.
Most contracts between public sector clients and our EE&I and Industrial
operating segments are awarded through a competitive bidding process that places
no limit on the number or type of potential service providers. The process
usually begins with a government agency request for proposal that
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delineates the size and scope of the proposed contract. The government agency
evaluates the proposals on the basis of technical merit and cost. For the Water
operating segment, most contracts are awarded through qualification selection
processes that vary among projects.
In both the private and public sectors, acting either as a prime contractor or
as a subcontractor, we may join with other firms that we otherwise compete with
to form a team to compete for a single contract. Because a team can often offer
stronger combined qualifications than any firm standing alone, these teaming
arrangements can be very important to the success of a particular contract
competition or proposal. Consequently, we maintain a network of relationships
with other companies to form teams that compete for particular contracts and
projects.
Conflicts of Interest May Limit Opportunities
Many of our clients and potential clients are concerned about actual or possible
conflicts of interest in retaining professional services consultants.
Governmental agencies and some private sector clients have contracting policies
that may, from time to time, prevent us from seeking or performing contracts for
other clients if there is a conflict of interest. We have, on occasion, declined
to bid on particular projects because of actual or perceived conflicts of
interest, and we are likely to continue encountering such conflicts of interest
in the future.
Item 2. Properties
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Our corporate headquarters, a 131,000 square foot facility, is located at 6060
South Willow Drive, Greenwood Village, Colorado 80111. We lease all of our
significant facilities, including our corporate headquarters and approximately
66 domestic and 33 foreign office locations, under many separate leases. We
believe that comparable facilities are available for lease and therefore that
the loss of any such leases would not have a material adverse impact on our
operations. We believe that our facilities are adequate for the present needs of
our business.
Item 3. Legal Proceedings
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CH2M HILL is party to various legal actions arising in the normal course of its
business, some of which involve claims of substantial sums. Damages assessed in
connection with and the cost of defending any such actions could be substantial.
CH2M HILL's management believes that the levels of insurance coverage are
generally adequate to cover CH2M HILL's liabilities, if any, with regard to such
claims. CH2M HILL generally accrues amounts for retentions and deductibles based
on advice from legal counsel when it is probable that a loss will be incurred
and such loss is estimable. Gain contingencies or recoveries are rare and are
usually recorded when the cash is collected.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
No items were submitted to a vote of security holders during the fourth quarter
of 1999.
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PART II
Item 5. Market for Registrant's Common Equity and Related Shareholder Matters
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CH2M HILL has a policy of being employee owned. As a result CH2M HILL stock is
available to CH2M HILL employees, directors and consultants only. There is no
market for CH2M HILL stock with the general public. In order to provide
liquidity for its shareholders, however, an internal market (the "Internal
Market") will be maintained through a broker, Buck Investment Services, Inc.
The Internal Market permits existing shareholders to offer for sale shares of
CH2M HILL common stock on predetermined days, (each, a "Trade Date"). Generally,
there will be four Trade Dates each year which typically occur approximately
four weeks after the quarterly meeting of CH2M HILL's Board of Directors which
are currently scheduled for February, May, August and November. All sales of
CH2M HILL common stock are made at the price determined by the Board of
Directors pursuant to the valuation process described below.
All sales of common stock on the internal market will be restricted to the
following buyers:
. Employees, directors and consultants of CH2M HILL
. Employee Benefit Plans:
. Trustees of the 401(k) Plan
. Trustees of the Employee Stock Plan (ESP)
. Trustees of the Deferred Compensation Plans
. Administrator of the Payroll Deduction Stock Purchase Plan
All sellers on the Internal Market, other than CH2M HILL and the employee
benefit plans, pay Buck Investment Services, Inc. a commission equal to 2% of
the proceeds from such sales. No commission is paid by purchasers on the
Internal Market.
In the event that the aggregate number of shares offered for sale in the
Internal Market on any Trade Date exceeds the number of shares sought to be
purchased by buyers, offers by shareholders to sell 500 or less shares of CH2M
HILL common stock (or up to the first 500 shares if more than 500 shares of CH2M
HILL common stock are offered by any such shareholder) will be accepted first.
Offers to sell shares in excess of 500 shares of CH2M HILL common stock will be
accepted on a pro-rata basis. If, however, there are insufficient purchase
orders to support the primary allocation of 500 shares of CH2M HILL common stock
for each interested seller, then the purchase orders will be allocated equally
among all of the proposed sellers up to the total number of shares offered for
sale.
CH2M HILL may, but is not obligated to, purchase shares of CH2M HILL common
stock on the Internal Market, but, only if, and to the extent that the number of
shares offered for sale by shareholders exceeds the number of shares sought to
be purchased, and CH2M HILL, in its discretion, determines to make such
purchases. No assurance can be given that an individual desiring to sell shares
of CH2M HILL's common stock will be able to do so.
To the extent that the aggregate number of shares sought to be purchased by
buyers exceeds the aggregate number of shares offered for sale by shareholders,
CH2M HILL may, but is not obligated to, sell authorized but unissued shares of
CH2M HILL common stock in the Internal Market. If the aggregate purchase orders
exceed the number available for sale, the following prospective purchasers will
have priority, in the order listed:
. Administrator of the Payroll Deduction Stock Purchase Plan
. Trustees of the 401(k) Plan
. Trustees of the Employee Stock Plan
. Individual employees, directors and consultants on a pro-rata
basis which includes purchases through the pre-tax and after-
tax deferred compensation plans
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To the extent that CH2M HILL chooses not to sell authorized but unissued shares
of CH2M HILL common stock on the Internal Market, the ability of individuals to
purchase shares may be adversely affected. CH2M HILL has imposed significant
restrictions on the transfer of our CH2M HILL common stock other than through
sales on the Internal Market. No assurance can be given that an individual
desiring to buy shares of CH2M HILL common stock in any future trade will be
able to do so.
Price of CH2M HILL Common Stock
The Board of Directors will determine the price, which is intended to be the
fair market value, of the shares of CH2M HILL common stock that will be in
effect on each Trade Date pursuant to a valuation process described below. The
price per share of CH2M HILL common stock is determined as follows:
Share Price = [(7.8 x M x P) + (SE)] / CS
In order to determine the fair market value of the stock in the absence of a
public trading market, the Board of Directors felt it appropriate to develop a
valuation tool to determine a price that would be within a fair market value
range. In determining the fair market value stock price, the Board of Directors
believes that the use of a formula incorporating a going concern component
(i.e., net income, which we call profit after tax) and a book value component
(i.e., total shareholders' equity) is important. The Board of Directors believes
that the process CH2M HILL has developed reflects modern equity valuation
techniques and is based on those factors that are generally used in the
valuation of equity securities.
The constant 7.8 is a multiple necessary for the stock price derived by the new
formula to approximate our historical estimate of the fair market value of the
CH2M HILL common stock as derived by the old formula. The 7.8 constant is the
factor required to derive a fair market value stock price using an "M" factor of
1.0 at the beginning of the internal market.
"M" is the market factor, which is subjectively determined in the sole
discretion of the Board of Directors. In determining the market factor, the
Board of Directors will take into account factors the directors consider to be
relevant in determining the fair market value of the CH2M HILL common stock,
including:
. the market for publicly traded equity securities of companies
comparable to CH2M HILL
. the merger and acquisition market for companies comparable to CH2M
HILL
. the prospects for CH2M HILL's future performance
. general economic conditions
. general capital market conditions
. other factors the Board of Directors deems appropriate
In setting the market factor, the Board of Directors may take into account the
company appraisal information obtained by the trustees of the benefit plans.
The existence of an over-subscribed or under-subscribed market on any given
Trade Date will not affect the stock price on that Trade Date. However, the
Board of Directors, when determining the stock price for a future Trade Date,
may take into account the fact that there have been under-subscribed or over-
subscribed markets on prior Trade Dates.
The Board of Directors has not assigned predetermined weights to the various
factors it may consider in determining the market factor. A market factor
greater than one would increase the price per share and a market factor less
than one would decrease the price per share.
In its discretion, the Board of Directors may change, from time to time, the
market factor component of the formula price. The Board of Directors could
change the market factor, for example, following a change in general market
conditions that either increased or decreased stock market equity values
11
<PAGE>
generally, if the Board of Directors felt that the market change were
appropriately applicable to the CH2M HILL common stock as well. The Board of
Directors will not make any other change in the method of determining the price
per share of CH2M HILL common stock unless in the good faith exercise of its
fiduciary duties and, if appropriate, after consultation with its professional
advisors, the Board of Directors determines that the method for determining the
price per share of CH2M HILL common stock no longer results in a stock price
that reasonably reflects the fair market value of CH2M HILL on a per share
basis.
"P" is profit after tax, otherwise referred to as net income, for the four
fiscal quarters immediately preceeding the Trade Date. Nonrecurring or unusual
transactions could be excluded from the calculation at the discretion of the
Board of Directors. Nonrecurring or unusual transactions are unforeseen
developments that the market would not generally take into account in valuing an
equity security. A change in accounting rules, for example, could increase or
decrease net income without changing the fair market value of the CH2M HILL
common stock. Similarly, such a change could fail to have an immediate impact on
the value of the CH2M HILL common stock, but still have an impact on the value
of the CH2M HILL common stock over time. As a result, the Board of Directors
feels that in order to determine the fair market value of the CH2M HILL common
stock, it needs the ability to review unusual events that affect net income.
"SE" is total shareholders' equity, which includes intangible items, set forth
on CH2M HILL's most recently available quarterly or annual financial statements.
Nonrecurring or unusual transactions could be excluded from the calculation at
the discretion of the Board of Directors.
"CS" is the weighted average number of shares of CH2M HILL common stock
outstanding during the four fiscal quarters immediately preceeding the Trade
Date, calculated on a fully diluted basis. By "fully diluted" we mean that the
calculations are made as if all outstanding options to purchase CH2M HILL common
stock had been exercised, and the proceeds were used to purchase CH2M HILL
common stock during the period, and, as if other "dilutive" securities were
converted into shares of CH2M HILL common stock.
Price Range of CH2M HILL Common Stock
Because the CH2M HILL common stock has not been publicly traded, there has not
been any historical market-determined price. However, the Board of Directors has
periodically determined the price of the CH2M HILL common stock for purposes of
incentive awards of CH2M HILL common stock.
The following table sets forth the price per share figures for 1989 through 1999
as established by the Board of Directors pursuant to the old formula for
purposes of transactions under the key employee policy and employee benefit
plans. There can be no assurance that the CH2M HILL common stock will, in the
future, provide returns comparable to historical returns.
Because of the change from the old formula to the new valuation process for
determining the price, the historical prices for the CH2M HILL common stock are
not directly comparable to the stock prices that will be determined under the
new formula. Since the determination of the price includes market analyses that
are applied by the Board of Directors at the time of making its determinations,
we do not know what the historical prices for the CH2M HILL common stock would
have been under the new formula.
Date Price Per Share % Increase
(Old Formula) (Decrease)
- -------------------------------------------------------
1989 $2.05 __%
- -------------------------------------------------------
1990 2.25 9.8
- -------------------------------------------------------
1991 2.52 12.0
- -------------------------------------------------------
1992 2.77 9.9
- -------------------------------------------------------
1993 2.99 7.9
- -------------------------------------------------------
12
<PAGE>
- -------------------------------------------------------
1994 2.95 (1.3)
- -------------------------------------------------------
1995 3.07 4.1
- -------------------------------------------------------
1996 3.31 7.8
- -------------------------------------------------------
1997 3.59 8.5
- -------------------------------------------------------
1998 3.82 6.4
- -------------------------------------------------------
1999 4.31 12.8
- -------------------------------------------------------
Holders of CH2M HILL Common Stock
As of March 24, 2000, there were 2,729 holders of record of CH2M HILL common
stock. As of such date, all of the CH2M HILL common stock was owned of record by
current employees and directors of CH2M HILL and by various employee benefit
plans of CH2M HILL and its subsidiaries.
Dividend Policy
CH2M HILL has never declared or paid any cash dividends on its capital stock and
no cash dividends are contemplated in the foreseeable future. We intend to
retain any future earnings to finance the growth and development of our
business.
Item 6. Selected Financial Data
-----------------------
The following data has been derived from the Consolidated Financial Statements
of CH2M HILL, which have been reported on by Arthur Andersen LLP, independent
public accountants, for each of the last five years. During the periods
presented, CH2M HILL paid no cash dividends on its CH2M HILL common stock. The
following information should be read in conjunction with ``Management's
Discussion and Analysis of Financial Condition and Results of Operations'' and
the Consolidated Financial Statements and related notes thereto, included
elsewhere in this Form 10-K.
<TABLE>
<CAPTION>
Years Ended December 31,
(dollars in thousands except per share data) 1995 1996 1997 1998 1999
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Statement of Operations Data:
Revenues $804,614 $937,198 $917,578 $935,030 $1,184,528
Operating income 12,699 13,444 13,946 14,802 25,987
Net income 5,371 4,709 4,716 5,812 13,626
Net income per common and preferred share 0.19 0.17 0.17 0.21 0.46
(basic and diluted)
Balance Sheet Data:
Total assets 304,136 309,364 311,117 298,325 357,155
Long-term debt including current maturities 44,576 39,987 34,414 27,388 21,296
Total temporary shareholders' equity 56,171 58,130 62,303 75,132 97,092
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
-----------------------------------------------------------------------
of Operations
- -------------
13
<PAGE>
The following discussion and analysis explains our general financial condition,
changes in financial condition and results of operations for CH2M HILL as a
whole and each of our operating segments including:
. Factors affecting our business
. Our revenues and profits
. Where our revenues and profits came from
. Why those revenues and profits were different from year to year
. Where our cash came from and how it was used
. How all of this affects our overall financial condition
The following discussion contains, in addition to historical information,
forward-looking statements that involve risks and uncertainties. Our actual
results may differ significantly from the results discussed in the forward-
looking statements. As you read this section, you should also refer to our
consolidated financial statements and the accompanying notes. These consolidated
financial statements provide additional information regarding our financial
activities and condition. This analysis may be important to you in making
decisions about your investments in CH2M HILL.
Introduction
The engineering and construction industry has been undergoing substantial change
as public and private clients privatize and outsource many of the services that
were formerly provided internally. Numerous mergers and acquisitions in the
industry have resulted in a group of larger firms that offer a full complement
of single-source services including studies, designs, construction, operations,
and in some instances, facility ownership. Included in the current trend is the
movement towards longer-term contracts for the expanded array of services, e.g.,
5 to 20 year contracts for facility operations. These larger, longer contracts
require us to have substantially greater financial capital to remain
competitive. We believe we provide our clients with innovative project delivery
using cost-effective approaches and advanced technologies. We continuously
monitor acquisition and investment opportunities that will expand our portfolio
of services, add value to the projects undertaken for clients, or enhance
capital strength. We believe that we are well positioned geographically,
technically and financially to compete worldwide in the markets we have elected
to pursue and clients we serve.
<TABLE>
<CAPTION>
1999 1998 1997
----------------------------------------------------------------------------
(in millions) Revenues Pre-tax Revenues Pre-tax Revenues Pre-tax
Profit Profit Profit
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Environmental, Energy and $ 497.5 42% $17.4 $386.1 41% $ 9.3 $360.2 39% $ 5.8
Infrastructure
Water 438.0 37% 16.3 362.8 39% 7.2 309.9 34% 5.0
Industrial 249.0 21% - 186.1 20% 3.6 247.5 27% 7.2
Corporate - - (6.9) - - (5.7) - - (6.0)
----------------------------------------------------------------------------
Total $1,184.5 100% $26.8 $935.0 100% $14.4 $917.6 100% $12.0
------------------------------------------------------------------------------
</TABLE>
Results of Operations for the Year Ended December 31, 1999 Compared to 1998
Revenues for the year ended December 31, 1999 were $1,184.5 million compared to
$935.0 million for the same period in 1998. The increase of $249.5 million or
26.7% is comprised of growth in the Environmental, Energy & Infrastructure
(``EE&I'') segment of $111.4 million, the Water segment of $75.2 million, and
the Industrial segment of $62.9 million.
Pre-tax profit for the year ended December 31, 1999 was $26.8 million compared
to $14.4 million in the same period of 1998. The increase of $12.4 million was
comprised of increases in the EE&I segment of $8.1 million and the Water segment
of $9.1 million, offset by a decline in the Industrial segment of $3.6 million.
Corporate expenses increased by $1.2 million.
Environmental, Energy and Infrastructure
14
<PAGE>
Revenues in the EE&I segment for the year ended December 31, 1999 were $497.5
million compared to $386.1 million for the same period in 1998. This increase of
$111.4 million was primarily attributable to growth of $26.2 million in the
telecommunications markets, $30.3 million in the construction services market,
and $22.0 million in the transportation markets. The growth in the
telecommunications markets has occurred domestically and internationally.
Clients are building new infrastructure or upgrading existing infrastructure to
keep pace with the advancements in information technology. The growth in
revenues from construction services is indicative of our commitment to diversify
our business. Construction services revenues generated in the year ended
December 31, 1999 were primarily from remedial action contracts with the U.S.
Navy. The increase in the transportation markets is primarily the result of the
Transportation Equity Act for the 21st Century (TEA-21) which was adopted by
Congress in 1998. TEA-21 provides federal funding to the various states for
transportation infrastructure improvement projects for highways, highway safety,
and transit for the six-year period from 1998 to 2003.
Pre-tax profit for the EE&I segment was $17.4 million for the year ended
December 31, 1999 compared to $9.3 million in the same period of 1998. Profit as
a percent of revenue in 1999 was 3.5% compared to 2.4% in 1998. The increase in
pre-tax profit of $8.1 million was primarily generated by increased project
margins of $6.4 million from the telecommunications markets offset by an
increase in indirect costs of $2.8 million. The remaining increase of $4.5
million was achieved in the construction services and transportation markets due
to the increase in volume of contracts.
Water
The Water segment reported revenues of $438.0 million for the year ended
December 31, 1999 compared to revenues of $362.8 million in the same period of
1998. The increase of $75.2 million was attributable to significant growth in
several market areas. In general, $37.7 million of the increase in the Water
segment revenue resulted from prior traditional engineering consulting
development efforts, as well as new business obtained from our existing clients
due to the strong domestic economy. Revenues from design/build projects
increased by $24.8 million, as a result of our ongoing efforts to provide a full
array of services to our customers. Revenues from operations and maintenance
services increased by $12.7 million due to the addition of new infrastructure
support contracts, primarily with municipalities.
The Water segment reported $16.3 million of pre-tax profit for the year ended
December 31, 1999 compared to $7.2 million of pre-tax profit for the same period
of 1998. Profit as a percent of revenue for 1999 was 3.7% compared to 2.0% for
1998. The increase of $9.1 million in profit is attributable to the strong
revenue growth within all of our Water businesses discussed earlier. In
addition, spending increased due to continued investment in design/build
infrastructure and development, and focused investment in strategic business
development opportunities throughout the world.
Industrial
The Industrial segment reported revenues of $249.0 million for the year ended
December 31, 1999, of which $164.4 million was generated from the
microelectronics industry. The revenues for 1998 were $186.1 million, of which
$129.0 million was generated from the microelectronics industry. The increase of
$62.9 million was comprised of $35.4 million increase in revenues from the
microelectronics industry and an increase in revenues of $27.5 million from
other industries, including food, biopharmaceutical, fine chemical and facility
services.
The mix of the revenues between construction costs versus services for
engineering and construction management also changed significantly from 1999
versus 1998. The construction cost component of revenues increased from $46.8
million, which was 25.1% of 1998 revenues, to $153.4 million, which was 61.6% of
1999 revenues. The construction revenue increase was due to two large
construction projects that were started in first quarter 1999. This increase in
construction revenues of $106.6 million offset the decrease in service revenues,
which declined from $139.3 million in 1998, to $95.6
15
<PAGE>
million in 1999. This service revenue decrease of $43.7 million was due to the
significant decline in non-construction related services provided to
microelectronics businesses.
The Industrial segment reported no pre-tax profit for the year ended December
31, 1999 versus $3.6 million for 1998. Profit as a percent of revenues for 1998
was 1.9%. The most significant factor causing this profit decline was the
decrease in volume of services sold during 1999 and decline in project margins.
These were results of the significant decline in services provided to the
microelectronics industry and an increase in low-margin construction projects.
1998 Results of Operations Compared to 1997
Revenues for 1998 were $935.0 million compared to $917.6 million in 1997. The
increase of $17.4 million or 1.9% is comprised of significant improvements in
the EE&I segment of $25.9 million and the Water segment of $52.9 million. These
gains were reduced by the decrease of $61.4 million in the Industrial segment
revenues.
Pre-tax profit for 1998 was $14.4 million compared to $12.0 million in 1997.
The increase of $2.4 million or 20.0% was primarily due to volume increases in
the EE&I and Water segments as well as a reduction in corporate expenses.
Contracts in the EE&I and Water segments generally have a lower margin than the
contracts in the Industrial segment, but increases in the volume of contracts
offset any decline generated by the Industrial segment.
Bad debt expense was $57,000 in 1996, $1.4 million in 1997, and $5.2 million in
1998, which also impacts pre-tax profit. The increases in 1997 and 1998 relate
to specific projects in the EE&I and Water segments that needed to be reserved
for due to the uncertainty of collection. At December 31, 1997, the outstanding
receivables related to these projects were $2.2 million of unbilled and $1.2
million of billed. No amounts were outstanding at December 31, 1998. The
entire outstanding receivable balances were reserved for as the projects were
halted due to poor economic conditions in Latin America. Currently, future
collection of these receivables is not probable.
The loss on the sale of assets in 1998 of $1.7 million also negatively impacted
pre-tax profit. This loss related to assets that were sold in closing two of
our offices.
Environmental, Energy and Infrastructure
Revenues in the EE&I segment increased $25.9 million or 7.2% to $386.1 million
in 1998, compared to $360.2 million in 1997. EE&I revenues accounted for 39.0%
of our total operating revenues in 1997 and 41.0% in 1998. During 1998 we
benefited from the business development efforts undertaken in 1997. We reported
a full year of revenues in 1998 for public sector hazardous waste remediation
contracts awarded in 1997 by the U.S. Department of Defense and the U.S.
Department of Energy. Revenue growth from the U.S. Department of Defense was
strong in part due to legislation requiring military base closure and
remediation. The initial assessment phases are complete and the environmental
remediation and clean-up phases have begun.
The telecommunications markets, both domestically and internationally, also
attributed to the increase in revenues in 1998. We obtained several major
clients in this market providing program management oversight, site development
and construction management services to install or upgrade cable and wireless
networks and related infrastructure. With the technological advances in
wireless telecommunications, the ability to communicate rapidly via voice, data,
and video have become a necessity for business enterprises and individuals
around the world. We believe this market will provide continued revenue growth
in future years.
Although the private sector of the environmental and infrastructure market
slowed in 1997, we realized some recovery from this sector in 1998. We
attribute this growth to the strong domestic economy,
16
<PAGE>
which is affording larger, multinational corporations the opportunity to improve
their environmental performance and sustainability.
The transportation market also contributed to the increase in revenues in 1998.
We have benefited from the growth generated by the Intermodal Surface
Transportation Efficiency Act (ISTEA) adopted by Congress in 1991, which caused
significant increases in federal funding to the states for transportation
projects. We believe that we are also well positioned in the market to benefit
from the TEA-21 legislation.
The EE&I segment reported higher pre-tax profit in 1998, increasing from $5.8
million in 1997 to $9.3 million in 1998, an increase of 60.3%. Profit as a
percent of revenues was 2.4% in 1998 compared to 1.7% in 1997. The growth in
the telecommunications markets contributed $2.8 million in profit while the
remaining net increase of $0.7 million was attained by successful cost
containment efforts. The demand for services is high in the telecommunications
market, which can return higher gross margins than the public and private sector
environmental and infrastructure contracts.
During 1998, cost containment measures enacted in prior years reduced overhead
costs as administrative functions have been consolidated to enable us to manage
our resources more effectively.
Water
Water segment revenues were $362.8 million in 1998 versus $309.9 million in
1997, an increase of $52.9 million or 17.1%. Approximately 30% of the increase
came from new contracts, with terms up to 15 years, in the utility plant
operations market for public and private clients. The balance of the increase
came from contract activities in water and wastewater infrastructure improvement
projects undertaken by municipalities and other utility authorities across the
United States and abroad. The desire by municipalities to preserve the
environment and provide clean water creates a demand for services we offer.
Profitability in the Water segment increased from $5.0 million in 1997 to $7.2
million in 1998, an increase of 44.0%. Profit as a percent of revenues was 2.0%
in 1998 compared to 1.6% in 1997. Profitability continues to improve as we
continue to win significant new contracts as reflected by the increase in
revenues mentioned above. Additionally, the Water segment reported an increase
of $1.0 million in profit due to lower business development expenditures. From
year to year, we achieved increasing margins by focusing on improvements in
project delivery and effective cost management, even though competition in this
industry is increasing as a result of rapid consolidation. We believe that our
future success in the Water segment is dependent on continuing improvements in
our project delivery performance and our ability to win significant new
contracts.
Industrial
The Industrial segment's revenues for 1998 were $186.1 million, of which $141.4
million or 76.0% was generated from the microelectronics industry. The
Industrial segment's revenues for 1997 were $247.5 million, of which $222.8
million or 90.0% was generated from the microelectronics industry. Total
revenues from the industrial segment declined $61.4 million from 1997 to 1998
due to declines in the microelectronics industry offset by an increase in
revenues from other industries including food, biopharmaceutical, fine chemical,
and facility services. The microelectronics industry began to reduce capital
spending in 1997 which has continued into 1999, resulting in a sharp decline in
purchases of engineering and construction services by our microelectronics
clients. In order to reduce its dependence on the microelectronics industry,
the industrial segment has reallocated some of its workforce to focus on
diversifying into other industries mentioned above.
17
<PAGE>
Pre-tax profit in the industrial segment was $3.6 million in 1998 versus $7.2
million in 1997. Profit, as a percent of revenues was 1.9% in 1998 compared to
2.9% in 1997. The decrease in the total volume of services sold during 1998 to
the microelectronics industry caused this profit decline. In addition to the
impact of reduced volume, direct project costs as well as overhead expenses
affected profitability. Direct project costs, as a percentage of revenues,
decreased 2.0% in 1998 versus 1997, slightly improving gross margins. Indirect
labor costs, included in overhead expenses, as a percentage of gross revenues,
increased 4.0% from 1997 to 1998 because of the significant decline in revenue
during 1998.
Joint Ventures
We routinely enter into joint venture arrangements in order to service the needs
of our clients. Such arrangements are customary in the engineering and
construction industry and generally are established to manage a specific
project. Our largest joint venture is Kaiser-Hill Company, LLC (``Kaiser-
Hill''), a joint venture in which we own a 50% interest. This joint venture is
attributable to our EE&I operating segment. The earnings from this joint venture
are reported as equity in earnings of investees accounted for under the equity
method, along with other joint ventures that are individually insignificant.
For the year ended December 31, 1999, we reported equity in earnings of
investees accounted for under the equity method of $12.4 million compared to
$8.4 million in 1998 and $8.7 million in 1997. The earnings from the Kaiser-Hill
joint venture for the same period of 1999 were $6.4 million compared to $7.8
million for 1998. Under the Performance Based Management contract, as discussed
below, fees are earned based upon specific negotiated performance incentives
which are heavily weighted to the U.S. Government's fiscal year end of September
30. Due to the timing of specific work scopes and the completion of these
activities, earnings may not be comparable from period to period.
Equity in earnings of investees accounted for by the equity method generated
$12.4 million of revenues in 1999 which represents 47.6% of operating income and
91.0% of net income. For 1998, the $8.4 million of revenues represents 56.7% of
operating income and 144.53% of net income. Although Kaiser-Hill achieved the
negotiated performance measures for 1999 in the performance based contract, the
revenues from the contract for 1999 were expected to be lower than in 1998 due
to the fee structure in this contract. This was due to the types of tasks
required to be performed in 1999 to decommission the site and the corresponding
fee levels negotiated based on the difficulty and risks of those tasks. No one
specific task was material to the fee structure in this contract year over year.
The original contract was set to expire on June 30, 2000. This contract was a
Performance Based Management Contract, which means that the fees on the contract
were dependent on Kaiser-Hill's performance measured against safety, budget, and
schedule.
Effective February 1, 2000, the U.S. Department of Energy extended Kaiser-Hill's
Rocky Flats contract. Although the new contract is a closure contract and does
not have a defined term, we anticipate that closure of the site would be in
2006. Under the new contract, Kaiser-Hill is compensated through a base fee
affected, up or down, by its performance against the agreed site target closure
costs. Outside of a negotiated range, for every dollar that the U.S. Department
of Energy saves with earlier clean-up, Kaiser-Hill receives a 30 cent increase
in fee. At the same time, for every dollar the clean-up is over budget, the fee
is reduced by 30 cents up to an agreed minimum. The ultimate fee will also be
impacted by the project schedule and safety of our performance to achieve the
site closure.
Corporate Expenses
Corporate expenses for the year ended December 31, 1999 were $6.9 million
compared to $5.7 million in 1998 and $6.0 million in 1997. The increase of $1.2
million in 1999 is primarily related to the registration of our stock with the
Securities and Exchange Commission. Corporate expenses
18
<PAGE>
represent centralized management costs that are not allocable to individual
operating segments and primarily include expenses associated with administrative
compliance functions such as legal, treasury, accounting, tax, and general
business development efforts. The fluctuations from year to year are generally
dependent on the business development efforts undertaken as other administrative
costs historically remained constant.
Income Taxes
The income tax provision for the year ended December 31, 1999 was $13.1 million,
or an effective tax rate of 49.1%, compared to $8.6 million, or an effective tax
rate of 59.6%, for 1998. The decrease in the effective tax rate in 1999 is
primarily due to the reduction of non-deductible foreign net operating losses as
we have been able to improve the financial performance of our international
operations. The effective tax rate in 1998 was substantially the same as 1997.
Our effective tax rate continues to be higher than the U.S. statutory income tax
rate of 35.0% due to disallowed portions of meals and entertainment expenses and
non-deductible foreign net operating losses. Our income tax provisions for the
last several years were as follows:
- -----------------------------------------------------------------------
Date Income Tax Provision Effective Tax Rate
- -----------------------------------------------------------------------
1999 $13,144 49.1%
- -----------------------------------------------------------------------
1998 $ 8,571 59.6%
- -----------------------------------------------------------------------
1997 $ 7,295 60.7%
- -----------------------------------------------------------------------
Liquidity and Capital Resources
Cash Flows from Operating Activities
For the year ended December 31, 1999, operations provided $29.6 million of cash
and used $4.4 million of cash in 1998. During 1999, our receivables, payables
and billings in excess of revenues increased due to growth and due to the pass-
through of revenues and expenses related to new, large construction projects.
Other current liabilities decreased primarily due to the payment of accrued
incentive compensation and the settlement of accrued liabilities. Operations
generated $38.9 million of cash flows in 1997. The decrease of $43.3 million
from 1997 to 1998 was attributable to the following working capital changes:
. revenue growth provided a corresponding increase in accounts receivable
. prepaids increased as we contributed cash to our largest pension plan to
maintain its funded status
. billings in excess of revenues decreased due to a reduction in advance
payments on contracts formerly realized in the Industrial operating segment
Cash Flows from Investing Activities
Our business does not require significant capital expenditures. The capital
expenditures are generally for purchases of office equipment and leasehold
improvements. We spent $4.7 million in 1999, $4.7 million in 1998, and $2.6
million in 1997 on such expenditures. We have now established a formal operating
lease program under which most of our computing and related equipment is
procured on an ongoing basis. The increase in capital expenditures from 1997 to
1998 reflects leasehold improvements for large regional office moves for which
the leases had expired.
In 1999, we made three acquisitions, one of which was significant. We purchased
the CH2M HILL common stock of Lockheed Martin Hanford Corporation ("Hanford")
for $17.1 million. Hanford is an environmental management contractor that
provides tank waste remediation services to the U.S. Department of Energy. The
acquisition resulted in $16.9 million in goodwill that will be amortized over
the anticipated life of the contract of seven years.
Cash Flows from Financing Activities
During 1999, we borrowed an average of $0.6 million at a weighted average
interest rate of 5.9% against our line of credit to fund operations. At
December 31, 1999, no amounts were outstanding. In
19
<PAGE>
June 1999, we entered into a new credit facility for a $100.0 million revolving
line of credit maturing June 2002, which may be extended for an additional one-
year period, and the maximum amount of credit available may be increased by
$25.0 million, under certain conditions. The facility may be used for general
corporate purposes and permitted acquisitions. At the option of CH2M HILL, the
facility bears interest at a rate equal to either the London Inter-Bank Offering
Rate for interest periods of 1, 2, 3 or 6 months, plus applicable margins
ranging from 1.0% to 2.0%, the lender's prime rate, or the sum of 0.5% plus the
federal fund rate, if greater than the lender's prime rate. Borrowings under the
credit agreement are available on a revolving basis through the final maturity
date. The credit facility is guaranteed by each direct and indirect wholly-owned
subsidiary of CH2M HILL whose gross revenues account for greater than 5% of the
consolidated annual revenues of CH2M HILL. The credit agreement contains usual
and customary representations and warranties, and affirmative and negative
covenants and financial covenants for credit facilities of like size, type and
purpose. CH2M HILL is in compliance with such covenants.
At December 31, 1999, under our unsecured loan agreement, we had an outstanding
term loan for $2.0 million, which will be paid in full during 2000. The interest
rate on the loan is 7.1% and payments are made quarterly. We also had $18.8
million in 1999, $20.6 million in 1998, and $22.5 million in 1997, in notes
payable to over 300 former shareholders in varying amounts over the next ten
years.
CH2M HILL believes its current sources of funds will be sufficient to satisfy
its current operations and anticipated growth through 2000.
Derivatives and Financial Instruments
We occasionally enter into forward contracts to hedge foreign currency risks and
not for speculative purposes. At December 31, 1999 and 1998, there were no
significant forward contracts outstanding. Generally, we do not have derivative
type instruments.
Year 2000 Compliance
The turn of the century posed many challenges to companies worldwide that rely
on computers and/or programmed control devices to operate their businesses or
are suppliers or providers of time-sensitive software or automated technology
devices. The problem stemmed from the practice of software writers, software
vendors and equipment suppliers of using only two digits to designate calendar
year (e.g. 98 versus 1998) in automated applications. That practice did not
provide for proper recognition of the Year 2000 because computers and other
automated equipment may interpret the two-digit date "00" as, for example, 1900,
rather than 2000. Consequently, computers and other automated systems may have
ceased operation or operated incorrectly. This effect is commonly referred to
as the "Year 2000 problem."
The Company estimated the Year 2000 remediation efforts were approximately $4.0
million. The actual cost did not materially differ from those estimates. The
Company does not plan on spending any additional amounts on the Year 2000
problem, as there are no remaining contingencies.
The turn of the century had no significant impact on the Company. In addition,
the impact on the Company related to third parties was also insignificant.
New Accounting Standards Not Yet Adopted
SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities,"
establishes fair value accounting and reporting standards for derivative
instruments and hedging activities. CH2M HILL will adopt SFAS No. 133 in the
first quarter of fiscal 2001. CH2M HILL is currently assessing the effect of
adoption, if any, on its financial position, results of operations, and cash
flows.
20
<PAGE>
Special Note Regarding Forward-Looking Statements
This report contains forward-looking statements that involve risks and
uncertainties. Our actual results may differ significantly from the results
discussed in the forward-looking statements. Factors that might cause such
differences include, but are not limited to:
. the continuance of and funding for certain governmental regulation and
enforcement programs which create demand for our services
. our ability to attract, finance and perform large, longer-term projects
. our ability to insure against or otherwise cover the liability risks inherent
in our business, including environmental liabilities and professional
engineering liabilities
. our ability to manage the risks inherent in the government contracting
business
. our ability to manage the costs associated with our fixed-price contracts
. our ability to attract and retain professional personnel
. general economic conditions
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
----------------------------------------------------------
Market risk is the risk of loss from adverse changes in market prices and
interest rates. We manage our market risk by matching projected cash inflows
from operations, financing activities and investing activities with projected
cash outflows to fund debt payments, capital expenditures and other cash
requirements. We may utilize debt or equity financing for general corporate
purposes and acquisitions. Historically, we have used short-term variable rate
borrowings under our unsecured revolving credit agreement although we do have
$2.0 million currently outstanding on a term note to be repaid by June 30, 2000.
Our earnings and cash flows are affected by changes in interest rates affecting
our variable rate borrowings under our bank credit facility. However, at
December 31, 1999, there were no amounts outstanding on the bank credit
facility. The interest rates on CH2M HILL's short-term and long-term borrowings
approximate fair value.
Item 8. Financial Statements and Supplementary Data
-------------------------------------------
Reference is made to the information set forth on pages F-1 through F-18.
Item 9. Changes in and Disagreements With Accountants on Accounting and
---------------------------------------------------------------
Financial Disclosure
--------------------
None.
21
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant
--------------------------------------------------
Directors
- ---------
See the information set forth in the section of the Proxy Statement entitled
"Election of Directors," which is incorporated herein by reference.
Executive Officers
- ------------------
See the information set forth in the section of the Proxy Statement entitled
"Executive Officers" which is incorporated herein by reference.
Item 11. Executive Compensation
----------------------
See the information set forth in the sections of the Proxy Statement entitled
"Executive Compensation," which is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
--------------------------------------------------------------
See the information set forth under "Security Ownership of Certain Shareholders
and Management" in the Proxy Statement which is incorporated herein by
reference.
Item 13. Certain Relationships and Related Transactions
----------------------------------------------
See the information set forth in the section of the Proxy Statement entitled
"Certain Relationships and Related Transactions," which is incorporated herein
by reference.
22
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
----------------------------------------------------------------
(a) Documents Filed as Part of this Report
1. Financial Statements
Report of Independent Public Accountants - Arthur Andersen LLP...... F-1
Consolidated Balance Sheets at December 31, 1998 and 1999........... F-2
Consolidated Statements of Income for the Years Ended December 31,
1997, 1998 and 1999.............................................. F-3
Consolidated Statements of Temporary Shareholders' Equity
for the Years Ended December 31, 1997, 1998 and 1999............. F-4
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1997, 1998 and 1999................................. F-5
Notes to Consolidated Financial Statements.......................... F-6
2. Financial Statement Schedules
All financial statement schedules have been omitted because the required
information is included in the consolidated financial statements or notes
thereto, or because such schedules are not applicable.
3. Exhibits
The following exhibits are filed as part of this annual report:
Exhibit
Number Description
------ -----------
2.1 Stock Purchase Agreement, dated as of November 29, 1999, by and
between CH2M Hill Companies, Ltd. and Lockheed Martin Corporation
[certain portions of the Stock Purchase Agreement have been
omitted pursuant to a request for condifidential treatment filed
seperately with the Securities and Exchange Commission] filed as
Exhibit 2.1 on Form 8-K, on January 5, 2000 (File No. 000-27261)
*3.1 Restated Articles of Incorporation of CH2M HILL Companies, Ltd.
*3.2 Restated Bylaws of CH2M HILL Companies, Ltd.
*10.1 CH2M HILL Retirement and Tax-Deferred Savings Plan, as amended
and restated effective January 1, 2000
*10.2 CH2M HILL Employee Stock Plan, as amended and restated effective
January 1, 2000
*10.3 CH2M HILL Companies, Ltd. 1999 Stock Option Plan, as amended and
restated on November 12, 1999
*10.4 CH2M HILL Companies, Ltd. Payroll Deduction Stock Purchase Plan
*10.5 CH2M HILL Companies, Ltd. Pre-Tax Deferred Compensation Plan
10.6 Trust Under CH2M HILL Companies, Ltd. Pre-Tax Deferred
Compensation Plan, filed as Exhibit 10.6 to Registration
Statement on Form S-1 on March 15, 1999 (File No. 333-74427)
*10.7 CH2M HILL Companies, Ltd. After-Tax Deferred Compensation Plan
10.8 Trust Under CH2M HILL Companies, Ltd. After-Tax Deferred
Compensation Plan, filed as Exhibit 10.8 to Registration
Statement on Form S-1 on March 15, 1999 (File No. 333-74427)
10.9 Contract with Buck Investment Services, Inc., filed as Exhibit
10.9 to Registration Statement on Form S-1, Amendment No. 1, on
May 14, 1999 (File No. 333-74427)
10.10 Contract (#DE-AC3495RF00825) between Kaiser-Hill Company, LLC, a
subsidiary of the Corporation, and the U.S. Department of Energy
dated as of April 4, 1995, along with Modifications 1 to 81 to
Contract #DE-AC3495RF00825 (Modifications 41, 72 and 78 not
received), incorporated by reference from ICF Kaiser
International Inc.'s (i) Form 10-K for the fiscal year ended
February 28, 1995 filed on March 29, 1996 (File No. 1-12248);
(ii) Registration Statement on Form S-1 filed on November 27,
1996 (SEC file no. 333-16937); (iii) Form 10-K for the fiscal
year ended December 31, 1996 filed on March 31, 1998 (File No. 1-
12248).
23
<PAGE>
*10.11 Contract between Kaiser-Hill Company, LLC, a subsidiary of the
Corporation, and the U.S. Department of Energy dated January 24, 2000
10.12 $100,000,000 Senior Unsecured Revolving Credit Agreement dated as of
June 18, 1999, Wells Fargo Bank, National Association, as Agent,
filed as Exhibit 10.11 to Registration Statement on Form S-1,
Amendment No. 2, on July 8, 1999 (File No. 333-74427)
*10.13 Deferred Compensation Retirement Program Arrangement effective
December 1, 1995
*10.14 Executive Deferred Compensation Program Arrangement effective
January 1, 1997
*21 Subsidiaries of CH2M HILL Companies, Ltd.
*27 Financial Data Schedule
99.1 Internal Market Rules, filed as Exhibit 99 to Registration Statement
on Form S-1 on March 15, 1999 (File No. 333-74427)
*99.2 Opinion of KPMG LLP
__________
* Filed herewith
(b) Reports on Form 8-K:
None.
24
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To CH2M HILL Companies, Ltd.:
We have audited the accompanying consolidated balance sheets of CH2M HILL
Companies, Ltd. (an Oregon corporation) and subsidiaries as of December 31, 1998
and 1999 and the related consolidated statements of income, temporary
shareholders' equity and cash flows for each of the three years in the period
ended December 31, 1999. These financial statements are the responsibility of
CH2M HILL's management. Our responsibility is to express an opinion on these
financial statements based on our audits. We did not audit the financial
statements of CH2M HILL Industrial Design Corporation, which statements reflect
total assets and total revenues of 17 percent and 27 percent in 1997, 8 percent
and 20 percent in 1998, and 21 percent and 21 percent in 1999, respectively, of
the related consolidated totals. Those statements were audited by other
auditors whose report has been furnished to us, and our opinion, insofar as it
relates to the amounts included for this entity, is based solely on the report
of the other auditors.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits and the report of other
auditors provide a reasonable basis for our opinion.
In our opinion, based on our audits and the report of other auditors, the
financial statements referred to above present fairly, in all material respects,
the financial position of CH2M HILL Companies, Ltd. and subsidiaries as of
December 31, 1998 and 1999, and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 1999 in
conformity with accounting principles generally accepted in the United States.
ARTHUR ANDERSEN LLP
Denver, Colorado,
February 18, 2000.
F-1
<PAGE>
CH2M HILL COMPANIES, LTD.
Consolidated Balance Sheets
(Dollars in thousands)
<TABLE>
<CAPTION>
Pro Forma
December 31, December 31, December 31,
1998 1999 1999
------------ ------------ -------------
ASSETS (Unaudited)
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 16,595 $ 12,557
Receivables, net -
Client accounts 136,882 164,914
Unbilled revenue 87,635 96,610
Other 4,567 4,930
Prepaid expenses and other 8,059 7,912
------------ ------------
Total current assets 253,738 286,923
Property, plant and equipment, at cost
Land 229 219
Building and land improvements 2,845 2,813
Furniture, fixtures and equipment 31,466 30,198
Leasehold improvements 7,522 7,920
------------ ------------
42,062 41,150
Less: Accumulated depreciation and amortization (28,072) (26,876)
------------ ------------
Net property, plant and equipment 13,990 14,274
------------ ------------
Goodwill, net 1,203 18,697
Other assets, net 28,853 35,301
Deferred income taxes 541 1,960
------------ ------------
Total assets $ 298,325 $ 357,155
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 4,512 $ 2,221
Current portion of notes payable to former shareholders 4,527 4,154
Accounts payable 29,187 60,107
Billings in excess of revenues 30,556 49,143
Accrued incentive compensation 18,065 13,330
Employee related liabilities 42,013 43,100
Other accrued liabilities 27,725 13,278
Current deferred income taxes 23,855 26,907
------------ ------------
Total current liabilities 180,440 212,240
Other long-term liabilities 24,404 32,902
Long-term debt 2,286 313
Notes payable to former shareholders 16,063 14,608
------------ ------------
Total liabilities 223,193 260,063
------------ ------------
Commitments and contingencies (Notes 3, 6 and 15)
Temporary shareholders' equity
Preferred stock, Class A $.02 par value, 50,000,000 shares
authorized; 11,068,580 and 12,095,220 issued and outstanding
at December 31, 1998 and 1999, respectively; redeemable
for $52,130 at December 31, 1999 221 242
Common stock, $.01 par value, 100,000,000 shares authorized;
16,957,360 and 17,234,170 issued and outstanding at
December 31, 1998 and 1999, respectively; redeemable for
$74,279 at December 31, 1999 170 172
Additional paid-in capital 20,283 29,234
Retained earnings 56,148 69,774
Accumulated other comprehensive loss (1,690) (2,330)
Permanent shareholders' equity
Common stock, 29,329,390 shares issued and outstanding, pro forma - - $ 414
Additional paid in capital, pro forma - - 29,234
Retained earnings, pro forma - - 69,774
Accumulated other comprehensive loss, pro forma - - (2,330)
------------
Total shareholders' equity - - $ 97,092
------------ ------------ ============
Total liabilities and shareholders' equity $ 298,325 $ 357,155
============ ============
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements.
F-2
<PAGE>
CH2M HILL COMPANIES, LTD.
Consolidated Statements of Income
(Dollars in thousands except per share)
<TABLE>
<CAPTION>
December 31, December 31, December 31,
1997 1998 1999
------------ ------------ --------------
<S> <C> <C> <C>
Gross revenue $ 908,854 $ 926,630 $ 1,172,153
Equity in earnings of joint ventures and affiliated companies 8,724 8,400 12,375
------------ ------------ --------------
Total revenues 917,578 935,030 1,184,528
Operating expenses:
Direct cost of services and overhead (617,356) (629,468) (845,050)
General and administrative (286,276) (290,760) (313,491)
------------ ------------ --------------
Operating income 13,946 14,802 25,987
Other income (expense):
Interest income 570 1,735 1,977
Interest expense (2,505) (2,154) (1,194)
------------ ------------ --------------
Income before provision for income taxes 12,011 14,383 26,770
Provision for income taxes (7,295) (8,571) (13,144)
------------ ------------ --------------
Net income $ 4,716 $ 5,812 $ 13,626
============ ============ ==============
Net income per common and preferred share:
Basic & Diluted $ 0.17 $ 0.21 $ 0.46
Weighted average number of common and preferred shares:
Basic 27,688,780 28,330,940 29,451,100
Diluted 27,688,780 28,330,940 29,737,145
The accompanying notes are an intergral part of these consolidated financial statements
</TABLE>
F-3
<PAGE>
CH2M HILL COMPANIES, LTD.
Consolidated Statements of Temporary Shareholders' Equity
(Dollars in thousands)
<TABLE>
<CAPTION>
Total Class A
Class A Preferred and Additional
Preferred Stock Common Stock Common Paid-in
Shares Amount Shares Amount Shares Capital
----------- --------- ---------- --------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
BALANCES, December 31, 1996 8,742,010 $ 175 18,212,450 $ 182 26,954,460 $ 13,282
Shares issued in connection with
stock based compensation and
employee benefit plans 1,210,540 24 1,218,390 12 2,428,930 9,151
Shares purchased and retired (40,840) (1) (2,083,840) (20) (2,124,680) (7,411)
Comprehensive income:
Net income - - - - - -
Other comprehensive loss:
Foreign currency translation adjustments - - - - - -
Comprehensive income - - - - - -
----------- --------- ---------- --------- ------------ -----------
BALANCES, December 31, 1997 9,911,710 198 17,347,000 174 27,258,710 15,022
Shares issued in connection with
stock based compensation and
employee benefit plans 1,203,830 24 1,341,720 13 2,545,550 11,693
Shares purchased and retired (46,960) (1) (1,731,360) (17) (1,778,320) (6,432)
Comprehensive income:
Net income - - - - - -
Other comprehensive loss:
Foreign currency translation adjustments - - - - - -
Comprehensive income - - - - - -
----------- --------- ---------- --------- ------------ -----------
BALANCES, December 31, 1998 11,068,580 221 16,957,360 170 28,025,940 20,283
Shares issued in connection with
stock based compensation and
employee benefit plans 1,310,930 26 1,322,480 13 2,633,410 14,181
Shares purchased and retired (284,290) (5) (1,045,670) (11) (1,329,960) (5,230)
Comprehensive income:
Net income - - - - - -
Other comprehensive income:
Foreign currency translation adjustments - - - - - -
Comprehensive income - - - - - -
----------- --------- ---------- --------- ------------ -----------
BALANCES, December 31, 1999 12,095,220 $ 242 17,234,170 $ 172 29,329,390 $ 29,234
</TABLE>
<TABLE>
<CAPTION>
Accumulated
Other Total
Comprehensive Retained Comprehensive Shareholders'
Income Earnings Loss Equity
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
BALANCES, December 31, 1996 $ - $ 45,620 $ (1,129) $ 58,130
Shares issued in connection with
stock based compensation and
employee benefit plans - - - 9,187
Shares purchased and retired - - - (7,432)
Comprehensive income:
Net income 4,716 4,716 - 4,716
Other comprehensive loss:
Foreign currency translation adjustments (2,298) - (2,298) (2,298)
-------------
Comprehensive income 2,418 - - -
------------- ------------- -------------
BALANCES, December 31, 1997 50,336 (3,427) 62,303
Shares issued in connection with
stock based compensation and
employee benefit plans - - - 11,730
Shares purchased and retired - - - (6,450)
Comprehensive income:
Net income 5,812 5,812 - 5,812
Other comprehensive loss:
Foreign currency translation adjustments 1,737 - 1,737 1,737
-------------
Comprehensive income 7,549 - - -
------------- ------------- -------------
BALANCES, December 31, 1998 56,148 (1,690) 75,132
Shares issued in connection with
stock based compensation and
employee benefit plans - - - 14,220
Shares purchased and retired - - - (5,246)
Comprehensive income:
Net income 13,626 13,626 - 13,626
Other comprehensive income:
Foreign currency translation adjustments (640) - (640) (640)
-------------
Comprehensive income $ 12,986 - - -
============= ------------- ------------- -------------
BALANCES, December 31, 1999 $ 69,774 $ (2,330) $ 97,092
============= ============= =============
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements.
F-4
<PAGE>
CH2M HILL COMPANIES, LTD.
Consolidated Statements of Cash Flows
(Dollars in thousands)
<TABLE>
<CAPTION>
December 31, December 31, December 31,
1997 1998 1999
------------ ------------ ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 4,716 $ 5,812 $ 13,626
Adjustments to reconcile net income to net cash
provided by (used in) operating activities -
Depreciation and amortization 9,605 8,558 6,343
Stock based compensation for employees and employee benefit plans 8,520 10,725 14,164
Allowance for doubtful accounts 1,441 3,189 2,907
Deferred income taxes and other 829 2,983 10,256
Loss (gain) on sale of assets 217 1,727 (5)
Change in -
Receivables 10,288 (5,301) (37,844)
Prepaid expenses and other (1,713) (9,327) (8,010)
Accounts payable (10,479) (5,373) 28,943
Billings in excess of revenues 12,990 (13,226) 18,671
Other current liabilities 2,448 (4,143) (19,446)
------------ ------------ ------------
Net cash provided by (used in) operating activities 38,862 (4,376) 29,605
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the sale of assets 75 372 248
Capital expenditures (2,612) (4,723) (4,401)
Other investing activities (898) - -
Acquisitions - - (18,406)
------------ ------------- ------------
Net cash used in investing activities (3,435) (4,351) (22,559)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowing on long-term debt 843 111 331
Borrowing on line of credit - - 32,000
Payments on line of credit - - (32,000)
Principal payments on notes payable to former shareholders (4,968) (4,966) (5,039)
Principal payments on long-term debt (5,652) (5,274) (4,595)
Purchases and retirements of stock (2,561) (2,342) (1,979)
------------ ------------- ------------
Net cash used in financing activities (12,338) (12,471) (11,282)
CASH EFFECT OF CUMULATIVE TRANSLATION ADJUSTMENT (437) (534) 198
------------ ------------- ------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 22,652 (21,732) (4,038)
CASH AND CASH EQUIVALENTS, beginning of year 15,675 38,327 16,595
------------ ------------- ------------
CASH AND CASH EQUIVALENTS, end of year $ 38,327 $ 16,595 $ 12,557
============ ============= ============
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
F-5
<PAGE>
CH2M HILL COMPANIES, LTD.
Notes to Consolidated Financial Statements
(Dollars in thousands)
(1) Summary of business and significant accounting policies
CH2M HILL Companies, Ltd. and its wholly owned subsidiaries are a
multinational infrastructure and environmental services firm. CH2M HILL's
predominant line of business is providing engineering and construction
management services related to water, environmental, transportation,
infrastructure and management services. CH2M HILL also provides facility design
and construction management services to the electronics, food processing and
biopharmaceutical related industries and provides utility system operations and
maintenance services primarily for water and wastewater treatment facilities.
CH2M HILL provides the above services for clients in private industry,
federal government agencies, as well as state, municipal and local government
entities. A substantial portion of professional fees arises from projects that
are funded directly or indirectly by governmental entities.
Unaudited Pro Forma Information
On November 6, 1998, the Board of Directors approved a new ownership
program for CH2M HILL and certain resolutions that were subsequently ratified by
a vote of the shareholders on December 18, 1998. Such resolutions included, but
were not limited to, adopting amendments to the Restated Bylaws and Articles of
Incorporation which provide for the:
. termination of the existing Key Employee Policy and Agreement,
. authorization to convert all outstanding Class A preferred stock into
shares of common stock on a one-for-one basis,
. increase in the authorized shares of common stock to 100,000,000, par value
$.01 per share, and Class A preferred stock to 50,000,000, par value $.02
per share,
. authorization of a ten-for-one stock split on CH2M HILL's common stock and
Class A preferred stock,
. imposition of certain restrictions on the stock including, but not limited
to, the right but not the obligation to repurchase shares upon termination
of employment or affiliation, the right of first refusal, and ownership
limits, and,
. approval of the 1999 Stock Option Plan.
The effective date of the above resolutions is January 1, 2000 as
determined by the Board of Directors at its November 1999 meeting.
Common and preferred stock amounts, equivalent share amounts and per share
amounts have been adjusted retroactively to give effect to the stock split. The
conversion of outstanding Class A preferred stock to common stock has been
reflected in the unaudited pro forma balance sheet at December 31, 1999.
Principles of Consolidation
The consolidated financial statements include the accounts of CH2M HILL and
all of its wholly owned subsidiaries after elimination of all intercompany
accounts and transactions. Investments in affiliates which are 50 percent or
less owned are reported using the equity method. Certain amounts in prior years
have been reclassified to conform with the current year presentation.
F-6
<PAGE>
Currency Translation
All assets and liabilities of CH2M HILL's foreign subsidiaries are
translated into U.S. dollars at the period-end exchange rate. Revenues and
expenses are translated at the average exchange rate for the year. Translation
gains and losses are reflected in shareholders' equity as part of accumulated
other comprehensive loss. Taxes are not provided on the translation gains and
losses as deferred taxes are not provided on the unremitted earnings of the
foreign subsidiaries to which they relate. Gains and losses on foreign
currency transactions are not significant.
Accounting for Revenue
Contract revenue is recognized primarily on a percentage-of-completion
basis by relating the actual cost of work performed to date to the current
estimated total cost of the respective contracts. Unbilled revenue represents
the excess of contract revenue recognized over billings to date. Billings in
excess of revenues represent the excess of billings to date over revenue
recognized. Losses on contracts in process are recognized in their entirety
when the loss becomes evident and the amount of loss can be reasonably
estimated.
The federal government accounted for 15.8% and 17.2% of our net receivables
in 1998 and 1999, respectively. Receivables are stated at net realizable
values, reflecting reserves of $2,977, $6,166 and $7,805 in 1997, 1998 and 1999,
respectively. The changes in the allowance for uncollectible accounts consisted
of the following:
1997 1998 1999
---------- ---------- -----------
Balance at beginning of year $1,536 $2,977 $ 6,166
Provision charged to expense 1,441 3,189 2,907
Accounts written off - - (1,268)
---------- ---------- -----------
Balance at end of year $2,977 $6,166 $ 7,805
========== ========== ===========
Cash and Cash Equivalents
CH2M HILL maintains a cash management system which provides for cash in the
bank sufficient to pay checks as they are submitted for payment and invests cash
in excess of this amount in interest bearing short-term investments such as
certificates of deposit, commercial paper and repurchase agreements. These
investments are principally invested with original short-term maturities of less
than three months and are considered cash equivalents in the consolidated
balance sheets and statements of cash flows.
1997 1998 1999
---------- ---------- -----------
Cash paid for interest $ 2,431 $ 1,777 $1,217
Cash paid for income taxes $11,869 $16,352 $5,775
The following noncash transactions have been excluded from the accompanying
statements of cash flows:
. Stock purchases for debt of $4,204, $3,103 and $3,211 in 1997, 1998 and
1999, respectively
. Decrease of an additional minimum pension liability and related asset at
December 31, 1997, 1998 and 1999, of $2,122, $198 and $125, respectively.
Property, Plant and Equipment
All additions, including betterments to existing facilities, are recorded
at cost. Maintenance and repairs are charged to expense as incurred. When
assets are retired or otherwise disposed of,
F-7
<PAGE>
the cost of the assets and the related accumulated depreciation are removed from
the accounts. Any gain or loss on retirements is reflected in income in the year
of disposition.
Depreciation for owned property is based on the estimated useful lives of
the assets using both straight-line and accelerated methods for financial
statement purposes. Useful lives for buildings and land improvements range from
15 to 30 years with an average life of 25 years. Leasehold improvements are
depreciated over the remaining term of the associated lease. Useful lives on
other assets range from two to ten years with an average of approximately five
years.
Goodwill
Goodwill is based on the excess of cost (purchase price) over the fair
value of net assets of businesses acquired. At December 31, 1999, $16,862 of
goodwill related to the acquisition of Lockheed Martin Hanford Corporation.
This goodwill is being amortized on a straight-line basis over the total
estimated life of the contract, including options, of seven years. At December
31, 1998 and 1999, accumulated amortization related to goodwill was $590 and
$742, respectively.
Other Assets
Other Assets includes capitalized software costs, investments in
unconsolidated joint ventures, and prepaid pension expenses. The related
amortization reflected in the statements of income and the statements of cash
flows totaled $2,145 in 1997, $2,188 in 1998 and $1,973 in 1999.
Fair Value of Financial Instruments
The carrying amounts of cash and cash equivalents, accounts receivable,
accounts payable and accrued liabilities approximate fair value due to the
short-term maturities of these assets and liabilities. The interest rates on
CH2M HILL's bank borrowings are adjusted regularly to reflect current market
rates. Accordingly, the carrying amount of CH2M HILL's short-term and long-term
borrowings also approximate fair value. At December 31, 1998 and 1999, the fair
value of CH2M HILL's notes payable to former shareholders was $19,237 and
$16,613, respectively, based on a discount rate that is estimated using the
rates currently offered for debt with similar remaining maturities.
Pervasiveness of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Asset Impairment
CH2M HILL reviews its assets for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. Assets which are held and used in operations would be impaired if
the undiscounted future cash flows related to the asset did not exceed the net
book value.
Stock-Based Compensation Plans
The Financial Accounting Standards Board has issued SFAS No. 123,
"Accounting for Stock-Based Compensation." SFAS No. 123 requires that stock-
based compensation plans be accounted for based on the fair value based method
of accounting. CH2M HILL continues to measure compensation cost using the
intrinsic value based method of accounting prescribed by Accounting Principles
Board Opinion No. 25, "Accounting for Stock Issued to Employees," as permitted
by SFAS No. 123 and discloses the difference between the two methods in Note 11.
CH2M HILL accounts for
F-8
<PAGE>
its stock-based employee compensation agreements using the intrinsic value
method under which no compensation is generally recognized for equity
instruments granted to employees with an exercise price equal to or greater than
the fair market value of the underlying stock.
New Accounting Standards
SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities," establishes fair value accounting and reporting standards for
derivative instruments and hedging activities. CH2M HILL will adopt SFAS No.
133 in the first quarter of fiscal 2001. CH2M HILL is currently assessing the
effect of adoption, if any, on its financial position, results of operations,
and cash flows.
(2) Segment information
CH2M HILL operates in three reportable segments that offer different
services to different customer bases. They are managed separately because each
business requires different business and marketing strategies. Environmental,
Energy, and Infrastructure (EE&I) includes management, consulting, design,
construction, procurement, and operations and maintenance services to the
environmental, nuclear, energy, systems, and transportation industries. Water
focuses on the planning, design and implementation of water supply systems and
wastewater treatment facilities as well as providing operations and maintenance
services to water and wastewater facility operators. Industrial provides
design, construction, specialized manufacturing support and sustained facility
services support to high-technology manufacturing companies, food and beverage
processing businesses, and fine chemical and pharmaceutical manufacturers.
CH2M HILL evaluates performance based on several factors, of which the
primary financial measure is profit before tax. The accounting policies of the
segments are the same as those described in the summary of significant
accounting policies. Intersegment sales are accounted for at fair value as if
the sales were to third parties. Other includes the elimination of intersegment
sales and unallocable corporate expenses.
Certain financial information for each segment is provided below:
<TABLE>
<CAPTION>
Financial
Statement
1997 EE&I Water Industrial Other Balances
- ---------------------------------------- ---------- ---------- ------------ --------- ------------
<S> <C> <C> <C> <C> <C>
Revenues from external customers........ $352,343 $310,014 $246,497 $ - $908,854
Intersegment sales...................... 16,025 22,764 1,088 (39,877) -
Equity in earnings of investees
accounted for by the equity method.... 7,886 (144) 982 - 8,724
Depreciation and amortization........... 4,729 2,684 2,192 - 9,605
Interest income......................... 159 159 252 - 570
Interest expense........................ 804 736 965 - 2,505
Segment profit.......................... 5,853 5,011 7,174 (6,027) 12,011
Segment assets.......................... 136,119 113,725 61,273 - 311,117
Financial
Statement
1998 EE&I Water Industrial Other Balances
- ---------------------------------------- ---------- ---------- ------------ --------- ------------
<S> <C> <C> <C> <C> <C>
Revenues from external customers........ $378,276 $362,668 $185,686 $ - $926,630
Intersegment sales...................... 21,301 18,586 1,342 (41,229) -
Equity in earnings of investees
accounted for by the equity method.... 7,785 124 491 - 8,400
Depreciation and amortization........... 4,034 3,423 1,101 - 8,558
Interest income......................... 582 720 433 - 1,735
Interest expense........................ 928 677 549 - 2,154
Segment profit.......................... 9,259 7,230 3,648 (5,754) 14,383
Segment assets.......................... 142,124 128,967 27,234 - 298,325
Financial
Statement
1999 EE&I Water Industrial Other Balances
- ---------------------------------------- ---------- ---------- ------------ --------- ------------
<S> <C> <C> <C> <C> <C>
Revenues from external customers........ $488,043 $435,757 $248,353 $ - $1,172,153
</TABLE>
F-9
<PAGE>
<TABLE>
<CAPTION>
Financial
Statement
1999 EE&I Water Industrial Other Balances
- ---------------------------------------- ---------- ---------- ------------ --------- ------------
<S> <C> <C> <C> <C> <C>
Intersegment sales...................... 32,379 9,949 2,589 (44,917) -
Equity in earnings of investees
accounted for by the equity method.... 9,505 2,233 637 - 12,375
Depreciation and amortization........... 5,269 708 366 - 6,343
Interest income......................... 521 1,062 394 - 1,977
Interest expense........................ 511 460 223 - 1,194
Segment profit.......................... 17,412 16,304 (80) (6,866) 26,770
Segment assets.......................... 159,874 143,444 53,837 - 357,155
</TABLE>
CH2M HILL derived approximately 15% in 1997, 16% in 1998 and 17% in 1999,
of its total revenues from contracts with federal government agencies.
Revenues are attributed to the country in which the services are performed.
Although CH2M HILL provides services in numerous countries, no single country
outside of the United States accounted for a significant portion of the total
consolidated revenues.
1997 1998 1999
-------------- -------------- ----------------
United States $803,844 $877,794 $1,072,015
International 113,734 57,236 112,513
-------------- -------------- ----------------
Total $917,578 $935,030 $1,184,528
============== ============== ================
(3) Lines of credit
CH2M HILL has an unsecured revolving credit agreement, as amended, with a
line-of-credit facility with a maximum borrowing capacity of $100,000, and a
$25,000 commercial paper facility. The line-of-credit facility expires on June
18, 2002. The commercial paper facility has a term of one year and may be
renewed annually. Interest accrues on outstanding borrowings at variable rates,
which as of December 31, 1999, ranged from 7.1 % to 7.7 %, based on maturity and
a liabilities to earnings ratio. Additionally, a commitment fee is payable
based on the liabilities to earnings ratio. At December 31, 1998 and 1999, no
amounts were outstanding under this line.
The agreement requires CH2M HILL to maintain, among other restrictions,
prescribed liabilities to earnings, tangible net worth, working capital, and
fixed cost coverage ratios.
The agreement allows CH2M HILL to issue letters of credit to back various
trade activities. Issued letters of credit are reserved against the borrowing
base of the line of credit. As of December 31, 1998 and 1999, there were $5,125
and $5,735 issued and outstanding letters of credit, respectively.
(4) Notes payable to former shareholders
CH2M HILL issues interest-bearing notes to former shareholders for the
purchase price of stock redeemed by CH2M HILL. The total amount outstanding for
notes payable to former shareholders at December 31, 1998 and 1999 was $20,590
and $18,762, respectively. The interest on the notes is adjusted annually (on
the anniversary dates of the notes) to 3/4 of the U.S. Federal Reserve Discount
Rate on the first business day of each calendar year. At January 1, 1999 the
interest rate on the notes was 3.4%. The notes are unsecured, and payable in
varying annual installments through 2009.
Future minimum principal payments on notes payable to former shareholders
are as follows:
Year Ending
- ------------------------------
2000 $ 4,154
2001 3,832
2002 3,379
2003 2,328
2004 1,799
Thereafter 3,270
-------------
$18,762
=============
F-10
<PAGE>
(5) Long-term debt
Long-term debt consisted of the following at December 31:
<TABLE>
<CAPTION>
1998 1999
------------ ----------
<S> <C> <C>
Note payable to bank, 7.1%, payable in quarterly
installments through 2000 $6,000 $2,000
Other notes payable, various rates between 7.1% and
7.8%, payable through 2001 798 534
------------ ----------
Total long-term debt 6,798 2,534
Less: current portion of long-term debt 4,512 2,221
------------ ----------
$2,286 $ 313
============ ==========
</TABLE>
Future minimum principal payments on long-term debt are as follows:
<TABLE>
<CAPTION>
Year Ending
- ---------------------------------------------
<S> <C>
2000 $2,221
2001 313
------------
$2,534
============
</TABLE>
(6) Operating lease obligations
CH2M HILL has entered into certain noncancelable leases, which are being
accounted for as operating leases. At December 31, 1999, future minimum
operating lease payments are as follows:
<TABLE>
<CAPTION>
Year Ending
- ----------------------------------------------------
<C> <S> <C>
2000 $ 36,813
2001 30,648
2002 24,420
2003 17,397
2004 14,335
Thereafter 37,707
--------------
$161,320
==============
</TABLE>
Total lease and rental expense charged to operations was $40,561, $41,475
and $43,028 during 1997, 1998 and 1999, respectively.
Certain of CH2M HILL's operating leases contain provisions for a specific
rent-free period. In accordance with generally accepted accounting principles,
CH2M HILL accrues rental expense during the rent-free period based on total
expected rent payments to be made over the life of the related lease. The
excess of expense over actual cash payments to date is shown in the accompanying
balance sheets in other long-term liabilities. The cash payments expected to
exceed rental expense in the next year are included in other accrued
liabilities.
(7) Shareholders' equity
As discussed in Note 1, CH2M HILL and the shareholders have approved
changes to the features of its stock that took effect on January 1, 2000. Prior
to January 1, 2000, the bylaws and key employee agreements of CH2M HILL
restricted ownership of CH2M HILL's Class A preferred and CH2M HILL common stock
to active employees and provided the following:
F-11
<PAGE>
. Upon death, withdrawal, legal incapacity, retirement or discharge, a
shareholder's shares must be sold back to CH2M HILL.
. Upon death, legal incapacity or retirement, the purchase price was determined
by a formula calculated as of December 31 of each year, based on the net book
value of CH2M HILL and a multiple of the average of the past five years'
earnings.
. The purchase price of stock from employees withdrawing to compete or who were
discharged is the greater of the net book value of the shares or the price of
the shares at acquisition by the employee.
. The purchase price of stock returned to CH2M HILL became interest-bearing
debt to be paid over a ten-year period. Subject to Board of Directors approval,
the payout period could have been shortened upon occurrence of certain criteria.
(8) Income taxes
CH2M HILL accounts for income taxes in accordance with SFAS No. 109,
"Accounting for Income Taxes." SFAS No. 109 uses an asset and liability
approach that requires the recognition of deferred tax assets and liabilities
for the expected future tax effects of events that have been recognized in the
financial statements or tax returns. In estimating future tax consequences,
CH2M HILL generally considers all expected future events other than enactment of
changes in the tax laws or rates.
Income (loss) from continuing operations before income taxes includes the
following:
<TABLE>
<CAPTION>
1997 1998 1999
------------ ------------ ------------
<S> <C> <C> <C>
U.S. income $13,703 $14,461 $27,538
Foreign loss (1,692) (78) (768)
------------ ------------ ------------
Net income before taxes $12,011 $14,383 $26,770
============ ============ ============
</TABLE>
The provision for income taxes for the years ended December 31 is comprised
of the following:
<TABLE>
<CAPTION>
1997 1998 1999
------------- ------------ ------------
Current income tax expense:
<S> <C> <C> <C>
Federal $ 9,343 $4,195 $ 6,969
Foreign 1,224 1,458 2,994
State & local 2,012 903 1,548
------------- ------------ ------------
Total current taxes 12,579 6,556 11,511
Deferred income tax benefit (5,284) 2,015 1,633
------------- ------------ ------------
Total tax expense $ 7,295 $8,571 $13,144
============= ============ ============
</TABLE>
The reconciliation of income tax computed at the U.S. federal statutory tax
rate to CH2M HILL's effective income tax rate for the years ended December 31
were as follows:
<TABLE>
<CAPTION>
1997 1998 1999
------------ ------------ ------------
<S> <C> <C> <C>
Pretax income $12,011 $14,383 $26,770
Federal statutory rate 35% 35% 35%
------------ ------------ ------------
Expected tax expense 4,204 5,034 9,370
Reconciling items:
State income taxes 1,358 610 1,055
Disallowance of meals and
entertainment expenses 1,589 1,665 1,384
Foreign operating losses 630 991 668
</TABLE>
F-12
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Other (486) 271 667
------------ ------------ ------------
Provision for income taxes $ 7,295 $ 8,571 $13,144
============ ============ ============
</TABLE>
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and liabilities at December 31 were as
follows:
1998 1999
------------ ------------
Deferred tax assets:
Foreign net operating losses $ 2,800 $ 3,100
Depreciation and amortization 1,133 -
Investments in affiliates 4,413 2,447
------------ ------------
Total deferred tax assets 8,346 5,547
Valuation allowance (2,800) (3,100)
Net deferred tax assets 5,546 2,447
------------ ------------
Deferred tax liabilities:
Deferred recognition of net 28,860 26,955
income until collection of
payment occurs
Depreciation and amortization - 439
------------ ------------
Total deferred tax liabilities 28,860 27,394
------------ ------------
Net deferred tax liability $23,314 $24,947
============ ============
A valuation allowance is required to be established for those deferred tax
assets that it is more likely than not that they will not be realized based upon
certain estimated circumstances. The above valuation allowances relate to
foreign net operating losses of $9,000 and $9,500 for the years ended December
31, 1998 and 1999, respectively, which will require taxable income within the
applicable foreign subsidiary in order for the deferred tax asset to be
realized. The foreign net operating losses generally may be carried forward
indefinitely.
At December 31, 1999, CH2M HILL has no material tax carryforwards.
Undistributed earnings of CH2M HILL's foreign subsidiaries amounted to
approximately $9,215 at December 31, 1999. Those earnings are considered to be
indefinitely reinvested and accordingly, no provision for U.S. federal and state
income taxes or foreign withholding taxes has been made. Upon distribution of
those earnings, CH2M HILL would be subject to U.S. income taxes (subject to a
reduction for foreign tax credits) and withholding taxes payable to the various
foreign countries. Determination of the amount of unrecognized deferred U.S.
income tax liability is not practicable; however, unrecognized foreign tax
credit carryovers would be available to reduce some portion of the U.S. tax
liabilities.
(9) Earnings per share
The computation of basic earnings per share is based on the weighted
average number of common and preferred shares outstanding during the year. The
outstanding preferred shares are included in the basic earnings per share
calculation since the preferred shares do not have any preferences over common
shares, other than in liquidation, and CH2M HILL converted all preferred stock
to common shares on a one-for-one basis on January 1, 2000. Diluted income per
share is based on the weighted average number of common and preferred shares
outstanding during the year and, to the extent dilutive, common stock
equivalents consisting of stock options, stock awards subject to restrictions
and stock appreciation rights. The difference between the basic and diluted
shares relates to the issuance of 2,740,215 stock options during 1999. At
December 31, 1997 and 1998, CH2M HILL did not have dilutive securities
outstanding.
(10) Employee incentive and benefit plans
F-13
<PAGE>
Incentive Plan
CH2M HILL, at the discretion of the Board of Directors, provides stock
bonuses to employees of CH2M HILL through short-term and long-term incentive
plans. Expenses under these programs amounted to $4,784, $5,550 and $9,621 in
1997, 1998 and 1999, respectively.
Employee Stock Plan
CH2M HILL has a profit sharing plan ("ESP") for all eligible employees and
has established an Employee Stock Plan and Trust to administer the ESP.
Contributions to the ESP are made to the Trust as determined by the Board of
Directors. Contributions to the ESP were $2,804, $3,513, and $3,436 in 1997,
1998 and 1999, respectively. The contributions are to be made primarily through
the issuance of common stock.
Retirement and Tax-Deferred Savings Plan (the "401(k) Plan")
CH2M HILL has a 40l(k) Plan that provides for company matching
contributions, which range from 0.5% to 2.0% of eligible employees' base pay.
Contributions for 1997, 1998 and 1999 were $1,589, $1,996 and $1,107,
respectively, and vest equally over a five-year period, beginning with the
employees' second year of service. The contributions were made primarily
through the issuance of common stock.
Defined Contribution Savings Plan
CH2M HILL has a defined contribution plan that provides for contributions
generally equal to 1.5% of eligible employees' base pay. These contributions
vest equally over a five-year period, beginning with the employees' second year
of service. For the years ended December 31, 1997, 1998 and 1999, CH2M HILL
recorded $6,045, $5,084 and $5,418 in expense, respectively. Contributions are
generally made in cash.
(11) Stock option plan
CH2M HILL's 1999 Stock Option Plan was approved by the Board of Directors
on November 6, 1998 to reserve 8,000,000 shares of CH2M HILL common stock for
issuance upon exercise of options granted under this plan.
Options have been granted at an exercise price equal to the fair market
value of CH2M HILL's common stock at the date of the grant and vest over 36
months. Options generally have a term of five years from date of grant.
The following table summarizes the activity relating to options:
Year Ended
December 31,
------------------------------------------
Shares Weighted Average
Exercise Price
--------------- -----------------------
Stock Options:
Options outstanding, - $ -
beginning of year
Granted 2,740,215 4.31
Exercised - -
Terminated (171,107) 4.31
--------------- -----------------------
Options outstanding, end of year 2,569,108 4.31
--------------- -----------------------
F-14
<PAGE>
Options exercisable, end of year - $ -
=============== =======================
Weighted average fair value of
options granted during the year $0.74
=======================
The total fair value of options granted was computed to be approximately
$2,165 for the year ending December 31, 1999. For purposes of the fair value
proforma disclosures, this amount will be amortized over the vesting period of
the options. Cumulative compensation cost recognized in pro forma net income
with respect to options that are forfeited prior to vesting is adjusted as a
reduction of pro forma compensation expense in the period of forfeiture. Pro
forma stock-based compensation, net of the effect of forfeitures and tax, was
approximately $285 for the year ended December 31, 1999.
If the fair value method were used to account for employee stock option
grants, CH2M HILL's net income and earnings per share for the year ended
December 31, 1999 would have decreased by the following pro forma amounts:
Year Ended
December 31, 1999
-----------------
Net income:
As reported $13,626
Pro forma $13,341
Earnings per share:
As reported $ 0.46
Pro forma $ 0.45
There was no compensation expense related to SFAS No. 123 as of December
31, 1997 and 1998.
The fair value of each option grant was determined using the minimum value
method. The assumptions used to determine the fair market value of each option
grant are as follows:
Year Ended
December 31, 1999
------------------
Risk-free interest rates 6.47%
Expected dividend yield rates 0.00%
Expected lives 3 years
Expected volatility .001%
The following table summarizes information about the stock options
outstanding at December 31, 1999:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
------------------------------------------------ ----------------------------
Weighted Average Weighted
Remaining Weighted Average
Exercise Number Contractual Average Number Exercise
Price Outstanding Life Exercise Price Exercisable Price
- ---------- ------------- --------------------- -------------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
$4.31 2,569,108 4.17 years $4.31 - $4.31
</TABLE>
(12) Other employee benefits
Pension and Other Postretirement Benefits
F-15
<PAGE>
CH2M HILL has several noncontributory defined benefit pension plans, of
which one remains active. Benefits are based on years of service and
compensation during the span of employment. Funding for these plans is provided
through contributions based on recommendations from the plans' independent
actuary. Plan assets consist primarily of CH2M HILL common stock, corporate
debt instruments and U.S. government securities.
CH2M HILL sponsors a medical benefit plan for retired employees of three
subsidiaries. The plan is contributory, with retiree premiums based on service
at retirement. The benefits contain limitations and a cap on future cost
increases. CH2M HILL continues to fund postretirement medical benefits on a
pay-as-you-go basis.
<TABLE>
<CAPTION>
1998 1999 1998 1999
------------- ------------- ------------- -------------
Plan Assets in Excess of Benefit Obligations:
<S> <C> <C> <C> <C>
Benefit obligation at December 31 $ (59,054) $ (56,983)
Fair value of plan assets at December 31 59,808 62,053
------------- -------------
Funded status $ 754 $ 5,070
============= =============
Benefit Obligations in Excess of Plan Assets:
Benefit obligation at December 31 $ (14,759) $ (15,584) $(11,680) $(12,004)
Fair value of plan assets at December 31 10,566 12,638 - -
------------- ------------- ------------- -------------
Unfunded status $ (4,193) $ (2,946) $(11,680) $(12,004)
============= ============= ============= =============
Prepaid (accrued) benefit cost
recognized in the balance sheet $ 8,155 $ 9,959 $ (6,104) $ (7,612)
Weighted-average assumptions at
December 31:
Discount rate 6.75-7.20% 7.75% 7.20% 7.75%
Expected return on plan assets 8.00-9.00% 8.00-9.00% - -
</TABLE>
For measurement purposes, 10.73% annual rate of increase in the per capita
cost of covered health care benefits was assumed for 1999. The rate was assumed
to decrease gradually to 6.00% for 2010 and remain at that level thereafter.
<TABLE>
<CAPTION>
Pension Benefits Other Benefits
------------------------ ------------------------
1998 1999 1998 1999
--------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
Net periodic benefit cost $ 2,396 $ 2,378 $ 1,633 $ 1,766
Employer contributions 8,593 4,182 - -
Participant contributions - - 257 241
Benefit payments (1,996) (2,780) (514) (499)
</TABLE>
(13) Investments in unconsolidated affiliates
F-16
<PAGE>
CH2M HILL has the following investments in affiliated companies that are
50% or less owned, which are accounted for under the equity method:
% of Ownership
Domestic:
Kaiser-Hill Company, LLC ("Kaiser-Hill") 50%
MK/IDC (PSI) 50%
Foreign:
CH2M Gore and Storrie Limited 49%
CH2M HILL/CSA 50%
Sembawang-IDC 25%
CH2M HILL BECA, Ltd. 50%
TDC International of Israel 50%
As of December 31, 1998 and 1999, the total investments in these material
unconsolidated affiliates were approximately $2,629 and $5,763, respectively,
and are included in other assets in the accompanying consolidated balance
sheets. As of December 31, 1998 and 1999, CH2M HILL received distributions from
Kaiser-Hill Company, LLC of $7,750 and $3,300, respectively.
Kaiser-Hill's revenues are derived from the U.S. Department of Energy's
Performance Based Integrating Management Contract for the Rocky Flats Closure
Project in Golden, Colorado. Under this contract, performance based incentive
fees and cost reduction proposal fees are accrued when management believes the
contract performance milestones have been achieved and are therefore earned.
Summarized financial information for these affiliates is as follows:
December 31,
-------------------------------
1998 1999
-------------- --------------
FINANCIAL POSITION:
Current assets $148,784 $143,036
Noncurrent assets 9,339 11,712
-------------- --------------
$158,123 $154,748
============== ==============
Current liabilities $139,561 $131,501
Noncurrent liabilities 7,041 2,385
Shareholders' equity 11,521 20,862
-------------- --------------
$158,123 $154,748
============== ==============
Year Ended December 31,
------------------------------------------------
1997 1998 1999
-------------- -------------- --------------
RESULTS OF OPERATIONS:
Revenues $874,534 $873,524 $757,434
Direct costs 835,562 836,302 712,746
-------------- -------------- --------------
Gross margin 38,972 37,222 44,688
General and administrative
expenses 21,860 19,579 22,370
-------------- -------------- --------------
Operating income 17,112 17,643 22,318
Other income (expense) 483 348 (391)
Net income $ 17,595 $ 17,991 $ 21,927
============== ============== ==============
(14) Acquisition
Effective December 22, 1999, CH2M HILL acquired all of the outstanding
common stock of Lockheed Martin Hanford Corporation ("Hanford"), a wholly-owned
subsidiary of Lockheed Martin Corporation. Hanford is an environmental
management contractor that provides
F-17
<PAGE>
tank waste remediation services to the U.S. Department of Energy. The
acquisition was accounted for under the purchase method of accounting. Total
consideration was for $17.1 million and resulted in $16.9 million in goodwill.
The goodwill will be amortized on a straight-line basis over the total estimated
life of the contract, including options, of seven years. Contingent
consideration is determined based upon the additional contract years awarded
under the option period and net fee awarded under those option years. It is not
included as part of the initial purchase price as it is not readily
determinable.
The initial purchase price is allocated to the acquired assets and
liabilities as follows:
Initial consideration of cash $17,145
Allocated to:
Other assets (364)
Current working capital (916)
Pension liability 997
-------
Goodwill $16,862
=======
The following unaudited pro forma financial data represent the acquisition
as if it had occurred on January 1, 1998 and 1999, respectively:
December 31,
----------------------------------
1998 1999
--------------- ---------------
(Unaudited) (Unaudited)
Professional fees $1,215,190 $1,477,589
Net Income 7,400 15,916
Earnings per share $ 0.26 $ 0.54
(15) Contingencies
General
CH2M HILL is party to various legal actions arising in the normal course of
its business, some of which may involve claims for substantial sums. Damages
assessed in connection with and the cost of defending any such actions could be
substantial. CH2M HILL's management believes that the levels of insurance
coverage (after retentions and deductibles) are generally adequate to cover CH2M
HILL's liabilities, if any, with regard to such claims. Any amounts that are
probable of payment by CH2M HILL related to retentions and deductibles are
accrued when such amounts are estimable.
Guarantor
CH2M HILL has guaranteed a $10,000 credit facility between a subsidiary and
a joint venture partner. The facility is secured by assets of the joint venture
and is used for general project purposes. CH2M HILL has joint and several
liabilities with the joint partner for the full amount. At December 31, 1998
and 1999, $2,400 and $7,491 was outstanding on the credit facility which bears
interest at
F-18
<PAGE>
varying rates, based upon the chosen LIBOR rate plus 1.25%. The
rate at December 31, 1999 was 7.46%.
Performance Bonds
In the normal course of business, CH2M HILL purchases performance bonds to
comply with client mandated contractual obligations. At December 31, 1998 and
1999, the performance bonds purchased were $229,000 and $342,684.
F-19
<PAGE>
Kaiser-Hill Company, LLC
and Subsidiary
Consolidated Financial Statements
as of December 31, 1999 and 1998 and for each of
the three years in the period ended December 31, 1999
together with Report of Independent Accountants
F-20
<PAGE>
Report of Independent Accountants
To the Members of
Kaiser-Hill Company, LLC:
We have audited the accompanying consolidated balance sheets of Kaiser-Hill
Company, LLC (a Colorado limited liability company) (the "Company") and
Subsidiary as of December 31, 1999 and 1998, and the related consolidated
statements of income, members' equity and cash flows for each of the three years
in the period ended December 31, 1999. These consolidated financial statements
and the supplementary consolidating information referred to below are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements and supplementary
consolidating information based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Kaiser-
Hill Company, LLC and Subsidiary as of December 31, 1999 and 1998, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1999, in conformity with accounting
principles generally accepted in the United States.
Our audits were made for the purpose of forming an opinion on the consolidated
financial statements taken as a whole. The consolidating information contained
in Schedules I and II is presented for purposes of additional analysis of the
consolidated financial statements, rather than to present the financial
position, results of operations and cash flows of the individual companies. This
information has been subjected to the auditing procedures applied in our audits
of the consolidated financial statements and, in our opinion, is fairly stated
in all material respects in relation to the consolidated financial statements
taken as a whole.
ARTHUR ANDERSEN LLP
Denver, Colorado
January 25, 2000
F-21
<PAGE>
Kaiser-Hill Company, LLC and Subsidiary
Consolidated Balance Sheets
as of December 31, 1999 and 1998
(amounts in thousands of dollars)
- --------------------------------------------------------------------------------
1999 1998
Assets
Current assets:
Cash and cash equivalents $ 5,336 $ 3,644
Contract receivables 107,267 124,352
Receivable from Member -- 396
---------- ----------
Total current assets 112,603 128,392
Deferred financing and organization
costs, net of accumulated amortization
of $7 and $2,578, respectively
518 1,004
---------- ----------
$ 113,121 $ 129,396
========== ==========
Liabilities and Members' Equity
Current liabilities:
Accounts payable and payables $ 90,472 $ 114,988
to subcontractors
Accrued vacation 7,947 7,627
Accrued salaries and employee 6,770 5,039
benefits
Payable to Members 732 742
---------- ----------
Total current liabilities 105,921 128,396
Contingencies (Note 6)
Members' equity 7,200 1,000
---------- ----------
$ 113,121 $ 129,396
========== ==========
The accompanying notes are an integral part of these consolidated
financial statements.
F-22
<PAGE>
Kaiser-Hill Company, LLC and Subsidiary
Consolidated Statements of Income
for the years ended December 31, 1999, 1998 and 1997
(amounts in thousands of dollars)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Gross revenue $ 646,398 $ 636,190 $ 584,739
Subcontractor costs and direct material
costs (456,015) (464,692) (421,800)
----------- ----------- -----------
Service revenue 190,383 171,498 162,939
Direct cost of service and overhead (176,898) (155,962) (145,598)
----------- ----------- -----------
Operating income 13,485 15,536 17,341
Other income (expense):
Interest income 539 295 661
Interest expense (385) (331) (238)
----------- ----------- -----------
Net income before
cumulative effect of
adoption of a new
accounting principle 13,639 15,500 17,764
Cumulative effect of adoption
of a new accounting
principle (Note 2) (839) -- --
----------- ----------- -----------
Net income $ 12,800 $ 15,500 $ 17,764
=========== =========== ===========
Pro forma net income amounts assuming
change in the adoption of a new
accounting principle is applied
retroactively (Note 2) $ 13,639 $ 16,177 $ 18,281
=========== =========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
F-23
<PAGE>
Kaiser-Hill Company, LLC and Subsidiary
Consolidated Statements of Members' Equity
for the years ended December 31, 1999, 1998 and 1997
(amounts in thousands of dollars)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Kaiser K-H CH2M Hill
Holdings, Constructors,
Inc. Inc. Total
<S> <C> <C> <C>
Members' equity, December 31, 1996 $ 6,153 $ 6,153 $ 12,306
Net income 8,882 8,882 17,764
Distributions (13,950) (13,950) (27,900)
------------- ------------- --------------
Members' equity, December 31, 1997 1,085 1,085 2,170
Net income 7,750 7,750 15,500
Distributions (8,335) (8,335) (16,670)
------------- ------------- --------------
Members' equity, December 31, 1998 500 500 1,000
Net income 6,400 6,400 12,800
Distributions (3,300) (3,300) (6,600)
------------- ------------- --------------
Members' equity, December 31, 1999 $ 3,600 $ 3,600 $ 7,200
============= ============= ==============
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
F-24
<PAGE>
Kaiser-Hill Company, LLC and Subsidiary
Consolidated Statements of Cash Flows
for the years ended December 31, 1999, 1998 and 1997
(amounts in thousands of dollars)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 12,800 $ 15,500 $ 17,764
Adjustments to reconcile net income to net cash
provided by operating activities:
Cumulative effect of adoption of a new
accounting principle 839 -- --
Amortization 172 787 627
Changes in assets and liabilities:
Decrease (increase) in contract
receivables 17,085 (36,963) (12,402)
Decrease (increase) in receivable
from Member 396 (396) --
(Decrease) increase in accounts
payable and payables to subcontractors (24,741) 36,597 18,987
Increase (decrease) in other accrued expenses 2,051 (3,479) 627
Increase (decrease) in payable to Members (10) (1,914) 511
---------- ---------- ----------
Net cash provided by operating activities 8,592 10,132 26,114
---------- ---------- ----------
Cash flows from financing activities:
Distributions to Members (6,600) (16,670) (27,900)
Payment of financing costs (300) -- --
---------- ---------- ----------
Net cash used in financing activities (6,900) (16,670) (27,900)
Net increase (decrease) in cash and cash equivalents 1,692 (6,538) (1,786)
Cash and cash equivalents, beginning of year 3,644 10,182 11,968
---------- ---------- ----------
Cash and cash equivalents, end of year $ 5,336 $ 3,644 $ 10,182
========== ========== ==========
Supplemental cash flow information:
Cash paid for interest $ 212 $ 221 $ 128
========== ========== ==========
Supplemental noncash financing activity:
Accrued financing costs $ 225 $ -- $ --
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
F-25
<PAGE>
Kaiser-Hill Company, LLC and Subsidiary
Notes to Consolidated Financial Statements
- -------------------------------------------------------------------------------
1. Organization
Kaiser-Hill Company, LLC (the "Company") was formed on October 24, 1994. The
principal business of the Company is to procure, execute, deliver, and
perform under a contract with the Department of Energy ("DOE") to manage the
programs and operate the DOE facilities at Rocky Flats Environmental
Technology Site ("RFETS") in Golden, Colorado. The mission of the RFETS is
directed toward cleanup, deactivation, and preparation for decontamination
and disposition of these DOE facilities.
The Company is a limited liability company owned equally by Kaiser K-H
Holdings, Inc. (formerly known as ICF Kaiser Government Programs, Inc.), a
wholly owned subsidiary of Kaiser Group International, Inc. (formerly known
as ICF Kaiser International, Inc.) ("Kaiser"), and CH2M Hill Constructors,
Inc., an indirect wholly owned subsidiary of CH2M Hill Companies, Ltd. ("CH2M
Hill") (collectively, the "Members"). Net profits and/or losses and
distributions thereof are allocated equally to the Members.
At December 31, 1999, the Company employed 1,733 hourly workers and 315
salaried workers. Approximately 84% of the hourly employees are represented
by United Steel Workers of America (the "Union") under a collective
bargaining agreement which expires on October 3, 2001.
The Company maintains its cash accounts primarily with banks located in
Colorado, New York and Washington D.C. Cash balances are insured by the FDIC
up to $100,000 per bank and cash equivalents are not insured by the FDIC. As
of December 31, 1999, the majority of the cash balance was made up of cash
equivalents.
On January 24, 2000, the Company and the DOE entered into a new contract
effective February 1, 2000. The new contract is in effect until the physical
completion of the Rocky Flats Closure Project including closure, disposal of
nuclear material, demolition of facilities, environmental remediation, waste
disposal, infrastructure and general site operations. Under the new contract,
the Company has the opportunity to earn incentive fee if the total costs
incurred are below the contract target cost or the completion of the site
closure is before March 31, 2007. In addition, the Company can lose incentive
fees if the costs exceed an amount equal to $200 million above the contract
target cost or the site closure is after March 31, 2007. The maximum and
minimum incentive fee available to be earned by the Company through the date
of closure is $460 million and $130 million, respectively.
2. Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the Company and its wholly
owned subsidiary Kaiser-Hill Funding Company, LLC. All intercompany accounts
and transactions have been eliminated in the consolidated financial
statements.
Revenue Recognition
Revenue is recognized using the percentage of completion method whereby
revenue is accrued in an amount equal to cost plus management's best estimate
of base fee, performance based incentive fees and cost reduction proposal
fees to be received.
Statements of Cash Flows
For purposes of the statements of cash flows, the Company considers cash in
checking and short-term investments with original maturities of three months
or less to be cash and cash equivalents.
New Accounting Policy
Effective January 1, 1999, the Company adopted Statement of Position 98-5
("SOP 98-5"), Reporting on the Costs of Start-up Activities, which states
that costs of start-up activities, including organizational costs, be
expensed when incurred. Upon adoption, the Company recorded a cumulative
effect of a change in accounting principle of $839,000 in the accompanying
consolidated statements of income. Assuming SOP 98-5 was not adopted in 1999,
amortization on start-up activities would have been approximately $609,000
and the remaining
F-26
<PAGE>
Kaiser-Hill Company, LLC and Subsidiary
Notes to Consolidated Financial Statements
- --------------------------------------------------------------------------------
$203,000 would have been expensed in 2000. The pro forma amounts shown on the
income statement have been adjusted for the effect of retroactive application
had SOP 98-5 been in effect during the years presented.
Income Taxes
The financial statements do not include a provision for income taxes because
the Company is treated as a partnership for income tax purposes and does not
incur federal or state income taxes. Instead, its earnings and losses are
included in the Members' separate income tax returns.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
3. Related Party Transactions
In 1999 and 1998, the Members were subcontracted by the Company to perform
certain tasks under the DOE contract. The "Payable to Members" in the
accompanying balance sheets as of December 31, 1999 and 1998 consists of
$297,000 and $742,000, respectively, to Kaiser and $435,000 and $0,
respectively, to CH2M Hill for these subcontracted tasks. These payables are
non-interest bearing. The "Receivable from Member" in the accompanying
consolidated balance sheet as of December 31, 1998 consists of $396,000 due
from CH2M Hill relating to advance payment of general and administrative
expenses, less operating payables.
In addition, costs incurred related to work performed by Kaiser and CH2M
Hill, the majority of which are reimbursable and billed under the DOE
contract, were approximately $609,000 and $938,000 in 1999, respectively,
$3,600,000 and $960,000 in 1998, respectively, and $2,600,000 and $1,100,000
in 1997, respectively.
4. Contract Receivables
Contract receivables as of December 31, 1999 and 1998 represent unbilled
receivables due under the DOE contract. Unbilled receivables result from
revenue that has been earned by the Company but not billed to the DOE as of
the end of the period. The unbilled receivables can be invoiced at
contractually defined intervals and milestones. Management anticipates that
the unbilled receivables will be billed and collected in less than one year.
The Company's contract receivables result primarily from its long-term
contract with the DOE. As a consequence, management believes that credit risk
is minimal.
5. Business Loan and Security Agreement
Effective November 2, 1999, the Company, including its wholly owned
subsidiary Kaiser-Hill Funding Company, LLC, entered into a Business Loan and
Security Agreement (the "Agreement") with Bank of America, N.A. ("BOA")
replacing its previous agreement with NationsBank, N.A. The Company, Kaiser
and CH2M Hill granted a first lien security interest to BOA in all of the
ownership and equity interest of the Company.
Under the agreement, the Company has financing available which provides
temporary financing for the payment of the Company's costs incurred under the
DOE contract. This financing is utilized throughout the year for periods of
less than one month as, under the terms of the DOE contract, the DOE must pay
the Company's invoices within three business days of receipt. The funding
level under the agreement can not exceed a Maximum Borrowing Base calculated
on the lesser of eligible billed and unbilled government accounts receivable,
as defined, or $35,000,000. Under the terms of the agreement, interest on the
advances is calculated either under a rate based upon LIBOR or a rate based
upon the higher of the Federal Funds Rate or the Prime Rate.
F-27
<PAGE>
Kaiser-Hill Company, LLC and Subsidiary
Notes to Consolidated Financial Statements
- -------------------------------------------------------------------------------
The agreement also contains various covenants, including tangible net worth,
fixed charge ratio and minimum cash balances requirements, among other
restrictions. Management believes the Company was in compliance with all
restrictive covenants.
6. Contingencies
The Company's reimbursable costs are subject to audit in the ordinary course
of business by various U.S. Government agencies. Management is not presently
aware of any significant costs, which have been, or may be, disallowed by any
of these agencies.
7. Employee Benefit Plans
In accordance with the DOE contract, the Company sponsors several benefit
plans covering substantially all employees who meet length of service
requirements. These plans include the following defined benefit pension
plans: The Rocky Flats Multiple Employer Salaried Retirement Plan and the
Kaiser-Hill Retirement Plan for Hourly Production and Maintenance Employees.
The Company also sponsors the following defined contribution plans: Kaiser-
Hill Company, LLC Savings Plan for Hourly Employees, which includes no
Company matching; and Rocky Flats Multiple Employer Salaried Thrift Plan,
which includes Company matching. The Company contribution amounts for the
Savings Plan/Thrift Plan were approximately $454,000, $413,000 and $482,000
for 1999, 1998 and 1997, respectively. No amounts were contributed to the
Retirement Plans during 1999, 1998 and 1997 because the Plans were
overfunded.
The Company administers these benefit plans with benefits equivalent to the
RFETS contractor benefit plans maintained by the contractor that preceded the
Company at RFETS. Under the DOE contract, the Company recognizes the cost of
benefit plans when paid, and such costs are reimbursed by the DOE. Any excess
pension plan assets or unfunded pension plan liability which may currently
exist or is remaining at the end of the DOE contract is the responsibility of
the DOE.
F-28
<PAGE>
SCHEDULE I
Kaiser-Hill Company, LLC and Subsidiary
Supplementary Consolidating Information to
Consolidated Financial Statements
Balance Sheet
as of December 31, 1999
(amounts in thousands of dollars)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Kaiser-Hill
Kaiser-Hill Funding
Company Company
LLC LLC Eliminations Consolidated
Assets:
Current assets:
<S> <C> <C> <C> <C>
Cash and cash equivalents $ 5,287 $ 49 $ -- $ 5,336
Contract receivables 107,272 84 (89) 107,267
--------- --------- --------- ---------
Total current assets 112,559 133 (89) 112,603
Investment in Kaiser-Hill Funding
Company, LLC 106 -- (106) --
Financing costs, net of accumulated
amortization of $7 518 -- -- 518
--------- --------- --------- ---------
$113,183 $ 133 $ (195) $ 113,121
========= ========= ========= =========
Liabilities and Members' Equity:
Current liabilities:
Accounts payable and payable
to subcontractors $ 90,451 $ 21 $ -- $ 90,472
Accrued vacation 7,947 -- -- 7,947
Accrued salaries and
employee benefits 6,770 -- -- 6,770
Intercompany amounts 83 6 (89) --
Payable to Members 732 -- -- 732
--------- --------- --------- ---------
Total current liabilities 105,983 27 (89) 105,921
Members' equity 7,200 106 (106) 7,200
--------- --------- --------- ---------
$113,183 $ 133 $ (195) $ 113,121
========= ========= ========= =========
</TABLE>
F-29
<PAGE>
SCHEDULE II
Kaiser-Hill Company, LLC and Subsidiary
Supplementary Consolidating Information to
Consolidated Financial Statements
Statement of Income
for the year ended December 31, 1999
(amounts in thousands of dollars)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Kaiser-Hill
Kaiser-Hill Funding
Company Company
LLC LLC Eliminations Consolidated
<S> <C> <C> <C> <C>
Gross revenue $ 646,398 $ -- $ -- $ 646,398
Intercompany revenue -- 360 (360) --
Intercompany expense (360) -- 360 --
Subcontractor costs and
direct material costs (456,017) 2 -- (456,015)
----------- ----------- ------------ ------------
Service revenue 190,021 362 -- 190,383
Direct cost of service and
overhead (176,757) (141) -- (176,898)
----------- ----------- ------------ ------------
Operating income 13,264 221 -- 13,485
Other income (expense):
Interest income 539 -- -- 539
Interest expense (173) (212) -- (385)
----------- ----------- ------------ ------------
Net income before --
cumulative effect of
adoption of a new accounting
principle 13,630 9 -- 13,639
Cumulative effect on --
adoption of a new accounting
principle (Note 2) (839) -- -- (839)
----------- ----------- ------------ ------------
Net income $ 12,791 $ 9 $ -- $ 12,800
=========== =========== ============ ============
</TABLE>
F-30
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
CH2M HILL Companies, Ltd.
By: /s/ Ralph R. Peterson Date: March 27, 2000
-------------------------------------
Ralph R. Peterson
President and Chief Executive Officer
Signature Title Date
- ------------------------ ----------------------------- --------------
/s/ Ralph R. Peterson
- ------------------------ President and Chief March 27, 2000
Ralph R. Peterson Executive Officer (Principal
Executive Officer)
/s/ Philip G. Hall
- ------------------------ Chairman of the Board of March 27, 2000
Philip G. Hall Directors and Senior Vice
President
/s/ Samuel H. Iapalucci
- ------------------------ Chief Financial Officer March 27, 2000
Samuel H. Iapalucci (Principal Financial and
Principal Accounting
Officer)
/s/ Joseph A. Ahearn
- ------------------------ Director March 27, 2000
Joseph A. Ahearn
/s/ Kenneth F. Durant
- ------------------------ Director March 27, 2000
Kenneth F. Durant
/s/ Donald S. Evans
- ----------------------- Director March 27, 2000
Donald S. Evans
/s/ James J. Ferris
- ----------------------- Director March 27, 2000
James J. Ferris
/s/ Jerry D. Geist
- ----------------------- Director March 27, 2000
Jerry D. Geist
/s/ Michael D. Kennedy
- ----------------------- Director March 27, 2000
Michael D. Kennedy
/s/ Susan D. King
- ----------------------- Director March 27, 2000
Susan D. King
/s/ Michael Y. Marcussen
- ----------------------- Director March 27, 2000
Michael Y. Marcussen
/s/ Jewel T. Sideman
- ----------------------- Director March 27, 2000
Jewel T. Sideman
/s/ Barry L. Williams
- ----------------------- Director March 27, 2000
Barry L. Williams
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
------ -----------
2.1 Stock Purchase Agreement, dated as of November 29, 1999, by and
between CH2M Hill Companies, Ltd. and Lockheed Martin Corporation
[certain portions of the Stock Purchase Agreement have been
omitted pursuant to a request for condifidential treatment filed
seperately with the Securities and Exchange Commission] filed as
Exhibit 2.1 on Form 8-K, on January 5, 2000 (File No. 000-27261)
*3.1 Restated Articles of Incorporation of CH2M HILL Companies, Ltd.
*3.2 Restated Bylaws of CH2M HILL Companies, Ltd.
*10.1 CH2M HILL Retirement and Tax-Deferred Savings Plan, as amended
and restated effective January 1, 2000
*10.2 CH2M HILL Employee Stock Plan, as amended and restated effective
January 1, 2000
*10.3 CH2M HILL Companies, Ltd. 1999 Stock Option Plan, as amended and
restated on November 12, 1999
*10.4 CH2M HILL Companies, Ltd. Payroll Deduction Stock Purchase Plan
*10.5 CH2M HILL Companies, Ltd. Pre-Tax Deferred Compensation Plan
10.6 Trust Under CH2M HILL Companies, Ltd. Pre-Tax Deferred
Compensation Plan, filed as Exhibit 10.6 to Registration
Statement on Form S-1 on March 15, 1999 (File No. 333-74427)
*10.7 CH2M HILL Companies, Ltd. After-Tax Deferred Compensation Plan
10.8 Trust Under CH2M HILL Companies, Ltd. After-Tax Deferred
Compensation Plan, filed as Exhibit 10.8 to Registration
Statement on Form S-1 on March 15, 1999 (File No. 333-74427)
10.9 Contract with Buck Investment Services, Inc., filed as Exhibit
10.9 to Registration Statement on Form S-1, Amendment No. 1, on
May 14, 1999 (File No. 333-74427)
10.10 Contract (#DE-AC3495RF00825) between Kaiser-Hill Company, LLC, a
subsidiary of the Corporation, and the U.S. Department of Energy
dated as of April 4, 1995, along with Modifications 1 to 81 to
Contract #DE-AC3495RF00825 (Modifications 41, 72 and 78 not
received), incorporated by reference from ICF Kaiser
International Inc.'s (i) Form 10-K for the fiscal year ended
February 28, 1995 filed on March 29, 1996 (File No. 1-12248);
(ii) Registration Statement on Form S-1 filed on November 27,
1996 (File No. 333-16937); (iii) Form 10-K for the fiscal year
ended December 31, 1996 filed on March 31, 1998 (File No. 1-
12248).
<PAGE>
*10.11 Contract between Kaiser-Hill Company, LLC, a subsidiary of the
Corporation, and the U.S. Department of Energy dated January 24, 2000
10.12 $100,000,000 Senior Unsecured Revolving Credit Agreement dated as of
June 18, 1999, Wells Fargo Bank, National Association, as Agent,
filed as Exhibit 10.11 to Registration Statement on Form S-1,
Amendment No. 2, on July 8, 1999 (File No. 333-74427)
*10.13 Deferred Compensation Retirement Program Arrangement effective
December 1, 1995
*10.14 Executive Deferred Compensation Program Arrangement effective
January 1, 1997
*21 Subsidiaries of CH2M HILL Companies, Ltd.
*27 Financial Data Schedule
99.1 Internal Market Rules, filed as Exhibit 99 to Registration Statement
on Form S-1 on March 15, 1999 (File No. 333-74427)
*99.2 Opinion of KPMG LLP
__________
* Filed herewith
(b) Reports on Form 8-K:
None.
<PAGE>
EXHIBIT 3.1
RESTATED
ARTICLES OF INCORPORATION
OF
CH2M HILL COMPANIES, LTD.
Pursuant to the Oregon Business Corporation Act, CH2M HILL Companies, Ltd.
adopts the following Restated Articles of Incorporation which supersede the
heretofore existing Articles of Incorporation and all amendments thereto:
ARTICLE I
The name of this Corporation is CH2M HILL Companies, Ltd. and its duration shall
be perpetual.
ARTICLE II
The purpose for which the Corporation is organized is to conduct any lawful
activities for which corporations may be organized under Oregon law.
ARTICLE III
The aggregate number of shares which the Corporation shall have authority to
issue is 100,000,000 shares of voting Common Stock of the par value of $.01 per
share, and 50,000,000 shares of nonvoting Class A Preferred Stock of the par
value of $.02 per share.
The nonvoting Class A Preferred Stock shall have the following rights and
restrictions:
A. That, except as expressly provided by these Restated Articles of
Incorporation or as required by law, the Class A Preferred Stock shall not
be entitled to vote on any matter submitted to a vote at a meeting of
stockholders.
B. That upon liquidation, dissolution, or winding up of the Corporation,
whether voluntary or involuntary, the Class A Preferred Stock shall be
entitled, before any distribution is made to any Common Stockholder, to be
paid the sum of $.02 per share. In case the net assets of the Corporation
are insufficient to pay all holders of outstanding Class A Preferred Stock
the amount to which they are entitled, then the entire net assets of the
Corporation shall be distributed ratably to all holders of outstanding
shares of Class A Preferred Stock.
C. That the rights granted to said Class A Preferred Stock cannot be amended
except by affirmative vote of the holders of at least a majority of the
Common Stock voting as one class, and at least a majority of the Class A
Preferred Stock voting as one class.
D. The Board of Directors may, at any time, by majority vote, convert each
outstanding share of nonvoting Class A Preferred Stock into one share of
voting Common Stock without the consent of the holders of nonvoting Class A
Preferred Stock or voting Common Stock.
Page 1
<PAGE>
ARTICLE IV
No stockholder of this Corporation shall have any preemptive rights to purchase
any shares to be sold or issued by the Corporation, either of the presently
existing classes or a class established in the future whether the issuance be as
original sale or distribution or sale or distribution of treasury stock.
ARTICLE V
Voting rights of Common Stock are denied while such stock is held or has been
acquired in violation of any provision of these Restated Articles, the Restated
Bylaws, any stockholder's agreement, benefit plan, any other Corporation
document or policy, or applicable law.
ARTICLE VI
This Corporation shall have the right to purchase, take, receive, or otherwise
acquire its own stock to the extent and in any manner allowed under applicable
law.
Unless approved by the Board of Directors and a majority of shares entitled to
vote and represented at the meeting, the Corporation shall not sell or in any
other way transfer any of its stock to any person other than, directly or
indirectly such as through an employee benefit trust, an employee or director
of, or consultant to, the Corporation or any of its affiliates.
ARTICLE VII
The number of directors of the Corporation shall be no fewer than nine and no
more than thirteen, as specified from time to time by resolution of the Board of
Directors. Nine of the directors shall be employees of the Corporation or its
affiliates; any additional directors cannot be employees.
ARTICLE VIII
No director of the Corporation shall be personally liable to the Corporation or
its shareholders for monetary damages for conduct as a director, provided that
this Section shall not eliminate the liability of a director for any act or
omission for which such elimination of liability is not permitted under the
Oregon Business Corporation Act. No amendment of the Oregon Business
Corporation Act that further limits the acts or omissions for which elimination
of liability is permitted shall affect the liability of a director for any act
or omission which occurs prior to the effective date of the amendment.
ARTICLE IX
Any vacancy created by death, resignation, removal or incapacity of a director
may be filled by the affirmative vote of a majority of the remaining directors,
though less than a quorum of the Board of Directors, or by a sole remaining
director. A director appointed to fill a vacancy
Page 2
<PAGE>
shall serve until the next shareholders' meeting at which directors are elected.
Any such vacancy not so filled by the directors shall be filled by election, in
accordance with the provisions of the Restated Bylaws entitled "Nomination of
Directors" and "Election of Directors," at the next annual meeting of
stockholders or at a special meeting of stockholders called for that purpose.
Any directorship to be filled by reason of an increase in the specified number
of directors shall be filled by election, in accordance with the provisions of
the Restated Bylaws entitled "Nomination of Directors" and "Election of
Directors," at the next annual meeting of stockholders or at a special meeting
of stockholders called for that purpose.
To be elected as a director, a nominee must receive at least the number of votes
equal to a majority of the shares entitled to vote and represented at the
meeting.
The Board of Directors shall have the power to adopt, amend and repeal the
Restated Bylaws of the Corporation (except so far as the Restated Bylaws of the
Corporation adopted by the stockholders shall otherwise provide). The
Corporation's shareholders may amend or repeal the Corporation's Restated
Bylaws. The Corporation shall hold a special meeting of shareholders if the
holders of at least ten percent (10%) of all votes entitled to be cast on
amendment or repeal of the Restated Bylaws sign, date and deliver to the
Corporation's Secretary one or more written demands for such meeting.
As restated by stockholder action on February 9, 1974, and as amended:
February 15, 1975
February 14, 1976
February 12, 1977
February 19, 1978
February 23, 1980
February 21, 1981
February 20, 1982
February 26, 1983
December 15, 1983
February 25, 1984
February 23, 1985
March 8, 1993
September 6, 1994
January 1, 1996
October 23, 1997
January 1, 2000
Page 3
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EXHIBIT 3.2
RESTATED BYLAWS
OF
CH2M HILL COMPANIES, LTD.
ARTICLE 1 - OFFICES
The principal office of the Corporation shall be 6060 South Willow Drive,
Greenwood Village, Colorado 80111, or such other place as the Board of Directors
may designate. The Corporation may have offices in other states.
ARTICLE 2 - STOCKHOLDERS
Section 1 - Annual Meeting.
The annual regular meeting of stockholders to elect directors and transact other
business shall be held in May of each year at such hour and place as designated
by the Board of Directors. The Chairman of the Board may change the time of the
annual meeting, provided notice is given to the stockholders in accordance with
applicable law.
Section 2 - Special Meetings.
Special meetings of the stockholders may be called by the Chairman of the Board,
by the President, by three directors, or by the holders of at least one-tenth
(1/10) of the outstanding stock.
Section 3 - Notice of Meeting.
The Secretary or such person as may be designated by the Chairman of the Board,
the President, or persons calling special meetings shall give written notice to
all stockholders of any regular or special meeting, stating the location, time
and purpose or purposes of the meeting, at least ten (10) days but not more than
sixty (60) days prior to such meeting. Such notice shall be deemed delivered
when deposited in the United States mail addressed to the stockholder as the
address appears in the stock transfer books of the Corporation.
Section 4 - Voting Lists.
The Secretary or such other person as may be designated by the Chairman of the
Board, the President, or the Board of Directors shall within two business days
after notice is given for each meeting prepare a list of stockholders entitled
to vote at such meeting and the number of shares of stock held by each.
<PAGE>
Section 5 - Quorum.
A majority of the outstanding stock of the Corporation entitled to vote on a
matter, represented in person or by proxy, shall constitute a quorum at any
meeting of stockholders with respect to that matter. Stockholders present at a
duly organized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of stockholders so as to leave less than a
quorum.
Section 6 - Proxies.
At all meetings of stockholders, a stockholder may vote by proxy executed in
writing by the stockholder or a duly authorized attorney-in-fact. Such proxy
shall be filed with the Secretary of the Corporation before or at the time of
the meeting. No proxy shall be valid after 11 months from the date of its
execution, unless otherwise provided in the proxy.
Section 7 - Voting of Shares.
Except as provided in the Restated Articles of Incorporation, each outstanding
share entitled to vote shall be entitled to one vote upon each matter submitted
to a vote at a meeting of stockholders.
ARTICLE 3 - BOARD OF DIRECTORS
Section 1 - General Powers.
The business and affairs of the Corporation shall be managed by its Board of
Directors. Notwithstanding, the Board of Directors may delegate such authority
as it deems appropriate.
Section 2 - Number and Tenure.
The number of directors of the Corporation shall be no less than nine and no
more than thirteen, as specified from time to time by resolution of the Board of
Directors. Nine of the directors shall be employees of the Corporation or its
affiliates; any additional directors cannot be employees. No decrease in the
number of directors shall have the effect of shortening the term of any
incumbent director. The directors shall be elected to three-year staggered terms
by dividing the directors into three classes as equal in number as possible. At
each annual meeting the same number of directors shall be elected for a three-
year term as the number whose term expires.
Directors shall serve until their successors shall have been elected and
qualified. Directors need not be residents of the state of Oregon. Directors may
be reelected and there shall be no limit on the number of terms a director may
serve.
Section 3 - Nomination of Directors.
The Chairman of the Board, with the concurrence of the Board of Directors, shall
appoint a nominating committee for employee positions on the Board of Directors
by November 1 of each year, consisting of the President, two directors, and two
stockholders of the
<PAGE>
Corporation who are not directors. The Chairman of the Board shall be the
nonvoting Chairman of the nominating committee. This nominating committee shall
review the available candidates for the Board of Directors and propose a nominee
for each position to be filled, which shall be submitted to the stockholders by
not less than one hundred twenty (120) days prior to the date of the annual
meeting. Thereafter, thirty (30) days shall be allowed for the additional
nomination of candidates by petitions signed by stockholders representing at
least ten (10) percent of the shares of Common Stock outstanding. Such petitions
shall be submitted to the Secretary of the Corporation. The Secretary shall
notify all stockholders not less than ten (10) days prior to the date set for
the annual meeting of the names of those additional persons nominated by
petition.
Nonemployee director candidates (also known as outside directors) shall be
nominated by the Board of Directors. Nomination of additional outside director
candidates by petition will not be allowed. The Secretary shall notify all
stockholders not less than ten (10) days prior to the date set for the annual
meeting or the special meeting of the names of the outside director candidates
nominated by the Board of Directors.
In addition, nominations for the election of directors may be made at the annual
meeting by any stockholder entitled to vote in the election of directors
generally. However, any such stockholder may nominate one or more persons for
election as directors at a meeting only if such stockholder has given timely
notice in proper written form of his intent to make such nomination or
nominations. To be timely, a stockholder's notice must be delivered to or
mailed and received by the Secretary of the Corporation not later than one
hundred twenty (120) days prior to the anniversary date of the Corporation's
notice of annual meeting provided with respect to the previous year's annual
meeting; provided, however, that in the event that less than forty (40) days'
notice or prior public disclosure of the date of the meeting is given or made to
stockholders, notice by the stockholder to be timely must be received not later
than the close of business on the tenth (10th) day following the date on which
such notice of the date of such meeting was mailed or such public disclosure was
made. To be in proper written form, a stockholder's notice to the Secretary
shall set forth: (i) the name and address of the stockholder who intends to
make the nomination and of the person or persons to be nominated; (ii) a
representation that the stockholder is a holder of record of stock of the
Corporation entitled to vote at such meeting and intends to appear in person or
by proxy at the meeting to nominate the person or persons specified in the
notice; (iii) a description of all arrangements or understandings between the
stockholder and each nominee and any other person or persons (naming such person
or persons) pursuant to which the nomination or nominations are to be made by
the stockholder; (iv) such other information regarding each nominee proposed by
such stockholder as would be required to be included in a proxy statement filed
pursuant to the proxy rules of the Securities and Exchange Commission had the
nominee been nominated, or intended to be nominated, by the Board of Directors;
and (v) the consent of each nominee to serve as a director of the Corporation if
so elected. The chairman of the meeting may refuse to acknowledge the
nomination at the annual meeting of any person not made in compliance with the
foregoing procedure. Except as provided above, nomination of additional
candidates from the floor at the stockholders' meeting will not be accepted.
<PAGE>
Section 4 - Election of Directors.
The nominees for directors shall be separated into a slate of employee
candidates and a slate of outside director candidates and shall be voted upon by
the stockholders. Except as restricted in the Restated Articles of
Incorporation, each stockholder shall have the right to vote, in person or by
proxy, the number of shares owned for as many nominees as there are directors to
be elected on each slate. To be elected, nominees must receive at least the
number of votes equal to a majority of the shares entitled to vote and
represented at the meeting.
If, after balloting, one or more directors' posts remain unfilled, the nominee
receiving the fewest votes on that slate shall be removed from the list of
nominees. Subsequent balloting will be held with each stockholder entitled to
vote casting a ballot, in person or by proxy, for as many nominees as there are
directors remaining to be elected. Such stockholders shall have the right to
vote (one vote per share) for each of the positions to be filled. Such process
shall be continued until all directors' positions are filled. If a tie vote
between two or more nominees results in an inconclusive election, e.g. two (2)
or more nominees receive the same number of votes and all nominees so tied
receive sufficient votes for election, but the number of nominees being so tied
exceeds the number of directorships to be filled, a separate runoff election
will be held between the tied nominees only.
Section 5 - Annual and Regular Meetings.
The regular annual meeting of the Board of Directors shall be held without other
notice than these Restated Bylaws immediately after the annual meeting of
stockholders. The Board of Directors may provide for other regular meetings to
be held elsewhere.
Section 6 - Special Meetings.
A special meeting of the Board of Directors may be called at the request of the
Chairman of the Board, the President, or any two directors. The persons
authorized to call such meetings of the Board of Directors may fix any place as
the place of meeting.
Section 7 - Notice.
Notice of any special meeting shall be given at least two days prior to the
meeting by personal delivery, telephone, mail, facsimile transmission or
telegram. If mailed, notice shall be deemed to be given on the third business
day after deposited in the United States mail addressed to the director at the
director's business address, with postage thereon prepaid. If by telegram,
notice shall be deemed to be given when the telegram is delivered to the
telegraph company. The attendance of a director at a meeting shall constitute a
waiver of notice of such meeting, except where a director attends a meeting for
the express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the Board
of Directors need be specified in the notice or waiver of notice of such
meeting.
<PAGE>
Section 8 - Quorum.
A majority of directors shall constitute a quorum for the transaction of any
business. An affirmative vote of not less than a majority of the entire Board of
Directors is required for the Board to act for and on behalf of the Corporation,
except as may be otherwise specifically provided by statute, by the Restated
Articles of Incorporation, or by these Restated Bylaws.
Section 9 - Participation by Telephone.
Members of the Board of Directors may hold a board meeting by conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other. Participation in such a manner
shall constitute presence in person at the meeting.
Section 10 - Action Without a Meeting.
Any action that may be taken by the Board of Directors at a meeting may be taken
without a meeting if one or more consents in writing, setting forth the action
so to be taken, shall be signed by each of the directors. Such consent, which
shall have the same effect as a unanimous vote of the directors, shall be filed
with the minutes of the Corporation.
Section 11 - Vacancies and Increases.
Any vacancy created by death, resignation, removal or incapacity of a director
may be filled by the affirmative vote of a majority of the remaining directors,
though less than a quorum, or by a sole remaining director. A director appointed
to fill a vacancy shall serve until the next shareholders' meeting at which
directors are elected. Any such vacancy not so filled by the directors shall be
filled by election, in accordance with the provisions of the Restated Bylaws
entitled "Nomination of Directors" and "Election of Directors," at the next
annual meeting of stockholders or at a special meeting of stockholders called
for that purpose.
Any directorship to be filled by reason of an increase in the specified number
of directors (e.g., from nine directors to ten directors) shall be filled by
election, in accordance with the provisions of the Restated Bylaws entitled
"Nomination of Directors" and "Election of Directors," at the next annual
meeting of stockholders or at a special meeting of stockholders called for that
purpose.
Section 12 - Removal from Office.
An employee director shall no longer serve as a director effective upon the date
of termination of employment. However, a retired employee who does not compete
with the business of the Corporation may, upon approval of the majority of the
remaining directors, complete the term as an employee director; thereafter, if
re-elected, the director shall be an outside director. All or any number of the
directors may be removed, with or without cause, at a meeting of the
stockholders called expressly for that purpose, by a vote of the holders of a
majority of the shares then entitled to vote at an election of directors.
<PAGE>
Section 13 - Presumption of Assent.
A director present at a meeting of the Board of Directors shall be presumed to
have assented to any action taken unless a dissent be recorded or unless a
written dissent is filed with the Secretary. The right to dissent shall not
apply to a director who voted in favor of the action.
ARTICLE 4 - OFFICERS
Section 1 - Number.
The officers of the Corporation shall be a Chairman of the Board, a President,
one or more Vice Presidents, such Senior Vice Presidents, Executive Vice
Presidents or Assistant Vice Presidents as determined by the Board of Directors,
a Secretary, such Assistant Secretaries as may be determined by the Board of
Directors, a Treasurer, such Assistant Treasurers as may be determined by the
Board of Directors, and such other officers as may be determined by the Board of
Directors.
Section 2 - Election and Term of Office.
The officers of the Corporation shall be elected by a majority of the Board of
Directors at its regular annual meeting. If the election of officers shall not
then be held, such election shall be held as soon thereafter as convenient. Each
officer shall hold office until resignation, death, or removal. The Board of
Directors may authorize the President of the Corporation to appoint officers.
Any officer or agent of the Corporation may be removed by the Board of Directors
or the person appointing the officer or agent, whenever the best interests of
the Corporation, in the opinion of the Board of Directors or the person
appointing the officer or agent, will be served thereby.
Section 3 - Chairman of the Board.
The Chairman of the Board shall be a director of the Corporation and, subject to
the policies, duties and goals set by the Board of Directors, shall be
responsible for all duties incident to the office of Chairman.
Section 4 - President.
The President shall be the Corporation's chief executive officer and shall be
responsible for the general and active management of the business of the
Corporation, under the general direction of the Board of Directors. The
President shall perform all duties incident to the office of the President and
will carry out such other duties as the Board of Directors may determine. The
President shall vote the shares of stock of any other corporation that are held
by this Corporation, or appoint proxies for such purposes, unless other
provisions are made by the Board of Directors.
<PAGE>
Section 5 - Vice Presidents.
The Vice Presidents shall perform such duties as the Chairman of the Board, the
President or the Board of Directors may designate. Any Vice President may sign
certificates for shares of stock of the Corporation and other documents
requiring a signature of the President. The Senior, Executive, and Assistant
Vice Presidents shall have such additional responsibilities as may be designated
by the Board of Directors.
Section 6 - Secretary.
The Secretary shall keep the minutes of the Stockholders' and Board of
Directors' meetings, provide notices as required, be custodian of the corporate
records and of the seal of the Corporation, and perform all duties incident to
the office of Secretary and such other duties as from time to time may be
assigned. The duties of the Secretary may be delegated to other persons by the
Board of Directors except as may be prohibited by this Article.
Section 7 - Treasurer.
The Treasurer shall perform all the duties incident to the office of the
Treasurer and such other duties as from time to time may be assigned by the
Chairman of the Board, the President, or the Board of Directors.
Section 8 - Assistant Secretaries and Assistant Treasurers.
The Assistant Secretaries and Assistant Treasurers, in general, shall perform
such duties as shall be assigned to them by the Secretary or the Treasurer,
respectively, or by the Chairman of the Board, the President, or the Board of
Directors.
Section 9 - Salaries.
From time to time a Committee of the Board of Directors shall recommend to the
Board of Directors and the Board of Directors shall review and approve salaries
of the President, Chairman and such other officers as may be decided by the
Board of Directors. An officer who is a director may receive a salary.
ARTICLE 5 - CONTRACTS, LOANS, CHECKS, AND DEPOSITS
Section 1 - Contracts.
The Board of Directors may authorize any officer or officers, agent or agents,
or designated class of employees, to enter into any contract or execute and
deliver any instrument in the name of and on behalf of the Corporation and such
authority may be general or confined to specific instances.
<PAGE>
Section 2 - Loans.
Loans and evidence of same shall not be contracted on behalf of the Corporation
unless authorized by a resolution of the Board of Directors. Such authority and
delegation of authority to bind the Corporation may be general or confined to
specific instances.
Section 3 - Checks, Drafts, etc.
All checks, drafts, or other orders for the payment of money, notes, or other
evidences of indebtedness issued in the name of the Corporation shall be signed
in such manner as shall from time to time be determined by resolution of the
Board of Directors.
Section 4 - Deposits.
All funds of the Corporation not otherwise employed shall be deposited from time
to time to the credit of the Corporation in such banks, trust companies, or
other depositories as the Board of Directors may select.
ARTICLE 6 - CERTIFICATES FOR STOCK AND THEIR TRANSFER
Section 1 - Certificates for Stock.
The Board of Directors may authorize the issue of shares without certificates.
If certificates representing stock of the Corporation are used, they shall be
consecutively numbered and in such form as shall be determined by the Board of
Directors or in accordance with these Bylaws. Such certificates shall be signed
as the Board of Directors may determine. The name and address of the person to
whom the shares represented thereby are issued, with the number of shares and
date of issue, shall be entered on the stock transfer books of the Corporation.
All certificates surrendered to the Corporation for transfer shall be canceled
and no new certificate shall be issued until the former certificate for a like
number of shares shall have been surrendered and canceled, except that in case
of lost, destroyed, or mutilated certificates a new one may be issued therefor
upon such terms and indemnity to the Corporation as the Board of Directors may
prescribe. Section 2 - Transfer of Stock.
Transfer of stock of the Corporation shall be made only on the stock transfer
books of the Corporation. Transfers will not be made in violation of these
Restated Bylaws, any stockholder agreement, benefit plan, any other Corporation
document or policy, or applicable law. The name under which shares stand on the
books of the Corporation shall be deemed by the Corporation to be the name of
the owner thereof.
ARTICLE 7 - SPECIAL PROVISIONS RELATIVE TO STOCK
Section 1 - Ownership Policy.
<PAGE>
The purpose of this Article is to define the policy of the Corporation to
maintain ownership of its stock by compatible persons actively contributing to
its success. This policy is based on the belief that stock ownership by
competent, loyal, contributing employees and directors of, and consultants to,
the Corporation and its affiliates will be of continuing benefit to the
Corporation.
Section 2 - Restrictions on Stock.
A. Corporation's Right to Repurchase upon Termination of Affiliation. As
used in this Article, "Stock" shall mean the Common Stock and any class
or series of Preferred Stock issued or to be issued by the Corporation.
All shares of Stock held of record by a person who is an employee or
director of, or a consultant to, the Corporation or any of its
affiliates shall be subject to the Corporation's right to repurchase all
of such shares in the event that such holder's affiliation with the
Corporation as an employee, director or consultant is terminated. Such
right of repurchase upon termination of affiliation shall also be
applicable to all shares of Stock which such person has the right to
acquire subsequent to termination of affiliation pursuant to any of the
Corporation's employee benefit plans (other than shares distributable to
such person under any benefit plan adopted by the Corporation or any of
its affiliates which, by law or its terms, prohibits the Corporation's
right to repurchase shares issued thereunder upon termination of
affiliation) or pursuant to any option or other contractual right to
acquire shares of Stock which was outstanding at the date of such
termination of affiliation. An authorized leave of absence approved in
accordance with the Corporation's policy shall not constitute a
termination of affiliation for purposes of this subparagraph `A';
provided, however, that the issuance of a formal personnel action notice
by the Corporation's human resources department advising an employee
that the leave of absence is terminated shall constitute a termination
of affiliation for purposes of this subparagraph `A'. The Corporation's
right of repurchase shall be exercised by mailing written notice to such
holder at his address of record on the Corporation's stock record books
within sixty (60) days following the termination of such affiliation,
which notice shall request delivery of certificates representing the
shares of Stock, duly endorsed in blank or to the Corporation, free and
clear of all liens, claims, charges and encumbrances of any kind
whatsoever. If the Corporation repurchases the shares, the price shall
be the Formula Price (as hereinafter defined) per share (i) on the date
of such termination of affiliation, in the case of shares held of record
by such holder at that date and shares issuable to such holder
subsequent to that date pursuant to any option or other contractual
right to acquire shares of Stock which was outstanding at that date; or
(ii) on the date such shares are distributed to such holder, in the case
of shares distributable to such holder subsequent to his termination of
affiliation pursuant to any of the Corporation's employee benefit plans.
The Corporation shall, if it exercises its right to repurchase such
shares of Stock as provided in this subparagraph `A', pay for such
shares in cash or promissory notes issued within ninety (90) days after
(i) the date of such termination of affiliation (such ninety (90)-day
period shall commence on such date of termination of affiliation and
shall not be extended by accrued vacation, sick days or similar
accruals), in the case of shares held of record by such holder at that
date and shares issuable to such holder subsequent to that date pursuant
to any option
<PAGE>
or other contractual right to acquire shares of Stock which was
outstanding at that date; or (ii) the date such shares are distributed
to such holder, in the case of shares distributable to such holder
subsequent to his termination of affiliation pursuant to any of the
Corporation's employee benefit plans. If the Corporation is unable to
make such payment directly to such holder, then the Corporation may
satisfy its obligation to make such payment by depositing the purchase
price in cash or promissory notes within such ninety (90)-day period in
an account for the benefit of such holder and such shares of Stock shall
thereby be deemed to have been transferred to the Corporation and no
longer outstanding with all rights of such holder with regard to such
shares terminated. The Corporation and any holder of Stock may by
contract mutually agree to extend the time period of the Corporation's
right to repurchase such holder's Stock, and to alter payment terms from
those contained in this subparagraph `A'.
B. Corporation's Right of First Refusal. If at any time a holder of Stock
desires to sell any of such shares (other than through the limited
market maintained by the Corporation), such holder shall first give
notice to the Secretary of the Corporation containing:
(1) A statement signed by such holder notifying the Corporation
that such holder desires to sell shares of Stock and has
received a bona fide offer to purchase such shares.
(2) A statement signed by the intended purchaser containing:
a) the intended purchaser's full name, address and taxpayer
identification number;
b) the number of share s to be purchased;
c) the price per share to be paid;
d) other terms under which the purchase is intended to be
made; and
e) a representation that the offer, under the terms
specified, is bona fide.
(3) If the purchase price is payable in cash, in whole or in part,
a copy of a certified check, cashier's check or money order
payable to such holder from the purchaser in the aggregate
amount of the purchase price which is to be paid in cash.
The Corporation shall thereupon have an option exercisable within
fourteen (14) days of receipt of such notice by the Secretary to
purchase all, but not less than all, of the shares specified in the
notice at the offer price and upon the same terms as set forth in
the notice, accompanied by payment of the purchase price; provided,
however, that if the offer price is payable, in whole or in part,
other than in cash, the Corporation shall pay the equivalent value
of any noncash
<PAGE>
consideration as mutually agreed upon between the holder and the
Corporation. Such option shall be exercised by the Corporation by
mailing written notice to such holder at his address of record on
the Corporation's stock record books. In the event the Corporation
does not exercise such option, such holder may sell the shares
specified in the notice within thirty (30) days thereafter to the
person, at the price and upon the terms and conditions set forth
therein. The holder may not sell such shares to any other person,
or at any different price, or on any different terms without first
re-offering such shares to the Corporation. All shares sold
pursuant to this subparagraph `B' shall continue to be subject to
this Article 7, further transfers of the shares can be made only in
accordance with this Article 7 and each purchaser is required to
execute an agreement to be bound by the terms of this Article 7.
C. Election of Rights by Corporation. If circumstances shall occur which
would ordinarily permit the Corporation to exercise its rights under
either subparagraphs `A' or `B' of this Article at a time when the
Corporation's rights under the other subparagraph have become and remain
exercisable, the Corporation in its sole discretion may elect which of
such rights it shall exercise. The Corporation may designate one or more
nominees to purchase any shares of Stock which it has the right to
purchase pursuant to subparagraphs `A' or `B' of this Article, in lieu
of purchasing such shares itself.
D. Other Transfers. Except for sales in the limited market maintained by
the Corporation and as provided in subparagraphs `A' or `B' of this
Article, no holder of shares of Stock may sell, assign, pledge, transfer
or otherwise dispose of or encumber any shares of Stock without the
prior written approval of the Corporation, and any attempt to so sell,
assign, pledge, transfer or otherwise dispose of or encumber such shares
without such prior approval shall be null and void. If any transfer of
the Corporation's Stock is (1) not a sale by an employee or director of,
or consultant to, the Corporation or (2) by a person who acquired such
Stock other than by purchase, directly or indirectly, from an employee
or director of, or consultant to the Corporation, then the Corporation
is expressly authorized to condition its approval of such transfer upon
the transferee's agreement to hold such Stock subject to this Article
upon the termination of affiliation of the employee, director, or
consultant. All shares transferred with the Corporation's prior written
approval pursuant to this subparagraph `D' shall continue to be subject
to this Article 7, further transfers of the shares can be made only in
accordance with this Article 7, and each transferee is required to
execute an agreement to be bound by the terms of this Article 7.
E. Definition of Formula Price. As used in this Article, "Formula Price"
shall mean the price determined pursuant to the formula adopted by the
Board of Directors of the Corporation for the purpose of determining the
fair market value of the Corporation's Stock, as such formula may be
modified from time to time by the Board of Directors.
F. Ownership Limit.
<PAGE>
No person may own more than three hundred fifty thousand (350,000)
shares of Common Stock of the Corporation, excluding the person's
beneficial interest in any class or series of stock of the Corporation
held by an employee benefit trust.
ARTICLE 8 - FISCAL YEAR
The fiscal year of the Corporation shall begin on the first day of January and
end on the 31st day of December in each year or such other period as may be
determined by the Board of Directors.
ARTICLE 9 - DIVIDENDS
The Board of Directors may from time to time declare, and the Corporation may
pay, dividends on its outstanding stock in the manner and upon the terms and
conditions provided by law.
ARTICLE 10 - SEAL
The corporate seal shall be circular and have inscribed thereon the name of the
Corporation, the state of incorporation, and the words "Corporate Seal."
ARTICLE 11 - WAIVER OF NOTICE
Any notice required under these Restated Bylaws, by statute, or the Restated
Articles of Incorporation may be waived at any time in writing, signed by the
person entitled to such notice. Stockholders and directors may take action
without meeting if subsequent consent in writing is executed by the stockholders
or directors for said action. Attendance at meetings shall be a waiver of
notice.
ARTICLE 12 - AMENDMENTS
Subject to the provisions of the Restated Articles of Incorporation and Oregon
law, these Restated Bylaws may be altered, amended or repealed or new Bylaws may
be adopted by the stockholders or by the Board of Directors, when such power is
conferred upon the Board of Directors by the Restated Articles of Incorporation,
at any regular meeting of the Board of Directors, at any annual meeting of the
stockholders or at any special meeting of the Board of Directors or stockholders
duly called for that purpose if notice of such alteration, amendment, repeal or
adoption of new Bylaws is contained in the notice of such special meeting.
<PAGE>
ARTICLE 13 - PARTIAL INVALIDITY - SAVING CLAUSE
Should any portion, section, paragraph, or part of these Restated Bylaws be held
invalid, the remainder of these Restated Bylaws shall remain valid and
enforceable.
ARTICLE 14 - INDEMNIFICATION
Section 1 - Indemnification of Officers and Directors.
To the extent permitted by Oregon law, the Corporation shall indemnify and hold
harmless each person now or hereafter serving as a director or officer of the
Corporation, or at the request of the Corporation now or hereafter serving as a
director, officer, employee, or agent of any other corporation, partnership,
joint venture, trust, or other enterprise of which the Corporation is a
stockholder, partner, trustee, owner, or creditor from and against any and all
liabilities and counsel fees, costs, and legal and other expenses (including,
without limitation, fines, penalties, judgments and amounts paid in settlement)
reasonably incurred or imposed in connection with or resulting from (i) any
claim, action, suit, or proceeding, whether civil, criminal or investigative, or
any appeal therefrom, in which the person may be or become involved or with
which the person may be threatened, as a party, or otherwise, by reason of the
person now or hereafter being or having heretofore been a director or officer of
the Corporation or a director, officer, employee or agent of such other
corporation, partnership, joint venture, trust, or other enterprise or by reason
of the person's alleged acts or omissions as a director, officer, employee, or
agent, as aforesaid, whether or not the person continues to be such at the time
such liabilities, fees, costs, or expenses shall have been incurred, and (ii)
any action, suit, or proceeding, or any appeal therefrom, brought by the person
to recover the indemnity provided for by this Article 14.
Section 2 - Exclusivity of Rights.
The right of indemnification provided for by this Article 14 shall not be deemed
exclusive of any other rights to which any director or officer may otherwise be
entitled, nor shall this Article 14 be deemed to exclude or limit any power that
the Corporation may lawfully exercise to provide any additional or other
indemnity or right for any director, officer, or other person.
Section 3 - Benefit.
The indemnification provided by this Article 14 shall inure to the benefit of
the heirs, executors, and administrators of any such director or officer.
<PAGE>
As restated by stockholder action on February 9, 1974, and as amended:
February 15, 1975
February 14, 1976
February 12, 1977
February 18, 1978
February 23, 1980
February 21, 1981
February 20, 1982
February 26, 1983
December 15, 1983
February 25, 1984
February 23, 1985
March 8, 1993
September 6, 1994
January 1, 1996
October 23, 1997
January 1, 2000
<PAGE>
Exhibit 10.1
CH2M HILL RETIREMENT AND TAX-DEFERRED
-------------------------------------
SAVINGS PLAN
------------
(As Amended and Restated Effective January 1, 2000)
<PAGE>
TABLE OF CONTENTS
Article 1. Name, Effective Date, Purpose and Construction....................1-1
1.1 Plan Name..............................................................1-1
1.2 Effective Date.........................................................1-1
1.3 Purpose and History....................................................1-1
1.4 Construction...........................................................1-1
1.5 Employment Relationship Not Affected...................................1-2
1.6 Terminated Participants Not Affected...................................1-2
Article 2. Definitions.......................................................2-1
2.1 Account................................................................2-1
2.2 Adjustment Factor......................................................2-1
2.3 Affiliated Employer....................................................2-1
2.4 Allowable Compensation.................................................2-1
2.5 Alternate Payee........................................................2-2
2.6 Beneficiary............................................................2-2
2.7 Board..................................................................2-2
2.8 Break in Service.......................................................2-2
2.9 Code...................................................................2-2
2.10 Company...............................................................2-2
2.11 Date of Hire..........................................................2-2
2.12 Deferred Retirement Date..............................................2-2
2.13 Determination Date....................................................2-3
2.14 Disability............................................................2-3
2.15 Eligible Employee.....................................................2-3
2.16 Eligible Participant..................................................2-3
2.17 Employee..............................................................2-3
2.18 Employee Account......................................................2-4
2.19 Employer..............................................................2-4
2.20 Employer Account......................................................2-4
2.21 Employer Stock........................................................2-4
2.22 Employer Stock Fund...................................................2-4
2.23 Entry Date............................................................2-4
2.24 ERISA.................................................................2-4
2.25 Fiscal Year...........................................................2-4
2.26 Forfeiture............................................................2-4
2.27 GATT..................................................................2-4
2.28 General Trust Fund....................................................2-4
2.29 Hour of Service.......................................................2-4
2.30 Inactive Participant..................................................2-4
2.31 Key Employee..........................................................2-5
2.32 Leased Employee.......................................................2-5
2.33 Matching Account......................................................2-6
i
<PAGE>
2.34 Non-Elective Account................................................. 2-6
2.35 Member Employer...................................................... 2-6
2.36 Non-Key Employee..................................................... 2-6
2.37 Normal Retirement Date............................................... 2-6
2.38 OBRA '93............................................................. 2-6
2.39 Owner................................................................ 2-6
2.40 Participant.......................................................... 2-6
2.41 Plan................................................................. 2-6
2.42 Plan Administrator................................................... 2-6
2.43 Plan Compensation.................................................... 2-6
2.44 Profit Sharing Account............................................... 2-7
2.45 Qualified Domestic Relations Order................................... 2-7
2.46 Quarter.............................................................. 2-7
2.47 REA.................................................................. 2-7
2.48 Rollover Account..................................................... 2-7
2.49 Salary Deferral Account.............................................. 2-8
2.50 SBJPA................................................................ 2-8
2.51 Service.............................................................. 2-8
2.52 Spousal Consent...................................................... 2-8
2.53 Suspended Participant................................................ 2-8
2.54 TEFRA................................................................ 2-8
2.55 Testing Compensation................................................. 2-8
2.56 Top-Heavy Plan....................................................... 2-9
2.57 TRA '86.............................................................. 2-9
2.58 Trust................................................................2-10
2.59 Trust Agreement......................................................2-10
2.60 Trust Fund...........................................................2-10
2.61 Trustees.............................................................2-10
2.62 USERRA...............................................................2-10
2.63 Valuation Date.......................................................2-10
2.64 List of Terms Defined Elsewhere......................................2-10
Article 3. Eligibility, Participation and Beneficiary Designation........... 3-1
3.1 Definitions........................................................... 3-1
3.2 Participation......................................................... 3-1
3.3 Beneficiary Designation............................................... 3-1
3.4 Change from Ineligible to Eligible Employee........................... 3-2
3.5 Former Employee Rehired............................................... 3-2
3.6 Trustees Determine Eligibility........................................ 3-2
Article 4. Contributions.................................................... 4-1
4.1 Definitions........................................................... 4-1
4.2 Employer Contributions................................................ 4-4
4.3 Timing of, Limitations on, and Return of Employer Contributions....... 4-5
ii
<PAGE>
4.4 Salary Deferral Contributions......................................... 4-6
4.5 Non-Discrimination Tests for Elective Deferrals....................... 4-7
4.6 Non-Discrimination Tests for Employer Matching Contributions..........4-10
4.7 Adjustment to Corrective Payments.....................................4-13
4.8 Overriding Limitations................................................4-13
4.9 Record Requirements...................................................4-14
4.10 Rollover Contributions...............................................4-14
Article 5. Allocation of Contributions and Forfeitures...................... 5-1
5.1 Definitions........................................................... 5-1
5.2 Allocation Methods.................................................... 5-3
5.3 Limitations on Annual Allocations..................................... 5-4
5.4 Overall Limitation for Different Types of Plans....................... 5-4
5.5 Restoration Procedures................................................ 5-5
Article 6. Vesting of Accounts.............................................. 6-1
6.1 Automatic Vesting..................................................... 6-1
6.2 Vesting Based on Service.............................................. 6-1
6.3 Years of Service for Vesting.......................................... 6-1
6.4 Forfeitures and Restorations.......................................... 6-2
6.5 No Divestment......................................................... 6-3
6.6 Amendment to Vesting.................................................. 6-3
6.7 Lost Participants..................................................... 6-3
Article 7. Participants' Accounts........................................... 7-1
7.1 Separate Accounts..................................................... 7-1
7.2 Determination of Value of Participant Accounts........................ 7-1
7.3 Statement of Accounts................................................. 7-1
7.4 Valuation of Account When Payment Due................................. 7-1
Article 8. Distributions and Withdrawals.................................... 8-1
8.1 General............................................................... 8-1
8.2 Administrative Rules.................................................. 8-1
8.3 Timing of Distributions............................................... 8-1
8.4 Treatment of Deferred Amounts......................................... 8-3
8.5 Methods of Distribution............................................... 8-3
8.6 Distribution Upon Death of Participant................................ 8-4
8.7 Distributions to Minors or Legally Incompetents....................... 8-4
8.8 Tax Information To Be Provided........................................ 8-4
8.9 In Service Withdrawals................................................ 8-5
8.10 Limitations on Distributions Upon Plan Termination................... 8-6
8.11 Direct Rollovers..................................................... 8-7
iii
<PAGE>
Article 9. Service.......................................................... 9-1
9.1 General Definitions................................................... 9-1
9.2 Crediting of Hours Subject to DOL Regulation.......................... 9-2
9.3 Elapsed Time Service Definitions...................................... 9-2
Article 10. Fiduciary Responsibility........................................10-1
10.1 Named Fiduciaries....................................................10-1
10.2 Fiduciary Standards..................................................10-1
10.3 Fiduciaries Liable for Breach of Duty................................10-1
10.4 Fiduciary May Employ Agents..........................................10-1
10.5 Authority Outlined...................................................10-1
10.6 Fiduciaries Not to Engage in Prohibited Transactions.................10-2
10.7 Duties of Plan Administrator.........................................10-3
Article 11. Administration of the Plan......................................11-1
11.1 Selection of Trustees................................................11-1
11.2 Trustees' Operating Rules............................................11-1
11.3 Trustees' Administrative Authority...................................11-1
11.5 Trustees May Retain Advisors.........................................11-1
11.6 Claims Procedure.....................................................11-1
Article 12. Investments.....................................................12-1
12.1 Investment Authority.................................................12-1
12.2 Use of Mutual or Commingled Funds Permitted..........................12-1
12.3 Trustees May Hold Necessary Cash.....................................12-1
12.4 Appointment of Investment Manager....................................12-1
12.5 Loans to Participants or Beneficiaries...............................12-2
12.6 Separate Investment Funds............................................12-4
Article 13. Trustee.........................................................13-1
13.1 Trustees' Duties With Respect to Trust Assets........................13-1
13.2 Indicia of Ownership Must Be in the United States....................13-1
13.3 Permissible Trustees' Actions........................................13-1
13.4 Voting of Employer Stock.............................................13-1
13.5 Trustees' Fees for Services and Advisors Retained....................13-2
13.5 Annual Accounting and Asset Valuation................................13-2
13.6 Trustee Removal or Resignation.......................................13-2
13.7 Approval of Trustees' Accounting.....................................13-2
13.8 Trust Not Terminated Upon Trustees' Removal or Resignation...........13-2
13.9 Trustees May Consult With Legal Counsel..............................13-3
13.10 Trustees Not Required to Verify Identification or Addresses.........13-3
13.11 Individual Trustee Rules............................................13-3
iv
<PAGE>
13.12 Indemnification of Trustees and Insurance...........................13-3
13.13 Income Tax Withholding..............................................13-4
Article 14. Amendment, Termination and Merger...............................14-1
14.1 Trust Is Irrevocable.................................................14-1
14.2 Employer May Amend Trust Agreement...................................14-1
14.3 Employer May Terminate Plan or Discontinue Matching and Profit
Sharing Contributions................................................14-1
14.4 Timing of Plan Termination...........................................14-1
14.5 Action Required Upon Plan Termination................................14-2
14.6 Non-Reversion of Assets..............................................14-2
14.7 Merger or Consolidation Cannot Reduce Benefits.......................14-2
14.8 Employer Contributions Conditioned Upon Initial Plan Approval........14-2
Article 15. Assignments.....................................................15-1
15.1 No Assignment........................................................15-1
15.2 Qualified Domestic Relations Order Permitted.........................15-1
Article 16. Adoption of the Plan by Affiliated Employers....................16-1
16.1 Purpose..............................................................16-1
16.2 Conditions of Subscription Agreement.................................16-1
16.3 Participation of Affiliated Employers................................16-1
16.4 Termination of Member Employer's Participation.......................16-3
Article 17. Miscellaneous...................................................17-1
17.1 Special Rule Relating to Veterans Reemployment Rights Under
USERRA...............................................................17-1
v
<PAGE>
CH2M HILL RETIREMENT AND TAX-DEFERRED SAVINGS PLAN
(As Amended and Restated Effective January 1, 2000)
THIS PLAN AND TRUST AGREEMENT is made and entered into by and between CH2M
HILL COMPANIES, LTD. (Employer) and FRED K. BERRY, SAMUEL H. IAPALUCCI, SHARON
SCHLECHTER, CLIFF THOMPSON, and STAN VINSON (Trustees).
Article 1.
Name, Effective Date, Purpose and Construction
1.1 Plan Name. The Plan set forth in this Agreement shall be designated
--- ----------
as the CH2M HILL RETIREMENT AND TAX-DEFERRED SAVINGS PLAN.
1.2 Effective Date.
--- ---------------
(a) In General. The Effective Date of this amended and restated
--- -----------
Plan and Trust Agreement shall be January 1, 2000.
(b) Specific Articles. Notwithstanding the above, certain Articles
--- ------------------
within this Plan and Trust are effective as of the dates specified within those
Articles. The Articles providing for Employer Matching and Profit Sharing
Contributions are effective January 1, 1994, but only with respect to Member
Employers who have specifically adopted them.
1.3 Purpose and History.
--- --------------------
(a) Purpose. The Plan and Trust are intended to qualify as a
--- --------
Profit Sharing 401(k) Plan under Code Sections 401(a) and 501(a) and are created
and maintained for the exclusive benefit of Eligible Employees of the Employer
and their Beneficiaries to enable them to share in Employer profits, to provide
Eligible Employees with a means to accumulate retirement savings, to provide
retirement funds, and to provide benefits in the event of the death or
Disability of the Employee.
(b) History. The original Plan and Trust Agreement was first
--- -------
effective July 1, 1985, and was originally designated as the CH2M Hill Tax-
Deferred Savings Plan. This Plan and Trust Agreement is an amendment and
restatement of the Plan and Trust Agreement effective January 1, 2000.
(c) Purposes of Restatement. The principal purposes of this
--- ------------------------
amendment and restatement are to recognize the limited trading market for
Employer Stock and to amend the Plan and Trust Agreement to comply with SBJPA,
GATT and USERRA.
1.4 Construction. The following miscellaneous provisions shall apply
--- -------------
in the construction of this Trust Agreement:
1-1
<PAGE>
(a) State Jurisdiction. All matters respecting the validity, effect,
--- -------------------
interpretation and administration of this Plan shall be determined in accordance
with the laws of the State of Colorado except where preempted by ERISA or other
federal statutes.
(b) Gender. Wherever appropriate, words used in the singular may
--- -------
include the plural or the plural may be read as the singular, the masculine may
include the feminine, and the neuter may include both the masculine and the
feminine.
(c) Application of ERISA and Code References. All references to
--- -----------------------------------------
sections of ERISA or the Code, or any regulations or rulings thereunder, shall
be deemed to refer to such sections as they may subsequently be modified,
amended, replaced or amplified by any federal statutes, regulations or rulings
of similar application and import enacted by the Government of the United States
or any duly authorized agency of the Government.
(d) Enforceable Provisions Remain Effective. If any provision of
--- ----------------------------------------
this Plan and Trust shall be held by a court of competent jurisdiction to be
invalid or unenforceable, the remaining provisions of the Plan shall continue to
be fully effective.
(e) Headings. Headings are inserted for reference only and
--- ---------
constitute no part of the construction of this Agreement.
1.5 Employment Relationship Not Affected. Nothing in the Plan or Trust
--- -------------------------------------
shall be deemed a contract between the Employer and any Employee, nor shall the
rights or obligations of the Employer or any Employee to continue or terminate
employment at any time be affected hereby.
1.6 Terminated Participants Not Affected. Notwithstanding anything to
--- -------------------------------------
the contrary herein, the rights and remedies, if any, of any person hereunder
shall be determined as of the date his participation ceased or the date he
ceased to be an Eligible Employee, whichever occurs first, and shall be based on
the terms and conditions of the Plan in effect on such date, without regard to
any changes made by Articles which have specific effective dates subsequent to
such date.
* * * * End of Article 1 * * * *
1-2
<PAGE>
Article 2.
Definitions
Definitions. Terms which are used only in a single Article (beginning with
------------
Article 3) are generally defined at the beginning of that Article. Article 2.64
lists the terms so defined. The following words and phrases are used throughout
this Trust Agreement and are defined below:
2.1 "Account" means the aggregate of all records maintained by the
---------
Trustees for purposes of determining a Participant's or Beneficiary's interest
in the Trust Fund and shall include the Employer Account and Employee Account,
as adjusted by such other amounts properly credited or debited to such Account.
Each subaccount is defined alphabetically in Article 2.
2.2 "Adjustment Factor" means the cost of living factor prescribed by the
-------------------
Secretary of the Treasury under Code Section 415(d) for years beginning after
December 31, 1987, as applied to such items and in such manner as the Secretary
shall provide. For purposes of the OBRA '93 annual compensation limit under
Code Section 401(a)(17), the Adjustment Factor shall be applied as provided in
Code Section 401(a)(17)(B) for calendar years after 1994.
2.3 "Affiliated Employer" means any corporation which is a member of a
---------------------
controlled group of corporations (as defined in Code Section 414(b)) which
includes the Employer, any trade or business (whether or not incorporated) which
is under common control (as defined in Code Section 414(c)) with the Employer,
any organization (whether or not incorporated) which is a member of an
affiliated service group (as defined in Code Section 414(m)) which includes the
Employer, and any other entity required to be aggregated with the Employer
pursuant to regulations under Code Section 414(o).
2.4 "Allowable Compensation" for purposes of determining the Top-Heavy
------------------------
minimum contributions, and for purposes of determining the limitations on
allocations pursuant to Article 5.3, means the total of all wages, salaries,
fees for professional services and other amounts paid by the Employer or an
Affiliated Employer during a Limitation Year to a Participant for services
actually rendered in the course of employment including (but not limited to)
bonuses, overtime, commissions and incentive compensation, but excluding
severance pay and amounts which are contributed to a retirement plan, deferred
compensation plan or other plan and which are not included as taxable income for
such year, or amounts which are not deemed to be income for current services
rendered such as amounts realized from the sale, exercise or exchange of
Employer Stock or stock options. Allowable Compensation shall not include
amounts which a Participant elected to have the Employer contribute on his
behalf for the Fiscal Year as a Salary Deferral Contribution under Article 4.4.
2-1
<PAGE>
Notwithstanding the foregoing, amounts earned in the Limitation Year but
paid during the first few weeks of the next year because of the timing of pay
periods and pay days may be included on a uniform and consistent basis in the
Allowable Compensation of all similarly situated Participants for the Limitation
Year. In addition, for Limitation Years beginning before December 31, 1991, the
requirement that the amounts earned in a Limitation Year be paid in the first
few weeks of the next year shall not apply.
Notwithstanding the foregoing, the amount determined above shall be reduced
by any amounts paid or reimbursed by the Employer and/or Affiliated Employer for
moving expenses incurred by the Participant, but only to the extent that it is
reasonable to believe that such expenses are deductible by the Participant under
Code Section 217.
Notwithstanding the foregoing, for Fiscal Years beginning on or after
January 1, 1998, Allowable Compensation shall include any elective deferral (as
defined in Section 402(g)(3) of the Code) and any amount which is contributed or
deferred by the Employer at the election of the Employee which is not includible
in the gross income of the Employee by reason of Section 125 or 457 of the Code.
2.5 "Alternate Payee" means any spouse, former spouse, child or other
-----------------
dependent of a Participant recognized by a Qualified Domestic Relations Order as
having a right to receive all, or a portion of, a Participant's benefits under
the Plan.
2.6 "Beneficiary" means any person designated by a Participant to receive
-------------
benefits upon the death of such Participant, subject to the provisions of
Article 3.3.
2.7 "Board" means the Board of Directors of the Company.
-------
2.8 "Break in Service" means for purposes of Article 6, a Fiscal Year in
------------------
which an Employee of the Employer and an Affiliated Employer is credited with
500 or fewer Hours of Service.
2.9 "Code" means the Internal Revenue Code of 1986, as amended (and
------
regulations issued thereunder).
2.10 "Company" means CH2M HILL COMPANIES, LTD.
---------
2.11 "Date of Hire" means the date on which an Employee first performs an
--------------
of Service for the Employer or any Member Employer. For purposes of applying
the rules in Article 3.1 and Article 3.2 to determine an Eligible Employee's
Entry Date, the Date of Hire for any employee hired during the first five days
of January shall be deemed to be January 1.
2.12 "Deferred Retirement Date" means the date of actual retirement from
--------------------------
the Employer by a Participant who remains in the employ of the Employer after
attaining his Normal Retirement Date.
2-2
<PAGE>
2.13 "Determination Date" means, with respect to any Fiscal Year, the
--------------------
last day of the preceding Fiscal Year.
2.14 "Disability" means the permanent incapacity of a Participant, by
------------
reason of physical or mental illness, to perform his usual duties for the
Employer, resulting in termination of his service with the Employer. Disability
shall be determined by the Trustees in a uniform and nondiscriminatory manner
after consideration of such evidence as it may require, which shall include a
report of such physician or physicians as it may designate.
2.15 "Eligible Employee" has the meaning set forth in Article 3.1.
-------------------
2.16 "Eligible Participant" means:
----------------------
(a) For purposes of Employer Profit Sharing Contributions under
Article 4.2(a), (i) an Eligible Employee who completed at least 1,000 Hours of
Service in the Fiscal Year and who is an Employee and a Participant on the last
day of the Fiscal Year, or (ii) a Participant who was an Eligible Employee who
terminated employment during the Fiscal Year due to death or Disability, or
after reaching his Normal Retirement Date or after attaining age 55 and
completing five Years of Service; or (iii) a Participant who terminated
employment and was rehired during the Fiscal Year and who remained employed
until the end of the Fiscal Year at an annual rate of 1,000 Hours of Service or
more.
(b) For purposes of Employer Matching Contributions under Article
4.2(c), a Participant who was an Eligible Employee on the last day of the
Quarter, or a Participant who was an Eligible Employee who terminated employment
during the Quarter due to death or Disability, or after reaching his Normal
Retirement Date.
(c) In the event the Plan does not otherwise meet the coverage
requirements of Code Section 410(b) for a Fiscal Year, and to the extent the
Trustees determine it necessary to meet such requirements, each other Eligible
Employee who:
(i) Is a Participant at any time during the year, and/or
(ii) Completed a number of Hours of Service (as determined by the
Trustees) during the Fiscal Year, which is less than 1,000.
(d) Suspended Participants, but only for purposes of Article
4.1(a) and (b). (e) Eligible Employees who were Participants at any time during
the Fiscal Year but did not meet the requirements of (a) or (b) above but only
for purposes of Article 4.1(a) and/or 4.1(b).
2.17 "Employee" means any person in the service of the Employer including
----------
officers, but excluding directors who are not in the Employer's employ in any
other
2-3
<PAGE>
capacity and Leased Employees. Sub-categories of "Employee" are defined
alphabetically in Article 2.
2.18 "Employee Account" means that portion of an Account attributable to a
-----------------
Participant's Salary Deferral Account and Rollover Account.
2.19 "Employer" means the Company, and such of its successors or assigns
----------
as may expressly adopt this Plan and Trust Agreement and agree in writing to
continue this Plan and Trust.
2.20 "Employer Account" means that portion of an Account attributable to
------------------
Employer contributions and Forfeitures. A Participant's Employer Account shall
include such Participant's Matching Account, Non-Elective Account and Profit
Sharing Account.
2.21 "Employer Stock" means shares of any classes of preferred or common,
---------------
voting or nonvoting, stock issued by the Employer.
2.22 "Employer Stock Fund" means that portion of the Trust Fund
---------------------
established by the Trustees for the investment of Employer Stock pursuant to
Section 12.6.
2.23 "Entry Date" means, for purposes of Profit Sharing contributions,
------------
the first day of any month.
2.24 "ERISA" means the Employee Retirement Income Security Act of 1974 and
-------
regulations issued thereunder.
2.25 "Fiscal Year" means the accounting year of the Plan and Trust,
-------------
which is the 12-consecutive month period ending December 31.
2.26 "Forfeiture" is described in Article 6.4(a).
------------
2.27 "GATT" means the Uruguay Round Agreements Act, implementing
------
Agreements under the General Agreement on Tariffs and Trade.
2.28 "General Trust Fund" means that portion of the Trust Fund other than
--------------------
property and income held as or for segregated Accounts or under separate
investment funds under the provisions of this Trust Agreement.
2.29 "Hour of Service" has the meaning set forth in Article 9.1(b).
-----------------
2.30 "Inactive Participant" means a Participant who remains an Employee,
----------------------
but who ceases to be an Eligible Employee because of a change in employment
status. Accounts of Inactive Participants shall share in allocations of
contributions and Forfeitures to the extent provided in Article 5, and such
Accounts shall continue to be adjusted by other amounts properly credited or
debited to such Accounts pursuant to
2-4
<PAGE>
Article 7. Inactive Participants shall not be permitted to
have Salary Deferral Contributions made on their behalf.
2.31 "Key Employee" means, with respect to a Fiscal Year, any Employee or
--------------
former Employee (including any deceased Employee) who at any time during the
"testing period," consisting of the Fiscal Year containing the Determination
Date and the four preceding Fiscal Years, is or was:
(a) Officer. An officer of the Employer, or an Employee with the
--- --------
authority of an officer, with Testing Compensation of more than 50% of the
applicable dollar limit under Code Section 415(b)(1)(A) for the applicable
Fiscal Year. However, no more than 50 Employees shall be treated as officers. In
addition, such Employees who meet the requirements of this paragraph and who had
the largest annual Testing Compensation from the Employer in any Fiscal Year
during the "testing period" shall first be counted as officers, without regard
to whether they are Key Employees for any other reason; or
(b) Owner.
--- ------
(i) A 5% owner; or
(ii) A 1% owner with annual Testing Compensation from the
Employer for the applicable Fiscal Year of more than $150,000;
(iii) A 1/2% owner who (1) is one of the 10 Employees who have
the largest ownership interest in the Employer, (2) has annual Testing
Compensation from the Employer which is greater than the dollar limitation under
Code Section 415(c)(1)(A) for the applicable Fiscal Year, and (3) does not meet
the criteria in (i) or (ii). For purposes of this (iii), if two Employees have
the same ownership interest in the Employer during the "testing period," then
the Employee with the greater annual Testing Compensation from the Employer for
the Fiscal Year during which the ownership interest existed shall be considered
to have a larger ownership interest in the Employer.
(c) Beneficiary. A Beneficiary of a deceased Key Employee shall be
--- ------------
considered to be a Key Employee, and a Beneficiary of a deceased Non-Key
Employee shall be considered a Non-Key Employee. Notwithstanding the above, the
Trustees shall be guided by the Code in determining Key Employees for any Fiscal
Year and shall maintain records adequate to determine Key Employees for any
Fiscal Year.
2.32 "Leased Employee," for Fiscal Years beginning before January 1, 1997,
------------------
means any individual who would not otherwise be considered an Employee but who
has provided services to the Employer of a type historically performed by
employees in the Employer's field of business, pursuant to an agreement between
the Employer and any other entity, on a substantially full-time basis for a
period of at least one year.
For Fiscal Years beginning on or after January 1, 1997, the term "Leased
Employee" means any person (other than an employee of the recipient) who
pursuant to
2-5
<PAGE>
an agreement between the recipient and any other person has performed services
for the recipient (or for the recipient and related persons determined in
accordance with Section 414(n)(6) of the Code) on a substantially full time
basis for a period of at least one (1) year and such services are performed
under the primary direction or control of the recipient.
However, Leased Employees will not be considered Employees if they
constitute less than 20% of the Employer's Non-Highly Compensated Employees as
defined in Code section 414(q) and if they are covered by a plan described in
Code Section 414(n)(5).
2.33 "Matching Account" means that portion of an Account attributable to
------------------
Employer Matching Contributions and attributable Forfeitures.
2.34 "Non-Elective Account" means that portion of an Account attributable
----------------------
to the Employer's Non-Elective contributions as provided in Article 4.5.
2.35 "Member Employer" shall mean the Employer and any Affiliated Employer
-----------------
who adopts this Plan and Trust Agreement.
2.36 "Non-Key Employee" means any Employee who is not a Key Employee,
------------------
including Employees who are former Key Employees.
2.37 "Normal Retirement Date" means the date of a Participant's 65th
------------------------
birthday.
2.38 "OBRA '93" means the Omnibus Budget Reconciliation Act of 1993.
----------
2.39 "Owner" means any person who owns (within the meaning of Code Sections
-------
318 and 416(i)(1)(B)), or has owned within the four Fiscal Years prior to the
Fiscal Year under consideration, a portion of the outstanding stock or voting
power of the Employer. The ownership percentage of a "5%" Owner means greater
than a 5% interest, that of a "1%" Owner means greater than a 1% interest and
that of a "1/2%" Owner means greater than a 1/2% interest.
2.40 "Participant" means any Employee or former Employee who has entered
-------------
the Plan in accordance with Article 3, and whose Account, if any, hereunder has
not subsequently been liquidated.
2.41 "Plan" means the Plan created by this Agreement.
------
2.42 "Plan Administrator" means the Trustees.
--------------------
2.43 "Plan Compensation" for purposes of Salary Deferral Contributions
-------------------
for any Fiscal Year means all amounts paid by the Employer to an Eligible
Employee while a Participant with respect to services rendered during such
Fiscal Year including all amounts contributed by the Employer pursuant to salary
reduction agreement which are not includible in the Employee's gross income
under Code Section 125, 402(a)(8),
2-6
<PAGE>
402(b) or 403(b). For purposes of determining the amount of Matching
Contributions to be allocated to an Employee under Article 4.2(c), an Employee's
Plan Compensation for any Quarter shall equal his basic hourly rate of pay on
the last day of the Quarter times the number of regular work hours for such
Quarter. For purposes of Profit Sharing contributions, an Employee's Plan
Compensation for any Fiscal Year shall equal his basic hourly rate of pay on the
last day of the year, times the lesser of:
(i) the number of regular work hours for such year after
his Entry Date, or
(ii) the number of Hours of Service for which he was paid
during such year while he was a Participant and an Eligible Employee.
Periods of disability during which the Participant is eligible to receive
Disability benefits under a plan maintained by the Employer or Affiliated
Employer, or would have been eligible if covered by such plan, and periods of
unpaid leave of absence shall be excluded in determining the multiplier in (i)
and (ii) above.
Notwithstanding the above, Plan Compensation shall not exceed $200,000,
multiplied by the Adjustment Factor. For Fiscal Years beginning on or after
January 1, 1994, Plan Compensation shall not exceed OBRA '93 annual compensation
limit of $150,000, multiplied by the Adjustment Factor.
The total of the Plan Compensation received by (1) a Highly Compensated
Employee (as defined in Article 4.1) who is one of the 10 most Highly
Compensated Employees, and/or a 5% Owner, (2) his spouse, and (3) his lineal
descendants who have not attained the age of 19 by the end of the Fiscal Year,
shall not exceed $200,000 ($150,000 for Fiscal Years beginning on or after
January 1, 1994) multiplied by the Adjustment Factor. For Fiscal Years
beginning on or after January 1, 1997, the limitations of this paragraph shall
be applied without regard to sections (2) and (3).
2.44 "Profit Sharing Account" means that portion of an Account resulting
------------------------
from Employer Profit Sharing Contributions and attributable Forfeitures.
2.45 "Qualified Domestic Relations Order" ("QDRO") has the meaning set
--------------------------------------------
forth in Code Section 414(p).
2.46 "Quarter" means a calendar year quarter ending on March 31, June 30,
---------
September 30 or December 31.
2.47 "REA" means the Retirement Equity Act of 1984.
-----
2.48 "Rollover Account" means that portion of an Account attributable
------------------
Employee's rollover contributions and to the direct transfer of benefits to this
Plan from another qualified plan on an Employee's behalf.
2-7
<PAGE>
2.49 "Salary Deferral Account" means that portion of an Account
-------------------------
attributable to Salary Deferral Contributions.
2.50 "SBJPA" means the Small Business Job Protection Act of 1996.
-------
2.51 "Service" has the meaning set forth in Article 9.
---------
2.52 "Spousal Consent" means the revocable written consent of the
-----------------
Participant's spouse to an action taken by the Participant hereunder which
requires such consent under the terms of the Plan; provided that:
(i) Such consent shall acknowledge the Beneficiary designated
by the Participant and the effect of such consent;
(ii) Any change in the designated Beneficiary, other than to
make the spouse the Beneficiary of 100% of the Participant's vested Account,
shall require a new spousal consent;
(iii) Such consent shall be effective only with respect to that
spouse;
(iv) Such consent shall be witnessed by a notary public; and
(v) Such written consent shall not be required if it is
established to the satisfaction of a Plan representative that such consent
cannot be obtained because (1) there is no spouse or, (2) the spouse cannot be
located, or (3) such other circumstances exist as may be prescribed by
applicable regulations.
2.53 "Suspended Participant" means a Participant who has been suspended
-----------------------
from deferring amounts to his Salary Deferral Account because he made a hardship
withdrawal under the provisions of Article 8.
2.54 "TEFRA" means the Tax Equity and Fiscal Responsibility Act of 1982.
-------
2.55 "Testing Compensation" for purposes of determining (1) whether an
----------------------
Employee is a Key Employee, (2) whether an Employee is a Highly Compensated
Employee, and (3) each Participant's Contribution Percentage and Deferral
Percentage pursuant to Article 4.1(c) and 4.1(d) means Allowable Compensation,
except that:
(a) Amounts contributed by the Employer pursuant to a salary
reduction agreement which are not includible in the Employee's income under Code
Section 125, 402(e)(3), 402(h) or 403(b) shall be included.
(b) Amounts attributable to periods during which an individual was
not eligible to be a Participant shall be excluded for purposes of determining
his Contribution Percentage under Article 4.1(c) and Article 4.1(d).
2-8
<PAGE>
Testing Compensation shall not exceed $200,000, multiplied by the
Adjustment Factor. For Fiscal Years beginning on or after January 1, 1994,
Testing Compensation shall not exceed the OBRA '93 limit of $150,000, multiplied
by the Adjustment Factor.
The total of the Testing Compensation received by (1) a Highly Compensated
Employee in a group consisting of the 10 most Highly Compensated Employees
and/or a 5% Owner and (2) his spouse, and (3) his lineal descendants who have
not attained the age of 19 by the end of the Fiscal Year, shall not exceed
$200,000 ($150,000 for Fiscal Years beginning on or after January 1, 1994),
multiplied by the Adjustment Factor. For Fiscal Years beginning on or after
January 1, 1997, the limitations of this paragraph shall be applied without
regard to sections (2) and (3).
2.56 "Top-Heavy Plan " means the Plan during each Fiscal Year in which
the aggregate value of the Accounts of Key Employees exceeds 60% of the
aggregate value of all Accounts under the Plan as of the Determination Date for
such Fiscal Year. For purposes of determining the value of Employees' Accounts
in the Plan, the following shall be excluded: (1) rollover contributions from a
non-related employer; (2) the Accounts of Participants who have not performed
any services for the Employer within the five year period ending on the
Determination Date; and (3) the Account of any individual who was a Key Employee
with respect to the Plan for any prior Fiscal Year but is not a Key Employee
with respect to the Plan for the applicable Fiscal Year. For purposes of
determining the aggregate value of Accounts and/or accrued benefits under this
Article, distributions made within a 5 year period ending on the Determination
Date shall be included to the extent required by applicable law and regulation.
(a) Required Aggregation to Determine Top-Heaviness. If a Key
--- ------------------------------------------------
Employee is a Participant in this Plan for any Fiscal Year and the Employer
maintains or has maintained any other plans (including terminated plans), (1) in
which a Key Employee is or was a participant within the 5 year period ending on
the Determination Date, or (2) which must be combined with this Plan in order to
meet the requirements of Code Sections 401(a)(4) or 410(b) for any Fiscal Year,
then this Plan's top-heaviness shall be determined for such Fiscal Year by
aggregating the Accounts and/or present value of accrued benefits of
participants in this Plan and all other such plans.
(b) Permissive Aggregation to Determine Top-Heaviness. If the
--- --------------------------------------------------
Employer maintains or has maintained any plans (including terminated plans)
other than one described in (a) above, the Trustees may aggregate the accounts
and/or present value of accrued benefits of participants in any such plan with
those of this Plan to determine whether this Plan is a Top-Heavy Plan for any
Fiscal Year, provided that the requirements of Code Sections 401(a)(4) and
410(b) would continue to be met by treating this Plan, any plan that must be
aggregated with the Plan under (a) above and any other plan referred to in this
sentence as one unit. In determining top-heaviness and the aggregate value of
Accounts and/or accrued benefits under this Article, the Trustees shall be
guided by the provisions of the Code, including but not limited to Code Section
416(g)(3)(B).
2-9
<PAGE>
2.57 "TRA '86" means the Tax Reform Act of 1986.
2.58 "Trust" means the legal entity created by this Trust Agreement as
part of the Plan.
2.59 "Trust Agreement" means this Agreement.
2.60 "Trust Fund" means all property and income held by the Trustees
under the Trust Agreement.
2.61 "Trustees" means FRED K. BERRY, SAMUEL H. IAPALUCCI, SHARON
SCHLECHTER, CLIFF THOMPSON, and STAN VINSON, and any duly appointed successor,
as provided in Article 14.
2.62 "USERRA" means the Uniformed Services Employment and Reemployment
Rights Act of 1994.
2.63 "Valuation Date" means the last day of the Fiscal Year and such
other date(s) as may be designated by the Trustees as provided in Article 7.
2.64 List of Terms Defined Elsewhere: Article
-------------------------------- -------
(a) "Annual Addition" 5.1
(b) "Annual Amount" 5.1
(c) "Annual Benefit" 5.1
(d) "Average Contribution Percentage" 4.1
(e) "Average Deferral Percentage" 4.1
(f) "Contribution Percentage" 4.1
(g) "Deferral Percentage" 4.1
(h) "Defined Benefit Fraction" 5.1
(i) "Defined Contribution Fraction" 5.1
(j) "Dollar Limitation" 5.1
(k) "Eligibility Computation Period" 3.1
(l) "Eligible Employee" 3.1
(m) "Employer Matching Contributions" 4.1
(n) "Employer Profit Sharing Contributions 4.1
(o) "Excess Contribution" 4.1
(p) "Excess Deferrals" 4.1
(q) "Excess Matching Contributions" 4.1
(r) "Family Group" 4.1
(s) "Highly Compensated Employee" 4.1
(t) "Limitation Account" 5.1
(u) "Limitation Year" 5.1
2-10
<PAGE>
2.64 List of Terms Defined Elsewhere (continued) Article
------------------------------------------- -------
(v) "Non-Highly Compensated Employee" 4.1
(w) "Percentage Limitation" 5.1
(x) "Projected Annual Benefits" 5.1
(y) "Salary Deferral Contributions" 4.1
(z) "Social Security Normal Retirement Age" 5.1
(aa) "Super Top-Heavy" 5.1
(bb) "Transition Amount" 5.1
* * * * End of Article 2 * * * *
2-11
<PAGE>
Article 3.
Eligibility, Participation and Beneficiary Designation
3.1 Definitions.
------------
(a) "Eligible Employee" means any Employee, except an Employee who is
-------------------
classified by the Employer as a temporary employee, or whose compensation and
conditions of employment are established by the terms of a collective bargaining
agreement to which the Employer is a party and which does not specifically
provide for coverage of such Employee under the Plan.
(b) "Eligibility Computation Period" means, for purposes of Profit
--------------------------------
Sharing contributions, the 12 consecutive month period beginning with the
Employee's Date of Hire, and each Fiscal Year starting after the Employee's Date
of Hire.
3.2 Participation.
--------------
(a) Continuing Plan Participation. Each individual who was an
------------------------------
Eligible Employee and a Participant in the Plan immediately preceding the
effective date of this amendment and restatement shall continue to be a
Participant on such effective date.
(b) Plan Entry. Each other Eligible Employee shall become a
-----------
Participant in the Plan as follows:
(i) For purposes of Salary Deferral Contributions and
Matching Contributions:
For Employees of Industrial Design Corporation and Paragon
Structural Design, Inc., the first day of the first full
pay period coinciding with or next following the Employee's
Date of Hire;
For Employees of Operations Management International, Inc.,
the first day of the calendar month next following the
Employee's Date of Hire; and
For all other Employees, the Employee's Date of Hire, and
(ii) For purposes of Profit Sharing contributions, on the Entry
Date coinciding with or next following the last day of the Eligibility
Computation Period in which he completes 1,000 Hours of Service.
3.3 Beneficiary Designation.
------------------------
(a) Designation Procedure. Each Eligible Employee, upon becoming a
----------------------
Participant, shall designate a Beneficiary or Beneficiaries to receive benefits
under the
3-1
<PAGE>
Plan after his death. A Participant may change his Beneficiary designation at
any time. Each Beneficiary designation shall be in a form prescribed by the
Trustees and will be effective only when filed with the Trustees during the
Participant's lifetime. Each Beneficiary designation filed with the Trustees
will cancel all previously filed Beneficiary designations.
(b) Spousal Consent. In the event that a married Participant wishes
----------------
to designate a Beneficiary other than his spouse for any portion of his vested
Account, such designation shall include Spousal Consent.
(c) Lack of Designation. In the absence of a valid designation by
--------------------
an unmarried Participant or if no designated Beneficiary survives an unmarried
Participant, his interest shall be distributed to his estate. In the absence of
a valid designation by a married Participant or if no designated Beneficiary
survives a married Participant, his interest shall be distributed to his
surviving spouse, or if there is no surviving spouse, then to his estate.
3.4 Change from Ineligible to Eligible Employee. An Employee who is
--------------------------------------------
excluded under Article 3.1 for any period shall be eligible to participate on
the first date he is no longer excluded, provided that the requirements of
Article 3.2 have been satisfied, but not earlier than the Entry Date on which he
would have entered the Plan had he not been excluded under Article 3.1.
3.5 Former Employee Rehired. A former Employee who had completed the
------------------------
eligibility requirements of Article 3.2 with the Employer and who is reemployed
by the Employer shall become a Participant as of the date of reemployment as an
Eligible Employee, but not earlier than the Entry Date on which he would have
entered the Plan had his employment not terminated.
3.6 Trustees Determine Eligibility. Compliance with the eligibility
-------------------------------
requirements shall be determined by the Trustees in their capacity as Plan
Administrator.
* * * * End of Article 3 * * * *
3-2
<PAGE>
Article 4.
Contributions
4.1 Definitions.
------------
(a) "Average Contribution Percentage" ("ACP") means the average of
-----------------------------------------
the Contribution Percentages of a group of Eligible Participants.
(b) "Average Deferral Percentage" ("ADP") means the average of the
-------------------------------------
Deferral Percentages of a group of Eligible Participants.
(c) "Contribution Percentage" means the ratio (expressed as a
-------------------------
percentage) of (i) the Matching Contributions allocated to a Participant's
Accounts for such Fiscal Year, to (ii) his Testing Compensation for such Fiscal
Year. The determination and treatment of the Contribution Percentage of any
Participant shall satisfy such other requirements as may be prescribed by the
Secretary of the Treasury. Effective for Fiscal Years beginning on or after
January, 1, 1997 the Employer may elect whether to use data from the current
Fiscal Year or data from the previous Fiscal Year in determining the
Contribution Percentage of Non-HCEs, provided that if such an election is made,
it may not be changed except as provided by the Secretary of the Treasury,
except that if current year data was used to determine the Contribution
Percentage of Non-HCEs for the Fiscal Year beginning January 1, 1997, the
Employer may use prior year data to determine the Contribution Percentage of
Non-HCEs for the Fiscal Year beginning January 1, 1998 without obtaining
approval from the Secretary.
(d) "Deferral Percentage" means the ratio (expressed as a percentage)
---------------------
of (i) the contributions made under the Plan to a Participant's Salary Deferral
and Non-Elective Accounts for such Fiscal Year, to (ii) such Participant's
Testing Compensation for such Fiscal Year. The determination and treatment of
the Deferral Percentage of any Participant shall also satisfy such other
requirements as may be prescribed by the Secretary of the Treasury. Effective
for Fiscal Years beginning on or after January, 1, 1997, the Employer may elect
whether to use data from the current Fiscal Year or data from the previous
Fiscal Year in determining the Deferral Percentage of Non-HCEs, provided that if
such an election is made, it may not be changed except as provided by the
Secretary of the Treasury, except that if current year data was used to
determine the Deferral Percentage of Non-HCEs for the Fiscal Year beginning
January 1, 1997, the Employer may use prior year data to determine the Deferral
Percentage of Non-HCEs for the Fiscal Year beginning January 1, 1998 without
obtaining approval from the Secretary.
(e) "Employer Matching Contributions" means contributions made by
---------------------------------
the Employer to the Plan pursuant to Article 4.2(c).
(f) "Employer Profit Sharing Contributions" means contributions made
---------------------------------------
by the Employer to the Plan pursuant to Article 4.2(a).
4-1
<PAGE>
(g) "Excess Contributions" means Salary Deferral Contributions that
----------------------
exceed those permitted by the non-discrimination tests in Article 4.5.
(h) "Excess Deferrals" means Salary Deferral Contributions for a
------------------
calendar year that exceed the dollar limit provided under Article 4.4(a). If
Salary Deferral Contributions are made on behalf of a Participant under two or
more plans during a calendar year and the sum of these amounts exceed the dollar
limit in Article 4.4(a), then the Trustees shall establish a claims procedure so
that the Participant can designate the amounts and the plans from which such
Excess Deferrals shall be returned. The Participant's claim shall be in writing;
shall be submitted to the Plan Administrator not later than the following April
15th; shall specify the amount of the Participant's Excess Deferrals for the
preceding calendar year; and shall be accompanied by the Participant's written
statement that if such Excess Deferrals are not distributed, the amounts
deferred under this Plan and other plans or arrangements described in Code
Sections 401(k), 408(k), or 403(b), will exceed the limit imposed on the
Participant by Code Section 402(g) for the year in which the deferral occurred.
(i) "Excess Matching Contributions" means Employer Matching
-------------------------------
Contributions that exceed those permitted by the non-discrimination tests in
Article 4.6.
(j) "Family Group" means a group of two or more Participants which
--------------
includes a 5% Owner and/or one of the 10 most Highly Compensated Employees, and
one or more of his family members. For this purpose, a Participant's family
members include his spouse, his lineal ascendant and descendants and spouses of
such lineal ascendant and descendants.
(k) "Highly Compensated Employee ("HCE")" for Fiscal Years before
-------------------------------------
January 1, 1997 includes:
(i) A 5% Owner in the current or the preceding Fiscal Year;
(ii) An Employee whose Testing Compensation exceeds $75,000,
multiplied by the Adjustment Factor in the current or the preceding Fiscal Year;
(iii) An Employee (A) whose Testing Compensation exceeds $50,000,
multiplied by the Adjustment Factor in the current Fiscal Year, and (B) who is
currently a member of the Top Paid Group, or (C) who met both of the
requirements of (A) and (B) in the preceding Fiscal Year;
(iv) An officer described in Article 2.31(a). If no officer
meets the compensation requirement of Article 2.31(a) and this Article 4.1(k),
then the highest paid officer shall be treated as a Highly Compensated Employee
regardless of his Testing Compensation.
Notwithstanding the foregoing, an Employee who is not a 5% Owner in the
current or the preceding Fiscal Year, who is not in the top 100 Employees of the
Employer when ranked by Testing Compensation in the current Fiscal Year and who
was
4-2
<PAGE>
not a HCE in the preceding Fiscal Year will not be considered a HCE in the
current year. The Employer may elect to determine who is a HCE on the basis of
the calendar year coinciding with or ending within the current Fiscal Year. If
the Fiscal Year coincides with the calendar year, then this Article 4.1(k) will
apply only to the current Fiscal Year and not to the preceding Fiscal Year.
(l) "Highly Compensated Employee" ("HCE") for Fiscal Years beginning
-------------------------------------
on or after January 1, 1997 (except that, in determining whether an employee is
a Highly Compensated Employee in 1997, the following is treated as having been
in effect in 1996), the term "Highly Compensated Employee" shall include highly
compensated active Employees and highly compensated former Employees.
(i) A highly compensated active employee means any employee
who:
(1) was a 5% Owner of the Employer at any time during
the current or preceding Fiscal Year, or
(2) for the preceding Fiscal Year, (a) had Testing
Compensation from the Employer in excess of $80,000 (multiplied by the
Adjustment Factor, except that the base period shall be the calendar quarter
ending September 30, 1996), and (b) if the Employer elects the application of
this clause for such preceding year, was in the Top Paid Group of Employees for
such preceding year.
(ii) A former Employee shall be treated as a Highly
Compensated Employee if: (1) such Employee was a Highly Compensated Employee
when such Employee separated from service, or (2) such Employee was a Highly
Compensated Employee at any time after attaining age 55.
(m) "Non-Highly Compensated Employee" ("Non-HCE") means an Employee
---------------------------------------------
who is not a Highly Compensated Employee.
(n) "Salary Deferral Contributions" means contributions made to the
-------------------------------
Plan pursuant to Article 4.4.
(o) "Top Paid Group" for a Fiscal Year is equal to 20% of the total
----------------
number of Employees of the Employer for the Fiscal Year. In determining the
total number of Employees for such year, the following Employees may be
excluded:
(i) Those who have not completed six months of service at the
end of such year;
(ii) Those who normally work less than 17 1/2 hours per week;
(iii) Those who normally work less than six months per year;
(iv) Those who have not reached their 21st birthday;
4-3
<PAGE>
(v) Non-resident aliens; and
(vi) Collectively bargained Employees, provided that this
exclusion may be used only if at least 90% of the Employees of the Employer are
covered by bona fide collective bargaining agreements.
The Top Paid Group will be determined by listing all of the Employees of
the Employer (including those excluded above) in descending order by Testing
Compensation and selecting the 20% of the total number of Employees as
determined above who are the highest paid. An Employee may be in the Top Paid
Group even though he falls in one of the groups which has been excluded in
determining the number of Employees. The resolution of any ambiguity relating
to the determination of HCEs shall be based on IRS regulation 1.414(q).
4.2 Employer Contributions.
-----------------------
(a) Employer Profit Sharing Contributions. As of the last day of
--------------------------------------
each Fiscal Year, a Member Employer may make a Profit Sharing contribution to
the Trust for its own Employees in such amount, if any, as is determined by the
Member Employer. The Profit Sharing contribution shall be reduced by any Profit
Sharing contribution amounts in Limitation Accounts under Article 5,
attributable to Employees of such Member Employer. These contributions will be
allocated to such Member Employer's Participants' Profit Sharing Accounts as
provided in Article 5.2.
(b) Non-Elective Contributions. A Member Employer may make Non-
---------------------------
Elective contributions for its own Employees in accordance with Article 4.5(f),
which shall be allocated to its Participants' Non-Elective Accounts.
(c) Employer Matching Contributions. As of the last day of each
--------------------------------
Quarter, a Member Employer may make a Matching Contribution to the Trust for its
own Employees which will be reduced by any Matching Contribution amounts in
Limitation Accounts under Article 5 attributable to Employees of such Member
Employer. Such Matching Contributions shall be allocated each Quarter to the
Matching Accounts of the Member Employer's Eligible Participants either (1) in
the proportion to the Participant's elected rate of Salary Deferral
Contributions for the Quarter, up to 3%, multiplied by the Participant's Plan
Compensation for the Quarter, or (2) effective July 1, 1995, as a uniform
percentage of a flat dollar amount of the Participant's Salary Deferral
Contributions for the Quarter.
(i) Notwithstanding the above, an Employee whose Salary
Deferral Contributions were stopped during the Fiscal Year due to the dollar
limit under Article 4.4(a) will be deemed to have an elected rate of Salary
Deferral Contributions in effect for the Quarter equal to his rate prior to
reaching the limit.
(ii) No Matching contribution amount shall knowingly be made:
(1) on Excess Deferrals or Excess Contributions, or
4-4
<PAGE>
(2) to the extent they would cause any non-
discrimination test under Code Sections 401(m) or 401(a)(4) to fail.
(iii) The rate of the Matching Contribution shall be determined
annually by the Member Employer and announced before the beginning of the
applicable Fiscal Year.
(iv) Employer Matching Contributions may be made in cash or in
Employer Stock.
(d) Restoration Contribution. The Member Employer shall make the
-------------------------
contributions required to restore the Accounts of its Participants as described
in Article 5.5 and Article 6.4. These contributions will be allocated in
accordance with their purpose.
(e) Top-Heavy Minimum Contribution. For any Fiscal Year during
-------------------------------
which the Plan is a Top-Heavy Plan, the sum of the Member Employer's Profit
Sharing contributions, Non-Elective contributions, and Forfeitures allocated on
behalf of each of its Participants who is a Non-Key Employee, but is employed by
the Member Employer as an Eligible Employee on the last day of the Fiscal Year
shall not be less than the lesser of:
(i) 5% of the Allowable Compensation paid or accrued to such
Employee during the Fiscal Year; or
(ii) The highest percentage of Allowable Compensation which is
allocated during the Fiscal Year on behalf of any Key Employee in the aggregate:
(1) To his Employer Account under Article 5.2 of this
Plan; and
(2) To his Salary Deferral Account under this Plan; and
(3) From contributions by the Employer to his account in
any other defined contribution plan.
To the extent that these minimum allocations are not provided by other
provisions of this Plan, the Employer shall make a minimum contribution in an
amount which is determined to meet the requirements of this Article 4.2(e),
which shall be allocated to the Accounts of Participants who are Non-Key
Employees to carry out the purpose of this Article.
4.3 Timing of, Limitations on, and Return of Employer Contributions.
----------------------------------------------------------------
(a) Amount and Timing of Contributions. Employer contributions
-----------------------------------
shall not exceed an amount which is estimated to constitute the maximum
allowable deduction under Code Section 404(a). Employer contributions shall be
paid to the
4-5
<PAGE>
Trustee on or prior to the last day for filing the Member Employer's federal
income tax return for such year, including any extensions of time granted for
such filing. Contributions shall be made in cash; provided, however, that
Employer Matching Contributions may be made in cash or in Employer stock.
(b) Return of Employer Contributions. If an amount is contributed
---------------------------------
by the Employer due to a mistake of fact, the Employer shall be entitled to
recover such amount within one year of the date such contribution is made.
Unless otherwise provided in a resolution of the Board, any amounts contributed
by the Employer which are disallowed as a deduction under Code Section 404 shall
be returned to the Employer within one year of the date such deduction is
disallowed. Trust income attributable to the amount to be recovered shall not be
paid to the Employer, but Trust loss attributable thereto shall reduce such
amount.
4.4 Salary Deferral Contributions.
------------------------------
(a) General Rules. Each Participant may elect in writing to have
--------------
the Employer make Salary Deferral Contributions on his behalf in an amount from
1% to 15% of such Participant's Plan Compensation. Notwithstanding the
foregoing, effective January 1, 1987, no more than $7,000, multiplied by the
Adjustment Factor, of Salary Deferral Contributions may be made on behalf of any
Participant during any calendar year.
(b) Administrative Guidelines. The Trustees have the power to
--------------------------
establish uniform and nondiscriminatory rules and from time to time to modify or
change such rules governing the manner and method by which Salary Deferral
Contributions shall be made, as well as the manner and method by which Salary
Deferral Contributions may be changed or discontinued temporarily or
permanently. Participants who do not elect to begin making Salary Deferral
Contributions as of the date their participation begins in accordance with
Article 3.2(b)(i), can begin making such contributions only as of any subsequent
January 1, April 1, July 1, or October 1. Participants who have stopped making
Salary Deferral Contributions can again begin making such contributions only as
of any subsequent January 1, April 1, July 1, or October 1. All Salary Deferral
Contributions shall be authorized by the Participant in writing, made by payroll
deduction, deducted from the Participant's Plan Compensation without reduction
for any taxes or withholding (except to the extent required by law or the
regulations) and paid over to the Trust by the Employer within a reasonable
period following the date of deduction, but in no event later than 90 days after
the date on which such salary would otherwise have been paid. All Salary
Deferral Contributions shall be credited to such Participant's Salary Deferral
Account and shall be treated as Employer contributions for purposes of their
deductibility and tax treatment under the Code.
(c) Payment of Excess Deferrals. Notwithstanding any other
----------------------------
provision of the Plan, Excess Deferral Amounts plus any income or less any loss
allocable thereto, as determined under Article 4.7, may be paid to Participants
who have such Excess
4-6
<PAGE>
Deferrals for a calendar year no later than the following April 15th. If not
paid by such date, these amounts must remain in the Participant's Account until
otherwise withdrawable or payable under the terms of the Plan. Because of the
double income tax treatment that a Participant will encounter if these amounts
are not returned to him by the following April 15th, the Trustees shall make
every effort to meet this deadline.
4.5 Non-Discrimination Tests for Elective Deferrals.
------------------------------------------------
(a) General Rule. The Deferral Percentages for any Fiscal Year
-------------
shall satisfy the table below:
Then, ADP of Eligible
If ADP of Eligible Participants Participants Who are HCEs
Who are Non-HCEs is: Cannot Exceed:
----------------------------------------------------------------------
(1) (2)
Less than 2% Two times column (1) ADP
2% but less than 8% Column (1) ADP plus 2%
8% or greater 1.25 times column (1) ADP
(b) Family Aggregation. For Fiscal Years beginning before January 1,
-------------------
1997, a single Deferral Percentage shall apply to all members of a Family Group
and shall be determined by totaling the amounts credited to the Salary Deferral
Accounts of all members of the Family Group and dividing by the sum of the
Testing Compensation received by such members. This limitation shall not apply
for Fiscal Years beginning on or after January 1, 1997.
(c) Inclusion of Non-Elective Deferrals. Amounts allocated to a
------------------------------------
Participant's Non-Elective Account for a Fiscal Year may be included in
computing his Deferral Percentage.
(d) Participation in Multiple 401(k) Plans. The Deferral
---------------------------------------
Percentage for any Employee who is a Participant under two or more Code Section
401(k) arrangements of the Employer shall be the sum of the Deferral Percentages
for such Employee under such arrangements.
(e) Aggregation of Plans. In the event that one or more other
---------------------
plans are aggregated with this Plan to satisfy Code Sections 401(a)(4) and
410(b), the Deferral Percentages of Eligible Participants shall be determined as
if all such plans were a single plan. All such plans must have the same plan
year.
Notwithstanding the foregoing, if Section 4.5(a) would otherwise not be met
for Fiscal Years commencing on or before December 31, 1991, the Trustees may
restructure the Plan into component plans based on employee groups in accordance
with Internal Revenue Service Proposed and Temporary Regulations 1.401(a)(4)-
(9). Each such component plan must meet the tests in this Article 4.5(a).
4-7
<PAGE>
(f) Corrective Actions.
-------------------
(i) If the Salary Deferral Contributions for any Fiscal Year
would otherwise cause the Plan to fail to meet the non-discrimination tests of
this Article 4.5, then the Trustees may, at their discretion within the period
permitted by applicable law or regulation, take one or more of the following
actions, but only as necessary: (1) reduce Salary Deferral Contributions made on
behalf of Participants who are HCEs for the remainder of the Fiscal Year; or (2)
return Excess Contributions to the affected Participants in accordance with
Article 4.5(h).
(ii) A Member Employer may make a Non-Elective contribution
for any Fiscal Year for its own Employees. Such contribution shall be allocated
to the Non-Elective Accounts of a group of Eligible Participants who are Non-
HCEs and who are selected on a basis that is not prohibited by law or by
regulation. Each Participant who is entitled to share in such contribution for a
Fiscal Year shall receive an allocation in the same ratio to such contribution
as his Testing Compensation bears to the Testing Compensation of all those
eligible for such an allocation.
(iii) If the Trustees have restructured the Plan into
component plans in accordance with (e), the Trustees may take the actions in
(f)(i) with respect to the HCEs of any component plan which would not otherwise
pass the non-discrimination tests of Article 4.5 or the Employer may make a Non-
Elective contribution which shall be allocated in accordance with (f)(ii) but
only to Participants who are included in any component plan which would not
otherwise pass the non-discrimination tests of Article 4.5.
(g) Determination of Excess Contributions.
--------------------------------------
(i) The maximum Deferral Percentage for a Participant who is
a HCE is calculated by reducing the Deferral Percentage of the HCE with the
highest Deferral Percentage to the extent required to (1) enable the Plan to
satisfy the non-discrimination test in Article 4.5(a), or (2) cause such HCE's
Deferral Percentage to equal the Deferral Percentage of the HCE with the next
highest Deferral Percentage. This process will be repeated as necessary until
the Plan satisfies the non-discrimination test in Article 4.5(a).
(ii) The reduction of the Deferral Percentage of members of a
Family Group, if required under (i), shall be accomplished by making
proportionate reductions in the amounts allocated to the Salary Deferral Account
of each member of the Family Group.
(iii) A HCE's Excess Contribution is equal to the difference
between (1) the amount of contribution actually made under the Plan to his
Salary Deferral Account for such Fiscal Year, and (2) the amount determined by
multiplying the maximum Deferral Percentage calculated in (i) by such HCE's
Testing Compensation.
4-8
<PAGE>
(iv) If the Trustees have restructured the Plan into
component plans in accordance with (e), the computations in (g)(i), (ii) and
(iii) shall be made only for the HCEs of any component plan which does not
otherwise meet the non-discrimination tests of Article 4.5.
(h) Payment of Excess Contributions.
--------------------------------
(i) For Fiscal Years beginning before January 1, 1997,
Excess Contributions shall be distributed in proportion to the relevant
Participants' Elective Deferrals for the relevant Fiscal Year.
(ii) Effective for Fiscal Years beginning on or after January
1, 1997, any distribution of Excess Contributions for any Fiscal Year shall be
made to Highly Compensated Employees on the basis of the amount of contributions
by, or on behalf of, such Highly Compensated Employees. Excess Contributions
will be distributed according to the following procedures:
(1) The dollar amount of Excess Contributions is
computed for each affected Highly Compensated Employee in accordance with the
provisions of the Plan currently in effect.
(2) The Salary Deferral Contributions of the Highly
Compensated Employee with the highest dollar amount of Salary Deferral
Contributions shall be reduced until all Excess Contributions have been
distributed or until such Salary Deferral Contributions equal the dollar amount
of Salary Deferral Contributions made by the Highly Compensated Employee with
the next highest dollar amount of contributions, whichever comes first. This
amount will be distributed to the Highly Compensated Employee with the highest
dollar amount of Salary Deferral Contributions.
(3) This process shall be repeated until total Excess
Contributions are distributed.
(4) If these distributions are made, the Actual Deferral
Percentage is treated as meeting the nondiscrimination test of Section 401(k)(3)
of the Code regardless of whether the Actual Deferral Percentage, if
recalculated after distributions, would satisfy Section 401(k)(3) of the Code.
(5) The above procedures are used for the purposes of
recharacterizing excess contributions under Section 401(k)(8)(A)(ii) of the
Code.
(6) For purposes of Section 401(m)(9) of the Code, if a
corrective distribution of excess contributions has been made, or a
recharacterization has occurred, the Actual Deferral Percentage for Highly
Compensated Employees is deemed to be the largest amount permitted under Section
401(k)(3) of the Code.
4-9
<PAGE>
(iii) Notwithstanding any other provision of the Plan, Excess
Contributions, plus any income or less any loss allocable thereto as determined
in Article 4.7, shall be paid in accordance with the following procedures:
(A) Excess Contributions for a Fiscal Year shall be paid
to Participants on whose behalf such Excess Contributions were made,
no later than the last day of the succeeding Fiscal Year.
(B) The Excess Contributions which would otherwise be
paid shall be reduced, in accordance with regulations, by any Excess
Deferral Amounts paid to the Participant.
(iv) Payments under this Article 4.5(h) shall be made from the
Participant's Salary Deferral Account.
4.6 Non-Discrimination Tests for Employer Matching Contributions.
-------------------------------------------------------------
(a) General Rule. Employer Matching Contributions for any Fiscal
-------------
Year shall satisfy the table below:
If ACP of Eligible Participants Then, ACP of Eligible
Who are Non-HCEs is: Participants Who are HCEs
Cannot Exceed:
----------------------------------------------------------------
(1) (2)
Less than 2% Two times column (1) ACP
2% but less than 8% Column (1) ACP plus 2%
8% or greater 1.25 times column (1) ACP
(b) Family Aggregation. For Fiscal Years beginning before January
-------------------
1, 1997, a single Contribution Percentage shall apply to all members of a Family
Group and shall be determined by totalling the amounts credited to the Matching
Accounts of all members of the Family Group and dividing by the total of the
Testing Compensation received by such members. This limitation shall not apply
in Fiscal Years beginning on or after January 1, 1997.
(c) Inclusion of Non-Elective Contributions. Any amounts allocated
----------------------------------------
to a Participants' Non-Elective Accounts for a Fiscal Year and not used to meet
the tests in Article 4.5 shall be included in the Contribution Percentage.
(d) Aggregation of 401(m) Arrangements. The Contribution
-----------------------------------
Percentage for any Employee who is a Participant under two or more Code Section
401(m) arrangements of the Employer shall be the sum of the Contribution
Percentages for such Employee under such arrangements.
4-10
<PAGE>
(e) Aggregation of Plans. In the event that one or more other plans
---------------------
are aggregated with this Plan to satisfy Code Sections 401(a)(4) and 410(b),
this Article 4.6 shall be applied by determining the Contribution Percentages of
Eligible Participants as if all such plans were a single plan. All such plans
must have the same plan year, starting with the Fiscal Year which commences in
1989.
(f) Component Plans. Notwithstanding the foregoing, if the Plan has
----------------
been restructured into component plans in accordance with Article 4.5(a)(v), the
same component plans must be used for purposes of this Article 4.6 and separate
tests performed for each component plan under Article 4.6(a) and (g). In a
similar fashion, corrective actions under (h) below, determination of the amount
of Excess Matching Contributions under (i) below and corrective payments under
(j) below shall apply only to HCEs of any component plans that do not meet the
tests in Article 4.6(a) and/or (g).
(g) Multiple Use of Alternative Limitation. If the provisions of
---------------------------------------
Articles 4.5 and 4.6 apply to one or more HCEs and if both the ADP and the ACP
of HCEs the corresponding ADP and ACP of Non-HCEs multiplied by 1.25, then an
additional non-discrimination test must be met, as follows:
(i) The sum of the ADP and ACP of Eligible Participants who are
HCEs shall not exceed the greater of: (A) the sum of A & B; where A = 1.25 times
the greater of the ADP or the ACP of Eligible Participants who are Non-HCEs, and
B = two time the smaller of the ADP or ACP of Eligible Participants who are Non-
HCEs or, if less, two percent plus such smaller percentage; or (B) the sum of A
& B; where A = 1.25 times the lesser of the ADP or ACP of Eligible Participants
who are Non-HCEs, and B = two times the greater of the ADP or ACP of Eligible
Participants who are Non-HCEs or, if less, two percent plus such greater
percentage.
(ii) The ACPs and ADPs used in this Article 4.6(b) shall be
determined after any corrective distributions have been made of Excess
Deferrals, Excess Contributions, and Excess Matching Contributions.
(h) Corrective Actions.
-------------------
(i) If the Matching Contributions for any Fiscal Year would
otherwise cause the Plan to fail to meet the non-discrimination tests of this
Article 4.6, the Trustees may at their discretion within the period permitted by
applicable law or regulation, take one or more of the following actions, but
only as necessary:
(A) Reduce Salary Deferral Contributions that would
otherwise be permitted for HCEs for the remainder of the Fiscal Year
and the Matching Contributions that would have been made based on such
Salary Deferral Contributions.
(B) Pay any fully vested matching contributions to the
affected HCEs, as provided in Article 4.6(j).
4-11
<PAGE>
(C) Forfeit as necessary any non-vested Matching
Contributions that were made on behalf of the affected HCEs.
(ii) If Salary Deferral Contributions for any year would
otherwise cause the Plan to fail to meet the multiple use of alternative
limitation provisions of (g) above, procedures similar to those detailed in
Article 4.5(f), (g) and (h) shall be used to bring the Plan into compliance with
such provisions. Any Salary Deferral Contributions which must be returned to
Participants pursuant to this Article 4.6(h) shall be considered Excess
Contributions for purposes of this Plan.
(i) Determination of the Amount of Excess Matching
----------------------------------------------
Contributions.
--------------
(i) The maximum Contribution Percentage for a
Participant who is a HCE is calculated by reducing the Contribution Percentage
of the HCE with the highest Contribution Percentage to the extent required to
(1) enable the Plan to satisfy the non-discrimination tests in Articles 4.6(a)
and (g), or (2) cause such HCE's Contribution Percentage to equal the
Contribution Percentage of the HCE with the next highest Contribution
Percentage. This process will be repeated, as necessary, until the Plan
satisfies the non-discrimination tests in Articles 4.6(a) and (g).
(ii) The reduction of the Contribution Percentage of
members of a Family Group, if required under (i), shall be accomplished by
making proportionate reductions in the Matching Contributions allocated to the
Account of each member of the Family Group.
(iii) A HCE's Excess Matching contribution is equal to
the difference between (1) the amount of Matching contribution actually made to
his Account under the Plan for such Fiscal Year and (2) the amount determined by
multiplying the maximum Contribution Percentage calculated in (i) above by such
HCE's Testing Compensation.
(j) Corrective Payments.
--------------------
(i) Effective for Fiscal Years beginning before
January 1, 1997, any distribution of Excess Matching Contributions for any
Fiscal Year shall be made to HCEs on the basis of the respective portions of
such amounts attributable to each of such Employees.
(ii) Effective for Fiscal Years beginning on or after
January 1, 1997, any distribution of Excess Matching Contributions for any
Fiscal Year shall be made to Highly Compensated Employees on the basis of the
amount of contributions by, or on behalf of, such Highly Compensated Employees.
Forfeitures of Excess Matching Contributions may not be allocated to
Participants whose contributions are reduced under this Section. Excess Matching
Contributions will be distributed according to the following procedures:
4-12
<PAGE>
(1) The dollar amount of Excess Matching Contributions
is computed for each affected Highly Compensated Employee in accordance with the
provisions of the Plan currently in effect.
(2) The Matching Contributions of the Highly
Compensated Employee with the highest dollar amount of Matching Contributions
shall be reduced until all Excess Matching Contributions have been distributed
or until such Matching Contributions equal the dollar amount of Matching
Contributions of the Highly Compensated Employee with the next highest dollar
amount of contributions, whichever comes first. This amount will be distributed
to the Highly Compensated Employee with the highest dollar amount of Matching
Contributions.
(3) This process shall be repeated until total Excess
Matching Contributions are distributed.
(4) If these distributions are made, the Actual
Contribution Percentage is treated as meeting the nondiscrimination test of
Section 401(m)(2) of the Code regardless of whether the Actual Contribution
Percentage, if recalculated after distributions, would satisfy Section 401(m)(2)
of the Code.
(5) For purposes of Section 401(m)(9) of the Code, if
a corrective distribution of Excess Matching Contributions has been made, the
Actual Contribution Percentage for Highly Compensated Employees is deemed to be
the largest amount permitted under Section 401(m)(2) of the Code.
Notwithstanding any other provisions of the Plan, Excess Matching
Contributions, plus any income and less any loss allocable thereto, as
determined under Article 4.7, shall be paid or forfeited in a nondiscriminatory
manner. Excess Matching Contributions shall be paid, if appropriate, to
Participants for whom such contributions have been made during a Fiscal Year, or
forfeited, if appropriate, no later than the last day of the succeeding Fiscal
Year. If such Matching Contributions are not vested, they will be forfeited.
If such Matching Contributions are vested, they will be paid to the Participant.
4.7 Adjustment to Corrective Payments. Excess Deferrals and Excess
----------------------------------
Contributions shall all be paid to the appropriate Participants, together with
an investment adjustment. Such adjustment shall be computed by the Trustees to
establish a proportionate crediting of Trust income or loss between the excess
amounts and the amounts which are not to be returned for the Fiscal Year in
which such excess occurred.
4.8 Overriding Limitations.
-----------------------
(a) Corrective Actions. When Salary Deferral Contributions made on
-------------------
behalf of Participants who are HCEs are reduced for the remainder of a Fiscal
Year, no Matching Contributions shall be made with respect to the Salary
Deferral Contributions not permitted because of such reduction.
4-13
<PAGE>
(b) Excess Deferrals. When Excess Deferrals are paid to a
-----------------
Participant, any Matching Contributions that are attributable to such Excess
Deferrals shall be forfeited.
(c) Excess Contributions. When Excess Contributions are paid to a
---------------------
Participant, any Matching Contributions that are attributable to such Excess
Contributions shall be forfeited.
4.9 Record Requirements. The Trustees shall maintain such records as may
--------------------
be needed to prove that for each Fiscal Year commencing on or after January 1,
1987, the requirements of Article 4.5 and Article 4.6 are met.
4.10 Rollover Contributions.
-----------------------
(a) Rollover Contributions Permitted. The Trustees may accept a
---------------------------------
rollover contribution from an Employee who is or is to become a Participant, in
accordance with and subject to the limitations of applicable sections of the
Code.
(b) General Rules. A rollover contribution shall be made within 60
--------------
days of the Participant's receipt of the distribution (unless made as a Direct
Rollover) and shall not include any amounts contributed by the Employee, except
to the extent permitted by the Code and applicable regulations. An Employee may
be required to furnish evidence satisfactory to the Trustees that the amount to
be transferred meets all of the requirements.
(c) Rollovers Credited to Rollover Account. A rollover
---------------------------------------
contribution may be made in cash and shall be credited to such Rollover Account
as of the date such contribution is received. The Participant's Rollover Account
shall be fully vested and shall be valued pursuant to Article 7.
(d) Investment of Rollover Contributions. If a Participant makes a
-------------------------------------
rollover contribution to the Trust, the Trustee shall invest the contributions
as part of the Participant's Account in the Trust Fund.
(e) Direct Transfer From Another Trust. The Trustees may accept on
-----------------------------------
behalf of any Participant, or Employee who is to become a Participant, the
direct transfer of amounts from any other trust qualified under Code Section
501(a), which is part of any plan qualified under Code Section 401(a). In no
event, however, may the Trustees accept a direct transfer from: (i) a defined
benefit pension plan, (ii) a defined contribution plan subject to the minimum
funding standards of Code Section 412, or (iii) any other defined contribution
plan to which the requirements of Code Section 401(a)(11)(A) apply with respect
to such Participant or Employee, unless such a direct transfer may be made under
applicable law and regulation without jeopardizing this Plan's exempt status
under Code Section 401(a)(11)(B).
* * * * End of Article 4 * * * *
4-14
<PAGE>
Article 5.
Allocation of Contributions and Forfeitures
5.1 Definitions.
------------
(a) "Annual Addition" means the sum for the Limitation Year to
---------------
which the allocation pertains (whether or not allocated in such year) of all
Employer and Employee contributions and Forfeitures allocated to the
Participant's Account in this Plan for such year and any other similar
contributions to any other defined contribution plan maintained by the Employer
and an Affiliated Employer, including Excess Contributions and Excess Matching
Contributions (regardless of when corrected or returned) and Excess Deferrals if
not returned or otherwise corrected by the April 15 following the calendar year
in which made.
(b) "Annual Amount" means the lesser of 35% (1.4 x 25%) of the
--------------
Participant's Allowable Compensation (as defined in Article 2) for such
Limitation Year or $37,500 (125% of $30,000) (or such other amount as may be
established for such Limitation Year under Code Section 415(d) for any
Limitation Year).
(c) "Annual Benefit" means the sum of all annual benefits payable
---------------
in the form of a single life annuity from all defined benefit plans (whether or
not terminated) maintained by a Member Employer. Benefits payable in any other
form, except a qualified joint and survivor annuity as defined in Code Section
417(b), shall be adjusted to the actuarial equivalent of a single life annuity
beginning at the same age. The Annual Benefit shall not be adjusted for any pre-
retirement death or disability benefits provided.
(d) "Defined Benefit Fraction" means the fraction in which the:
--------------------------
(i) Numerator equals the Participant's Projected Annual
Benefit in the defined benefit plan determined as of the close of the Limitation
Year, and
(ii) Denominator equals the lesser of 140% of the Percentage
Limitation or 125% of the Dollar Limitation.
(e) "Defined Contribution Fraction" means the fraction in which the:
-------------------------------
(i) Numerator equals the sum of a Participant's Annual Additions
for each Limitation Year to date from all defined contribution plans (whether or
not terminated) maintained by the Employer, less any Transition Amounts, and
(ii) Denominator equals the sum of the Annual Amounts for each
Limitation Year included in the Participant's Service, plus any Transition
Amounts.
5-1
<PAGE>
(f) "Dollar Limitation" means the adjusted value of $90,000 (or such
-------------------
other amount as may be in effect on the last day of the Limitation Year pursuant
to Code Section 415(d)) based on the age of the Participant when the benefit
begins as follows:
<TABLE>
<CAPTION>
Age Limitation Adjustment Under the Defined Benefit Plan
- --- ----------------------------------------------------
<S> <C>
Over the Social Security Normal limitation is actuarially increased based on the mortality table used for
Retirement Age actuarial equivalence in the Plan and 5% interest, but not more than the
actuarial increase (if any) specified in the Defined Benefit Plan
Social Security Normal Retirement no adjustment
Age
Age 62 and over but below Social limitation is reduced by 5/9% for each of the first 36 months and by 5/12%
Security Normal Retirement Age for each of the next 24 months that the age precedes Social Security Normal
Retirement Age
Under 62 the lesser of:
(i) actuarial equivalent of limitation for age 62, based on the mortality
table used for actuarial equivalence in the Plan and 5% interest, and
(ii) the limitation at age 62 multiplied by the ratio of the Plan's early
retirement factor at age of commencement to the Plan's early retirement
factor at age 62
</TABLE>
If a Participant has completed less than ten years of Service in the Defined
Benefit Plan, the Dollar Limitation shall be adjusted by multiplying such
limitation by a fraction, the numerator of which is the Participant's number of
years (or part thereof) of Service not to exceed ten, and the denominator of
which is ten.
(g) "Limitation Account" means an account expressly set up and
--------------------
maintained to hold Excess Annual Addition amounts contributed in error pursuant
to Article 5.3(b).
(h) "Limitation Year" means the Fiscal Year.
-----------------
(i) "Percentage Limitation" means 100% of the average of Allowable
-----------------------
Compensation (as defined in Article 2) paid or accrued over the three (or the
Participant's actual number of years of Service, if fewer) consecutive
Limitation Years included in the Participant's Service which produce the highest
average. If a Participant has completed less than ten years of Service with a
Member Employer, this limitation shall be adjusted by multiplying such amounts
by a fraction, the numerator of which is the Participant's number of years of
Service (or part thereof), and the denominator of which is ten. In no event
shall the reduction for less than 10 years of Service reduce this limitation to
an amount less than one-tenth of the applicable limitation (as determined
without regard to this paragraph).
5-2
<PAGE>
(j) "Projected Annual Benefit" means the Annual Benefit that a
--------------------------
Participant in a defined benefit plan would be entitled to under the terms of
that plan based on the following assumptions:
(i) The Participant will continue employment until normal
retirement age (or his current age, if later) under the terms of that plan;
(ii) The Participant's compensation for the applicable
limitation year will remain the same until his normal retirement age under (i)
above; and
(iii) All other relevant factors used to determine benefits
under that plan for the applicable limitation year will remain constant for all
future limitation years.
(k) "Social Security Normal Retirement Age" means the age when
---------------------------------------
unreduced old-age benefits are available from Social Security (as adjusted
pursuant to Code (S) 415(b)(8)), rounded to the next higher year, according to
the following table:
Social Security
Year of Birth Normal Retirement Age
--------------------------------- ---------------------
1937 and Before 65
1938-1954 66
1955 and After 67
(l) "Super Top-Heavy" means a Plan which is Top-Heavy after
-----------------
substituting 90% for 60% in the definition for Top-Heavy in Article 2.
(m) "Transition Amount" means an amount which is permanently
-------------------
subtracted from the numerator or added to the denominator of the Defined
Contribution Fraction pursuant to transition rules related to the amendments of
Code Section 415.
5.2 Allocation Methods.
-------------------
(a) Salary Deferral, Non-Elective, Matching, Top-Heavy Minimum and
--------------------------------------------------------------
Restoration Contributions. Salary Deferral, Non-Elective, Matching, Top-Heavy
- --------------------------
Minimum and Restoration Contributions are allocated as provided in Article 4.
(b) Profit Sharing Allocation. Member Employer Profit Sharing
--------------------------
Contributions and amounts in Limitation Accounts attributable to Member Employer
Profit Sharing Accounts for any Fiscal Year shall be allocated as of the last
day of such Fiscal Year to the Profit Sharing Accounts of all Eligible
Participants of the Member Employer in the ratio that each such Eligible
Participant's Plan Compensation bears to the aggregate Plan Compensation of all
Eligible Participants of the Member Employer.
(c) Overriding Top-Heavy Minimum Allocation. Notwithstanding the
----------------------------------------
provisions of Article 5.2(b), for any Fiscal Year during which the Plan is
a Top-Heavy Plan the requirements of Article 4.2(e) shall be met.
5-3
<PAGE>
5.3 Limitations on Annual Allocations.
----------------------------------
(a) Limitation Amount.
------------------
(i) Notwithstanding any other provision of this Plan to the
contrary, for Fiscal Years beginning before January 1, 1995, the Annual Addition
to a Participant's Account for any Limitation Year shall not exceed the lesser
of 25% of the Employee's Allowable Compensation or $30,000 (or, if greater, 1/4
of the dollar limitation in effect under Code Section 415(b)(1)(A)), or such
other amount for the Limitation Year as may be established by regulations under
Code Section 415(d).
(ii) Notwithstanding any other provision of this Plan to the
contrary, for Fiscal Years beginning on or after January 1, 1995, the Annual
Addition to a Participant's Account for any Limitation Year shall not exceed the
lesser of 25% of the Employee's Allowable Compensation or $30,000, or such other
amount for the Limitation Year as may be established by regulations under Code
Section 415(d).
(b) Treatment of Excess Annual Addition Made in Error. In the
event that (as a result of the allocation of Forfeitures, a reasonable error in
estimating a Participant's compensation, a reasonable error in determining the
amount of elective deferrals or other limited facts and circumstances which the
Internal Revenue Service finds to be applicable) an amount would otherwise be
allocated which would result in the Annual Addition limitation being exceeded
with respect to any Participant, the excess amount shall be eliminated:
(i) First, by returning to such Participant, to the extent
necessary his Salary Deferral Contributions, if any. A return of Salary Deferral
Contributions shall include investment gains attributable to such contributions
determined as provided in Article 4.7;
(ii) Second, by holding any excess Profit Sharing and/or
Matching amounts in a Limitation Account. Any amounts in the Limitation Accounts
shall be reallocated among the appropriate Accounts of Eligible Participants
pursuant to Article 5.2 as of the last day of each succeeding Fiscal Year until
the excess if exhausted, provided that the Annual Addition limitation with
respect to any Participant may not be exceeded in any Limitation Year. No
allocation of contributions may be credited to the Accounts of Eligible
Participants in succeeding years until such excess has been exhausted.
5.4 Overall Limitation for Different Types of Plans.
------------------------------------------------
(a) General Limitation. For Limitation Years beginning before
-------------------
January 1, 2000, a Participant in this Plan is also a Participant in a qualified
defined benefit pension plan maintained by the Employer or an Affiliated
Employer (or was at any time a Participant in such a defined benefit pension
plan maintained by the Employer or an Affiliated Employer which has since been
terminated), the sum of the
5-4
<PAGE>
Defined Contribution Fraction and the Defined Benefit Fraction for any
Limitation Year shall not exceed 1.0. If a restriction on contributions or
benefits is required for any Employee, such restriction will first be applied to
the Retirement and Tax-Deferred Savings Plan. For Limitation Years beginning on
or after January 1, 2000, the limitation set forth in this Article 5.4(a) shall
no longer apply.
(b) Super Top-Heavy Limitation. For Limitation Years beginning
---------------------------
before January 1, 2000, for each Fiscal Year in which the Plan is Super Top-
Heavy or if the Plan is Top-Heavy and the minimum contribution under Article
4.2(e) is less than 7.5%, 100% shall be substituted for 125% wherever it appears
in Articles 5.1(b) and (d), unless no additional allocations or benefits accrue
to any affected Participant. For Limitation Years beginning on or after January
1, 2000, the limitation set forth in this Article 5.4(b) shall no longer apply.
5.5 Restoration Procedures.
-----------------------
(a) Computing Amounts. In the event that a Participant's Account was
------------------
improperly excluded in any year from an allocation of Employer contributions and
Forfeitures pursuant to Article 5.2, such Participant's Account shall be
restored to its correct status by the addition of amounts that are determined as
follows:
(i) First, an amount will be computed on the same basis as
Employer contributions and Forfeitures that were allocated to the Accounts of
other Eligible Participants under Article 5.2 in each year for which restoration
is necessary, and
(ii) Second, Trust Fund income, gain or loss attributable to
amounts that should have been allocated under (i) above will be computed on the
same basis that Trust Fund income, gain or loss was allocated to other
Participants' Accounts in the valuation process described in Article 7.2 in each
year for which restoration is necessary.
(b) Income, Gain or Loss. In the event that a Participant's
---------------------
Account was improperly excluded in any year from an allocation of Trust Fund
income, gain or loss pursuant to the valuation process described in Article 7.2,
such Participant's Account shall be restored to its correct status by the
addition or subtraction of amounts that should have been allocated under Article
7.2 in each year for which restoration is necessary.
(c) Source of Amounts. Such amounts shall be restored first from
------------------
Forfeitures, if any; and then, if necessary, the Member Employer shall
contribute an amount which is necessary to fully restore each improperly
excluded Account.
* * * * End of Article 5 * * * *
5-5
<PAGE>
Article 6.
Vesting of Accounts
6.1 Automatic Vesting.
------------------
(a) Retirement, Death or Disability. The value of a Participant's
--------------------------------
Account shall become fully vested (i) when the Participant attains his Normal
Retirement Date or reaches age 55 and completes 5 Years of Service while an
Employee, or (ii) upon his termination of employment by reason of death or
Disability.
(b) Employee Account. A Participant's Employee Account shall be
-----------------
fully vested at all times.
(c) Non-Elective Account. A Participant's Non-Elective Account
---------------------
shall be fully vested at all times.
6.2 Vesting Based on Service.
-------------------------
(a) General Rule. Except as otherwise provided in Article 6.4(f)
-------------
and Article 14.3, a Participant's Employer Account shall become vested in
accordance with the following schedule:
Years of Service Vested Percentage
----------------- -----------------
Less than 2 years 0%
2 years 20%
3 years 40%
4 years 60%
5 years 80%
6 years or more 100%
(b) Special Rule. Notwithstanding the foregoing, effective July 1,
-------------
1995, Participants employed by Member Employer Operations Management
International, Inc. shall vest in accordance with the following schedule:
Years of Service Vested Percentage
----------------- -----------------
Less than 1 year 0%
1 year 20%
2 years 40%
3 years 60%
4 years 80%
5 years or more 100%
6.3 Years of Service for Vesting.
-----------------------------
(a) Year of Service. An Employee shall be credited with one year
----------------
of Service for vesting for each full year in his Period of Service, as defined
in Article 9.3.
6-1
<PAGE>
(b) Termination Prior to Vesting. If the vested percentage
-----------------------------
applicable to a Participant's Employer Account is 0% at the time his Service
terminates, his Service prior to such termination shall be disregarded for
vesting purposes if he is reemployed after he has incurred 5 consecutive Breaks
in Service.
6.4 Forfeitures and Restorations.
-----------------------------
(a) Forfeitures on Date of Termination. Any remainder of a
-----------------------------------
terminating Participant's Account which is not vested shall be forfeited on the
earliest to occur of the following dates:
(i) The date of termination of the Participant, provided that
this date applies only if the Participant did not then have a vested interest in
his Account;
(ii) The date on which the terminated Participant receives
payment of his entire vested interest;
(iii) The date on which the Participant completes five
consecutive one-year Breaks in Service.
(b) Matching Contribution Forfeitures Used to Pay Administrative
------------------------------------------------------------
Expenses. Forfeitures of a Member Employer's own employees' Matching Accounts
during a Fiscal Year (including forfeitures of Matching Contributions under
Article 4) which are not used to restore any of its Participants' Account as of
the last day of such Fiscal year shall be used to pay such Member Employer's
share of the reasonable expenses of administering the Plan.
(c) Profit Sharing Forfeitures Used to Pay Administrative Expenses.
---------------------------------------------------------------
Forfeitures of a Member Employer's own Employees' Profit Sharing Accounts during
a Fiscal Year which are not used to restore any of its Participants' Accounts as
of the last day of such Fiscal Year shall be used to pay such Member Employer's
share of the reasonable expenses of administering the Plan.
(d) Reemployment After Forfeiture. If a Participant is reemployed
------------------------------
before incurring 5 consecutive Breaks in Service, any amounts forfeited shall be
treated as follows:
(i) Restoration If No Distribution. In the event a
Participant did not receive a distribution of his vested interest, any amounts
previously forfeited shall be fully restored as provided in (iii) below and
shall be recredited to the Participant's Account as of his reemployment date.
(ii) Restoration If Total Distribution Repaid. In the event a
distribution of a Participant's entire vested Account was made to him, the
forfeited amount shall be fully restored as provided in (iii) below if he makes
an after-tax contribution (which shall not be subject to Code Section 401(m)) of
the full amount of the prior distribution before the date which is 5 years after
he is reemployed by the
6-2
<PAGE>
Employer or before the date on which he incurs 5 consecutive Breaks in Service,
if earlier. If the Participant does not make such contribution by that date, the
forfeited amount will not be restored.
(iii) Source of Restored Amounts. Forfeited amounts to be
restored for any Fiscal Year may be restored from Forfeitures as of the last day
of a Fiscal Year, from additional Employer contributions for such Fiscal Year,
from Trust income, or from a combination of these methods, as determined by the
Trustees.
(e) No Partial Repayments Permitted. A Participant shall not be
--------------------------------
permitted to repay part of a distribution.
(f) No Restoration After 5 Consecutive Breaks in Service. If a
-----------------------------------------------------
Participant is reemployed after 5 consecutive Breaks in Service, no portion of
his non-vested Account shall be restored and any undistributed vested interest
shall be maintained as a separate fully vested Account.
6.5 No Divestment. Except as provided under Articles 4.3(b), 6.7 and
--------------
14.8, a Participant's vested rights shall not be subject to divestment for any
reason.
6.6 Amendment to Vesting. Notwithstanding any other provisions of this
---------------------
Article 6, the vested percentage of an individual who was a Participant
immediately preceding the effective date of any amendment to the Plan is
determined by the provisions of the Plan existing immediately prior to such
amendment if such provisions provide a greater vested percentage at any relevant
time.
6.7 Lost Participants.
------------------
(a) Participant's Account. If all or a portion of a Participant's
----------------------
Account becomes payable under Article 8 and the Trustees, after a reasonable
search, cannot locate the Participant or his Beneficiary (if such Beneficiary is
entitled to payment), the vested Account shall:
(i) Be used to establish an Individual Retirement Account in
the Participant's name; or
(ii) Remain in the Plan for a sufficient period of time so
that under state law the Account would escheat, at which point the Account shall
be forfeited and reallocated, in accordance with Articles 4 and 5, as of such
date as the Trustees may decide.
(b) Search for Participants. The Trustees shall make a reasonable
------------------------
attempt to find such a Participant, including securing any assistance available
from the Internal Revenue Service.
6-3
<PAGE>
(c) Restoration. If an Account is forfeited under this Article 6.7,
------------
and the Participant or his Beneficiary subsequently presents a valid claim for
benefits to the Trustees, the Trustees shall cause the vested Account, equal to
the amount that was forfeited under this Article 6, to be restored in accordance
with the provisions of Article 5.5.
* * * * End of Article 6 * * * *
6-4
<PAGE>
Article 7.
Participants' Accounts
7.1 Separate Accounts. The Trustees shall open and maintain a separate
------------------
Account for each Participant. Each Participant's Account shall reflect the
amounts allocated thereto and distributed therefrom and the market value of the
investments of such Account.
7.2 Determination of Value of Participant Accounts. As of each Valuation
-----------------------------------------------
Date, the Trustees shall determine the value of each Participant Account based
on:
(a) contributions credited to the Account through such date
(b) withdrawals or other distributions paid from the Account through
such date, and
(c) the net asset value as of such date of each separate investment
fund (established as provided in Article 13) in which the Participant Account is
invested on such date; provided, however, that if no valuation is made on such
date, the most recent valuation shall apply.
7.3 Statement of Accounts. As soon as practicable after the end of each
----------------------
calendar quarter, the Trustees shall furnish to each Participant a statement of
his Account, determined as of the end of such calendar quarter. Upon the
discovery of any error or miscalculation in an Account, the Trustees shall
correct it, to the extent correction is practically feasible. Statements to
Participants are for reporting purposes only, and no allocation, valuation or
statement shall vest any right or title in any part of the Trust Fund, nor
require any segregation of Trust assets, except as is specifically provided in
this Agreement.
7.4 Valuation of Account When Payment Due. The amount of the payment
--------------------------------------
shall be based on the value of the Participant's Account at the time the payment
is processed; provided, however, that with respect to Employer Stock the payment
shall be based on the amount received on the trade date determined in accordance
with Article 8.5(d).
* * * * End of Article 7 * * * *
7-1
<PAGE>
Article 8.
Distributions and Withdrawals
8.1 General. Benefits under the Plan shall be distributed solely from the
--------
Trust. The Employer has no liability or responsibility for Plan benefits or for
the Trust. No distribution shall be made or commenced prior to the
Participant's termination of employment, except as required under Article 8.3(d)
and permitted under Article 15.2(b) and except for withdrawals in accordance
with Article 8.9. Distributions can also be made upon termination of the Plan
subject to the provisions of Article 8.10. All distributions from the Plan will
be made in accordance with Code Section 401(a)(9) and the regulations thereunder
including the transition rules in proposed regulation 1.401(a)(9)-l and the
incidental death benefit requirements of proposed regulation 1.401(a)(9)-2. The
provisions of Code Section 401(a)(9) shall override any distribution option
under the Plan which might be inconsistent with such provisions.
A distribution to a Participant shall be made solely from his Account.
When a distribution is to be made, his Account shall be valued in accordance
with Article 7.2. The amount to be paid to him shall be based on his vested
interest as determined in Article 6.
8.2 Administrative Rules.
---------------------
(a) Authority. Distributions shall be made only in accordance with
----------
the directions of the Trustees. The Trustees have the authority to direct the
distributions in accordance with the terms and conditions of the Plan, but the
Trustees shall have no power of discretion or consent with regard to a
Participant's or Beneficiary's choice of the form or timing of a distribution,
except as specifically stated herein or to the extent that the Trustees are
constrained by the options available under the Plan or by the requirements of
law or regulation.
(b) Claims. A Participant, Beneficiary or Alternate Payee has the
-------
right to file a claim for benefits as set forth in Article 11.6.
8.3 Timing of Distributions.
------------------------
(a) Cashout of Amounts Under $5,000. If the Participant's vested
--------------------------------
Account does not exceed $5,000, and at the time of any prior distribution, if
any, has not exceeded $5,000, distribution shall be made in a lump sum as soon
as practicable after the Participant's termination of employment.
(b) Amounts Over $5,000. If the Participant's vested Account exceeds
--------------------
the cashout requirements of Article 8.3(a), the Participant may elect to:
(i) Receive a distribution as soon as practicable after the
amount can be determined, or
8-1
<PAGE>
(ii) Defer receipt of his distribution in accordance with (d)
below. Unless otherwise elected by the Participant under (d) below, the payment
of benefits under the Plan to the Participant will not begin later than the 60th
day after the end of the Fiscal Year in which the latest of the following
occurs:
(1) The date on which the Participant attains the earlier
of Age 65 or his Normal Retirement Date,
(2) The date which is the 10th anniversary of his
commencement of participation in the Plan, or
(3) The date of termination of his service with the
Employer;
However, if the amount of the payment cannot be ascertained and/or the
Participant cannot be located by the date required above, payment shall be made
within 60 days after all of these facts are known.
Notwithstanding the foregoing, no payments may be made to a Participant
prior to his Normal Retirement Date or his 62nd birthday, whichever is later, if
his vested Account exceeds the cashout requirements of Article 8.3(a), unless
the written consent of the Participant is obtained by the Trustees within the
90-day period prior to commencement of the distribution.
(c) Information and Rights. The following applies to the
-----------------------
Participant's written consent:
(i) The Participant must be informed of his right to defer
receipt of the distribution. If a Participant fails to consent, it shall be
deemed an election to defer commencement of the distribution.
(ii) Notice of the rights specified herein shall be provided
no less than 30 days and no more than 90 days before the first day on which all
events have occurred which entitle the Participant to such distribution.
(iii) Written consent of the Participant to the distribution
must not be made before the Participant receives the notices and must not be
made more than 90 days before the first day on which all events have occurred
which entitle the Participant to such distribution.
(iv) No consent shall be valid if a significant detriment is
imposed under the Plan on any Participant who does not consent to the
distribution.
(v) If a distribution is one to which Section 401(a)(11) and
417 of the Internal Revenue Code do not apply, such distribution may commence
less than 30 days after the notice required under Section 1.411(a)-11(c) of the
Income Tax Regulations is given, provided that:
8-2
<PAGE>
(1) the Plan Administrator clearly informs the
Participant that the Participant has a right to a period of at least 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
(2) the Participant, after receiving the notice,
affirmatively elects a distribution.
(vi) Notwithstanding anything in this Article 8.3 to the
contrary, effective for Plan Years beginning on or after January 1, 1997, the
written explanation described in Section 417(a)(3)(A) of the Code may be
provided after the annuity starting date. In such event, the 90-day applicable
election period to waive the qualified joint and survivor annuity described in
Section 417(a)(3)(A) of the Code shall not end before the 30th day after the
date on which such explanation is provided. Effective for Plan Years beginning
on or after January 1, 1997, a Participant may elect (with any applicable
spousal consent) to waive any requirement that the written explanation be
provided at least 30 days before the annuity starting date (or to waive the 30-
day requirement in the preceding sentence) if the distribution commences more
than 7 days after such explanation is provided.
(d) Required Distributions. A Participant who meets the requirements
-----------------------
of Article 8.3(b) may defer a distribution by providing the Trustees with a
written, signed notice specifying the date on which the distribution is to
commence, provided that the distribution shall be made no later than the April 1
following the last day of the calendar year in which a Participant attains age
70 1/2. Notwithstanding the foregoing, for Plan Years beginning on or after
January 1, 1997, a Participant may elect to defer a distribution to the later of
April 1 following the last day of (i) the calendar year in which the Participant
attains age 70 1/2 or (ii) the calendar year in which the Participant retires.
8.4 Treatment of Deferred Amounts. Where the distribution of a
------------------------------
Participant's Account is to be deferred, the vested portion shall continue to be
held and invested as an Account of the Trust subject to revaluation as provided
in Article 7.
8.5 Methods of Distribution.
------------------------
(a) Method. Distribution to any Participant or Beneficiary shall be
-------
made in a lump sum, in cash and kind.
(b) Timing. If the amount of a distribution cannot be determined
-------
by the date specified under Article 8.3, payment of benefits shall be made no
later than 60 days after the earliest date on which the amount of the
distribution can be determined.
(c) In Kind Distributions. In kind distributions shall be (i) made
----------------------
only in a form of investment that was held on behalf of the Participant in a
separate investment fund pursuant to Article 12.6 immediately preceding the date
of distribution, (ii) limited to the amount of such investment so held, and
(iii) based on the fair market
8-3
<PAGE>
value of the distributable property, as determined by the Trustees at the time
of distribution. Notwithstanding the foregoing, no distribution shall be made in
the form of Employer Stock.
(d) Distribution Delayed Until Trade Date. To the extent that a
--------------------------------------
Participant is entitled to a distribution of all or a portion of his Account
that is invested in Employer Stock, the Participant shall receive such
distribution as soon as reasonably practicable after the Trustees are able to
liquidate sufficient shares of Employer Stock to permit the distribution.
8.6 Distribution Upon Death of Participant.
---------------------------------------
(a) Distribution Made to Participant's Beneficiary. The vested
-----------------------------------------------
portion of a Participant's Account which remains at his death shall be
distributed to the Participant's Beneficiary in accordance with the provisions
of this Article 8.6.
(b) General Rules. If a Participant dies before his distribution
--------------
has been made, his vested Account shall be distributed within 5 years after the
death of the Participant. In addition:
(1) If the Beneficiary is the deceased Participant's surviving
spouse, distributions may be deferred until the date on which the Participant
would have attained age 70 1/2 , and
(2) If such surviving spouse dies before receiving any
distributions, the provisions of this Article 8.6 shall be applied as if such
spouse were the Participant.
8.7 Distributions to Minors or Legally Incompetents. In case of any
------------------------------------------------
distribution to a minor or to a legally incompetent person, the Trustees may
make the distribution to his legal representative, to a designated relative, or
directly to such person for his benefit. The Trustees shall not be required to
oversee the application, by any third party, of any distributions made pursuant
to this Article 8.7. Distributions made under this Article 8.7 shall be in
accordance with the provisions of this Article 8.
8.8 Tax Information To Be Provided. The Trustees shall provide to each
-------------------------------
Participant, Beneficiary or Alternate Payee who receives an eligible rollover
distribution (as defined in Code Section 402(f)), at the time such distribution
is made, a written explanation of the (1) provisions under which the
distribution will not be subject to tax if timely transferred to an eligible
retirement plan and, if applicable; (2) provisions regarding the availability of
10-year averaging or 5-year averaging tax treatment of the distribution.
8-4
<PAGE>
8.9 In Service Withdrawals.
-----------------------
(a) Withdrawals Permitted for Hardship.
-----------------------------------
(i) At the request of a Participant, the Trustee shall
authorize a withdrawal at any time from his Salary Deferral or Rollover Account,
provided that authorization for such withdrawal and the amount thereof shall be
given only on account of hardship incurred by the Participant which imposes
immediate and heavy financial needs which may not reasonably be met by the
Participant's other resources. Such withdrawal shall not exceed the amount
required to meet the immediate financial need created by the hardship including
any taxes or penalties created by such withdrawal. The amount which may be
withdrawn from such Participant's Salary Deferral and Rollover Account shall not
exceed the lesser of:
(1) The value of his Salary Deferral and Rollover
Account; or
(2) The value of his Salary Deferral and Rollover
Account as of December 31, 1998, plus the total of the Salary Deferral
Contributions made for the Participant since December 31, 1998, less any amounts
withdrawn after such date.
(ii) A distribution shall be deemed to be due to an immediate and
heavy financial need if it is on account of:
(1) Medical expenses incurred or anticipated by the
Employee or his spouse or other dependent or the need of these persons to obtain
medical care;
(2) Costs directly related to the purchase (excluding
mortgage payments) of the Employee's principal residence;
(3) Payment of tuition and related education fees for
the next 12 months of post-secondary education for the Employee or his spouse or
dependents;
(4) The need to prevent the eviction from or the
foreclosure on the mortgage of the Employee's principal residence;
(5) Such other needs to be added by the Commissioner of
Internal Revenue.
(iii) A distribution shall be treated as necessary to satisfy
a financial need if:
(1) The Employee has obtained all distributions, other
than for hardship, and all non-taxable loans currently available under the Plan
and any other plan maintained by the Employer;
8-5
<PAGE>
(2) No contributions shall be added to the Employee's
Salary Deferral Account and no elective contributions shall be made by such
participant to any other plan sponsored by the Employer for a period of 12
months after receipt of the hardship distribution, and such Employee shall be a
Suspended Participant during this 12-month period; and
(3) The maximum amount of Salary Deferrals that the
Employee can made in the calendar year immediately following the year in which
the hardship distribution is received is equal to the applicable maximum amount
for such calendar year less the Salary Deferrals made by the Employee in the
calendar year in which the distribution was received.
(b) Withdrawals Permitted Without Hardship. A Participant who has
---------------------------------------
attained age 59 1/2 may withdraw amounts from his Salary Deferral or Rollover
Account regardless of hardship by giving the Trustees notice of his intention to
make such a withdrawal at least 30 days prior to the withdrawal.
(c) Consent Required. All withdrawals are subject to written
-----------------
Participant Consent to the extent required by applicable law and regulation.
(d) Withdrawal Charged to Participant's Account. The Trustees shall
--------------------------------------------
make a distribution to a Participant of the amount which such Participant is
eligible to withdraw, and the amount of such withdrawal shall be charged by the
Trustees against the Salary Deferral or Rollover Accounts of the Participant.
Withdrawals under this Article 8.9 will be charged against the Participant's
Account as of the specified date of withdrawal, but no interest or other income
credit shall accrue with respect to such amounts to be withdrawn on account of
any period elapsing between the withdrawal date and the actual date of payment.
(e) Trustees Establish Rules. The Trustees have the power to
-------------------------
establish uniform and nondiscriminatory rules and from time to time to modify or
change such rules governing the manner and method by which in service
withdrawals may be made.
8.10 Limitations on Distributions Upon Plan Termination. Distributions
---------------------------------------------------
of a Participant's Salary Deferral and Non-Elective Accounts upon termination of
the Plan shall not commence prior to the Participant's termination of employment
or his attainment of age 59 1/2 except for hardship withdrawals in accordance
with Article 8.9, unless payment is made in a lump sum and (i) no successor
defined contribution plan (as defined in IRS regulations) is adopted; (ii) the
only successor plan (as defined in IRS regulations) is an ESOP as defined in
Code Section 4975(e)(7); or (iii) the distribution is:
(1) After the date of all of all Employer assets used
in its trade or business to a non-Affiliated Employer by whom the Participant is
still employed;
8-6
<PAGE>
(2) After the date of sale of an incorporated Affiliated
Employer's interest in a subsidiary by whom the Participant is employed; or
(3) Otherwise permitted by applicable law and
regulations.
8.11 Direct Rollovers.
-----------------
(a) In General. This Article applies to distributions made on or
-----------
after January 1, 1993. Notwithstanding any provision of the Plan to the contrary
that would otherwise limit a distributee's election under this Article, a
distributee may elect, at the time and in the manner prescribed by the Trustees,
to have an eligible rollover distribution paid directly to an eligible
retirement plan specified by the distributee in a direct rollover.
(b) Definitions Pertaining to Direct Rollovers.
-------------------------------------------
(i) Eligible rollover distribution: An eligible rollover
-------------------------------
distribution is any distribution 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).
(ii) Eligible retirement plan: An eligible retirement plan is
-------------------------
an individual retirement account described in Section 408(a) of the Code, an
annuity plan described in Section 403(a) of the Code, an individual retirement
annuity described in Section 408(b) 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.
(iii) Distributee: A 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 Alternative Payee under a qualified domestic relations order, as defined in
Section 414(p) of the Code, are distributees with regard to the interest of the
spouse or former spouse.
(iv) Direct rollover: A direct rollover is a payment by the
----------------
Plan to the eligible retirement plan specified by distributee.
* * * * End of Article 8 * * * *
8-7
<PAGE>
Article 9.
Service
9.1 General Definitions.
--------------------
(a) "Service" means an Employee's total period of employment with
---------
the Employer, including service with a predecessor entity or an Affiliated
Employer. Throughout this Article 9, Employer shall include Affiliated Employer
and any predecessor entity.
(b) "Hour of Service" means:
---------------
(i) Each hour for which an Employee is paid, or entitled to
payment, for the performance of duties for the Employer.
(ii) Each hour for which an Employee is paid, or entitled to
payment, by the Employer on account of a period of time during which no duties
are performed (regardless of whether the employment relationship has terminated)
due to vacation, holiday, illness, incapacity (including disability), layoff,
jury duty, military duty or leave of absence; provided that no Hours of Service
shall be credited to an Employee:
(1) For a period during which no duties are performed if
payment is made or due
under a plan maintained solely for purpose of complying with applicable
worker's compensation, unemployment compensation, or disability insurance
laws;
(2) On account of any payment made or due an Employee
solely as reimbursement for medical or medically related expenses incurred by
the Employee,
(3) On account of any payment made to an Employee as
severance pay, unless the severance pay is in lieu of advance notice of
termination.
(iii) Each hour not otherwise credited under the Plan for which
back pay, irrespective of mitigation of damages, has either been awarded or
agreed to by the Employer. Such hours are to be credited to the period or
periods to which the award or agreement pertains. If this provision results in
an Employee becoming an Eligible Participant for a Fiscal Year in which he was
not otherwise an Eligible Participant under Article 5 or if this provision
results in an increase in the vested percentage applicable to a Participant's
Account which has been forfeited under Article 6, the Trustees shall establish
equitable procedures for determining and allocating any resulting amounts to
such Employee's Account.
9-1
<PAGE>
(iv) No more than 501 Hours of Service shall be credited
under Articles 9.1(b)(ii) or (iii) to an Employee on account of any single
continuous period of time during which the Employee performs no duties for the
Employer.
9.2 Crediting of Hours Subject to DOL Regulation. The calculation of the
---------------------------------------------
number of Hours of Service to be credited under Articles 9.1(b)(ii) and (iii)
for periods during which no duties are performed, and the crediting of such
Hours of Service to periods of time for purposes of computations under the Plan,
shall be determined by the Trustees in accordance with the rules set forth in
the Department of Labor Regulation Section 2530.200b-2 paragraphs (b) and (c),
which rules shall be consistently applied with respect to all employees within
the same job classifications.
9.3 Elapsed Time Service Definitions.
---------------------------------
(a) "Break in Service" means a one year Period of Severance.
------------------
Solely for purposes of determining whether a Break in Service has occurred, a
one year period of absence shall be disregarded, provided such absence is:
(1) By reason of pregnancy or the birth of a child of
the Employee;
(2) By reason of the placement of a child with the
Employee in connection with his adoption of such child; or
(3) For purposes of caring for any such child for a
period beginning immediately following such birth or placement, and further
provided that the Employee provides the Plan Administrator with such timely
information as the Plan Administrator may reasonably require to establish that
the absence is for a reason described above.
(b) "Employment Commencement Date" means each of the following:
------------------------------
(i) The date on which an Employee first performs an Hour of
Service for an Employer with respect to which such Employee is compensated or
entitled to compensation by the Employer.
(ii) In the case of an Employee who incurs a Period of
Severance and who is subsequently reemployed by the Employer, the term
Employment Commencement Date means the first day following such Period of
Severance on which such Employee performs an Hour of Service for the Employer
with respect to which he is compensated or entitled to compensation.
(c) "Period of Service" shall mean the period of time beginning on an
-------------------
Employee's Employment Commencement Date and ending on his Severance Date.
Periods of Service shall be measured under the elapsed time method as authorized
under regulations promulgated by the Secretary of Labor.
9-2
<PAGE>
Periods of Service shall also be subject to the following:
(i) If an Employee severs from Service by quit, discharge or
retirement and returns to service within 12 months, that Period of Severance
shall be considered as part of that Employee's Period of Service.
(ii) Notwithstanding the rule in subparagraph (i) above, if an
Employee severs from Service by reason of quit, discharge or retirement after a
period of absence from service of 12 months or less, which period of absence
occurred for reasons other than a quit, discharge or retirement, such period of
absence shall be considered as part of the Employee's Period of Service only if
such Employee performs an Hour of Service within 12 months of the date on which
the Employee was first absent from service.
An Employee is considered to have returned to service on his new Employment
Commencement Date.
(d) "Period of Severance" means the period of time beginning on an
---------------------
Employee's Severance Date and ending on the Employee's new Employment
Commencement Date, if any, following thereafter.
(e) "Severance Date" means the date on which an Employee quits,
----------------
retires, is discharged or dies, or, if earlier, the first anniversary of the
beginning of a period of absence from service (for reasons other than a quit,
retirement, discharge or death, such as vacation, holiday, sickness, disability,
leave of absence or lay off).
* * * * End of Article 9 * * * *
9-3
<PAGE>
Article 10.
Fiduciary Responsibility
10.1 Named Fiduciaries. The authority to control and manage the
------------------
operation and administration of the Plan shall be allocated as provided in this
Agreement between the Employer and the Trustees, all of whom are named
fiduciaries under ERISA.
In addition, procedures for the appointment of another fiduciary, an
investment manager, are set forth in Article 12.4.
10.2 Fiduciary Standards. Each fiduciary shall discharge its duties
--------------------
with respect to the Plan solely in the interest of the Participants and
Beneficiaries as follows:
(1) For the exclusive purpose of providing benefits to
Participants and their Beneficiaries and defraying reasonable expenses of
administering the Plan;
(2) With the care, skill, prudence and diligence under
the circumstances then prevailing that a prudent man acting in a like capacity
and familiar with such matters would use in the conduct of an enterprise of a
like character and with like aims;
(3) By diversifying the investments of the Trust Fund
so as to minimize the risk of large losses, unless under the circumstances it is
clearly prudent not to do so; and
(4) In accordance with this Trust Agreement.
10.3 Fiduciaries Liable for Breach of Duty. A fiduciary shall be
--------------------------------------
liable, as provided in ERISA, for any breach of his fiduciary responsibilities.
In addition, a fiduciary under this Plan shall be liable for a breach of
fiduciary responsibility of another fiduciary under this Plan as provided under
ERISA Section 405.
10.4 Fiduciary May Employ Agents. Any person or group of persons may
----------------------------
serve in more than one fiduciary capacity with regard to the Plan. A fiduciary
may, with the consent of the Employer, employ one or more persons to render
advice and assistance with regard to any function such fiduciary has under the
Plan. The expenses of such persons shall be paid by the Trust if not paid by
the Employer, provided that only reasonable expenses of administering the Plan
may be paid from the Trust.
10.5 Authority Outlined.
-------------------
(a) Employer Authority. The Employer has the authority to amend and
-------------------
terminate the Plan. The chief executive officer of the Company has the authority
to appoint and remove Trustees.
10-1
<PAGE>
(b) Trustees' Administrative Authority. The Trustees, in their role
-----------------------------------
as Plan Administrator, have the authority to:
(i) Allocate the Employer contributions;
(ii) Establish rules pertaining to Salary Deferral
Contributions and their suspension and withdrawals;
(iii) Determine the method for allocation of the Trust income
or loss;
(iv) Maintain separate Accounts for Participants;
(v) Furnish, and correct errors in, statements of Accounts;
(vi) Direct the method, timing and media of distributions
pursuant to Article 8;
(vii) Direct the segregation of assets;
(viii) Direct distribution of the interests of incompetent
persons and minors;
(ix) Construe the Plan and Trust Agreement and determine
questions thereunder;
(x) Establish a funding policy;
(xi) Appoint and delegate duties to an investment manager; and
(xii) Employ advisors and assistants.
Article 11 further describes the administrative authority and duties of the
Trustees.
(c) Trustees' Authority With Respect to Plan Assets. The Trustees
------------------------------------------------
have the authority to establish the fair market value of the Trust Fund, to
value segregated Accounts, to employ advisors, agents and counsel, to hold the
Trust assets and to render accounts of their administration of the Trust.
Article 13 further describes the authority and duties of the Trustees with
respect to Plan assets.
10.6 Fiduciaries Not to Engage in Prohibited Transactions. A fiduciary
-----------------------------------------------------
shall not cause the Plan to engage in a transaction if he knows or should know
that such transaction constitutes a prohibited transaction under ERISA Section
406 or Code Section 4975, unless such transaction is exempted under ERISA
Section 408 or Code Section 4975.
10-2
<PAGE>
10.7 Duties of Plan Administrator. The Trustees are the Plan
-----------------------------
Administrator under ERISA and shall have the duty and authority to comply with
those reporting and disclosure requirements of ERISA and the Code which are
specifically required of the Plan Administrator. The Plan Administrator is the
agent for the service of legal process. The Plan Administrator shall keep on
file a copy of this Plan and Trust Agreement, including any subsequent
amendments, all annual and interim reports of the Trustee and the latest annual
report required under Title I of ERISA for examination by Participants during
business hours.
* * * * End of Article 10 * * * *
10-3
<PAGE>
Article 11.
Administration of the Plan
11.1 Selection of Trustees. There shall be five Trustees to manage and
---------------------
administer this Plan. The Trustees shall be appointed by the chief executive
officer of the Company, who shall also select a successor Trustee upon
resignation, death or removal of a Trustee.
11.2 Trustees' Operating Rules'. The Trustees shall act by agreement of a
---------------------------
majority of their members, either by vote at a meeting or in writing without a
meeting. By such action, the Trustees may authorize one or more members to
execute documents on their behalf, or may delegate such authority to another
person. A Trustee, who is also a Participant hereunder, shall not vote or act
upon any matter relating solely to himself. In the event of a deadlock or other
situation which prevents agreement of a majority of the Trustees, the matter
shall be decided by the Employer.
11.3 Trustees' Administrative Authority'. The Trustees have the authority
------------------------------------
and duty to do all things necessary or convenient to effect the intent and
purpose of this Plan, whether or not such authority and duties are specifically
set forth herein. Not in limitation but in amplification of the foregoing, the
Trustees shall have the discretionary power to construe the Plan and Trust
Agreement and to determine all questions that shall arise hereunder. Decisions
of the Trustees made in good faith upon any matters within the scope of its
authority shall be final and binding on the Employer, the Participants, their
Beneficiaries and all others. The Trustees shall at all times act in a uniform
and nondiscriminatory manner in making and carrying out their decisions and
directions, and may from time to time prescribe and modify uniform rules of
interpretation and administration. The Trustees are the Plan Administrator and
have the duties outlined in Article 3.
11.4 Trustees May Retain Advisors. With the approval of the Employer, the
-----------------------------
Trustees may from time to time or on a continuing basis, retain such agents or
advisors including, specifically, attorneys, accountants, actuaries, investment
counsel, consultants and administrative assistants, as it considers necessary to
assist it in the proper performance of its duties. The expenses of such agents
or advisors shall be paid by the Trust if not paid by the Employer, provided
that only reasonable expenses of administering the Plan may be paid from the
Trust.
11.5 Claims Procedure.
-----------------
(a) Claim Must Be Submitted Within 60 Days. The Trustees shall
---------------------------------------
determine Participants', Alternate Payees' and Beneficiaries' rights to benefits
under the Plan. In the event of a dispute over benefits, a Participant,
Beneficiary or Alternate Payee may file a written claim for benefits with the
Trustees, provided that such claim is filed within 60 days of the date the
Participant, Beneficiary or Alternate Payee receives notification of the
Trustees' determination.
11-1
<PAGE>
(b) Requirements for Notice of Denial. If a claim is wholly or
----------------------------------
partially denied, the Trustees shall provide the claimant with a Notice of
Denial, written in a manner calculated to be understood by the claimant, setting
forth:
(i) The specific reason for such denial;
(ii) Specific references to the pertinent Plan provisions on
which the denial is based;
(iii) A description of any additional material or information
necessary for the claimant to perfect the claim with an explanation of why such
material or information is necessary; and
(iv) Appropriate information as to the steps to be taken if
the claimant wishes to submit his claim for review.
The Notice of Denial shall be given within a reasonable time period but no
later than 90 days after the claim is filed, unless special circumstances
require an extension of time for processing the claim. If such extension is
required, written notice shall be furnished to the claimant within 90 days of
the date the claim was filed stating the special circumstances requiring an
extension of time and the date by which a decision on the claim can be expected,
which shall be no more than 180 days from the date the claim was filed. If no
Notice of Denial is provided as herein described, the claimant may appeal the
claim as though the claim had been denied.
(c) Claimant's Rights If Claim Denied. The claimant and/or his
----------------------------------
representative may appeal the denied claim and may:
(i) Request a review upon written application to the Trustees;
(ii) Review pertinent documents; and
(iii) Submit issues and comments in writing;
provided that such appeal is made within 60 days of the date the claimant
receives notification of the denied claim.
(d) Time Limit on Review of Denied Claim. Upon receipt of a
-------------------------------------
request for review, the Trustees shall provide written notification of its
decision to the claimant stating the specific reasons and referencing specific
Plan provisions on which its decision is based, within a reasonable time period
but not later than 60 days after receiving the request, unless special
circumstances require an extension for processing the review. If such an
extension is required, the Trustees shall notify the claimant of such special
circumstances and of the date, no later than 120 days after the original date
the review was requested, on which the Trustees will notify the claimant of its
decision.
11-2
<PAGE>
(e) No Legal Recourse Until Claims Procedure Exhausted. In the
---------------------------------------------------
event of any dispute over benefits under this Plan, all remedies available to
the disputing individual under this Article 11.6 must be exhausted before legal
recourse of any type is sought.
* * * * End of Article 11 * * * *
11-3
<PAGE>
Article 12.
Investments
12.1 Investment Authority. The Trustees are hereby granted full power and
---------------------
authority to invest and reinvest the Trust Fund or any part thereof in
accordance with the standards set forth in Article 10. Without limiting the
generality of the foregoing, the Trustees may invest in bonds, notes, mortgages,
commercial or federal paper, preferred stock, common stock, or other securities,
rights, obligations or property, real or personal, including shares and
certificates of participation issued by investment companies or investment
trusts. The Trustees are expected to accept and hold Employer Stock contributed
to the Trust as Employer Matching Contributions and Employer Stock purchased
with Employer Matching Contributions, if such stock, at the time contributed,
constitutes no more than 10 percent of the fair market value of the Trust
assets.
12.2 Use of Mutual or Commingled Funds Permitted. The Trustees may cause
--------------------------------------------
any part or all of the assets of this Trust to be invested in mutual funds; or
commingled with the assets of similar Trusts qualified under Code Sections
401(a) and 501(a) by causing such assets to be invested as part of a common fund
of a custodian or other fiduciary. To the extent that Trust assets are invested
in any collectively investment fund for which the Trust is eligible, the
declaration of trust establishing such funds is hereby adopted. Any assets of
the Trust that are invested in any such fund will be held and administered by
the Trustee under the terms of the fund's governing instrument.
12.3 Trustees May Hold Necessary Cash. The Trustees may hold in a cash
---------------------------------
or cash equivalent account such portion of the Trust Fund as may be deemed
necessary for the ordinary administration of the Trust and disbursement of
funds. Such funds may be deposited in any bank or savings and loan institution
subject to the rules and regulations governing such deposits.
12.4 Appointment of Investment Manager. The power of the Trustees to
----------------------------------
direct, control or manage the investment of the Trust Fund may be delegated to
one or more investment managers appointed by the Trustees. Any such investment
manager, if appointed, must acknowledge in writing that he is a fiduciary with
respect to the Trust Fund and shall then have the power to manage, acquire, or
dispose of any asset of the Trust Fund. An investment manager must be a person
who is (1) registered as an investment advisor under the Investment Advisors Act
of 1940; (2) a bank, as defined in that Act; or (3) an insurance company
qualified to perform such services under the laws of more than one state. If an
investment manager has been appointed, the Trustee shall neither be liable for
acts or omissions of such investment manager nor be under any obligation to
invest or otherwise manage any asset of the Trust Fund. The Trustees shall not
be liable for any act or omission of the investment manager in carrying out such
responsibility except to the extent that the Trustees violated Article 10.2 of
this Trust Agreement with respect to:
(1) Such designation,
12-1
<PAGE>
(2) The establishment or implementation of the procedures
for the designation of an investment manager, or
(3) Continuing the designation, in which case the
Trustees would be liable in accordance with Article 10.3.
12.5 Loans to Participants or Beneficiaries.
---------------------------------------
(a) Limit on Amount of Loan. The Trustee shall make a loan or loans
------------------------
to a Participant who is an active Employee (the Borrower) upon such terms as the
Trustees may determine in a uniform and nondiscriminatory manner. Such loan or
loans shall be limited to the lesser of (1) 50% of the Borrower's vested
Account; (2) the Borrower's Salary Deferral Account and/or Rollover Account, or
(3) $50,000. However, the amount of any new loan shall not exceed $50,000,
reduced by the highest outstanding loan balance of the Borrower during the
preceding 12 months. In determining whether the limitations of this Article have
been exceeded at any date, all loans made at any time from the Plan (or from any
other qualified plans maintained by the Employer or by an Affiliated Employer)
to the Borrower and still outstanding on such date shall be aggregated, and the
Borrower's vested interest in all qualified plans maintained by the Employer or
an Affiliated Employer, shall be aggregated.
(b) Repayment of Loan. All loans shall be evidenced by the
------------------
Borrower's promissory note. Such note shall provide for repayment of principal
and interest in substantially level installment payments made at least
quarterly. Loans to Participants who are Employees shall be repaid by payroll
deduction. The terms of any loan shall provide that repayment is to be made
within five years of the date of the loan, unless the loan is used to acquire a
dwelling to be used within a reasonable time (as determined at the date of the
loan) as the principal residence of the Participant, in which case the term of
such loan may be up to 25 years.
(c) Loan Policies and Procedures. The Participant loan program will
-----------------------------
be administered in a uniform and nondiscriminatory manner by the Trustees,
according to the policies and procedures set forth below:
(i) Application Procedure. A Borrower may apply for a loan
from the Plan in the form and manner prescribed by the Plan Administrator.
(ii) Limitations. Loans are available for any purpose. No
loans will be made in amounts less than $1,000. A Borrower may have only one
loan outstanding at one time.
(iii) Interest Rate. The interest rate shall be based on a
reference interest rate. The interest rate for loans issued shall be based on
the reference interest rate in effect on the date the application for the loan
is received. The reference interest rate and the interest rate charged by the
Plan are:
12-2
<PAGE>
(1) For loans with terms of 5 years or less, the
reference interest rate shall be the interest rate charged by the CH2M Hill
Federal Credit Union for a loan secured by new titled equipment and having the
same term as the loan from the Plan. The interest rate charged by the Plan shall
be equal to the reference interest rate. If a loan from the Plan is for a term
for which a reference interest rate is not set, the interest rate shall be equal
to the interest rate for the next higher term for which there is a reference
interest rate.
(2) For loans with terms of over 5 years, the reference
interest rate shall be the interest rate charged by the CH2M Hill Federal Union
for a second mortgage loan. The interest rate charged by the Plan shall be equal
to the reference interest rate. If a reference interest rate is established for
different terms, the interest rate charged by the Plan shall be based on the
reference interest rate for the term that is the closest to the term of the loan
from the Plan.
The Trustees shall review the interest rates charged by the Plan to
determine that such rates meet the requirements of Section 408(b)(1) of ERISA
for a reasonable interest rate on loans from the Plan and the Trustees may adopt
a new basis for interest rates if they determine that a change is necessary to
meet such requirements.
(iv) Security for Loan. The loan shall be secured by up to 50%
of the Borrower's vested Account Balance. No additional collateral or other form
of collateral will be accepted or allowed to secure the loan.
(v) Default. A loan shall be in default if the Borrower
fails to make principal and /or interest payments pursuant to the promissory
note for a period of 3 months. In the event of default, the Trustees:
(1) Shall deduct the full unpaid balance of the loan
from any distribution made to the Participant due to his termination of
employment.
(2) May, if permitted by the terms of the promissory
note which has been signed by the Participant:
(A) Distribute to a terminating Participant the full
unpaid balance of the loan, notwithstanding that the Participant might
otherwise have the right to defer receipt of payment as provided in
Article 8;
(B) Make a deemed distribution to the Borrower,
which will not involve an actual payment to him but will be currently
taxable to the Borrower, and will not reduce the unpaid balance of the
loan.
(vi) Loan Fees. Any costs relating to the establishment of a
separate loan account and to transactions within such an account can be passed
on to the
12-3
<PAGE>
Borrower in a nondiscriminatory manner. A Borrower shall receive a clear
statement of all charges involved in the loan transaction before the loan is
made.
(d) Loans Are Segregated. Any loan under this Article 12.5 shall
---------------------
be accounted for as a segregated loan Account in the Trust. Repayments of the
principal amount of the loan will (1) reduce the total amount of principal due
in the segregated loan Account by the amount of such payments, and (2) increase
by an equal amount the value of the Borrower's Account. Payments of interest on
such loan will reduce the total amount of interest due in the segregated loan
Account. Such interest payments will be credited directly to the Borrower's
Account.
(e) Loans Made Prior to October 19, 1989. Notwithstanding the
-------------------------------------
foregoing, any loan made pursuant to the rules in effect prior to October 19,
1989 must comply only with the requirements of the Plan and the laws in effect
at the time the loan was made, until such time as that loan is repaid or
renegotiated.
12.6 Separate Investment Funds.
--------------------------
(a) Trustees May Establish Separate Funds. The Trustees may, in
--------------------------------------
their sole discretion, designate for the Trust's investment, one or more
separate investment funds, having such different specific investment objectives
as the Trustees shall from time to time determine. From time to time the
Trustees may add or delete funds without amending the Plan. Participants will be
informed of the various investment options available. One such separate
investment fund shall be the Employer Stock Fund. The Trustees shall establish
an Employer Stock Fund for the investment of Employer Matching Contributions
made for Plan years after 1995, and for the optional investment of other
contributions to the Participants' Accounts.
(b) Participant Direction Permitted. Each Participant has the
--------------------------------
right to direct the investment of his Account into one or more of the Plan's
separate investment funds, provided, however, that:
(i) All Employer Matching Contributions made for Plan years
after 1995 shall be invested in the Employer Stock Fund,
(ii) The Trustees shall establish rules governing Participant
direction of investments in the Employer Stock Fund, which rules may specify
that transfers into or out of the Employer Stock Fund may be made only at
certain times and only to the extent that the Trustees are able to buy or sell
sufficient shares of Employer Stock to permit such transfers, and
(iii) If any Participant fails to make an investment direction
pursuant to this Article for all or any part of his Account not automatically
invested in the Employer Stock Fund in accordance with (i) above, the undirected
portion of such Account shall be invested in the money market fund.
12-4
<PAGE>
Each directed investment Account shall be valued separately under
the provision of Article 7.
(c) Trustees to Establish Rules. The Trustees may at any time make
----------------------------
such uniform and nondiscriminatory rules as it determines necessary regarding
the administration of this directed investment option. The Trustees shall
develop and maintain rules governing the rights of Participants to make or to
change their investment directions and the frequency with which changes can be
made.
* * * * End of Article 12 * * * *
12-5
<PAGE>
Article 13.
Trustee
13.1 Trustees' Duties With Respect to Trust Assets'. The duties of the
-----------------------------------------------
Trustees with respect to Trust assets shall be to direct the receipt and payment
of funds of the Trust, the safeguarding and valuing Trust assets, and the
investing and reinvesting the Trust Funds. The directions of the Trustees shall
be in writing and bear the signature of one or more persons designated as its
authorized signatory or signatories, as provided in Article 11.2. The
directions of an investment manager shall be in writing or in such other form as
is acceptable to the Trustee. The Employer may, however, authorize the Trustees
to act with respect to any specific matter or class of matters by delivering to
the Trustees a certified copy of a resolution authorizing the Trustees so to
act.
13.2 Indicia of Ownership Must Be in the United States. The Trustees
--------------------------------------------------
shall not maintain the indicia of ownership of any Trust assets outside the
jurisdiction of the district courts of the United States, except as authorized
by regulations issued by the Department of Labor.
13.3 Permissible Trustees' Actions'. In the discharge of its duties, the
-------------------------------
Trustees have all the powers, authority, rights and privileges of an absolute
owner of the Trust Fund and, not in limitation of but in amplification of the
foregoing, may (i) receive, hold, manage, invest and reinvest, sell, exchange,
dispose of, encumber, hypothecate, pledge, mortgage, lease, grant options
respecting, repair, alter, insure, or distribute any and all property in the
Trust Fund; (ii) borrow money, participate in reorganizations, pay calls and
assessments, vote or execute proxies, exercise subscription or conversion
privileges and register in the name of a nominee any securities in the Trust
Fund; (iii) renew, extend the due date, compromise, arbitrate, adjust, settle,
enforce or foreclose by judicial proceedings or otherwise or defend against the
same, any obligations or claims in favor of or against the Trust Fund; (iv)
exercise options, employ agents; and, (v) whether herein specifically referred
to or not, do all such acts, take all such actions and proceedings and exercise
all such rights and privileges as if the Trustees were the absolute owner of any
and all property in the Trust Fund. The Trustees have no authority or duty to
determine the amount of the Employer contribution or to enforce the payment of
any Employer contribution to it.
13.4 Voting of Employer Stock. Every Participant shall have the right to
-------------------------
direct the Trustees with respect to the voting of the Employer Stock allocated
to his Account. At the time of the mailing to shareholders of the notice of any
shareholders' meeting of the Employer, the Employer shall cause to be prepared
and delivered to each Participant a notice of the shareholders' meeting with a
descriptive statement of the items upon which the Participant has the right to
exercise his right to vote. The Trustees shall vote any Employer Stock which a
Participant fails to vote as authorized by this Article in the same proportion
as the allocated shares for which voting instructions have been received and are
voted.
13-1
<PAGE>
13.5 Trustees' Fees for Services and Advisors Retained. Individual
-------------------------------------------------
Trustees shall serve without compensation for their service as such. However,
with the approval of the Employer, the Trustees may from time to time or on a
continuing basis, retain such agents or advisors, including specifically
accountants, attorneys, investment counsel and administrators, as they consider
necessary to assist them in the proper performance of their duties. The expenses
of such agents or advisors and all other expenses of the Trustees shall be paid
by the Trust if not paid by the Employer, provided that only reasonable expenses
of administering the Plan may be paid from the Trust.
13.6 Annual Accounting and Asset Valuation. Within 60 days or within a
-------------------------------------
reasonable period following the close of each Fiscal Year, the Trustees shall
render to the Employer an accounting of the administration of the Trust during
the preceding year. The Trustees shall also determine the value of the Trust
Fund, at the close of the Fiscal Year in Article 7. Notwithstanding any other
provisions of this Agreement, if the Trustees find that the Trust Fund consists,
in whole or in part, of property not traded freely on a recognized market or
that information necessary to ascertain the fair market value thereof is not
readily available to the Trustees, the Trustees shall take such action as is
required to ascertain the fair market value of such property including the
retention of such counsel and independent appraisers as it considers necessary;
and in such event the fair market value so determined shall be conclusive and
binding.
13.7 Trustee Removal or Resignation. A Trustee may resign at any time
------------------------------
upon 30 days written notice to the Employer and the Trustees or such shorter
period as may be agreeable to the Employer. Upon receipt of instructions or
directions from the Employer with which the Trustees are unable or unwilling to
comply, a Trustee may resign upon written notice to the Employer, given within a
reasonable time under the circumstances then prevailing. After resignation, a
Trustee shall have no liability to the Employer, or any person interested herein
for failure to comply with any instructions or directions. The Employer may
remove a Trustee without cause at any time upon 30 days written notice. In case
of resignation or removal of all the Trustees, the Trustees shall have the right
of a settlement of their accounts, which may be made at the option of the
Trustees, either by judicial settlement in an action in a court of competent
jurisdiction or by agreement of settlement between the Trustees and the
Employer. The Trustees shall not be required to transfer assets of the Trust
Fund to a successor Trustee under Article 13.8 or otherwise until its accounts
have been settled.
13.8 Approval of Trustees' Accounting. The written approval of any
--------------------------------
Trustees'accounting by the Employer shall be final as to all matters and
transactions stated or shown therein and binding upon the Employer, and all
persons who then shall be or thereafter shall become interested in this Trust.
Failure of the Employer to notify the Trustees of its disapproval of an
accounting within 90 days after it has been received shall be the equivalent of
written approval.
13.9 Trust Not Terminated Upon Trustees' Removal or Resignation.
----------------------------------------------------------
Resignation or removal of all of the Trustees shall not terminate the Trust. If
any or all of the Trustees have died, resigned, or been removed, the chief
executive officer of the
<PAGE>
Company shall appoint a successor Trustee pursuant to Article 11.1. Any
successor Trustee shall have all the powers and duties herein conferred upon the
former Trustee. The title to all Trust property shall automatically vest in a
successor Trustee without the execution or filing of any instrument or the doing
of any act, but the former Trustee shall, nevertheless, execute all instruments
and do all acts which would otherwise be necessary to vest such title in any
successor. The appointment of a successor Trustee may be effected by amendment
to this Trust Agreement or by a board resolution of the Employer, with the
agreement of the successor Trustee to act as such being evidenced by its
execution of such amendment or acceptance of such board resolution.
13.10 Trustees May Consult With Legal Counsel. The Trustees may
---------------------------------------
consult with legal counsel (who may or may not be counsel to the Employer)
concerning any question which may arise with reference to its duties under this
Agreement.
13.11 Trustees Not Required to Verify Identification or Addresses. The
------------------------------------------------------------
Trustees shall not be required to make any investigation to determine the
identity or mailing address of any person entitled to benefits under this
Agreement and shall be entitled to withhold making payments until the identity
and mailing address of any person entitled to benefits are certified by the
Employer. In the event that any dispute shall arise as to the identity or
rights of persons entitled to benefits hereunder, the Trustees may withhold
payment of benefits until such dispute has been determined by a court of
competent jurisdiction or shall have been settled by written stipulation of the
parties concerned.
13.12 Individual Trustee Rules. The action of individual Trustees shall
-------------------------
be determined by the vote or other affirmative expression of the majority
thereof, and they shall designate one of their members, or some other person, to
keep a record of their decision on matters to be determined hereunder and of all
dates, documents and other matters pertaining to their administration of this
Trust. However, no Trustee who is a Participant shall vote on any action
relating specifically to himself, and in the event the remaining Trustees by
majority vote thereof are unable to come to a determination of any such
question, the matter shall be decided by the Employer.
13.13 Indemnification of Trustees and Insurance. To the fullest extent
-----------------------------------------
permitted by law, the Employer agrees to indemnify, to defend, and to hold
harmless the Trustees, individually and collectively, against any liability
whatsoever for any action taken or omitted by such Trustees in good faith in
connection with this Plan and Trust or duties hereunder and for any expenses or
losses for which the Trustees may become liable as a result of any such actions
or non-actions unless resultant from willful misconduct. The Employer may
purchase insurance for the Trustees to cover any of their potential liabilities
with regard to the Plan and Trust.
<PAGE>
13.14 Income Tax Withholding. In directing payments from the Trust, the
----------------------
Trustees shall be liable for federal income tax withholding, and shall withhold
the appropriate amount of tax, if any, as provided by applicable law and
regulation, from any payment made to a Participant, Beneficiary or Alternate
Payee.
* * * * End of Article 13 * * * *
<PAGE>
Article 14.
Amendment, Termination and Merger
14.1 Trust Is Irrevocable. The Trust shall be irrevocable but shall be
--------------------
subject to amendment and termination as provided in this Article 14.
14.2 Employer May Amend Trust Agreement. The Employer reserves the right
----------------------------------
to amend this Trust Agreement to any extent and in any manner that it may deem
advisable by action of its Board of Directors. The Employer, the Trustees, all
Participants, their Beneficiaries and all other persons having any interest
hereunder shall be bound by any such amendment; provided, however, that no
amendment shall:
(1) Cause or permit any part of the principal or income
of the Trust to revert to the Employer or to be used for, or be diverted to, any
purpose other than the exclusive benefit of Participants or their Beneficiaries
except as permitted by ERISA;
(2) Change the duties or liabilities of the Trustees
without their written assent to such amendment;
(3) Adversely affect the then accrued benefits of any
Participants; or
(4) Eliminate an optional form of distribution for
Account balances accrued before such amendment, except as allowed under the
Code.
14.3 Employer May Terminate Plan or Discontinue Matching and Profit Sharing
----------------------------------------------------------------------
Contributions. The Employer has established the Plan with the bona fide
- -------------
intention and expectation that the Plan will continue indefinitely, and that it
will be able to make its Matching and Profit Sharing contributions indefinitely,
but the Employer shall be under no obligation to continue its Matching and
Profit Sharing contributions or to maintain the Plan for any given length of
time and may, in its sole discretion, completely discontinue its Matching or
Profit Sharing contributions or terminate the Profit Sharing and/or Salary
Deferral portion of the Plan at any time without any liability whatsoever. In
the event of the earlier of (1) the termination of the Profit Sharing portion of
this Plan, or (2) the complete discontinuance of matching and Profit Sharing
contributions hereunder, the full value of the applicable Accounts of all
Participants of the terminated portion or portions of the Plan shall become
fully vested and nonforfeitable. In the event of partial termination of the
Profit Sharing portion of the Plan, the full value of the applicable Accounts of
the Participants involved in the partial termination shall become fully vested
and nonforfeitable.
14.4 Timing of Plan Termination. The Plan or either portion thereof shall
--------------------------
terminate:
<PAGE>
(a) By Written Notice. Upon the date specified in a written notice
-----------------
of such termination, executed by the Employer and delivered to the Trustee; or
(b) Purpose of Trust Accomplished. Upon the earlier of (i) the
-----------------------------
complete accomplishment of all purposes for which the Plan was created, or (ii)
the death of the last person entitled to receive any benefits hereunder who is
living at the date of execution of the Trust Agreement. However, if, upon the
death of such last survivor, the Trust may continue for a longer period without
violation of any law of the jurisdiction to which the Trust is subject, the
Trust shall continue until the complete accomplishment of all the purposes for
which the Plan and Trust are created, unless sooner terminated under the other
provisions hereof.
14.5 Action Required Upon Plan Termination. Upon the termination of this
-------------------------------------
Plan and after payment of all expenses of the Trust, including any amounts then
due the Trustees and agents of the Trustees, the Trust assets and all
Participants' Accounts shall be revalued according to the procedures provided in
Article 7. Limitation Accounts held pursuant to Article 5 shall be allocated as
of the date the Plan is terminated in accordance with Articles 4 and 5. The
Trustee shall hold and distribute such Accounts as directed by the Trustees in
accordance with the provisions of Article 8. Upon such termination, if the
Employer has ceased to exist, all rights, powers, and duties to be exercised or
performed by the Employer shall thereafter be exercised or performed by the
Trustees, including the filling of vacancies on the Trustees and the amending of
the Plan.
14.6 Non-Reversion of Assets. Except as provided in Article 4.3(b) and
-----------------------
14.8, in no event shall any part of the principal or income of the Trust revert
to the Employer or be used for or diverted to any purpose other than the
exclusive benefit of Participants or their Beneficiaries.
14.7 Merger or Consolidation Cannot Reduce Benefits. In no event shall
----------------------------------------------
this Plan or either portion thereof be merged or consolidated with any other
plan, nor shall there be any transfer of assets or liabilities from this Plan,
or either portion thereof to any other plan unless immediately after such
merger, consolidation or transfer, each Participant's benefits, if such other
plan were then to terminate, are at least equal to or greater than the benefits
which the Participant would have been entitled to had this Plan or such
applicable portion thereof been terminated immediately before such merger,
consolidation or transfer.
14.8 Employer Contributions Conditioned Upon Initial Plan Approval.
-------------------------------------------------------------
Notwithstanding any other provisions of the Agreement to the contrary, the
Employer's obligation to make contributions hereunder is conditioned upon the
Employer receiving an initial notification from the United States Department of
the Treasury that this Plan is considered to be qualified Plan under Code
Section 401(a) and that this Trust is considered exempt from taxation under Code
Section 501(a). If such initial notification is not received, the Employer and
any Employee who has made contributions hereunder shall be entitled to recover
from the Trustee the full amount of the then value of such
<PAGE>
contributions. Prior to the receipt of such initial notification, no Participant
hereunder or his Beneficiary has any vested interest in, or shall be entitled
to, any benefit payments based on Employer contributions made hereunder;
provided, however, that upon receipt of such notification, such vestings or
entitlements shall be retroactive to the date of their occurrence in accordance
with the other provisions of this Plan, and this Article 14.8 shall be no
further force or effect.
* * * * End of Article 14 * * * *
<PAGE>
Article 15.
Assignments
15.1 No Assignment. Except as provided in Article 12.5(c) regarding loans
-------------
and Article 15.2 below, the interest herein, whether vested or not, of any
Participant, former Participant or Beneficiary, shall not be subject to
alienation, assignment, pledging, encumbrance, attachment, garnishment,
execution, sequestration, or other legal or equitable process, or
transferability by operation of law in the event of bankruptcy, insolvency or
otherwise.
15.2 Qualified Domestic Relations Order Permitted. The provisions of
--------------------------------------------
Article 15.1 above shall not prevent the creation, assignment or recognition of
any individual's right to a benefit payable with respect to a Participant
pursuant to a Qualified Domestic Relations Order (QDRO).
(a) Not All Domestic Relations Orders Qualify as QDROs. The
--------------------------------------------------
Trustees shall establish reasonable procedures to determine whether a domestic
relations order is a QDRO and to administer distributions under a QDRO. If any
domestic relations order is received by the Plan, the Trustees shall promptly
notify the Participant and each Alternate Payee that the order has been
received, and shall determine within a reasonable period after receipt of the
order whether it is a QDRO and notify the Participant and each Alternate Payee
of the Trustees' determination.
(b) Payments May Occur Before Termination of Service. The Plan may
------------------------------------------------
make benefit payments to an Alternate Payee under a QDRO before the
Participant's termination of Service if such payments are made on or after the
earlier of (i) at any time after the order is determined to be a QDRO; (ii) the
earliest date on which the Participant is entitled to a distribution under the
Plan; or (iii) the later of (A) the Participant's 50th birthday, or (B) the
earliest date on which the Participant could receive benefits under the Plan if
the Participant separated from Service; in accordance with applicable law or
regulations.
(c) Separate Accounting of Alternate Payee's Account. During any
------------------------------------------------
period in which the issue of whether a domestic relations order is a QDRO is
being determined by the Trustees, a court of competent jurisdiction or
otherwise, the Trustees shall separately account for (herein referred to as "the
separate amounts") the amounts which would have been payable to the Alternate
Payee during such period if the order had been determined to be a QDRO. If the
order, or a modification of the order, is determined within the 18 month period
described herein to be a QDRO, the Trustees shall pay the separate amounts (as
adjusted by attributable investment income or loss), in accordance with the
Plan's provisions, to the entitled individuals). If, within the 18 month period
described herein, the order is determined not to be a QDRO or its status as a
QDRO is not resolved, the Trustees shall return the separate amounts (as
adjusted by attributable investment income or loss) to his Account; or if
applicable, the Trustees shall pay such separate amounts to the individuals who
would have been entitled to
<PAGE>
receive such amounts absent such order. Any determination that an order is a
QDRO made after the close of the 18-month period described herein shall be
applied prospectively only. For purposes of this Article 15.2(c), the 18-month
period shall be the 18-month period beginning with the date on which the first
payment would be required to be made under the QDRO.
(d) Consent Requirements. Except as otherwise provided in a QDRO,
--------------------
payments made to an Alternate Payee shall not be subject to (1) Spousal Consent,
or (2) consent of the Alternate Payee.
* * * * End of Article 15 * * * *
<PAGE>
Article 16.
Adoption of the Plan by Affiliated Employers
16.1 Purpose. The purpose of this Article 16 is to describe the terms
--------
and conditions under which an Affiliated Employer may adopt the Plan for the
benefit of its Eligible Employees.
16.2 Conditions of Subscription Agreement. Any Affiliated Employer may,
-------------------------------------
with the written consent of the Board, execute a Subscription Agreement under
which it shall agree:
(a) To be bound by all the provisions of the adopted Plan and Trust
in the manner set forth herein:
(b) To pay its share of the expenses of the Plan and Trust as they
may be determined from time to time in the manner specified in this Article 16;
and
(c) To provide the Board and the Trustees with full, complete and
timely information on all matters necessary to them in the operation of the Plan
and Trust.
16.3 Participation of Affiliated Employers. In the event of the adoption
--------------------------------------
of the Plan and Trust by an Affiliated Employer, the following shall apply with
respect to the participation of such Affiliated Employer hereunder:
(a) All the terms and conditions of the Plan and Trust shall apply
to the participation of such Member Employer and its Employees in the same
manner as set forth for the Employer and its Employees, except as follows:
(i) The right to designate an Affiliated Employer is
specifically reserved to the Board.
(ii) An Affiliated Employer which adopts the Plan shall have
the right to designate for purposes of Article 3 alternative requirements which
shall be met by its Eligible Employees in order to qualify as Participants. In
the event that no such designation is made, the current requirements set forth
in Article 3 shall apply to Employees of such Member Employer.
(iii) An Affiliated Employer which adopts the Plan shall have
the right to designate that it does not adopt Article 4.2(a) permitting Employer
---
Profit Sharing Contributions and/or Article 4.2(c) permitting Employer Matching
Contributions, and all applicable provisions related to such Profit Sharing
and/or Matching Contributions.
(iv) The right to appoint the Trustees as Plan Administrator
is specifically reserved to the Board, provided that a Member Employer may
appoint an
16-1
<PAGE>
Advisory Committee of such composition and size as it may determine to advise
the Trustees on any matters affecting such Member Employer or its Employees who
are Participants under the Plan. The Trustees shall be entitled to rely on any
information furnished it by any such Advisory Committee in the same manner as if
furnished by the Member Employer appointing such Advisory Committee, but in no
event shall the existence of any such Advisory Committee modify or otherwise
limit any of the powers or duties of the Trustees under the Plan.
(v) The right to direct, appoint, remove, approve the account of
or otherwise deal with the Trustees are specifically reserved to the Board.
(vi) The right to amend the Plan and Trust is specifically
reserved to the Board, and any such amendment, unless otherwise specified
therein, shall be fully binding with respect to the participation of any Member
Employer, provided that this reservation shall in no event be construed to
prevent any Member Employer from terminating at any time its participation in
the Plan and Trust.
(b) In the operation of the Plan with respect to a Member Employer, the
term "effective date" shall mean the effective date in this Restatement or such
later date as specified in such Member Employer's Subscription Agreement.
(c) The Trustees shall at all times maintain separate Accounts reflecting
the participation of the Eligible Employees of the Member Employer and in no
event shall there be a commingling of the Accounts of the Eligible Employees of
the Employer or any Member Employer, provided that this requirement shall in no
event be construed to be a limitation on the commingling of any contributions of
the Trust Fund for investment purposes nor shall it require the Trustees to
maintain separate accounts with respect to the Trust Fund except as otherwise
provided herein.
(d) Notwithstanding any other provisions of this Agreement to the
contrary, it is specifically understood that the participation of any Affiliated
Employer hereunder, the obligation of such Affiliated Employer to make
contributions hereunder, and the vesting and entitlements of any Participant
based on such contributions are conditional to the extent that if a notification
is received from the United States Treasury that its Subscription Agreement as
part of the Plan, or the same as it may have been amended, is not part of a
qualified plan under Section 401 of the Code, as amended by ERISA, with respect
to its participation, such Affiliated Employer shall not be a Member Employer
hereunder and the then value of any contributions made by such Affiliated
Employer or its Employees shall be returned from the Trust Fund, and no
Participant hereunder or his Beneficiary shall have any vested interest in, or
be entitled to, any benefit payments based on such contributions. Further, it is
understood and provided that upon receipt of an initial notification from the
United States Treasury Department that such Subscription Agreement and the Plan
and Trust, as they may have been amended in order to receive such notification,
are qualified and exempt from taxation under the applicable sections of the
Code, the participation of such Affiliated Employer as a Member Employer and the
vestings and entitlement of all Participants
<PAGE>
employed by such Member Employer and their Beneficiaries shall be retroactive to
the date of their occurrence in accordance with the other provisions of the
Plan, and this Article 16.3 shall be of no further force or effect with respect
to such Member Employer and its Employees.
16.4 Termination of Member Employer's Participation'. Any Member
------------------------------------------------
Employer may at any time elect to terminate its participation in the Plan and
Trust, or any Member Employer may elect at any time by appropriate amendment or
action affecting only its own status hereunder to disassociate itself from the
Plan and Trust but to continue the Plan and the portion of the Trust as it
pertains to itself and its Employees as an entity separate and distinct from the
Plan and Trust if otherwise permitted by law. Termination of the participation
of any Member Employer shall not affect the participation of any other Member
Employer nor terminate the Plan or Trust with respect to them and their
Employees; provided that, if Employer shall terminate its participation, or
disassociate itself, then each remaining Member Employer shall make such
arrangement and take such action as may be necessary to assume the duties of
providing for the operation and continued administration of the Plan and Trust
as the same pertains to the Member Employer.
* * * * End of Article 16 * * * *
16-3
<PAGE>
Article 17.
Miscellaneous
17.1 Special Rule Relating to Veterans Reemployment Rights Under USERRA.
-------------------------------------------------------------------
Notwithstanding any provision of this Plan to the contrary, effective as of
December 12, 1994, contributions, benefits and service credit with respect to
qualified military service will be provided in accordance with Section 414(u) of
the Code.
* * * * End of Article 17 * * * *
17-1
<PAGE>
IN WITNESS WHEREOF, the Employer and the Trustees have caused this
Agreement to be executed by their respective duly authorized parties on this
_____ day of ___________________, 1999.
CH2M HILL COMPANIES, LTD.
(Employer)
By___________________________________
Its__________________________________
FRED K. BERRY
SAMUEL H. IAPALUCCI
SHARON SCHLECHTER
CLIFF THOMPSON
STAN VINSON
(Trustees)
By___________________________________
By___________________________________
By___________________________________
By___________________________________
By___________________________________
<PAGE>
Exhibit 10.2
CH2M HILL EMPLOYEE STOCK PLAN
-----------------------------
(as amended and restated effective January 1, 2000)
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
Article 1. Name, Effective Date, Purpose and Construction....................1-1
1.1 Plan Name.............................................................1-1
1.2 Effective Date........................................................1-1
1.3 Purpose and History...................................................1-1
1.4 Construction..........................................................1-1
1.5 Employment Relationship Not Affected..................................1-2
1.6 Terminated Participants Not Affected..................................1-2
Article 2. Definitions.......................................................2-1
2.1 Account...............................................................2-1
2.2 Adjustment Factor.....................................................2-1
2.3 Affiliated Employer...................................................2-1
2.4 Allowable Compensation................................................2-1
2.5 Alternate Payee.......................................................2-2
2.6 Beneficiary...........................................................2-2
2.7 Board.................................................................2-2
2.8 Break in Service......................................................2-2
2.9 Code..................................................................2-2
2.10 Company...............................................................2-2
2.11 Date of Hire..........................................................2-2
2.12 Deferred Retirement Date..............................................2-2
2.13 Determination Date....................................................2-2
2.14 Disability............................................................2-2
2.15 Eligible Employee.....................................................2-3
2.16 Eligible Participant..................................................2-3
2.17 Employee..............................................................2-3
2.18 Employer..............................................................2-3
2.19 Employer Stock........................................................2-3
2.20 Entry Date............................................................2-3
2.21 ERISA.................................................................2-3
2.22 Fiscal Year...........................................................2-4
2.23 Forfeiture............................................................2-4
2.24 GATT..................................................................2-4
2.25 General Trust Fund....................................................2-4
2.26 Hour of Service.......................................................2-4
2.27 Inactive Participant..................................................2-4
2.28 Key Employee..........................................................2-5
2.29 Leased Employee.......................................................2-5
2.30 Member Employer.......................................................2-5
2.31 Non-Key Employee......................................................2-5
2.32 Normal Retirement Date................................................2-5
</TABLE>
i
<PAGE>
2.33 OBRA '93..............................................................2-5
2.34 Owner.................................................................2-5
2.35 Participant...........................................................2-6
2.36 Plan..................................................................2-6
2.37 Plan Administrator....................................................2-6
2.38 Plan Compensation.....................................................2-6
2.39 Quarter...............................................................2-6
2.40 Qualified Domestic Relations Order....................................2-7
2.41 REA...................................................................2-7
2.42 Savings Plan..........................................................2-7
2.43 SBJPA.................................................................2-7
2.44 Service...............................................................2-7
2.45 Spousal Consent.......................................................2-7
2.47 TEFRA.................................................................2-7
2.48 Testing Compensation..................................................2-7
2.49 Top-Heavy Plan........................................................2-8
2.50 TRA '86...............................................................2-9
2.51 Trust.................................................................2-9
2.52 Trust Agreement.......................................................2-9
2.53 Trust Fund............................................................2-9
2.54 Trustees..............................................................2-9
2.55 USERRA................................................................2-9
2.56 Valuation Date........................................................2-9
2.57 List of Terms Defined Elsewhere.......................................2-9
Article 3. Eligibility, Participation and Beneficiary Designation............3-1
3.1 Definitions............................................................3-1
3.2 Participation..........................................................3-1
3.3 Beneficiary Designation................................................3-1
3.4 Change from Ineligible to Eligible Employee............................3-2
3.5 Former Employee Rehired................................................3-2
3.6 Trustees Determine Eligibility.........................................3-2
Article 4. Contributions.....................................................4-1
4.1 Employer Contribution..................................................4-1
4.2 Top-Heavy Minimum Contribution.........................................4-1
4.3 Timing of, Limitations on, and Return of Employer Contributions........4-1
Article 5. Allocation of Contributions and Forfeitures.......................5-1
5.1 Definitions............................................................5-1
5.2 Allocation Methods.....................................................5-3
5.3 Limitations on Annual Allocations......................................5-4
5.4 Overall Limitation for Different Types of Plans........................5-4
ii
<PAGE>
5.5 Restoration Procedures.................................................5-5
Article 6. Vesting of Accounts
6.1 Automatic Vesting on Retirement, Death or Disability...................6-1
6.2 Vesting Based on Service...............................................6-1
6.3 Forfeitures and Restorations...........................................6-1
6.4 No Divestment..........................................................6-2
6.5 Amendment to Vesting...................................................6-2
6.6 Lost Participants......................................................6-2
Article 7. Participants' Account Valuation...................................7-1
7.1 Separate Accounts......................................................7-1
7.2 Determination of Value of Participant Accounts.........................7-1
7.3 Valuation Dates........................................................7-1
7.4 Special Valuation Dates................................................7-1
7.5 Accounts to be Valued..................................................7-1
7.6 Statement of Accounts..................................................7-1
7.7 Valuation of Account When Payment Due..................................7-2
Article 8. Distributions and Withdrawals.....................................8-1
8.1 General................................................................8-1
8.2 Administrative Rules...................................................8-1
8.3 Timing of Distributions................................................8-1
8.4 Treatment of Deferred Amounts..........................................8-3
8.5 Methods of Distribution................................................8-3
8.6 Distribution Upon Death of Participant.................................8-4
8.7 Distributions to Minors or Legally Incompetents........................8-4
8.8 Tax Information To Be Provided.........................................8-4
8.9 Distributions After Age 59 1/2.........................................8-4
8.10 Direct Rollovers......................................................8-4
Article 9. Service
9.1 General Definitions....................................................9-1
9.2 Crediting of Hours Subject to DOL Regulation...........................9-2
9.3 Elapsed Time Service Definitions.......................................9-2
Article 10. Fiduciary Responsibility........................................10-1
10.1 Named Fiduciaries....................................................10-1
10.2 Fiduciary Standards..................................................10-1
10.3 Fiduciaries Liable for Breach of Duty................................10-1
10.4 Fiduciary May Employ Agents..........................................10-1
iii
<PAGE>
10.5 Authority Outlined...................................................10-1
10.6 Fiduciaries Not to Engage in Prohibited Transactions.................10-2
10.7 Duties of Plan Administrator.........................................10-2
Article 11. Administration of the Plan......................................11-1
11.1 Selection of Trustees................................................11-1
11.2 Trustees' Operating Rules............................................11-1
11.3 Trustees' Administrative Authority...................................11-1
11.4 Trustees May Retain Advisors.........................................11-1
11.5 Claims Procedure.....................................................11-1
Article 12. Investments.....................................................12-1
12.1 Investment Authority.................................................12-1
12.2 Trustees May Hold Necessary Cash.....................................12-1
12.3 Appointment of Investment Manager....................................12-1
Article 13. Trustee.........................................................13-1
13.1 Trustees' Duties With Respect to Trust Assets........................13-1
13.2 Indicia of Ownership Must Be in the United States....................13-1
13.3 Permissible Trustees' Actions........................................13-1
17.8 Voting of Employer Stock.............................................13-1
13.4 Trustees' Fees for Services and Advisors Retained....................13-2
13.5 Annual Accounting and Asset Valuation................................13-2
13.6 Trustee Removal or Resignation.......................................13-2
13.7 Approval of Trustees' Accounting.....................................13-2
13.8 Trust Not Terminated Upon Trustees' Removal or Resignation...........13-3
13.9 Trustees May Consult With Legal Counsel..............................13-3
13.10 Trustees Not Required to Verify Identification or Addresses.........13-3
13.11 Individual Trustee Rules............................................13-3
13.12 Indemnification of Trustees and Insurance...........................13-3
13.13 Income Tax Withholding..............................................13-4
Article 14. Amendment, Termination and Merger
14.1 Trust Is Irrevocable.................................................14-1
14.2 Employer May Amend Trust Agreement...................................14-1
14.3 Employer May Terminate Plan..........................................14-1
14.4 Timing of Plan Termination...........................................14-1
14.5 Action Required Upon Plan Termination................................14-2
14.6 Non-Reversion of Assets..............................................14-2
14.7 Merger or Consolidation Cannot Reduce Benefits.......................14-2
iv
<PAGE>
Article 15. Assignments.....................................................15-1
15.1 No Assignment........................................................15-1
15.2 Qualified Domestic Relations Order Permitted.........................15-1
Article 16. Adoption of the Plan by Affiliated Employers....................16-1
16.1 Purpose..............................................................16-1
16.2 Conditions of Subscription Agreement.................................16-1
16.3 Participation of Affiliated Employers................................16-1
16.4 Termination of Member Employer's Participation.......................16-3
Article 17. Miscellaneous...................................................17-1
17.1 Special Rule Relating to Veterans Reemployment Rights Under USERRA...17-1
v
<PAGE>
CH2M HILL EMPLOYEE STOCK PLAN
(As Amended and Restated Effective January 1, 2000)
THIS PLAN AND TRUST AGREEMENT is made and entered into by and between
CH2M HILL COMPANIES, LTD. (Employer) and FRED K. BERRY, SAMUEL H. IAPALUCCI,
SHARON SCHLECHTER, CLIFF THOMPSON, and STAN VINSON (Trustees).
Article 1.
Name, Effective Date, Purpose and Construction
1.1 Plan Name. The Plan set forth in this Agreement shall be designated
---------
as the CH2M HILL EMPLOYEE STOCK PLAN.
1.2 Effective Date.
(a) In General. The Effective Date of this amended and restated Plan
----------
and Trust Agreement shall be January 1, 2000.
(b) Specific Articles. Notwithstanding the above, certain Articles
-----------------
within this Plan and Trust are effective as of the dates specified within those
Articles.
1.3 Purpose and History.
-------------------
(a) Purpose. The Plan and Trust are intended to qualify as a Profit
-------
Sharing Plan under Code Sections 401(a) and 501(a) and are created and
maintained for the exclusive benefit of Eligible Employees of the Employer and
their Beneficiaries to enable them to share in Employer profits, to provide
Eligible Employees with a means to accumulate retirement savings, to provide
retirement funds, and to provide benefits in the event of the death or
Disability of the Employee.
(b) History. The original Plan and Trust Agreement was adopted as an
-------
Employee Stock Ownership Plan effective January 1, 1977, and was subsequently
amended and restated effective in 1983 to convert it to a profit sharing plan
authorized to invest entirely in Employer Stock. The Plan and Trust Agreement
was restated effective January 1, 1989, and again effective January 1, 1996.
(c) Purposes of Restatement. The principal purposes of this
-----------------------
amendment and restatement are to recognize the limited trading market for
Employer Stock and to amend the Plan and Trust Agreement to comply with SBJPA,
GATT and USERRA.
1.4 Construction. The following miscellaneous provisions shall apply in
------------
the construction of this Trust Agreement:
(a) State Jurisdiction. All matters respecting the validity, effect,
------------------
interpretation and administration of this Plan shall be determined in accordance
with the
1-1
<PAGE>
laws of the State of Colorado except where preempted by ERISA or other federal
statutes.
(b) Gender. Wherever appropriate, words used in the singular may
------
include the plural or the plural may be read as the singular, the masculine may
include the feminine, and the neuter may include both the masculine and the
feminine.
(c) Application of ERISA and Code References. All references to
----------------------------------------
sections of ERISA or the Code, or any regulations or rulings thereunder, shall
be deemed to refer to such sections as they may subsequently be modified,
amended, replaced or amplified by any federal statutes, regulations or rulings
of similar application and import enacted by the Government of the United States
or any duly authorized agency of the Government.
(d) Enforceable Provisions Remain Effective. If any provision of this
---------------------------------------
Plan and Trust shall be held by a court of competent jurisdiction to be invalid
or unenforceable, the remaining provisions of the Plan shall continue to be
fully effective.
(e) Headings. Headings are inserted for reference only and constitute
--------
no part of the construction of this Agreement.
1.5 Employment Relationship Not Affected. Nothing in the Plan or Trust
------------------------------------
shall be deemed a contract between the Employer and any Employee, nor shall the
rights or obligations of the Employer or any Employee to continue or terminate
employment at any time be affected hereby.
1.6 Terminated Participants Not Affected. Notwithstanding anything to the
------------------------------------
contrary herein, the rights and remedies, if any, of any person hereunder shall
be determined as of the date his participation ceased or the date he ceased to
be an Eligible Employee, whichever occurs first, and shall be based on the terms
and conditions of the Plan in effect on such date, without regard to any changes
made by Articles which have specific effective dates subsequent to such date.
* * * * End of Article 1 * * * *
1-2
<PAGE>
Article 2.
Definitions
Definitions. Terms which are used only in a single Article (beginning
------------
with Article 3) are generally defined at the beginning of that Article. Article
2.57 lists the terms so defined. The following words and phrases are used
throughout this Trust Agreement and are defined below:
2.1 "Account" means the aggregate of all records maintained by the Trustees
-------
for purposes of determining a Participant's or Beneficiary's interest in the
Trust Fund and shall be adjusted by all amounts properly credited or debited to
such Account.
2.2 "Adjustment Factor" means the cost of living factor prescribed by the
-----------------
Secretary of the Treasury under Code Section 415(d) for years beginning after
December 31, 1987, as applied to such items and in such manner as the Secretary
shall provide. For purposes of the OBRA '93 annual compensation limit under
Code Section 401(a)(17), the Adjustment Factor shall be applied as provided in
Code Section 401(a)(17)(B) for calendar years after 1994.
2.3 "Affiliated Employer" means any corporation which is a member of a
-------------------
controlled group of corporations (as defined in Code Section 414(b)) which
includes the Employer, any trade or business (whether or not incorporated) which
is under common control (as defined in Code Section 414(c)) with the Employer,
any organization (whether or not incorporated) which is a member of an
affiliated service group (as defined in Code Section 414(m)) which includes the
Employer, and any other entity required to be aggregated with the Employer
pursuant to regulations under Code Section 414(o).
2.4 "Allowable Compensation" for purposes of determining the Top-Heavy
----------------------
minimum contributions, and for purposes of determining the limitations on
allocations pursuant to Article 5.3, means the total of all wages, salaries,
fees for professional services and other amounts paid by the Employer or an
Affiliated Employer during a Limitation Year to a Participant for services
actually rendered in the course of employment including (but not limited to)
bonuses, overtime, commissions and incentive compensation, but excluding
severance pay and amounts which are contributed to a retirement plan, deferred
compensation plan or other plan and which are not included as taxable income for
such year, or amounts which are not deemed to be income for current services
rendered such as amounts realized from the sale, exercise or exchange of
Employer Stock or stock options.
Notwithstanding the foregoing, amounts earned in the Limitation Year
but paid during the first few weeks of the next year because of the timing of
pay periods and pay days may be included on a uniform and consistent basis in
the Allowable Compensation of all similarly situated Participants for the
Limitation Year. In addition, for Limitation Years beginning before December
31, 1991, the requirement that the
2-1
<PAGE>
amounts earned in a Limitation Year be paid in the first few weeks of the next
year shall not apply.
Notwithstanding the foregoing, the amount determined above shall be
reduced by any amounts paid or reimbursed by the Employer and/or Affiliated
Employer for moving expenses incurred by the Participant, but only to the extent
that it is reasonable to believe that such expenses are deductible by the
Participant under Code Section 217.
Notwithstanding the foregoing, for Fiscal Years beginning on or after
January 1, 1998, Allowable Compensation shall include any elective deferral (as
defined in Section 402(g)(3) of the Code) and any amount which is contributed or
deferred by the Employer at the election of the Employee which is not includible
in the gross income of the Employee by reason of Section 125 or 457 of the Code.
2.5 "Alternate Payee" means any spouse, former spouse, child or other
---------------
dependent of a Participant recognized by a Qualified Domestic Relations Order as
having a right to receive all, or a portion of, a Participant's benefits under
the Plan.
2.6 "Beneficiary" means any person designated by a Participant to receive
-----------
benefits upon the death of such Participant, subject to the provisions of
Article 3.3.
2.7 "Board" means the Board of Directors of the Company.
-----
2.8 "Break in Service" for purposes of applying the provisions of Article 6
----------------
for vesting credit applicable to a Participant's Account is defined in Article
9.3.
2.9 "Code" means the Internal Revenue Code of 1986, as amended (and
----
regulations issued thereunder).
2.10 "Company" means CH2M HILL COMPANIES, LTD.
-------
2.11 "Date of Hire" means the date on which an Employee first performs an
------------
Hour of Service for the Employer.
2.12 "Deferred Retirement Date" means the date of actual retirement from
------------------------
the Employer by a Participant who remains in the employ of the Employer after
attaining his Normal Retirement Date.
2.13 "Determination Date" means, with respect to any Fiscal Year, the last
------------------
day of the preceding Fiscal Year.
2.14 "Disability" means the permanent incapacity of a Participant, by
----------
reason of physical or mental illness, to perform his usual duties for the
Employer, resulting in termination of his service with the Employer. Disability
shall be determined by the Trustees in a uniform and nondiscriminatory manner
after consideration of such
2-2
<PAGE>
evidence as it may require, which shall include a report of such physician or
physicians as it may designate.
2.15 "Eligible Employee" has the meaning set forth in Article 3.1.
-----------------
2.16 "Eligible Participant " means:
--------------------
(a) For purposes of Employer contributions under Article 4.1:
(i) an Eligible Employee who completed at least 1,000 Hours of
Service in the Fiscal Year and who is an Employee and a Participant on the last
day of the Fiscal Year;
(ii) a Participant who was an Eligible Employee who terminated
employment during the Fiscal Year due to death or Disability, or after reaching
his Normal Retirement Date or after attaining age 55 and completing five Years
of Service; or
(iii) a Participant who terminated employment and was rehired
during the Fiscal Year and who remained employed until the end of the Fiscal
Year at an annual rate of 1,000 Hours of Service or more.
(b) In the event the Plan does not otherwise meet the coverage
requirements of Code Section 410(b) for a Fiscal Year, and to the extent the
Trustees determine it necessary to meet such requirements, each other Eligible
Employee who:
(i) Is a Participant at any time during the year, and/or
(ii) Completed a number of Hours of Service (as determined by
the Trustees) during the Fiscal Year, which is less than 1,000.
2.17 "Employee " means any person in the Service of the Employer including
--------
officers, but excluding directors who are not in the Employer's employ in any
other capacity and Leased Employees. Sub-categories of "Employee" are defined
alphabetically in Article 2.
2.18 "Employer" means the Company, and such of its successors or assigns
--------
as may expressly adopt this Plan and Trust Agreement and agree in writing to
continue this Plan and Trust.
2.19 "Employer Stock" means shares of any classes of preferred or common,
--------------
voting or nonvoting, stock issued by the Employer.
2.20 "Entry Date" means the first day of any month.
----------
2.21 "ERISA" means the Employee Retirement Income Security Act of 1974 and
-----
regulations issued thereunder.
2-3
<PAGE>
2.22 "Fiscal Year" means the accounting year of the Plan and Trust,
-----------
which is the 12-consecutive month period ending December 31.
2.23 "Forfeiture" is described in Article 6.4(a).
----------
2.24 "GATT" means the Uruguay Round Agreements Act, implementing
----
Agreements under the General Agreement on Tariffs and Trade.
2.25 "General Trust Fund" means that portion of the Trust Fund other
------------------
than property and income held as or for segregated Accounts or under separate
investment funds under the provisions of this Trust Agreement.
2.26 "Hour of Service" has the meaning set forth in Article 9.1(b).
---------------
2.27 "Inactive Participant" means a Participant who remains an Employee,
--------------------
but who ceases to be an Eligible Employee because of a change in employment
status. Accounts of Inactive Participants shall share in allocations of
contributions and Forfeitures to the extent provided in Article 5, and such
Accounts shall continue to be adjusted by other amounts properly credited or
debited to such Accounts pursuant to Article 7.
2.28 "Key Employee" means, with respect to a Fiscal Year, any Employee
------------
or former Employee (including any deceased Employee) who at any time during the
"testing period", consisting of the Fiscal Year containing the Determination
Date and the four preceding Fiscal Years, is or was:
(a) Officer. An officer of the Employer, or an Employee with the
-------
authority of an officer, with Testing Compensation of more than 50% of the
applicable dollar limit under Code Section 415(b)(1)(A) for the applicable
Fiscal Year. However, no more than 50 Employees shall be treated as officers. In
addition, such Employees who meet the requirements of this paragraph and who had
the largest annual Testing Compensation from the Employer in any Fiscal Year
during the "testing period" shall first be counted as officers, without regard
to whether they are Key Employees for any other reason; or
(b) Owner.
-----
(i) A 5% owner; or
(ii) A 1% owner with annual Testing Compensation from the
Employer for the applicable Fiscal Year of more than $150,000;
(iii) A 1/2% owner who (1) is one of the 10 Employees who
have the largest ownership interest in the Employer, (2) has annual Testing
Compensation from the Employer which is greater than the dollar limitation under
Code Section 415(c)(1)(A) for the applicable Fiscal Year, and (3) does not meet
the criteria in (i) or
2-4
<PAGE>
(ii). For purposes of this (iii), if two Employees have the same ownership
interest in the Employer during the "testing period", then the Employee with the
greater annual Testing Compensation from the Employer for the Fiscal Year during
which the ownership interest existed shall be considered to have a larger
ownership interest in the Employer.
(c) Beneficiary. A Beneficiary of a deceased Key Employee shall be
-----------
considered to be a Key Employee, and a Beneficiary of a deceased Non-Key
Employee shall be considered a Non-Key Employee. Notwithstanding the above, the
Trustees shall be guided by the Code in determining Key Employees for any Fiscal
Year and shall maintain records adequate to determine Key Employees for any
Fiscal Year.
2.29 "Leased Employee", for Fiscal Years beginning before January 1, 1997,
---------------
means any individual who would not otherwise be considered an Employee but who
has provided services to the Employer of a type historically performed by
employees in the Employer's field of business, pursuant to an agreement between
the Employer and any other entity, on a substantially full-time basis for a
period of at least one year.
For Fiscal Years beginning on or after January 1, 1997, the term
"Leased Employee" means any person (other than an employee of the recipient) who
pursuant to an agreement between the recipient and any other person has
performed services for the recipient (or for the recipient and related persons
determined in accordance with Section 414(n)(6) of the Code) on a substantially
full time basis for a period of at least one (1) year and such services are
performed under the primary direction or control of the recipient.
However, Leased Employees will not be considered Employees if they
constitute less than 20% of the Employer's Non-Highly Compensated Employees as
defined in Code section 414(q) and if they are covered by a plan described in
Code Section 414(n)(5).
2.30 "Member Employer" shall mean the Employer and any Affiliated
---------------
Employer who adopts this Plan and Trust Agreement.
2.31 "Non-Key Employee" means any Employee who is not a Key Employee,
----------------
including Employees who are former Key Employees.
2.32 "Normal Retirement Date" means the date of a Participant's 65th
----------------------
birthday.
2.33 "OBRA '93'" means the Omnibus Budget Reconciliation Act of 1993.
--------
2.34 "Owner" means any person who owns (within the meaning of Code
-----
Sections 318 and 416(i)(1)(B)), or has owned within the four Fiscal Years prior
to the Fiscal Year under consideration, a portion of the outstanding stock or
voting power of the Employer. The ownership percentage of a "5%" Owner means
greater than a 5%
2-5
<PAGE>
interest, that of a "1%" Owner means greater than a 1% interest and that of a
"1/2%" Owner means greater than a 1/2% interest.
2.35 "Participant" means any Employee or former Employee who has entered
-----------
the Plan in accordance with Article 3, and whose Account, if any, hereunder has
not subsequently been liquidated.
2.36 "Plan" means the Plan created by this Agreement.
----
2.37 "Plan Administrator" means the Trustees.
------------------
2.38 "Plan Compensation" shall equal an Employee's basic hourly rate of
-----------------
pay on the last day of the year, times the lesser of:
(i) the number of regular work hours for such year after his
Entry Date, or
(ii) the number of Hours of Service for which he was paid during
such year while he was a Participant and an Eligible Employee.
For an Employee who transfers to another Member Employer and is
still an Employee on the last day of the Fiscal Year, Plan Compensation with the
first Member Employer shall be calculated through his transfer date based on the
rate of pay on his transfer date.
Periods of Disability during which the Participant is eligible to
receive Disability benefits under a plan maintained by the Employer or
Affiliated Employer, or would have been eligible if covered by such plan, and
periods of unpaid leave of absence shall be excluded in determining the
multiplier in (i) and (ii) above.
Notwithstanding the above, Plan Compensation shall not exceed
$200,000, multiplied by the Adjustment Factor. For Fiscal Years beginning on or
after January 1, 1994, Plan Compensation shall not exceed the OBRA '93 annual
compensation limit of $150,000, multiplied by the Adjustment Factor.
The total of the Plan Compensation received by (1) a Highly
Compensated Employee (as defined in Section 414(q) of the Code) who is one of
the 10 most Highly Compensated Employees, and/or a 5% Owner, (2) his spouse, and
(3) his lineal descendants who have not attained the age of 19 by the end of the
Fiscal Year, shall not exceed $200,000 ($150,000 for Fiscal Years beginning on
or after January 1, 1994) multiplied by the Adjustment Factor. For Fiscal Years
beginning on or after January 1, 1997, the limitations of this paragraph shall
be applied without regard to sections (2) and (3) of this paragraph.
2.39 "Quarter" means a calendar year quarter ending on March 31, June
-------
30, September 30 or December 31.
2-6
<PAGE>
2.40 "Qualified Domestic Relations Order" ("QDRO") has the meaning set
----------------------------------
forth in Code Section 414(p).
2.41 "REA" means the Retirement Equity Act of 1984.
---
2.42 "Savings Plan" means the CH2M Hill Retirement and Tax-Deferred
------------
Savings Plan.
2.43 "SBJPA" means Small Business Job Protection Act of 1996.
-----
2.44 "Service" has the meaning set forth in Article 9.1.
-------
2.45 "Spousal Consent" means the revocable written consent of the
---------------
Participant's spouse to an action taken by the Participant hereunder which
requires such consent under the terms of the Plan; provided that:
(i) Such consent shall acknowledge the Beneficiary
designated by the Participant and the effect of such consent;
(ii) Any change in the designated Beneficiary, other than to
make the spouse the Beneficiary of 100% of the Participant's vested Account,
shall require a new spousal consent;
(iii) Such consent shall be effective only with respect to
that spouse;
(iv) Such consent shall be witnessed by a notary public; and
(v) Such written consent shall not be required if it is
established to the satisfaction of a Plan representative that such consent
cannot be obtained because (1) there is no spouse or, (2) the spouse cannot be
located, or (3) such other circumstances exist as may be prescribed by
applicable regulations.
2.46 [Reserved]
2.47 "TEFRA" means the Tax Equity and Fiscal Responsibility Act of
-----
1982.
2.48 "Testing Compensation" for purposes of determining (1) whether an
--------------------
Employee is a Key Employee, and (2) whether an Employee is a Highly Compensated
Employee means Allowable Compensation, except that amounts contributed by the
Employer pursuant to a salary reduction agreement which are not includible in
the Employee's income under Code Section 125, 402(e)(3), 402(h) or 403(b) shall
be included.
Testing Compensation shall not exceed $200,000, multiplied by the
Adjustment Factor. For Fiscal Years beginning on or after January 1, 1994,
Testing
2-7
<PAGE>
Compensation shall not exceed the OBRA '93 limit of $150,000, multiplied
by the Adjustment Factor.
The total of the Testing Compensation received by (1) a Highly
Compensated Employee in a group consisting of the 10 most Highly Compensated
Employees and/or a 5% Owner and (2) his spouse, and (3) his lineal descendants
who have not attained the age of 19 by the end of the Fiscal Year, shall not
exceed $200,000 ($150,000 for Fiscal Years beginning on or after January 1,
1994), multiplied by the Adjustment Factor. For Fiscal Years beginning on or
after January 1, 1997, the limitations of this paragraph shall be applied
without regard to sections (2) and (3) of this paragraph.
2.49 "Top-Heavy Plan" means the Plan during each Fiscal Year in which
--------------
the aggregate value of the Accounts of Key Employees exceeds 60% of the
aggregate value of all Accounts under the Plan as of the Determination Date for
such Fiscal Year. For purposes of determining the value of Employees' Accounts
in the Plan, the following shall be excluded: (1) rollover contributions from a
non-related employer; (2) the Accounts of Participants who have not performed
any services for the Employer within the five year period ending on the
Determination Date; and (3) the Account of any individual who was a Key Employee
with respect to the Plan for any prior Fiscal Year but is not a Key Employee
with respect to the Plan for the applicable Fiscal Year. For purposes of
determining the aggregate value of Accounts and/or accrued benefits under this
Article, distributions made within a 5 year period ending on the Determination
Date shall be included to the extent required by applicable law and regulation.
(a) Required Aggregation to Determine Top-Heaviness. If a Key
-----------------------------------------------
Employee is a Participant in this Plan for any Fiscal Year and the Employer
maintains or has maintained any other plans (including terminated plans), (1) in
which a Key Employee is or was a participant within the 5 year period ending on
the Determination Date, or (2) which must be combined with this Plan in order to
meet the requirements of Code Sections 401(a)(4) or 410(b) for any Fiscal Year,
then this Plan's top-heaviness shall be determined for such Fiscal Year by
aggregating the Accounts and/or present value of accrued benefits of
participants in this Plan and all other such plans.
(b) Permissive Aggregation to Determine Top-Heaviness. If the
-------------------------------------------------
Employer maintains or has maintained any plans (including terminated plans)
other than one described in (a) above, the Trustees may aggregate the accounts
and/or present value of accrued benefits of participants in any such plan with
those of this Plan to determine whether this Plan is a Top-Heavy Plan for any
Fiscal Year, provided that the requirements of Code Sections 401(a)(4) and
410(b) would continue to be met by treating this Plan, any plan that must be
aggregated with the Plan under (a) above and any other plan referred to in this
sentence as one unit.
2-8
<PAGE>
In determining top-heaviness and the aggregate value of Accounts
and/or accrued benefits under this Article, the Trustees shall be guided by the
provisions of the Code, including but not limited to Code Section 416(g)(3)(B).
2.50 "TRA '86" means the Tax Reform Act of 1986.
------
2.51 "Trust" means the legal entity created by this Trust Agreement as
-----
part of the Plan.
2.52 "Trust Agreement" means this Agreement.
---------------
2.53 "Trust Fund" means all property and income held by the Trustees
----------
under the Trust Agreement.
2.54 "Trustees" means FRED K. BERRY, SAMUEL H. IAPALUCCI, SHARON
--------
SCHLECHTER, CLIFF THOMPSON, and STAN VINSON, and any duly appointed successor,
as provided in Article 11.1.
2.55 "USERRA" means Uniformed Services Employment and Reemployment Rights
------
Act of 1994.
2.56 "Valuation Date" means the last day of the Fiscal Year and such
--------------
other date(s) as may be designated by the Trustees as provided in Article 7.
2.57 List of Terms Defined Elsewhere: Article
-------------------------------- -------
(a) "Annual Addition" 5.1
(b) "Annual Amount" 5.1
(c) "Annual Benefit" 5.1
(d) "Defined Benefit Fraction" 5.1
(e) "Defined Contribution Fraction" 5.1
(f) "Dollar Limitation" 5.1
(g) "Eligibility Computation Fraction" 5.1
(h) "Eligible Employee" 3.1
(i) "Limitation Account" 5.1
(j) "Limitation Year" 5.1
(k) "Percentage Limitation" 5.1
(l) "Projected Annual Benefits" 5.1
(m) "Social Security Normal Retirement Age" 5.1
(n) "Super Top-Heavy" 5.1
(o) "Transition Amount" 5.1
* * * * End of Article 2 * * * *
2-9
<PAGE>
Article 3.
Eligibility, Participation and Beneficiary Designation
3.1 Definitions.
------------
(a) "Eligible Employee" means any Employee, excluding an Employee who is
-----------------
classified by the Employer as a temporary employee, or an Employee whose
compensation and conditions of employment are established by the terms of a
collective bargaining agreement to which the Employer is a party and which does
not specifically provide for coverage of such Employee under the Plan.
(i) "Eligibility Computation Period" means the 12 consecutive month
-------------------------------
period beginning with the Employee's Date of Hire, and each Fiscal Year starting
after the Employee's Date of Hire.
3.2 Participation.
--------------
(a) Continuing Plan Participation. Each individual who was an
------------------------------
Eligible Employee and a Participant in the Plan immediately preceding the
effective date of this amendment and restatement shall continue to be a
Participant on such effective date.
(i) Plan Entry. Each other Eligible Employee shall become a
-----------
Participant in the Plan on the Entry Date coinciding with or next following the
last day of the Eligibility Computation Period in which he completes 1,000 Hours
of Service.
3.3 Beneficiary Designation.
------------------------
(a) Designation Procedure. Each Eligible Employee, upon becoming a
----------------------
Participant, shall designate a Beneficiary or Beneficiaries to receive benefits
under the Plan after his death. A Participant may change his Beneficiary
designation at any time. Each Beneficiary designation shall be in a form
prescribed by the Trustees and will be effective only when filed with the
Trustees during the Participant's lifetime. Each Beneficiary designation filed
with the Trustees will cancel all previously filed Beneficiary designations.
(b) Spousal Consent. In the event that a married Participant wishes
----------------
to designate a Beneficiary other than his spouse for any portion of his vested
Account, such designation shall include Spousal Consent.
(c) Lack of Designation. In the absence of a valid designation by an
--------------------
unmarried Participant or if no designated Beneficiary survives an unmarried
Participant, his interest shall be distributed to his estate. In the absence of
a valid designation by a married Participant or if no designated Beneficiary
survives a married Participant, his
3-1
<PAGE>
interest shall be distributed to his surviving spouse, or if there is no
surviving spouse, then to his estate.
3.4 Change from Ineligible to Eligible Employee. An Employee who is
--------------------------------------------
excluded under Article 3.1 for any period shall be eligible to participate on
the first date he is no longer excluded, provided that the requirements of
Article 3.2 have been satisfied, but not earlier than the Entry Date on which he
would have entered the Plan had he not been excluded under Article 3.1.
3.5 Former Employee Rehired. A former Employee who had completed the
------------------------
eligibility requirements of Article 3.2 with the Employer and who is reemployed
by the Employer shall become a Participant as of the date of reemployment as an
Eligible Employee, but not earlier than the Entry Date on which he would have
entered the Plan had his employment not terminated.
3.6 Trustees Determine Eligibility. Compliance with the eligibility
-------------------------------
requirements shall be determined by the Trustees in their capacity as Plan
Administrator.
* * * * End of Article 3 * * * *
3-2
<PAGE>
Article 4.
Contributions
4.1 Employer Contribution. As of the last day of each Fiscal Year, a
----------------------
Member Employer may make a contribution to the Trust for its own Employees in
such amount, if any, as is determined by the Member Employer. These
contributions will be allocated to such Member Employer's Participants' Accounts
as provided in Article 5.2.
4.2 Top-Heavy Minimum Contribution. For any Fiscal Year during which the
Plan is a Top-Heavy Plan, the top-heavy minimum contribution shall be made in
the Savings Plan.
4.3 Timing of, Limitations on, and Return of Employer Contributions.
----------------------------------------------------------------
(a) Amount and Timing of Contributions. Member Employer contributions
-----------------------------------
shall not exceed an amount which is estimated to constitute the maximum
allowable deduction under Code Section 404(a). Member Employer contributions
shall be paid to the Trustee on or prior to the last day for filing the Member
Employer's federal income tax return for such year, including any extensions of
time granted for such filing. Contributions shall be made in cash or in Employer
Stock.
(b) Return of Employer Contributions. If an amount is contributed by
---------------------------------
a Member Employer due to a mistake of fact, the Member Employer shall be
entitled to recover such amount within one year of the date such contribution is
made. Unless otherwise provided in a resolution of the Board, any amounts
contributed by a Member Employer which are disallowed as a deduction under Code
Section 404 shall be returned to the Member Employer within one year of the date
such deduction is disallowed. Trust income attributable to the amount to be
recovered shall not be paid to the Member Employer, but Trust loss attributable
thereto shall reduce such amount.
* * * * End of Article 4 * * * *
4-1
<PAGE>
Article 5.
Allocation of Contributions and Forfeitures
5.1 Definitions.
------------
(a) "Annual Addition" means the sum for the Limitation Year to which
----------------
the allocation pertains (whether or not allocated in such year) of all Member
Employer and Employee contributions and Forfeitures allocated for such year to
the Participant's Account in this Plan and any other defined contribution plan
maintained by the Employer and an Affiliated Employer.
(b) "Annual Amount" means the lesser of 35% (1.4 x 25%) of the
--------------
Participant's Allowable Compensation (as defined in Article 2) for such
Limitation Year or $37,500 (125% of $30,000) (or such other amount as may be
established for such Limitation Year under Code Section 415(d) for any
Limitation Year).
(c) "Annual Benefit" means the sum of all annual benefits payable in
---------------
the form of a single life annuity from all defined benefit plans (whether or not
terminated) maintained by a Member Employer. Benefits payable in any other form,
except a qualified joint and survivor annuity as defined in Code Section 417(b),
shall be adjusted to the actuarial equivalent of a single life annuity beginning
at the same age. The Annual Benefit shall not be adjusted for any pre-retirement
death or disability benefits provided.
(d) "Defined Benefit Fraction" means the fraction in which the:
-------------------------
(i) Numerator equals the Participant's Projected Annual Benefit
in the defined benefit plan determined as of the close of the Limitation Year,
and
(ii) Denominator equals the lesser of 140% of the Percentage
Limitation or 125% of the Dollar Limitation.
(e) "Defined Contribution Fraction" means the fraction in which the:
------------------------------
(i) Numerator equals the sum of a Participant's Annual Additions
for each Limitation Year to date from all defined contribution plans (whether or
not terminated) maintained by a Member Employer, less any Transition Amounts,
and
(ii) Denominator equals the sum of the Annual Amounts for each
Limitation Year included in the Participant's Service, plus any Transition
Amounts.
(f) "Dollar Limitation" means the adjusted value of $90,000 (or such
------------------
other amount as may be in effect on the last day of the Limitation Year pursuant
to Code Section 415(d)) based on the age of the Participant when the benefit
begins as follows:
5-1
<PAGE>
<TABLE>
<CAPTION>
Age Limitation Adjustment Under the Defined Benefit Plan
- --- ----------------------------------------------------
<S> <C>
Over the Social Security Normal Retirement Age limitation is actuarially increased based on the
mortality table used for actuarial equivalence in the
Plan and 5% interest, but not more than the actuarial
increase (if any) specified in the Defined Benefit Plan
Social Security Normal Retirement Age no adjustment
Age 62 and over but below Social Security Normal limitation is reduced by 5/9% for each of the first 36
Retirement Age months and by 5/12% for each of the next 24 months that
the age precedes Social Security Normal Retirement Age
Under 62 the lesser of:
(i) actuarial equivalent of limitation for age 62,
based on the mortality table used for actuarial
equivalence in the Plan and 5% interest, and
(ii) the limitation at age 62 multiplied by the ratio
of the Plan's early retirement factor at age of
commencement to the Plan's early retirement factor at
age 62
</TABLE>
If a Participant has completed less than ten years of Service in the Defined
Benefit Plan, the Dollar Limitation shall be adjusted by multiplying such
limitation by a fraction, the numerator of which is the Participant's number of
years (or part thereof) of Service not to exceed ten, and the denominator of
which is ten.
(g) "Limitation Account" means an account expressly set up and
-------------------
maintained to hold Excess Annual Addition amounts contributed in error pursuant
to Article 5.3(b).
(h) "Limitation Year" means the Fiscal Year.
----------------
(i) "Percentage Limitation" means 100% of the average of Allowable
----------------------
Compensation (as defined in Article 2) paid or accrued over the three (or the
Participant's actual number of years of Service, if fewer) consecutive
Limitation Years included in the Participant's Service which produce the highest
average. If a Participant has completed less than ten years of Service with a
Member Employer, this limitation shall be adjusted by multiplying such amounts
by a fraction, the numerator of which is the Participant's number of years of
Service (or part thereof), and the denominator of which is ten. In no event
shall the reduction for less than 10 years of Service reduce this limitation to
an amount less than one-tenth of the applicable limitation (as determined
without regard to this paragraph).
5-2
<PAGE>
(j) "Projected Annual Benefit" means the Annual Benefit that a
-------------------------
Participant in a defined benefit plan would be entitled to under the terms of
that plan based on the following assumptions:
(i) The Participant will continue employment until normal
retirement age (or his current age, if later) under the terms of that plan;
(ii) The Participant's compensation for the applicable
limitation year will remain the same until his normal retirement age under (i)
above; and
(iii) All other relevant factors used to determine benefits under
that plan for the applicable limitation year will remain constant for all future
limitation years.
(k) "Social Security Normal Retirement Age" means the age when
unreduced old-age benefits are available from Social Security (as adjusted
pursuant to Code (S) 415(b)(8)), rounded to the next higher year, according to
the following table:
Year of Birth Social Security
------------- Normal Retirement Age
---------------------
1937 and Before 65
1938-1954 66
1955 and After 67
(l) "Super Top-Heavy" means a Plan which is Top-Heavy after
----------------
substituting 90% for 60% in the definition for Top-Heavy in Article 2.
(m) "Transition Amount" means an amount which is permanently
------------------
subtracted from the numerator or added to the denominator of the Defined
Contribution Fraction pursuant to transition rules related to the amendments of
Code Section 415.
5.2 Allocation Methods.
-------------------
(a) Top-Heavy Minimum and Restoration Contributions. Top-Heavy
------------------------------------------------
Minimum and Restoration Contributions are allocated as provided in Article 4 and
Article 6.
(b) Contribution Allocation. Member Employer contributions and
------------------------
Forfeitures, and amounts in Limitation Accounts attributable to Member Employer
Accounts for any Fiscal Year shall be allocated as of the last day of such
Fiscal Year to the Accounts of all Eligible Participants of the Member Employer
in the ratio that each such Eligible Participant's Plan Compensation from such
Member Employer during the Fiscal Year bears to the aggregate Plan Compensation
of all Eligible Participants of the Member Employer for the Fiscal Year.
5-3
<PAGE>
5.3 Limitations on Annual Allocations.
----------------------------------
(a) Limitation Amount.
------------------
(i) Notwithstanding any other provision of this Plan to the
contrary, for Fiscal Years beginning before January 1, 1995, the Annual Addition
to a Participant's Account for any Limitation Year shall not exceed the lesser
of 25% of the Employee's Allowable Compensation or $30,000 (or, if greater, 1/4
of the dollar limitation in effect under Code Section 415(b)(1)(A)), or such
other amount for the Limitation Year as may be established by regulations under
Code Section 415(d).
(ii) Notwithstanding any other provision of this Plan to the
contrary, for Fiscal Years beginning on or after January 1, 1995, the Annual
Addition to a Participant's Account for any Limitation Year shall not exceed the
lesser of 25% of the Employee's Allowable Compensation or $30,000, or such other
amount for the Limitation Year as may be established by regulations under Code
Section 415(d).
(b) Treatment of Excess Annual Addition Made in Error. In the event
--------------------------------------------------
that (as a result of the allocation of Forfeitures, a reasonable error in
estimating a Participant's compensation, a reasonable error in determining the
amount of elective deferrals or other limited facts and circumstances which the
Internal Revenue Service finds to be applicable) an amount would otherwise be
allocated which would result in the Annual Addition limitation being exceeded
with respect to any Participant, the excess amount shall be eliminated:
(i) First, by applying the corrective measures in Article 5.3 of
the Savings Plan;
(ii) Second, by holding any remaining excess amounts in a
Limitation Account. Any amounts in the Limitation Accounts shall be reallocated
among the appropriate Accounts of Eligible Participants pursuant to Article 5.2
as of the last day of each succeeding Fiscal Year until the excess is exhausted,
provided that the Annual Addition limitation with respect to any Participant may
not be exceeded in any Limitation Year. No allocation of contributions may be
credited to the Accounts of Eligible Participants in succeeding years until such
excess has been exhausted.
5.4 Overall Limitation for Different Types of Plans.
(a) General Limitation. For Limitation Years beginning before January
-------------------
1, 2000, if a Participant in this Plan is also a Participant in a qualified
defined benefit pension plan maintained by the Employer or an Affiliated
Employer (or was at any time a Participant in such a defined benefit pension
plan maintained by the Employer or an Affiliated Employer which has since been
terminated), the sum of the Defined Contribution Fraction and the Defined
Benefit Fraction for any Limitation Year shall not exceed 1.0. If a restriction
on contributions or benefits is required for any Employee, such restriction will
first be applied to the Retirement and Tax-Deferred Savings Plan.
5-4
<PAGE>
For Limitation Years beginning on or after January 1, 2000, the limitation set
forth in this Article 5.4(a) shall no longer apply.
(b) Super Top-Heavy Limitation. For Limitation Years beginning before
---------------------------
January 1, 2000, for each Fiscal Year in which the Plan is Super Top-Heavy or if
the Plan is Top-Heavy and the minimum contribution under Article 5.2(d) is less
than 7.5%, 100% shall be substituted for 125% wherever it appears in Articles
5.1(b) and (d), unless no additional allocations or benefits accrue to any
affected Participant. For Limitation Years beginning on or after January 1,
2000, the limitation set forth in this Article 5.4(b) shall no longer apply.
5.5 Restoration Procedures.
-----------------------
(a) Computing Amounts. In the event that a Participant's Account was
------------------
improperly excluded in any year from an allocation of Member Employer
contributions and Forfeitures pursuant to Article 5.2, such Participant's
Account shall be restored to its correct status by the addition of amounts that
are determined as follows:
(i) First, an amount will be computed on the same basis as
Member Employer contributions and Forfeitures that were allocated to the
Accounts of other Eligible Participants under Article 5.2 in each year for which
restoration is necessary, and
(ii) Second, Trust Fund income, gain or loss attributable to
amounts that should have been allocated under (i) above will be computed on the
same basis that Trust Fund income, gain or loss was allocated to other
Participants' Accounts in the valuation process described in Article 7.2 in each
year for which restoration is necessary.
(b) Income, Gain or Loss. In the event that a Participant's Account
---------------------
was improperly excluded in any year from an allocation of Trust Fund income,
gain or loss pursuant to the valuation process described in Article 7.2, such
Participant's Account shall be restored to its correct status by the addition or
subtraction of amounts that should have been allocated under Article 7.2 in each
year for which restoration is necessary.
(c) Source of Amounts. Such amounts shall be restored first from
------------------
Forfeitures, if any; and then, if necessary, the Member Employer shall
contribute an amount which is necessary to fully restore each improperly
excluded Account.
* * * * End of Article 5 * * * *
5-5
<PAGE>
Article 6.
Vesting of Accounts
6.1 Automatic Vesting on Retirement, Death or Disability. The value of a
-----------------------------------------------------
Participant's Account shall become fully vested (i) when the Participant attains
his Normal Retirement Date or reaches age 55 and completes 5 Years of Service
while an Employee, or (ii) upon his termination of employment by reason of death
or Disability.
6.2 Vesting Based on Service. Except as otherwise provided in Article
-------------------------
6.4(d) and Article 14.3, a Participant's Account shall become vested in
accordance with the following schedule:
Years of Service Vested Percentage
---------------- -----------------
Less than 2 years 0%
2 years 20%
3 years 40%
4 years 60%
5 years 80%
6 years or more 100%
6.3 Years of Service for Vesting.
-----------------------------
(a) Year of Service. An Employee shall be credited with one year of
----------------
Service for vesting for each full year in his Period of Service, as defined in
Article 9.3.
(b) Termination Prior to Vesting. If the vested percentage applicable
-----------------------------
to a Participant's Account is 0% at the time his Service terminates, his Service
prior to such termination shall be disregarded for vesting purposes if he is
reemployed after he has incurred 5 consecutive Breaks in Service.
6.4 Forfeitures and Restorations.
-----------------------------
(a) Date Forfeitures Occur. Any remainder of a terminating
-----------------------
Participant's Account which is not vested shall be forfeited on the earliest to
occur of the following dates:
(i) The date of termination of the Participant, provided that
this date applies only if the Participant did not then have a vested interest in
his Account;
(ii) The date on which the terminated Participant receives
payment of his entire vested interest;
(iii) The date on which the Participant completes five
consecutive one-year Breaks in Service.
(b) Forfeitures Reallocated. Forfeitures of a Member Employer's own
Employees' non-vested Account balances during a Fiscal Year which are not used
to
6-1
<PAGE>
restore any of its Participant's Accounts as of the last day of such Fiscal Year
shall be allocated as of the last day of the Fiscal Year to the Accounts of its
Eligible Participants as provided in Article 5.2(b).
(c) Reemployment After Forfeiture. If a Participant is reemployed
------------------------------
before incurring 5 consecutive Breaks in Service, any amounts forfeited shall be
treated as follows:
(i) Restoration If No Distribution. In the event a Participant
-------------------------------
did not receive a distribution of his vested interest, any amounts previously
forfeited shall be fully restored as provided in (iii) below and shall be
recredited to the Participant's Account as of his reemployment date.
(ii) Restoration If Total Distribution Repaid. In the event a
-----------------------------------------
distribution of a Participant's entire vested Account was made to him, the
forfeited amount shall be fully restored as provided in (iii) below if he makes
an after-tax contribution of the full amount of the prior distribution before
the date which is 5 years after he is reemployed by the Employer or before the
date on which he incurs 5 consecutive Breaks in Service, if earlier. If the
Participant does not make such contribution by that date, the forfeited amount
will not be restored.
(iii) Source of Restored Amounts. Forfeited amounts to be
---------------------------
restored for any Fiscal Year may be restored from Forfeitures as of the last day
of a Fiscal Year, from additional Employer contributions for such Fiscal Year,
from Trust income, or from a combination of these methods, as determined by the
Trustees.
(d) No Restoration After 5 Consecutive Breaks in Service. If a
-----------------------------------------------------
Participant is reemployed after 5 consecutive Breaks in Service, no portion of
his non-vested Account shall be restored and any undistributed vested interest
shall be maintained as a separate fully vested Account.
6.5 No Divestment. Except as provided under Articles 4.3(b) and 6.7, a
--------------
Participant's vested rights shall not be subject to divestment for any reason.
6.6 Amendment to Vesting. Notwithstanding any other provisions of this
---------------------
Article 6, the vested percentage of an individual who was a Participant
immediately preceding the effective date of any amendment to the Plan is
determined by the provisions of the Plan existing immediately prior to such
amendment if such provisions provide a greater vested percentage at any relevant
time.
6.7 Lost Participants.
------------------
(a) Participant's Account. If all or a portion of a Participant's
----------------------
Account becomes payable under Article 8 and the Trustees, after a reasonable
search, cannot locate the Participant or his Beneficiary (if such Beneficiary is
entitled to payment), the vested Account shall:
6-2
<PAGE>
(i) Be used to establish an Individual Retirement Account in the
Participant's name; or
(ii) Remain in the Plan for a sufficient period of time so that
under state law the Account would escheat, at which point the Account shall be
forfeited and reallocated, in accordance with Articles 4 and 5, as of such date
as the Trustees may decide.
(b) Search for Participants. The Trustees shall make a reasonable
------------------------
attempt to find such a Participant, including securing any assistance available
from the Internal Revenue Service.
(c) Restoration. If an Account is forfeited under this Article 6.7,
------------
and the Participant or his Beneficiary subsequently presents a valid claim for
benefits to the Trustees, the Trustees shall cause the vested Account, equal to
the amount that was forfeited under this Article 6, to be restored in accordance
with the provisions of Article 5.5.
* * * * End of Article 6 * * * *
6-3
<PAGE>
Article 7.
Participants' Account Valuation
7.1 Separate Accounts. The Trustees shall open and maintain a separate
------------------
Account for each Participant. Each Participant's Account shall reflect the
amounts allocated thereto and distributed therefrom and such other information
as affects the value of such Account pursuant to this Agreement. Employer Stock
allocated to a Participant shall be carried in a stock account. All other assets
shall be carried in another asset account.
7.2 Determination of Value of Participant Accounts. As of each Valuation
-----------------------------------------------
Date, the Trustees shall determine the net income or loss of the Trust Fund
based on the receipts and disbursements of the General Trust Fund since the
immediately preceding Valuation Date and of the fair market value of the Fund as
of the Valuation Date; provided, however, that if no valuation is available on
such Valuation Date the most recent valuation shall apply. The Trustees shall
use the same value as that calculated in accordance with the Employer's bylaws
to establish the "fair market value" of the Fund. Prior to any allocation of
contributions and Forfeitures to be made as of such date, the net income or loss
of the General Trust Fund since the immediately preceding Valuation Date,
including net appreciation or depreciation and excluding any expenses paid by
the Trust, shall be allocated to each Participant Account in the ratio that the
value, as of the immediately preceding Valuation Date, of each such Account
invested in the General Trust Fund bears to the value, as of the immediately
preceding Valuation Date, of all Accounts invested in the General Trust Fund.
Dividends on Employer Stock shall be allocated in proportion to shares held in
the stock account. Stock dividends shall be credited to the stock account and
cash dividends shall be credited to the other asset account.
7.3 Valuation Dates. The General Trust Fund shall be valued as of the last
----------------
day of each Fiscal Year and as of any other date the Trustees decided to value
the Trust Fund, as provided in Article 7.4.
7.4 Special Valuation Dates. The Trustees may determine the fair market
------------------------
value of the Trust Fund and may make a determination of Trust income or loss as
of any date other than the last day of a Fiscal Year. If the allocation of such
Trust income or loss will produce a significant change in the value of
Participants' Accounts, and if such valuation shall affect a distribution, then
such date shall thereupon be deemed a Valuation Date, and Trust income or loss
shall be allocated to Participant's Accounts in accordance with the provisions
of Article 7.2.
7.5 Accounts to be Valued. All sub-accounts of all Participants shall be
----------------------
valued at each Valuation Date.
7.6 Statement of Accounts. As soon as practicable after the end of each
----------------------
Fiscal Year, the Trustee shall furnish to each Participant a statement of his
Account,
7-1
<PAGE>
determined as of the end of such Fiscal Year. Upon the discovery of any error or
miscalculation in an Account, the Trustees shall correct it, to the extent
correction is practically feasible. Statements to Participants are for reporting
purposes only, and no allocation, valuation or statement shall vest any right or
title in any part of the Trust Fund, nor require any segregation of Trust
assets, except as is specifically provided in this Agreement.
7.7 Valuation of Account When Payment Due. The amount of the payment shall
--------------------------------------
be based on the value of the Participant's Account at the time the payment is
processed; provided, however, that with respect to Employer Stock, the payment
shall be based on the amount received on the trade date determined in accordance
with Article 8.5(d).
* * * * End of Article 7 * * * *
7-2
<PAGE>
Article 8.
Distributions and Withdrawals
8.1 General. Benefits under the Plan shall be distributed solely from the
--------
Trust. The Member Employers have no liability or responsibility for Plan
benefits or for the Trust. No distribution shall be made or commenced prior to
the Participant's termination of employment, except as required under Article
8.3(d) and permitted under Article 15.2(b). Distributions can also be made upon
termination of the Plan. All distributions from the Plan will be made in
accordance with Code Section 401(a)(9) and the regulations thereunder including
the transition rules in proposed regulation 1.401(a)(9)-l and the incidental
death benefit requirements of proposed regulation 1.401(a)(9)-2. The provisions
of Code Section 401(a)(9) shall override any distribution option under the Plan
which might be inconsistent with such provisions.
A distribution to a Participant shall be made solely from his Account.
When a distribution is to be made, his Account shall be valued in accordance
with Article 7.2. The amount to be paid to him shall be based on his vested
interest as determined in Article 6.
8.2 Administrative Rules.
---------------------
(a) Authority. Distributions shall be made only in accordance with
----------
the directions of the Trustees. The Trustees have the authority to direct the
distributions in accordance with the terms and conditions of the Plan, but the
Trustees shall have no power of discretion or consent with regard to a
Participant's or Beneficiary's choice of the form or timing of a distribution,
except as specifically stated herein or to the extent that the Trustees are
constrained by the options available under the Plan or by the requirements of
law or regulation.
(b) Claims. A Participant, Beneficiary or Alternate Payee has the
-------
right to file a claim for benefits as set forth in Article 11.6.
8.3 Timing of Distributions.
------------------------
(a) Cashout of Amounts Under $5,000. If the Participant's vested
--------------------------------
Account does not exceed $5,000, and at the time of any prior distribution, if
any, has not exceeded $5,000, distribution shall be made in a lump sum as soon
as practicable after the Participant's termination of employment.
(b) Amounts Over $5,000. If the Participant's vested Account exceeds
--------------------
the cashout requirements of Article 8.3(a), the Participant may elect to:
(i) Receive a distribution as soon as practicable after the
amount can be determined, or
8-1
<PAGE>
(ii) Defer receipt of his distribution in accordance with (d)
below. Unless otherwise elected by the Participant under (d) below, the payment
of benefits under the Plan to the Participant will not begin later than the 60th
day after the end of the Fiscal Year in which the latest of the following
occurs:
(1) The date on which the Participant attains the earlier
of Age 65 or his Normal Retirement Date,
(2) The date which is the 10th anniversary of his
commencement of participation in the Plan, or
(3) The date of termination of his service with the
Employer;
However, if the amount of the payment cannot be ascertained and/or the
Participant cannot be located by the date required above, payment shall be made
within 60 days after all of these facts are known.
Notwithstanding the foregoing, no payments may be made to a
Participant prior to his Normal Retirement Date or his 62nd birthday, whichever
is later, if his vested Account exceeds the cashout requirements of Article
8.3(a), unless the written consent of the Participant is obtained by the
Trustees within the 90-day period prior to commencement of the distribution.
(c) Information and Rights. The following applies to the
-----------------------
Participant's written consent:
(i) The Participant must be informed of his right to defer
receipt of the distribution. If a Participant fails to consent, it shall be
deemed an election to defer commencement of the distribution.
(ii) Notice of the rights specified herein shall be provided no
less than 30 days and no more than 90 days before the first day on which all
events have occurred which entitle the Participant to such distribution.
(iii) Written consent of the Participant to the distribution must
not be made before the Participant receives the notices and must not be made
more than 90 days before the first day on which all events have occurred which
entitle the Participant to such distribution.
(iv) No consent shall be valid if a significant detriment is
imposed under the Plan on any Participant who does not consent to the
distribution.
(v) If a distribution is one to which Section 401(a)(11) and
417 of the Internal Revenue Code do not apply, such distribution may commence
less than
8-2
<PAGE>
30 days after the notice required under Section 1.411(a)11(c) of the Income Tax
Regulations is given, provided that:
(1) the Plan Administrator clearly informs the Participant
that the Participant has a right to a period of at least 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
(2) the Participant, after receiving the notice,
affirmatively elects a distribution.
(vi) Notwithstanding anything in this Article 8.3(c) to the
contrary, effective for Fiscal Years beginning on or after January 1, 1997, the
written explanation described in Section 417(a)(3)(A) of the Code may be
provided after the annuity starting date. In such event, the 90-day applicable
election period to waive the qualified joint and survivor annuity described in
Section 417(a)(3)(A) of the Code shall not end before the 30th day after the
date on which such explanation is provided. Effective for Plan Years beginning
on or after January 1, 1997, a Participant may elect (with any applicable
spousal consent) to waive any requirement that the written explanation be
provided at least 30 days before the annuity starting date (or to waive the 30-
day requirement in the preceding sentence) if the distribution commences more
than 7 days after such explanation is provided.
(d) Required Minimum Distributions. A Participant who meets the
-------------------------------
requirements of Article 8.3(b) may defer a distribution by providing the
Trustees with a written, signed notice specifying the date on which the
distribution is to commence, provided that the distribution shall be made no
later than the April 1 following the last day of the calendar year in which the
Participant attains age 70 1/2. Notwithstanding the foregoing, for Plan Years
beginning on or after January 1, 1997, a Participant may elect to defer a
distribution to the later of April 1 following the last day of (i) the calendar
year in which the Participant attains age 70 1/2, or (ii) the calendar year in
which the Participant retires.
8.4 Treatment of Deferred Amounts. Where the distribution of a
------------------------------
Participant's Account is to be deferred, the vested portion shall continue to be
held and invested as an Account of the Trust subject to revaluation as provided
in Article 7.
8.5 Methods of Distribution.
------------------------
(a) Method. Distribution to any Participant or Beneficiary shall be
-------
made in a lump sum, in cash.
(b) Timing. If the amount of a distribution cannot be determined by
-------
the date specified under Article 8.3, payment of benefits shall be made no later
than 60 days after the earliest date on which the amount of the distribution can
be determined.
8-3
<PAGE>
(c) Distributions Delayed Until Trade Date. To the extent that a
---------------------------------------
Participant is entitled to a distribution of all or a portion of his Account
that is invested in Employer Stock, the Participant shall receive such
distribution as soon as reasonably practicable after the Trustees are able to
liquidate sufficient shares of Employer Stock to permit the distribution.
8.6 Distribution Upon Death of Participant.
---------------------------------------
(a) Distribution Made to Participant's Beneficiary. The vested
-----------------------------------------------
portion of a Participant's Account which remains at his death shall be
distributed to the Participant's Beneficiary in accordance with the provisions
of this Article 8.6.
(b) General Rules. If a Participant dies before his distribution has
--------------
been made, his vested Account shall be distributed within 5 years after the
death of the Participant.
8.7 Distributions to Minors or Legally Incompetents. In case of any
------------------------------------------------
distribution to a minor or to a legally incompetent person, the Trustees may
make the distribution to his legal representative, to a designated relative, or
directly to such person for his benefit. The Trustees shall not be required to
oversee the application, by any third party, of any distributions made pursuant
to this Article 8.7. Distributions made under this Article 8.7 shall be in
accordance with the provisions of this Article 8.
8.8 Tax Information To Be Provided. The Trustees shall provide to each
-------------------------------
Participant, Beneficiary or Alternate Payee who receives an eligible rollover
distribution (as defined in Code Section 402(f)), at the time such distribution
is made, a written explanation of the (1) provisions under which the
distribution will not be subject to tax if timely transferred to an eligible
retirement plan and, if applicable; (2) provisions regarding the availability of
10-year averaging or 5-year averaging tax treatment of the distribution.
8.9 Distributions After Age 59 1/2 1/2. A Participant who has attained age
-----------------------------------
59 1/2 may withdraw amounts from his Account by giving the Trustees notice of
his intention to make such a withdrawal at least 30 days prior to the
withdrawal.
8.10 Direct Rollovers.
-----------------
(a) In General. This Article applies to distributions made on or
-----------
after January 1, 1993. Notwithstanding any provision of the Plan to the contrary
that would otherwise limit a distributee's election under this Article, a
distributes may elect, at the time and in the manner prescribed by the Trustees,
to have an eligible rollover distribution paid directly to an eligible
retirement plan specified by the distributes in a direct rollover.
8-4
<PAGE>
(b) Definitions Pertaining to Direct Rollovers.
-------------------------------------------
(i) Eligible rollover distribution: An eligible rollover
-------------------------------
distribution is any distribution 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).
(ii) Eligible retirement plan: An eligible retirement plan is an
-------------------------
individual retirement account described in Section 408(a) of the Code, an
annuity plan described in Section 403(a) of the Code, an individual retirement
annuity described in Section 408(b) 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.
(iii) Distributee: A 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 qualified domestic relations order, as defined in Section 414(p)
of the Code, are distributees with regard to the interest of the spouse or
former spouse.
(iv) Direct rollover: A direct rollover is a payment by the Plan
----------------
to the eligible retirement plan specified by distributee.
* * * * End of Article 8 * * * *
8-5
<PAGE>
Article 9.
Service
9.1 General Definitions.
--------------------
(a) "Service" means an Employee's total period of employment with the
--------
Employer, including service with a predecessor entity or an Affiliated Employer.
Throughout this Article 9, Employer shall include Affiliated Employer and any
predecessor entity.
(b) "Hour of Service" means:
----------------
(i) Each hour for which an Employee is paid, or entitled to
payment, for the performance of duties for the Employer.
(ii) Each hour for which an Employee is paid, or entitled to
payment, by the Employer on account of a period of time during which no duties
are performed (regardless of whether the employment relationship has terminated)
due to vacation, holiday, illness, incapacity (including disability), layoff,
jury duty, military duty or leave of absence; provided that no Hours of Service
shall be credited to an Employee:
(1) For a period during which no duties are performed if
payment is made or due under a plan maintained solely for purpose of complying
with applicable worker's compensation, unemployment compensation, or disability
insurance laws;
(2) On account of any payment made or due an Employee
solely as reimbursement for medical or medically related expenses incurred by
the Employee,
(3) On account of any payment made to an Employee as
severance pay, unless the severance pay is in lieu of advance notice of
termination.
(iii) Each hour not otherwise credited under the Plan for which
back pay, irrespective of mitigation of damages, has either been awarded or
agreed to by the Employer. Such hours are to be credited to the period or
periods to which the award or agreement pertains. If this provision results in
an Employee becoming an Eligible Participant for a Fiscal Year in which he was
not otherwise an Eligible Participant under Article 5 or if this provision
results in an increase in the vested percentage applicable to a Participant's
Account which has been forfeited under Article 6, the Trustees shall establish
equitable procedures for determining and allocating any resulting amounts to
such Employee's Account.
9-1
<PAGE>
(iv) No more than 501 Hours of Service shall be credited under
Articles 9.1(b)(ii) or (iii) to an Employee on account of any single continuous
period of time during which the Employee performs no duties for the Employer.
9.2 Crediting of Hours Subject to DOL Regulation. The calculation of the
---------------------------------------------
number of Hours of Service to be credited under Articles 9.1(b)(ii) and (iii)
for periods during which no duties are performed, and the crediting of such
Hours of Service to periods of time for purposes of computations under the Plan,
shall be determined by the Trustees in accordance with the rules set forth in
the Department of Labor Regulation Section 2530.200b-2 paragraphs (b) and (c),
which rules shall be consistently applied with respect to all employees within
the same job classifications.
9.3 Elapsed Time Service Definitions.
---------------------------------
(a) "Break in Service" means a one year Period of Severance. Solely
-----------------
for purposes of determining whether a Break in Service has occurred, a one year
period of absence shall be disregarded, provided such absence is:
(1) By reason of pregnancy or the birth of a child of the
Employee;
(2) By reason of the placement of a child with the Employee
in connection with his adoption of such child; or
(3) For purposes of caring for any such child for a period
beginning immediately following such birth or placement, and further provided
that the Employee provides the Plan Administrator with such timely information
as the Plan Administrator may reasonably require to establish that the absence
is for a reason described above.
(b) "Employment Commencement Date" means each of the following:
-----------------------------
(i) The date on which an Employee first performs an Hour of
Service for an Employer with respect to which such Employee is compensated or
entitled to compensation by the Employer.
(ii) In the case of an Employee who incurs a Period of Severance
and who is subsequently reemployed by the Employer, the term Employment
Commencement Date means the first day following such Period of Severance on
which such Employee performs an Hour of Service for the Employer with respect to
which he is compensated or entitled to compensation.
(c) "Period of Service" shall mean the period of time beginning on an
------------------
Employee's Employment Commencement Date and ending on his Severance Date.
Periods of Service shall be measured under the elapsed time method as authorized
under regulations promulgated by the Secretary of Labor.
9-2
<PAGE>
Periods of Service shall also be subject to the following:
(i) If an Employee severs from Service by quit, discharge or
retirement and returns to Service within 12 months, that Period of Severance
shall be considered as part of that Employee's Period of Service.
(ii) Notwithstanding the rule in subparagraph (i) above, if an
Employee severs from Service by reason of quit, discharge or retirement after a
period of absence from service of 12 months or less, which period of absence
occurred for reasons other than a quit, discharge or retirement, such period of
absence shall be considered as part of the Employee's Period of Service only if
such Employee performs an Hour of Service within 12 months of the date on which
the Employee was first absent from service.
An Employee is considered to have returned to service on his new
Employment Commencement Date.
(d) "Period of Severance" means the period of time beginning on an
--------------------
Employee's Severance Date and ending on the Employee's new Employment
Commencement Date, if any, following thereafter.
(e) "Severance Date" means the date on which an Employee quits,
--------------
retires, is discharged or dies, or, if earlier, the first anniversary of the
beginning of a period of absence from service (for reasons other than a quit,
retirement, discharge or death, such as vacation, holiday, sickness, disability,
leave of absence or lay off).
* * * * End of Article 9 * * * *
9-3
<PAGE>
Article 10.
Fiduciary Responsibility
10.1 Named Fiduciaries. The authority to control and manage the operation
------------------
and administration of the Plan shall be allocated as provided in this Agreement
between the Employer and the Trustees, all of whom are named fiduciaries under
ERISA.
In addition, procedures for the appointment of another fiduciary, an
investment manager, are set forth in Article 12.3.
10.2 Fiduciary Standards. Each fiduciary shall discharge its duties with
--------------------
respect to the Plan solely in the interest of the Participants and Beneficiaries
as follows:
(1) For the exclusive purpose of providing benefits to
Participants and their Beneficiaries;
(2) With the care, skill, prudence and diligence under the
circumstances then prevailing that a prudent man acting in a like capacity and
familiar with such matters would use in the conduct of an enterprise of a like
character and with like aims;
(3) By diversifying the investments of the Trust Fund so as
to minimize the risk of large losses, unless under the circumstances it is
clearly prudent not to do so; and
(4) In accordance with this Trust Agreement.
10.3 Fiduciaries Liable for Breach of Duty. A fiduciary shall be liable, as
--------------------------------------
provided in ERISA, for any breach of his fiduciary responsibilities. In
addition, a fiduciary under this Plan shall be liable for a breach of fiduciary
responsibility of another fiduciary under this Plan as provided under ERISA
Section 405.
10.4 Fiduciary May Employ Agents. Any person or group of persons may
----------------------------
serve in more than one fiduciary capacity with regard to the Plan. A fiduciary
may, with the consent of the Employer, employ one or more persons to render
advice and assistance with regard to any function such fiduciary has under the
Plan. The expenses of such persons shall be paid by the Trust if not paid by
the Employer.
10.5 Authority Outlined.
-------------------
(a) Employer Authority. The Employer has the authority to amend and
-------------------
terminate the Plan, to appoint and to remove Trustees.
(b) Trustees' Administrative Authority. The Trustees, in their role
-----------------------------------
as Plan Administrator, have the authority to:
10-1
<PAGE>
(i) Allocate the Employer contributions;
(ii) Determine the method for allocation of the Trust income
or loss;
(iii) Maintain separate Accounts for Participants;
(iv) Furnish, and correct errors in, statements of Accounts;
(v) Direct the method, timing and media of distributions
pursuant to Article 8;
(vi) Direct the segregation of assets;
(vii) Direct distribution of the interests of incompetent
persons and minors;
(viii) Construe the Plan and Trust Agreement and determine
questions thereunder;
(ix) Establish a funding policy;
(x) Appoint and delegate duties to an investment manager;
and
(xi) Employ advisors and assistants.
Article 11 further describes the administrative authority and duties
of the Trustees.
(c) Trustees' Authority With Respect to Plan Assets. The Trustees
------------------------------------------------
have the authority to establish the fair market value of the Trust Fund, to
value segregated Accounts, to employ advisors, agents and counsel, to hold the
Trust assets and to render accounts of their administration of the Trust.
Article 13 further describes the authority and duties of the Trustees with
respect to Plan assets.
10.6 Fiduciaries Not to Engage in Prohibited Transactions. A
-----------------------------------------------------
fiduciary shall not cause the Plan to engage in a transaction if he knows or
should know that such transaction constitutes a prohibited transaction under
ERISA Section 406 or Code Section 4975, unless such transaction is exempted
under ERISA Section 408 or Code Section 4975.
10.7 Duties of Plan Administrator. The Trustees are the Plan
-----------------------------
Administrator under ERISA and shall have the duty and authority to comply, with
those reporting and disclosure requirements of ERISA and the Code which are
specifically required of the Plan Administrator. The Plan Administrator is the
agent for the service of legal process. The Plan Administrator shall keep on
file a copy of this Plan and Trust Agreement, including any subsequent
amendments, all annual and interim reports of the Trustee and
10-2
<PAGE>
the latest annual report required under Title I of ERISA for examination by
Participants during business hours.
* * * * End of Article 10 * * * *
10-3
<PAGE>
Article 11.
Administration of the Plan
11.1 Selection of Trustees. There shall be five Trustees to manage and
----------------------
administer this Plan. The Trustees shall be appointed by the chief executive
officer of the Company, who shall also select a successor Trustee upon
resignation, death or removal of a Trustee.
11.2 Trustees' Operating Rules. The Trustees shall act by agreement of a
--------------------------
majority of their members, either by vote at a meeting or in writing without a
meeting. By such action, the Trustees may authorize one or more members to
execute documents on their behalf, or may delegate such authority to another
person. A Trustee, who is also a Participant hereunder, shall not vote or act
upon any matter relating solely to himself. In the event of a deadlock or other
situation which prevents agreement of a majority of the Trustees, the matter
shall be decided by the Employer.
11.3 Trustees' Administrative Authority. The Trustees have the authority
-----------------------------------
and duty to do all things necessary or convenient to effect the intent and
purpose of this Plan, whether or not such authority and duties are specifically
set forth herein. Not in limitation but in amplification of the foregoing, the
Trustees shall have the discretionary power to construe the Plan and Trust
Agreement and to determine all questions that shall arise hereunder. Decisions
of the Trustees made in good faith upon any matters within the scope of its
authority shall be final and binding on the Employer, the Participants, their
Beneficiaries and all others. The Trustees shall at all times act in a uniform
and nondiscriminatory manner in making and carrying out their decisions and
directions, and may from time to time prescribe and modify uniform rules of
interpretation and administration. The Trustees are the Plan Administrator and
have the duties outlined in Article 3.
11.4 Trustees May Retain Advisors. With the approval of the Employer,
-----------------------------
the Trustees may from time to time or on a continuing basis, retain such agents
or advisors including, specifically, attorneys, accountants, actuaries,
investment counsel, consultants and administrative assistants, as it considers
necessary to assist it in the proper performance of its duties. The expenses of
such agents or advisors shall be paid by the Employer, or, if not paid by the
Employer, the Trustees may direct that such expenses be paid from the Trust
Fund; provided that only reasonable expenses of administering the Trust may be
paid from the Trust.
11.5 Claims Procedure.
-----------------
(a) Claim Must Be Submitted Within 60 Days. The Trustees shall
---------------------------------------
determine Participants', Alternate Payees' and Beneficiaries' rights to benefits
under the Plan. In the event of a dispute over benefits, a Participant,
Beneficiary or Alternate Payee may file a written claim for benefits with the
Trustees, provided that such claim is
11-1
<PAGE>
filed within 60 days of the date the Participant, Beneficiary or Alternate Payee
receives notification of the Trustees' determination.
(b) Requirements for Notice of Denial. If a claim is wholly or
----------------------------------
partially denied, the Trustees shall provide the claimant with a Notice of
Denial, written in a manner calculated to be understood by the claimant, setting
forth:
(i) The specific reason for such denial;
(ii) Specific references to the pertinent Plan provisions on
which the denial is based;
(iii) A description of any additional material or information
necessary for the claimant to perfect the claim with an explanation of why such
material or information is necessary; and
(iv) Appropriate information as to the steps to be taken if
the claimant wishes to submit his or her claim for review.
The Notice of Denial shall be given within a reasonable time period
but no later than 90 days after the claim is filed, unless special circumstances
require an extension of time for processing the claim. If such extension is
required, written notice shall be furnished to the claimant within 90 days of
the date the claim was filed stating the special circumstances requiring an
extension of time and the date by which a decision on the claim can be expected,
which shall be no more than 180 days from the date the claim was filed. If no
Notice of Denial is provided as herein described, the claimant may appeal the
claim as though the claim had been denied.
(c) Claimant's Rights If Claim Denied. The claimant and/or his
----------------------------------
representative may appeal the denied claim and may:
(i) Request a review upon written application to the
Trustees;
(ii) Review pertinent documents; and
(iii) Submit issues and comments in writing; provided that
such appeal is made within 60 days of the date the claimant receives
notification of the denied claim.
(d) Time Limit on Review of Denied Claim. Upon receipt of a request
-------------------------------------
for review, the Trustees shall provide written notification of its decision to
the claimant stating the specific reasons and referencing specific Plan
provisions on which its decision is based, within a reasonable time period but
not later than 60 days after receiving the request, unless special circumstances
require an extension for processing the review. If such an extension is
required, the Trustees shall notify the claimant of
11-2
<PAGE>
such special circumstances and of the date, no later than 120 days after the
original date the review was requested, on which the Trustees will notify the
claimant of its decision.
(e) No Legal Recourse Until Claims Procedure Exhausted. In the
---------------------------------------------------
event of any dispute over benefits under this Plan, all remedies available to
the disputing individual under this Article 11.6 must be exhausted before legal
recourse of any type is sought.
* * * * End of Article 11 * * * *
11-3
<PAGE>
Article 12.
Investments
12.1 Investment Authority. The Trustees are hereby granted full power and
---------------------
authority to invest and reinvest the Trust Fund or any part thereof in
accordance with the standards set forth in Article 10. Without limiting the
generality of the foregoing, the Trustees may invest in bonds, notes, mortgages,
commercial or federal paper, preferred stock, common stock, or other securities,
rights, obligations or property, real or personal, including shares and
certificates of participation issued by investment companies or investment
trusts. However, the Trustees shall accept and retain Employer Stock
contributed to the Trust and to invest all or substantially all cash
contributions in Employer Stock to the extent it is available.
12.2 Trustees May Hold Necessary Cash. The Trustees may hold in a cash or
---------------------------------
cash equivalent account such portion of the Trust Fund as may be deemed
necessary for the ordinary administration of the Trust and disbursement of
funds. Such funds may be deposited in any bank or savings and loan institution
subject to the rules and regulations governing such deposits.
12.3 Appointment of Investment Manager. The power of the Trustees to
----------------------------------
direct, control or manage the investment of the Trust Fund may be delegated to
one or more investment managers appointed by the Trustees. Any such investment
manager, if appointed, must acknowledge in writing that he is a fiduciary with
respect to the Trust Fund and shall then have the power to manage, acquire, or
dispose of any asset of the Trust Fund. An investment manager must be a person
who is (1) registered as an investment advisor under the Investment Advisors Act
of 1940; (2) a bank, as defined in that Act; or (3) an insurance company
qualified to perform such services under the laws of more than one state. If an
investment manager has been appointed, the Trustee shall neither be liable for
acts or omissions of such investment manager nor be under any obligation to
invest or otherwise manage any asset of the Trust Fund. The Trustees shall not
be liable for any act or omission of the investment manager in carrying out such
responsibility except to the extent that the Trustees violated Article 10.2 of
this Trust Agreement with respect to:
(1) Such designation,
(2) The establishment or implementation of the procedures
for the designation of an investment manager, or
(3) Continuing the designation, in which case the Trustees
would be liable in accordance with Article 10.3.
* * * * End of Article 12 * * * *
12-1
<PAGE>
Article 13.
Trustee
13.1 Trustees' Duties With Respect to Trust Assets. The duties of the
----------------------------------------------
Trustees with respect to Trust assets shall be to direct the receipt and payment
of funds of the Trust, the safeguarding and valuing of Trust assets, and the
investing and reinvesting of the Trust Funds. The directions of the Trustees
shall be in writing and bear the signature of one or more persons designated as
its authorized signatory or signatories, as provided in Article 11.2. The
directions of an investment manager shall be in writing or in such other form as
is acceptable to the Trustee. The Employer may, however, authorize the Trustees
to act with respect to any specific matter or class of matters by delivering to
the Trustees a certified copy of a resolution authorizing the Trustees so to
act.
13.2 Indicia of Ownership Must Be in the United States. The Trustees
--------------------------------------------------
shall not maintain the indicia of ownership of any Trust assets outside the
jurisdiction of the district courts of the United States, except as authorized
by regulations issued by the Department of Labor.
13.3 Permissible Trustees' Actions. Except as provided in Article 13.4,
------------------------------
in the discharge of its duties, the Trustees have all the powers, authority,
rights and privileges of an absolute owner of the Trust Fund and, not in
limitation of but in amplification of the foregoing, may (i) receive, hold,
manage, invest and reinvest, sell, exchange, dispose of, encumber, hypothecate,
pledge, mortgage, lease, grant options respecting, repair, alter, insure, or
distribute any and all property in the Trust Fund; (ii) borrow money,
participate in reorganizations, pay calls and assessments, vote or execute
proxies, exercise subscription or conversion privileges and register in the name
of a nominee any securities in the Trust Fund; (iii) renew, extend the due date,
compromise, arbitrate, adjust, settle, enforce or foreclose by judicial
proceedings or otherwise or defend against the same, any obligations or claims
in favor of or against the Trust Fund; (iv) exercise options, employ agents;
and, (v) whether herein specifically referred to or not, do all such acts, take
all such actions and proceedings and exercise all such rights and privileges as
if the Trustees were the absolute owner of any and all property in the Trust
Fund. The Trustees have no authority or duty to determine the amount of the
Employer contribution or to enforce the payment of any Employer contribution to
it.
13.4 Voting of Employer Stock. Every Participant shall have the right to
-------------------------
direct the Trustees with respect to the voting of the Employer Stock allocated
to his Account. At the time of the mailing to shareholders of the notice of any
shareholders' meeting of the Employer, the Employer shall cause to be prepared
and delivered to each Participant a notice of the shareholders' meeting with a
descriptive statement of the items upon which the Participant has the right to
exercise his right to vote. The Trustees shall vote any Employer Stock which a
Participant fails to vote as authorized by this Article in the
13-1
<PAGE>
same proportion as the allocated shares for which voting instructions have been
received and are voted.
13.5 Trustees' Fees for Services and Advisors Retained. Individual Trustees
--------------------------------------------------
shall serve without compensation for their service as such. However, with the
approval of the Employer, the Trustees may from time to time or on a continuing
basis, retain such agents or advisors, including specifically accountants,
attorneys, investment counsel and administrators, as they consider necessary to
assist them in the proper performance of their duties. The expenses of such
agents or advisors and all other expenses of the Trustees shall be paid by the
Trust if not paid by the Employer, provided that only reasonable expenses of
administering the Plan may be paid from the Trust.
13.6 Annual Accounting and Asset Valuation. Within 60 days or within a
--------------------------------------
reasonable period following the close of each Fiscal Year, the Trustees shall
render to the Employer an accounting of the administration of the Trust during
the preceding year. The Trustees shall also determine the value of the Trust
Fund, at the close of the Fiscal Year in Article 7. Notwithstanding any other
provisions of this Agreement, if the Trustees find that the Trust Fund consists,
in whole or in part, of property not traded freely on a recognized market or
that information necessary to ascertain the fair market value thereof is not
readily available to the Trustees, the Trustees shall take such action as is
required to ascertain the fair market value of such property including the
retention of such counsel and independent appraisers as it considers necessary;
and in such event the fair market value so determined shall be conclusive and
binding.
13.7 Trustee Removal or Resignation. A Trustee may resign at any time upon
-------------------------------
30 days written notice to the Employer and the Trustees or such shorter period
as may be agreeable to the Employer. Upon receipt of instructions or directions
from the Employer with which the Trustees are unable or unwilling to comply, a
Trustee may resign upon written notice to the Employer, given within a
reasonable time under the circumstances then prevailing. After resignation, a
Trustee shall have no liability to the Employer, or any person interested herein
for failure to comply with any instructions or directions. The Employer may
remove a Trustee without cause at any time upon 30 days written notice. In case
of resignation or removal of all the Trustees, the Trustees shall have the right
of a settlement of their accounts, which may be made at the option of the
Trustees, either by judicial settlement in an action in a court of competent
jurisdiction or by agreement of settlement between the Trustees and the
Employer. The Trustees shall not be required to transfer assets of the Trust
Fund to a successor Trustee under Article 13.8 or otherwise until its accounts
have been settled.
13.8 Approval of Trustees' Accounting. The written approval of any
---------------------------------
Trustees' accounting by the Employer shall be final as to all matters and
transactions stated or shown therein and binding upon the Employer, and all
persons who then shall be or thereafter shall become interested in this Trust.
Failure of the Employer to notify the
13-2
<PAGE>
Trustees of its disapproval of an accounting within 90 days after it has been
received shall be the equivalent of written approval.
13.9 Trust Not Terminated Upon Trustees' Removal or Resignation.
-----------------------------------------------------------
Resignation or removal of all of the Trustees shall not terminate the Trust. If
all or any of the Trustees have died, resigned, or been removed, a successor
Trustee shall be appointed pursuant to Article 11.1. Any successor Trustee shall
have all the powers and duties herein conferred upon the former Trustee. The
title to all Trust property shall automatically vest in a successor Trustee
without the execution or filing of any instrument or the doing of any act, but
the former Trustee shall, nevertheless, execute all instruments and do all acts
which would otherwise, be necessary to vest such title in any successor. The
appointment of a successor Trustee may be effected by amendment to this Trust
Agreement or by a board resolution of the Employer, with the agreement of the
successor Trustee to act as such being evidenced by its execution of such
amendment or acceptance of such board resolution.
13.10 Trustees May Consult With Legal Counsel. The Trustees may consult
----------------------------------------
with legal counsel (who may or may not be counsel to the Employer) concerning
any question which may arise with reference to its duties under this Agreement.
13.11 Trustees Not Required to Verify Identification or Addresses. The
------------------------------------------------------------
Trustees shall not be required to make any investigation to determine the
identity or mailing address of any person entitled to benefits under this
Agreement and shall be entitled to withhold making payments until the identity
and mailing address of any person entitled to benefits are certified by the
Employer. In the event that any dispute shall arise as to the identity or rights
of persons entitled to benefits hereunder, the Trustees may withhold payment of
benefits until such dispute has been determined by a court of competent
jurisdiction or shall have been settled by written stipulation of the parties
concerned.
13.12 Individual Trustee Rules. The action of individual Trustees shall be
-------------------------
determined by the vote or other affirmative expression of the majority thereof,
and they shall designate one of their members, or some other person, to keep a
record of their decision on matters to be determined hereunder and of all dates,
documents and other matters pertaining to their administration of this Trust.
However, no Trustee who is a Participant shall vote on any action relating
specifically to himself, and in the event the remaining Trustees by majority
vote thereof are unable to come to a determination of any such question, the
matter shall be decided by the Employer.
13.13 Indemnification of Trustees and Insurance. To the fullest extent
------------------------------------------
permitted by law, the Employer agrees to indemnify, to defend, and to hold
harmless the Trustees, individually and collectively, against any liability
whatsoever for any action taken or omitted by such Trustees in good faith in
connection with this Plan and Trust or duties hereunder and for any expenses or
losses for which the Trustees may become liable as a result of any such actions
or non-actions unless resultant from willful
13-3
<PAGE>
misconduct. The Employer may purchase insurance for the Trustees to cover any of
their potential liabilities with regard to the Plan and Trust.
13.14 Income Tax Withholding. In directing payments from the Trust, the
-----------------------
Trustees shall be liable for federal income tax withholding, and shall withhold
the appropriate amount of tax, if any, as provided by applicable law and
regulation, from any payment made to a Participant, Beneficiary or Alternate
Payee.
* * * * End of Article 13 * * * *
13-4
<PAGE>
Article 14.
Amendment, Termination and Merger
14.1 Trust Is Irrevocable. The Trust shall be irrevocable but shall be
---------------------
subject to amendment and termination as provided in this Article 14.
14.2 Employer May Amend Trust Agreement. The Employer reserves the right to
-----------------------------------
amend this Trust Agreement to any extent and in any manner that it may deem
advisable by action of its Board of Directors. The Employer, the Trustees, all
Participants, their Beneficiaries and all other persons having any interest
hereunder shall be bound by any such amendment; provided, however, that no
amendment shall:
(1) Cause or permit any part of the principal or income of
the Trust to revert to the Employer or to be used for, or be diverted to, any
purpose other than the exclusive benefit of Participants or their Beneficiaries
except as permitted by ERISA;
(2) Change the duties or liabilities of the Trustees
without their written assent to such amendment;
(3) Adversely affect the then accrued benefits of any
Participants; or
(4) Eliminate an optional form of distribution for Account
balances accrued before such amendment, except as allowed under the Code.
14.3 Employer May Terminate Plan. The Employer has established the Plan
----------------------------
with the bona fide intention and expectation that the Plan will continue
indefinitely, and that it will be able to make its contributions indefinitely,
but the Employer shall be under no obligation to continue its contributions or
to maintain the Plan for any given length of time and may, in its sole
discretion, terminate the Plan at any time without any liability whatsoever. In
the event of the termination of this Plan, the full value of the Accounts of all
Participants shall become fully vested and nonforfeitable. In the event of
partial termination of the Plan, the full value of the applicable Accounts of
the Participants involved in the partial termination shall become fully vested
and nonforfeitable.
14.4 Timing of Plan Termination. The Plan shall terminate:
---------------------------
(a) By Written Notice. Upon the date specified in a written notice of
------------------
such termination, executed by the Employer and delivered to the Trustee; or
(b) Purpose of Trust Accomplished. Upon the earlier of (i) the
------------------------------
complete accomplishment of all purposes for which the Plan has created, or (ii)
the death of the last person entitled to receive any benefits hereunder who is
living at the
14-1
<PAGE>
date of execution of the Trust Agreement. However, if, upon the death of such
last survivor, the Trust may continue for a longer period without violation of
any law of the jurisdiction to which the Trust is subject, the Trust shall
continue until the complete accomplishment of all the purposes for which the
Plan and Trust are created, unless sooner terminated under the other provisions
hereof.
14.5 Action Required Upon Plan Termination. Upon the termination of this
--------------------------------------
Plan and after payment of all expenses of the Trust, including any amounts then
due the Trustees and agents of the Trustees, the Trust assets and all
Participants' Accounts shall be revalued according to the procedures provided in
Article 7. Limitation Accounts held pursuant to Article 5 shall be allocated as
of the date the Plan is terminated in accordance with Articles 4 and 5. The
Trustee shall hold and distribute such Accounts as directed by the Trustees in
accordance with the provisions of Article 8. Upon such termination, if the
Employer has ceased to exist, all rights, powers, and duties to be exercised or
performed by the Employer shall thereafter be exercised or performed by the
Trustees, including the filling of vacancies on the Trustees and the amending of
the Plan.
14.6 Non-Reversion of Assets. Except as provided in Article 4.3(b), in no
------------------------
event shall any part of the principal or income of the Trust revert to the
Employer or be used for or diverted to any purpose other than the exclusive
benefit of Participants or their Beneficiaries.
14.7 Merger or Consolidation Cannot Reduce Benefits. In no event shall this
-----------------------------------------------
Plan or either portion thereof be merged or consolidated with any other plan,
nor shall there be any transfer of assets or liabilities from this Plan, or
either portion thereof to any other plan unless immediately after such merger,
consolidation or transfer, each Participant's benefits, if such other plan were
then to terminate, are at least equal to or greater than the benefits which the
Participant would have been entitled to had this Plan or such applicable portion
thereof been terminated immediately before such merger, consolidation or
transfer.
* * * * End of Article 14 * * * *
14-2
<PAGE>
Article 15.
Assignments
15.1 No Assignment. Except as provided in Article 12.5(c) the interest
--------------
herein, whether vested or not, of any Participant, former Participant or
Beneficiary, shall not be subject to alienation, assignment, pledging,
encumbrance, attachment, garnishment, execution, sequestration, or other legal
or equitable process, or transferability by operation of law in the event of
bankruptcy, insolvency or otherwise.
15.2 Qualified Domestic Relations Order Permitted. The provisions of
---------------------------------------------
Article 15.1 above shall not prevent the creation, assignment or recognition of
any individual's right to a benefit payable with respect to a Participant
pursuant to a Qualified Domestic Relations Order (QDRO).
(a) Not All Domestic Relations Orders Qualify as QDROs. The Trustees
---------------------------------------------------
shall establish reasonable procedures to determine whether a domestic relations
order is a QDRO and to administer distributions under a QDRO. If any domestic
relations order is received by the Plan, the Trustees shall promptly notify the
Participant and each Alternate Payee that the order has been received, and shall
determine within a reasonable period after receipt of the order whether it is a
QDRO and notify the Participant and each Alternate Payee of the Trustees'
determination.
(b) Payments May Occur Before Termination of Service. The Plan may
-------------------------------------------------
make benefit payments to an Alternate Payee under a QDRO before the
Participant's termination of Service if such payments are made on or after the
earlier of (i) at any time after the order is determined to be a QDRO; (ii) the
earliest date on which the Participant is entitled to a distribution under the
Plan; or (iii) the later of (A) the Participant's 50th birthday, or (B) the
earliest date on which the Participant could receiving benefits under the Plan
if the Participant separated from Service; in accordance with applicable law or
regulations.
(c) Separate Accounting of Alternate Payee's Account. During any
-------------------------------------------------
period in which the issue of whether a domestic relations order is a QDRO is
being determined by the Trustees, a court of competent jurisdiction or
otherwise, the Trustees shall separately account for (herein referred to as "the
separate amounts") the amounts which would have been payable to the Alternate
Payee during such period if the order had been determined to be a QDRO. If the
order, or a modification of the order, is determined within the 18 month period
described herein to be a QDRO, the Trustees shall pay the separate amounts (as
adjusted by attributable investment income or loss), in accordance with the
Plan's provisions, to the entitled individuals). If, within the 18 month period
described herein, the order is determined not to be a QDRO or its status as a
QDRO is not resolved, the Trustees shall return the separate amounts (as
adjusted by attributable investment income or loss) to his Account; or if
applicable, the Trustees shall pay such separate amounts to the individuals who
would have been entitled to
15-1
<PAGE>
receive such amounts absent such order. Any determination that an order is a
QDRO made after the close of the 18-month period described herein shall be
applied prospectively only. For purposes of this Article 15.2(c), the 18-month
period shall be the 18-month period beginning with the date on which the first
payment would be required to be made under the QDRO.
(d) Consent Requirements. Except as otherwise provided in a QDRO,
---------------------
payments made to an Alternate Payee shall not be subject to (1) Spousal Consent,
or (2) consent of the Alternate Payee.
* * * * End of Article 15 * * * *
15-2
<PAGE>
Article 16.
Adoption of the Plan by Affiliated Employers
16.1 Purpose. The purpose of this Article 16 is to describe the terms and
--------
conditions under which an Affiliated Employer may adopt the Plan for the benefit
of its Eligible Employees.
16.2 Conditions of Subscription Agreement. Any Affiliated Employer may,
-------------------------------------
with the written consent of the Board, execute a Subscription Agreement under
which it shall agree:
(a) To be bound by all the provisions of the adopted Plan and Trust
in the manner set forth herein:
(b) To pay its share of the expenses of the Plan and Trust as they
may be determined from time to time in the manner specified in this Article 16;
and
(c) To provide the Board and the Trustees with full, complete and
timely information on all matters necessary to them in the operation of the Plan
and Trust.
16.3 Participation of Affiliated Employers. In the event of the adoption
--------------------------------------
of the Plan and Trust by an Affiliated Employer, the following shall apply with
respect to the participation of such Affiliated Employer hereunder:
(a) All the terms and conditions of the Plan and Trust shall apply to
the participation of such Member Employer and its Employees in the same manner
as set forth for the Employer and its Employees, except as follows:
(i) The right to designate an Affiliated Employer is
specifically reserved to the Board.
(ii) An Affiliated Employer which adopts the Plan shall have the
right to designate for purposes of Articles 2.38 and 5.2(b), an alternative
definition of Plan Compensation, and for purposes of Article 3, alternative
requirements which shall be met by its Eligible Employees in order to qualify as
Participants. In the event that no such designation is made, the current
requirements set forth in Article 2.38 and Article 3 shall apply to Employees of
such Member Employer.
(iii) The right to appoint the Trustees as Plan Administrator is
specifically reserved to the Board, provided that a Member Employer may appoint
an Advisory Committee of such composition and size as it may determine to advise
the Trustees on any matters affecting such Member Employer or its Employees who
are Participants under the Plan. The Trustees shall be entitled to rely on any
information furnished it by any such Advisory Committee in the same manner as if
furnished by the
16-1
<PAGE>
Member Employer appointing such Advisory Committee, but in no event shall the
existence of any such Advisory Committee modify or otherwise limit any of the
powers or duties of the Trustees under the Plan.
(iv) The right to direct, appoint, remove, approve the account
of or otherwise deal with the Trustees are specifically reserved to the Board
and/or the chief executive officer of the Company as otherwise set forth in this
Plan and Trust.
(v) The right to amend the Plan and Trust is specifically
reserved to the Board, and any such amendment, unless otherwise specified
therein, shall be fully binding with respect to the participation of any Member
Employer, provided that this reservation shall in no event be construed to
prevent any Member Employer from terminating at any time its participation in
the Plan and Trust.
(b) In the operation of the Plan with respect to a Member Employer,
the term "effective date" shall mean the effective date in this Restatement or
such later date as specified in such Member Employer's Subscription Agreement.
(c) The Trustees shall at all times maintain separate Accounts
reflecting the participation of the Eligible Employees of the Member Employer
and in no event shall there be a commingling of the Accounts of the Eligible
Employees of the Employer or any Member Employer, provided that this requirement
shall in no event be construed to be a limitation on the commingling of any
contributions of the Trust Fund for investment purposes nor shall it require the
Trustees to maintain separate accounts with respect to the Trust Fund except as
otherwise provided herein.
(d) Notwithstanding any other provisions of this Agreement to the
contrary, it is specifically understood that the participation of any Affiliated
Employer hereunder, the obligation of such Affiliated Employer to make
contributions hereunder, and the vesting and entitlements of any Participant
based on such contributions are conditional to the extent that if a notification
is received from the United States Treasury that its Subscription Agreement as
part of the Plan, or the same as it may have been amended, is not part of a
qualified plan under Section 401 of the Code, as amended by ERISA, with respect
to its participation, such Affiliated Employer shall not be a Member Employer
hereunder and the then value of any contributions made by such Affiliated
Employer or its Employees shall be returned from the Trust Fund, and no
Participant hereunder or his Beneficiary shall have any vested interest in, or
be entitled to, any benefit payments based on such contributions. Further, it is
understood and provided that upon receipt of an initial notification from the
United States Treasury Department that such Subscription Agreement and the Plan
and Trust, as they may have been amended in order to receive such notification,
are qualified and exempt from taxation under the applicable sections of the
Code, the participation of such Affiliated Employer as a Member Employer and the
vestings and entitlement of all Participants employed by such Member Employer
and their Beneficiaries shall be retroactive to the date of their occurrence in
accordance with the other provisions of the Plan, and this
16-2
<PAGE>
Article 16.3 shall be of no further force or effect with respect to such Member
Employer and its Employees.
16.4 Termination of Member Employer's Participation. Any Member Employer
-----------------------------------------------
may at any time elect to terminate its participation in the Plan and Trust, or
any Member Employer may elect at any time by appropriate amendment or action
affecting only its own status hereunder to disassociate itself from the Plan and
Trust but to continue the Plan and the portion of the Trust as it pertains to
itself and its Employees as an entity separate and distinct from the Plan and
Trust if otherwise permitted by law. Termination of the participation of any
Member Employer shall not affect the participation of any other Member Employer
nor terminate the Plan or Trust with respect to them and their Employees;
provided that, if Employer shall terminate its participation, or disassociate
itself, then each remaining Member Employer shall make such arrangement and take
such action as may be necessary to assume the duties of providing for the
operation and continued administration of the Plan and Trust as the same
pertains to the Member Employer.
* * * * End of Article 16 * * * *
16-3
<PAGE>
Article 17.
Miscellaneous
17.1 Special Rule Relating to Veterans Reemployment Rights Under USERRA.
-------------------------------------------------------------------
Notwithstanding any provision of this Plan to the contrary, effective as of
December 12, 1994, contributions, benefits and service credit with respect to
qualified military service will be provided in accordance with Section 414(u) of
the Code.
* * * * End of Article 17 * * * *
17-1
<PAGE>
IN WITNESS WHEREOF, the Employer and the Trustees have caused this
Agreement to be executed by their respective duly authorized parties on this
_____ day of ___________________, 1999.
CH2M HILL COMPANIES, LTD.
(Employer)
By
---------------------------------------
Its
--------------------------------------
FRED K. BERRY
SAMUEL H. IAPALUCCI
SHARON SCHLECHTER
CLIFF THOMPSON
STAN VINSON
(Trustees)
By
---------------------------------------
By
---------------------------------------
By
---------------------------------------
By
---------------------------------------
By
---------------------------------------
<PAGE>
EXHIBIT 10.3
CH2M HILL COMPANIES, LTD.
1999 STOCK OPTION PLAN
AS AMENDED AND RESTATED
SECTION 1: PURPOSE
------------------
The purpose of the CH2M HILL Companies, Ltd. 1999 Stock Option Plan As
Amended and Restated (the "Plan") is to further the growth and development of
CH2M HILL Companies, Ltd. (the "Company") by affording an opportunity for stock
ownership to selected employees and directors of and consultants to the Company
and certain other entities in which the Company has an ownership interest, who
are responsible for the conduct and management of the Company's business or who
are involved in endeavors significant to the Company's success.
SECTION 2: DEFINITIONS
----------------------
Unless otherwise indicated, the following words when used herein shall have
the following meanings:
a. "Board of Directors" shall mean the Board of Directors of the Company.
b. "Cause" shall mean a termination of affiliation with the Company on account
of: (1) repeated refusal to obey written directions of the Board of
Directors or a superior officer of the Company (so long as such directions
do not involve illegal or immoral acts); (2) acts of substance abuse which
are materially injurious to the Company; (3) fraud or dishonesty that is
materially injurious to the Company; (4) commission of a criminal offense
involving money or other property of the Company (excluding any traffic
violations or similar violations); or (5) commission of a criminal offense
that constitutes a felony in the jurisdiction in which the offense is
committed.
c. "Change in Control" shall be deemed to have occurred: (1) at such time as a
third person, including a "group" as defined in Section 13(d)(3) of the
Securities Exchange Act of 1934, becomes the beneficial owner of shares of
the Company having 50% or more of the total number of votes that may be
cast for the election of Directors of the Company; or (2) on the date on
which the shareholders of the Company approve (i) any agreement for a
merger or consolidation in which the Company will not survive as an
independent corporation or (ii) any sale, exchange or other disposition of
all or substantially all of the Company's assets; or (3) on the effective
date of any sale, exchange or other disposition of greater than 50% in fair
market value of the Company's assets; or (4) on the date on which a
majority of the members of the Board of Directors consists of individuals
who were not members of the Board of Directors on January 1, 2000 and whose
election or appointment to the Board of Directors was not approved by a
majority of the members of the Board of Directors as comprised immediately
prior to such election or appointment. In determining whether clause (1) of
the preceding sentence has been satisfied, the third person owning shares
must be a person or entity other than an employee benefit plan of the
Company. The Committee's reasonable
<PAGE>
Page 2
determination as to whether a Change in Control has occurred shall be final
and conclusive.
d. "Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time.
e. "Committee" shall mean the Committee appointed by the Board of Directors in
accordance with Section 4.1 to administer the Plan.
f. "Common Stock" shall mean the Company's common stock (par value $0.01 per
share) and any share or shares of the Company's capital stock hereafter
issued or issuable in substitution for such shares.
g. "Incentive Stock Option" shall mean any option granted to an eligible
employee under the Plan, which the Company intends at the time the option
is granted to be an Incentive Stock Option within the meaning of Section
422 of the Code.
h. "Nonqualified Stock Option" shall mean any option granted to an eligible
participant under the Plan which is not an Incentive Stock Option.
i. "Option" shall mean and refer collectively to Incentive Stock Options and
Nonqualified Stock Options.
j. "Option Agreement" shall mean the agreement specified in Section 7.2.
k. "Optionee" shall mean any person who is granted an Option under the Plan.
"Optionee" shall also mean the personal representative of the estate of a
deceased Optionee or any designated beneficiary or other person who
acquires the right to exercise an Option by bequest or inheritance.
l. "Parent" shall mean a parent corporation of the Company as defined in
Section 424(e) of the Code.
m. "Subsidiary" shall mean a subsidiary corporation of the Company as defined
in Section 424(f) of the Code.
SECTION 3: EFFECTIVE DATE
-------------------------
The effective date of the Plan is January 1, 1999; provided, however, that the
adoption of the Plan by the Board of Directors is subject to approval and
ratification by the shareholders of the Company within twelve months before or
after the effective date. Options granted under the Plan prior to approval of
the Plan by the shareholders of the Company shall be subject to approval of the
Plan by the shareholders of the Company and may not be exercised prior to the
approval of the Plan by the shareholders of the Company. The effective date of
the amended and restated Plan is November 12, 1999,
<PAGE>
Page 3
which is the date on which the Board of Directors approved the amended and
restated Plan.
SECTION 4: ADMINISTRATION
-------------------------
4.1 Administrative Committee. The Plan shall be administered by a
------------------------
Committee appointed by and serving at the pleasure of the Board of Directors.
The Committee shall at all times include at least two Directors and shall
include such other members (Directors or non-Directors) as the Board of
Directors may determine. The Board of Directors may from time to time remove
members from or add members to the Committee, and vacancies on the Committee
shall be filled by the Board of Directors.
4.2 Committee Meetings and Actions. The Committee shall hold meetings at
------------------------------
such times and places as it may determine. A majority of the members of the
Committee shall constitute a quorum, and the acts of a majority of the members
present at a meeting or a consent in writing signed by all members of the
Committee shall be the acts of the Committee and shall be final, binding and
conclusive upon all persons, including the Company, its shareholders, and all
persons having any interest in Options which may be or have been granted
pursuant to the Plan. The Committee may delegate some or all of its duties
under this Plan to such other committees or employees as the Committee deems
appropriate in order to carry out such duties in an efficient manner.
4.3 Powers of Committee. The Committee shall have the full and exclusive
-------------------
right to grant and to determine terms and conditions of all Options granted
under the Plan and to prescribe, amend and rescind rules and regulations for
administration of the Plan. In granting Options, the Committee shall take into
consideration the contribution the Optionee has made or may make to the success
of the Company and such other factors as the Committee shall determine.
4.4 Interpretation of Plan. The determination of the Committee as to any
----------------------
disputed question arising under the Plan, including questions of construction
and interpretation, shall be final, binding and conclusive upon all persons,
including the Company, its shareholders, and all persons having any interest in
Options which may be or have been granted pursuant to the Plan.
4.5 Indemnification. Each person who is or shall have been a member of
---------------
the Committee or of the Board of Directors shall be indemnified and held
harmless by the Company against and from any loss, cost, liability or expense
that may be imposed upon or reasonably incurred in connection with or resulting
from any claim, action, suit or proceeding to which such person may be a party
or in which such person may be involved by reason of any action taken or failure
to act under the Plan and against and from any and all amounts paid in
settlement thereof, with the Company's approval, or paid in satisfaction of a
judgment in any such action, suit or proceeding against him, provided such
person shall give the Company an opportunity, at its own expense, to handle and
defend the same before undertaking to handle and defend it on such person's own
behalf.
<PAGE>
Page 4
The foregoing right of indemnification shall not be exclusive of, and is in
addition to, any other rights of indemnification to which any person may be
entitled under the Company's Articles of Incorporation or Bylaws, as a matter of
law, or otherwise, or any power that the Company may have to indemnify them or
hold them harmless.
SECTION 5: STOCK SUBJECT TO THE PLAN
------------------------------------
5.1 Number. The aggregate number of shares of Common Stock which may be
------
issued under Options granted pursuant to the Plan shall not exceed 8,000,000
shares (determined after the ten-to-one (10:1) stock split approved by the Board
of Directors on a conditional basis on November 6, 1998). Shares which may be
issued under Options may consist, in whole or in part, of authorized but
unissued stock or treasury stock of the Company not reserved for any other
purpose.
5.2 Unused Stock. If any outstanding Option under the Plan is cancelled,
------------
expires, or for any other reason ceases to be exercisable, in whole or in part,
other than upon exercise of the Option, the shares which were subject to such
Option and as to which the Option had not been exercised shall continue to be
available under the Plan.
5.3 Adjustment for Change in Outstanding Shares. If there is any change,
-------------------------------------------
increase or decrease, in the outstanding shares of Common Stock which is
effected without receipt of additional consideration by the Company, by reason
of a stock dividend, recapitalization, merger, consolidation, stock split,
combination or exchange of stock, or other similar circumstances, then in each
such event, the Committee shall make an appropriate adjustment in the aggregate
number of shares of stock available under the Plan, the maximum number of shares
of stock for which Options may be granted to a person under the Plan, the number
of shares of stock subject to each outstanding Option, and the Option prices, in
order to prevent the dilution or enlargement of any Optionee's rights. The
Committee's determinations in making adjustments shall be final and conclusive.
5.4 Reorganization or Sale of Assets. If the Company is merged or
--------------------------------
consolidated with another corporation and the Company is not the surviving
corporation, or if all or substantially all of the assets of the Company are
acquired by another entity, or if the Company is liquidated or reorganized (each
of such events being referred to as a "Reorganization Event"), the Committee
shall, as to outstanding Options, either: (1) make appropriate provision for
the protection of any such outstanding Options by the substitution on an
equitable basis of appropriate stock of the Company, or of the merged,
consolidated or otherwise reorganized corporation, which will be issuable in
respect of the Common Stock, provided that no additional benefits shall be
conferred upon Optionees as a result of such substitution, and provided further
that the excess of the aggregate fair market value of the shares subject to the
Options immediately after such substitution over the purchase price thereof is
not more than the excess of the aggregate fair market value of the shares
subject to such Options immediately before such substitution over the purchase
price thereof; or (2) upon written notice to all Optionees, which notice shall
be given not less than 20 days prior to the effective date of the Reorganization
Event,
<PAGE>
Page 5
provide that all unexercised Options must be exercised within a specified
number of days (which shall not be less than ten) of the date of such notice or
such Options will terminate. In response to a notice provided pursuant to
clause (2) of the preceding sentence, an Optionee may make an irrevocable
election to exercise the Optionee's Option contingent upon and effective as of
the effective date of the Reorganization Event. The Committee may, in its sole
discretion, accelerate the exercise dates of outstanding Options in connection
with any Reorganization Event which does not also result in a Change in Control.
SECTION 6: ELIGIBILITY
----------------------
All employees of the Company and its Subsidiaries who are responsible for the
conduct and management of the Company's business or who are involved in
endeavors significant to the success of the Company shall be eligible to receive
both Incentive Stock Options and Nonqualified Stock Options under the Plan.
Directors of and consultants to the Company and employees and directors of and
consultants to entities in which the Company has a direct or indirect ownership
interest of at least 50%, who are not employees of the Company or its
Subsidiaries but who are involved in endeavors significant to the success of the
Company, shall be eligible to receive Nonqualified Stock Options, but not
Incentive Stock Options, under the Plan. The Board of Directors may reduce the
50% ownership requirement in the preceding sentence, except that such percentage
shall not be reduced below 10%. Notwithstanding the preceding sentences of this
Section, the Committee may from time to time, in its sole discretion, determine
that employees and directors of and consultants to specific entities are not
eligible to receive Options under the Plan.
SECTION 7: GRANT OF OPTIONS
---------------------------
7.1 Grant of Options. The Committee may from time to time in its sole
----------------
discretion determine which of the eligible participants should receive Options,
the type of Options to be granted (whether Incentive Stock Options or
Nonqualified Stock Options), the number of shares subject to such Options, the
dates on which such Options are to be granted and, except as otherwise provided
by the Plan, all other terms and conditions relating to Options. The terms and
conditions of an Option granted under the Plan need not be identical to the
terms and conditions of any other Option granted under the Plan. No employee
may be granted Incentive Stock Options to the extent that the aggregate fair
market value (determined as of the time each Incentive Stock Option is granted)
of the Common Stock with respect to which any such Incentive Stock Options are
exercisable for the first time during a calendar year (under all incentive stock
option plans of the Company and its Parent and Subsidiaries) would exceed
$100,000. No person shall be granted Options under the Plan to purchase more
than 350,000 shares of Common Stock.
7.2 Option Agreement. Each Option granted under the Plan shall be
----------------
evidenced by a written Option Agreement setting forth the terms upon which the
Option is granted.
<PAGE>
Page 6
Each Option Agreement shall designate the type of Options being granted (whether
Incentive Stock Options or Nonqualified Stock Options) and shall state the
number of shares of Common Stock, as designated by the Committee, to which that
Option pertains. More than one Option may be granted to an eligible person.
7.3 Option Price. The option price per share of Common Stock under each
------------
Option shall be determined by the Committee and stated in the Option Agreement.
The option price for Incentive Stock Options granted under the Plan shall not be
less than 100% of the fair market value (determined as of the day the Option is
granted) of the shares subject to the Option. The option price for Nonqualified
Stock Options granted under the Plan shall not be less than 90% of the fair
market value (determined as of the day the Option is granted) of the shares
subject to the Option.
7.4 Determination of Fair Market Value. For all purposes of the Plan and
----------------------------------
all Option Agreements under the Plan, the fair market value of each share of
Common Stock on any date shall be deemed to be the Formula Price per share in
effect on that date, as determined in accordance with the Company's Articles of
Incorporation and Bylaws as amended from time to time.
7.5 Duration of Options. Each Option shall be of a duration as specified
-------------------
in the Option Agreement; provided, however, that the term of each Option shall
be no more than ten years from the date on which the Option is granted and shall
be subject to early termination as provided herein. Each Option may be
cancelled, with or without cause, at any time by the Committee by written notice
of cancellation to the Optionee. Upon cancellation of an Option by the
Committee, the Optionee shall not have any rights to purchase Common Stock under
the Option, and neither the Company nor the Committee shall have any liability
to the Optionee with respect to such Option or the cancellation of such Option.
7.6 Additional Limitations on Grant. No Incentive Stock Option shall be
-------------------------------
granted to an employee who, at the time the Incentive Stock Option is granted,
owns stock (as determined in accordance with Section 424(d) of the Code)
representing more than 10% of the total combined voting power of all classes of
stock of the Company or of any Parent or Subsidiary, unless the option price of
such Incentive Stock Option is at least 110% of the fair market value
(determined as of the day the Incentive Stock Option is granted) of the Common
Stock subject to the Incentive Stock Option and the Incentive Stock Option by
its terms is not exercisable more than five years from the date it is granted.
7.7 Other Terms and Conditions. The Option Agreement may contain such
--------------------------
other provisions, which shall not be inconsistent with the Plan, as the
Committee shall deem appropriate, including, without limitation, provisions that
relate the Optionee's ability to exercise an Option to the passage of time or
the achievement of specific goals established by the Committee or the occurrence
of certain events specified by the Committee. The Option Agreement may also
provide, in the discretion of the Committee, that any shares of Common Stock
acquired upon exercise of an Option shall become, upon such acquisition, subject
to the terms of a Stock Restriction Agreement which shall be set forth as an
attachment to the Option Agreement.
<PAGE>
Page 7
SECTION 8: EXERCISE OF OPTIONS
------------------------------
8.1 Manner of Exercise. Subject to the limitations and conditions of the
------------------
Plan or the Option Agreement, an Option shall be exercisable, in whole or in
part, from time to time, by giving written notice of exercise to the Treasurer
of the Company, which notice shall specify the number of shares of Common Stock
to be purchased and shall be accompanied by all of the following: (1) payment in
full to the Company of the purchase price of the shares to be purchased; (2)
payment in full of such amount as the Company shall determine to be sufficient
to satisfy any liability that the Company or any other entity may have for any
withholding of federal, state or local income or other taxes incurred by reason
of the exercise of the Option; (3) a representation meeting the requirements of
Section 12.2, if demanded by the Company; and (4) a Stock Restriction Agreement
meeting the requirements of Section 12.3, if requested by the Committee. An
Option shall be considered to be exercised on the earlier of the date on which
the Treasurer of the Company receives all of the items specified in the
preceding sentence or the date on which all of the items specified in the
preceding sentence are mailed to the Treasurer of the Company, as evidenced by a
United States Postal Service postmark.
8.2 Payment of Purchase Price. Payment for shares shall be in the form of
-------------------------
either: (1) cash; or (2) a personal check to the order of the Company; or (3) a
combination of cash and a personal check. In addition, unless the Committee, in
its discretion, provides otherwise, all or part of the payment for shares may be
made by tendering to the Company whole shares of Common Stock owned by the
Optionee, in an amount the fair market value of which (as determined in
accordance with Section 7.4) on the date of exercise equals or exceeds the
aggregate option price of the shares with respect to which the Option is being
exercised. If shares of Common Stock owned by the Optionee are used to pay all
or part of the purchase price, such shares shall be evidenced by negotiable
certificates endorsed to the Company or, if authorized by the Committee, by a
written attestation of ownership of shares signed by the Optionee.
8.3 Designation of Beneficiary. Each Optionee may designate one or more
--------------------------
beneficiaries (who may be designated contingently or successively) to whom the
right to exercise Options following the Optionee's death shall pass, if the
Option Agreement permits the exercise of unexercised Options after the
Optionee's death. Each designation will automatically revoke any prior
designations by the same Optionee, shall be in writing in such form as may be
prescribed by the Committee, and shall be effective as of the date on which the
written designation is received by the Committee during the lifetime of the
Optionee. If no valid designation of beneficiary is on file with the Committee
as of the date on which the Optionee dies, any right to exercise any unexercised
Options after the Optionee's death will pass to the Optionee's estate or to the
person or persons to whom the Optionee's rights under the Option pass by will or
by applicable law.
8.4 Prohibition on Exercise of Options if Limits on Ownership of Common
-------------------------------------------------------------------
Stock Would be Exceeded. Notwithstanding any other provision of this Plan or of
- -----------------------
any Option Agreement, an Option granted under this Plan may not be exercised if,
immediately after
<PAGE>
Page 8
the exercise of such Option, the recipient of shares of Common Stock pursuant to
such exercise would own more shares of Common Stock of the Company than such
person is permitted to own under the Articles of Incorporation or Bylaws of the
Company.
SECTION 9: CHANGE IN CONTROL
----------------------------
Notwithstanding any vesting requirements contained in any Option Agreement,
all outstanding Options shall become immediately exercisable in full upon the
occurrence of a Change in Control.
SECTION 10: EFFECT OF TERMINATION OF AFFILIATION
------------------------------------------------
10.1 Involuntary Termination of Affiliation Other Than Upon Death or
---------------------------------------------------------------
Disability; Retirement. The Committee shall provide in each Option Agreement
- ----------------------
that, upon involuntary termination of the Optionee's affiliation with the
Company other than upon death or disability (within the meaning of Section
22(e)(3) of the Code) and other than for Cause, and upon the retirement of an
Optionee, the Optionee may, at any time within three months after the date of
termination of affiliation or retirement, but not later than the date of
expiration of the Option, exercise the Option to the extent the Optionee was
entitled to do so on the date of termination of affiliation or retirement. Any
Options not exercisable as of the date of termination of affiliation or
retirement and any Options or portions of Options of terminated Optionees not
exercised as provided herein shall terminate. For purposes of this Section 10,
retirement shall mean the voluntary termination of an Optionee's employment with
the Company and all of its affiliates at or after age 65 (or at or after 55 if
the Optionee has at least ten years of service with the Company and its
affiliates.
10.2 Termination of Affiliation by Death of Optionee. The Committee shall
-----------------------------------------------
provide in each Option Agreement that, if an Optionee dies while affiliated with
the Company or within a period of three months after termination of affiliation
with the Company or retirement under circumstances to which Section 10.1
applies, the personal representative of the Optionee's estate or the designated
beneficiary or other person or persons who shall have acquired the Option from
the Optionee by bequest or inheritance may exercise the Option at any time
within one year after the date of death but not later than the expiration date
of the Option, to the extent the Optionee was entitled to do so on the date of
death. Any Options not exercisable as of the date of death and any Options or
portions of Options of deceased Optionees not exercised as provided herein shall
terminate.
10.3 Termination of Affiliation by Disability of Optionee. The Committee
----------------------------------------------------
shall provide in each Option Agreement that, upon termination of an Optionee's
affiliation with the Company by reason of the Optionee's disability (within the
meaning of Section 22(e)(3) of the Code), the Optionee may exercise the Option
at any time within one year after the date of termination of affiliation but not
later than the expiration date of
<PAGE>
Page 9
the Option, to the extent the Optionee was entitled to do so on the date of
termination of affiliation. Any Options not exercisable as of the date of
termination of affiliation and any Options or portions of Options of disabled
Optionees not exercised as provided herein shall terminate.
10.4 Other Terminations of Affiliation. Upon termination of an Optionee's
---------------------------------
affiliation with the Company under circumstances other than those set forth in
Sections 10.1, 10.2 or 10.3, including without limitation a termination for
Cause and a voluntary termination on the part of the Optionee other than
retirement, Options granted to the Optionee shall terminate immediately.
10.5 Definition of Termination of Affiliation. For purposes of any
----------------------------------------
Nonqualified Stock Option granted under this Plan, an Optionee's affiliation
with the Company shall be deemed to be terminated as of the first day on which
the Optionee is no longer an employee or director of or a consultant to the
Company or by another entity that is eligible to participate in the Plan. For
purposes of any Incentive Stock Option granted under this Plan, an Optionee's
employment with the Company shall be deemed to be terminated as of the first day
on which the Optionee is no longer employed by the Company or any Subsidiary of
the Company.
10.6 Employees and Directors of and Consultants to Eligible Entity that
------------------------------------------------------------------
Becomes Ineligible. If an entity whose employees, directors and consultants are
- ------------------
eligible to participate in the Plan becomes ineligible to participate in the
Plan because of a change in the Company's ownership of the entity or because of
a determination by the Committee under Section 6, all Options held by employees
and directors of an consultants to such entity shall become immediately
exercisable in full. The change in the status of the entity to one whose
employees, directors and consultants are not eligible to participate in the Plan
shall be deemed to be an involuntary termination of affiliation with the Company
with respect to the employees and directors or and consultants to that entity.
10.7 Exercise of Nonqualified Stock Option After Termination of
----------------------------------------------------------
Affiliation. Notwithstanding any other provision of the Plan, the Committee
- -----------
may, in its sole discretion, provide in an Option Agreement or otherwise that,
upon termination of an Optionee's affiliation with the Company, one or more
Nonqualified Stock Options held by the Optionee may be exercised at such time
and subject to such conditions as the Committee, in its sole discretion, may
designate.
SECTION 11: NON-TRANSFERABILITY OF OPTIONS
------------------------------------------
Options granted pursuant to the Plan are not transferable by the Optionee
other than by will or the laws of descent and distribution and shall be
exercisable during the Optionee's lifetime only by the Optionee. Upon any
attempt to transfer, assign, pledge, hypothecate or otherwise dispose of an
Option contrary to the provisions hereof, or upon the levy of any attachment or
similar process upon an Option, the Option shall immediately become null and
void.
<PAGE>
Page 10
SECTION 12: ISSUANCE OF SHARES
------------------------------
12.1 Transfer of Shares to Optionee. As soon as practicable after the
------------------------------
Treasurer of the Company has received an Optionee's written notice of exercise
of an Option and the other items specified in Section 8.1, the Company shall
issue or transfer to the Optionee the number of shares of Common Stock as to
which the Option has been exercised and shall deliver to the Optionee a
certificate or certificates therefor, registered in the Optionee's name. In the
alternative, the Company may provide for the recording of ownership of shares
without the issuance of certificates. If the issuance or transfer of shares by
the Company would for any reason, in the opinion of counsel for the Company,
violate any applicable federal or state laws or regulations, the Company may
delay issuance or transfer of such shares to the Optionee until compliance with
such laws can reasonably be obtained. In no event shall the Company be
obligated to effect or obtain any listing, registration, qualification, consent
or approval under any applicable federal or state laws or regulations or any
contract or agreement to which the Company is a party with respect to the
issuance of any such shares.
12.2 Investment Representation. Upon demand by the Company, the Optionee
-------------------------
shall deliver to the Company a representation in writing that the purchase of
all shares with respect to which notice of exercise of the Option has been given
by the Optionee is being made for investment only and not for resale or with a
view to distribution, and containing such other representations and provisions
with respect thereto as the Company may require. Upon such demand, delivery of
such representation promptly and prior to the transfer or delivery of any such
shares and prior to the expiration of the option period shall be a condition
precedent to the right to purchase such shares.
12.3 Restrictions on Common Stock Acquired Through Exercise of Options.
-----------------------------------------------------------------
All shares of Common Stock acquired through the exercise of Options granted
under this Plan shall be subject to all restrictions on shares of Common Stock
of the Company set forth in the Articles of Incorporation and Bylaws of the
Company, including: (1) restrictions that grant the Company the right to
repurchase shares upon termination of the shareholder's affiliation with the
Company; (2) restrictions that grant the Company a right of first refusal if the
shareholder wishes to sell shares other than in the limited market maintained by
the Company; (3) restrictions that require the approval of the Company for any
other sale of shares; and (4) restrictions that define the Formula Price to be
applied in purchases and sales of shares. In addition, if requested by the
Committee in its sole discretion, the Optionee shall execute and deliver to the
Company a Stock Restriction Agreement in such form as the Committee may provide
at the time of exercise of the Option. Such Stock Restriction Agreement may
include, without limitation, restrictions in addition to those restrictions set
forth in the Articles of Incorporation and Bylaws of the Company. Upon such
request, execution of the Stock Restriction Agreement by the Optionee prior to
the transfer or delivery of any shares and prior to the expiration of the option
period shall be a condition precedent to the right to purchase such shares,
unless such condition is expressly waived in writing by the Committee.
<PAGE>
Page 11
SECTION 13: AMENDMENTS
----------------------
The Board of Directors may at any time and from time to time alter, amend,
suspend or terminate the Plan or any part thereof as it may deem proper, except
that no such action shall diminish or impair the rights under an Option
previously granted without the consent of the Optionee. Unless the shareholders
of the Company shall have given their approval, the total number of shares for
which Options may be issued under the Plan shall not be increased, except as
provided in Section 5.3, and no amendment shall be made which reduces the option
price at which the Common Stock may be offered through Incentive Stock Options
under the Plan below the minimum required by Section 7.3, except as provided in
Section 5.3, or which materially modifies the requirements as to eligibility for
receipt of Incentive Stock Options under the Plan. Subject to the terms and
conditions of the Plan, the Committee may modify, extend or renew outstanding
Options granted under the Plan, or accept the surrender of outstanding Options
to the extent not theretofore exercised and authorize the granting of new
Options in substitution therefor, except that no such action shall diminish or
impair the rights under an Option previously granted without the consent of the
Optionee.
SECTION 14: TERM OF PLAN
------------------------
This Plan shall terminate on December 31, 2008; provided, however, that the
Board of Directors may at any time prior thereto suspend or terminate the Plan.
SECTION 15: RIGHTS AS STOCKHOLDER
---------------------------------
An Optionee shall have no rights as a stockholder of the Company with respect
to any shares of Common Stock covered by an Option until the date of the
issuance of the stock certificate for such shares or the date of the recording
of the ownership of the shares in the Optionee's name.
SECTION 16: NO EMPLOYMENT RIGHTS
--------------------------------
Nothing contained in this Plan or in any Option granted under the Plan shall
confer upon any Optionee any right with respect to the continuation of such
Optionee's affiliation with the Company or interfere in any way with the right
of the Company or any other entity participating in the Plan, subject to the
terms of any separate employment agreement to the contrary, at any time to
terminate such affiliation or to increase or decrease the compensation of the
Optionee from the rate in existence at the time of the grant of the Option.
<PAGE>
Page 12
SECTION 17: EMPLOYEES, DIRECTORS AND CONSULTANTS BASED OUTSIDE OF THE UNITED
----------------------------------------------------------------------------
STATES
------
With respect to Options granted to employees and directors of and consultants
to the Company and other participating entities who are based outside of the
United States, the Committee shall have complete discretion to determine which
such affiliates are eligible to receive Options, to define all terms and
conditions of Options granted to such affiliates (including the duration of such
Options and the option price under such Options), to modify and amend such
Options as may be necessary or appropriate to comply with the laws and
regulations of foreign jurisdictions, and to establish subplans and modified
procedures with respect to the grant and exercise of such Options.
Notwithstanding the provisions of Sections 7.3 and 7.5, the Committee may in its
discretion grant Options to employees and directors of and consultants to the
Company and other participating entities who are based outside of the United
States that have an option price that is less than 90% of the fair market value
(determined as of the day the Option is granted) of the shares subject to the
Options or that have a term of more than ten years from the date on which the
Options are granted, or both.
SECTION 18: GOVERNING LAW
-------------------------
This Plan, and all Options granted under this Plan, shall be construed and
shall take effect in accordance with the laws of the State of Colorado, without
regard to the conflicts of laws rules of such State.
Adopted (as amended and restated) this 12th day of November, 1999.
CH2M Hill Companies, Ltd.
By: Samuel H. Iapalucci
-------------------
Title: Chief Financial Officer and Secretary
-------------------------------------
<PAGE>
Exhibit 10.4
CH2M HILL COMPANIES, LTD.
PAYROLL DEDUCTION STOCK PURCHASE PLAN
1. Purpose
CH2M HILL Companies, Ltd. (the "Company") hereby establishes the CH2M HILL
Companies, Ltd. Payroll Deduction Stock Purchase Plan (the "Plan"). The purpose
of the Plan is to secure for the Company and its shareholders the benefits
inherent in the ownership of capital stock of the Company by employees of the
Company and its Affiliates. The Plan is intended to provide to eligible
employees of the Company and designated Affiliates an opportunity to purchase
shares of Common Stock through payroll deductions. The Plan encompasses two
components. One component ("423 Component") constitutes a plan designed to
comply with Section 423(b) of the Code, such that the shares purchased under
that component will qualify for the favorable tax treatment provided by Sections
423(a) and 421(a) of the Code. The second component ("non-423 Component")
constitutes a plan which provides for the purchase of shares which do not
qualify for the favorable tax treatment provided by Sections 423(a) and 421(a)
of the Code.
2. Definitions
(a) "Affiliate" means each entity in which the Company has a direct or
indirect ownership interest, whether such entity is a corporation, a
partnership, a joint venture, a limited liability company, or any other form of
entity.
(b) "Agent" means the Agent for the Plan and shall be either the Company or
its designee.
(c) "Board" means the Board of Directors of the Company.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Committee" means the Payroll Deduction Stock Purchase Plan Committee,
which is responsible for administering the Plan.
(f) "Company Percent" means the percent of the purchase price contributed
by the Company pursuant to the provisions of Section 11. The Company Percent
shall be from zero percent (0%) to fifteen percent (15%) and shall initially be
ten percent (10%) until changed by the Board.
(g) "Fair Market Value" as of any date means the Formula Price per share of
Common Stock in effect on that date, as determined by the Board in accordance
with the Company's Articles of Incorporation and Bylaws, as amended from time to
time.
(h) "Internal Market" means the limited secondary market maintained by the
Company for the purchase and sale of Common Stock of the Company.
(i) "Participant Percent" means the difference between one hundred percent
(100%) and the Company Percent.
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(j) "Subsidiary Corporation" means any corporation (other than the Company)
in an unbroken chain of corporations that begins with the Company and in which
each of the corporations other than the last corporation in the chain owns at
least fifty percent (50%) of the total voting power of all classes of stock in
one of the other corporations in the chain.
3. Stock Subject to the Plan
The capital stock which may be purchased under the Plan is the Common Stock,
par value one cent ($0.01) per share (the "Common Stock"), of the Company. The
Common Stock purchased by the Agent for stock purchase accounts under the Plan
shall be subject to the terms, conditions, and restrictions set forth in the
Articles of Incorporation and Bylaws of the Company, as amended from time to
time, including: (a) restrictions that grant the Company the right to repurchase
shares upon termination of the shareholder's affiliation with the Company; (b)
restrictions that grant the Company a right of first refusal if the shareholder
wishes to sell shares other than in the Internal Market; (c) restrictions that
require the approval of the Company for any other sale of shares; and (d)
restrictions that define the Formula Price to be applied in purchases and sales
of shares. The number of shares of Common Stock reserved for issuance under the
Plan is one million (1,000,000) shares of Common Stock, determined after the
ten-to-one (10:1) stock split approved by the Board on a conditional basis on
November 6, 1998.
4. Administration
(a) The Plan shall be administered by the Committee. The Committee shall
have the number of members determined by the President of the Company, with a
minimum of two (2) members. The members of the Committee shall be appointed by
and shall serve at the discretion of the President of the Company. Vacancies
occurring in the membership of the Committee shall be filled by appointment by
the President of the Company.
(b) Subject to the provisions of the Plan, the Committee shall have the
authority, in its discretion and on behalf of the Company:
(i) to prescribe, amend, and rescind rules and regulations relating
to the Plan;
(ii) to prescribe forms for carrying out the provisions and purposes
of the Plan;
(iii) to interpret the Plan; and
(iv) to make all other determinations deemed necessary or advisable
for the administration of the Plan, including factual
determinations.
(c) In exercising its authority, the Committee shall have the broadest
possible discretion and the Committee's determinations under the Plan made in
good faith shall be binding and conclusive on participating employees and other
persons claiming entitlements under the Plan. In no event shall a Committee
determination with respect to a particular employee or provision of the Plan be
binding with respect to any other employee (even if similarly situated) nor with
respect to any future determinations regarding the same or other provisions of
the Plan.
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No member of the Committee shall be liable for any action taken or determination
made in administering the Plan, if such action is taken or such determination is
made in good faith.
(d) A majority of the Committee shall constitute a quorum. The acts of a
majority of the members present at any meeting at which a quorum is present, or
acts approved in writing by all of the members, shall be the acts of the
Committee.
5. Eligibility
(a) The Committee shall from time to time designate the corporations whose
employees may participate in the 423 Component of the Plan, provided that only
the Company and its Subsidiary Corporations (including corporations that become
Subsidiary Corporations after the adoption and approval of the Plan) shall be
eligible to be designated by the Committee to participate in the 423 Component
of the Plan. Subject to the terms, provisions, and conditions of the Plan, each
employee of each designated corporation shall be eligible to participate in the
423 Component of the Plan, except for: (i) an employee who owns capital stock
having five percent (5%) or more of the total combined voting power or value of
all classes of capital stock of the Company or of any of its Subsidiary
Corporations; (ii) an employee whose customary employment is less than twenty
(20) hours per week; and (iii) an employee whose customary employment is for
less than five (5) months in any calendar year. The Committee may impose
additional eligibility requirements consistent with Section 423(b) of the Code.
The Committee's determination of the status of an individual as an employee
eligible to participate in the 423 Component of the Plan for a particular
purchase date or period shall be final, binding, and conclusive, regardless of
any subsequent reclassification or change in status.
(b) The Affiliates whose employees may participate in the non-423 Component
of the Plan shall be designated from time to time by the Committee. The
Committee, in its sole discretion, shall have the power and authority to modify
the eligibility for, and terms and conditions of, participation in the Plan by
employees of such Affiliates and to establish subplans, modified Plan
procedures, and other terms and procedures to the extent such actions are deemed
necessary or desirable by the Committee. Participation in the non-423 Component
of the Plan by employees of designated Affiliates and the offer and purchase of
Common Stock by such employees shall not be considered part of, or pursuant to,
a plan qualified under Section 423 of the Code.
(c) An employee shall cease to be eligible to participate in the 423
Component of the Plan upon termination of employment with all corporations
participating in the 423 Component of the Plan, whether by death, total
disability, retirement, transfer to an entity that is not participating in the
423 Component of the Plan, or otherwise. A former employee of a participating
corporation shall again become eligible to participate in the 423 Component of
the Plan as of the date of such person's re-employment by a corporation
participating in the 423 Component of the Plan.
(d) An employee shall cease to be eligible to participate in the non-423
Component of the Plan upon termination of employment with all Affiliates
participating in the non-423 Component of the Plan, whether by death, total
disability, retirement, transfer to an entity that is not participating in the
non-423 Component of the Plan, or otherwise. A former employee of a
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<PAGE>
participating Affiliate shall again become eligible to participate in the non-
423 Component of the Plan as of the date of such person's re-employment by an
Affiliate participating in the non-423 Component of the Plan.
(e) No employee shall be entitled to purchase shares of Common Stock with a
Fair Market Value (measured as of the purchase date) of more than twenty-five
thousand dollars ($25,000) in any calendar year under the Plan and any other
"employee stock purchase plan" of the Company or any of its Affiliates, or at
any other rate of purchase that exceeds the rate allowed for plans qualifying
under Section 423(b) of the Code.
6. Participation in the Plan
(a) An eligible employee may enter the Plan at any time prior to
termination of the Plan. An eligible employee enters the Plan by completing a
payroll deduction authorization form and delivering such form in the manner
prescribed by the Committee. Alternatively, the Committee may prescribe or
permit electronic enrollment procedures. The employee's payroll deduction
authorization shall authorize regular payroll deductions from the employee's
compensation.
(b) The participating employee's payroll deduction authorization form shall
also designate the Company or the Company's designee to be the Agent for the
employee with respect to all stock certificates for shares purchased under the
Plan. All stock certificates representing shares purchased for participating
employees shall be delivered to and held by the Agent. Prior to any record date
established by the Company for any vote of its shareholders, the Agent shall
distribute to each participant a stock certificate representing all shares
purchased under the Plan and not yet distributed to the participant.
Alternatively, the Committee may prescribe or authorize bookkeeping entry or
electronic recording of share ownership.
7. Payroll Deductions
(a) Payroll deductions for a participating employee shall be in an amount
specified by the employee in the participating employee's payroll deduction
authorization form, but not less than one percent (1%) nor more than ten percent
(10%) of the participating employee's compensation, expressed as a whole
percentage of such compensation. Compensation for purposes of the Plan shall be
defined by the Committee; provided, however, compensation shall include the
regular wages, salary or commissions paid to the employee. Payroll deductions
shall be credited to the stock purchase account maintained for the participating
employee.
(b) A participating employee may increase or decrease the amount of the
participating employee's payroll deduction (within the minimum and maximum
limits provided for in Section 7(a) above) at any time, subject to such rules as
may be adopted by the Committee with respect to the effective date of such
changes. A participating employee increases or decreases the amount of the
participating employee's payroll deduction by delivering or providing a new
payroll deduction authorization form in the manner prescribed by the Committee.
8. Stock Purchase Accounts
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<PAGE>
(a) Amounts credited to a participating employee's stock purchase account
may not be assigned, transferred, pledged, hypothecated, or otherwise disposed
of in any way by a participating employee other than by will or the laws of
descent and distribution, and any attempt to do so shall be null and void and
without effect.
(b) No interest will be paid on the amounts credited to a participating
employee's stock purchase account, unless required by applicable law.
9. Purchase Price of Shares
Unless otherwise determined by the Board, the purchase price of each share
of Common Stock purchased under the Plan shall be the Fair Market Value in
effect as of the date of purchase.
10. Purchase of Shares
(a) Shares will be purchased by the Agent in the Internal Market or shares
will be issued by the Company from the remaining balance of those shares
reserved for issuance under Section 3 of the Plan.
(b) Stock purchases shall be made on predetermined purchase dates
established by the Committee, which may coincide with the dates that trades are
conducted for the Internal Market. The first purchase date shall not be prior to
January 1, 2000, even if the Committee permits eligible employees to elect to
have amounts deducted from their compensation and contributed to their stock
purchase accounts in the Plan during the last calendar quarter of 1999. If on
any purchase date a participating employee has an amount credited to the
participating employee's stock purchase account, the Agent shall use such amount
to pay the Participant Percent of the purchase price of shares of Common Stock.
The employee's stock purchase account shall be charged with the Participant
Percent of the purchase price of such shares.
(c) With respect to both newly issued shares of Common Stock which are
purchased for the account of participating employees under the Plan and shares
purchased on the Internal Market, a stock certificate will be issued in the name
of the Agent and held by the Agent in accordance with Section 6 of the Plan.
Notwithstanding that such stock certificates are held by the Agent for
participating employees, each participant shall have all the rights and
privileges of a shareholder with respect to the shares purchased for the
participating employee's account, subject to the provisions of Sections 6 and
10(d). Alternatively, the Committee may prescribe or authorize bookkeeping entry
or electronic recording of share ownership.
(d) Except as provided in this Section 10(d), shares purchased pursuant to
the Plan may not be sold, transferred, pledged as collateral, or in any way
encumbered for so long as the stock certificates are held by the Agent. A
participant may apply to the Committee for permission to sell shares that have
been purchased by the participant pursuant to the Plan but which have not yet
been distributed to the participant. The Committee, in its sole discretion, may
grant or deny the application or may grant the application in part and deny the
remainder of the application. The Committee's action on any such application
shall be final and binding for all purposes and shall not be subject to review.
If the Committee grants an application in whole or
5
<PAGE>
in part, the Agent will place an order to sell the participant's shares with
respect to which the application was granted at the next date on which trades
are conducted for the Internal Market. If the order to sell shares is accepted
in whole or in part, the Agent will sell the shares for which the order was
accepted and will distribute the net proceeds from such sale to the participant.
Any shares with respect to which the participant's application is denied or with
respect to which the Agent's order to sell shares is not accepted will continue
to be held by the Agent until such shares are distributed to the participant in
accordance with Section 6(b).
11. Company Contributions
The Company shall contribute the Company Percent of the purchase price of
each share of Common Stock purchased under the Plan. On each purchase date, the
Company will, through the Agent and under the direction of the Committee, pay
the Company Percent of the purchase price of each share purchased by the Agent,
whether purchased in the Internal Market or as a newly issued share. No
contribution shall be made by the Company into an employee's stock purchase
account.
12. Termination of Participation and Re-Entry
(a) An employee may terminate participation in the Plan at any time by
completing a payroll deduction authorization form and delivering such form in
the manner prescribed by the Committee. Alternatively, the Committee may
prescribe or permit electronic procedures for such changes. Such employee's
participation in the Plan shall terminate as soon as practicable upon receipt of
the payroll deduction authorization form by the Company. An employee who
terminates participation in the Plan pursuant to this Section 12(a) shall not be
eligible to re-enter the Plan until the first business day of the following
calendar quarter.
(b) If a participating employee ceases to be eligible to participate in the
Plan as described in Section 5(c) or (d) or terminates participation in the
Plan, or if the Plan terminates or is terminated, any cash credited to the
employee's stock purchase account will be distributed to the participating
employee or, in the event of the death of the participating employee, to the
participating employee's estate. Any shares held by the Agent for an employee
whose affiliation with the Company has terminated will be released by the Agent
to the employee. Such shares will be subject to the Company's right to
repurchase the shares, as set forth in the Company's Articles of Incorporation
and Bylaws, as amended from time to time.
13. Government and Stock Exchange Regulations
The Company shall not be required to sell or deliver any shares of Common
Stock under the Plan unless and until the Company has fully complied with any
then applicable requirements of the Securities and Exchange Commission, state
securities commissions, or other regulatory agencies having jurisdiction, and of
any exchanges upon which Common Stock of the Company may be listed. The Company
shall not be obligated to obtain any required licenses or to register any Common
Stock to permit purchases of Common Stock under the Plan.
14. Application of Funds
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<PAGE>
All funds received by the Company as a result of the sale of newly issued
shares of Common Stock under the Plan may be used for any corporate purpose.
15. Recapitalization
In the event any change, such as a stock split, reverse stock split or
stock dividend, is made in the Company's capitalization which results in an
adjustment in the number of shares of capital stock outstanding without receipt
of consideration by the Company, appropriate adjustment, as determined by the
Committee in its discretion, may be made in the number of shares reserved for
issuance as provided in Section 3 of the Plan.
16. Withholding
The Company shall be entitled to make appropriate arrangements to comply
with any withholding requirements imposed by federal, state, or local law with
respect to the purchase or disposition of shares of Common Stock under the Plan,
including, without limitation, payroll withholding or withholding from proceeds
of a disposition of shares of Common Stock acquired under the Plan.
17. No Employment Obligation
An employee's employment with the Company or an Affiliate is not for any
specified term and may be terminated by such employee or by the Company or the
Affiliate at any time, for any reason, with or without cause, except as
otherwise provided by law or contract. Nothing in this Plan shall confer upon
any employee any right to continue in the employ of, or affiliation with, the
Company or an Affiliate, nor constitute any promise or commitment by the Company
or an Affiliate regarding future positions, future work assignments, future
compensation, or any other term or condition of employment or affiliation.
18. Amendment of the Plan
The Board may at any time suspend or terminate the Plan and may at any time
or from time to time amend the Plan in such respects as the Board may deem
advisable; provided, however, no such amendment of the Plan shall, without the
approval of a majority of the voting power of the capital stock of the Company
present or represented and entitled to vote at a duly constituted meeting of
shareholders, increase the number of shares reserved for purchase under the
Plan, except as provided in Section 15.
19. No Implied Rights or Obligations
The Company, in establishing and maintaining this Plan as a voluntary and
unilateral undertaking, expressly disavows the creation of any rights in
participating employees or others claiming entitlements under the Plan or any
obligations on the part of the Company, any Affiliate, the Agent, or the
Committee, except as expressly provided in this Plan.
20. Effective Date and Termination of the Plan
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<PAGE>
(a) The Plan is effective as of the date on which the Plan is adopted by
the Board. The Committee shall determine when eligible employees may begin
payroll deductions under the Plan.
(b) Unless the Plan is terminated earlier by the Board, the Plan shall
terminate on December 31, 2007. Termination shall be deemed to be effective as
of the close of business on the day of termination.
21. Governing Law
The Plan shall be construed in accordance with and governed by the laws of
the State of Colorado.
Adopted this 12th day of November, 1999.
CH2M HILL Companies, Ltd.
By:
-------------------------------
Title:
----------------------------
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Exhibit 10.5
CH2M HILL COMPANIES, LTD.
PRE-TAX DEFERRED COMPENSATION PLAN
1. Purposes
The purposes of the CH2M HILL Companies, Ltd. Pre-Tax Deferred Compensation
Plan are: (a) to provide a mechanism by which certain bonuses awarded to
employees of certain affiliates of CH2M HILL Companies, Ltd. may be deferred to
a specified date or until the earlier occurrence of one of several specified
events; and (b) to provide certain employees of certain affiliates of CH2M HILL
Companies, Ltd. with the opportunity to defer compensation on a voluntary basis
to a specified date or until the earlier occurrence of one of several specified
events.
2. Definitions
(a) "Affiliate" means each entity in which the Company has a direct or
indirect ownership interest, whether such entity is a corporation, a
partnership, a joint venture, a limited liability company, or any other form of
entity.
(b) "Beneficiary" means one or more individuals or entities designated by a
Participant to receive the Participant's benefits under the Plan in the event of
the Participant's death. A Participant's designation of a Beneficiary must be in
writing and must comply with rules and procedures established by the Committee.
If a Participant dies without a properly designated Beneficiary, the
Participant's estate will be deemed to be the Participant's Beneficiary.
(c) "Board" means the Board of Directors of the Company.
(d) "Committee" means the Deferred Compensation Plan Committee appointed by
the President of the Company in accordance with Section 3.
(e) "Common Stock" means the common stock, par value one cent ($0.01) per
share, of the Company.
(f) "Company" means CH2M HILL Companies, Ltd.
(g) "Formula Price" as of any date means the value per share of Common
Stock in effect on that date, as determined by the Board.
(h) "Internal Market" means the limited secondary market maintained by the
Company for the purchase and sale of Common Stock.
(i) "Participant" means each employee of a participating Affiliate who has
been awarded a deferred bonus under Section 5 and each eligible employee of
<PAGE>
a participating Affiliate who has elected to defer compensation under Section 6.
An individual will become a Participant when the individual is awarded a
deferred bonus under Section 5 or when the individual makes an election to defer
compensation under Section 6. An individual will cease to be a Participant when
the individual dies or, if earlier, when the individual receives a full
distribution of all benefits to which the individual is entitled under the Plan.
(j) "Plan" means the CH2M HILL Companies, Ltd. Pre-Tax Deferred
Compensation Plan.
(k) "Trade Date" means a date on which trading in Common Stock takes place
on the Internal Market.
(l) "Trust" means the Trust Under CH2M HILL Companies, Ltd. Pre-Tax
Deferred Compensation Plan established by the Company.
(m) "Trustee" means the Trustee of the Trust.
3. Administration
(a) The Plan will be administered by the Committee. The Committee will have
the number of members determined by the President of the Company, with a minimum
of two (2) members. The members of the Committee will be appointed by and will
serve at the discretion of the President of the Company. Vacancies occurring in
the membership of the Committee will be filled by appointment by the President
of the Company.
(b) Subject to the provisions of the Plan, the Committee will have the
authority, in its discretion and on behalf of the Company:
(i) to establish, amend, and rescind rules and procedures relating
to the Plan;
(ii) to prescribe forms for carrying out the provisions and purposes
of the Plan;
(iii) to interpret the Plan; and
(iv) to make all other determinations deemed necessary or advisable
for the administration of the Plan, including factual
determinations.
(c) In exercising its authority, the Committee will have the broadest
possible discretion. The Committee's determinations under the Plan made in good
faith will be binding and conclusive on the Company, its Affiliates, employees
of the Company and its Affiliates, Participants and Beneficiaries, and any
persons claiming benefits under the Plan. In no event will a Committee
2
<PAGE>
determination with respect to a particular person or provision of the Plan be
binding with respect to any other person (even if similarly situated) nor with
respect to any future determinations regarding the same or other provisions of
the Plan. No member of the Committee will be liable for any action taken or
determination made in administering the Plan, if such action is taken or such
determination is made in good faith.
(d) A majority of the Committee will constitute a quorum. The acts of a
majority of the members of the Committee present at any meeting at which a
quorum is present, or acts approved in writing by all of the members of the
Committee, will be the acts of the Committee.
4. Affiliates Eligible to Participate in the Plan
The Committee will designate from time to time those Affiliates whose
employees are eligible to participate in the Plan. The Committee may provide
that a particular Affiliate will participate in the Plan only with respect to
bonuses awarded to employees of the Affiliate, or only with respect to voluntary
deferrals by eligible employees of the Affiliate, or with respect to both
bonuses awarded to employees of the Affiliate and voluntary deferrals by
eligible employees of the Affiliate. The Committee may change the eligibility of
an Affiliate to participate in the Plan from time to time. All determinations of
the Committee with respect to the eligibility of an Affiliate to participate in
the Plan will be final and binding for all purposes.
5. Participation with Respect to Bonuses
If the Committee designates an Affiliate as eligible to participate in the
Plan with respect to bonuses awarded to employees of the Affiliate, then the
Board may provide that all or a portion of any bonus awarded to one or more
employees of the Affiliate will be deferred in accordance with the terms of this
Plan. Any such deferred bonus may be awarded in the form of a specific dollar
amount or in the form of a specific number of shares of Common Stock, or in a
combination of a specific dollar amount and a specific number of shares of
Common Stock, as determined by the Board in its sole discretion. Any such
determination by the Board will be binding for all purposes.
6. Participation with Respect to Voluntary Deferrals
(a) If the Committee designates an Affiliate as eligible to participate in
the Plan with respect to voluntary deferrals by eligible employees of the
Affiliate, then the Committee will also designate (by name, by job
classification, or by other criteria selected by the Committee) those employees
of the Affiliate who may elect to defer compensation in accordance with the
terms of the Plan. The Committee's designations under this Section 6(a) of
Affiliates as eligible to
3
<PAGE>
participate in the Plan and of employees as eligible to elect to defer
compensation under the Plan will be final, binding, and conclusive for all
purposes and will not be subject to review.
(b) An eligible employee designated by the Committee may elect to defer
compensation to be earned during calendar year 2000 in accordance with the terms
of the Plan by: (i) executing a deferred compensation election in a form
specified by the Committee; and (ii) delivering the executed deferred
compensation election to the Committee at such time as may be designated by the
Committee. The deferred compensation election will designate the amount or
percentage of the Participant's regular compensation that will be deferred in
accordance with the terms of the Plan.
(c) The Company will withhold from compensation earned by a Participant
during calendar year 2000 the amount designated by the Participant as deferred
compensation in accordance with Section 6(b).
7. Establishment of Bookkeeping Account
(a) The Company will establish a bookkeeping account in the name of each
Participant in the Plan.
(b) The bookkeeping account of a Participant will be credited with the
number of shares of Common Stock awarded to the Participant as a deferred bonus
in accordance with Section 5 and with the dollar amount awarded to the
Participant as a deferred bonus in accordance with Section 5. Any dollar amount
credited to the Participant's bookkeeping account will be converted to a number
of shares of Common Stock as of the next Trade Date, based on the Formula Price
of the Common Stock on that Trade Date.
(c) The bookkeeping account of a Participant will be credited with a dollar
amount equal to the amount of compensation withheld by the Company pursuant to
the Participant's election to defer compensation under Section 6. The dollar
amount credited to the Participant's bookkeeping account will be converted to a
number of shares of Common Stock as of the next Trade Date, based on the Formula
Price of the Common Stock on that Trade Date. The Board, in its sole discretion,
may provide that the conversion of the dollar amount credited to Participants'
bookkeeping accounts under this Section 7(c) as of a particular Trade Date will
be based on a discounted Formula Price of the Common Stock on that Trade Date.
The discount may be as much as fifteen percent (15%) of the Formula Price, as
determined by the Board in its sole discretion. This discount provision will not
apply to dollar amounts credited to Participants' bookkeeping accounts under
Section 7(b) (relating to deferred bonuses).
4
<PAGE>
(d) Each Participant's bookkeeping account in the Plan will be debited for
all shares of Common Stock transferred to the Participant or to the
Participant's Beneficiary pursuant to Sections 9 and 10.
(e) Each Participant's bookkeeping account in the Plan will be adjusted by
the Committee, in its discretion, to reflect any change, such as a stock split,
reverse stock split, or stock dividend, made in the Company's capitalization
that results in an adjustment in the number of shares of capital stock
outstanding without receipt of consideration by the Company.
8. Establishment of Trust
The Company is establishing the Trust. The agreement establishing the
Trust is made a part of the Plan and is incorporated into the Plan by reference.
As soon as reasonably practicable after the Board awards a deferred bonus to a
Participant in accordance with Section 5, the Company will transfer to the Trust
an amount of cash or a number of shares of Common Stock or a combination of cash
and Common Stock, equal to the deferred bonus awarded to the Participant. As
soon as reasonably practicable after the Company withholds an amount from a
Participant's compensation pursuant to the Participant's election to defer
compensation under Section 6, the Company will transfer to the Trust an amount
of cash or a number of shares of Common Stock or a combination of cash and
Common Stock, equal to the amount withheld. The cash and the shares of Common
Stock transferred by the Company to the Trust will be allocated to the
recordkeeping account in the Trust maintained in the name of the Participant.
9. Distribution
(a) As soon as reasonably practicable after the occurrence of the
distribution event with respect to a Participant, the Company will transfer to
the Participant or, if applicable, to the Participant's Beneficiary the number
of shares of Common Stock credited to the Participant's bookkeeping account in
the Plan. The Company may satisfy its obligation to transfer shares of Common
Stock to the Participant or, if applicable, to the Participant's Beneficiary by
instructing the Trustee of the Trust to transfer to the Participant or, if
applicable, to the Participant's Beneficiary the number of shares of Common
Stock held in the recordkeeping account in the Trust in the name of the
Participant. The transfer to the Participant or, if applicable, to the
Participant's Beneficiary of the number of shares of Common Stock credited to
the Participant's bookkeeping account in the Plan (whether by the Company or by
the Trustee) will complete the Company's obligations to the Participant and the
Participant's Beneficiary under the Plan.
(b) The distribution event with respect to a Participant is the first of
the following to occur:
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<PAGE>
(i) January 2, 2008 (at which time distribution will be made to the
Participant);
(ii) the termination of the Participant's affiliation with the
Company, as determined by the Committee in its discretion (in
which case distribution will be made to the Participant);
(iii) the transfer of the Participant to a position of employment with
the Company or with an Affiliate that the Committee, in its
discretion, determines to be a position that warrants a
distribution under the Plan (in which case distribution will be
made to the Participant);
(iv) the death of the Participant (in which case distribution will be
made to the Participant's Beneficiary); or
(v) the termination of the Plan (in which case distribution will be
made to the Participant).
10. Application to Exercise Deferred Compensation
(a) A Participant may apply to the Committee to exercise the Participant's
deferred compensation with respect to part or all of the shares of Common Stock
credited to the Participant's bookkeeping account in the Plan. Such application
will be submitted in accordance with rules and procedures established by the
Committee. The Committee may approve the application, disapprove the
application, or approve a part of the application and disapprove the rest of the
application, in its sole discretion.
(b) If the Committee disapproves a Participant's application to exercise
the Participant's deferred compensation with respect to shares of Common Stock
credited to the Participant's bookkeeping account in the Plan, the Participant
will not be eligible to apply to the Committee to exercise the Participant's
deferred compensation until the first day of the next succeeding calendar
quarter.
(c) If the Committee approves a Participant's application to exercise the
Participant's deferred compensation, the Committee will, on behalf of the
Participant, place an order to sell the shares of Common Stock with respect to
which the application was approved in the Internal Market at the next Trade
Date.
(i) If the order to sell shares is accepted, in whole or in part,
then prior to the Trade Date the Company will transfer to the
Participant the number of shares of Common Stock for which the
order was accepted, and those shares of Common Stock will be
sold in the Limited Market at the Trade Date in accordance with
the accepted order. The Company may satisfy its obligation to
transfer shares of Common Stock to
6
<PAGE>
the Participant by instructing the Trustee of the Trust to
transfer to the Participant the appropriate number of shares of
Common Stock from the shares of Common Stock held in the
recordkeeping account in the Trust in the name of the
Participant.
(ii) If the order to sell shares is not accepted in full, then the
Participant's application to exercise the Participant's deferred
compensation will be treated as though the Committee disapproved
the application with respect to the number of shares for which
the order to sell shares is not accepted. The Participant will
not be eligible to apply to the Committee to exercise the
Participant's deferred compensation until the first day of the
next succeeding calendar quarter.
11. Restrictions on Transfers of Common Stock
(a) All shares of Common Stock transferred to a Participant or, if
applicable, to a Participant's Beneficiary in accordance with the Plan will be
subject to the terms, conditions, and restrictions on Common Stock set forth in
the Company's Articles of Incorporation and Bylaws, as amended from time to
time, including: (i) restrictions that grant the Company the right to repurchase
shares upon termination of the shareholder's affiliation with the Company; (ii)
restrictions that grant the Company a right of first refusal if the shareholder
wishes to sell shares other than in the Internal Market; (iii) restrictions that
require the approval of the Company for any other sale of shares; and (iv)
restrictions that define the Formula Price to be applied in purchases and sales
of shares. In addition, the Committee, in its sole discretion, may condition any
distribution or transfer of Common Stock under the Plan on an agreement by the
recipient of such distribution or transfer to sell the shares in the Internal
Market at the next Trade Date.
(b) Notwithstanding any other provision of the Plan, the Company will not
be required to transfer Common Stock to any person if, immediately after the
transfer, the recipient would own more shares of Common Stock than that person
is permitted to own under the Articles of Incorporation and Bylaws of the
Company, as amended from time to time. The Company will not be required to
transfer Common Stock to any person unless and until the Company has fully
complied with any then applicable requirements of the Securities and Exchange
Commission, state securities commissions, or other regulatory agencies having
jurisdiction, and of any exchanges upon which the Common Stock may be listed.
The Company will not be obligated to obtain any required licenses or to register
any Common Stock to permit transfers of Common Stock under the Plan.
12. Amendment and Termination
7
<PAGE>
(a) The Plan may be amended at any time by the Company, in its sole
discretion. Any amendment to the Plan will be made by the adoption of a
resolution by the Board, approving a written amendment. An amendment to the Plan
will not apply to amounts credited to a Participant's bookkeeping account in the
Plan on the date the amendment is made unless the Participant accepts the
amendment in writing.
(b) The Company may terminate the Plan at any time, in its sole discretion.
Any termination of the Plan will be made by the adoption of a resolution by the
Board, approving a written termination of the Plan and specifying the effective
date of the termination. As soon as reasonably practicable after termination of
the Plan, the Company will transfer to each Participant the number of shares of
Common Stock credited to the Participant's bookkeeping account in the Plan. The
Company may satisfy its obligation to transfer shares of Common Stock to a
Participant by instructing the Trustee of the Trust to transfer to the
Participant the number of shares of Common Stock held in the recordkeeping
account in the Trust in the name of the Participant.
13. Withholding
The Company will be entitled to make appropriate arrangements to comply
with any withholding requirements imposed by federal, state, or local law with
respect to amounts deferred under the Plan and with respect to transfers of
shares of Common Stock under the Plan, including, without limitation, payroll
withholding or withholding from proceeds of a disposition of shares of Common
Stock acquired under the Plan.
14. No Employment Obligation
An employee's employment with the Company or an Affiliate is not for any
specified term and may be terminated by such employee or by the Company or the
Affiliate at any time, for any reason, with or without cause, except as
otherwise provided by law or contract. Nothing in the Plan confers upon any
employee any right to continue in the employ of, or affiliation with, the
Company or an Affiliate, nor constitute any promise or commitment by the Company
or an Affiliate regarding future positions, future work assignments, future
compensation, or any other term or condition of employment or affiliation.
8
<PAGE>
15. No Implied Rights or Obligations
The Company, in establishing and maintaining the Plan as a voluntary and
unilateral undertaking, expressly disavows the creation of any rights in
participating employees or others claiming entitlements under the Plan or any
obligations on the part of the Company, any Affiliate, or the Committee, except
as expressly provided in the Plan.
16. Effective Date
The Plan is effective on the date that it is approved by the Board.
17. Miscellaneous
(a) Except as expressly provided in Section 8 of the Plan (requiring the
Company to transfer certain amounts to the Trust), the Company is not required
to fund or secure payment of the Company's obligation under this Plan. The
Company's obligation under this Plan is specifically limited to an unfunded,
unsecured promise to transfer shares of Common Stock in the future. The rights
acquired by a Participant under this Plan are those of a general unsecured
creditor of the Company and its Affiliates.
(b) No Participant or Beneficiary will have any right to sell, transfer,
alienate, assign, pledge, or encumber any benefits under the Plan. Benefits
under the Plan are not subject to attachment, garnishment, or any other charge,
whether voluntary or involuntary.
(c) The Plan will be construed in accordance with the laws of the State of
Colorado, without regard to the choice of law provisions of that state.
CH2M HILL COMPANIES, LTD
By:
-----------------------------------
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Exhibit 10.7
CH2M HILL COMPANIES, LTD.
AFTER-TAX DEFERRED COMPENSATION PLAN
1. Purpose
The purpose of the CH2M HILL Companies, Ltd. After-Tax Deferred
Compensation Plan is to provide a mechanism by which certain employees of
certain affiliates of CH2M HILL Companies, Ltd. may transfer cash or shares of
Common Stock to CH2M HILL Companies, Ltd. in exchange for benefits under the
Plan.
2. Definitions
(a) "Affiliate" means each entity in which the Company has a direct or
indirect ownership interest, whether such entity is a corporation, a
partnership, a joint venture, a limited liability company, or any other form of
entity.
(b) "Beneficiary" means one or more individuals or entities designated by a
Participant to receive the Participant's benefits under the Plan in the event of
the Participant's death. A Participant's designation of a Beneficiary must be in
writing and must comply with rules and procedures established by the Committee.
If a Participant dies without a properly designated Beneficiary, the
Participant's estate will be deemed to be the Participant's Beneficiary.
(c) "Board" means the Board of Directors of the Company.
(d) "Committee" means the Deferred Compensation Plan Committee appointed by
the President of the Company in accordance with Section 3.
(e) "Common Stock" means the common stock, par value one cent ($0.01) per
share, of the Company.
(f) "Company" means CH2M HILL Companies, Ltd.
(g) "Formula Price" as of any date means the value per share of Common
Stock in effect on that date, as determined by the Board.
(h) "Internal Market" means the limited secondary market maintained by the
Company for the purchase and sale of Common Stock.
(i) "Participant" means each employee of an Affiliate who has been
designated by the Committee as eligible to participate in the Plan and who has
elected to participate in the Plan by transferring cash or shares of Common
Stock to the Company. An individual will become a Participant when the
individual makes an election to participate in the Plan under Section 5. An
individual will
<PAGE>
cease to be a Participant when the individual dies or, if earlier, when the
individual receives a full distribution of all benefits to which the individual
is entitled under the Plan.
(j) "Plan" means the CH2M HILL Companies, Ltd. After-Tax Deferred
Compensation Plan.
(k) "Trade Date" means a date on which trading in Common Stock takes place
on the Internal Market.
(l) "Trust" means the Trust Under CH2M HILL Companies, Ltd. After-Tax
Deferred Compensation Plan established by the Company.
(m) "Trustee" means the Trustee of the Trust.
3. Administration
(a) The Plan will be administered by the Committee. The Committee will have
the number of members determined by the President of the Company, with a minimum
of two (2) members. The members of the Committee will be appointed by and will
serve at the discretion of the President of the Company. Vacancies occurring in
the membership of the Committee will be filled by appointment by the President
of the Company.
(b) Subject to the provisions of the Plan, the Committee will have the
authority, in its discretion and on behalf of the Company:
(i) to establish, amend, and rescind rules and procedures relating to
the Plan;
(ii) to prescribe forms for carrying out the provisions and purposes of
the Plan;
(iii) to interpret the Plan; and
(iv) to make all other determinations deemed necessary or advisable for
the administration of the Plan, including factual determinations.
(c) In exercising its authority, the Committee will have the broadest
possible discretion. The Committee's determinations under the Plan made in good
faith will be binding and conclusive on the Company, its Affiliates, employees
of Affiliates, Participants, Beneficiaries, and any persons claiming benefits
under the Plan. In no event will a Committee determination with respect to a
particular person or provision of the Plan be binding with respect to any other
person (even if similarly situated) nor with respect to any future
determinations regarding the same or other provisions of the Plan. No member of
2
<PAGE>
the Committee will be liable for any action taken or determination made in
administering the Plan, if such action is taken or such determination is made in
good faith.
(d) A majority of the Committee will constitute a quorum. The acts of a
majority of the members of the Committee present at any meeting at which a
quorum is present, or acts approved in writing by all of the members of the
Committee, will be the acts of the Committee.
4. Employees Eligible to Participate in the Plan
The Committee will designate from time to time those employees of
Affiliates who are eligible to participate in the Plan. All determinations of
the Committee with respect to the eligibility of employees of Affiliates to
participate in the Plan will be final and binding for all purposes.
5. Participation by an Eligible Employee
An eligible employee designated by the Committee may elect to participate
in the Plan at any time during calendar year 2000 by: (i) executing an election
to participate in the Plan in a form specified by the Committee; (ii) delivering
the executed participation election to the Committee; and (iii) transferring to
the Company, in the manner specified by the Committee, the number of shares of
Common Stock or the amount of cash with respect to which the eligible employee
is participating in the Plan. The participation election will designate the
number of shares of Common Stock or the amount of cash with respect to which the
eligible employee is participating in the Plan. A Participant's election to
participate in the Plan is irrevocable.
6. Establishment of Bookkeeping Account
(a) The Company will establish a bookkeeping account in the name of each
Participant in the Plan.
(b) The bookkeeping account of a Participant will be credited with the
number of shares of Common Stock or the dollar amount of cash designated in the
Participant's election to participate in the Plan. Any dollar amount credited to
the Participant's bookkeeping account will be converted to a number of shares of
Common Stock as of the next Trade Date, based on the Formula Price of the Common
Stock on that Trade Date.
(c) Each Participant's bookkeeping account in the Plan will be debited for
all shares of Common Stock transferred to the Participant or to the
Participant's Beneficiary pursuant to Sections 8 and 9.
3
<PAGE>
(d) Each Participant's bookkeeping account in the Plan will be adjusted by
the Committee, in its discretion, to reflect any change, such as a stock split,
reverse stock split, or stock dividend, made in the Company's capitalization
that results in an adjustment in the number of shares of capital stock
outstanding without receipt of consideration by the Company.
7. Establishment of Trust
The Company is establishing the Trust. The agreement establishing the
Trust is made a part of the Plan and is incorporated into the Plan by reference.
As soon as reasonably practicable after a Participant makes an election to
participate in the Plan with respect to a number of shares of Common Stock, the
Company will transfer to the Trust a number of shares of Common Stock equal to
the number of shares of Common Stock with respect to which the Participant
elected to participate in the Plan. As soon as reasonably practicable after a
Participant makes an election to participate in the Plan with respect to a
dollar amount of cash, the Company will transfer to the Trust an amount of cash
or a number of shares of Common Stock or a combination of cash and Common Stock,
equal to the dollar amount with respect to which the Participant elected to
participate in the Plan. The cash and the shares of Common Stock transferred by
the Company to the Trust will be allocated to the recordkeeping account in the
Trust maintained in the name of the Participant.
8. Distribution
(a) As soon as reasonably practicable after the occurrence of the
distribution event with respect to a Participant, the Company will transfer to
the Participant or, if applicable, to the Participant's Beneficiary the number
of shares of Common Stock credited to the Participant's bookkeeping account in
the Plan. The Company may satisfy its obligation to transfer shares of Common
Stock to the Participant or, if applicable, to the Participant's Beneficiary by
instructing the Trustee of the Trust to transfer to the Participant or, if
applicable, to the Participant's Beneficiary the number of shares of Common
Stock held in the recordkeeping account in the Trust in the name of the
Participant. The transfer to the Participant or, if applicable, to the
Participant's Beneficiary of the number of shares of Common Stock credited to
the Participant's bookkeeping account in the Plan (whether by the Company or by
the Trustee) will complete the Company's obligations to the Participant and the
Participant's Beneficiary under the Plan .
(b) The distribution event with respect to a Participant is the first of
the following to occur:
(i) January 2, 2008 (at which time distribution will be made to the
Participant);
4
<PAGE>
(ii) the termination of the Participant's affiliation with the Company,
as determined by the Committee in its discretion (in which case
distribution will be made to the Participant);
(iii) the transfer of the Participant to a position of employment with
the Company or with an Affiliate that the Committee, in its
discretion, determines to be a position that warrants a
distribution under the Plan (in which case distribution will be
made to the Participant);
(iv) the death of the Participant (in which case distribution will be
made to the Participant's Beneficiary); or
(v) the termination of the Plan (in which case distribution will be
made to the Participant).
9. Application to Exercise Deferred Compensation
(a) A Participant may apply to the Committee to exercise the Participant's
deferred compensation with respect to part or all of the shares of Common Stock
credited to the Participant's bookkeeping account in the Plan. Such application
will be submitted in accordance with rules and procedures established by the
Committee. The Committee may approve the application, disapprove the
application, or approve a part of the application and disapprove the rest of the
application, in its sole discretion.
(b) If the Committee disapproves a Participant's application to exercise
the Participant's deferred compensation with respect to shares of Common Stock
credited to the Participant's bookkeeping account in the Plan, the Participant
will not be eligible to apply to the Committee to exercise the Participant's
deferred compensation until the first day of the next succeeding calendar
quarter.
(c) If the Committee approves a Participant's application to exercise the
Participant's deferred compensation, the Committee will, on behalf of the
Participant, place an order to sell the shares of Common Stock with respect to
which the application was approved in the Internal Market at the next Trade
Date.
(i) If the order to sell shares is accepted, in whole or in part, then
prior to the Trade Date the Company will transfer to the
Participant the number of shares of Common Stock for which the
order was accepted, and those shares of Common Stock will be sold
in the Limited Market at the Trade Date in accordance with the
accepted order. The Company may satisfy its obligation to transfer
shares of Common Stock to the Participant by instructing the
Trustee of the Trust to transfer to the Participant the
appropriate number of shares
5
<PAGE>
of Common Stock from the shares of Common Stock held in the
recordkeeping account in the Trust in the name of the Participant.
(ii) If the order to sell shares is not accepted in full, then the
Participant's application to exercise the Participant's deferred
compensation will be treated as though the Committee disapproved the
application with respect to the number of shares for which the order
to sell shares is not accepted. The Participant will not be eligible
to apply to the Committee to exercise the Participant's deferred
compensation until the first day of the next succeeding calendar
quarter.
10. Restrictions on Transfers of Common Stock
(a) All shares of Common Stock transferred to a Participant or, if
applicable, to a Participant's Beneficiary in accordance with the Plan will be
subject to the terms, conditions, and restrictions on Common Stock set forth in
the Company's Articles of Incorporation and Bylaws, as amended from time to
time, including: (i) restrictions that grant the Company the right to repurchase
shares upon termination of the shareholder's affiliation with the Company; (ii)
restrictions that grant the Company a right of first refusal if the shareholder
wishes to sell shares other than in the Internal Market; (iii) restrictions that
require the approval of the Company for any other sale of shares; and (iv)
restrictions that define the Formula Price to be applied in purchases and sales
of shares. In addition, the Committee, in its sole discretion, may condition any
distribution or transfer of Common Stock under the Plan on an agreement by the
recipient of such distribution or transfer to sell the shares in the Internal
Market at the next Trade Date.
(b) Notwithstanding any other provision of the Plan, the Company will not
be required to transfer Common Stock to any person if, immediately after the
transfer, the recipient would own more shares of Common Stock than that person
is permitted to own under the Articles of Incorporation and Bylaws of the
Company, as amended from time to time. The Company will not be required to
transfer Common Stock to any person unless and until the Company has fully
complied with any then applicable requirements of the Securities and Exchange
Commission, state securities commissions, or other regulatory agencies having
jurisdiction, and of any exchanges upon which the Common Stock may be listed.
The Company will not be obligated to obtain any required licenses or to register
any Common Stock to permit transfers of Common Stock under the Plan.
6
<PAGE>
11. Amendment and Termination
(a) The Plan may be amended at any time by the Company, in its sole
discretion. Any amendment to the Plan will be made by the adoption of a
resolution by the Board, approving a written amendment. An amendment to the Plan
will not apply to amounts credited to a Participant's bookkeeping account in the
Plan on the date the amendment is made unless the Participant accepts the
amendment in writing.
(b) The Company may terminate the Plan at any time, in its sole
discretion. Any termination of the Plan will be made by the adoption of a
resolution by the Board, approving a written termination of the Plan and
specifying the effective date of the termination. As soon as reasonably
practicable after termination of the Plan, the Company will transfer to each
Participant the number of shares of Common Stock credited to the Participant's
bookkeeping account in the Plan. The Company may satisfy its obligation to
transfer shares of Common Stock to a Participant by instructing the Trustee of
the Trust to transfer to the Participant the number of shares of Common Stock
held in the recordkeeping account in the Trust in the name of the Participant.
12. Withholding
The Company will be entitled to make appropriate arrangements to comply
with any withholding requirements imposed by federal, state, or local law with
respect to transfers of shares of Common Stock under the Plan, including,
without limitation, payroll withholding or withholding from proceeds of a
disposition of shares of Common Stock acquired under the Plan.
13. No Employment Obligation
An employee's employment with an Affiliate is not for any specified term
and may be terminated by such employee or by the Affiliate at any time, for any
reason, with or without cause, except as otherwise provided by law or contract.
Nothing in the Plan confers upon any employee any right to continue in the
employ of, or affiliation with, the Affiliate, nor constitute any promise or
commitment by the Affiliate regarding future positions, future work assignments,
future compensation, or any other term or condition of employment or
affiliation.
14. No Implied Rights or Obligations
The Company, in establishing and maintaining the Plan as a voluntary and
unilateral undertaking, expressly disavows the creation of any rights in
participating employees or others claiming entitlements under the Plan or any
obligations on the part of the Company, any Affiliate, or the Committee, except
as expressly provided in the Plan.
7
<PAGE>
15. Effective Date
The Plan is effective on the date that it is approved by the Board.
16. Miscellaneous
(a) Except as expressly provided in Section 7 of the Plan (requiring the
Company to transfer certain amounts to the Trust), the Company is not required
to fund or secure payment of the Company's obligation under this Plan. The
Company's obligation under this Plan is specifically limited to an unfunded,
unsecured promise to transfer shares of Common Stock in the future. The rights
acquired by a Participant under this Plan are those of a general unsecured
creditor of the Company and its Affiliates.
(b) No Participant or Beneficiary will have any right to sell, transfer,
alienate, assign, pledge, or encumber any benefits under the Plan. Benefits
under the Plan are not subject to attachment, garnishment, or any other charge,
whether voluntary or involuntary.
(c) The Plan will be construed in accordance with the laws of the State of
Colorado, without regard to the choice of law provisions of that state.
CH2M HILL COMPANIES, LTD
By:_______________________________________
DTC:0055981.04
8
<PAGE>
Exhibit 10.11
AWARD/CONTRACT 1.THIS CONTRACT IS A RATED ORDER RATING PAGE OF PAGE
UNDER DPAS (15 CFR 350) N/A. 1
2. CONTRACT (Proc. Inst. No.) 3. EFFECTIVE DATE
DE-AC34-00RF01904 1 February 2000
4. REQUISITION/PURCHASE REQUEST/PROJECT
134-00RF01904.000
5. ISSUED BY CODE 6. ADMINISTERED BY (If other CODE
than Item 5)
US Department of Energy
ROCKY FLATS FIELD OFFICE
10808 Highway 93, Unit A
Golden, CO 80403-8200
7. NAME AND ADDRESS OF CONTRACTOR 8. DELIVERY
(No. street, city, county, State [ ] FOB ORIGIN [ ] OTHER
and Zip Code) (See below)
KAISER-HILL COMPANY, L.L.C
10808 Highway 93, Unit B 9. DISCOUNT FOR PROMPT PAYMENT
Golden, CO 80403-8200 N/A
10. SUBMIT INVOICES ITEM
(4 copies unless
otherwise specified
TO THE ADDRESS SHOWN IN: G.3
CODE FACILITY CODE
11. SHIP TO/MARK FOR CODE 12. PAYMENT WILL BE MADE BY CODE
13. AUTHORITY FOR USING OTHER THAN 14. ACCOUNTING AND
FULL AND OPEN COMPETITION: APPROPRIATION DATA
[ ] 10 USC 2304 (c) 89X0251.91
[X] 41 USC 253 (c) ( 7 )
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15A. ITEM NO. 15B. SUPPLIES/SERVICES 15C. QUANTITY 15D. UNIT 15E. UNIT PRICE 15F. AMOUNT
SEE SECTION B
15G. TOTAL AMOUNT OF CONTRACT:
</TABLE>
16. TABLE OF CONTENTS
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SEC. DESCRIPTION PAGE(S) SEC. I DESCRIPTION PAGE(S)
PART I-THE SCHEDULE PART 11--CONTRACT CLAUSES
X A SOLICITATION/CONTRACT FORM X I CONTRACT CLAUSES
X B SUPPLIES OR SERVICES AND PRICES/COSTS
X C DESCRIPTION/SPECS/WORK STATEMENT PART III - LIST OF DOCUMENTS, EXHIBITS AND OTHER ATTCH.
X D PACKAGING AND MARKING
X E INSPECTION AND ACCEPTANCE X J LIST OF ATTACHMENTS
X F DELIVERIES OR PERFORMANCE
X G CONTRACT ADMINISTRATION DATA PART IV - REPRESENTATIONS AND INSTRUCTIONS
X H SPECIAL CONTRACT REQUIREMENTS
X K REPRESENTATIONS, CERTIFICATIONS AND OTHER
STATEMENTS OF OFFERORS
L INSTRS., CONDS., AND NOTICES TO OFFERORS
M EVALUATION FACTORS FOR AWARD
</TABLE>
CONTRACTING OFFICER WILL COMPLETE ITEM 17 OR 18 AS APPLICABLE
17. [X] CONTRACTOR'S NEGOTIATED AGREEMENT
(Contractor is required to sign and this document and return 3 copies to
issuing office.)
Contractor agrees to furnish and deliver all items or perform all the services
set forth otherwise indentified above and on any continuation sheets for the
consideration stated herein. The rights and obligations of the parties to this
contract shall be subject to and governed by the following documents: (a) this
award/contract, (b) the solicitation, if any and (c) such provisions,
representations, certifications, and specifications, as are attached or
incorporated by reference herein. (Attachments are listed herein.)
18. [ ] AWARD (Contractor is not required to sign this document)
Your offer on Solicitation Number _____________ including the additions or
changes made by you which additions or changes are set forth in full above, is
hereby accepted as to the items listed above and on any continuation sheets.
This award consummates the contract which consists of the following documents:
(a) the Government's solicitation and your offer, and (b) this award/contract.
No further contractual document is necessary.
19A. NAME AND TITLE OF SIGNER (Type or print)
Robert G. Card
President and CEO
19B. NAME OF CONTRACTOR
By: /s/ 1/24/00
--------------------------------
(Signature of person authorized to sign)
20A. NAME OF CONTRACTING OFFICER
Paul Golan
Acting Manager
20B. UNITED STATES OF AMERICA 20C. DATE SIGNED
By: /s/ 1/24/00
--------------------------------
(Signature of Contracting Officer)
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
PART I - THE SCHEDULE
SECTION B
SUPPLIES OR SERVICES AND PRICES/COST
Table of Contents
Section Number Clause Title
B.1 SERVICES BEING ACQUIRED
B.2 ESTIMATED COST AND FEE
B.3 OBLIGATION OF FUNDS
B.4 RESERVED
B.5 SCHEDULE INCENTIVE
B.6 FEE PAYMENT SCHEDULE AND FEE PAYMENT WITHHOLDINGS
B.7 FINAL FEE DETERMINATION
B.8 ADDITIONAL ITEM(S) EXCLUDED FROM ACTUAL COST
Section B - Page 1
<PAGE>
SECTION B
SUPPLIES OR SERVICES AND PRICES/COST
B.1 SERVICES BEING ACQUIRED
(a) The Contractor is responsible for completing the Rocky Flats
Closure Project in accordance with this Contract. Except for
personnel, services, facilities, equipment, materials and
supplies utilized or furnished by the Government, the Contractor
will furnish all personnel, facilities, equipment, material,
supplies, and services needed by Contractor to perform the work
in the manner required by this contract.
(b) (OPTIONAL) 903 Pad Remediation Project Removal. Planning,
executing, and completing the 903 Pad Remediation Project as
identified in Work Breakdown Structure (WBS) #1.1.03.12.06.02 may
be removed from the scope of this contract. Execution of this
option will require negotiation on the exact scope and timing of
the action, and associated reduction in available funds to match
funding required for completion by a third party. This option
would represent a change to the contract and require
consideration as set forth in the Clause of this contract
entitled "Changes."
(c) (OPTIONAL) 903 Pad Remediation Project Extension. Planning,
executing, and completing of the 903 Pad Remediation Project as
identified in Work Breakdown Structure (WBS) #1.1.03.12.06.02 may
be extended beyond a fiscal year 2001 start and 2002 completion.
The extension may be from one year to as much as three years, to
a fiscal year 2004 start and 2005 completion. Execution of this
option will require negotiation on the exact timing of the action
and amount of the delay. This option would represent a change to
the contract and require consideration as set forth in the Clause
of this contract entitled "Changes."
B.2 TARGET COST AND TARGET FEE
The Target Cost and Target Fee are:
Target Cost (excludes fee): $ 3,963,000,000
--------------------------
Target Fee: $ 340,000,000
--------------------------
The actual fee will be determined in accordance with contract clause I.23.
B.3 OBLIGATION OF FUNDS
(a) Subject to the "Limitation of Funds," clause in Section I, the total
funds obligated under this contract is $_________________.
(b) (OPTIONAL) $15,000,000 per year (fiscal years [FY] 01, 02, 03 and 04)
funding increase. The annual funding available to Rocky Flats from the
EW-05 Closure Account described in Section C, Technical Exhibit A,
paragraph VIII "Closure Project Funding" will be increased by
$15,000,000 each year from the basis point of $657,000,000 per year
beginning in fiscal year 2001. Execution of this option will result in
the subject increase in available funding for use by the Contractor, and
the Contractor agrees to a reduction in the Target Fee of $15,000,000
for this funding stream. In consideration of the contract modification
to revise funding upward as stated herein for fiscal years 01, 02, 03
and 04, the Target Fee shall be reduced as stated herein without any
adjustments to the maximum and minimum fee and associated share-line,
providing that this option must be exercised prior to the start of each
affected fiscal year.
Section B - Page 2
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
(c) (OPTIONAL) $30,000,000 per year (FYs 01, 02, 03 and 04) funding
increase. The annual funding available to Rocky Flats from the EW-05
Closure Account described in Section C, Technical Exhibit A, paragraph
VIII "Closure Project Funding" will be increased by $30,000,000 each
year from the basis point of $657,000,000 per year beginning in fiscal
year 2001. Execution of this option will result in the subject increase
in available funding for use by the Contractor, and the Contractor
agrees to a reduction in the Target Fee of $30,000,000 for this funding
stream. In consideration of the contract modification to revise funding
upward as stated herein for fiscal years 01, 02, 03 and 04, the Target
Fee shall be reduced as stated herein without any adjustments to the
maximum and minimum fee and associated share-line, providing that this
option must be exercised prior to the start of each affected fiscal
year.
B.4 RESERVED
B.5 SCHEDULE INCENTIVE
(a) Accelerated physical completion of the Rocky Flats Closure Project is a
strategic objective of the DOE and has significant benefits to the
Government.
(b) The Target Schedule Date for physical completion of this contract is set
forth in subparagraph (c) below. As set forth in subparagraph (c)
below, physical completion on Target Schedule Date will result in $15
million Schedule Incentive Fee. Physical completion earlier than this
date will result in $5 million additional fee payment in a uniform daily
amount, up to a maximum of the Earliest Schedule date dollar value. For
each day that physical completion is later than the Target Schedule
Date, the acceleration payment to Contractor will be reduced a uniform
daily amount up to a maximum of the Latest Schedule date dollar value,
as more fully set forth in the Schedule Incentive graph, Section J,
Attachment H.
(c) Schedule Incentive Fees will be earned in accordance with the following:
Date Incentive Fee
------------------ -------------
Earliest Schedule March 31, 2006 $20,000,000
-----------
Target Schedule December 15, 2006 $15,000,000
-----------
Zero Point March 31, 2007 $ 0
-----------
Latest Schedule March 31, 2008 $20,000,000 Reduction
-----------
This is graphically depicted in Section J, Attachment H.
(d) In no event shall the schedule incentive fee payable under subparagraphs
(b) and (c) plus the incentive fee payable in accordance with Clause
I.23 exceed $450,000,000. Any fee reduction for late schedule set forth
in subparagraphs (b) and (c) shall be deducted from the incentive fee
payable under Clause I.23. Nothing in this subparagraph shall limit the
deduction from fee for Category 1, 2 or 3 events as set forth in Clause
B.6(3).
B.6 FEE PAYMENT SCHEDULE AND FEE PAYMENT WITHHOLDINGS
(a) This provision establishes the method for payments of incentive fee as
set forth in Clause I.23 entitled "Incentive Fee (MAR 1997)" from FAR
52.216-10. The amount of any conditional incentive fee payment shall be
determined and paid by the Contracting Officer as set forth in Clause
I.23 and other applicable clauses of this contract. As used in this
contract, the following definitions shall apply:
(1) "Target Cost"( TC )means the Target Cost specified in Section B.2
of this contract. The Target Cost may be adjusted for equitable
adjustments as set forth in the Clause of this contract entitled,
"Changes," or other clauses of this contract.
Section B - Page 3
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
(2) "Target Fee"( TF ) means the Target Fee specified in Section B.2
of this contract. The Target Fee may be adjusted for equitable
adjustments as set forth in the Clause of this contract entitled,
"Changes," or other clauses of this contract.
(3) "Budgeted Cost of Work Scheduled at Target Cost" (BCWSTC) means
that portion of the approved Target Cost planned to be spent on
an activity during a given period, measurable by period and
cumulative to date, that reflects the Target Cost (TC). This will
be established by the submittal of a revised baseline to execute
the closure contract (ref. Paragraph H.1.04 (e)). The BCWSTC will
be changed through equitable adjustments in accordance with the
applicable clauses of the contract.
(4) "Budgeted Cost of Work Performed at Target Cost" (BCWPTC) is the
sum of the approved Target Cost elements for activities completed
during a given period, measurable by period and cumulative to
date, that relates directly to the Budgeted Cost for Work
Scheduled at Target Cost (BCWSTC).
(5) "Actual Cost of Work Performed at Target Cost" (ACWPTC) means the
adjusted (as reflected in Clause B.8) total allowable costs
expended under the contract to achieve the accomplished work,
measurable by period and cumulative to date.
(6) "Cost Variance at Target Cost" (CVTC) means the variance between
budgeted Target Cost of work accomplished and actual cost of work
accomplished, measurable by period and cumulative to date. It is
expressed by the formula: BCWPTC - ACWPTC.
(7) "Schedule Variance at Target Cost" (SVTC) as set forth in Section
B.6(d)(2) means the variance between planned and actual work
accomplishment, measurable by period and cumulative to date. It
is expressed by the formula: BCWPTC - BCWSTC.
(8) "Schedule Incentive Fee" (SF ) means the Schedule Incentive Fee
specified in Section B.5 of this contract. The Schedule Incentive
Fee may be adjusted for equitable adjustments as set forth in the
Clause of this contract entitled, "Changes," or other clauses of
this contract.
(9) "Conditional Incentive Fee" means Target Fee divided by the
number of quarters in the contract using the target physical
completion date of December 15, 2006: (CF = TF / 27.67 quarters).
(10) "Ordinary Fee", means Conditional Incentive Fee less a 50%
withholding.
(11) "Physical completion" as used in this contract and Clause I.23,
Incentive Fee shall be defined as set forth by contract Clause
F.2.
(12) "Maximum Fee" (MaxF ) means the highest fee the Contractor can
earn as set forth in Clause I.23, Incentive Fee.
(13) "Minimum Fee" (MinF ) means the lowest fee the Contractor can
earn as set forth in Clause I.23, Incentive Fee.
(14) "Actual cost of physical completion" means the total allowable
cost to achieve physical completion, as set forth in Clause I.23
and as adjusted by Section B.8, below.
(15) Non-Legacy Onsite Event is an onsite condition or event created
by the Contractor after the effective date of this contract.
(b) The Contractor may submit invoices for ordinary fee payments following
the submittal of the Quarterly Critical Analysis in accordance with
Clause H.1.03(e)(2). The Government will review and disposition
Contractor's Quarterly Critical Analysis, and within forty (40) calendar
days of submittal date, provide
Section B - Page 4
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
Contractor written notice of consent to submit its invoice. Upon
receipt of an acceptable invoice for ordinary fee, the Contracting
Officer will assess the need for adjustments based upon the factors
discussed later in this provision. Unless the Contracting Officer
elects to do otherwise as set forth below, ordinary fee payments will be
made quarterly, not more than 3 business days consistent with
subparagraph G.7(a) after the Contractor submits an acceptable invoice.
The process for administration of the incentive fees shall be as
follows:
(1) Calculation of Conditional Incentive Fee
(2) Calculation of Ordinary Fee
(3) Cost, schedule, or other adjustment as set forth in
subparagraphs (d) through (g), below
(4) Based on items 1 through 3 immediately above, remittance of fee
payment as set forth herein.
(c) The Contractor may elect not to submit an invoice for an ordinary fee
payment. In the event the Contractor elects not to submit an invoice for
an ordinary fee payment, the Contractor shall affirm its election in
writing to the Contracting Officer. When the Contractor elects not to
submit an invoice, pursuant to this subparagraph, the fee amount not
invoiced will be due and payable in accordance with Clauses F.3 and B.7.
(d) In determining the appropriate amount of fee to be paid, the Contracting
Officer will take the following factors into consideration:
(1) Cost Variance at Target Cost. The Budgeted Cost of Work
Performed at Target Cost (BCWPTC) minus the Actual Cost of Work
Performed at Target Cost (ACWPTC) will define the cost variance.
When there is no cost variance, the Contracting Officer will make
no adjustment to the ordinary fee payment (unless otherwise
warranted for reasons described elsewhere in this Clause). When
cost variances indicate the Contractor will earn Maximum Fee, the
Contracting Officer will adjust the ordinary fee payment upward
proportionally, up to a maximum of MaxF/27.67; if cost variances
indicate the Contractor will earn Minimum Fee, the Contracting
Officer will adjust the ordinary fee payment downward
proportionally, down to a minimum of MinF/27.67.
(2) Schedule Variance at Target Cost. A calculation of "earned value
variance" based on physical completion of project mission tasks
(level of effort work generally excluded) will be used to define
the schedule variance. The "earned value variance" will be
calculated as the BCWPTC minus the Budgeted Cost of Work
Scheduled at Target Cost (BCWSTC) for predetermined work
activities. Earned value variance will be calculated for the
project from contract effective date to current date. Earned
value for each predetermined work activity will only be included
when work is 100% complete. No intermediate calculations of
earned value will be used for schedule variance. The Contracting
Officer may reduce the conditional fee payment for negative
schedule variances as measured by earned value variances, or
increase conditional fee payment for positive schedule variances
as measured by earned value variances. The range of
increases/decreases for schedule variance will be similar to that
for cost variance described above.
(3) Fee Payments During Transition to the New Baseline. The
Contracting Officer will make no adjustments, except for Category
1, 2 or 3 events, to the ordinary fee payments for Cost or
Schedule Variances during transition. The contractor may invoice
for fee in accordance with the following schedule.
Date Ordinary Fee Payment
---- --------------------
March 31, 2000 $4,116,374
June 30, 2000 $6,143,838
September 30, 2000 $6,143,838
December 31, 2000 $6,143,838
Section B - Page 5
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
(e) For reasons and in the manner explained in paragraphs below and to
provide for the remedies and obligations established in Section E or
elsewhere in this contract, the Contracting Officer may decide to reduce
any ordinary fee payment. The Contracting Officer may elect to deduct
fee. This would result both in a reduction of the immediate conditional
incentive fee payment and also in a downward adjustment to the amount of
the total adjusted fee at the contract's physical completion.
Environment, Safety & Health (ES&H) and Safeguards and Security
Compliance
The Rocky Flats Closure Project and this contract have a mission of
accelerated project completion. The nature of the contract, along with
the financial incentives for accelerated completion or for cost
effectiveness should never compromise or impede full and effective
implementation of the Integrated Safety Management System and full ES&H
and Safeguards and Security compliance. Cost and schedule variances due
to work delays resulting from Contractor safety management lapses or
non-compliance will generally not be accepted as a basis for adjustment
to the Target Cost or Target Schedule Date. In addition, the Contractor
will be subject to monetary fee deductions as described below. Such
events or incidents are considered symptomatic of a breakdown in the
safety management system.
(1) Category 1 Events or Incidents:
Category 1 events or incidents are those that would threaten the
success of the Rocky Flats Closure Project. This Category would
include events or incidents that lead to DOE's decision to
disapprove an important system critical to project success, such
as the Safety Management System or the Safeguards and Security
(S&S) System. For Category 1 events or incidents, the Contracting
Officer may deduct up to 6 months worth of ordinary fee payments
in their entirety. Examples include, but are not limited to:
o Nuclear criticality event
o Workplace fatality due to work-related conditions
o Theft, loss or diversion of Special Nuclear Material, as
defined in the 1995 S&S Glossary of terms. Excludes
inventory discrepancies not related to theft or
diversion.
o Fire in a Hazard Category 2 or 3 facility exceeding Max.
Possible Fire Loss as defined in DOE Order 420.1
o Event which results in a consequence greater than 100
mrem to a co-located worker (600 meters from the
facility) due to an accident in a Hazard Category 2 or 3
facility
o Non-legacy onsite event which results in an offsite water
quality exceedence of greater than 15.0 pCi/liter Pu as
measured in accordance with the Integrated Monitoring
Plan.
(2) Category 2 Events or Incidents:
Category 2 events or incidents are those that reflect conditions
significantly adverse to safety or conditions that could result
in significant additional costs to the Government. This Category
would also include events or incidents where an actual injury,
exposure, or exceedence occurred or nearly occurred but has minor
practical long-term health consequence and would also include
potential breakdown or failure of an important system critical to
project success, such as the Safety Management System or the
Safeguards and Security System. For Category 2 incidents, the
Contracting Officer may deduct up to $2 million in ordinary fee
payments. Examples include, but are not limited to:
o Event resulting in individual receiving a calculated
absorbed dose exceeding 25 rem CEDE
o Event which results in loss of all criticality safety
contingencies. Excludes legacy events.
o Facility fire exceeding the Maximum Credible Fire, as
that term is defined in DOE Order 420.1
o Unmitigated acute exposure which exceeds ERPG-2 limits
established for emergency planning purposes
o Total Site level 1 and 2 Technical Safety Requirements
(TSR) violations exceed 30 in a calendar year
Section B - Page 6
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
o Non-legacy onsite event which results in an offsite water
quality exceedence of greater than 1.5 pCi/liter Pu as
measured in accordance with the Integrated Monitoring
Plan
o Contractor-caused packaging deficiency that results in a
container breach and material release during offsite
shipment or receiving
o Theft, loss, or diversion of strategically significant
classified materials (i.e., physical equipment, tooling,
etc) or classified documents. Excludes inventory
discrepancies not related to theft or diversion.
o Air release from project or incident causing a measured
10 mrem dose at the site boundary.
(3) Category 3 Events or Incidents:
Category 3 events or incidents are those that may indicate or
reflect a lack of focus on improving environment, safety, health,
safeguards, or security performance. For Category 3 incidents,
the Contracting Officer may deduct up to $250,000 from ordinary
fee payments. Examples include, but are not limited to:
o Accident resulting in 5 or more Lost-Workday cases
o Each month that the 12 month rolling average for Total
Recordable Case Rate exceeds 3.5
o Each month that the 12 month rolling average Lost Workday
Case Rate exceeds 2.0
o Each month that NCRs on waste packages exceed 8% on a 12
month rolling average
o More than 15 level 1 or 2 TSR violations in calendar year
o More than 7 Level A and B fire impairments over 30 days
old in a calendar month
o Number of level 3 and above criticality safety
infractions exceeds 14 in a calendar year
o More than 20 skin contaminations above 1,000 dpm per 100
cm2 in a calendar year
o Less than a 10% reduction in site total person-rem from
previous calendar year (excluding DOE). Once collective
site exposure is below 100 rem this event shall no longer
be applicable.
o More than 20 confirmed internal depositions above 100
mrem in a calendar year
o Unmitigated acute exposure which exceeds ERPG-1 limits
established for emergency planning purposes
o Non-legacy onsite event which results in an offsite water
quality exceedence of greater than the 0.15 pCi/liter Pu
as measured in accordance with the Integrated Monitoring
Plan
o Radiological air release from a project exceeding 10
times the planned maximum defined in project documents.
o One or more regulatory milestones missed as identified
from the Rocky Flats Closure Project Baseline by using
the milestone setting process identified in the RFCA
provided that penalties for missed RFCA milestones have
been assessed against DOE.
(4) Mitigation Factors:
In deciding to adjust ordinary fee payments for a Category 1, 2
or 3 event, the Contracting Officer shall apply only a single
penalty for each separate event even if a single event may
qualify for more than one penalty; however, fines and penalties
imposed under the Price-Anderson Act are excepted from this
provision. If event or incident results in Price Anderson fines
or penalties, or penalties for missed RFCA milestones, along with
Category 1, 2 or 3 consequences, the PAAA fines or penalties, or
penalties for missed RFCA milestones will apply. If the
applicable deduction is greater than the fine or penalty, the
difference between the PAAA fines or penalties or penalty for
missed RFCA milestones and the applicable deduction will be an
adjustment to the ordinary fee payment. The Contracting Officer
shall ensure that Contractor receives impartial fair and
equitable treatment, as set forth in FAR 1.602-2, and will take
into account mitigating factors. These may include factors such
as those set forth below:
o Degree of control that the Contractor had over the event
o Event caused by "Good Samaritan" act by the Contractor
(e.g., offsite emergency response)
Section B - Page 7
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
o Efforts that the Contractor had made to anticipate and
mitigate the possibility of the event in advance
o Contractor response to the event to mitigate its impacts
and recurrence
o General status (trend and absolute performance) of safety
and compliance in related areas
The Contracting Officer may apply appropriate fee reductions or
withholdings after the fact to subsequent ordinary fee payments,
provided such fee adjustments are identified in writing to
Contractor within six (6) months of date of the event or incident
occurrence or last event in a trend.
(f) Release of Withheld Fee.
(1) The Contracting Officer may release withheld fees when the
Contractor demonstrates that the condition leading to the
withholding has been corrected. For example, a withheld fee
resulting from one or more cost variance(s) may be paid to the
Contractor when the Contractor recovers from the cost variance,
meaning that there has been acceptable cost variance at the ends
of two consecutive quarters.
(2) Upon physical completion of the contract, fee withholdings will
be released in accordance with Clause F.3.
(g) Bankruptcy or Other Issues with Guarantor Companies. In order to assure
the Contractor's ability to repay any ordinary fees that are determined
to be in excess of the actual fee earned at the physical completion of
the contract, the Contracting Officer reserves the right to discontinue
ordinary fee payments in the event one of the Contractor's Guarantor
companies files bankruptcy or is acquired by other owners, or other
events arise with the Guarantor company that jeopardize the Government's
ability to recover unearned ordinary fee payments.
(h) Repayment of Bankruptcy Reserve. In the event of the bankruptcy,
acquisition by other owner or other event as described in (g) above, the
remaining Guarantor company shall within 120 days after such event,
provide evidence satisfactory to the Contracting Officer that such
bankruptcy, change in ownership or other event does not affect the
ability of the Contractor to continue to perform the obligations under
the contract, or affect a material Governmental or DOE interest. Upon
such showing, the Contracting Officer shall resume making payments of
fee unreduced because of the events in subparagraph (g) and shall
release all fee payments withheld due to events described in (g) during
the preceding 120 days.
Nothing in this Clause B.6 limits the rights of the Contracting Officer set
forth in the clause "Incentive Fee" of this contract.
B.7 FINAL FEE DETERMINATION
(a) Upon the physical completion of the contract, the Contracting Officer
shall determine and pay the total fee earned by the Contractor
consistent with Clause I.23, "Incentive Fee," Clause B.6, "Fee Payment
Schedule and Fee Payment Withholding," Clause B.5, "Schedule Incentive,"
and Section F of the contract. All payments of ordinary fee made
before physical completion of the contract will be conditional. If the
amount of the total adjusted fee is less than the total amount of
ordinary fee payments previously made to the Contractor, the Contractor
shall reimburse the Government the difference. If the amount of total
adjusted fee is more than the total amount of ordinary payments of fee
previously made to Contractor, the Government shall pay the Contractor
the difference.
(b) Termination. If this contract is terminated in its entirety, fee shall
be payable to the Contractor consistent with Clause I.23 and the
termination provisions of this contract. DOE and the Contractor
recognize that accelerated closure is the mission of the Rocky Flats
Environmental Technology Site. The parties agree that the term
"Default" in Clause I.85, Termination, includes the situation where the
aggregate adjustments for Cost Variance at Target Cost and Schedule
Variance at Target Cost equals or exceeds -56% (negative
Section B - Page 8
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
56%) for a period of any 4 consecutive calendar quarters, commencing the
first quarter from July 1, 2001. Nothing in this paragraph shall limit
or restrict the application of Clause I.85, Termination, of this
contract.
B.8 ADDITIONAL ITEM(S) EXCLUDED FROM ACTUAL COST
Subparagraph (e) of Clause I.23 entitled "Incentive Fee" identifies
certain costs that will not be included in "total allowable cost" for the
purposes of fee adjustment. As set forth in subparagraph (e)(5), all other
allowable costs are included in "total allowable cost" for fee adjustment in
accordance with subparagraph (e), unless otherwise specifically provided in this
contract. The following item(s) of cost are not to be included in "total
allowable cost" for the purposes of fee adjustment under the clause "Incentive
Fee":
o The cost of any lump-sum payment directed by the Contracting
Officer in accordance with Clause H.9 " Responsibilities for
Operation/Termination of Benefits Systems."
o Increased disposal or transportation costs for waste disposal
sites controlled by DOE (such as NTS and WIPP)
o All administrative and closeout costs incurred by Contractor as
referenced in Clause F.3 of the contract.
Section B - Page 9
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
PART I - THE SCHEDULE
SECTION C
STATEMENT OF WORK
Table of Contents
Section Number Clause Title
C.1 GENERAL SITE INFORMATION
C.2 DEFINITIONS (GLOSSARY)
C.3 GOVERNMENT FURNISHED SERVICES/ITEMS
C.4 CONTRACTOR FURNISHED ITEMS
C.5 STATEMENTS OF COMMITMENT
TECHNICAL EXHIBITS
A. Detailed Description of Scope and Services
B. Abbreviations, Acronyms, and Definitions
C. List of Rocky Flats Environmental Technology Site Compliance Orders,
Agreements and Permits
D. Rocky Flats Cleanup Agreement
E. Rocky Flats Environmental Technology Site Workforce Restructuring Plan
Section C - Page 1
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
C.1 GENERAL SITE INFORMATION
C.1.1 FACILITY DESCRIPTION
The Rocky Flats Environmental Technology Site (RFETS) is located in
northern Jefferson County, approximately 16 miles northwest of downtown
Denver. The main site is a 384-acre complex consisting of
manufacturing, chemical processing, and laboratory and support
facilities. It is situated within a 6,200-acre preserve which functions
as the site's buffer zone.
Approximately 2 million people live within a 50-mile radius of RFETS.
The proximity of the Denver metropolitan area, and its growth, have
caused increased interest in RFETS in recent years. The type and
quantity of materials at RFETS have presented health, safety and
environmental concerns.
C.1.2 MISSION AND PHYSICAL COMPLETION OF THE CONTRACT
The mission is to accelerate closure of the Rocky Flats Environmental
Technology Site. The Rocky Flats Closure Project is intended to close
the former Rocky Flats Plant that was previously part of the U. S.
Department of Energy's (DOE) Nuclear Weapons Complex. The Contractor
shall accomplish site closure in a safe, compliant and efficient
manner. The Contractor shall take all steps and perform all work
activities in this Statement of Work necessary to accomplish physical
completion of the contract.
Since this is a closure project, the Contractor shall adopt a
management approach to site closure consistent with a finite life cycle
scope project. The RFETS closure project must be accomplished so as to
maintain the site in a safe condition for the workers, the public, and
the environment and by complying with all applicable laws, regulations
and agreements.
The Rocky Flats Closure Project Statement of Work is composed of five
major sections that relate to the key work activities associated with
closure, disposal of Special Nuclear Material, demolition of
facilities, environmental remediation, waste disposal, and
infrastructure and general site operations. Other activities such as
disposition of employee health records and termination or transfer of
benefit programs must also be completed. Other support services will be
terminated when they are no longer needed during the closure process.
In addition, the Contractor shall maintain DOE office accommodations
and implementation of the Three Party Transfer Agreements.
Although the sections identified in Technical Exhibit A provide some
detail for the specific scope of work for site closure, there may be
other ancillary activities related to closure specifically identified
in Technical Exhibit A, but which may be identified in other critical
closure documents such as DOE Orders and the latest revision of the
Rocky Flats Closure Baseline. Dates listed in the scope column of the
Technical Exhibit A are set forth for reference. The Contractor's
failure to meet a date specified in the scope column of Technical
Exhibit A shall not be the sole basis for imposition of penalty, fee
deduct or deferral or termination of the contract. All applicable
federal and state laws must also be followed in the execution of this
contract. All required final regulatory documentation will be completed
including the draft interim final Record of Decision Document for site
closure which shall be prepared by the Contractor and submitted by DOE
to regulatory agencies. All administrative matters including, but not
limited to pension plans, labor agreements, subcontracts, and
litigation will be completed, closed, terminated or transferred to the
approved successor organization. DOE will conduct audits and
surveillances of all aspects of the terms of this contract to ensure
compliance with the terms of this SOW. The results of all audits and
surveillances will be resolved with the Contractor. DOE reserves the
right to stop work in accordance with Clause H.3, Stop Work and
Shutdown Authorization.
The Region VIII Environmental Protection Agency (EPA) Office and the
Colorado Department of Public Health and Environment (CDPHE) are the
regulators for operations at the site. The RFETS is also subject to
oversight by the Defense Nuclear Facilities Safety Board (DNFSB), an
independent agency created to monitor operations and safety-related
activities at the Department of Energy's nuclear facilities.
Section C - Page 2
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
Physical Completion of the Contract
"Physical completion of the contract" as that term is used in Clause
I.23, Incentive Fee, is defined as the point in time in which:
(1) All buildings are demolished, except continuing water
treatment facilities or other structures with a DOE
declared continuing mission;
(2) All IHSSs are remediated or dispositioned per the
Rocky Flats Cleanup Agreement (RFCA) (amended as of
10/01/99);
(3) All wastes are removed except for some materials that
can be left in place, recycled or used as fill
materials in accordance with regulatory requirements;
(4) Closure caps are used for the remediation of two old
landfills, the 700-Area and the solar ponds or these
areas are otherwise remediated in accordance with
RFCA (amended as of 10/01/99);
(5) Building foundations, utilities or other remaining
structures, paved roads and/or parking lots are
covered by a minimum of three feet of fill after
final grade;
(6) Surface water onsite will meet health-based standards
based on open space use calculated using methodology
and toxicity assumptions utilized for the July 19,
1996 surface water action level; and
(7) Water leaving the site in Woman and Walnut Creeks
meets the water quality standards established (as of
10/01/99) by the Colorado Water Quality Control
Commission.
Physical completion of the contract does not include and will be
unaffected by interim storage (and eventual shipment) of waste and
materials awaiting availability of DOE designated receiver site(s) as
described in Section C of the contract, completion work such as
cosmetic grading of the site, removal of uncontaminated buried
underground utilities, removal of railroad tracks, paving of new
surface roads or construction of new structures, and other similar
activities. In the event material and waste receiver sites are
unavailable, the Contractor may construct interim storage facilities,
to include Corrective Action Management Units.
C.2 DEFINITIONS (GLOSSARY)
A listing of abbreviations and technical definitions used in this
contract is provided at Section C, exhibit B.
C.3 GOVERNMENT FURNISHED SERVICES/ITEMS
C.3.1 Within thirty (30) days after the effective date of the contract
and by September 1 prior to each fiscal year end, the Contractor will
provide the Contracting Officer an annual projection which details its
projection of needed Government Furnished Services/Items, identified in
column 3 of Exhibit A, for DOE approval. The Contractor will also
provide quarterly updates to the Contracting Officer. Amendments to the
projection, if any, will be provided to the Contracting Officer 45 days
in advance of the need date. Each Contractor submittal (annual,
quarterly, or individual) shall be reviewed by DOE. Within 15 days
after receipt, DOE shall notify the Contractor whether it will accept
the requested GFS/I. If DOE cannot accept, DOE will identify in writing
no later than 30 calendar days after receipt of Contractor's
notification the requested GFS/I it can accept and provide. If DOE
cannot accept the request for GFS/I that is within the ranges listed in
Technical Exhibit A, then it shall be treated as a change in accordance
with the clause entitled "Changes" in this contract.
C.3.2 Consistent with C.3.1, above, the Government will provide the
Contractor with repository site locations and shipping rates which the
Contractor may use, for storage, treatment or disposal. The
Section C - Page 3
Government Furnished Services/Items are provided in Section C, Exhibit
A. Notwithstanding the specific obligations set forth in GFS/I, the
Government agrees to use its best efforts to accelerate delivery of
GFS/I in support of the Contractor's efforts to successfully close
Rocky Flats. Shipping services provided by DOE will be at a rate in
accordance with the approved shipper/receiver agreements submitted by
the Contractor. DOE will provide certification for containers for all
Special Nuclear Material shipments and a waiver or revision to the DOE
Standard 3013-96 to address Pu oxides between 30 and 50 wt.%, to allow
for potential Pu contamination on the outside of the inner can and to
approve alternative moisture measurement methods.
C.3.3 The Government shall provide all NEPA compliance activities
described in Technical Exhibit A and as detailed in the latest revision
of the Rocky Flats Closure Project Baseline.
C.4 CONTRACTOR FURNISHED ITEMS
Except for Government-Furnished Services/Items, the Contractor shall
furnish all personnel, supervision, management, equipment, materials,
transportation and supplies required to plan, schedule, coordinate and assure
performance of all required services necessary to close the Site.
C.5 STATEMENTS OF COMMITMENT
The Government and Contractor recognize the accelerated closure is a
cooperative undertaking that requires both parties to seek innovative approaches
to achieve the end objective. Streamlining process and eliminating
non-value-added requirements are critical to accomplishing accelerated closure.
Both parties agree through the term of this contract to use their best efforts
and to cooperate in seeking the reduction of non-value-added requirements and
processes that impede progress. Further, both parties agree to use their best
efforts to further accelerate closure activities, including maximizing shipping
and receiving flexibility and capacity.
The Government and Contractor have currently identified a number of key
performance requirements that are particularly amenable to streamlining. The
Statements of Commitment identify the commitments or deliverables necessary to
achieve the stated objective. The parties will work during the term of the
contract to fulfill the objective and meet the commitment and deliverables
identified therein.
During the performance of the contract, the parties agree that
efficiencies and performance improvements will be required to reduce the actual
cost and/or improve the schedule for the work. The benefit to the Government of
any savings resulting from efficiencies and/or performance improvements
occurring during the performance of this contract accrue through the
Government's cost share identified in Clause I.23 of the contract. The parties
further agree that there will be no reduction to the Target Cost, Target
Schedule or Target Fee as a result of any such efficiencies and/or performance
improvements.
The Contractor and the Government will establish a Partnering Agreement
for the work leading to the closure of the site. The agreement will establish a
common vision with supporting goals and missions. It will promote the principles
of teamwork, mutual respect, openness, honesty, trust, professionalism and build
a better understanding of one another's position. The agreement will also
include joint commitments to:
o Maintain high safety performance
o Complete the project on schedule, within cost
o Eliminate barriers to a faster, more cost effective program
o Create an organizational culture able to accommodate change
o Resolve conflicts through a coordinated work effort to avoid
adversarial relations
o Reinforce the partnered relationship with honest feedback and
continual improvement.
Section C - Page 4
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
SECTION C
STATEMENT OF WORK
TECHNICAL EXHIBITS
Table of Contents
No. TITLE (Reference Paragraph)
- -----------------------------------------------------------------------------
A. Detailed Description of Scope and Services
B. Abbreviations, Acronyms and Definitions
C. List of Rocky Flats Environmental Technology Site Compliance Orders,
Agreements and Permits
D. Rocky Flats Cleanup Agreement
E. Rocky Flats Environmental Technology Site Workforce Restructuring Plan
Section C - Page 5
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
TECHNICAL EXHIBIT A
DETAILED DESCRIPTION OF SCOPE AND SERVICES
I. Special Nuclear Material
The Contractor will be required to perform the work listed below for the removal
of all Special Nuclear Material (SNM).
SCOPE
A. Plutonium
- ------------
1) Ship all non-classified plutonium metals and oxides to the Savannah River
Site or other DOE approved alternative (2) by September 30, 2002 (except
for Pu holdup discovered and/or removed after 9/30/02).
2) Ship all classified, by shape, plutonium metal to the Savannah River Site
or DOE approved alternative by September 30, 2002.
3) Ship all plutonium fluorides to the Savannah River Site or DOE approved
alternative by September 30, 2002.
4) Ship all plutonium metal composites to Lawrence Livermore National
Laboratory or DOE approved alternative by September 30, 2002.
5) Ship all IAEA material to Savannah River Site or DOE approved alternative
by September 30, 2002.
REQUIREMENT(S)
o Non classified plutonium metal and oxide must be packaged to the
DOE-STD-3013-96 prior to shipment to the DOE approved receiver site.
o All Special Nuclear Material must be shipped in a DOE approved shipping
container (i.e. 9965, 9975, DT22, etc.)
o DOE Orders 5610.12, 5610.14 and 460.1A must be followed.
GOVERNMENT FURNISHED SERVICES & ITEMS (1)
o Safe, Secure Transport services (e.g., escorts, tractor and trailer) at a
rate and number sufficient to support SNM shipments (average number of 5
shipments per month not to exceed 9 shipments per month) started on
10/01/99 and ending as early as 10/1/01 and no later than 9/30/02 for a
total of 175 shipments.
o DOE approved receiver sites that can receive SNM and plutonium fluorides
and IAEA materials at a rate to support shipment completion as early as
10/1/01 and no later than 9/30/02 (average number of 5 shipments per month
not to exceed 9 shipments per month).
o DOE shall certify the following containers for all SNM:
- 9975
- DOT-6M
- DT-22
- 3013
o DOE-provided containers for SNM at a rate and number consistent with the
planning and approval process described in C.3 to support the SNM shipping
schedule. (DOE will certify but not provide 9975 and 3013 containers)
- ----------
1 As used throughout this Technical Exhibit A, "None" is used solely to indicate
that the Government has not identified a specific service or item to be
provided by the Government in support of the particular scope description.
2 Dependent upon the completion of the NEPA process for the Record of Decision
for Disposal.
Section C - Page 6
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
SCOPE
B. Highly Enriched Uranium
- --------------------------
Ship all highly enriched uranium metal that is contaminated with plutonium to
the DOE approved receiver site by September 30, 2002.
C. Other Nuclear Materials
- --------------------------
Ship all depleted uranium, 4.5% LEU, radioactive sources, thorium samples, U-233
non-combustibles to designated DOE or other approved receiver sites by September
30, 2002.
REQUIREMENTS
o All Special Nuclear Material must be shipped in a DOE approved shipping
container (i.e. 9965, 9975, DT22, etc.)
o DOE Orders 5610.12, 5610.14 and 460.1A must be followed.
GOVERNMENT FURNISHED SERVICES & ITEMS
o Same items as for Section A. Plutonium.
o In addition for C,
- NEPA as required
- Designated receiver sites
- Certified shipping containers
o DOE shall certify the following containers for all SNM:
- 9975
- DOT-6M
- DT-22
- 3013
o DOE-provided containers for SNM at a rate and number consistent with the
planning and approval process described in C.3 to support the SNM shipping
schedule. (DOE will certify but not provide 9975 and 3013 containers)
Section C - Page 7
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
II. Facility Deactivation, Decommissioning and Demolition
The Contractor will be required to deactivate, decommission and demolish the
Rocky Flats facilities in accordance with the Rocky Flats Cleanup Agreement,
except for those facilities specifically defined by DOE to remain as detailed
below:
SCOPE
A. SNM Buildings
- ----------------
The Contractor shall deactivate, decontaminate and demolish all former Special
Nuclear Material building clusters & supporting facilities to include (See
Project Baseline Descriptions, for cluster descriptions)
o B371/374 cluster by March 1, 2006,
o B771/774 cluster by October 1, 2004,
o B707/750 cluster by February 1, 2005,
o B776/777 cluster by March 1, 2004, and
o B559 cluster by September 1, 2004.
B. Other Facilities
- -------------------
The Contractor shall decontaminate and demolish the remaining building clusters
& supporting facilities by September 30, 2006. (See Project Baseline
Descriptions for cluster and supporting facility descriptions.)
REQUIREMENT(S)
Planning, characterization, area preparations, physical decontamination,
dismantlement, demolition and reporting requirements shall be accomplished in
accordance with the Rocky Flats Cleanup Agreement.
Planning, characterization, area preparations, physical decontamination,
dismantlement, and demolition shall be accomplished in accordance with the Rocky
Flats Cleanup Agreement.
GOVERNMENT FURNISHED SERVICES & ITEMS
o CERCLA Administrative Record Repository
o DOE shall provide comments on draft decision documents and regulatory
reports within 20 business days of receipt.
o CERCLA Administrative Record Repository
o DOE shall provide comments on draft decision documents and regulatory
reports within 20 business days of receipt.
Section C - Page 8
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
III. Waste Management
The Contractor shall store, process and/or package and ship to DOE approved or
other storage, treatment or disposal sites all wastes. These wastes consist of
transuranic (TRU) and transuranic mixed (TRU mixed), low level radioactive (LLW)
and low level radioactive mixed (LLW mixed), hazardous, and sanitary waste.
These wastes must be processed and/or packaged to meet disposal or receiver site
criteria as stipulated below:
SCOPE
A. Transuranic and Transuranic Mixed Waste
- ------------------------------------------
Ship to the Waste Isolation Pilot Plant (WIPP) and other DOE designated sites,
all transuranic and transuranic mixed waste by December 15, 2006.
REQUIREMENT(S)
o The Waste Isolation Pilot Plant (WIPP) Waste Acceptance Criteria (WAC)
Rev. 5, dated April 1996, and DOE Order 435.1.
o The TRUPACT-II Authorized Methods for Payload Control TRUPACT IIs were
delivered to Rocky Flats Site (TRAMPAC) procedure and beginning on
10/01/99, and will be delivered at the Site-Specific TRAMPAC for TRU
following rates per month: waste loading requirements.
o The TRUPACT-II SARP (Safety Analysis Report) and TRUCON (TRUPACT-II
Content Code).
o All DOT transportation requirements applicable at the time of shipment
for hazardous and radioactive waste must be met as well.
--10 CFR Parts 70 & 71 (packaging)
--49 CFR Parts 107, 110, 171, 173 (transportation)
--Packaging QA Program Plan
GOVERNMENT FURNISHED SERVICES & ITEMS
TRUPACT II containers and trailers to support transuranic and transuranic mixed
waste (including classified waste) shipments to WIPP and other DOE approved
storage, treatment or disposal sites.
FY00 36/mo
FY01 72/mo
FY02 120/mo
FY03 120/mo
FY04 120/mo
FY05 80/mo
FY06 36/mo
FY07 36/mo
DOE will also provide all transportation services from the loading facilities at
Rocky Flats to all DOE approved sites.
Section C - Page 9
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
SCOPE
B. Low Level Waste
- ------------------
Ship to approved DOE or commercial disposal sites all low-level waste by
December 15, 2006.
The Contractor shall provide transportation services to the disposal site and
disposal site fees unless otherwise stipulated by DOE.
C. Low Level Mixed Waste (less than 10 nanocuries per gram)
- ------------------------
Ship to approved DOE or commercial treatment and disposal sites all low level
mixed waste less than 10 nanocuries per gram by December 15, 2006.
The Contractor shall provide transportation services to the disposal site and
treatment and disposal site fees unless otherwise stipulated by DOE.
D. Low Level Mixed Waste (greater than 10 nanocuries per gram and less
- ------------------------ than 100 nanocuries per gram)
Ship to approved DOE or commercial treatment and disposal sites all low-level
mixed waste greater than 10 nanocuries per gram by December 15, 2006. The
Contractor shall provide transportation services to the disposal site and
treatment and disposal fees (up to the unit price in III.C. above) unless
otherwise stipulated by DOE.
REQUIREMENT(S)
Disposal site waste acceptance criteria and DOE Order 435.1, All applicable DOT
requirements at the time of shipment for radioactive waste must be met.
Currently available disposal site - the DOE Nevada Test Site (NTS) in accordance
with NTS Waste Acceptance Criteria dated August 1997, Rev 1, or Commercial Waste
Acceptance Criteria if that disposal option is chosen.
Disposal site waste acceptance criteria and DOE Orders 5480.3 and 435.1. All
applicable DOT requirements for shipment of radioactive and hazardous waste must
be met.
Disposal site waste acceptance criteria and DOE Orders 5480.3 and 435.1, All
requirements for shipment of radioactive and hazardous waste must be met.
GOVERNMENT FURNISHED SERVICES & ITEMS
DOE receiver sites that can accept waste at a rate and number consistent with
the planning and approval process described in C.3. to support low level waste
shipments.
DOE fulfills its commitment in the Waste Management Programmatic Environmental
Impact Statement to designate DOE or commercial receiver site(s) that can accept
waste at a rate and number consistent with the planning and approval process
described in C.3 to support low level mixed waste shipments.
DOE fulfills its commitment in the Waste Management Programmatic Environmental
Impact Statement to applicable DOT designate DOE or commercial receiver site(s)
that can accept waste at a rate and number consistent with the planning and
approval process described in C.3 to support low level mixed waste shipments.
Section C - Page 10
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
E. Sanitary Waste
- -----------------
Ship to commercial facilities for disposal, or recycle, all sanitary waste by
December 15, 2006.
F. RCRA Regulated Hazardous Waste
- ----------------------------------
Ship to commercial facilities, all RCRA Regulated Hazardous Waste by December
15, 2006.
G. Waste Minimization
- ---------------------
The Contractor shall develop and implement a pollution prevention program
incorporating waste prevention, recycling and an affirmative procurement
program.
The Contractor shall establish waste reduction goals for transuranic, low-level
waste, low level mixed and RCRA regulated hazardous waste.
REQUIREMENT(S)
Local and state regulations regarding waste acceptance at sanitary landfills as
well as any requirements associated with individual disposal sites. Sanitary
waste leaving the Rocky Flats Site must be inspected to assure that no
radioactive materials are present in accordance with Colorado Sanitary Waste
regulations (6 CCR 1007-2) for landfills and individual landfill permits.
Disposal sites waste acceptance criteria, the Resource Conservation Recovery Act
and DOE Order 435.1
o Executive Order 12856
o Executive Order 13101
o DOE Order 5400.1
GOVERNMENT FURNISHED SERVICES & ITEMS
None
None
None
Section C - Page 11
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
IV. Environmental Remediation
The Contractor shall prepare a draft interim final record of decision (ROD),
submit to DOE for DOE, EPA, and CDPHE approval, and complete all actions
required by the approved interim final ROD to remediate soil, surface water,
ground water, and other contaminated media. The remediation shall be completed
as stipulated below:
SCOPE
A. Remediation
- --------------
The Contractor shall remediate Individual Hazardous Substance Sites (IHSS) (3),
Potential Areas of Concern (PAC), or under building contamination (UBC) by
December 15, 2006.
The total waste volumes for this environmental remediation portion of the
project are assumed not to exceed those quantities as follows:
o Non-Rad Waste: 11,000 cubic yards
o Low Level Waste: 107,000 cubic yards
o Low Level Mixed Waste less than 1 nanocurie: 41,000 cubic yards
o Low Level Mixed Waste greater than 1 nanocurie: 220 cubic yards
B. Post Closure Care under RCRA Permit
- --------------------------------------
The Contractor shall perform the closure and post-closure care requirements for
RCRA permitted and interim status units during the performance of this contract.
REQUIREMENT(S)
o Planning, characterization, area preparations, remediation, disposition,
final regulatory approvals and reporting requirements shall be accomplished
in accordance with RFCA
o Remediation shall be specified in the approved interim final Record of
Decision (ROD) and Proposed Plan
o Contractor must transport and maintain CERCLA administrative record IAW 40
CFR 300-311
The Contractor shall comply with closure and post closure care requirements
under the RCRA permit in accordance with RCRA, 40 CFR Parts 264 and 265, the
Colorado Hazardous Waste Act requirements, 6 CCR 1007-3 and RFCA. (4)
GOVERNMENT FURNISHED SERVICES & ITEMS
o CERCLA Administrative Record Repository
o DOE shall provide comments on draft decision documents and regulatory
reports within 20 business days of receipt.
None
- ----------
3 If the 903 Pad Remediation Project removal option is exercised, then the
project planning, execution and completion as identified in WBS
#1.1.03.12.06.02 shall be removed from the scope of work and this contract.
4 Assumes RCRA Permit is not extinguished and its requirements are not absorbed
into RFCA.
Section C - Page 12
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
C. End State
- ------------
The Contractor shall develop and submit for RFFO and regulatory approval a Draft
Interim Final ROD and Proposed Plan. The end state is defined in Clause C.1.2.
REQUIREMENT(S)
o Draft Interim Final ROD shall be in accordance with RFCA and be of
sufficient quality and completeness to obtain regulatory approval and
issuance of an approved Interim Final ROD and Proposed Plan.
o Draft Interim Final ROD will be prepared and presented in sufficient time to
allow:
o Public and regulatory review as provided in RFCA
o Regulatory approval and publication
o Completion of remediation actions described in the ROD and Proposed Plan
prior to December 15, 2006
o Contractor must transport and maintain CERCLA administrative record in
accordance with 40 CFR 300-311.
GOVERNMENT FURNISHED SERVICES & ITEMS
o CERCLA Administrative Record Repository
o DOE shall provide comments on draft decision documents and regulatory
reports within 20 business days of receipt.
o DOE will use its best efforts to obtain an approved Interim Final ROD.
Section C - Page 13
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
V. Infrastructure and General Site Operations
The Contractor shall perform the infrastructure operations and general support
services listed below in support of the site closure mission.
o All items listed below are required until the end of this contract unless
otherwise approved for termination by DOE.
o These items are generally required to support the items listed Sections I
through IV above, or the general operation of the site until closure
o It is recognized that this is a closure site, all facilities have a limited
life span, and the nuclear safety risk and required controls should be
steadily declining throughout the project. The standard requirements
referenced in this contract are generally designed for continuous ongoing
facility operations. this will create the desirability for a number of
interpretations and/or exceptions and deviations from the standard
requirements to ensure that project costs are being deployed for the maximum
net government risk reduction. The Contractor and DOE shall actively engage
in early identification and appropriate requirements reduction activities to
ensure a safe and cost effective closure.
o The Contractor shall provide any other services or operations not listed
below as required by other contract requirements including those DOE Orders
listed in Section J, Attachment B.
o Safety services are subdivided into three sections: 1) Nuclear safety
requirements which apply to handling and processing fissile material and to
the operation of facilities that house fissile material, 2) radiological
safety requirements that apply to handling and processing of radioactive
waste and operations in facilities that are radiologically contaminated or
house radioactive materials, and 3) industrial safety requirements which
apply to all work activities and facilities at the Site.
SCOPE
A. Environmental Monitoring
- ---------------------------
The Contractor shall conduct required environmental monitoring in compliance
with environmental laws, regulations, permits, agreements, decision documents
and in support of emergency response activities.
The Contractor shall provide annual updates to the Historical Release Report and
CERCLA Administrative Record.
The Contractor shall maintain the current and any new enforceable agreements at
the Site as identified in the technical exhibit D in this section C.
REQUIREMENT(S)
Environmental Monitoring shall be accomplished in accordance with the provisions
of Resource Conservation and Recovery Act (RCRA); the Comprehensive
Environmental Response, Compensation, and Liability Act (CERCLA); the Clean Air
Act; the Clean Water Act; the Colorado Water Quality Control Commission (CWQCC)
standards; natural resource management regulations, and RFCA. (5)
GOVERNMENT FURNISHED SERVICES & ITEMS
DOE will provide necessary access to accomplish all offsite environmental
monitoring.
- ----------
5 Requirements will be revised if RFCA is amended to include above stated
requirements as ARARs.
Section C - Page 14
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
SCOPE
B. Facility Operation and Material Storage
- ------------------------------------------
The Contractor shall operate all facilities until they are demolished in
accordance with applicable safety, security requirements and store all materials
(chemicals, etc.), waste, property, etc., in accordance with applicable
requirements.
C. Safeguards & Security
- ------------------------
The Contractor shall ensure appropriate levels of protection against
unauthorized access; theft, diversion, loss of custody of Special Nuclear
Material; espionage; loss or theft of classified matter or Government property;
and other hostile acts that may cause unacceptable adverse impacts on national
security or the health and safety of DOE and contractor employees, the public or
the environment.
The Contractor shall promptly prepare and submit applications for security
clearances as required for work under this contract.
The Contractor shall deter, prevent, detect and respond to unauthorized
possession, use, or sabotage of Special Nuclear Materials.
The Contractor shall provide an integrated system of activities, systems,
programs, facilities and policies for the protection of classified information,
nuclear materials, and DOE and certain DOE contractor property and personnel as
required by the Atomic Energy Act of 1954, as amended, other Federal statutes,
Executive orders, and other directives.
REQUIREMENT(S)
Applicable requirements for facility operation or material storage are listed in
Section J, Attachment B..
o Program Management, DOE Order 470 Series
o Personnel Security, DOE Order 472 Series
o Protection Operations, DOE Order 5632 and DOE Order 473 Series
o Materials Control And Accountability, DOE Order 5633 and DOE Order 474
Series
o Information Security, DOE Order 5639 and DOE Order 471 Series
GOVERNMENT FURNISHED SERVICES & ITEMS
None
DOE shall promptly process Contractor security clearances. On average,
processing time will be in accordance with DOE Order 472 guidelines which for
clear cases will be at or below the following:
Q clearance- 75 calendar days
L clearance - 75 calendar days
AAA clearance - 60 calendar days
Processing time begins upon receipt of the case from the Contractor.
Section C - Page 15
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
SCOPE
D. Analytical Services
- ----------------------
The Contractor shall perform and maintain Analytical Services and/or
Laboratories.
The Contractor shall ensure that any lab samples analyzed by off-site
laboratories will be disposed of from the laboratory and not returned to the
Rocky Flats Site for disposal unless there is prior contractual agreement for
the return of specific samples for which no other disposition is possible.
E. Public Relations & Media Support
- -----------------------------------
The Contractor shall provide communication services to include Citizens Advisory
Board representation, tours and visits and other stakeholder support.
F. Litigation Management
- ------------------------
The Contractor shall maintain a legal function and demonstrate sound litigation
management practices to include litigation, arbitration, legal advice on
environmental matters, procurement, employment, labor, and the Price-Anderson
Act (PAA); review and interpretation of legislation and laws; research and
drafting of memorandum, and the management and oversight of outside legal
counsel; for both the prime and subcontractors.
The Contractor shall provide litigation support to the Government when judged
necessary by the Contracting Officer (or Contracting Officer Representative) in
cases of actual or threatened litigation, regulatory matters, or third-party
claims and subject to applicable rules and regulations. Litigation support
includes, but is not limited to: case preparation assistance; document
retrieval, review and reproduction; witness preparation and testimony; expert
witness testimony; and assisting Government counsel as necessary in response to
discovery or other information related activities responsive to any legal
proceeding.
REQUIREMENT(S)
Analytical Services and laboratories shall be operated in accordance with one or
more of the following references: 10 CFR 830.120, DOE Order 414.1, ASME-NQA-1,
ANSI/ASQC E4, and/or ISO 9000.
o Communication services shall be provided as needed to maintain stakeholder
support for the Rocky Flats Closure Project.
o Contractor must transport and maintain supporting community documents in the
established DOE Reading room(s).
o Litigation management practices shall be provided in accordance with the
RFFO approved Litigation Management Plan.
o Department of Energy, Office of General Counsel, Legal Services and
Litigation Management Policies and Procedures
GOVERNMENT FURNISHED SERVICES & ITEMS
DOE shall maintain a quality National Analytical Management Program or a DOE
alternative program which supports the analytical services necessary to close
the site.
DOE Reading Room(s)
None
Section C - Page 16
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
SCOPE
G. Audit Support Services
- -------------------------
The Contractor shall provide audit support services for GAO, IG, DNFSB, EPA,
CDPHE and other external audits that examine and evaluate Site-wide activities.
H. Utilities & Infrastructure
- -----------------------------
The Contractor shall provide and maintain the infrastructure, utilities, etc.
necessary to support the closure mission. DOE will provide at a later date a
specific definition of which roads and components of the site utility system
that will remain after closure.
I. Radiological Assistance Program
- ----------------------------------
The Contractor shall provide a field unit under the Radiological Assistance
Program (RAP) until the RAP program is terminated by DOE.
J. Health Effects
- -----------------
The Contractor shall provide support for health programs/ambulatory care,
beryllium and radiation worker health surveillance programs and personnel
monitoring program. These services are required to assess, monitor, record data,
and provide medical support for current site workers who are or may be exposed
to radiological and hazardous materials. This is expected to encompass 6500
(+/-1000) current site workers through the term of this contract. The Contractor
shall maintain medical records of former workers and make them available for
health effects studies as requested by DOE.
REQUIREMENT(S)
Audit Support Services shall be provided in accordance with DOE Order 2300.1B,
Audit Resolution and Follow-up, DOE Order 2320.1C, Cooperation with the Office
of Inspector General, DOE Order 2321.1B, Auditing of Programs and Operations;
and, Department of Energy, Office of General Counsel, Legal Services and
Litigation Management Policies and Procedures
Utilities and infrastructure shall be maintained in accordance with DOE Order
430.2 and the Site Safety Analysis Report.
DOE Order 5530.3 provides the requirements for the Radiological Assistance
Program.
Health effects shall be maintained in accordance with Public Law 102-484, DOE
Order 440.1, and will last until the program and documents are turned over to
DOE at the end of this contract.
GOVERNMENT FURNISHED SERVICES & ITEMS
DOE /OIG Rocky Flats Audit Plan
DOE shall provide and pay for site utilities to include raw water, electricity,
natural gas and heating oil.
DOE shall provide additional funding for the RAP and one member and may provide
up to three (3) members for the RAP team.
None
Section C - Page 17
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
SCOPE
K. Occupational Health
- ----------------------
The Contractor shall provide the following classes of examinations for the
purpose of providing initial and continuing assessment of employee health:
pre-placement in accordance with the Americans with Disabilities Act (42 United
States Code 12101), qualification examinations, fitness for duty, medical
surveillance and health monitoring, return to work health evaluations, and
termination examinations. The occupational medical department shall be informed
of all job transfers and shall determine whether a medical evaluation is
necessary. The physician responsible for the delivery of medical services or
his/her designee shall inform contractor management of appropriate employee work
restrictions.
L. Emergency Management
- -----------------------
The Contractor shall provide Site Emergency Management Services to include
emergency planning and preparedness as well as response to possible incidents
involving nuclear, radiological and hazardous materials on site.
The Contractor shall provide a fully equipped and adequately staffed Emergency
Operations Center on the site.
REQUIREMENT(S)
DOE Order 440.1A provides the requirements for employee health examinations.
This applies to all contractor and sub-tier contractor personnel as required by
DOE Order 440.1A.
DOE Order 151.1 specifies the performance requirements, capabilities and
response times for emergency management services. Emergency management shall be
performed at the levels specified until the major nuclear facilities' hazards
are removed or ameliorated, or the facilities are demolished. A reduced level of
emergency services may be allowed once the major hazards on-site are removed and
as they are approved by DOE. DOE Order 225.1A specifies the requirements for
conducting accident investigations.
GOVERNMENT FURNISHED SERVICES & ITEMS
None
None
Section C - Page 18
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
SCOPE
M. Nuclear Criticality Safety
- -----------------------------
The Contractor shall maintain a Nuclear Criticality Safety Program which ensures
that operations with fissionable materials which pose a criticality accident
hazard shall be evaluated and documented to demonstrate that the operation will
be subcritical under both normal and credible abnormal conditions. Fissionable
material operations shall be conducted in such a manner that consequences to
personal and property that result from a criticality accident will be mitigated.
No single credible event or failure shall result in a criticality accident
having unmitigated consequences.
N. Nuclear Safety
- ------------------
The Contractor shall develop and maintain the safety analysis and controls for
nuclear facilities, operations, and activities. Readiness determinations for
restart of activities and for start-up of new activities will be required to
demonstrate readiness to safely start the activity.
O. Occupational Safety
- ----------------------
The Contractor shall meet all occupational safety and health requirements
(including but not limited to industrial safety, fire protection, construction
safety, firearms safety, explosive safety, industrial hygiene, pressure safety
and motor vehicle safety) for all site-related operations and conditions.
REQUIREMENT(S)
DOE Order 420.1 provides the requirements and invokes the applicable ANSI/ANS 8
Standards. Sabotage and seismic events that are predicted to result in facility
collapse are exempt from the requirement for double contingency. The Criticality
Safety Program will be required in each facility until fissile materials
inventories are reduced to less than that stipulated in ANSI/ANL8.
DOE Orders 420.1, 425.1, 5480.21, 5480.22, and 5480.23 specify the requirements
for nuclear safety.
Occupational safety requirements are as stipulated in DOE Orders 420.1, DOE
Order 440.1A.
GOVERNMENT FURNISHED SERVICES & ITEMS
None
DOE complies with the following authorization basis review schedule:
A. Justification for Continued Operation - 4 calendar weeks
B. Page Change- 4 calendar weeks
C. New -Authorization Basis- 2 calendar months
D. Authorization Basis revision- 6 calendar weeks
E. Positive unreviewed safety question - 2 calendar weeks
DOE will work cooperatively with the Contractor to improve upon this review
schedule as a part of the best efforts approach of the Nuclear Licensing
Statement of Commitment.
None
Section C - Page 19
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
SCOPE
P. Fire Protection
- ------------------
The Contractor shall maintain an acceptable fire protection program which
supports a level of fire protection and fire suppression capability sufficient
to minimize losses from fire and related hazards consistent with the best in
class of protected property in private industry.
Q. Quality Assurance Program
- ----------------------------
The Contractor shall perform all work on site in accordance with applicable
quality assurance requirements.
R. International Agreements
- ----------------------------
The Contractor shall support 12 inspections per year by the International Atomic
Energy Agency (IAEA) as well as maintain material surveillance equipment.
S. Records Management and Document Control
- -------------------------------------------
The Contractor shall provide on an ongoing basis the maintenance, storage,
protection, and disposition of active and inactive classified and unclassified
records, retrieval from on-site and off-site storage facilities and support in
ongoing discovery efforts for litigation. All Government records, regardless of
media, in the Contractor's custody must be properly inventoried, indexed, moved
to DOE approved off-site storage facilities, and possess a disposition schedule
or equivalent thereof pending a schedule being developed, including those
records that are required to document closure activities. Those records that are
radiologically, beryllium or otherwise contaminated shall be handled and
dispositioned in accordance with site procedures including applicable free
release levels. The Contractor will provide a complete records inventory list in
a hardcopy and electronic format to the post closure records custodian
identified by the DOE Contracting Officer.
REQUIREMENT(S)
DOE Order 420.1 provides the requirements and invokes the National Fire
Protection Association Standards.
DOE Order 414.1 and 10 CFR 830.120 specify basic requirements that apply to the
quality assurance program. For site activities where transuranic waste will be
characterized, packaged, or shipped, the DOE Carlsbad Area Office Quality
Assurance Program Document, CAO-94-1012 and DOE Carlsbad Area Office Quality
Assurance Program Plan, CAO-94-1010 shall apply. The Nevada Test Site Waste
Acceptance Criteria shall apply for those activities where Low Level Waste is
characterized, certified, packaged, or shipped.
o IAEA agreement INFCIRC 288 and DOE Order 1270.2B
o This requirement will remain in effect until IAEA materials have been
permanently removed from the Site.
Records management and document control will be conducted in accordance with DOE
Order 200.1, 36 CFR Chapter 12, Subchapter B and the Joint Records Management
Strategy for Site Closure.
GOVERNMENT FURNISHED SERVICES & ITEMS
None
None
None
DOE approved receiver site(s)
Section C - Page 20
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
SCOPE
T. Radiation Protection Program
- -------------------------------
The Contractor shall ensure that all site activities are conducted in compliance
with a documented Radiation Protection Program to minimize occupational exposure
to internal radiation, direct, external exposure to ionizing radiation as well
as to minimize the spread of contamination. The As Low As Reasonably Achievable
(ALARA) process will be applied to all site activities.
U. Environmental Permits
- ------------------------------
The Contractor shall obtain, maintain, and comply with environmental permits as
required and allowed by law.
REQUIREMENT(S)
10 CFR 835 and the Departmental Implementing Guides shall apply.
Contractor's compliance with environmental permits shall be in accordance with
the Resource Conservation and Recovery Act (RCRA); the Comprehensive
Environmental Response, Compensation, and Liability Act (CERCLA); the Clean Air
Act; the Clean Water Act; and the Rocky Flats Cleanup Agreement. (6)
GOVERNMENT FURNISHED SERVICES & ITEMS
None
None
- ----------
6 Requirements will be revised if RFCA is amended to include above stated
requirements as ARARs.
Section C - Page 21
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
VI. DOE Office Accommodations
The Contractor shall provide basic office accommodations for DOE personnel as
specified below. A central DOE office will be needed as well as smaller office
accommodations in a few critical facilities until they are decommissioned.
During the final stages of closure it is expected that DOE will relocate its
office off-site.
SCOPE
DOE Offices
- -----------
DOE will continue to occupy Building 460 until the facility is scheduled for
demolition or until the Contractor provides alternate office space, whichever
occurs first. This includes space for up to 250 DOE and support service
personnel. Regardless of location, DOE will require that at least 150 of the
individual offices must be located in one building until the end of FY04. Up to
a maximum total of 10 office spaces (no more than three in each building) must
be maintained in or within 150 feet of Buildings 371, 750, 771, and 707 until
the Contractor closes the facilities. DOE will require additional space for
approximately 10 regulators doing Site inspections. Lunch services must be
provided within 500 feet of the single large DOE office on-site until 2005. The
Contractor shall provide for movement of DOE furniture property and other
materials if offices are moved from the satellite offices, or from B460.
Adequate access for DOE personnel is required through closure.
REQUIREMENT(S)
DOE office accommodations will be provided in Building 460, or an alternative.
Any central office location besides Building 460 requested to house the DOE
offices must be approved by the Manager, RFFO.
GOVERNMENT FURNISHED SERVICES & ITEMS
None
Section C - Page 22
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
VII. Tri-Party Agreement
The Contractor shall continue to implement the Three Party Transfer Agreements.
SCOPE
Tri-Party Agreement
- -------------------
The Contractor shall ensure the continued support and assistance to Rockwell and
EG&G as prescribed by the RFP Three Party Transfer Agreement dated June 30,
1995.
REQUIREMENT(S)
RFETS Three Party Transfer Agreement with DOE, EG&G Rocky Flats, Inc., and
Kaiser-Hill Company, L.L.C., June 30, 1995, and as incorporated by reference,
the RFP Three Party Transfer Agreement with DOE, EG&G Rocky Flats, Inc., and
Rockwell International Corporation, October 23, 1989.
GOVERNMENT FURNISHED SERVICES & ITEMS
None
VIII. Closure Project Funding
The Contractor shall plan to execute this Statement of Work assuming a minimum
annual funding of $657 Million from the Closure Account, (EW-05) received no
later than October 1, of each year, for the term of the contract. The receipt of
funding is subject to Congressional and Departmental funding Authorization. The
following table describes the maximum funding RFFO may receive during the
project from the Closure Account. If DOE removes scope, such as the 903 Pad
remediation, adjustment to this funding may be negotiated.
- --------------------------------------------------------------------------
FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07
& Outyears
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
$18.8M $18.8M $18.8M $18.2M $17.6M $16.6M $16.3M $3.9M
- --------------------------------------------------------------------------
Section C - Page 23
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
Exhibit B
Abbreviations, Acronyms, and Definitions
Abbreviations and Acronyms:
ACP Accelerated Cleanup Plan
ADS Activity Data Sheets
ALARA As Low As Reasonably Achievable
APSF Advanced Plutonium Storage Facility
ASAP Accelerated Site Action Project
BCP Baseline Change Proposal
BEST97 Basis of Estimate Software Tool
BOES Basic Operating and Essential Services
CAB Citizens Advisory Board
CAD Corrective Action Decision
CAMU Corrective Active Management Unit
CDPHE Colorado Department of Public Health and Environment
CERCLA Comprehensive Environmental Response, Compensation and
Liability Act of 1980
CFR Code of Federal Regulations
CID Cumulative Impacts Document
D&D Decontamination and Decommissioning
DNFSB Defense Nuclear Facilities Safety Board
DOE Department of Energy
DOR Direct Oxide Reduction
ECA Energy Communities Alliance
EIS Environmental Impact Statement
EM Environmental Management
EPA Environmental Protection Agency
ER Environmental Restoration
FSUWG Future Site Use Working Group
FTIRS Fourier Transform Infrared System
FY Fiscal Year
HQ Headquarters
IAW In Accordance With
ICCB Internal Change Control Board
ID Department of Energy Idaho Operations Office
IDC Item Description Code
IHSS Individual Hazardous Substance Site
IMC Integrating Management Contract
INEEL Idaho National Engineering and Environmental Laboratory
IPL Integrated Priority Listing
ISM Integrated Safety Management
LANL Los Alamos National Laboratory
LCB Life Cycle Baseline
LLMW Low Level Mixed Waste
LLW Low Level Waste
M&O Management & Operating
Mat'l Material
Misc. Miscellaneous
MLLW Mixed Low Level Waste
MOL Minimum Operating Level
MOX Mixed Oxide Fuel
MR Mortgage Reduction Milestones
mrem Millirem
MSE/ER Molten Salt Extraction/Electrorefining
NEPA National Environmental Policy Act
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
NTS Nevada Test Site
Ops. Operations
OR Oak Ridge
OU Operable Unit
PA Protected Area
PAC Potential Area of Concern
PBIMC Performance Based Integrating Management Contract
PBD Project Baseline Description
pCi/g Pico Curies per gram
PEIS Programmatic Environmental Impact Statement
PPI Program Planning and Integration
Pu Plutonium
PuF4 Plutonium Fluoride
RESRAD Computer Model Pertaining to Residual Radiation Material
RFCA Rocky Flats Cleanup Agreement
RFETS Rocky Flats Environmental Technology Site
RFFO Rocky Flats Field Office
ROD Record of Decision
SAL Soil Action Levels
SCCB Site Change Control Board
SISMP Site Integrated Stabilization Management Plan
Site Rocky Flats Environmental Technology Site
SMEs Subject Matter Experts
SNM Special Nuclear Material
SRS Savannah River Site
SS&C Salt Sand & Crucible
SSTs Safe Secure Transport
SSSP Site Safeguard & Security Plan
STCG Site Technology Coordination Group
STLs Safeguards Treatability Limits
STP Site Treatment Plan
TBD To be determined
TRU Transuranic
TRUM Transuranic Mixed
TRUPACT Transuranic Waste Packaging and Transportation
TSCA Toxic Substance Control Act
TYP Ten Year Plan
USTs Underground Storage Tanks
WAD Work Authorization Document
WBS Work Breakdown Structure
WIPP Waste Isolation Pilot Plant
WM Waste Management
Definitions:
Baseline: A work activity based plan that describes the Contractor'
s approach to execute the project Statement of Work,
including the schedule for those work activities and
estimates of the associated costs (plus or minus approved
changes). Defined as the Rocky Flats Closure Project
Baseline.
Statement of Work: Narrative description of products or services to be
supplied/delivered under the contract (see Section C).
Scope: Sum of the products or services to be provided as the
project.
Technical Safety Requirements (TSR) Level 1 Violation: A Level 1 violation is
indicative of a significant breakdown of safety controls in a facility. It
results in an actual release of material to the environment, or allows
conditions to exist where there are no remaining barriers to release to the
environment. DOE discovery of a Level 2 violation also represents a Level 1
violation.
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
Technical Safety Requirements (TSR) Level 2 Violation: Level 2 violations are
significant violations of the control set, but do not pose an immediate threat
to the co-located worker, the public or to the environment. A violation that can
or does result in adverse consequences to facility workers is a Level 2
violation. Level 2 violations also result from DOE discovery of a failure to
comply with administrative controls or lack of rigor in maintaining the safety
envelope.
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
Exhibit C
List of Rocky Flats Environmental Technology Site Compliance Orders, Agreements
and Permits
Parties Statute Type Date Executed
- ----------------------------------------------------------------------------
DOE/Colorado RFCO Site Treatment Plan COOC 10/3/95
DOE-Kaiser-Hill-RMRS RCRA Mixed Residue SA & COOC 4/23/93
- -Safe Sites/Colorado
DOE-Kaiser-Hill/ RCRA Waste Chemicals COOC 8/21/97
Colorado
DOE-Kaiser-Hill/ RCRA Idle Equipment and Tanks 8/21/97
Colorado COOC
DOE/Colorado RCRA Mixed Residues COOC 8/14/98
DOE-Kaiser-Hill- RCRA RCRA Permit 6/30/97
Safe Sites-RMRS -
Closure Site Services/
Colorado
DOE/EPA/Colorado RCRA/ RFCA 7/19/96
CERCLA
DOE-Kaiser-Hill/EPA CWA NPDES Permit 6/30/84
DOE/EPA CWA NPDES FFCA 3/91
COOC = Compliance Order on Consent
SA = Settlement agreement
RFCO = RCRA Facility Consent Order
FFCA = Federal Facility Compliance Agreement
RFCA = Rocky Flats Cleanup Agreement
1. Note that RFFO and K-H are parties to the RFETS facility Clean Air Act
Permit Application filed with CDPHE. No facility permit has been issued, but
various sources on site continue to have specific air permits.
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
Exhibit D
ROCKY FLATS CLEANUP AGREEMENT
Incorporated by reference as of October 1, 1999.
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
Exhibit E
ROCKY FLATS ENVIRONMENTAL TECHNOLOGY SITE WORKFORCE RESTRUCTURING PLAN
<PAGE>
ROCKY FLATS ENVIRONMENTAL TECHNOLOGY SITE
WORK FORCE RESTRUCTURING
PLAN THREE
U.S. Department of Energy
Rocky Flats Environmental Technology Site
Golden, Colorado
MAY 5, 1997
<PAGE>
ROCKY FLATS WORK FORCE RESTRUCTURING PLAN 3
TABLE OF CONTENTS
INTRODUCTION 1
Work Force Restructuring Programs 1
CORRELATION WITH THE TEN-YEAR PLAN 2
GOALS 2
OUTSOURCING OF CURRENT ACTIVITIES 2
Strategy 2
Decision-Making Process 3
Implementation Process 3
WORK FORCE PLANNING 4
Work Force Analysis 4
Salaried Employee Selection Process 5
Hourly Employee Selection Process 5
Management Rights 5
Eligibility 6
Maximize Use of Existing Staff 7
Employee and Community Notification Requirements 8
RESTRUCTURING ELEMENTS 8
Voluntary Separation Payment Program (VSPP) 8
Involuntary Separation Process 9
Health Insurance Benefits 9
Relocation Assistance 9
Separated Employee Training 9
TRAINING FOR THE RETAINED WORK FORCE 10
REHIRING AT DOE FACILITIES AND THE RESUME NETWORK 10
Resume Network 10
CAREER ASSISTANCE FOR PLACEMENT AT NON-DOE FACILITIES 11
PREFERENTIAL TREATMENT OF DOE COMPLEX EMPLOYEES 11
STAKEHOLDER CONSULTATION 12
Consultation With Outside Sources 12
Employee and Stakeholder Input and Review 12
COMMUNITY IMPACT ASSISTANCE 13
Mitigate Economic Impact on Local Communities 13
Rocky Flats Local Impacts Initiative (RFLII) Activities 13
Community Transition 13
<PAGE>
ROCKY FLATS WORK FORCE RESTRUCTURING PLAN 3
TABLE OF CONTENTS (con't)
MEASURING RESULTS ------------------------------------------------- 15
CONCLUSION -------------------------------------------------------- 15
APPENDIX 1 - Standard Area Full-Time Employment Definitions ------- 16
APPENDIX 2 - Voluntary Separation Payment Program Guidelines
and General Release and Waiver ----------------------- 17
APPENDIX 3 - Draft Employee Letters ------------------------------- 18
APPENDIX 4 - Separated Employee Health Insurance Guidelines ------- 19
APPENDIX 5 - Relocation Guidelines -------------------------------- 20
APPENDIX 6 - Separated Employee Training Guidelines --------------- 21
APPENDIX 7 - Stakeholder Comments and Public Meetings ------------- 22
<PAGE>
ROCKY FLATS ENVIRONMENTAL TECHNOLOGY SITE
WORK FORCE RESTRUCTURING PLAN 3
INTRODUCTION
- ------------
Since the implementation of Section 3161 of the Fiscal Year (FY) 1993 National
Defense Authorization Act Rocky Flats Environmental Technology Site (Site) has
voluntarily or involuntarily separated approximately 3,400 employees. This
action is a result of the Department of Energy's (DOE) mission change and the
designation of Rocky Flats for accelerated closure.
One of the DOE Rocky Flats Field Office's (RFFO) basic goals is to maintain a
trained work force to meet the Site's new closure mission. Unfortunately, budget
reductions and adjustments in skills needed to accomplish closure have resulted
in work force restructuring.
Section 3161 gives specific guidance to DOE on work force restructuring and
requires that a plan be prepared when it has been determined that a change in
the work force of a defense nuclear facility is necessary. The Rocky Flats Work
Force Restructuring Plan 3 responds to this requirement. It details the programs
under which future downsizing actions will occur. The actual restructuring
figures will depend on future budgets and required skill mix in order to
accomplish the closure mission. The Plan will be updated, as necessary, in
accordance with Section 3161 provisions.
Savings generated from downsizing actions across the DOE Complex equal
approximately $60,000 annually in pay and benefits for each separated employee.
Projected cost savings for the number of individuals who will be impacted by
this plan will be reported once the final restructuring numbers am identified.
Work Force Restructuring Programs
- ---------------------------------
Since the implementation of the Voluntary Separation Payment Program (VSPP) at
the Site, approximately 2,732 employees have separated under that program, and
approximately 686 have been involuntarily separated. Then numbers include 596
voluntary separations, and up to 372 involuntary separations in FY96. An
additional 352 employees accepted employment with lower-tier subcontractors in
FY95.
Outplacement assistance and retraining options are available to employees who
voluntarily or involuntarily separate from Rocky Flats and who am eligible for
such benefits wider the terms of this Plan. Counseling services and community
resources for job placement are part of the outplacement assistance for
employees before and after separation. A Career Assistance Center for current
employees and an Outplacement Center for separated employees have been
established and staffed to help employees with a variety of services that
include workshops on job search skills, resume preparation, interview skills,
job identification; financial counseling, and community services. Eligible
separated employees may use the training programs identified in this Plan to
pursue courses in current or new career fields.
-1-
<PAGE>
Future job openings at Rocky Flats will require review of involuntarily
separated workers within the DOE complex using the Job Opportunity Bulletin
Board System (JOBBS) database before external hiring is considered. The resumes
of employees involuntarily separated from Rocky Flats will be provided to other
DOE sites for similar consideration. Relocation assistance will be provided for
individuals hired for positions within the DOE Complex.
Additional approvals will not be required for implementation of any work force
restructuring program as long as the threshold of 500 separations in a twelve-
month period is not exceeded and as long as the restructuring can be
accomplished within current funding allocations consistent with the terms of
this Plan. Notification to RFFO, the Office of Worker and Community Transition
and stakeholders is required at least one week prior to any activity and shall
include a complete copy of the documents for employees in conjunction with
implementation of the program. Any deletions or modification in program
documents will be approved by DOE with the concurrence of counsel. There is no
guarantee that any required future restructuring of the work force will have
benefits equal to or greater than those contained within this Plan. Nor is it
the intent of DOE in implementing this Plan to create any private rights of
action or to create any rights in third parties.
CORRELATION WITH THE TEN-YEAR PLAN
- ----------------------------------
The projectization concept of the Ten-Year Plan and the Rocky Flats Clean-up
Agreement will provide greater certainty about the scope and schedule for clean-
up and closure. Implementation of the Site closure plan will likely require
smaller, selective, and more predictable restructuring activities in both scope
and schedule. As projects are completed, workers will be moved to other tasks or
separated if their skills are no longer required.
GOALS
- -----
The basic goals of RFFO and its contractors during the required work force
restructuring are to maintain a trained work force to accomplish the revised
mission of the Rocky Flats Site; to keep involuntary separations to a minimum;
to offer to the extent practicable, the work force retraining opportunities for
positions required to meet the new mission; and to minimize the impact of the
mission change and associated restructuring on the work force and, surrounding
communities. Stakeholder involvement has been, and will continue to be, an
integral part of the restructuring planning process.
OUTSOURCING OF CURRENT ACTIVITIES
- -------------------------------
Strategy
- --------
The Kaiser-Hill Team will retain employees with the skills needed to deliver the
core activities at the Site. Ancillary support activities that require
fluctuating staffing levels may be performed by contractors outside of the
Kaiser-Hill Team (outsourcing).
-2-
<PAGE>
Consistent with DOE policies and procedures and collective bargaining agreement
obligations, "make or buy" cost evaluation tools will be used to determine the
cost/benefit ratio of any proposed outsourcing action.
Examples of ancillary support activities include medical services, training, and
non-routine safety analyses. Examples of activities requiring fluctuating
staffing levels include construction and demolition.
Staffing flexibility, avoidance of capital expenditures, increased efficiency,
or access to expertise not available at the Site will be important
considerations when making the ultimate outsourcing decisions.
Decision-Making Process
- -----------------------
Consistent with DOE policies and procedures and collective bargaining agreement
obligations, an analysis will be conducted by the Kaiser-Hill Team to determine
whether outsourcing will accomplish measurable cost savings, or meet other
outsourcing objectives or provide staffing flexibility to meet fluctuating
needs. The Kaiser-Hill Team will establish a make-or- buy review committee to
review initial outsourcing decisions. The committee will request bargaining unit
involvement in appropriate instances that have the potential to impact
bargaining unit employees. 'Me purpose of outsourcing will, not be to reduce
wages and benefits for existing employees, but rather to improve productivity.
Implementation Process
- ----------------------
Once an area is identified for outsourcing, the Kaiser-Hill Team will pursue the
following process:
1. The Kaiser-Hill Team will notify DOE every six months of potential
outsourcings that are being considered for implementation during the next
six-month period. The Team will also report outsourcings that became
effective during the preceding six-month period.
2. Affected employees will be notified prior to the anticipated contract
effective date that their scope of work is at risk of being subcontracted
and that they are, therefore, at risk of being involuntarily separated.
At that time, affected employees will be provided detailed, written
notification of their separation benefit program options. In the event that
a VSPP is one of the options, employees will receive adequate advance
notice to comply with the requirements of the Age Discrimination in
Employment Act and the Older Workers Benefit Protection
-3-
<PAGE>
Act. If an employee is eligible, and elects a VSPP option, he or she will
have to comply with the restrictions on reemployment set out in the General
Release and Waiver. (See Appendix 2)
3. Affected employees who are involuntarily separated will receive a two-week
layoff notice prior to the effective date of the new subcontract. In some
cases, management may choose to involuntarily separate employees after the
subcontract has taken effect. At management's discretion, employees receiving
their two-week notice will either remain at work during the two weeks, or
will be sent home With pay pending the termination of their employment.
Salaried employees will receive the standard Involuntary Separation Program
(ISP), including severance pay.
Hourly employees will receive severance pay according to the collective
bargaining agreement in effect at the time of separation, and may receive
standard ISP benefits when involuntarily separated.
After the two-week notice is given and their termination from employment is
effective, employees will be free to accept and begin employment With another
employer at the Site or elsewhere without forfeiting their rights to
severance pay under the ISP. Consistent with applicable collective bargaining
agreements and personnel policies, employees who quit and begin new
employment before the two-week notice will be treated as voluntary quits and
will receive no severance pay.
4. An on-site tuition reimbursement program provides employees with an ongoing
opportunity to retrain themselves to provide core functions, and thus remain
employed in the jobs available on site. Employees whose functions are being
outsourced are also offered the following:
1) Voluntary separation through the current VSPP, if offered;
2) Involuntary Separation through the current ISP, and
3) Involuntary Separation after accepting a position with the outsourccd
entity. (This option allows the employee to accept employment with the
new entity, work through the separation notice period, and receive his
or her full severance payment and hiring preference).
WORK FORCE PLANNING
- -------------------
Work Force Analysis
- -------------------
The Rocky Flats work force is being restructured to meet new mission
requirements. Contractor input is the first step in the work force analysis.
DOE, however, recognizes its obligation to oversee and independently assess the
information that it receives.
RFFO and Kaiser-Hill cooperated to produce a work force analysis that shows the
job category changes and future impacted classifications projected from current
Kaiser-Hill budget-based estimates.
-4-
<PAGE>
This information will be provided as specific restructuring activities are
identified. Initially, RFFO provided Kaiser-Hill guidance on the format and
methodology used for conducting the analysis.
Several meetings were held throughout the process in which RFFO continually
reviewed the progress and findings of the analysis in order to assure that the
analysis was being conducted in the appropriate manner. RFFO and the Office of
Worker and Community Transition reviewed and approved the final analysis.
A work force analysis was released to employees concurrent with the work force
restructuring notification issued on February 4, 1997.
Salaried Employee Selection Process
- -----------------------------------
Generally, the retention status of each salaried employee is based on
demonstrated performance as reflected by past performance evaluations,
versatility, foreseeable business requirements, and length of service (where
other factors are relatively equal).
Retention lists for each organization are reviewed and approved by the
organization's management. Employees can challenge this assessment through the
company complaint procedure.
Equal Employment Opportunity and Affirmative Action and diversity requirements
are considered in accordance with the protocols established by EEOC. Prior to
the proposed action, a detailed analysis is conducted within all major employee
groups by EEO-I categories, as established by the Equal Employment Opportunity
Commission, to determine whether the action would disparately impact a protected
employee classification and, if so, what legitimate business reasons would
create the disparity. At a minimum, all lawful steps will be taken to assure
that there is no disproportionate impact on protected groups from the
restructuring effort. A final diversity report will be developed for each
contractor's review before the final selection of salaried employees for
involuntary layoffs.
Hourly Employee Selection Process
- ---------------------------------
Any hourly employees impacted will be laid off using the applicable portions of
the labor agreements in effect.
Management Rights
- -----------------
In the event Kaiser-Hill finds cause to terminate a subcontract for default,
Kaiser-Hill has the authority to terminate the subcontract in accordance with
the provisions of the subcontract Employment of key personnel (specifically
defined by position in the subcontract), who are separated as a direct result of
the subcontract's termination for default will be treated as terminations for
cause for purposes of implementing this Plan. Employees who are key personnel of
the terminated subcontract will not be subject to the terms of this Plan.
-5-
<PAGE>
Eligibility
- -----------
Employees who meet the Job Attachment Test listed below can use the appropriate
benefits within the Work Force Restructuring Plan. Continuous service with a
Management and Operating (M&O) contractor or an Integrating Management
Contractor (IMC) equivalent covered by the requirements of Section 3161 at other
DOE defense nuclear facilities as defined in Appendix C-1 of the Interim
Planning Guidance for Contractor Work Force Restructuring, will be recognized
for determining overall eligibility for benefits. Such service will not be
recognized if work force restructuring benefits were previously received for
such period of service. Breaks in employment of 30 days or less between
continuous service dates will be allowed. Only continuous service at Rocky
Flats With the most current employer or its predecessor will continue to be used
in calculating the voluntary separation payment. Again, periods of service for
which an employee has previously received severance pay, separation pay, or
other work force restructuring benefits will not be recognized for eligibility
purposes and will not be counted or used in the calculation of severance or
voluntary separation payments.
Employees who were transferred by their employer for the benefit of DOE to the
M&O or IMC equivalent contractor at Rocky Flats from another M&O or IMC
equivalent contractor at another DOE facility with the understanding that their
service at Rocky Flats would be considered for all purposes as a continuation of
the prior service and that the prior service would be credited for purposes of
their Rocky Flats employment, may be eligible to have their continuous service
at the previous site recognized in the calculation of the voluntary separation
payment. For such service to be recognized for calculating separation pay, the
employee must have received no work force restructuring benefits coincident with
the transfer and there must have been no break in employment. Employees will
be required to furnish satisfactory proof of eligibility under this provision.
None of the benefits resulting from Section 3161 are available to employees re-
employed at or in support of RFETS.
Regular Employees
- ------------------
1. The employee must have been working for a contractor with a direct contract
for DOE at a defense nuclear facility on September 27, 1991;
2. The employee must have worked full-time (or regular part-time) at or in
support of the Rocky Flats Site from that date through February 4, 1997, the
date of the work force restructuring notification, and through the date of
their separation under either an ISP or VSPP.
3. The employee must have accepted a voluntary separation incentive or have been
involuntarily separated from employment at the Rocky Flats Site as a
consequence of the work force restructuring notice, set out in number two (2)
above, upon which the employee relies to establish eligibility.
4. Employees hired after September 27, 1991, are only eligible for the benefits
provided by their company's standard policies, access to Career Assistance
Center services, and participation in the Displaced Workers Medical Benefits
Program (if program eligibility requirements are met.)
-6-
<PAGE>
Intermittent Workers Including Construction Workers
- ---------------------------------------------------
1. The employee must have worked for a contractor at a defense nuclear
facility on or before September 27, 1991;
2. The employee must have worked for a contractor at or in support of the
Rocky Flats Site within 180 days preceding the work force restructuring
notification of February 4, 1997.
3. The employee must have worked for a contractor at or in support of the
Rocky Flats Site a total number of hours, including time worked prior to
September 27, 1991, equivalent to an employee having worked full time from
September 27, 1991, through the work force restructuring notification of
February 4, 1997, depending on the date the employee used to establish
eligibility, or have actually worked the local industry standard of fall
time as shown in Appendix 1, from September 27,1991, through the work force
restructuring notification of February 4, 1997, depending on the date the
employee uses to establish eligibility;
4. The employee's job at the Rocky Flats Site must be affected as a result of
the announced work force restructuring. For an intermittent employee, this
would mean the termination of a project or the completion of the assignment
or project without prospect for a follow-on assignment at the site.
Colorado Building Trades craft workers who meet the eligibility requirements
shown above will be eligible for a one-time, special 3161 payment of six weeks'
pay at the base hourly wage rate, relocation, tuition reimbursement, and Career
Assistance Center services. Any Building Trades craft worker who accepts this
3161 benefit will not be eligible for rehire by the site subcontractor for a
period of one year unless he or she pays back a pro rata, share of the voluntary
separation payment to DOE.
Department of Energy Support Service Contractors (SSC) am separated into two
categories:
1. Those employees whose Task Order or Contract is ending, or who are
displaced because they did not take a job with the new contractor, will be
eligible for Outplacement Center access and will be placed on the priority
hiring list for six months.
2. SSC's who are displaced because their position was converted to a Federal
position am eligible for Outplacement Center access, and placement on the
priority hiring list for six months.
Maximize Use of Existing Staff
- ------------------------------
Rocky Flats contractor and subcontractor management personnel are fully
committed to maximizing use 'of the existing work force to the extent consistent
with efficient operation. Minimizing external hiring is one way to accomplish
this.
-7-
<PAGE>
Employee and Community Notification Requirements
- ------------------------------------------------
Pursuant to Section 3161 of the National Defense Authorization Act for Fiscal
Year 1993, a work force restructuring notification was issued to employees at
the work site and to surrounding communities on February 4, 1997.
The notification announced ongoing work force restructuring activities that
could affect up to 400 positions over the next few years. The restructuring
efforts may result from completion of projects, outsourcing of some functions,
efficiency and productivity improvement measures.
Rocky Flats announcements, bulletins and newspaper articles will continue to be
used to ensure that employees and stakeholders are kept informed concerning
work force restructuring activities.
Under certain conditions, the Worker Adjustment and Retraining Notification Act
(WARN) requires notification at least 60 days prior to layoff or site closure.
WARN Act notification is generally required when there is a layoff of 33 percent
of the employees totaling 50 or more at a single site of employment or a total
of 500 or more employees, or when there is a "plant closing" resulting in a
loss of employment for 50 or more employees in a 30-day period. DOE, in
consultation with the contractor, will determine whether WARN applies.
RESTRUCTURING ELEMENTS
- ----------------------
Voluntary Separation Payment Program (VSPP)
- -------------------------------------------
An optional VSPP may be offered under this Plan in hopes that work force
reductions will occur voluntarily to the maximum extent possible. While this
program has a significant cost impact, it may be needed to attract the required
number of employee reductions.
An employee voluntarily terminating his or her employment pursuant to the VSPP,
cannot become employed at Rocky Flats with DOE or any other contractor or
subcontractor at Rocky Flats for a period of one year from the date of his or
her separation unless he or she refunds a pro rata share of his or her
separation payment to DOE. This also applies to employees whose functions are
being outsourced and who terminate employment pursuant to a VSPP. Further
clarification is contained within the General Release and Waiver contained in
Appendix 2.
Unlike previous VSPPs, many of the future VSPPs may occur on a smaller, more
limited scale. This will happen in two ways: 1) creating targeted VSPPs
affecting only those job classifications actually requiring reduction; and 2)
permitting employees to select their departure date from predetermined VSPP
dates allowing advanced planning for both the employee and employer. In
addition, implementation of large-scale VSPPs may be justified by further
significant budget reductions. With the approval of DOE, the Kaiser-Hill Team
will determine which VSPP method would be most appropriate. They may use one or
all of the methods based on the circumstances that occur during the year. The
VSPP is detailed in Appendix 2.
-8-
<PAGE>
Draft letters to employees concerning the three options above are contained in
Appendix 3. These letters are examples only and are subject to modification.
Involuntary Separation Process
- ------------------------------
The process for involuntary separations is outlined by each contractor in its
policy manual for salaried employees and in the labor agreements for hourly
employees. At company discretion, employees may be paid for a minimum of a
two-week notice period while performing a job search. The 60-day notice required
under the WARN Act will only be made when it is determined by DOE, in
consultation with the contractor, that the WARN Act applies to the specific
situation.
Health Insurance Benefits
- -------------------------
Health insurance benefits for employees vary by company and by negotiated labor
agreements. However, extended coverage for eligible employees is available
pursuant to DOE's Displaced Worker Health Benefit Program (DWHBP) or the
Consolidated Omnibus Budget Reconciliation Act (COBRA). Eligible employees are
employees who either voluntarily or involuntarily separate and are not eligible
for such coverage under another employer's group plan, including that of a
spouse, or under Medicare coverage. Appendix 4 details this benefit
Relocation Assistance
- ---------------------
An involuntarily separated employee who moves 50 miles or mom from the Site and
his or her current residence to accept employment within the DOE Complex with a
company that does not provide moving expense reimbursement in the normal course
of business, may receive a maximum $4,000 reimbursement for actual allowable
expenses. This program is detailed in Appendix 5.
Separated Employee Training
- ---------------------------
Education assistance helps voluntarily and involuntarily separated employees
prepare for other positions. Separated employees must apply for this benefit
during the 12 months following their separation. This is a reimbursement program
which shall not exceed $10,000 total for each person, for a 24-month period
following approval of his or her plan of studies. Existence of this program is
dependent upon the availability of funding.
The Department of Labor (DOL) granted $2,100,000 in Job Training Partnership Act
(JTPA) funds from the Defense Conversion Act to the State of Colorado Governor's
Job Training Office (GJTO) for retraining surplus Rocky Flats workers through
December 31, 1997. These funds can only be used when individual employees have
been targeted for layoffs. JTPA funds am used to retrain individuals already
possessing minimum job skills.
-9-
<PAGE>
Another alternative for separated employees is starting their own businesses
using the Rocky Flats Local Impacts Initiative Entrepreneur Resource Program or
by taking courses in operating small businesses from local community colleges.
A third alternative is payments for approved on-the-job training with a new
employer subsidizing the worker's pay for his or her training period. This
program shall have no more than a maximum of 10 participants at any given time.
Appendix 6 details the Separated Employee Training program.
TRAINING FOR THE RETAINED WORK FORCE
- ------------------------------------
It is the goal of the contractor and DOE to provide training opportunities in
order to help employees who are retained at Rocky Flats under the environmental
management mission meet new mission requirements. As training needs become
available from various line and support organizations, the current training
programs and the necessity for new programs will be evaluated. Modifications to
existing programs will be made to maintain up-to-date programs which meet
emerging business needs.
REHIRING AT DOE FACILITIES AND THE RESUME NETWORK
- --------------------------------------------------
DOE developed the Job Opportunity Bulletin Board System (JOBBS) to simplify
implementation of hiring preference by eligible individuals, and by contractors
and subcontractors. Those individuals who have applied for and have been
determined to be eligible for the preference may have their resumes entered into
JOBBS where they will be specifically identified as job seekers with a hiring
preference.
Companies doing new hiring for DOE work should place job announcements into
JOBBS. Contractors and designated subcontractors (those whose DOE contracts
equal or exceed $500,000 in value) must first seek eligible workers from among
individuals listed in JOBBS who are eligible for a hiring preference. All other
subcontractors are encouraged to use JOBBS when hiring for DOE work.
Those individuals who do not want to enter their resumes into JOBBS are
responsible for informing potential employers of their eligibility for a hiring
preference. External hiring is considered only after specific criteria have been
met. The hiring and job-posting procedures are available at the Career
Assistance Centers, and at the Kaiser-Hill Team human resource departments.
Resume Network
- --------------
Current legislation requires that defense nuclear facility employees who are
involuntarily terminated be given preferential hiring consideration by other DOE
facilities. In order to best facilitate a process by which resume and
qualifications can be readily available to all contractors, a resume network
system has been developed by DOE for those employees who
request it.
-10-
<PAGE>
The system provides the following services:
o Resume distribution to Management and Operating and Integrating Contractors
o Opportunity announcements accessible to all separated or potentially
separated workers
o Resume development support for matching surplus workers with known
vacancies
o Matching separated or potentially separated workers with anticipated or
existing vacancies
o Removal of expired vacancies
o Tracking and reporting of preferential hire opportunities
CAREER ASSISTANCE FOR PLACEMENT AT NON-DOE FACILITIES
- -----------------------------------------------------
Career assistance will be provided to those employees whose positions are at
risk, who have been deemed surplus, or who have voluntarily separated as
described in this Plan. Counseling services for employees before and after
separation and the use of community resources will be part of this assistance.
PREFERENTIAL TREATMENT OF DOE COMPLEX EMPLOYEES
- -----------------------------------------------
Section 3161 provides that, to the extent practicable, employees whose
employment at a defense nuclear facility has been involuntarily terminated
receive hiring preference in filling vacancies in the work force of DOE and its
contractors and subcontractors. DOE has determined that employees must be
identified as having helped maintain the nation's nuclear deterrent during the
Cold War in order to qualify for this hiring preference. The preference should
be honored by all prime contractors, and by subcontractors whose contracts with
DOE equal or exceed $500,000 in value.
DOE established the following criteria for determining eligibility for the
hiring preference: the individual must be a former employee (1) who was
involuntarily terminated (except if terminated for cause); (2) who meets the
eligibility standards under the Section 3161 Job Attachment Test ; and (3) who
is qualified for the job at the time the work is to begin. Where qualifications
are approximately equal, eligible individuals will be given preference in
hiring. However, the preference will be administered so that it is consistent
with applicable law, regulation, or executive order, and collective bargaining
agreements.
This hiring preference is applicable with respect to vacancies in employment at
DOE facilities. However, no such vacancies occur when positions become available
through an outsourcing action or follow-on contract. Current employees are first
offered continued employment with the replacement contractor to avoid a layoff.
Subsequently, the current employees pursue their personal options and then it
becomes necessary to consider employment of non-employees of RFFO.
An individual's hiring preference continues until termination by the action (or
inaction) of that individual. Initially, and on an annual basis thereafter,
eligible individuals must certify their desire to retain their hiring
preference.
-11-
<PAGE>
Actions that will terminate an individual's hiring preference include: voluntary
termination or termination for cause from a position that was obtained through
the exercise of the preference, or failure to comply with the annual
certification requirement.
Future Rocky Flats employment opportunities will require review of involuntarily
separated workers within the DOE complex before a contractor considers hiring
individuals not previously employed at Rocky Flats. Of such individuals,
involuntarily separated Rocky Flats workers, who meet the requirements
previously discussed, will be given first preference for future job openings at
Rocky Flats. Currently, hourly contractor employees at Rocky Flats also have
recall rights in accordance with the provisions in their collective bargaining
agreements. Salaried employees do not have specific contractual recall rights.
Involuntarily separated employees from other DOE sites will also receive
consideration after individuals involuntarily separated from employment at Rocky
Flats, for P04itions for which they qualify. DOE has developed a resume network
described in the "Resume Network" Section. Resumes of impacted workers willing
to relocate from downsizing DOE defense nuclear facilities will be kept on file
for 12 months. These resumes will be reviewed for potential candidates prior to
considering candidates from any non-DOE complex source.
RFFO has completed a review of the Kaiser-Hill Team's implementation of
preferential hiring prior to issuance of this draft Work Force Restructuring
Plan. Reviews will continue to occur as needed in order to assure that the
hiring processes conform to preferential hiring requirements.
STAKEHOLDER CONSULTATION
- ------------------------
Consultation With Outside Sources
- ---------------------------------
In compliance with Section 3161 of the National Defense Authorization Act for
Fiscal Year 1993, a mechanism has been developed to use publicly funded
consultation programs. Consultation with outside agencies is required to support
the Plan.
Employee and Stakeholder Input and Review
- -----------------------------------------
This Plan has been developed by RFFO with the input and review of a variety of
stakeholders, including the Rocky Flats Local Impacts Initiative (RFLII) and
labor organizations representing potentially affected employees.
Their activities are described below in the "Community Impact Assistance"
Section. RFLII sponsored many meetings; some were designed to gather general
input while others were to interface with, and gather input from, state and
community agencies and local educational institutions. Meetings were also held
on-site to gather input on the draft plan that was distributed to employees. A
public comment period was conducted on the document.
-12-
<PAGE>
Appendix 7 provides specific information concerning stakeholder comments and the
types and numbers of public meetings held.
COMMUNITY IMPACT ASSISTANCE
- ---------------------------
Many businesses and local government service agencies could be significantly
impacted by the work force restructuring at Rocky Flats. The community impact
assistance described below is designed to offset the effects of work force
restructuring Rocky Flats employees who are impacted by restructuring efforts
are an important part of the picture.
Mitigate Economic Impact on Local Communities
- ---------------------------------------------
A goal of the Work Force Restructuring Plan is to minimize the economic impacts
on local communities. Much of this will be accomplished by the programs and
activities previously described. Allowing employees to leave voluntarily means
that people who are best prepared for and desirous of other employment are those
who leave. Many already have other employment opportunities available to them or
currently operate small businesses they can expand. Most people in the
aforementioned situations will remain in the area and will not tax the services
of the community. Other efforts to minimize the impacts on surrounding
communities are described below.
Rocky Flats Local Impacts Initiative (RFLII) Activities
- -------------------------------------------------------
The RFLII is a coalition of local governments, workers, community-based and
private sector interest groups, surrounding landowners and citizens working
together to identify, assess and mitigate impacts resulting from the change of
mission at Rocky Flats and to plan for its future. Membership is open to any
individual or group.
RFLII also includes non-voting representatives from DOE, Kaiser-Hill, and other
federal and state agencies and legislators who participate fully. Members
participate through various committees and meet as a full group regularly to
hear committee reports, exchange information, and discuss issues. The group was
formed in 1991, is governed by a 19-member board under an intergovernmental
agreement, and has a staff of four.
Community Transition
- --------------------
Based on evaluation of past programs and the results of numerous studies
including the efforts discussed above, RFLII has adopted a revised Community
Transition Plan for 1997-98. Its work plan has the following long term goal and
strategies:
Long Term Goal. Create new, permanent high-wage private sector jobs, especially
in fields matching the skills of displaced Rocky Flats workers. This will be
accomplished by strengthening and diversifying the local economy, helping
companies in target growth sectors expand, assisting businesses started by Rocky
Flats workers, and enhancing research, training, education, and technical
assistance in target industry sectors through the following strategies:
-13-
<PAGE>
Strategy 1. Strengthen the Manufacturing Base in the Denver metropolitan area,
with special emphasis on advanced machining, advanced structural materials,
telecommunications equipment, biomedical and electromedical equipment, advanced
computer system hardware, and environmental technologies.
Strategy 2. Promote and Strengthen Colorado as a Center for Environmental
Commerce, with special emphasis on professional services or consulting,
recycling or waste management, pollution control and prevention, analytical
laboratory or characterization .services, renewable energy technology, and
environmental restoration; and achieving a high rate of ISO 14000 certification.
Strategy 3. Assist startup companies in target industries (see numbers 1 and 2
above), and companies started by Rocky Flats workers to succeed and expand.
Strategy 4. Assist Rocky Flats vendors and other area businesses who rely on
defense-related contracts, to diversify and expand their markets. Promote
utilization of local vendors by Rocky Flats, unless doing so would jeopardize
other local jobs.
Strategy 5. Support existing small an medium size companies in the Denver
metropolitan area and help them expand, especially through coordinated
activities with area financial, economic development and business support
entities.
Strategy 6. Promote and facilitate transfer of technologies to and from DOE and
local companies, especially as they relate to Rocky Flats activities.
Based on an analysis of where displaced Rocky Flats workers reside, the
following Colorado counties are included in the RFLII impact area: Adams,
Arapahoe, Boulder, Clear Creek, Denver, Douglas, Gilpin, Jefferson, Larimer and
Weld.
RFLII programs include an Entrepreneurial Resource Program assisting small and
start-up businesses in targeted industries, or those started by Rocky Flats
workers, with management assistance and information resources and the Equipment
Transfer Program authorized by a Memorandum of Agreement enacted in July of
1996.
In addition, RFLII and RFFO are working with regulators and the private sector
to continue the National Conversion Pilot Project at Rocky Flats. Begun by
former Secretary O'Leary, the project tests the feasibility of converting four
former defense production facilities, along with technology and personnel, to
commercial use.
The second stage, cleanup of two of the buildings and refurbishing of equipment,
was complete at the end of March 1997. A solicitation is scheduled to be issued
in the fall of 1997. If the project proceeds to the manufacturing stage, one of
its goals will be to employ former Rocky Flats workers.
-14-
<PAGE>
MEASURING RESULTS
- -----------------
An annual report will be provided setting out implementation of the Plan. The
report will also reflect relevant changes in circumstances since the previous
plan and an evaluation of the Plan's implementation during the previous year. A
feedback program is being used to evaluate the restructuring program and to
provide for Plan updates, as required by Section 3161 of the National Defense
Authorization Act.
Rocky Flats maintains records that track employees' use of the various
restructuring activities and the expenditures on those activities; e.g., how
many accepted voluntary separation and what the costs were of these incentives;
how many enrolled in retraining programs and what the costs of retraining were;
how many were transferred to either new jobs within the DOE complex or to new
jobs off-site and the costs of relocation; etc. The Plan update also reports on
the completed actions and future plans of local community impact initiatives.
CONCLUSION
- ----------
This Plan is intended to be used as an umbrella for future work force
restructuring activities. The Plan may be modified as needed, in accordance with
departmental guidance on work force restructuring, as amended.
-15-
<PAGE>
APPENDIX 1
STANDARD AREA FULL-TIME EMPLOYMENT
DEFINITIONS
HOURS REQUIRED IN A YEAR
TO MAINTAIN CONSTRUCTION
LOCAL UNION WORKER BENEFITS
- ------------------------------------------------------------------------
Asbestos Workers, Local 28 1,600 Hours
Boilermakers, Local 101 1,000 Hours
Bricklayers, Local 7 1,000 Hours
Carpenters District Council 1,560 Hours
Carpenters , Local 1396 1,560 Hours
Carpet & Resilient Tile, Local 419 1,320 Hours
Cement Masons, Local 577 1,440 Hours
Electricians, Local 68 1,620 Hours
Operating Engineers, Local 9 1,600 Hours
Glaziers, Local 930 1,600 Hours
Ironworkers, Local 24 1,200 Hours
Laborers District Council 1,440 Hours
Laborers, Local 720 1,440 Hours
Millwrights, Local 2834 1,560 Hours
Painters & Drywall, Local 79 1,440 Hours
Plumbers & Gas, Local 3 1,500 Hours
Pipefitters, Local 208 1,500 Hours
Roofers, Local 41 1,200 Hours
Sheet Metal, Local 9 1,920 Hours
Sprinkler Fitters, Local 669 1,700 Hours
Teamsters, Local 13 1,600 Hours
<PAGE>
APPENDIX 2
VOLUNTARY SEPARATION PAYMENT PROGRAM
GUIDELINES AND
GENERAL RELEASE AND WAIVER
-17-
<PAGE>
APPENDIX 2
Rocky Flats Environmental Technology Site
Voluntary Separation Payment Program (VSPP)
Guidelines
General
- -------
A Voluntary Separation Payment Plan (VSPP) could be implemented for one or more
reasons which include: budget reductions, outsourcing or privatization of a
function or activity, building or function shutdown, or efficiencies gained
through realignment of work process. When such actions result in a VSPP, the
guidelines below will be followed. The guidelines have been established to
accomplish work force restructuring activities under Section 3161 of the
National Defense Authorization Act for Fiscal Year 1993. An employee voluntarily
terminating his or her employment cannot become employed at the Rocky Flats Site
by the Department of Energy or any other contractor or subcontractor for a
period of one (1) year from the date of his or her separation unless the
employee refunds a pro rata share of his or her separation payment to DOE. Only
those employees who were hired on or before September 27,1991, will be eligible
to participate in the VSPP.
o Voluntary Separation Program Benefits
- VSPP payments will be based on continuous years of service since the last
hire date with the current contractor, its predecessor or eligible
subcontractor at the Rocky Flats Site (with the exception noted above) in
accordance with the attached schedule.
- Medical may continue after separation as identified in Appendix 4.
- Separated employee training nay be provided as identified in Appendix 6.
- Career Assistance services shall be provided on-site prior to separation
and off-site after after separation.
o Eligibility for Voluntary Separation Payment Program
- All integrating and eligible subcontractor personnel (as defined in the
Work Force Planning Section of the Work Force Restructuring Plan 3) at the
Rocky Flats Site are eligible for the voluntary separation package when
offered by their employer.
- Each application shall be screened by the integrating contractor or
eligible subcontractor, using the following criteria to accept Or reject
applicants:
- Impact to a critical environmental safety and health mission supported
by the applicant,
- Impact to a critical safeguard and security mission supported by the
applicant,
- Creation of a condition which would require hiring off-site to backfill
a resulting vacancy,
- Probability that the applicant will be involuntarily separated,
- Probability that the voluntary separation by the applicant will save
another worker from being involuntary separated.
o Voluntary Separation Payment Program Options
- There are three VSPP options which may be used depending an the Site's
circumstances.
Under all options, eligible employees shall receive written descriptions
of program elements, have an opportunity to apply for the VSPP and to
rescind their decision within a specified time frame. Management will
review the applications for impact, retention of critical skills and
give approvals. The schedule details the VSPP percentage amounts.
<PAGE>
APPENDIX 2
VSPP Options
- ------------
Targeted VSPP
-------------
When it has been determined that a particular department, job classification or
employee group must downsize, the affected employees may be given an
opportunity to be voluntarily separated. Once final approval has been given,
the approved employees will separate on a specified date.
Process
-------
Affected departments, job classifications and employee groups would be given
written notice of work force restructuring. Included with this notice would be
the forms required to apply for a VSPP. Information would also include the
particulars (application and rescission time frame, available benefits, VSPP
schedule, waiver, etc.).
The worker would complete the appropriate paper work and return it to the
designated department by the application due date. At the close of the due
date, the worker would have a specified time in which to rescind his Or her
decision in writing. Once the recision period expires, management will review
the VSPP application for impact according to the criteria listed in the
Eligibility for Voluntary Separation Payment Program section.
Employees who are accepted for the VSPP will be notified by management and
their separation date will occur on the designated departure date (unless there
are special circumstances which require the worker to stay beyond the normal
VSSP date).
Predetermined VSPP
- ------------------
Unlike the goals of many other DOE sites, the Rocky Flats site goal is closure,
and all employees will eventually be impacted by work form restructuring.
Consequently, workers should plan their futures and careers with this in mind.
With the implementation of the Ten Year Plan and the Rocky Flats Clean-up eat,
the contractor will have a plan outlining the work force required to Complete
the project. The plan also provides a completion schedule which can help
determine when areas will require work force restructuring. The projectization
concept of the Ten-Year Plan and the Rocky Flats Clean-Up Agreement establishes
a manageable process by which workers can select a semi-annual VSPP date. This
allows for maximum planning on both the workers' and management's parts.
Under this option employees who apply and am selected to participate in the
VSPP win terminate employment on a date sometime in the future (potentially 6
to 36 months away) based an the completion of their work assignment building
closure, or project This would provide certainty to both the employee and the
company as to a separation date. By participating in the VSPP, an employee will
be agreeing to execute the General Release and Waiver and to terminate
employment on the date set by the Kaiser-Hill Tom An employee will not be
entitled to benefits under the VSPP if 1) he or she leaves earlier than the
release date without the agreement of the Kaiser-Hill Team, 2) he or she is
under a disciplinary suspension or subject to dismissal under the Kaiser-Hill
Team Disciplinary Policy, 3) he or she refuses to execute the Waiver, or 4) he
or she revokes agreement to the Waiver.
Large-scale VSPP
- ----------------
If a large-scale VSPP is necessary, management will determine which company
employee groups (salary exempt, salary non-exempt or hourly) shall be eligible
for the VSPP. Once final approval has been given, the approved employees will
separate on a specified date. This tool will continue to be used again if the
Site is faced with significant budget reductions or closure requirements.
<PAGE>
APPENDIX 2
Process
- -------
Company employee groups would would be given written notice of work force
restructuring. Information with this notice would be the forms required to apply
for a VSPP. Information would also include the particulars (application and
rescission time frame, available benefits, VSPP schedule waiver etc.)
The worker would complete the appropriate paper work and, return it to the
designated department by the application due date. At the close of the due date,
the worker would have a specified time in which which to rescind his or bar
decision in writing.
Once the recision period expires, management will review the VSPP applications
for impact according to the criteria listed in the Eligibility for Voluntary
Separation Payment Program section.
Employees who are accepted for he VSPP will be notified by management and their
separation date will occur on the designated departure date (unless there are
special circumstances which require the worker to stay beyond the normal VSPP
date).
<PAGE>
APPENDIX 2
Voluntary Separation Payment Schedule Percentages
*Year of service Percent of Annual Base Pay
- ------------------------------------------------------------------------
5 24
6 26
7 28
8 30
9 32
10 34
11 36
12 38
13 40
14 42
15 44
16 46
17 48
18 50
19 52
20 54
21 56
22 58
23 60
24 62
25 64
26 66
27 68
28 70
29 72
30 74
31 76
32 78
33+ 80
Employees hired after September 27, 1991, will not be eligible for the VSPP
and are only eligible for benefits provided by their company's standard
policies, access to Career Assistance Center services, and participation in the
Displaced Workers Medical Benefits Program (if program eligibility requirements
are met).
(*Continuous Rocky Flats service with current or predecessor contractor only.)
<PAGE>
APPENDIX 2
VOLUNTARY SEPARATION PAYMENT PROGRAM
GENERAL RELEASE AND WAIVER
This Voluntary Separation Payment Program, General Release and Waiver
("Agreement") is entered into by and between ________________ ("Employee") and
Kaiser-Hill, L.L.C. and its prime subcontractors, DynCorp of Colorado, Rocky
Mountain Remediation Services, Safe Sites of Colorado/LATA, and Wackenhut
Security, Inc. ("Employer") as part of Employee's voluntary election to
terminate employment with the Employer.
IN EXCHANGE FOR THE PROMISES SET FORTH BELOW, THE PARTIES AGREE AS FOLLOWS:
1. Employee voluntarily terminates his/her employment with the Employer
effective ___________. Absent the express written authorization of the U. S.
Department of Energy, Employee agree not to seek employment with or become
employed at the Rocky Flats Environmental Technology Site by the Department
of Energy or any other future or current contractor or subcontractor at the
Site for a period of one year from the date of employee's separation. This
includes but is not limited to temporary employment service contracts,
general task order assignments, indefinite quality contracts, basic ordering
agreements, and and consultant contracts. However, this does not preclude
Employee from employment with a company which is Providing supplies,
equipment, materials or commodities to the Site under a fixed-price contract
or purchase order.
2. Employee agrees that the Employer has no obligation to reemploy Employee in
the future, and Employee waives my recall, rehire, or rehire preference
rights such as those that my arise under Section 3161 of the National
defense Authorization Act for Fiscal Year 1993. Employee agrees to perform
all steps required by Employee's policies and procedures at the separation
of employment.
3. Except as set forth paragraph 4 below, Employee, on behalf of
himself/herself and any person or entity entitled to sue on Employee's
behalf, waives I releases Employer, its parents, subsidiaries, and
affiliates, the Department of Energy, and its employees, officers,
directors, shareholders, agents, and successors, from any causes of action
or claims whether known or unknown, that arise out of the Employee's
resignation and separation of employment with Employer and any causes of
action or claims that arise out of Employee's employment with Employer, up
to and including the date of Employee's resignation, under any federal,
state or local law, including but not limited to the Age Discrimination in
Employment Act, the Older Workers Benefit Protection Act of 1990, Title VII
of the 1964 Civil Rights Act, the Equal Pay Act, the Family and Medical
Leave Act, the Employee Retirement Income Security Act, and the Americans
with Disabilities Act, or any applicable state or local law. Employee will
not assert any claim or cause of action released under this agreement in any
administrative or judicial proceeding
4. HOWEVER, Employee does not waive:
(i) any causes of action or claims that arise out of Employee's employment
with Employer, up to and including the date of Employee's separation, that
have been asserted in writing and filed with the appropriate agency or court
prior to __________, 1997.
(ii) any rights or claims that may arise after the date this Agreement is
executed,
<PAGE>
APPENDIX~ 2
(iii) any claims relating to pension or retiree health benefits that currently
may be accrued under the Employer's standard retirement program,
iv) any claims under any applicable state worker's compensation laws, or
(v) Any claims for occupational injuries or illnesses arising from Employee's
employment with Employer that are not known or reasonably knowable by the
Employee at the time of the execution of this Agreement.
5. In exchange for Employee's voluntary separation and execution of this
Agreement, Employer Will give Employee the consideration and benefits
outlined in the Rocky Flats Environmental Technology Site, Work Force
Restructuring Plan Number Three, dated ____________.
6. If Employee becomes employed as prohibited in paragraph 1 or otherwise,
violates any provision of this Agreement, then, in addition to any other
remedies Employer has under this Agreement, Employer may require Employee to
repay a prorata portion or all of the payments or other benefits under this
Agreement, and Employee agrees to such payment.
7. Employee has been advised to consider this Agreement and to consult with an
attorney of his/her choice, and Employee has had the opportunity to do so.
Employee has had the right to consider this Agreement for a period of at
least forty-five (45) days prior to entering into this Agreement and has done
so, or has expressly requested that his/her application be granted prior to
the expiration of the 45 days. Employee has the right to revoke this
Agreement for a period of seven (7) days following execution of this
Agreement by giving written notice to the Work Force Restructuring
representative. If Employee revokes the Agreement, It shall not be effective
and enforceable, and Employee will not receive any of the benefits described
in paragraph 5. Employee has read and the terms and contents of this
Agreement, and Employee freely, voluntarily, and without coercion enters into
this Agreement and agrees to be bound by its terms.
8. This agreement constitutes the entire and agreement of Employee and Employer
and can only be modified in writing agreed to by both parties.
9. Employee had access to all of the information required to be disclosed in
these circumstances under the Age in Employment Act regarding who is covered
by the Program, the eligibility factors, the time limits of the Program, the
ages and job tides of everyone eligible for the Program, and the ages of
ineligible employees in the same job or organizational unit.
<PAGE>
APPENDIX 2
PLEASE READ THIS AGREEMENT CAREFULLY. IT CONTAINS A RELEASE OF KNOWN AND UNKNOWN
CLAIMS AS DESCRIBED IN PARAGRAPH 3, ABOVE, SUBJECT TO THE LIMITATIONS EXPRESSLY
SET FORTH IN PARAGRAPH 4.
Agreed to:
- --------------------------------------------------------
Employee Signature/Date
- --------------------------------------------------------
Employer Signature/Date
<PAGE>
APPENDIX 3
DRAFT EMPLOYEE LETTERS
<PAGE>
DRAFT
(TARGETED OR OUTSOURCING ACTIONS LETTER - OPTION 1)
Date
To: (EMPLOYEE)
From: (MANAGER)
Subject: NOTICE OF INVOLUNTARY SEPARATION AND VSPP OPTION - XXX-???-9X
This letter serves as notice that your organization will experience involuntary
separations on or after (DATE-at least 52 days after the date of this notice).
You may be one of the employees selected as a part of this action. If you are
selected for involuntary separation, you will be notified of your selections no
less than two weeks prior to the date of your involuntary separation.
Because you are now at risk of involuntary separation, you have three options
available to you:
Option 1: You may choose not to take any action. If you are selected for
involuntary separation you will remain an employee through your two week
notification period. At the end of the notification period you will be
terminated and receive your Involuntary Separation Program (ISP) severance
payment and other ISP benefits.
If you are selected for the ISP, then during the period between (MONTH, DAY) and
(MONTH, DAY, YEAR) you must report any full-time or part-time jobs obtained, or
changes in address For any employment during this time you should review Policy
HR 1.12, Conflict of Interest, available at do Offsite Career Assistance Center
(CAC). Should you begin full-time employment with another employer an or before
(MONTH, DAY, YEAR) you must terminate your employment with (COMPANY), under this
policy. Since this will constitute resignation to take another job, you will
cease receiving a weekly paycheck and you will not receive separation pay or any
separation benefits. If you do not secure other employment during this period,
you will remain on the payroll through (MONTH,DAY YEAR). Your paycheck will be
mailed to your home or bank each payday until that time. You will continue to
earn Time Off With Pay (TOWP). Contributions will continue to be made to your
Thrift Plan account during this time if you participate in that program. Your
final weekly paycheck will include all money due to you for unused TOWP. The
check for separation pay will be issued on or about (MONTH, DAY, YEAR).
Based an Section 3161 of the FY 1993 National Defense Authorization Act,
involuntarily separated workers have certain rights. If you meet the eligibility
requirements defined in the Work Force Restructuring Plan, you will be eligible
for preferential hiring consideration at DOE defense nuclear facilities for
future positions requiring the skill and expertise that you possess, should
hiring become necessary. The attached packet of information contains a form
entitled Preferential Hiring Form and a Resume Release Form. In order to
maintain your hiring preference status please complete them and return them to
Work Force Restructuring. We will need you to provide an up-to-date resume n a
computer disc if you wish to be included in the DOE Job Opportunity Bulletin
Board system. If you do not have a resume, the Offsite CAC will work with you to
develop one that is effective. It is your responsibility to maintain your resume
in current status.
<PAGE>
Option 2: You are immediately eligible to apply for Voluntary Separation Payment
Program (VSPP) benefits if you were hired on or before September 27, 1991. You
may also be eligible if you had less than a 30-day period between employment
with another DOE nuclear weapons facility and employment at the Rocky Flats
Environmental Technology Site. If you were a corporate transfer from another DOE
nuclear weapons facility you may receive some service credit. Contact your Human
Resources department for further information on these Work Force Restructuring
benefits. You may apply for the VSPP no later than (DATE). If you apply, you
will have a 7-day period, during which you may rescind your decision. If you do
not rescind and your application is accepted by management based on Work Force
Restructuring Plan criteria, you will be required to terminate your employment
(DATE) unless your management approves an alternate date. With prior management
approval, it may be possible to leave before the normal separation date or
extend beyond it. If interested, discuss this issue with your manager or your
Career Assistance Center (CAC) representative.
Attached is a VSPP Information Packet that includes information regarding
application and recision periods, all necessary forms, and a comparison of ISP
vs. VSPP benefits. Please review it carefully.
Option 3: YOU may terminate at any tune to accept other employment or for any
other reason. If you separate prior to the separation date determined by your
management, you will be considered a normal quit You will not receive your VSPP
or involuntary separation monies nor any of the associated Work Force
Restructuring benefit However, you am entitled to continue your medical
coverage wider the Consolidated Omnibus Budget Reconciliation Act (COBRA) if you
choose.
Please review your options carefully and consult with attorneys, accountants, or
financial advisors as necessary. Direct any questions you have to (NAME), (PHONE
NUMBER), in Work Force Restructuring. A final separation date will be provided
to you once you have determined your choice of options.
If you require further information about your possible involuntary separation or
associated benefits available to you, please contact (NAME), Work Force
Restructuring, at (PHONE NUMBER)- We appreciate your past service and
contributions the Site and regret this action may be necessary.
<PAGE>
DRAFT
(SELECTED DEPARTURE DATES VSPP LETTER - OPTION 2)
DATE:
TO: (EMPLOYEE)
FROM: (MANAGER)
SUBJECT: FY9X WORK FORCE RESTRUCTURING-XXX-???-9X
I would like to personally notify you that the Department Of Energy announced to
the Rocky Flats Environmental Technology Site (RFETS) a 120 Day Notice of
additional work force restructuring on (MONTH, DAY, YEAR). The announcement
indicated that up to (NUMBER) positions may be eliminated. Approval to offer a
Voluntary Separation Payment Program (VSPP) was also recently received.
A VSPP is being opened effective (MONTH, DAY) for all active, full time
employees at (COMPANY), RFETS who were hired on or before September 27, 1991.
You may also be eligible if you had less than a 30-day employment with another
DOE Nuclear Weapons facility and employment at the RFETS. If you were a
corporate transfer from another DOE nuclear weapons facility you May receive
some service credit. Contact your Human Resources department for further
information on these Work Force Restructuring benefits.
Selections for a future involuntary layoff, if one is required and approved,
will be determined by the Site's projected work requirements defined by the
Site's work force analysis. The number of employees to be involuntarily laid off
in order to attain the required reduction will be determined after the
completion of the VSPP.
Attached is a description of the VSPP, a summarization of voluntary versus
involuntary benefits a Payment Schedule, Application Form, commonly asked
questions and answers to them, information regarding continuation of health
benefits, and the General Release and Waiver Form which you will be required to
execute on your application date. Your agreement to be bound by the General
Release and Waiver Form is a DOE requirement for participation in this offering.
Please review it carefully with your financial advisor and attorney prior to
making your decision.
A major change has been implemented in this VSPP. It allows you to request a
particular separation date as a part of your application process from among a
number of predetermined future separation dates. Complete details are included
in the attached materials.
To assure that you received the best possible information on the upcoming work
force reduction we are taking the following actions. Managers were briefed the
week of (MONTH, DAY) and given information top resent to their employees.
Managers will hold "all-hands" meetings the week of (MONTH, DAY) to provide VSPP
information and to let you know the impact on your organization. Crossroads
articles and bulletin board postings will provide ongoing information. Also, the
Work Force Restructuring Department will hold a series of employee meetings
starting (MONTH, DAY) to give you an opportunity to ask questions you may have.
A meeting schedule is attached. Informational briefings on the VSPP and
available Career Assistance Center services have also been scheduled
<PAGE>
through the Career Assistance Center. The schedule of these briefings and the
telephone numbers to call to make a reservation are enclosed. Please plan on
attending to get all the information necessary to make an informed decision. You
are urged to consult with a financial advisor and your attorney before applying
for the VSPP.
The Onsite Career Assistance Center, Building T130J, is available to you to
provide services which may make your decision more clear. It has listings of
available jobs and continues to offer classes in interviewing techniques, job
search skills, resume writing, and a series of specialty classes dealing with
self esteem, and other work issues. Please call the center at extension 6050
for information or to arrange a meeting with an advisor if you desire.
VSPP SUMMARY
You are invited to review the enclosed information and decide if you would like
to apply. The program will be open until (MONTH, DAY, YEAR) and you will have
an opportunity to withdraw from the program during your 7 day recision period.
All withdrawals from the program will be final. You will not be able to change
your election before or after your recision period.
All active employees hired on or before September 27,1991 will be eligible to
apply for this VSPP- Employees who had prior service within the DOE Complex with
less than a 30-day break in employment may also be eligible. See your Human
Resources representative. Corporate transfers from other DOE nuclear defense
facilities may be given service credit. Employees eligible for retirement may
apply for the VSPP and retire concurrently based on our standard retirement plan
provisions. As in previous VSPPs, managers do have the authority to deny the
VSPP applications of those employees whose skills and abilities am required to
accomplish the Site mission.
Employees accepted for do VSPP will have a choice of a number of separation
dates but may separate from employment with the Site no later than (MONTH, DAY,
YEAR). Separation pay will be based on continuous Rocky Flats service from the
latest him date with the Kaiser Kill Team, or its based on the attached
schedule. Where an employee has separated from employment at the Site and been
rehired, the latest date of employment will prevail. This separation payment is
in lieu of any severance payment to which employees might have otherwise been
entitled. Employees will receive separation pay in a lump sum approximately two
weeks after their termination date.
BENEFITS HIGHLIGHTS
All salaried employees with four or more years of service who are currently
enrolled in the Rocky Flats Thrift Plan would be fully vested. Employees have a
variety of options available to them for these funds. Employees will be provided
a notice explaining their rights to make tax free rollover of company or
deferred funds. Other options include leaving the money in the Site Thrift Plan,
or receiving a payout of all monies. Please consult with your financial
advisor concerning the tax implications of your decision.
Employees who am eligible for and elect to take retirement will receive
insurance benefits as a regular retiree. Employees who are not eligible for
retirement benefits but who participate in the VSPP will be eligible for
continuation of medical benefits after separation, as set forth in the attached
guidelines.
<PAGE>
Outplacement services will be provided by the Offsite Career Assistance Center
2420 West 26 Avenue Building D, Suite 110, Denver Co. 80211-5302. Their phone
number is (303) 477-2036.
APPLICATION PROCESS
Employees electing to apply for the VSPP must complete the attached application,
obtain their manager's signature and submit the application in person to your
Human Resources department before close of business on (MONTH, DAY, YEAR). A
receipt will be given for each application.
Application may be withdrawn only during the employee's recision period. All
withdrawals will be final and must be submitted in person to your Human
Resources Department.
Please be aware that per Department of Energy guidelines you will not be able to
return to work at or in support of the Rocky Flats Technology Site with DOE or
any other contractor or subcontractor for one year unless you pay back a prorata
portion of the voluntary separation payment to DOE.
<PAGE>
DRAFT
(LARGE-SCALE VSPP LETTER - OPTION 3)
DATE:
TO: (EMPLOYEE)
FROM: (MANAGER)
SUBJECT: FY9X WORK FORCE REStRUCTURING-XXX-???-9X
I would like to personally notify you that the Department Of Energy announced to
the Rocky Flats Environmental Technology Site a 120 Day Notice of additional
work force restructuring on (MONTH, DAY, YEAR). The announcement indicated
that up to (NUMBER) positions may be eliminated. Approval to offer a Voluntary
Separation Payment Program (VSPP) was also recently received.
A Voluntary Separation Payment Program (VSPP) is being opened effective (MONTH,
DAY) for all active, full time employees at (COMPANY), Rocky Flats Environmental
Technology Site (RFETS) hired on or before September 27,1991. You may also be
eligible if You had less than a 30-day period between employment with another
DOE nuclear weapons facility and employment at the RFETS. If you were a
corporate transfer from another DOE nuclear weapons facility you may receive
some service credit. Contact your Human Resources department for further
information on these Work Force Restructuring benefits.
Selections for a future involuntary layoff, if one is required and approved,
will be determined by the Site's projected work requirements defined in the work
force analysis. The number of employees who might be involuntarily laid off in
order to attain the required reduction will be determined after the completion
of the VSPP.
Attached is a description of the VSPP, a summary of voluntary versus
involuntary benefits, a Payment Schedule, Application Form, commonly asked
questions and answers to them, information regarding continuation of health
benefits, and the General Release and Waiver Form which you will be required to
execute on your separation date. Your agreement to be bound by the General
Release and Waiver Form is a DOE requirement for participation in this offering.
Please review it carefully with your financial advisor and attorney prior to
making your decision.
To assure that you receive the best possible information available on the
upcoming work force reduction we are taking the following actions. Managers were
briefed the week of (MONTH, DAY) and given information to present to their
employees. Managers will hold "all-hands" meetings the we& of (MONTH, DAY) to
provide VSPP information and to let you know the impact on your organization.
Crossroads articles and bulletin board postings will provide ongoing
information. Also, the Work Force Restructuring Department win hold a series of
employee meetings starting (MONTH, DAY) to give you an opportunity to ask
questions you may have. A meeting schedule is attached. Informational briefings
on the VSPP and available Career Assistance Center services have been scheduled
through the Career Assistance Center.
<PAGE>
The schedule of these briefings and the telephone numbers to call to make a
reservation are enclosed. Please plan on attending to get all the information,
necessary to make an informed decision. You are urged to consult with a
financial advisor and your attorney before applying for the VSPP. It is a very
important life and career decision.
The Onsite Career Assistance Center, Building T130J, is also available to you to
provide services which may make your decision more clear. It has listings of
available jobs and continues to Offer classes in interviewing techniques, job
search skills, resume writing, and a series of specialty classes dealing with
self esteem, and other worker issues. Please call the center at extension 6050
for information or to arrange a meeting with an advisor if you desire.
VSPP SUMMARY
All active employees hired an or before September 27,1991 are eligible to apply
for this VSPP. Employees who had prior service with the DOE Complex with less
than a 30-day break in employment may also be eligible. See your Human Resources
representative. Corporate transfers from other DOE nuclear defense facilities
may be given service credit. Employees eligible for retirement may apply for the
VSPP and retire concurrently based on our standard retirement plan provisions.
Employees applying for this VSPP will receive the benefits described in the
Rocky Flats Environmental Technology Site Work Force Restructuring Plan (WFRP)
and summarized in the attached package of information. As in previous VSPPs,
managers do have the authority to deny the VSPP applications of employees whose
skills and abilities are required to accomplish the Site mission.
You are invited to review the enclosed information and decide if you would like
to apply. The program will be open until (MONTH, DAY, YEAR) and you will have an
opportunity to withdraw from the program during your 7-day recision period. All
withdrawals from the program will be final. You will not be able to change your
election before or after your recision period. With prior management approval it
may be possible to leave before the normal separation due or extend beyond it.
If interested, discuss this issue with your manager and/or your Career
Assistance Center (CAC) representative.
Employees accepted for the VSPP will separate from employment with the Site no
later than (MONTH, DAY, YEAR). Separation pay will be based on continuous Rocky
Flats service from the latest hire date with the Kaiser-Hill Team, or us
predecessors, based on the attached schedule. Where an employee has separated
from employment at the Site and been rehired, the latest date of reemployment
will prevail. This separation payment is in lieu of any severance payment to
which employees might have otherwise been entitled. Employees will receive
separation pay in a lump sum approximately two weeks after their separation
date.
BENEFITS HIGHLIGHTS
All salaried employees with four or more years of service who are currently
enrolled in the Rocky Flats Thrift Plan would be fully vested. Employees have a
variety of options available to them for these funds. Employees will be provided
with a notice explaining their rights to make tax free rollover of company or
deferred funds. Other options include leaving the money in the funds in which it
is invested or receiving a payout of all monies. Please consult with your
financial advisor concerning the tax implications of your decision.
<PAGE>
Employees who are eligible for and elect to take retirement will receive
insurance benefits as a regular retiree. Employees who am not eligible for
retirement benefits but participate in the VSPP will be eligible for
continuation of medical benefits after separation, as set forth in the attached
guidelines.
Outplacements services will be provided by The Offsite Career Assistance Center,
2420 West 26 Avenue Building D, Suite 110, Denver Co. 80211-5302. Their phone
number is (303) 477-2036.
APPLICATION PROCESS
Employees electing to apply for the VSPP must complete the attached application,
obtain their manager's signature and submit the application in person to their
Human Resources department before close of business on (MONTH, DAY, YEAR). A
receipt will be given for each application.
Applications may be withdrawn only during the employee's recision period. All
withdrawals will be final and must be submitted in person to the employee's
Human Resources department.
Please be aware that per Department of Energy guidelines, you will not be able
to return to work at or in support of the Rocky Flats Environmental Technology
Site with DOE or any other contractor or subcontractor for one year unless you
pay back a prorata portion of the voluntary separation payment to DOE.
<PAGE>
APPENDIX 4
SEPARATED EMPLOYEE HEALTH INSURANCE
GUIDELINES
-19-
<PAGE>
APPENDIX 4
Rocky Flats Environmental Technology Site
Separated Employee Health Insurance Guidelines
Kaiser-Hill Team employees voluntarily separated (who are not retiring) may be
eligible for healthcare coverage continuation as follows:
MEDICAL BENEFITS
- ----------------
Separating employees have the following 3 options regarding medical benefits.
1. DOE Displaced Workers Health Benefit (DWHB) Program
- ------------------------------------------------------
o Provides the same medical coverage you were enrolled in while you were an
active employee.
o Requires submission of the completed Continuation of Medical Coverage
election/Enrollment form within 30 days of receiving such.
o Requires submission of monthly premium and Statement of Certification/Payment
Coupon.
o First Twelve Months: Employee pays the active employee premium rate during the
first year following termination of employment. Rates are subject to change
annually beginning January 1. Employee premiums along with the Statement of
Certification/Payment coupon, are to be submitted monthly by personal check to
Mutual of Omaha. Employees will be sent invoices by Mutual of Omaha. The
effective date for extended benefits coverage under DWHB will be the first day
of the month following termination.
o Second Twelve Months: Employee pays half of the Consolidated Omnibus Budget
Reconciliation Act (COBRA) rate the second year (13th mouth through 24th
month, following termination of employment). The COBRA rate is 102 percent of
the total premium cost of the plan (including employer and employee shares).
COBRA rates are reviewed and revised each calendar year.
o Twenty-Fifth Month and After: Employee pays full COBRA rate during the third
and subsequent years (starting the 25th month following termination of
employment). COBRA rates are reviewed and revised each year.
If the separated employee's premiums and Statement of Certification/Payment
Coupon are not received by Mutual of Omaha by their due dates, coverage will
terminate effective to the last premium payment period and cannot later be
reinstated.
Coordination of benefits does not apply since employees and their dependents are
not eligible for extended medical coverage under DWHB if they are, or become,
eligible for group coverage elsewhere (Including through Medicare).
You and your dependents at no longer eligible for extended medical coverage
under DWHB when you become eligible for group medical benefits from another
plan. However coverage under DWHB can continue during a required waiting period
(if applicable) for now coverage to begin since you are not yet eligible for
benefits from another plan. For example, if you take a new job that offers
medical benefits that become effective 30 days after your new job begins, you
can continue your DWHB medical coverage during the 30-day wait.
<PAGE>
APPENDIX 4
If you are eligible for group coverage from another employer, but that employees
coverage contains a pre-existing condition limitation or exclusion, you will
continue to receive coverage for the pre-existing condition under the extended
medical coverage under DWHB until the preexisting condition limitation or
exclusion period is satisfied. Claims should be filed with the other employer's
insurance plan first. Then an Explanation of Benefits from the other employer's
plan (showing the benefits coverage limitation or exclusion for the preexisting
condition) should be filed with your medical carrier.
Eligible participants include only those dependents who were covered under your
medical plan immediately prior to termination of active employee coverage.
Dependents can be covered without the employee being covered, if the dependent
is not eligible for coverage under another plan. For example, if a terminating
employee is age 65 (or older) and eligible for Medicare (and therefore not
eligible for extended medical coverage und DWHB) and the employee has a spouse
who is age 62 (who is not eligible for coverage under another employer or
through Medicare), then only the spouse is eligible for coverage under DWHB and
the single person rate would be applied.
You can add or delete dependents to your extended medical coverage under DWHB
with a "qualifying event" provided you notify Mutual of Omaha of your qualifying
event/request for change no more that 31 days after the qualifying event occurs.
Informmation about typical qualifying events is contained in the Rocky Flats
Technology Site (RFETS) Summary Plan Description.
Dependents who experience loss of eligibility for extended medical beneft
coverage under DWHB due to a "subsequent qualifying event" (divorce, death of
spouse, children no longer meeting the eligibility provisions of the plan) are
eligible to continue extended medical benefits coverage under COBRA for a
maximum of 36 months from the loss of active employee coverage/termination of
employment provided all of the following are met: (1) they were covered by the
medical benefits plan immediately prior to termination of active employee
coverage, (2) they were continuously covered und extended medical coverap under
DWHB, (3) the subsequent event occurred no more than 18 months from the loss of
active employee coverage/termination of employment, and (4) they provide Mutual
of Omaha formal notification of the qualifying event/request for change no more
than 60 days after the occurrence of the subsequent qualifying event.
2. Normal COBRA Benefits
---------------------
. COBRA continuation coverage must be elected no more than 60 days after
termination of employment. Enrollment will be in the same medical choice in
which you were enrolled just prior to separation from employment with the
Kaiser-Hill Team. The effective date of continuation of coverage will be the
date following the last pay period after separation (which is the date that
insurance coverage as an active employee terminates).
. The separated employee pays full COBRA rate monthly. Employees will be sent
invoices by Mutual of Omaha.
. If coverage is not elected within 60 days after termination of employment,
and/or applicable premiums are not received by their due dates, coverage will
terminate effiective at the end of the last premium payment period and cannot
later be reinstated.
. When continuing medical coverage through COBRA, you may add or delete
dependents only upon the occurrence of a "qualifying event." You may change
your coverage option to become effective at the beginning of the next calendar
year.
<PAGE>
APPENDIX 4
o COBRA rates are reviewed and revised each calendar year.
3. No Coverage
- --------------
o Coverage terminates for claims incurred after termination (as of the last date
of the pay period) without continued participation by payment of employee
premiums under extended medical coverage under DWHB or by electing normal
COBRA benefits.
DENTAL BENEFITS
- ---------------
Normal COBRA Benefits
- ---------------------
o Dental coverage my only be continued by electing COBRA continuation coverage
for dental benefits no more than 60 days after termination of employment.
Enrollment will be in the same dental plan which you were enrolled just prior
to separation from RFETS. The effective date of COBRA continuation coverage
will be the date following the last pay period after separation (which is the
date that insurance coverage as an active employee terminates).
o The separated employee pays the full COBRA rate for dental coverage monthly by
personal check. Employees will be sent invoices by Mutual of Omaha, (Note:
full, monthly premium payment will be required rather than a pro-rata amount
for mid-month effective dates). Up to 18 months coverage is available as long
as premium payments continue to be made to Mutual of Omaha.
o If coverage is not elected within 60 days after termination of employment
and/or premiums are not received by their due dates, coverage will terminate
effective at the end of the last premiums payment period and cannot later be
reinstated.
o When continuing dental coverage through COBRA, you may add or delete
dependents only upon the occurrence of a "qualifying event." Further
information about COBRA is contained in the RFETS Summary Plan Descriptions.
o COBRA rates are reviewed and revised each calendar year.
"Dual Couples" (Both Spouses Work for the Kaiser-Hill Team)
- -----------------------------------------------------------
Loss of your employment or your spouse's employment is considered a "qualifying
event" for adding or deleting dependents from coverage. Therefore, an employee
who, separates from the Kaiser-Hill Team, whose spouse also works for the
Kaiser-Hill Team and is eligible for coverage, can be covered by their actively
employed Kaiser-Hill Team spouse. The active employee will need to contact
Benefits Administration at Building 452 or by telephoning 966-2856 to obtain the
necessary forms to add dependents (children and/or spouse). coverage must be
elected within 31 days of the "qualifying event" in which case the coverage
will be effective on the day immediately following the pay period in which the
employee separates from RFETS.
<PAGE>
APPENDIX 5
RELOCATION GUIDELINES
-20-
<PAGE>
APPENDIX 5
Rocky Flats Environmental Technology Site
Relocation Guidelines
Eligible involuntarily separated employees, as defined in the Work Force
Planning Section of the Work Force Restructuring Plan 3, who move 50 miles or
more from the Site and their current residence to accept employment within the
DOE Complex may receive a maximum $4,000 reimbursement. This reimbursement only
covers documented actual allowable relocation expenses incurred within 12 months
from the date of separation. Only expenses or receipts from established
businesses will be accepted.
Eligibility Requirements for Separated Employees:
- -------------------------------------------------
o Must have a confirmed full time job and start date before moving.
o The new employer does not provide moving expense reimbursement in the normal
course of business.
o If starting their own business, must have a business license established
prior to moving, and other documentation as required.
o Must be employed by new company for a minimum of two weeks.
o Receipts must reflect that the move occurred either after their start date or
within 14 calendar days prior to their start date.
o Employees traveling a minimum of 350 miles per day and not less than 150
miles on the last day may be eligible for meals and lodging en route.
o Employees moving a minimum of 100 miles from the Rocky Flats Site AND their
current residence may be eligible for temporary living expenses at their
destination.
o Employees who resign from the company under normal separation policies (other
than this Involuntary Separation Program) are not eligible for relocation
benefits.
Reimbursable Relocation Expenses
- --------------------------------
o Mileage or towing charges for one (1) vehicle for individuals with single
status and two (2) vehicles for individuals with family status. Direct
mileage will be determined by the Rand McNally Guide.
o The cost of packing, unpacking, and transportation of household goods and
personal effects, not to exceed 15,000 lbs., plus up to 30 days of storage at
an established storage business at your destination.
o Receipts are required from an established business for reimbursement of labor
charges and moving supplies.
o Up to five (5) days of temporary living expenses at your destination (meals
and lodging at an established business).
Taxes
- -----
Changes in the tax law, effective January 1, 1994, make some relocation
reimbursements taxable income. Taxes will be withheld on these amounts at the
rate of 40.65% (Federal Income Tax 28%, Colorado State Income Tax 5%, FICA 6.20%
and Medicare 1.45%). Consult your tax advisor.
NOTE: THE WORK FORCE RESTRUCTURING RELOCATION GUIDELINES FURTHER DETAIL THIS
PROGRAM. THEY ARE AVAILABLE AT THE ON-SITE CAREER ASSISTANCE CENTER
<PAGE>
APPENDIX 6
SEPARATED EMPLOYEE TRAINING GUIDELINES
-21-
<PAGE>
APPENDIX 6
Rocky Flats Environmental Technology Site
Separated Employee Training Guidelines
Education Assistance
- --------------------
The education assistance training program helps voluntary and involuntarily
separated employees prepare for positions that are available in the Denver
Denver and Metropolitan Areas. Extension Of education assistance for 36 months
past the separation date continues to be approved for those who are
involuntarily or voluntarily separated to help in their training needs.
Separated employees must apply for this benefit during the 12 months following
their separation. This program ends when the employee meets the $10,000 maximum
over a 24-month period or when his or her plan of study is completed, whichever
comes first. The funding for this program continues to be dependent upon budget
availability.
Self-Employment
- ---------------
Another alternative for separated employees is starting their own business using
the Rocky Flats Local Impacts Initiative Entrepreneur Resource Program or by
taking courses in operating small businesses from local community colleges.
These courses help prepare them to either begin their own business or buy an
existing business. The Small Business Administration has supported these efforts
by providing information and, where possible, financial support. Educational
advise on curriculum availability, educational program costs, and credit
transferability will be provided by the educational institution representatives.
These representatives will help to develop an appropriate individual plan of
studies.
Outplacement Apprenticeship Program
- -----------------------------------
A third alternative is subsidizing the worker's pay for his or her training
period to pay for approved on-the-job training with a new employer. This
training period will not exceed one year and a maximum of one-third (up to $4.00
per hour) of his or her pay with do new employer. This program shall have no
more than a maximum of 10 participants at any given time.
<PAGE>
APPENDIX 7
STAKEHOLDER COMMENTS AND PUBLIC MEETINGS
-22-
<PAGE>
COMMENT PERIOD
- --------------
A public comment period was opened and advertised December 6,1996 through
January 10, 1997.
BRIEFINGS AND INFORMATIONAL MEETINGS
- ------------------------------------
December 10, 1996 Briefing to the Rocky Flats Local Impacts
Initiative Worker Impacts Committee.
Sponsored by DOE
December 11, 1996 Employee informational meeting held on-site.
Sponsored by DOE.
December 12, 1996 Employee informational meeting held on-site.
Sponsored by DOE.
December 16, 1996 Two Employee informational meetings held on-site site.
Sponsored by DOE.
December 17, 1996 Employee informational meeting held on-site.
Sponsored by DOE.
December 18, 1996 Employee informational meeting held on-site.
Sponsored by DOE.
December 18, 1996 Briefing to Congressman David Skaggs' Office.
SUMMARY OF STAKEHOLDER COMMENTS
- -------------------------------
# COMMENTS SUBJECT
---------- -------
55 VSPP PAYMENT SCHEDULE - All 55 comments
requested that no reduction be made in the VSPP
payment schedule.
31 ELIGIBILITY FOR SECTION 3161 BENEFITS -
The majority of the comments requested that
individuals hired after September 27, 1991,
continue to be eligible for all Section 3161
benefits.
29 CREDITING SERVICE FROM OTHER DOE
DEFENSE NUCLEAR FACILITIES All 29 comments
requested that prior service at other
DOE Defense Nuclear Facilities be recognized
for the purpose of eligibility for Section 3161
benefits.
17 RELOCATION ASSISTANCE - The comments requested
that both voluntarily and involuntarily
employees be eligible for relocation
assistance as allowed in to approved 1995 Work
Force Restructuring Plan.
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
PART I - THE SCHEDULE
SECTION D
PACKAGING AND MARKING
Table of Contents
Section Number Clause Title
D.1 PACKAGING
D.2 MARKING
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
SECTION D
PACKAGING AND MARKING
D.1 PACKAGING
Preservation, packaging, and packing for shipment or mailing of all work
delivered hereunder shall be in accordance with good commercial practice and
adequate to insure acceptance by common carrier and safe transportation at the
most economical rate(s).
D.2 MARKING
Each package, report or other deliverable shall be accompanied by a
letter or other document which:
(a) Identifies the contract by number under which the item is being
delivered.
(b) Identifies the deliverable Item Number or Report Requirement that
requires the delivered item(s).
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
This page intentionally left blank.
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
PART I - THE SCHEDULE
SECTION E
INSPECTION AND ACCEPTANCE
Table of Contents
Section Number Clause Title
E.1 INSPECTION OF SERVICES - COST REIMBURSEMENT (APR
1984) FAR 52.246-05
E.2 ACCEPTANCE
E.3 INSPECTION
E.4 CONTRACTOR QUALITY CONTROL
E.5 GOVERNMENT QUALITY ASSURANCE
E.6 TECHNICAL EXHIBITS
GOVERNMENT QUALITY ASSURANCE/SURVEILLANCE PLAN
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
SECTION E
INSPECTION AND ACCEPTANCE
E.1 FAR 52.246-05 INSPECTION OF SERVICES - COST-REIMBURSEMENT
(APR 1984)
E.1.1 Definitions. "Services," as used in this clause, includes services
performed, workmanship, and material furnished or used in performing
services.
E.1.2 The Contractor shall provide and maintain an inspection system
acceptable to the Government covering the services under this contract.
Complete records of all inspection work performed by the Contractor
shall be maintained and made available to the Government during
contract performance and for as long afterwards as the contract
requires.
E.1.3 The Government has the right to inspect and test all services called
for by the contract, to the extent practicable at all places and times
during the term of the contract. The Government shall perform
inspections and tests in a manner that will not unduly delay the work.
E.1.4 If any of the services performed do not conform to contract
requirements, the Government may require the Contractor to perform the
services again in conformity with contract requirements for no
additional fee. When the defects in services cannot be corrected by
re-performance, the Government may (1) require the Contractor to take
necessary action to ensure that future performance conforms to contract
requirements, and (2) reduce any fee payable under the contract to
reflect the reduced value of the services performed.
E.1.5 If the Contractor fails to promptly perform the services again or take
the action necessary to ensure future performance in conformity with
contract requirements, the Government may (1) by contract or otherwise,
perform the services and reduce any fee payable by an amount that is
equitable under the circumstances, or (2) terminate the contract for
default.
E.2 ACCEPTANCE
Acceptance of all work and effort under this contract (including
"Reporting Requirements," if any) shall be accomplished by the Contracting
Officer, or any duly designated representative.
E.3 INSPECTION
Inspection of all items under this contract shall be accomplished by
the DOE Contracting Officer's Representative (COR) or any other duly authorized
Government representative in accordance with Sections H and I of this contract.
E.4 CONTRACTOR QUALITY CONTROL
In accordance with the "FAR 52.246-05, INSPECTION OF SERVICES - COST
REIMBURSEMENT" Clause, the Contractor shall establish and maintain an inspection
system acceptable to the Government, to assure the requirements of the contract
are provided as specified. This system shall:
(1) Identify deficiencies in the quality of services performed
throughout the entire scope of the contract and implement
timely corrective action before the level of performance
becomes unsatisfactory.
(2) Be implemented on the contract start date.
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
E.5 GOVERNMENT QUALITY ASSURANCE/SURVEILLANCE PLAN
(a) The Government Quality Assurance/Surveillance Plan identifies specific
services from the Statement of Work for which compliance with the
identified standards is required. The Surveillance Plan identifies
standards by which the Contractor is expected to perform in a
continuous satisfactory manner. The Contracting Officer may impose a
Category 3 fee adjustment in accordance with section B.6 of this
contract if the Contractor fails to correct DOE identified
non-compliance with the Standard in the timeframe specified by the
Contracting Officer, or if there are three non-compliance activities
with a specific standard within any given quarter. The Contractor
shall not be relieved of full performance of the services hereunder and
may be terminated for default based upon inadequate performance of
services, even if a penalty has been imposed.
(b) The services rendered under this contract are subject to Government
inspection both during the Contractor's operations and after completion
of the tasks. After each inspection, the Contractor will be advised of
any unsatisfactory condition(s) for which they are responsible. The
Contractor shall correct such deficiencies promptly and, by written
report to the Contracting Officer, shall address corrective/preventive
actions taken.
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
TECHNICAL EXHIBIT
GOVERNMENT QUALITY ASSURANCE/SURVEILLANCE PLAN
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
REQUIRED SERVICE SOW REF. NO. STANDARD SURVEILLANCE METHOD
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SNM Shipments Sec. I, A. & B. o All SNM shipped Periodic
in a DOE approved assessments, monthly
shipping container observations, and
o All DOT assessment of each
requirements shipping manifest
satisfactorily met.
o All requirements of
DOE Orders 5610.12,
5610.14 and 460.1A
satisfactorily met.
- ---------------------------------------------------------------------------------------------------
Waste Shipments Sec. III, A-F o All wastes Periodic
shipped in either DOE assessments, monthly
or DOT approved observations, and
shipping containers assessment of each
o All DOT shipping manifest
requirements
satisfactorily met.
o Requirements of DOE
Order 435.1
satisfactorily met.
o All disposal site
waste acceptance
criteria
satisfactorily met.
- ---------------------------------------------------------------------------------------------------
SNM Building Deactivation Sec, II, A Safe and Stable condition Periodic assessments
according to the Project and monthly
Execution Plan (PEP) observations
where vaults are empty,
residues and all SNM is
removed, MAA is closed,
chemicals and excess
equipment is removed and
process systems are
drained of SNM solutions.
- ---------------------------------------------------------------------------------------------------
Facility Decommissioning Sec, II, A All end state Periodic assessments
requirements of the and monthly
approved DOP have been observations
met. Holdup has been
reduced to a specified
manageable level,
equipment and gloveboxes
have been removed and
packaged for disposal and
the
</TABLE>
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
<TABLE>
<CAPTION>
<S> <C> <C> <C>
facility has been
decontaminated and
determined to be at the
required specified level.
- ---------------------------------------------------------------------------------------------------
Facility Demolition Sec, II. A All end state criteria of Periodic assessments
the approved DOP have and monthly
been met including observations
disposition of building
rubble, and protection of
any known areas of
contamination.
- ---------------------------------------------------------------------------------------------------
Safeguard and Security Program Sec, V, C. All requirements of the Periodic Surveys,
o Program Management, SSSP following DOE Orders are periodic
o Personnel Security satisfactorily met: DOE assessments, and
o Protection Operations Orders 470.1, 470.2, monthly
o Materials Control and 471.1, 471.2A, 472.1B, observations
Accountability 473.2-1, 474.1-2,
o Information Security 5632.1C, 5639.8A
- ---------------------------------------------------------------------------------------------------
Fire Protection Sec. V, P All requirements of DOE Periodic assessments
Order 420.1and the and
monthly National Fire
Protection observations
Association Standards
satisfactorily met.
- ---------------------------------------------------------------------------------------------------
Occupational Safety Sec. V, O All requirements in DOE Periodic assessments
Orders 420.1, 440.1A and
and monthly the
Occupational Health
observations and Safety
requirements
satisfactorily met.
- ---------------------------------------------------------------------------------------------------
Nuclear Criticality Safety Sec. V. M All requirements of DOE Periodic assessments
Order 420.1 and ANSI/ANS8 and monthly
satisfactorily met. observations
- ---------------------------------------------------------------------------------------------------
Radiological Protection Sec. V, T All requirements of 10 Periodic assessments
CFR 835 satisfactorily and monthly
met. observations
- ---------------------------------------------------------------------------------------------------
Nuclear Safety Sec. V, N All requirements of DOE Periodic assessments
Orders 420.1, 425.1, and
monthly 5480.21, 5480.22,
and observations 5480.23
satisfactorily met.
- ---------------------------------------------------------------------------------------------------
Environmental Monitoring Sec. V, A All requirements of Periodic assessments
Resource Conservation and and monthly
Recovery Act (RCRA); the observations
Comprehensive
Environmental
</TABLE>
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Response,
Compensation, and
Liability Act (CERCLA);
the Clean Air Act; the
Clean Water Act; the
Colorado Water Quality
Control Commission
(CWQCC) standards;
natural resource
management regulations,
and RFCA satisfactorily
met.
- ---------------------------------------------------------------------------------------------------
Environmental Remediation Section IV,A All requirements of Periodic assessments
Resource Conservation and and monthly
Recovery Act (RCRA); the observations
Comprehensive
Environmental Response,
Compensation, and
Liability Act (CERCLA);
the Clean Air Act; the
Clean Water Act; the
Colorado Water Quality
Control Commission
(CWQCC) standards;
natural resource
management regulations,
and RFCA satisfactorily
met.
- ---------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
PART I- THE SCHEDULE
SECTION F
DELIVERIES OR
PERFORMANCE
Table of Contents
Section Number Clause Title
F.1 PRINCIPAL PLACE OF PERFORMANCE
F.2 DELIVERY
F.3 PROJECT COMPLETION
Section F - Page 1
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
SECTION F
DELIVERIES OR PERFORMANCE
F.1 PRINCIPAL PLACE OF PERFORMANCE
The principal place of performance of this contract shall be within the
site outlines of the Rocky Flats Environmental Technology Site, near Golden,
Colorado, and such other facilities as may be leased or acquired from time to
time. All deliverable items shall be delivered to the Contracting Officer or
designee, unless otherwise specified.
F.2 DELIVERY
(a) Performance will commence with the effective date of this contract on
February 1, 2000. The target date for physical completion of the contract
is December 15, 2006.
(b) "Physical completion of the contract" as that term is used in Clause I.23,
Incentive Fee, is defined in Clause C. 1.2.
F.3 PROJECT COMPLETION
(a) Release of Withholdings. When the Contractor completes elements (1), (2),
(3) and (4) of physical completion as defined in Clause C. 1.2, the
Contracting Officer will project the Contractors expected fee earnings and
release withheld fees accordingly, but will retain a withholding of at
least $5,000,000 until physical completion as defined in Clause C. 1.2.
The release of withholdings by the Contracting Officer, at this point,
does not change the conditional nature of these fee payments. For
remaining conditional incentive fee payments, the Contracting Officer will
continue to withhold fees in accordance with Clause B.6.
(b) Declaration of Physical Completion. Upon physical completion of contract
as set forth in Clause C. 1.2, the Contractor may prepare a letter
declaring that the Rocky Flats Closure Project has been physically
completed. If the Contractor submits such a letter, the Government will
have one business day to decide whether the Contractor's declaration is
reasonable, after which the Government will, within ninety (90) calendar
days accept the project as complete or provide the Contractor with a final
definitive punch list of material deficiencies which preclude the
Government from accepting the physical completion of the contract. During
the acceptance period, the actual completion date shall be suspended and
fixed as of the date Contractor declares project completion. The
Contractor shall complete the identified deficiencies, the costs of which
shall be considered unallowable, during the nine (9) months immediately
succeeding the receipt of the Government's notification. During this
period, the actual completion date shall remain fixed while the Contractor
completes the remaining open deficiencies.
Upon completion of punch list material deficiencies, the Contractor will
submit a Final Declaration Letter for physical completion of the contract.
The Contractor's final Declaration Letter and the Contractor's
responsibility for completion of any material deficiencies shall be
limited only to completion of the Government's final definitive punch list
of material deficiencies established above, inasmuch as all other work was
previously accepted by the Government. In the event the Government
determines that a portion of its final punch list of material deficiencies
is not completed, the Contractor will be notified accordingly within
thirty (30) calendar days of receipt of the Contractor's Final Declaration
Letter. These costs shall also be considered unallowable. In this event,
and for any future incomplete final punch list work identified by the
Government, the Contractor shall proceed diligently with the completion of
the work and, upon completion, all withholding shall be released to the
Contractor except the required retainage amount set forth by Clause I.23.
Section F - Page 2
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
(c) Withheld Fee Funding and Payment.
(1) The Contractor will request a reserve of appropriate budget ninety
(90) days prior to the start of the next fiscal year or,
alternatively, the Contracting Officer will confirm in writing to the
Contractor that sufficient funds am available in the current fiscal
year to fund all or a portion of the Contractor's withheld fee.
Withheld fee shall be paid to the Contractor in the next quarter
subject to the provisions of (a) above.
(2) Upon Government acceptance of physical completion of the contact, all
remaining withholdings shall be paid to the Contractor within thirty
(30) calendar days of receipt of the Contractor's invoice.
(d) Upon full acceptance of physical completion of the contract the Government
will pay the Contractor as set forth by Clauses F. 3(c) and B.7.
(e) Contract Close-out. After the Contractor's declaration of physical
completion of the contract, the Government and Contractor shall establish
a separate plan including budget and schedule for close-out of the
contract. The Contract Close-out Plan will include all remaining
administrative matters necessary to close out the contract, including but
not limited to, resolution of remaining and open litigation, audit of
indirect costs, remaining records disposition required by the Government
ongoing monitoring and stewardship costs or any other activities required
by Clause I.22, Allowable Cost and Payment, to close-out the contract. As
set forth in Clause B.8, the cost, schedule and budget established for
contract close out activities shall not be included in Target Cost or
Target Schedule.
Section F - Page 3
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
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Section F - Page 4
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-OORF01904
SECTION J
ATTACHMENT A
PERFORMANCE GUARANTEES
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-OORF01904
PERFORMANCE AGREEMENT
---------------------
For value received, and in consideration of, and in order to induce the
United States (the Government) to enter into Contract DE-AC34-OORF01904 for the
Rocky Flats Closure Contract, (the Contract) dated, 1/24/00 by and between the
Government and Kaiser-Hill Company, L.L.C. (Contractor), the undersigned, Kaiser
Group International, Inc. (Guarantor), a corporation incorporated in the State
of Delaware, with its principal place of business at: 9300 Lee Highway, Fairfax,
Virginia, hereby unconditionally guarantees to the Government (a) The full and
prompt payment and performance of all obligations, accrued and executory, which
Contractor presently or hereafter may have to the Government under the Contract,
and (b) the full and prompt payment and performance by Contractor of all other
obligations and liabilities or the Contractor to the Government, fixed or
contingent, due or to become due, direct or indirect, now existing or hereafter
and howsoever arising or incurred under the Contract, and Guarantor further
agrees to indemnify the Government against any losses the Government may sustain
and expenses it may incur as a result of the enforcement by the Government of
any of its rights and remedies under the Contract, in the event of a default by
Contractor thereunder, and/or as a result of the enforcement by the Government
of any of its rights against Guarantor hereunder.
Guarantor has read and consents to the signing of the Contract. Guarantor
further agrees that Contractor shall have the full right, without any notice to
or consent from Guarantor, to make any and all modifications or amendments to
the Contract without affecting, impairing, or discharging, in whole or in part,
the liability of Guarantor hereunder.
Guarantor hereby expressly waives all rights and defenses which might
constitute a legal or equitable discharge of a surety or guarantor. and agrees
that this Performance Guarantee Agreement shall be valid and unconditionally
binding upon Guarantor regardless of (i) any acquisition, (ii) the
reorganization, merger, or consolidation of Contractor into or with another
entity corporate or otherwise, or the liquidation or dissolution of Contractor,
or the sale or other disposition of all or substantially all of the capital
stock, business or assets of Contractor to any other person or party, or (iii)
the enforcement or judgment or the institution of any bankruptcy,
reorganization, insolvency, debt agreement, or receivership proceedings by or
against Contractor, or adjudication of Contractor as a bankrupt, or (iv) the
assertion by the Government against Contractor of any of the Government's rights
and remedies provided for under the Contract, including any modifications or
amendments thereto, or under any other document(s) of instrument(s) executed by
Contractor, or existing in the Governments favor in Law, equity, or bankruptcy.
Guarantor further agrees that its liability under this Performance Guarantee
Agreement shall be continuing, absolute, primary, and direct on itself, any
successors or assigns, and that the Government shall not be required to pursue
any right or remedy it may have against Contractor or other Guarantors under the
Contract. or any modifications or amendments thereto, or any other document(s)
or instrument(s) executed by Contractor, or otherwise. Guarantor affirms that
the Government shall not be required to first commence any action or obtain any
judgment against Contractor before enforcing this Performance Guarantee
Agreement against Guarantor. and that Guarantor will. upon demand, pay the
Government any amount, the payment of which is guaranteed hereunder and law
payment of which by Contractor is in default under the Contract or under any
other document(s) or instrument(s) executed by Contractor as aforesaid, and that
Guarantor will upon demand, perform all other obligations of Contractor, the
performance of which by Contractor is guaranteed hereunder.
Notwithstanding anything in this Performance Guarantee Agreement, the
Guarantor's obligations for performance of the contract hereunder shall not be
any greater than those of the Contractor, and the rights and defenses available
to the Contractor, and specifically related to those rights and defenses arising
out of matters of Contract performance, shall also be available to
1
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Rocky Flats Closure Contract No. DE-AC34-OORF01904
the Guarantor in respect of any claim made against the Guarantor upon its
assuming its responsibilities under the Contract.
Guarantor agrees to assure that it shall cause this Performance Guarantee
Agreement to be unconditionally binding upon any successor(s) or assigns to its
interests regardless of (i) any acquisition, (ii) the reorganization, merger, or
consolidation of Guarantor into or with another entity corporate or otherwise,
or the liquidation or dissolution of Guarantor, or the sale or other disposition
of all or substantially all of the capital stock, business, or men of Guarantor
to any other person or party, or (iii) the enforcement of judgment or the
institution of any bankruptcy, reorganization, insolvency, debt agreement, or
receivership proceedings by or against Guarantor, or adjudication of Guarantor
as a bankrupt.
Guarantor further warrants and represents to the Government that the
execution and delivery of this Performance Guarantee Agreement is not in
contravention of Guarantor's Articles or organization, Charter, by-laws, and
applicable law, that the execution and delivery of this Performance Guarantee
Agreement, and the performance thereof has been duly authorized by the
Guarantor's Board of Directors, Trustees, or any other management board which is
required to participate in such decisions; and that the execution, delivery, and
performance of this Performance Guarantee Agreement will not result in a breach
of, or constitute a default under, any loan agreement indenture debt judgment or
contract to which Guarantor is a party or by or under which it is bound.
Notwithstanding any other provisions of this Performance Guarantee
Agreement, this Performance Guarantee Agreement shall expire upon the final
payment at Close out of the Contract
No express or implied provision, warranty, representation or term of this
Performance Guarantee Agreement is intended, or is to be construed. to confer
upon any third person(s) any rights or remedies whatsoever, except as expressly
provided in this Performance Guarantee Agreement.
Interpretation of this Performance Guarantee Agreement shall be subject to
Federal law.
In witness thereof. Guarantor has caused this Performance Guarantee
Agreement to be executed by its duly authorized officer, and its corporate seal
to be affixed hereto on 01/12/00
--------
Date
KAISER GROUP INTERNATIONAL, INC.
By: /s/
-----------------------------
Name
01/12/00
-----------------------------
Date
ATTESTATION INCLUDING APPLICATION
OF SEAL BY AN OFFICIAL OF
GUARANTOR AUTHORIZED TO AFFIX
CORPORATE SEAL
2
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-OORF01904
PERFORMANCE GUARANTEE AGREEMENT
-------------------------------
For value received, and in consideration of, and in order to induce the
United States (the Government) to enter into Contract DE-AC34-OORF01904 for the
Rocky Flats Closure Contract (the Contract) dated, 1/24/00 by and between the
Government and Kaiser-Hill Company, L.L.C. (Contractor), the undersigned, CH2M
Hill Companies, LTD. (Guarantor), a corporation incorporated in the State of
Oregon with its principal place of business at 6060 South Willow, Denver, CO,
hereby unconditionally guarantees to the Government (a) the full and prompt
payment and performance of all obligations, accrued and executory, which
Contractor presently or hereafter may have to the Government under the Contract,
and (b) the full and prompt payment and performance by Contractor of all other
obligations and liabilities of the Contractor to the Government, fixed or
contingent, due or to become due, direct or indirect, now existing or hereafter
and howsoever arising or incurred under the Contract, and Guarantor further
agrees to indemnify the Government against any losses the Government may sustain
and expenses it may incur as a result of the enforcement by the Government of
any of its rights and remedies under the Contract, in the event of a default by
Contractor thereunder, and/or as a result of the enforcement by the Government
of any of its rights against Guarantor hereunder.
Guarantor has read and consents to the signing of the Contract. Guarantor
further agrees that Contractor shall have the full right, without any notice to
or consent from Guarantor, to make any and all modifications or amendments to
the Contract without affecting, impairing, or discharging, in whole or in part,
the liability of Guarantor hereunder.
Guarantor hereby expressly waives all rights and defenses which might
constitute a legal or equitable discharge of a surety or guarantor, and agrees
that this Performance Guarantee Agreement shall be valid and unconditionally
binding upon Guarantor regardless of (i) any acquisition, (ii) the
reorganization, merger, or consolidation of Contractor into or with another
entity, corporate or otherwise, or the liquidation or dissolution of Contractor,
or the sale or other disposition of all or substantially all. of the capital
stock, business or assets of Contractor to any other person or party, or (iii)
the enforcement of judgment or the institution of any bankruptcy,
reorganization, insolvency, debt agreement, or receivership proceedings by or
against Contractor, or adjudication of Contractor as a bankrupt, or (iv) the
assertion by the Government against Contractor of any of the Government's rights
and remedies provided for under the Contract, including any modifications or
amendments thereto, or under any other document(s) or instrument(s) executed by
Contractor, or existing in the Governments favor in law, equity, or bankruptcy.
Guarantor further agrees that its liability under this Performance Guarantee
Agreement shall be continuing, absolute, primary, and direct, on itself, any
successors or assigns, and that the Government shall not be required to pursue
any right or remedy it may have against Contractor or other Guarantors under the
Contract, or any modifications or amendment is thereto, or any other document(s)
or instrument(s) executed by Contractor, or otherwise. Guarantor affirms; that
the Government shall not be required to first commence any action or obtain
any judgment against Contractor before enforcing this Performance Guarantee
Agreement against Guarantor, and that Guarantor will, upon demand, pay the
Government any amount, the payment of which is guaranteed hereunder and the
payment of which by Contractor is in default under the Contract or under any
other document(s) or instrument(s) executed by Contractor as aforesaid, and that
Guarantor will, upon demand, perform all other obligations of Contractor, the
performance of which by Contractor is guaranteed hereunder.
Notwithstanding anything in this Performance Guarantee Agreement, the
Guarantor's obligations for performance of the contract hereunder shall not be
any greater than those of the Contractor, and the rights and defenses available
to the Contractor, and specifically related to those rights and defenses arising
out of matters of Contract performance, shall also be available to
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Rocky Flats Closure Contract No. DE-AC34-OORF01904
the Guarantor in respect of any claim made against the Guarantor upon its
assuming its responsibilities under the Contract
Guarantor agrees to assure that it shall cause this Performance Guarantee
Agreement to be unconditionally binding upon any successor(s) or assigns to its
interests regardless of (i) any acquisition, (ii) the reorganization, merger, or
consolidation of Guarantor into or with another entity, corporate or otherwise,
or the liquidation or dissolution of Guarantor, or the sale or other disposition
of all or substantially all of the capital stock, business, or assets of
Guarantor to any other person or party, or (iii) the enforcement of judgment or
the institution of any bankruptcy, reorganization, insolvency, debt agreement,
or receivership proceedings by or against Guarantor, or adjudication of
Guarantor as a bankrupt.
Guarantor further warrants and represents to the Government that the
execution and delivery of this Performance Guarantee Agreement is not in
contravention of Guarantor's Articles of organization, Charter, by-laws, and
applicable law; that the execution and delivery of this Performance Guarantee
Agreement, and the performance thereof, has been duly authorized by the
Guarantor's Board of Directors, Trustees, or any other management board which is
required to participate in such decisions, and that the execution, delivery, and
performance of this Performance Guarantee Agreement will not result in a breach
of or constitute a default under, any loan agreement, indenture, debt, judgment
or contract to which Guarantor is a party or by or under which it is bound.
Notwithstanding any other provisions of this Performance Guarantee
Agreement, this Performance Guarantee Agreement shall expire upon-the final
payment at close out of the Contract.
No express or implied provision, warranty, representation or term of this
Performance Guarantee Agreement is intended, or is to be construed, to confer
upon any third person(s) any rights or remedies whatsoever, except as expressly
provided in this Performance Guarantee Agreement
Interpretation of this Performance Guarantee Agreement shall be subject to
federal law.
In witness thereof, Guarantor has caused this Performance Guarantee
Agreement to be executed by its duly authorized officer, and its corporate seal
to be affixed hereto on 12 January 2000
---------------
(Date)
CH2M HILL COMPANIES, LTD
By: /s/ Ralph R. Peterson
--------------------------
Name
12 January 2000
--------------------------
Date
ATTESTATION INCLUDING APPLICATION
OF SEAL BY AN OFFICIAL OF
GUARANTOR AUTHORIZED TO AFFIX
CORPORATE SEAL
2
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
PART I - THE SCHEDULE
SECTION G
CONTRACT ADMINISTRATION DATA
Table of Contents
Section Number Clause Title
G.1 CORRESPONDENCE PROCEDURES
G.2 ADDRESSES
G.3 BILLING INSTRUCTIONS
G.4 DEFECTIVE OR IMPROPER INVOICES
G.5 DOE PROPERTY ADMINISTRATION
G.6 REPRESENTATIONS AND CERTIFICATIONS
G.7 INVOICING/PAYMENT PROCEDURES
SECTION G - Page 1
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Rocky Flats Closure Contract No. DE-AC34-00RF01904
SECTION G
CONTRACT ADMINISTRATION DATA
----------------------------
G.1 CORRESPONDENCE PROCEDURES
To promote timely and effective administration, correspondence submitted
under this contract shall include the contract number and shall be subject to
the following procedures:
(a) Technical Correspondence. Technical correspondence (as used herein, this
term excludes technical correspondence where patent or technical data
issues are involved and correspondence which proposes or otherwise
involves waivers, deviations, or modifications to the requirements,
terms, or conditions of this contract) shall be addressed to the DOE
Contracting Officer's Representative (COR) with an information copy of
all correspondence to the DOE Contracting Officer.
(b) Other Correspondence. All other correspondence shall be addressed to the
DOE Contracting Officer, with information copies of the correspondence
to the COR and the DOE Patent Counsel (where patent or technical data
issues are involved).
G.2 ADDRESSES
The DOE Contracting Officer's address is:
Contracts Management Division - Bldg. 460
Attn: Melody C. Bell
Rocky Flats Field Office
US Department of Energy
10808 Highway 93, Unit A
Golden, CO 80403-8200
Future revisions of the Contracting Officer or the address may be
accomplished by written notification from the Contracting Officer to the
Contractor, without a formal contract modification.
G.3 BILLING INSTRUCTIONS
(a) The Contractor shall submit the original and three copies of invoices or
vouchers, in accordance with the Payments provisions of this contract,
to the following address:
Office of the Field Chief Financial Officer, Bldg. 460
Attn: Finance Group
Rocky Flats Field Office
US Department of Energy
10808 Highway 93, Unit A
Golden, CO 80403-8200
(b) The Contractor shall submit invoices in accordance with the Billing
Instructions, which will be provided at time of award of a contract, and
other applicable clauses of this document.
SECTION G - Page 2
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Rocky Flats Closure Contract No. DE-AC34-00RF01904
G.4 DEFECTIVE OR IMPROPER INVOICES
Name (where practicable), title, phone number, office name, and complete
mailing address of officials of the business concern who are to be notified when
the Government receives a defective or improper invoice:
Kaiser-Hill Company, LLC
10808 Highway 93 Unit B, Building 111
Golden, CO 80403-8200
Attention:Mr. L. A. Martinez
Vice President, Administration and CFO
Telephone: (303) 966-9768
G.5 DOE PROPERTY ADMINISTRATION
For purposes of administration of government property, the points of
contact are:
For real property:
Steven R. Schiesswohl 966-6501
For other than real property:
Joseph A. Legare (Primary) 966-5918
Steven W. Slaten (Secondary) 966-4639
Assistant Manager for Environment & Infrastructure, Building 460
Rocky Flats Field Office
US Department of Energy
10808 Highway 93, Unit A
Golden, CO 80403-8200
Future revisions of the points of contact may be accomplished by written
notification from the Contracting Officer to the Contractor, without formal
contract modification.
G.6 REPRESENTATIONS AND CERTIFICATIONS
The Representations and Certifications completed as attachment to
Section J leading to award of this contract, dated November 15, 1999, are hereby
incorporated into this contract.
G.7 INVOICING/PAYMENT PROCEDURES
(a) The Government will make payments to the Contractor by electronic funds
transfer not later than three (3) business days after receipt of an
acceptable invoice from the Contractor.
(b) The Contractor may submit cost invoices no more frequently than
bimonthly. Fee invoices will be submitted in accordance with Clause B.6.
(c) Any defects in invoices which are discovered after acceptance and
payment will be corrected on subsequent invoices. If the Government
discovers such defects, the Contracting Officer will notify
SECTION G - Page 3
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
the Contractor in writing to the individual listed in Clause G.4,
DEFECTIVE OR IMPROPER INVOICES, above. The Contracting Officer's
written notification will explain the nature of the defect, and will
direct the Contractor to reflect the appropriate credit on the next
invoice submitted under this Contract. Unless the Contractor reconciles
the defect to the satisfaction of the Contracting Officer within seven
(7) calendar days, the Contractor shall make the credit as previously
directed by the Contracting Officer.
(d) Any bases for withholding, set off or reduction with respect to invoices
which are discovered after acceptance will be corrected on subsequent
invoices. If the Government discovers such bases for withholding, set
off or reduction, the Contracting Officer will notify the Contractor in
writing to the individual listed in Clause G.4, Defective or Improper
Invoices, above. The Contracting Officer's written notification will
explain the nature of the bases for withholding, set off or reduction,
will specify the dollar amount of the withholding, set off or reduction
and will direct the Contractor to reflect the appropriate credit on the
next invoice submitted under this contract. Unless the Contractor
reconciles the bases for withholding, set off or reduction to the
satisfaction of the Contracting Officer within seven (7) calendar days,
the Contractor shall make the credit as previously directed by the
Contracting Officer.
(e) Nothing in this provision shall affect the rights of either the
Government or the Contractor under the Prompt Payment clause of this
contract.
(f) Notwithstanding the provisions of FAR 52.232-25(a)(4), the Government
is not limited to the seven (7) day notification to the Contractor of a
defective invoice.
(g) The Government acknowledges and agrees that the Contractor may finance
its performance under this contract by selling accounts receivable
arising under the contract to an affiliate of the contractor organized
solely for the purpose of assisting in the financing of the Contractor's
performance under the contract. Such affiliate may further sell and/or
otherwise grant a security interest in such receivables to an ultimate
financing source or sources or an agent or trustee acting on behalf of
an ultimate financing source or sources, such further sale and/or grant
of a security interest being solely for the purpose of completing the
financing of the Contractor's performance of the work under the
contract. The ultimate financing source or sources would provide funds
to the affiliate solely for the purpose of financing the affiliate's
purchasing said accounts receivable from the Contractor, thereby
providing the funding to the contractor to perform the work under the
contract. The Government consents to the financing arrangement
described above.
SECTION G - Page 4
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Rocky Flats Closure Contract No. DE-AC34-00RF01904
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SECTION G - Page 5
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
PART I - THE SCHEDULE
SECTION H
SPECIAL CONTRACT REQUIREMENTS
TABLE OF CONTENTS
Section Number Clause Title
H.1 PROJECT CONTROL SYSTEMS AND REPORTING REQUIREMENTS
H.2 TECHNICAL DIRECTION
H.3 STOP-WORK AND SHUTDOWN AUTHORIZATION
H.4 AUTHORIZATION AGREEMENT
H.5 PERFORMANCE GUARANTEE AGREEMENT
H.6 ROCKY FLATS CLEANUP AGREEMENT
H.7 ASSIGNMENT OF SUBCONTRACTS
H.8 INTERNAL AUDIT
H.9 RESPONSIBILITIES FOR OPERATION/TERMINATION OF BENEFITS SYSTEMS
H.10 LITIGATION SUPPORT AND LITIGATION MANAGEMENT PLAN
H.11 KEY PERSONNEL
H.12 CONTRACTOR SELF-PERFORMANCE
H.13 PATENT INDEMNITY SUBCONTRACTS
H.14 AUTHORIZATION AND CONSENT IN COPYRIGHT
H.15 ROYALTY INFORMATION DURING TERM OF CONTRACT
H.16 ALTERNATE DISPUTE RESOLUTION
H.17 CONTRACT TRANSITION
H.18 EVALUATION OF SUBCONTRACTORS
H.19 EMPLOYEE PERFORMANCE INCENTIVES AND REWARD AND RECOGNITION
H.20 LABOR DISPUTES AND WHISTLEBLOWER ACTIONS
Section H - Page 1
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
SECTION H
SPECIAL CONTRACT REQUIREMENTS
H.1 PROJECT CONTROL SYSTEMS AND REPORTING REQUIREMENTS
H.1.01 Project Control System Requirements
(a) In the performance of this contract, the Contractor shall establish,
maintain and use a project control system meeting the requirements
specified in the contract, in the following paragraphs titled "Baseline
Development," "Project Performance," and "Baseline Change Management" of
this Section H.1, and any other system requirements defined by the
Contracting Officer. Contractor may use a pre-existing project control
system if such system satisfactorily addresses the system requirements
defined below.
(b) The project control system must also meet the requirements of the
following DOE guidance:
(1) DOE Order 430.1A, Life-Cycle Asset Management (LCAM), October
14, 1998;
(2) Integrated Planning, Accountability, and Budgeting System -
Information Systems (IPABS-IS) Data Requirements, December 18,
1998;
(3) Integrated Planning, Accountability, and Budgeting System
(IPABS) Handbook, February 16, 1999; and
(4) HQ Baseline Change Control Charter, Office of Environmental
Management, Rev. 0, June 23, 1999.
(c) The Contractor shall provide the Contracting Officer with a detailed
written description of the proposed project control system for review
and approval within 30 days after award of the contract. Cost effective,
graded application of controls will be a critical factor in determining
acceptability of the proposed system.
(d) The Contracting Officer or designated representatives will conduct a
compliance review of the Contractor's proposed project control system to
determine if the description and procedures meet the intent of this
contract clause, "H.1, Project Control Systems and Reporting
Requirements." The Contracting Officer will use the following two
references as the main tools to evaluate the Contractor's project
control system:
(1) DOE/PR-036, Project Control System Guidelines Implementation
Reference Manual, Interim, December 1992; and
(2) A Guide to the Project Management Book of Knowledge, Project
Management Institute, 1996.
Upon system approval by the Contracting Officer, the Contractor shall
fully implement the project control system. The Contractor shall not
make any significant changes to the approved system without the prior
written approval of the Contracting Officer. The Contracting Officer may
direct additional compliance reviews after contract award to determine
whether the Contractor is operating the project control system
efficiently and producing accurate planning, budgeting, reporting and
change control data.
(e) The Contractor shall provide the Contracting Officer or designated
representatives with access to all pertinent records, data, and plans
for purposes of initial approval, approval of proposed changes, and the
ongoing operation of the project control system.
Section H - Page 2
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
H1.02 Baseline Development
(a) Technical Baseline and Work Scope Definition
(1) Work Breakdown Structure. The Work Breakdown Structure (WBS)
shall provide the basis for all project control system
components, including estimating, scheduling, budgeting,
performing, managing, and reporting, as required under this
contract.
(2) Technical Baseline. The approved project technical baseline shall
be established and maintained in a manner that ensures it can be
used to further define and accomplish work, performance can be
objectively measured, and its configuration is controlled and
changes managed by formal processes. The cost account (currently
Work Authorization Documents or WADs) is the fundamental grouping
of work at which the Contracting Officer will receive routine
status reports, evaluate and measure project performance, and
exercise change control authority. Cost accounts will be
summarized into nine Project Baseline Descriptions.
(b) Roles and Responsibilities
(1) Organizational Breakdown Structure. The manager responsible for
each cost account within the WBS shall be identified. The
functional and technical scope responsibilities, limits of
authority, and key interface points for each cost account manager
will also be included.
(2) Indirect Costs. Person(s) with responsibility and authority for
managing and controlling indirect costs shall be identified at a
level consistent with the other cost accounts.
(3) Cost Account Manager Responsibilities. A cost account shall be
assigned to a manager with responsibility and authority to plan
and budget the work, and control the resources and work
activities within the approved technical, schedule, and cost
baselines. The Cost Account Manager is also responsible to report
status to allow complete project rollup of technical, schedule,
and cost performance for current period, cumulative to-date, and
at-completion.
(c) Cost Estimating
(1) Estimating Methodologies. Estimates shall be integrated with the
WBS and use estimating methodologies that are consistent with DOE
Order 5700.2D, Cost Estimating Analysis and Standardization.
(2) Estimate Preparation. Estimates shall be prepared consistent with
the established project baseline and can be identified by each
WBS element, or rolled up to cost account, Project Baseline
Description (PBD), or total closure project level. The control
system must maintain capability to provide Total Estimated Cost
(TEC), Total Project Cost (TPC), Estimates-to-Complete (ETC), and
Estimates-at Completion (EAC).
(d) Planning and Scheduling Baseline
(1) Planning Constraints. A planning process shall be established and
maintained throughout the project life that identifies
programmatic, operational, legislative, institutional, and other
requirements, constraints, and assumptions that may affect
technical, schedule, and cost baselines. Potential impacts are
identified and considered in managing baselines through
contingency planning and management.
Section H - Page 3
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Rocky Flats Closure Contract No. DE-AC34-00RF01904
(2) Project Risk Management. The Risk Management Plan shall be
developed that identifies the various internal and external risks
to achieving the project baseline. The Risk Management Plan will
analyze possible alternatives to mitigate impacts, select and
definitize specific alternatives including cost and
implementation schedules for each alternative, and provide for
routine reporting and updating of the Plan at least quarterly.
(3) Schedule Development. Schedules shall be developed that integrate
with the WBS and cost estimates and represent all project work
scope regardless of funding source. Certain non-project level of
effort work scope may be excluded. Each activity will have
assigned duration representing work scope accomplishment.
Activity logic links shall depict all work scope constraints and
decision points and shall be integrated into a total project
network schedule. Work scope critical path network schedules are
required for the total project and each PBD and in all cost
accounts which exceed $5 million in life-cycle cost.
(4) Schedule Baseline. The project schedule shall clearly depict
critical path activities and milestones from which actual
performance for activities and milestones can be compared, and
from which performance forecasts can be derived. Activities shall
be resource loaded at one level below the cost account or lower
to develop time-phased budgets that are integrated with the
schedule.
(5) Intermediate Schedules. The project schedule shall be developed
in a manner that allows extraction of intermediate and detail
level schedules, for individual Project Baseline Descriptions and
individual cost accounts. Milestones shall be identified and
maintained as part of the schedules.
(e) Cost
(1) Cost Accounts. A cost account structure shall be developed that
is integrated with the WBS and facilitates collection of cost by
functional organization and cost element. All work scope for the
cost account shall be identified and a budget for that work
developed. Budget projections shall be time-phased consistent
with the schedule and anticipated resources, and shall be
reconcilable with the cost estimate.
(2) Total Value of Accounts. All work shall be represented in cost
accounts and the sum of the cost account budgets, plus
contingency and management reserve and fee, equals the baseline
value. The baseline will separately identify the following
individual budget elements:
a) Direct budget - developed at Work Package level, identified at
cost account level
b) Indirect budget - same as direct budget for indirect accounts
c) Management Reserve budget - identified at total closure
project level
d) Cost Contingency - developed at cost account level, but
summarized at PBD level
e) Fee - developed based on adjusted target cost, identified at
baseline summary level
(3) Managing Cost Accounts. A practical and effective method for
controlling and measuring performance of the cost accounts shall
be used, that is verifiable and consistent with schedule
performance management. The Contractor shall exercise specific
control and decision authority at the cost account level or
lower. Indirect budgets, management reserve, and cost contingency
will be included in the cost account management system.
H 1.03 Project Performance
(a) Funds Management
Section H - Page 4
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Rocky Flats Closure Contract No. DE-AC34-00RF01904
(1) Funding Limits. Project commitment and expenditures shall not
exceed funding limits as approved by the Contracting Officer.
Funding controls as established in the Contractor's control
system shall provide early warning before funding limits are
exceeded.
(2) Funding Changes. The Contractor shall analyze DOE proposed or
directed funding changes for their impact on technical, schedule,
and cost elements of the baseline. Baseline changes to adjust for
significant funding changes may be proposed consistent with
Change Control procedures.
(3) Funding Reconciliation. An ability to reconcile forecasted
funding requirements with estimated costs to execute remaining
project work shall be maintained on a monthly basis by cost
account. Analysis of the variance between currently authorized
funds and estimated costs to complete shall be used by the
Contractor to make adjustments to budgets or release contingency
funds to Cost Account Managers as appropriate.
(b) Accounting
(1) Recording Costs. All actual direct costs incurred for resources
applied in the performance of work shall be recorded on a timely
basis each month. Cost assignments shall be made in accordance
with an established and auditable system that conforms to
Generally Accepted Government Accounting Standards and Cost
Accounting Standards. Actual costs incurred must be recorded in
the same accounting period that performance is measured and
recorded. Any indirect costs and contingency costs shall also be
collected and appropriately allocated to the project.
(2) Collecting Costs. Costs shall be collected at a Work Package
level or lower and able to be summed through the WBS, cost
account, PBD, or by major Contractor functional organizations.
Mischarges on time cards or other administrative or accounting
errors shall be corrected in a timely manner. Cost Account
Managers shall be provided appropriate reports and information to
analyze monthly charges and are held responsible for the validity
of charges to their cost account.
(c) Work Authorization
(1) Work Authorization. Approval of this Contract provides
authorization for the Contractor to complete the full scope of
work in the Contract. Any Contractor requested changes or DOE
directed changes shall be addressed through the established
Change Control process.
(2) Contract Funding. The Closure Project Baseline with any approved
revisions shall provide the basis for annual authorization of
funds to the Contractor for each fiscal year. The Manager of the
Rocky Flats Field Office will under normal conditions obligate to
the contract the total annual project funding at the start of the
fiscal year. Contract funding under this contract shall be
subject to the administrative controls as described below:
Annual Work Analysis. Prior to the release of funds for
each fiscal year, the DOE will analyze the technical,
schedule, and cost baseline for that upcoming fiscal year.
By May 31st each year the DOE will provide an estimate of
any budget restrictions, or specific technical or schedule
guidance for the upcoming fiscal years through the
remainder of the project. The Contractor shall prepare a
project performance forecast for all upcoming fiscal years
from the approved total Closure Project Baseline and the
DOE guidance. By July 31st each year the Contractor shall
submit to the Contracting Officer or designee a
comprehensive analysis of total project status, including
impacts to technical, schedule, and cost elements of the
Closure Project Baseline and the projected budget
allocations to
Section H - Page 5
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
cost accounts with a focus to activities described in the
baseline for the upcoming fiscal year. This deliverable is
known as the Annual Work Analysis (AWA), as derived from
the life-cycle project baseline. Variations from the
life-cycle project baseline described in the AWA, which
exceed established thresholds, shall be addressed through
established Change Control procedures and if necessary,
incorporated into the contract by modification.
(3) Resolving Conflicts. In the event there is a conflict between
the requirements of this clause and the referenced DOE Orders and
guidance, the Contractor shall obtain guidance from the DOE
Contracting Officer.
(4) Responsibility to Achieve Environmental, Safety and Health
Compliance. It is the intention of the Government that all work
performed by the Contractor be conducted in a manner that
protects the environment, the health and safety of employees, and
the public. Notwithstanding the other provisions of this clause,
the Contractor has, in the event of an emergency, authority to
authorize corrective actions as may be necessary to sustain
operations in a manner consistent with applicable environmental,
safety and health statutes, regulations, and procedures. The
Contracting Officer shall be notified in writing within 24 hours
of any Contractor action taken pursuant to this provision.
(d) Performance Analysis
(1) Project Performance. Differences between planned and actual
performance, shall be analyzed and reviewed monthly against the
total project baseline and the Target Cost and Target Schedule
for the current fiscal year portion of the total project.
Performance analysis techniques shall be commercially accepted
and documented, and shall utilize earned-value methods at the
cost account or lower levels of the WBS and shall be reported to
DOE at the PBD level. Objective measures are preferred for
measurement of all technical work scope. For variances between
planned and actual that exceed thresholds established by the
Contracting Officer, the analysis shall describe the causes for
variance, impact on other cost accounts, and corrective action
required.
(2) Project Risk and Contingency Management. The risk from project
and program factors that may affect the technical, schedule, or
cost aspects shall be included in the development of the project
baseline. Changes in the nature of these risks due to evolving
social, political, organizational, environmental or other factors
shall be analyzed quarterly, and resulting impacts to the project
baseline evaluated. Risk plans shall be adjusted and risk
management actions taken as appropriate, including performance
improvements, reallocation of budgets to cost accounts, release
of contingency funds, or baseline change proposals submitted if
thresholds are exceeded.
(3) Estimate at Completion. Quarterly the Estimate at Completion
(EAC) for the total project shall be reviewed and evaluated for
consistency with observed trends in performance, emerging or
resolved issues, and changes in the assessment of project risk.
(e) Reporting
(1) Periodic Plans and Reports. The Contractor shall submit periodic
plans and reports in such form and substance as required by the
Contracting Officer. These periodic plans and reports shall
address general management, schedule/labor/cost, performance
measurement, financial incentives, and other technical
information relating to performance under the Contract. Section
J, Attachment F (Reporting Requirements Checklist) provides
specific information regarding the required plans and reports,
frequency, due dates, reporting levels, distribution, and
thresholds which apply. Where
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Rocky Flats Closure Contract No. DE-AC34-00RF01904
specific forms are required for individual plans and reports, the
Contracting Officer shall provide such forms to the Contractor.
(2) Quarterly Critical Analysis (QCA). Once each quarter the
Contractor shall prepare and submit a comprehensive report which
critically analyzes the overall status of the closure project as
well as many key metrics. This report shall include overall
narrative summaries, analysis of schedule trends and projects
float, critical path performance, analysis of critical manpower
skills of other resources, budget and funding figures, and
project risk and contingency plan updates. Reporting elements
required for the QCA are indicated on the Section J, Attachment F
(reporting Requirements Checklist). Each QCA will be signed by
the top executive for the Contractor to revalidate the
Contractor's commitment and accountability for the project
performance.
(3) Report Consistency. Plans and reports shall be prepared in such
a manner as to provide for consistency with the contract
Statement of Work, the project baseline, the approved Work
Breakdown Structure, and correlation of data among the various
plans and reports. The reporting system established and
maintained by the Contractor pursuant to this clause shall
recognize changes in work effort directed by the Contracting
Officer. The Contractor's reporting system shall be able to
provide for the following at the PBD level:
1) Timely incorporation of contractual changes affecting
estimated cost and schedule;
2) Reconciliation of estimated costs for those elements of
the WBS or discrete cost accounts with current
performance measurement budgets in terms changes to the
authorized work and internal replanning;
3) Changes to records pertaining to work performed that will
change previously reported costs for correction of errors
and routine accounting adjustments;
4) Revisions to the Contract's estimated costs for
Government-directed changes to the contractual effort.
(4) Full Access. The Contractor shall provide the Contracting
Officer, or designated authorized representatives, access to any
and all information and documents comprising the Contractor's
project control and reporting system. Generally access will not
be requested more than one level below the level chosen by the
DOE for control and approval authority (PBD), except during
compliance reviews.
(5) Flow-Down of Reporting. The Contractor shall include graded
reporting requirements in all subcontracts adequate to fairly
evaluate performance. The full requirements of this clause shall
be in all cost-reimbursement type contracts when:
1) The value of the subcontract is greater than $12.5
million per year, unless specifically waived by the
Contracting Officer; or,
2) The Contracting Officer determines that the
contract/subcontract effort is, or involves, a critical
task related to the contract.
H.1.04 Baseline Change Management
(a) Baseline Changes. The baseline (which shall be defined for all purposes
notwithstanding any other language in this contract as the Rocky Flats
Closure Project Baseline) is the source document for all project control
and baseline change management. The processes for managing
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Rocky Flats Closure Contract No. DE-AC34-00RF01904
and administering changes to all elements of the baseline shall be
timely, formal, and documented. Baseline changes shall be proposed when:
(1) Necessitated by significant project delays, events or other
impacts; or
(2) The parties have negotiated an equitable adjustment in accordance
with Clause, I.75 entitled "Changes - Cost Reimbursement" or
other clauses of this contract.
(b) Baseline Thresholds. Provided that the change does not affect Target
Cost and Target Schedule, the baseline change control thresholds for
technical, schedule, and cost changes shall be the lesser of the
following:
DOE Headquarters Level $40,000,000 or 20% of the PBD costs
on an annual basis
RFFO Level $20,000,000 or 10% of the PBD costs
on an annual basis
Contractor Level Up to the RFFO level
(c) Spending at Variance. In some circumstances the Contractor may exceed
authorized budget levels for a specific cost account when a baseline
change is not warranted, such as for cost overruns. The change control
system shall track, manage, and provide for approval of changes in
funding level as a separate but integrated part of the overall change
control process. Change control records shall maintain clear distinction
between approved changes in funding and baseline changes.
(d) Change Control Processing. Change proposals shall be initiated and
processed in a timely fashion consistent with the requirements of this
contract. Specific change control time frames for consideration and
approval will be established by the Contracting Officer. Each change
control threshold level shall accommodate emergency changes. A record of
all approved changes, at any level, shall be maintained through the life
of the project.
(e) A baseline update to the Rocky Flats Closure Baseline, revision 3a and
the Contractor's system of earned value will be submitted on June 30,
2000, and will include the following features:
o Will incorporate the Statement of Work and the terms and conditions of
this contract
o Will include baseline changes agreed to through June 30, 2000
o Will align project costs (budgeted cost of work scheduled plus
contingency) and the expected conditional incentive fee with the
annual funding level anticipated for this contract
o Will address Ernst and Young findings on the review of Revision 3a
o Will be developed at the same or lower level of detail as Revision 3a
The Contractor shall have the right to implement the revised baseline
and its system of earned value following submittal of the baseline,
subject to adjustments agreed between the parties.
(f) Target Cost and Schedule Adjustments. Any changes to target cost, target
fee, target date or target schedule incentive fee shall be executed only
by a contract modification pursuant to the contract terms and
conditions. Baseline changes will not imply the need for a contract
modification.
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Rocky Flats Closure Contract No. DE-AC34-00RF01904
H.2 TECHNICAL DIRECTION
(a) In addition to those functions specifically reserved throughout this
contract for the Contracting Officer, the Contracting Officer shall be
the sole authority within the RFFO for establishment of Performance
Baseline Descriptions (PBDs), establishment of work priorities, and
directing work requiring the expenditure of funds which have been
obligated for performance of this contract.
(b) Certain actions that require the formal signature of a Contracting
Officer may be officially delegated in writing to Contracting Officer's
Representatives (CORs). For the purpose of this clause, a COR is an
individual designated by the Contracting Officer to act as an authorized
representative for such functions as technical monitoring, inspection,
and other functions of a technical nature not involving a change in the
scope, cost, terms or conditions of the contract. Copies of any such
delegations relating to this contract will be provided to the
Contractor. The Contractor shall comply with direction provided by the
COR. The following positions are identified as having COR authority:
Paul Golan, the Deputy Manager, authority for environmental restoration;
waste management; environmental/ ecological monitoring; nuclear material
management; building management; environment, safety, and health;
nuclear and criticality safety; emergency management; safeguards and
security; architect/engineering and construction management; regulatory
interface and commitment activities; operational baselines and planning;
performance measure development and validation; necessary and sufficient
program; management control system; authorization basis activities;
performance assessment; quality assurance; invoice reviews; and
operations management;
Mell Roy, Chief Counsel, authority for litigation management activities,
invoice reviews and approvals/disapprovals, and the administration of
the DOE Office of General Counsel Legal Services and Litigation
Management Policies and Procedures
Mary Ann Tinney, acting Field Chief Financial Officer, authority for
budget formulation and budget execution activities, finance and
accounting activities, audit and audit-related activities, financial
compliance activities, and invoice reviews;
Mary O. Hammack, Closure Project Communications, authority for Freedom
of Information Act requests;
Michael Weis, Assistant Manager for Field and Performance Assessment,
serving as the Deputy Manager's alternate COR, authority for
environmental restoration; waste management; environmental/ecological
monitoring; nuclear material management; building management;
environment, safety, and health; nuclear and criticality safety;
emergency management; safeguards and security; architect/engineering and
construction management; regulatory interface and commitment activities;
operational baselines and planning; performance measure development and
validation; necessary and sufficient program; management control system;
authorization basis activities; performance assessment; quality
assurance; invoice reviews; and operations management; and
Joe Legare, Assistant Manager for Environment and Infrastructure,
serving as the Deputy Manager's alternate COR, authority for
environmental restoration; waste management; environmental/ecological
monitoring; nuclear material management; building management;
environment, safety, and health; nuclear and criticality safety;
emergency management; safeguards and security; architect/engineering and
construction management; regulatory interface and commitment activities;
operational baselines and planning; performance measure development and
validation; necessary and sufficient program; management control system;
authorization basis activities; performance assessment; quality
assurance; invoice reviews; and operations management.
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Rocky Flats Closure Contract No. DE-AC34-00RF01904
In addition to the above CORs, the Rocky Flats Field Office Manager has
full contracting authority in his/her capacity of Head of the
Contracting Activity. This authority is assumed by any individual he/she
designates to act as the Manager in his/her absence, when that designee
is acting within the limits of the Manager's delegation of authority.
Persons with written delegation of authority to act for the above CORs
on a temporary basis may sign authorizations within the CORs' authority.
Also, DOE personnel designated as Facility Representatives provide
technical oversight of operations to help line management assure that
the facilities are operated in a safe, healthful, and environmentally
acceptable manner in accordance with DOE Directives and other
requirements. As such, they have Stop Work and Shutdown Authorization
Authority.
(c) The performance of work by the Contractor, in compliance with the
Project Control System and PBDs, shall be subject to technical direction
from the CORs as follows:
(1) Directions to the Contractor which redirect the contract effort,
shift work emphasis within a work area or a PBD, require pursuit of
certain lines of inquiry, fill in details, or otherwise serve to
accomplish the contractual Statement of Work.
(2) Provision of written information to the Contractor which assists in
the interpretation of drawings, specifications, or technical
portions of the work description.
(3) Review and, where required by the contract, approval of reports,
drawings, specifications, and information to be delivered by the
Contractor to the Government under the contract.
(4) Monitoring compliance with applicable Environment, Safety and
Health provisions and DOE Rules and Orders.
(d) The Contractor shall only accept technical direction if provided in
writing and if within the provisions of the contract and the scope of
the closure project baseline. Technical direction shall not (1)
authorize the Contractor to exceed the total funds obligated on the
contract; (2) entitle the Contractor to any increase in the total amount
of fee set forth in the contract; (3) change any of the express terms or
conditions of the contract; or, (4) interfere with the Contractor's
rights under the terms and conditions of the contract.
(e) The Contractor shall proceed promptly with the performance required by
duly issued written technical directions. If, in the opinion of the
Contractor, any technical direction violates the prohibitions set forth
in paragraph (d) of this clause, the Contractor shall not proceed but
shall promptly orally notify the Contracting Officer of the direction
and reason(s) the direction violates the provisions of this clause. The
Contractor shall confirm this notification in writing within five (5)
workdays from receipt of DOE's written direction. The Contracting
Officer shall render a decision on whether or not the technical
direction is or is not within the Statement of Work of the contract and
whether or not a change order will be issued pursuant to the clause
entitled, "Changes." This decision shall be issued and/or confirmed in
writing, and the Contractor shall promptly comply with the DOE's
direction.
(f) A failure of the Contractor and DOE to agree that the technical
direction is within the scope of the contract, or a failure to agree
upon the contract action to be taken with respect thereto, shall be
subject to the provision of the clause entitled, "Disputes (Alternate
I)" (FAR 52.233-1).
H.3 STOP-WORK AND SHUTDOWN AUTHORIZATION
(a) In the event of an imminent health and safety hazard, identified by
facility line management or operators or facility health and safety
personnel overviewing facility operations, the individual or group that
identified the imminent hazard situation should immediately take actions
to eliminate or
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Rocky Flats Closure Contract No. DE-AC34-00RF01904
mitigate the hazard (i.e., by directing the operator/implementer of the
activity or process causing the imminent hazard to stop work, or by
initiating emergency response actions or other actions) to protect the
health and safety of the workers and the public and to protect DOE
facilities and the environment. In the event an imminent health and
safety hazard is identified, the individual or group that identified the
hazard should coordinate with an appropriate Contractor official, who
will direct the shutdown or other actions, as required. Such mitigating
actions should subsequently be coordinated with the DOE Field Office
Manager and Contractor management. The suspension or stop work order
should be promptly confirmed in writing from the Contracting Officer.
(b) In the event of a non-imminent health and safety hazard identified by
facility line managers, facility operators, health and safety personnel
overviewing facility operations, or by independent oversight
organizations, the individual or group identifying the potential health
and safety hazard may recommend facility shutdown. However, the
recommendation must be coordinated with Contractor management, and the
responsible Field Office Manager. Any written direction to suspend
operation should be issued by the Contracting Officer.
(c) Imminent Health and Safety Hazard is a given condition or situation
which, if not immediately corrected, could result in serious injury or
death, including exposure to radiation and toxic/hazardous chemicals.
Imminent Danger in relation to the Facility Safety Envelope is a
condition, situation or proposed activity which, if not terminated could
cause, prevent mitigation of, or seriously increase the risk of (1)
Nuclear Criticality, (2) Radiation Exposure, (3) Fire/Explosion, and/or
(4) Toxic/Hazardous Chemical Exposure.
(d) DOE personnel designated as Facility Representatives provide technical
oversight of operations to help line management assure that the
facilities are operated in a safe, healthful, and environmentally
acceptable manner. As such, they have Stop Work and Shutdown Authority.
H.4 AUTHORIZATION AGREEMENT
(a) The purpose of this clause is to 1) formalize the Contractor's and the
DOE's utilization of Authorization Agreements substantially in the
format of Authorization Agreement Nos. RFETS-006 (Building 559) and
RFETS-013 (750/904 Pads) both of which can be found in Section J,
Attachment G of this Contract; and 2) establish the process for
development and administration of Authorization Agreements.
(b) The Contractor and the DOE will periodically negotiate separate
Authorization Agreements for designated Site facilities and activities.
Each Authorization Agreement will identify the Authorization Basis,
which includes the DOE approved facility or activity safety basis and
contains a control set, that when fully implemented, will support the
safe performance of work on Site. An Authorization Basis may be changed
to update a facility or activity's safety basis in accordance with Site
procedures. The current authorization basis for Site facilities and
activities is reflected in the Authorization Basis Document List.
(c) Authorization Agreement(s) will be signed by the Contracting Officer and
the Contractor's President. The effective date for each current and
future Authorization Agreement will be the date of the signature of the
party last to sign the Authorization Agreement, and on this date it will
be considered incorporated into this Contract by reference. Some
Authorization Agreements will contain the date by which the
Authorization Basis in the Authorization Agreement must be completely
implemented if not already implemented at the time of the signature of
the party last to sign the Authorization Agreement.
(d) Except for changes made to an Authorization Basis, under the procedures
referred to in subparagraph (c) above, an Authorization Agreement may
only be changed bilaterally in writing
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Rocky Flats Closure Contract No. DE-AC34-00RF01904
by the Contracting Officer and the Contractor's President. Changes to an
Authorization Agreement shall be considered incorporated into this
Contract by reference.
H.5 PERFORMANCE GUARANTEE AGREEMENT
The Contractor's Guarantor organizations have provided a Performance
Guarantee Agreement in a manner and form acceptable to the Contracting Officer
assuring the performance, duties, and responsibilities of the Contractor will be
satisfactorily fulfilled. The Performance Guarantee Agreement is attached to and
made a part of this contract in Section J, Attachment A.
H.6 ROCKY FLATS CLEANUP AGREEMENT
The Rocky Flats Cleanup Agreement (RFCA), as of October 1, 1999, is the
legally binding agreement between the Department of Energy (DOE), the
Environmental Protection Agency (EPA), and the Colorado Department of Public
Health (CDPHE) to accomplish the required cleanup of radioactive and other
hazardous substances contamination at and from the Rocky Flats Environmental
Technology Site (RFETS). The Contractor agrees to plan and perform the work
under this contract consistent with the implementation of the RFCA requirements
and milestones.
H.7 ASSIGNMENT OF SUBCONTRACTS
The Government reserves the right to direct the Contractor to assign to
the Government or another contractor any subcontract awarded under this
contract.
H.8 INTERNAL AUDIT
The Contractor agrees to conduct internal audits and examinations,
satisfactory to DOE, of records, operations, expenses, and transactions with
respect to costs claimed to be allowable under this contract. The Contractor
shall submit, for the approval of the Contracting Officer, an audit plan for
internal audits of the Contractor and for audits of prime onsite, cost type
subcontractors. The official audit report(s), including the working papers (as
required), shall be submitted or made available to the Contracting Officer or
his/her designee. This clause does not supersede the Government's right to
perform self-initiated reviews, evaluations, or audits directed at improving the
efficiency of operations and an overall reduction in cost.
H.9 RESPONSIBILITIES FOR OPERATION/ TERMINATION OF BENEFITS SYSTEMS
(a) During the final six months of this contract, the Contracting Officer
shall provide written direction to the Contractor regarding certain
post-employment employee benefits systems, such as pension systems,
post-retirement medical insurance, post-retirement life insurance.
(b) The Contracting Officer may direct any of a number of potential means of
addressing the continuing responsibilities for these systems. The
direction will identify the potential means of addressing such
responsibilities that may include, but are not limited to: termination
of the plans in accordance with relevant laws and regulations,
continuation of the plans on a "pay-as-you-go" basis under a separate
contract with the Contractor, or transfer of plan responsibilities to
another contractor or a third party. The selection among these options
is at the sole discretion of the Contracting Officer. The Contractor
will implement the option as directed by the Contracting Officer.
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Rocky Flats Closure Contract No. DE-AC34-00RF01904
(c) To the extent that the Contractor incurs costs under this contract in
implementing the Contracting Officer direction, the Contractor's
allowable costs will be reimbursed according to the Allowable Cost and
Payment provisions of this contract.
H.10 LITIGATION SUPPORT AND LITIGATION MANAGEMENT PLAN
(a) The Contractor shall prepare a Litigation Management Plan, in accordance
with the requirements set forth in the Department of Energy Office of
General Counsel Legal Services and Litigation Management Policies and
Procedures that shall be submitted to the Contracting Officer for
approval within 60 days of contract award. The plan shall include
procedures to manage both the costs and substantive aspects of
litigation, and shall address and apply to subcontractor litigation the
costs of which will be reimbursable as a direct cost. The plan should be
consistent with the DOE policy favoring Alternative Dispute Resolution
(ADR) techniques where appropriate and beneficial to the Government. The
plan will be revised from time to time to conform to litigation
management and ADR policies established by DOE.
(b) The Contractor may, with the prior written authorization of the
Contracting Officer or the Contracting Officer's Representative, and
shall, upon the request of the Government, initiate litigation against
third parties including proceedings before administrative agencies, in
connection with this contract. Unless otherwise directed by the
Contracting Officer or the Contracting Officer's Representative in
writing, the Contractor shall furnish, immediately, to the Contracting
Officer's Representative, copies of all filings and papers received by
the Contractor with respect to such action. The Contractor shall proceed
with such litigation in good faith and as directed from time to time by
the Contracting Officer or the Contracting Officer's Representative, and
in accordance with the DOE-approved Contractor litigation management
plan (including case management and cost guidelines) and as set forth in
the DOE Office of General Counsel Legal Services and Litigation
Management Policies and Procedures, as such procedures may be revised
from time to time, and if not otherwise made unallowable in this
contract.
(c) The Contractor shall give the Contracting Officer and the Contracting
Officer's Representative immediate notice in writing of any action,
including any proceeding before any administrative agency, filed against
the Contractor arising out of the performance of this contract. Except
as otherwise directed by the Contracting Officer or the Contracting
Officer's Representative in writing, the Contractor shall furnish,
immediately, to the Contracting Officer's Representative, copies of all
filings and papers received by the Contractor with respect to such
action. The Contractor shall proceed with such litigation in good faith
and as directed from time to time by the Contracting Officer or the
Contracting Officer's Representative and in accordance with the
DOE-approved Contractor litigation management plan (including case
management and cost guidelines) and as set forth in the DOE Office of
General Counsel Legal Services and Litigation Management Policies and
Procedures, as such procedures may be revised from time to time, and if
not otherwise made unallowable in this contract.
(d) If any suit or action is filed or any claim is made against the
Contractor, the cost and expense of which may be reimbursable to the
Contractor under this contract and the risk of which is then uninsured
or is insured for less than the amount claimed, the Contractor shall:
(1) Immediately notify the Contracting Officer and Contracting
Officer's Representative and promptly furnish copies of all
filings and papers received;
(2) Authorize Government representatives to collaborate with (I)
in-house or approved outside counsel in settling or defending the
claim, or (ii) counsel for the insurance carrier in settling or
defending the claim when the amount of the liability claimed
exceeds the amount of coverage, unless precluded by the terms of
the insurance contract; and,
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Rocky Flats Closure Contract No. DE-AC34-00RF01904
(3) Authorize Government representatives to settle the claim or to
defend or represent the Contractor in and/or to take charge of
any litigation if required by the Department when the liability
is not insured or covered by bond. In any action against more
than one Department Contractor, the Department may require the
Contractor to be represented by common counsel. Counsel for the
Contractor may, at the Contractor's expense, be associated with
the Department representatives in any such claim or litigation.
(e) The term "filings and papers" as used in paragraph H.10 includes any
document (draft or final) related to an anticipated or instant case,
pending legal proceeding (judicial or administrative) involving
contractor or subcontractor litigation the costs of which will be
reimbursable as a direct cost.
(f) The Contractor and its subcontractors shall provide litigation support
to the Government when requested by the Contracting Officer or
Contracting Officer's Representative in cases of actual or threatened
litigation, regulatory matters, or third-party claims and subject to
applicable rules and regulations. Litigation support includes, but is
not limited to case preparation assistance, document retrieval, review
and reproduction, witness preparation and testimony, expert witness
testimony, and assisting Government counsel as necessary in response to
discovery or other information related activities responsive to any
legal proceeding.
H.11 KEY PERSONNEL
(a) The Contractor shall submit for DOE approval a list of key personnel
within 30 days of contract award. The personnel specified in the
submittal are considered to be essential to the work being performed on
this contract. Prior to diverting to other positions or substituting
any of the specified individuals, the Contractor shall notify the
Contracting Officer in writing at least 30 days in advance and shall
submit justification (including proposed substitutions) in sufficient
detail to permit Rocky Flats Field Office evaluation of the impact on
the Site Closure Project. No diversion or substitution shall be made by
the Contractor without the written consent of the Contracting Officer,
provided that the Contracting Officer may ratify in writing such
diversion or substitution, and such ratification shall constitute the
consent of the Contracting Officer required by this clause. Under no
circumstances will a key personnel position remain unfilled, acting
replacements aside, for more than four months. Failure to adhere to
this provision may be classified as a Category 3 event.
(b) Key Personnel are those positions identified by the Contractor and
approved by DOE in accordance with subparagraph (a) above. Reimbursement
of severance payments made to Key Personnel will be consistent with that
for non-Key Personnel.
H.12 CONTRACTOR SELF-PERFORMANCE
The Contractor is expected to provide project management and planning
for the Project while subcontracting the preponderance of the work to
specialized subcontractors. It is the goal of the parties that at least 80
percent of the work (as measured by contract cost) be subcontracted. Before
deciding to perform any of the remediation, waste management, environmental
restoration, decontamination, demolition, or site support services with its own
forces, the Contractor shall provide a detailed make-or-buy analysis for review
and approval by the Contracting Officer. The make-or-buy analysis, as described
in FAR 15.407-2 must be provided no later than 15 days in advance of any
self-performance.
H.13 PATENT INDEMNITY SUBCONTRACTS
Except as otherwise authorized by the Contracting Officer, the
Contractor shall obtain indemnification of the Government and its officers,
agents, and employees against liability, including costs,
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Rocky Flats Closure Contract No. DE-AC34-00RF01904
for infringement of U.S. Letters Patent (except Letters Patent issued upon an
application which is now or may hereafter be kept secret or otherwise withheld
from issue by order of the Government) from the Contractor's subcontractors for
any contract work subcontracted on the terms and in accordance with the Federal
Acquisition Regulations as may be supplemented by the Department of Energy
Acquisition Regulations.
H.14 AUTHORIZATION AND CONSENT IN COPYRIGHT
In the case of suit or potential suit in copyright infringement, the
Contractor may request authorization and consent in copyright from DOE.
Programmatic necessity shall be a major consideration in grant of authorization
and consent.
H.15 ROYALTY INFORMATION DURING TERM OF CONTRACT
(a) Cost of charges for royalties. If any royalty payments are directly
involved in the contract or will be charged to the Government as costs
under the contract, the Contractor agrees to report to the Contracting
Officer the following information relating to each separate item of
royalty or license fee:
(1) Name and address of licensor.
(2) Date of license agreement.
(3) Patent numbers, patent application serial numbers, or other
basis on which the royalty is payable.
(4) Brief description, including any part or model numbers of each
contract item or component on which the royalty is payable.
(5) Percentage or dollar rate of royalty per unit.
(6) Unit price of contract item.
(7) Number of units.
(8) Total dollar amount of royalties.
(b) Copies of current licenses. In addition, if specifically requested by
the Contracting Officer, the Contractor shall furnish a copy of the
current license agreement and an identification of applicable claims of
specific patents of other basis upon which the royalty is payable.
(c) The Contractor shall follow the procedures of 48 CFR 27.204 and 48 CFR
927.206 in all subcontracting.
H.16 ALTERNATE DISPUTE RESOLUTION
The DOE and Contractor both recognize that methods for fair and
efficient dispute resolution are essential to the successful completion of the
closure of the Rocky Flats site by the Target Date and for the Target Cost
identified in Section B of this contract. To facilitate the prevention and early
resolution of disputes, the parties agree to the following alternative dispute
resolution (ADR) provisions:
(a) Dispute Avoidance
(1) The Government and Contractor agree to participate in a
partnering workshop, to be conducted by an experienced
professional, jointly agreed upon by the parties, within 30 days
after execution of the contract.
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Rocky Flats Closure Contract No. DE-AC34-00RF01904
(2) The parties also agree to jointly select a "standing neutral" to
be available to help resolve disputes as soon as they arise. This
can be an individual or a company with specific expertise in this
area. If a neutral cannot be agreed upon, the DOE Office of
Dispute Resolution will assist the parties in this selection. The
specific ADR process(es) and procedures, as well as the selection
of the "standing neutral" will be determined at the partnering
workshop.
(b) Early Resolution of Disputes
(1) The Government and Contractor shall use their best efforts to
informally resolve any dispute, claim, question or disagreement,
by consulting and negotiating with each other in good faith,
recognizing their mutual interests, and attempting to reach a
just and equitable solution satisfactory to both parties. If an
agreement cannot be reached through informal negotiations, then
such disagreement shall be referred to the "standing neutral,"
pursuant to the procedures jointly developed in the partnering
workshop.
(2) If the neutral offers a non-binding advisory opinion, it shall
not be admissible in evidence in any subsequent proceeding. All
costs incurred by the Contractor in connection with the "standing
neutral" shall, if reasonable, be an allowable cost reimbursable
under this contract.
(c) Formal Complaint. If the dispute has not been resolved through the
"standing neutral" process, either party may request ADR under the
Disputes Clause of the contract.
H.17 CONTRACT TRANSITION
(a) The Contractor and the DOE agree that Contractor work completed prior to
the effective date of this contract, and any liabilities associated with
that work shall be governed by the terms and conditions of Contract
Number DE-AC34-94RF00825 ("previous contract"). Any performance measure
fee payable for incremental work completed under the previous contract
up to effective date of this contract shall be paid in accordance with
the terms of the previous contract. For work completed during the
previous contract (number DE-AC34-94RF00825), the Contractor shall be
entitled to submit completion reports after the conclusion of that
contract. Further, the DOE and the Contractor mutually agree to release
and give up all unresolved claims, and claims by the DOE as set forth on
the listing of claims included as Attachment I in Section J. Nothing in
this subparagraph shall alter the obligations of the parties to close
out the previous contract in accordance with its terms.
(b) The contract terms and conditions of this contract including those
relating to the payment of fee shall govern the execution of work
beginning after the start date set forth in Clause F.2. The terms and
conditions governing the performance of work under contract
DE-AC-34-95RF00825 shall cease to be operative irrespective of the
completion date of that contract.
H.18 EVALUATION OF SUBCONTRACTORS
The DOE and Contractor are committed to zero accidents at the RFETS. To
that end, the Contractor will evaluate all site subcontractors to ensure that
they have an acceptable environment, safety and health (ES&H) program, a program
which contains the following values:
o Compliant with applicable local, state and federal regulatory requirements.
o Employees are properly trained and equipped to perform their assigned work.
The Company has an established orientation program for new hires.
Section H - Page 16
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
o Policies and procedures are in place to eliminate accidents,
injuries/illnesses, and damage to property and equipment.
o ES&H records are adequately and properly maintained.
o Accidents/incidents are investigated promptly and required reports are
generated. If the investigation discovers inadequacies in either the work
process or the policies and procedures, the appropriate processes are put in
place to avert the accident/incident in the future and personnel are
provided proper training.
o Hazards are identified and appropriate measures are taken to ensure that
personnel and equipment are adequately protected as a result of identified
hazards.
o Employees have the right to report unsafe conditions and to interrupt or
stop work without fear of reprisal.
o The frequency of ES&H meetings with employees to discuss the work to be
performed and the hazards associated with the work is based upon the scope
of work and commensurate with the work hazards.
o ES&H inspections/audits are conducted to evaluate effectiveness of the
program.
o The Company has an average Experience Modification Rate (EMR), Occupational
Safety and Health Administration (OSHA) Recordable, and Lost Workday case
rate(s) of (1.0, 3.2, and 0.64), respectively, or less, for the previous
three (3) years and shows an improving trend in safety performance.
o The Company has an established written Hazard Communication Program and a
system within the program to maintain Material Safety Data Sheets (MSDS).
o The Company has had no willful citations from OSHA or other regulatory
organizations during the previous three (3) years.
o The Company has received no citations, other than those determined to be
minor violations, or fines for Price-Anderson Amendments Act (PAAA)
non-compliances during the previous three (3) years.
o The Company has received no fines for Nuclear Regulatory Commission
non-compliances during the previous three (3) years.
H.19 EMPLOYEE PERFORMANCE INCENTIVES AND REWARD AND RECOGNITION
The Contractor and its subcontractors may establish monetary incentive
programs to motivate and recognize employees and improve performance. Such
awards will be based on a combination of individual and company performance
aligned to achievement of closure mission objectives. The annual cost of such
programs will be an allowable cost to the Contractor upon Contracting Officer
approval of the overall program as required by DOE Orders. However, the cost to
DOE will not exceed four percent (4%) of annual gross payroll for any given
year.
Section H - Page 17
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
H.20 Labor disputes and whistleblower actions
(a) Labor settlement costs (awards) can arise from judicial orders,
negotiated agreements, arbitration, or an order from a Federal agency or
board. The awards generally involve a violation in one of the following
areas:
(1) Equal Employment Opportunity (EEO) laws,
(2) Union agreements,
(3) Federal labor laws, and
(4) Whistleblower protection laws.
(b) An award or settlement can cover compensatory damages, or underpayment
for work performed. Reimbursement for a complainant employee's legal
counsel may also be covered by an award or settlement.
(c) The allowability of these costs should be determined on a case-by-case
basis after considering the relevant terms of the contract and the
surrounding circumstances; i.e., looking behind the settlement and
considering the causes. If the dispute resulted from actions that would
be taken by a prudent business person (FAR 31.201-3 and 48 CFR (DEAR)
970.3101-3), the costs would be allowable. However, if the dispute was
occasioned by contractor actions which are unreasonable or were found by
the agency or board ruling on the dispute to be caused by unlawful,
negligent or other malicious conduct, the costs would be unallowable.
(d) The allocability of these costs must also be reviewed (FAR 31.201-4 and
48 CFR (DEAR) 970.3101-3). In some circumstances an award may not impact
direct costs, but may be determined to be an allowable indirect cost.
(e) Litigation costs incurred as part of labor settlements shall be
differentiated and accounted for so as to be separately identifiable. If
a contracting officer provisionally disallows such costs, the contractor
may not use funds advanced by DOE to finance litigation costs connected
with the defense of a labor dispute or whistleblower action.
(f) Settlement and litigation costs associated with actions resolved prior
to an adverse determination or finding against a contractor through
judicial action or an agency board will, depending on the circumstances
and facts of each case, generally be allowable, if consistent with
paragraph (c) of this section. Litigation costs associated with an
adverse determination against the contractor require a higher level of
scrutiny before a determination of allowability can be made.
Section H - Page 18
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
This page intentionally left blank.
Section H - Page 19
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Clause # FAR Reference Title Fill-In Information (See FAR 52.104(d))
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
I. 1 FAR 52.202-1 Definitions (OCT 1995) None
I. 2 FAR 52.203-3 Gratuities (APR 1984) None
I. 3 FAR 52.203-5 Covenant Against Contingent Fees (APR 1984) None
I. 4 FAR 52.203-6 Restrictions on Subcontractor Sales to the
Government (JUL 1995) None
I. 5 FAR 52.203-7 Anti-Kickback Procedures (JUL 1995) None
I. 6 FAR 52.203-8 Cancellation, Rescission, and Recovery of
Funds for Illegal or Improper Activity
(JAN 1997) None
I. 7 FAR 52.203-10 Price or Fee Adjustment for Illegal or Improper
Activity (JAN 1997) None
I. 8 FAR 52.203-12 Limitation on Payments to Influence certain
Federal Transactions (JUN 1997) None
I. 9 FAR 52.204-1 Approval of Contract (DEC 1989) Procurement Executive, Department
of Energy
I. 10 FAR 52.204-4 Printing/Copying Double-Sided on Recycled
Paper (JUN 1996) None
I. 11 FAR 52.209-6 Protecting the Government's Interest When
Subcontracting with Contractors Debarred,
Suspended or Proposed for Debarment (JUL 1995) None
I. 12 FAR 52.215-2 Audit and Records -- Negotiation (JUN 1999) None
I. 13 FAR 52.215-8 Order of Precedence -- Uniform Contract
Format (OCT 1997) None
I. 14 FAR 52.215-9 Changes or Additions to Make or Buy Program
(OCT 1997) None
I. 15 FAR 52.215-10 Price Reduction for Defective Cost or Pricing
Data (OCT 1997) None
I. 16 FAR 52.215-12 Subcontractor Cost or Pricing Data (Oct 1997) None
I. 17 FAR 52.215-13 Subcontractor Cost or Pricing Data--
Modifications (OCT 1997) None
I. 18 FAR 52.215-15 Termination of Defined Benefit Pension Plans
(OCT 1997) None
I. 19 FAR 52.215-17 Waiver of Facilities Capital Cost of Money
(OCT 1997) None
I. 20 FAR 52.215-18 Reversion or Adjustment of Plans for
Postretirement Benefits (PRB) Other than
Pensions (OCT 1997) None
I. 21 FAR 52.215-19 Notification of Ownership Changes (OCT 1997) None
I. 22 FAR 52.216-7 Allowable Cost and Payment (APR 1998) None
</TABLE>
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
<TABLE>
<CAPTION>
<S> <C> <C> <C>
I. 23 FAR 52.216-10 Incentive Fee (MAR 1997) e) Fee payable. (1) The fee payable
under this contract shall be the
target fee increased by thirty (30)
cents for every dollar that the
total allowable cost is less than
$3,963,000,000 or decreased by
thirty (30) cents for every dollar
that the total allowable cost
exceeds $4,163,000,000. If the
total allowable cost is between
$3,963,000,000 and $4,163,000,000,
the fee payable shall be the
Target Fee. In no event shall the
total fee payable be greater than
11.6 percent ($460 million) of Target
Cost or less than 3.77 percent
($150 million) of Target Cost. The
provisions set forth above are
depicted by the curve included in
Section J, Attachment H.
I. 24 FAR 52.219-4 Notice of Price Evaluation Preference for
HUBZone Small Business Concerns (JAN 1999) None
I. 25 FAR 52.219-8 Utilization of Small Business Concerns
(JAN 1999) None
I. 26 FAR 52.219-9 Small Business Subcontracting Plan (JAN 1999) -
Alternate II (JAN 1999) None
I. 27 FAR 52.219-16 Liquidated Damages -- Subcontracting Plan
(JAN 1999) None
I. 28 FAR 52.219-23 Notice of Price Evaluation Adjustment for Small
Disadvantaged Business Concerns (OCT 1998) "N/A - Noncompetitive award"
I. 29 FAR 52.219-25 Small Disadvantaged Business Participation
Program -- Disadvantaged Status and Reporting
(JAN 1999) None
I. 30 FAR 52.222-1 Notice to the Government of Labor Disputes
(FEB 1997) None
I. 31 FAR 52.222-3 Convict Labor (AUG 1996)
I. 32 FAR 52.222-4 Contract Work Hours and Safety Standards Act --
Overtime Compensation (JUL 1995) None
I. 33 FAR 52.222-17 Labor Standards for Construction Work --
Facilities Contracts (FEB 1988) None
I. 34 FAR 52.222-21 Prohibition of Segregated Facilities (FEB 1999) None
I. 35 FAR 52.222-26 Equal Opportunity (FEB 1999) None
I. 36 FAR 52.222-35 Affirmative Action for Disabled Veterans and
Veterans of the Vietnam Era (APR 1998) None
I. 37 FAR 52.222-36 Affirmative Action for Workers with Disabilities
(JUN 1998) None
I. 38 FAR 52.222-37 Employment Reports on Disabled Veterans and
Veterans of the Vietnam Era (JAN 1999) None
I. 39 FAR 52.222-41 Service Contract Act of 1965, as amended
(MAY 1989) None
I. 40 FAR 52.223-2 Clean Air and Water (APR 1984) None
I. 41 FAR 52.223-3 Hazardous Material Identification and Material (b)Hazardous material will be
Safety Data (JAN 1997) - Alternate I (JUL 1995) identified as the contract
progresses, and is much too
extensive to be listed
inclusively in this contract
clause.
I. 42 FAR 52.223-5 Pollution Prevention and Right-to-Know
Information (APR 1998) None
I. 43 FAR 52.223-7 Notice of Radioactive Materials (JAN 1997) (a) Notice shall be provided in
accordance with relevant laws,
orders, directives, and
regulations.
</TABLE>
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
<TABLE>
<CAPTION>
<S> <C> <C> <C>
I. 44 FAR 52.223-10 Waste Reduction Program (OCT 1997) None
I. 45 FAR 52.223-11 Ozone-Depleting Substances (JUN 1996) None
I. 46 FAR 52.223-12 Refrigeration Equipment and Air Conditioners
(JUN 1996) None
I. 47 FAR 52.223-14 Toxic Chemical Release Reporting (OCT 1996) None
I. 48 FAR 52.224-1 Privacy Act Notification (APR 1984) None
I. 49 FAR 52.224-2 Privacy Act (APR 1984) None
I. 50 FAR 52.225-3 Buy American Act -- Supplies (JAN 1994) None
I. 51 FAR 52.225-11 Restrictions on Certain Foreign Purchases
(AUG 1998) None
I. 52 FAR 52.226-1 Utilization of Indian Organizations and
Indian-Owned Economic Enterprises (JAN 1999) None
I. 53 FAR 52.227-1 Authorization and Consent (JUL 1995) None
I. 54 FAR 52.227-2 Notice and Assistance Concerning Patent and
Copyright Infringement (AUG 1996) None
I. 55 FAR 52.227-6 Royalty Information (APR 1984) None
I. 56 FAR 52.227-23 Rights to Proposal Data (Technical) (JUN 1987) Except for data contained on
pages none, it is agreed that
as a condition of award of
this contract, and
notwithstanding the conditions
of any notice appearing
thereon, the Government shall
have unlimited rights (as
defined in the "Rights in
Data--General" clause
contained in this contract) in
and to the technical data
contained in the proposal
dated November 1, 1999 as
modified by letter submitted
November 4, 1999
(RGC-116-99/99-RF-04306),
upon which this contract is based.
I. 57 FAR 52.229-3 Federal, State, and Local Taxes (JAN 1991) None
I. 58 FAR 52.230-2 Cost Accounting Standards (APR 1998) None
I. 59 FAR 52.230-6 Administration of Cost Accounting Standards
(APR 1996)
I. 60 FAR 52.232-17 Interest (JUN 1996) None
I. 61 FAR 52.232-18 Availability of Funds (APR 1984) None
I. 62 FAR 52.232-22 Limitation of Funds (APR 1984) None
I. 63 FAR 52.232-23 Assignment of Claims , Alternate I (APR 1984) None
I. 64 FAR 52.232-25 Prompt Payment (JUN 1997) None
I. 65 FAR 52.232-34 Electronic Funds Transfer (MAY 1999) None
I. 66 FAR 52.233-1 Disputes (DEC 1998) -- Alternate I (DEC 1991) None
I. 67 FAR 52.233-3 Protest After Award (AUG 1996) -- Alternate I
(JUN 1985) None
I. 68 FAR 52.237-2 Protection of Government Buildings, Equipment,
and Vegetation (APR 1984) None
I. 69 FAR 52.237-3 Continuity of Services (JAN 1991) None
I. 70 FAR 52.239-1 Privacy or Security Safeguards (AUG 1996) None
I. 71 FAR 52.242-1 Notice of Intent to Disallow Costs (APR 1984) None
I. 72 FAR 52.242-3 Penalties for Unallowable Costs (OCT 1995) None
I. 73 FAR 52.242-13 Bankruptcy (JUL 1995) None
I. 74 FAR 52.242-15 Stop-Work Order (AUG 1989) -- Alternate I
(APR 1984) None
I. 75 FAR 52.243-2 Changes -- Cost Reimbursement (AUG 1987) --
Alternate I (APR 1984) None
I. 76 FAR 52.243-6 Change Order Accounting (APR 1984) None
</TABLE>
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
<TABLE>
<CAPTION>
<S> <C> <C> <C>
I. 77 FAR 52.244-2 Subcontracts (AUG 1998) (e) As directed separately in
writing by the Contracting
Officer (k) Any subcontract
for which the Contractor
received written Contracting
Officer consent previously
under Contract
DE-AC34-95RF00825.
I. 78 FAR 52.244-5 Competition in Subcontracting (DEC 1996) None
I. 79 FAR 52.244-6 Subcontracts for Commercial Items and
Commercial Components (OCT 1998) None
I. 80 FAR 52.245-5 Government Property (Cost Reimbursement,
Time-and-Material, or Labor-Hour Contracts)
(JAN 1986) None
I. 81 FAR 52.246-5 Inspection of Services (Cost-Reimbursement)
(APR 1984) None
I. 82 FAR 52.246-25 Limitation of Liability -- Services (FEB 1997) None
I. 83 FAR 52.247-1 Commercial Bill of Lading Notations (APR 1984) (a) U. S. Department of Energy
(b) U. S. Department of Energy
Contract No. DE-AC34-00RFO1904
U. S. Department of Energy,
Rocky Flats Field Office,
Contracts Management Division,
10808 Highway 93, Unit A,
Golden, CO 80403-8200
I. 84 FAR 52.247-63 Preference for U.S.-Flag Air Carriers (JAN 1997) None
I. 85 FAR 52.249-6 Termination (Cost Reimbursement) (SEP 1996) None
I. 86 FAR 52.249-14 Excusable Delays (APR 1984) None
I. 87 FAR 52.251-1 Government Supply Sources (APR 1984) None
I. 88 FAR 52.251-2 Interagency Fleet Management System Vehicles
and Related Services (Jan 1991) None
I. 89 FAR 52.252-2 Clauses Incorporated by Reference (FEB 1998) http://www.arnet.gov/far;
http://www.pr.doe.gov/dear.html
I. 90 FAR 52.252-6 Authorized Deviations in Clauses (APR 1984) (b) The use in this
solicitation or contract of
any Department of Energy
Acquisition Regulation (48
CFR Part 9) clause with an
authorized deviation is
indicated by the addition
of "(DEVIATION)" after the
name of the regulation
I. 91 FAR 52.253-1 Computer Generated Forms (JAN 1991)
I. 92 DEAR 952.202-1 Definitions (JAN 1997) None
I. 93 DEAR 952.204-2 Security (SEP 1997) None
I. 94 DEAR 952.204-70 Classification/Declassification (SEP 1997) None
I. 95 DEAR 952.204-71 Sensitive Foreign Nations Controls (APR 1994) None
I. 96 DEAR 952.204-74 Foreign Ownership, Control, or Influence over
Contractor (APR 1984) None
I. 97 DEAR 952.208-7 Tagging of Leased Vehicles (APR 1984) None
I. 98 DEAR 952.209-72 Organizational Conflicts of Interest
(JUN 1997) Alternate I None
</TABLE>
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
<TABLE>
<CAPTION>
<S> <C> <C> <C>
I. 99 DEAR 952.222-70 Whistleblower Protection for Contractor
Employees (APR 1999) None
I. 100 DEAR 952.217-70 Acquisition of Real Property (APR 1984) None
I. 101 DEAR 952.223-75 Preservation of Individual Occupational
Radiation Exposure Records (APR 1984) None
I. 102 DEAR 952.224-70 Paperwork Reduction Act (APR 1994) None
I. 103 DEAR 952.226-74 Displaced Employee Hiring Preference (JUN 1997) None
I. 104 DEAR 952.237-70 Collective Bargaining Agreements -- Protective
Services (AUG 1993) None
I. 105 DEAR 952.245-5 Government Property (Cost Reimbursement, time
and materials or labor cost) None
I. 106 DEAR 952.247-70 Foreign Travel (FEB 1997) None
I. 107 DEAR 952.250-70 Nuclear Hazards Indemnity Agreement (JUN 1996) None
I. 108 DEAR 952.251-70 Contractor Employee Travel Discounts (JUN 1995) None
I. 109 DEAR 970.5204-2 Integration of Environment, Safety, and Health
into Work Planning and Execution (JUN 1997) None
I. 110 DEAR 970.5204-31 Insurance -- Litigation and Claims (JUN 1997) None
I. 111 DEAR 970.5204-58 Workplace Substance Abuse Programs at DOE Sites
(AUG 1992) None
I. 112 DEAR 970.5204-72 Patent Rights -- Profit Making Management and
Operating Contractors (MAR 1995) None
I. 113 DEAR 970.5204-75 Pre-Existing Conditions (JUNE 1997) None
I. 114 DEAR 970.5204-77 Workforce Restructuring Under Section 3161 of
the National Defense Authorization Act for
Fiscal Year 1993 (JUN 1997) None
I. 115 DEAR 970.5204-78 Laws, Regulations, and DOE Directives
(JUN 1997) None
I. 116 DEAR 970.5204-79 Access To and Ownership of Records (JUN 1997) None
I. 117 DEAR 970.5204-82 Rights in Data -- Facilities (FEB 1998) None
I. 118 DEAR 970.5204-86 Conditional Payment of Fee (APR 1999) None
</TABLE>
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
PART III - LIST OF DOCUMENTS, EXHIBITS, AND OTHER ATTACHMENTS
SECTION J
LIST OF ATTACHMENTS
Attachment A Performance Guarantees
Attachment B List of DOE Orders
Attachment C Small and Small Disadvantaged Business Subcontracting
Plan
Attachment D Representations and Certifications
Attachment E Key Personnel
Attachment F Reporting Requirements Checklist
Attachment G Authorization Agreements
Attachment H Schedule and Cost Incentive Graphs
Attachment I Listing of Claims
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
SECTION J
ATTACHMENT B
LAWS, REGULATIONS, AND DOE DIRECTIVES APPLICABLE TO RFETS
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
SECTION J
ATTACHMENT B
LAWS, REGULATIONS, AND DOE DIRECTIVES APPLICABLE TO RFETS
---------------------------------------------------------
The DOE Directives and Laws found in the following listing are the "List of
Applicable Laws and Regulations," "List of Applicable Directives" and "Lists A
and B" as those terms are used in paragraph (b) of Clause I.115, LAWS,
REGULATIONS, AND DOE DIRECTIVES. Exemptions, waivers and variances that exist in
contract DE-AC34-95RF00825 will carry forward to this contract. This is not
necessarily an all-inclusive list. The Contractor should follow the established
exemption process to obtain relief from requirements of these regulations where
applicable.
Section C refers to Statements of Commitment which detail a tailored and focused
application of Directives for a closure project. The Field Office will enable
this tailoring through a "best efforts" approach.
It is anticipated that during the performance of this contract, the conditions
for applicability of certain DOE Directives may no longer exist. For example,
when special nuclear materials (SNM) are removed from the site, the conditions
for applicability of those DOE Directives addressing safeguard and security of
such material may no longer exist. In any such situation where the Contractor
seeks relief from the requirements of such DOE Directives, the Contractor may
notify the Contracting Officer in writing, explaining the reasons for its belief
that the DOE Directives no longer apply to contract performance. The Contractor
may, at its own risk and assumption of all responsibility, cease to fulfill the
requirements of such DOE Directives once written notification has been delivered
to the Contracting Officer. The Contracting Officer may determine that the
conditions for applicability of a DOE Directive still exist, and may direct the
Contractor to continue compliance with the DOE Directive. Additionally, even
without such direction by the Contracting Officer, if the conditions for
applicability of a DOE Directive once again arise (e.g., SNM is discovered
unexpectedly during demolition efforts), the DOE Directive will immediately
become applicable once again. Sections or paragraphs of DOE Directives which are
not applicable to RFETS (e.g., DOE C 460.2 Section 2 relative to shipping
information on SNF and HLW) are self deleting.
LIST A: Applicable Laws and Regulations
10 CFR 835 RADIOLOGICAL PROTECTION
10 CFR 830.120 QUALITY ASSURANCE
10 CFR 850 BERYLLIUM
LIST B. Applicable DOE Directives
DOE C 140.1-1A DEPARTMENT OF ENERGY INTERFACE WITH THE DEFENSE
NUCLEAR FACILITIES SAFETY BOARD 01-26-99
DOE C 151.1 COMPREHENSIVE EMERGENCY MANAGEMENT SYSTEM 08-21-96
DOE C 200.1 INFORMATION MANAGEMENT PROGRAM 09-30-96
DOE M 200.1-1 TELECOMMUNICATIONS SECURITY MANUAL 03-15-97
DOE N 205.1 UNCLASSIFIED CYBER SECURITY PROGRAM 07-26-99
DOE C 210.1 PERFORMANCE INDICATORS AND ANALYSIS OF OPERATIONS
INFORMATION 09-27-95
DOE C 224.1 CONTRACTOR PERFORMANCE-BASED BUSINESS MANAGEMENT
Section J, Attach B - Pg 1
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
PROCESS 12-08-97
DOE C 225.1A ACCIDENT INVESTIGATIONS 11-26-97
DOE M 231.1-1 ENVIRONMENT, SAFETY AND HEALTH REPORTING MANUAL 09-30-95
CHANGE 001 11-07-96
DOE C 232.1A OCCURRENCE REPORTING AND PROCESSING OF OPERATIONS
INFORMATION 07-21-97
DOE C 241.1 SCIENTIFIC AND TECHNICAL INFORMATION MANAGEMENT 08-17-98
DOE M 232.1-1A OCCURRENCE REPORTING AND PROCESSING OF OPERATIONS
INFORMATION 07-21-97
DOE C 311.1A EQUAL EMPLOYMENT OPPORTUNITY AND DIVERSITY
PROGRAM 12-30-96
DOE C 350.1 CONTRACTOR HUMAN RESOURCE MANAGEMENT PROGRAMS,
Change 1 05-08-98
DOE C 413.1 MANAGEMENT CONTROL PROGRAM 12-06-95
DOE C 414.1A QUALITY ASSURANCE 11-24-98
DOE C 420.1 FACILITY SAFETY 10-13-95
DOE O 425.1A STARTUP AND RESTART OF NUCLEAR FACILITIES 12-28-98
DOE O 430.1A LIFE CYCLE ASSET MANAGEMENT 10-14-98
DOE O 435.1 RADIOACTIVE WASTE MANAGEMENT 07-09-99
DOE C of N 440.1 PERFORMANCE ELEMENTS FOR DEVELOPMENT OF A CHRONIC
BERYLLIUM DISEASE PREVENTION PROGRAM 7-15-97
DOE C of O 440.1A WORKER PROTECTION MANAGEMENT FOR DOE FEDERAL 03-27-98
AND CONTRACTOR EMPLOYEES
DOE N 441.1 RADIOLOGICAL PROTECTION FOR DOE ACTIVITIES 09-29-95
DOE O 442.1 DEPARTMENT OF ENERGY EMPLOYEE CONCERNS PROGRAM 02-01-99
DOE C 460.1A PACKAGING AND TRANSPORTATION SAFETY 10-02-96
DOE C 460.2 DEPARTMENTAL MATERIALS TRANSPORTATION AND
PACKAGING MANAGEMENT 09-27-95
DOE C 470.1 CONTRACTOR SAFEGUARDS AND SECURITY PROGRAM
REQUIREMENTS 09-28-95
DOE C 470.2 SAFEGUARDS AND SECURITY INDEPENDENT OVERSIGHT
PROGRAM
DOE C 471.1 IDENTIFICATION AND PROTECTION OF UNCLASSIFIED
CONTROLLED NUCLEAR INFORMATION 08-11-99
DOE C 471.2A INFORMATION SECURITY PROGRAM 03-27-97
Section J, Attach B - Pg 2
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
DOE M 471.2-1B CLASSIFIED MATTER PROTECTION AND CONTROL MANUAL 01-06-99
DOE M 471.2-2 CLASSIFIED INFORMATION SYSTEMS SECURITY MANUAL 08-03-99
DOE C 472.1B PERSONNEL SECURITY ACTIVITIES 03-24-97
DOE M 473.2-1 FIREARMS QUALIFICATION COURSES MANUAL 07-08-97
CHANGE 001 08-21-97
DOE O 474.1 CONTROL AND ACCOUNTABILITY OF NUCLEAR MATERIALS 08-11-99
DOE M 474.1-1 MANUAL FOR CONTROL AND ACCOUNTABILITY OF NUCLEAR
MATERIALS 08-11-99
DOE M 474.1-2 NUCLEAR MATERIALS MANAGEMENT AND SAFEGUARDS
SYSTEM REPORTING AND DATA SUBMISSION 02-10-98
CHANGE 001 04-27-98
CHANGE 002 11-16-98
DOE C 475.1-1 IDENTIFYING CLASSIFIED INFORMATION 05-08-98
[Includes only Attachment 2, the CRD document
within Manual 475.1-1, along with the
Definitions in Attachment 1 and the
"Index-CRD".]
N/A ACCOUNTING HANDBOOK Undated
(This document issued 10/17/95 by letter,
E.E. Smedley to distribution)
DOE O 1240.2B UNCLASSIFIED VISITS AND ASSIGNMENTS BY FOREIGN
NATIONALS 08-21-92
CHANGE 001 09-03-92
DOE O 1270.2B SAFEGUARDS AGREEMENT WITH THE INTERNATIONAL
ATOMIC ENERGY AGENCY 06-23-92
DOE O 1300.2A DEPARTMENT OF ENERGY TECHNICAL STANDARDS PROGRAM 05-19-92
DOE O 1300.3 POLICY ON THE PROTECTION OF HUMAN SUBJECTS 08-23-90
DOE O 1450.4 CONSENSUAL LISTENING-IN TO OR RECORDING
TELEPHONE/RADIO
CONVERSATIONS 11-12-92
DOE O 1500.3 FOREIGN TRAVEL AUTHORIZATION 11-10-86
CHANGE 007 07-06-94
DOE O 2030.4B REPORTING FRAUD, WASTE, AND ABUSE TO THE OFFICE
OF INSPECTOR GENERAL 05-18-92
DOE O 2300.1B AUDIT RESOLUTION AND FOLLOWUP 06-08-92
DOE O 2320.1C COOPERATION WITH THE OFFICE OF INSPECTOR GENERAL 05-18-92
DOE O 2321.1B AUDITING OF PROGRAMS AND OPERATIONS 05-14-92
DOE O 4330.4B MAINTENANCE MANAGEMENT PROGRAM 02-10-94
DOE O 5400.5 RADIATION PROTECTION OF THE PUBLIC AND THE
ENVIRONMENT 02-08-90
CHANGE 002 01-07-93
Section J, Attach B - Pg 3
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
[Excluding Paragraph 1a(3)(a) of Chapter II]
DOE O 5480.19 CONDUCT OF OPERATIONS REQUIREMENTS FOR DOE
FACILITIES 07-09-90
CHANGE 001 05-18-92
DOE O 5480.20A PERSONNEL SELECTION, QUALIFICATION AND TRAINING
REQUIREMENTS FOR DOE NUCLEAR FACILITIES 11-15-94
DOE O 5480.21 UNREVIEWED SAFETY QUESTIONS 12-24-91
DOE O 5480.22 TECHNICAL SAFETY REQUIREMENTS, CHG 2 01-23-96
DOE O 5480.23 SAFETY ANALYSIS REPORTS, CHG 1 03-10-94
DOE O 5530.1A ACCIDENT RESPONSE GROUP 09-20-91
DOE O 5530.2 NUCLEAR EMERGENCY SEARCH TEAM 09-20-91
DOE O 5530.3 RADIOLOGICAL ASSISTANCE PROGRAM 01-14-92
CHANGE 001 04-10-92
DOE O 5530.4 AERIAL MEASURING SYSTEM 09-20-91
DOE O 5530.5 FEDERAL RADIOLOGICAL MONITORING AND ASSESSMENT
CENTER 07-10-92
CHANGE 001 12-02-92
DOE O 5610.2 CONTROL OF WEAPON DATA 08-01-80
CHANGE 001 09-02-86
DOE O 5610.12 PACKAGING AND OFFSITE TRANSPORTATION OF NUCLEAR
COMPONENTS, AND SPECIAL ASSEMBLIES ASSOCIATED
WITH THE NUCLEAR EXPLOSIVES AND WEAPON SAFETY
PROGRAM 07-26-94
DOE O 5610.14 TRANSPORTATION SAFEGUARDS SYSTEM PROGRAM
OPERATIONS 05-12-93
DOE O 5632.1C PROTECTION AND CONTROL OF SAFEGUARDS AND
SECURITY INTERESTS 07-15-94
DOE M 5632.1C-1 MANUAL FOR PROTECTION AND CONTROL OF SAFEGUARDS
AND SECURITY INTERESTS 07-15-94
CHANGE 001 04-10-96
(Excluding Chapter III, paragraphs 1, 2, and
4 - 9; and Excluding Chapter XI)
DOE O 5632.7A PROTECTIVE FORCES 04-13-94
CHANGE 001 02-13-95
DOE O 5639.8A SECURITY OF FOREIGN INTELLIGENCE INFORMATION AND
SENSITIVE COMPARTMENTED INFORMATION FACILITIES 07-23-93
DOE O 5660.1B MANAGEMENT OF NUCLEAR MATERIALS 05-26-94
DOE O 5670.1A MANAGEMENT AND CONTROL OF FOREIGN INTELLIGENCE 01-15-92
DOE O 5670.3 COUNTERINTELLIGENCE PROGRAM 09-04-92
Section J, Attach B - Pg 4
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
SECTION J
ATTACHMENT C
SMALL AND SMALL DISADVANTAGED BUSINESS SUBCONTRACTING PLAN
<PAGE>
ROCKY FLATS CLOSURE CONTRACT NO. KAISER-HILL COMPANY, L.L.C.
DE-AC34-00RF01904
Small and Small Disadvantaged Business Subcontracting Plan
for
Kaiser-Hill Company, L.L.C.
Rocky Flats Closure Contract No. DE-AC34-OORF01904
Submitted to Department of Energy
ITEM/SERVICE: Rocky Flats 2006 Closure Project (Closure Project)
I. Introduction
In accordance with Federal Acquisition Regulation 52.219-9, titled Small and
Small Disadvantaged Business Subcontracting Plan, Kaiser-Hill will implement
a graded approach to procurement (i.e. the application of only the
appropriate terms, conditions, and other requirements to a given acquisition)
which maximizes competitive opportunities among small, HubZone small, small
disadvantaged, 8(a) and woman-owned small business concerns while optimizing
opportunities for success in performance of the subcontracted work.
Kaiser-Hill is committed to exceeding the goals set forth in this plan by
implementing effective procurement planning that focuses on meeting project
requirements.
A. Policy Statement
It is the Policy of the United States Government and Kaiser-Hill
Company, L.L.C. that small business concerns, HUBZone small business
concerns, small business concerns owned and controlled by socially
and economically disadvantaged individuals and small business
concerns owned and controlled by women shall have the maximum
practicable opportunity to participate in the performance of
government subcontracts awarded by Kaiser-Hill. It is Kaiser-Hill's
intention to aggressively pursue, wherever possible, subcontracting
opportunities with small business HUBZone small business small
disadvantaged business and woman-owned small business concerns, in
accordance with Public Law 99-661 and 100-180.
B. Definitions
1. Small Business (SB) concern means a small business as defined
pursuant to Section 3 of the Small Business Act and in relevant
regulations promulgated pursuant thereto, defined as a concern,
including its affiliates that is independently owned and operated,
not dominant in the field of operation in which it is bidding on
Government contracts, and qualified as a small business under
applicable size standards.
Use or disclosure of data contained Base Proposal
on this sheet is subject to the SB/SDB Subcontracting Plan -Page 1
restriction on title page of
this proposal.
<PAGE>
ROCKY FLATS CLOSURE CONTRACT NO. KAISER-HILL COMPANY, L.L.C.
DE-AC34-00RF01904
2. Small Disadvantaged Business (SDB) concern means a small business concern
that:
a. Is at least 51 percent owned by one or more individuals who are both
socially and economically disadvantaged or a publicly-owned business
having at least 51 percent of its stock owned by one or more socially
and economically disadvantaged individuals; and
b. Has its management and daily business controlled by one or more such
individuals.
3. Woman-Owned Small Business (WOSB) concern means a small business that is
at least 51 percent owned by a woman or women who control and operate the
business. Control in this context means exercising the power to make
policy decisions. Operate in this context means being actively involved in
the day-to-day management of the business. Woman means all woman small
business owners.
4. HUBZone Small Business means a small business as defined in paragraph B.1
above that appears on the list of Qualified HUBZone Small Business
Concerns maintained by the SBA.
5. Subcontract includes purchase orders.
6. Kaiser-Hill shall have the same meaning as Contractor.
II. FY00 Goals
A. Transition From Existing Prime Contract No. DE-AC34-95RF00825 to New
Closure Contract No. DE-AC3400RF01904:
The closure contract subcontracting plan contained herein includes similar
methods and procedures as the previous Kaiser-Hill subcontracting plan
approved by DOE/RFFO under prime contract number DE-AC34-RFOO825. It is
important to note, however, that this new subcontracting plan for the new
closure prime contract. (DE-AC34-OORF01904) incorporates Kaiser-Hill's new
subcontracting strategy to organizationally and functionally arrange the
site closure work under Kaiser-Hill's new project-focus management
approach. Consequently, Kaiser-Hill Team Subcontractors previously
identified as SSOC, RMRS, RFCSS and WSLLC will transition into traditional
project focused subcontracts (non-Team subcontractors) subject to
individual and separate subcontracting plans as set forth by the
Kaiser-Hill approved subcontracting plan.
B. Transition and Post-Transition FY00 Goals:
It is anticipated that the new project-focused subcontracts will be
awarded by April 1, 2000. Therefore, the calculation methods and
assumptions used from October 1, 1999 to April 1, 2000 for (SSOC, RMRS,
RFCSS and WSLLC) will be those previously applied under prime contract
number DE-AC34-95RFOO825 and yield the following goals:
Use or disclosure of data contained Base Proposal
on this sheet is subject to the SB/SDB Subcontracting Plan -Page 2
restriction on title page of
this proposal.
<PAGE>
ROCKY FLATS CLOSURE CONTRACT NO. KAISER-HILL COMPANY, L.L.C.
DE-AC34-00RF01904
I. Fiscal Year 2000 Goals (October 1, 1999 thru March 30, 2000)
SB SDB WOSB
KH $20,500,000 $6,500,000 $ 2,750,000
RFCSS $ 7,000,000 $1,500,000 $ 1,250,000
RMRS $12,400,000 $7,750,000 $ 2,000,000
SSOC $20,000,000 $3,500,000 $ 2,000,000
WSLLC $ 2,600,000 $750,000 $ 2,000,000
TOTAL $62,500,000 $20,000,000 $10,000,000
2. Fiscal Year 2000 Goals (April 1, 2000 through September 30, 2000)
The following FY00 goal calculation assumptions will be used effective April
1, 2000 or actual date of completion of team subcontractors transition to
project-focused (non-team) -subcontracts and yield the following goals:
SB SDB WOSB HUBZONE
KH $62,500,000 $20,000,000 $10,000,000 $1,396,500
(.5% of FY Contract
Value divided by 2)
3. Total FY2000:
SB SDB WOSB HUBZONE
$125,000,000 $40,000,000 $20,100,000 $1,396,500
4. Calculation Rules:
Kaiser-Hill's proposed small business goals will be submitted in writing
October 1 of each year during the term of this contract or by such later
dates as the Contracting Officer may authorize in writing.
Dollars awarded to small business means all dollars to a SB subcontractor by
Kaiser-Hill and its large business subcontractors (at any tier).
Dollars awarded to HubZone small businesses means all dollars awarded by
Kaiser-Hill, its large business subcontractors, or non-hubzone small
business subcontractors (at any tier).
Use or disclosure of data contained Base Proposal
on this sheet is subject to the SB/SDB Subcontracting Plan -Page 3
restriction on title page of
this proposal.
<PAGE>
ROCKY FLATS CLOSURE CONTRACT NO. KAISER-HILL COMPANY, L.L.C.
DE-AC34-00RF01904
Dollars awarded to small disadvantaged business (includes 8(a)
subcontractors) means all dollars awarded by Kaiser-Hill, its large
business subcontractors, or small, non-disadvantaged business
subcontractors (at any tier).
III. Objectives
The objectives of Kaiser-Hill's SB/SDB/WOSB subcontracting plan are:
A. To seek qualified, diverse SB/SDB/WOSB concerns and provide the entities
an equitable opportunity to compete for subcontracts under this
contract.
B. To establish goals and objectives that encourage increased participation
by SB/ SDB/WOSB concerns in the competitive process. Goals and
objectives will be established prior to each fiscal year.
C. To utilize, to the maximum extent practicable, SB/SDB/WOSB concerns.
D. To focus on SB/SDB/WOSB subcontractor success by rewarding excellent
performance with incentive fees and opportunities for further or
increased participation.
E. Organize and present periodic training seminars on how to qualify for an
SB/SDB/WOSB Subcontract.
F. Implement a Business Opportunity System that uses the Internet to expand
access by SB/SDB1WOSBs to the procurement process by using electronic
bulletin boards, standardized documents such as representations and
certifications, terms and conditions, and electronic source lists.
IV. Procedures
Kaiser-Hill will follow the procedures listed below to achieve the goals and
objectives of this plan.
A. Upon the completion of major team subcontractor transition to project
focused subcontracts, commit that the Small Business Liaison Officer
will assume the responsibilities of managing Kaiser-Hill's SB/SDB/WOSB
subcontracting program under this contract. The designated individual
will:
1. Report directly to the Vice President Subcontract, Technical and
Site Services
2. Interface with SBA to develop opportunities for SB/SDB/WOSB;
3. Maintain liaison with the Government concerning SB/SDB/WOSBs;
4. Search for SB/SDB/WOSB sources and maintain qualified SB/SDB/WOSB
source lists for use by Kaiser-Hill in procurements, including those
expected to exceed $ 100,000. Kaiser-Hill may reserve purchases of
$100,000 or less exclusively for SB's and purchases of $50,000 or
less for SDB's and WOSB's where there is a reasonable expectation
that bids, competitive as to price, quality, and delivery, will be
obtained from two or more responsible firms of the appropriate type;
5. Review and evaluate SB/SDB/WOSB subcontracting plans submitted to
Kaiser-Hill in connection with supply and /or service awards of
$500,000 or greater (or $1,000,000 or
Use or disclosure of data contained Base Proposal
on this sheet is subject to the SB/SDB Subcontracting Plan -Page 4
restriction on title page of
this proposal.
<PAGE>
ROCKY FLATS CLOSURE CONTRACT NO. KAISER-HILL COMPANY, L.L.C.
DE-AC34-00RF01904
greater for construction) and assure that such plans are similar to
the subcontracting plan agreed to by Kaiser-Hill under this
contract; and
6. Submit and ensure subcontractors submit SF 294 and/or SF 295 in
accordance with the instructions on the forms.
B. Assure that SB/SDB/WOSB concerns are provided an opportunity to
equitably compete for subcontracts, particularly by arranging
solicitations to facilitate the participation of these business concerns
in consideration of site priorities. Where Kaiser-Hill's lists of
potential subcontractors are excessively long, reasonable efforts shall
be made to give all such types of concerns an opportunity to compete
over a period of time.
C. Maintain records showing (i) whether each prospective subcontractor is a
SB/SDB/WOSB concern, (ii) procedures that have been adopted to comply
with the requirements set forth in this Subcontracting Plan, and (iii)
with respect to the award of any subcontract exceeding $100,000, as
follows:
1. Whether the subcontract award was to an SB/SDB/WOSB or large
business;
2. Whether more than two SB/SDB/WOSB concerns were solicited;
3. The rationale for not soliciting SB/SDB/WOSB concerns if such firms
were not solicited, and
4. The reasons for award to firms other than SB/SDB/WOSB concerns if
such firms were solicited.
Note: The records maintained above will be in a form determined by
Kaiser-Hill. Such reports will be considered to be management records
only and need not be submitted routinely to the Government; however,
records maintained pursuant to this subcontracting plan will be kept
available for review.
D. Cooperate with the Contracting Officer and the SBA in any requested
studies and surveys of Kaiser-Hill's subcontracting procedures and
practices under this contract.
E. Submit information with respect to subcontracting with SB/SDB/WOSBs as
requested by the Contracting Officer.
F. Maintain and use information from the SB/SDB/WOSB Kaiser-Hill Directory
and from DOE sources, including the Pro-Net to identify each category
and type of subcontractor for new subcontracting opportunities
G. Receive all appropriate visiting SB/SDB/WOSBs who desire to explain the
entity's capabilities, products and services. Explain the routine of
doing business with Kaiser-Hill.
H. Consider categories of procurements for exclusive SB participation,
provided that there are sufficient qualified firms to offer the needed
product or service and to assure reasonable prices, quality and
acceptable delivery.
I. Consider subcontracts with firms certified with the SBA under the
Section 8(a) program.
J. Include the clause entitled Utilization of Small, Small Disadvantaged
and Woman-Owned Small Business Concerns in all subcontracts that offer
further subcontracting opportunities.
Use or disclosure of data contained Base Proposal
on this sheet is subject to the SB/SDB Subcontracting Plan -Page 5
restriction on title page of
this proposal.
<PAGE>
ROCKY FLATS CLOSURE CONTRACT NO. KAISER-HILL COMPANY, L.L.C.
DE-AC34-00RF01904
Require all subcontractors (except SB/SDB/WOSB Concerns) that receive
subcontracts in excess of $500,000 ($ 1,000,000 for construction) to
adopt a plan similar to the plan required by the clause entitled Small
Business and Small Disadvantaged Business Subcontracting Plan.
K. Consider privatization initiatives that are set aside for SB/SDB/WOSB
concerns.
V. Responsibilities
A. Kaiser-Hill's technical groups shall cooperate with the Kaiser-Hill
procurement department in considering SB/SDB/WOSBs equitably and fairly
as sources of supply.
B. Major purchases (in excess of $100,000) shall be examined to determine
the feasibility of breaking them down into smaller units so that
SB/SDB/WOSBs may qualify as manufacturers and/or suppliers for such
requirements.
C. Kaiser-Hill shall, in accordance with Section VI of this document
establish realistic and attainable goals and measure progress toward
reaching those goals.
VI. Reports
A. Reports shall be submitted to the DOE as requested in writing, in the
frequency required and in the format agreed upon. Special reports shall
be kept to a minimum.
B. Quarterly reports on SB/SDB/WOSB activities shall also be furnished to
Kaiser-Hill's management staff.
C. SBA reports will be provided semi-annually.
D. Exceptional performance by any Kaiser-Hill employee in advancing the
SB/SDB/WOSB program will be reported to Kaiser-Hill senior management
and DOE. If weaknesses occur that interfere with the achievement of
goals and objectives, the weakness shall be brought to the attention of
Kaiser-Hill's management staff for appropriate remedial action.
VII. Goals
A. Kaiser-Hill's proposed SB/SDB/WOSB goals will be submitted in writing
by October 1st of each year during the term of this contract or by such
later date as the Contracting Officer may authorize in writing. The
proposed fiscal year goals will be based on the latest available
procurement projections, advance financial plan projections and
historical data.
B. Dollars awarded to SB means all dollars awarded to an SB subcontractor
by Kaiser-Hill and its large business subcontractors (at any tier).
Dollars awarded to HUBZone SBs means all dollars awarded by
Kaiser-Hill, its large business subcontractors, and non-HUBZone SB
awards at any tier awarded to a firm that is a HUBZone SB. Dollars
awarded to SDB means all dollars awarded to a SDB subcontractor by
Kaiser-Hill, its large business subcontractors, or a small,
non-disadvantaged business subcontractor, at any tier.
1. Service Categories
SB/SDB/WOSB are offered opportunities to submit proposals related
to, but not necessarily limited to the following:
Use or disclosure of data contained Base Proposal
on this sheet is subject to the SB/SDB Subcontracting Plan -Page 6
restriction on title page of
this proposal.
<PAGE>
ROCKY FLATS CLOSURE CONTRACT NO. KAISER-HILL COMPANY, L.L.C.
DE-AC34-00RF01904
a. Architect-engineering services
b. Professional services
c. augmentation
d. Travel agency services
e. Construction subcontracts in:
o Mechanical
o Electrical
o Fencing
o General construction
o Testing and inspection
o Painting
o Excavation
o Landscaping
f. Construction management
g. Other Specialty subcontracts
h. Vending service
i. Food service
j. Computer equipment
k. Computer training/software
l. Clerical support
2. Method of Developing Goals
The method used by Kaiser-Hill to develop its SB/SDB/WOSB
subcontracting goals are based on the factors stated in Section II
above. These factors include:
a. DOE-approved goals for FY2000
b. Past projects
c. Analysis of major (over $100,000) procurement projections
d. Established vendor database
e. Survey of procurement managers
f. Consideration of DOE Contracting Officer's recommendations
g. Analysis of historical socioeconomic performance by
Kaiser-Hill
Use or disclosure of data contained Base Proposal
on this sheet is subject to the SB/SDB Subcontracting Plan -Page 7
restriction on title page of
this proposal.
<PAGE>
ROCKY FLATS CLOSURE CONTRACT NO. KAISER-HILL COMPANY, L.L.C.
DE-AC34-00RF01904
h. HUBZone data provided by the SBA
3. Outreach Program
Kaiser-Hill will actively participate in local and national
organizations including but not limited to Minority Enterprises,
Inc., local chambers of commerce, the Small and Disadvantaged
Business Committee, Economic and Empowerment Breakfasts.
Kaiser-Hill will actively seek new SB/SDB/W0SB sources by
establishing a Small/Small Disadvantaged Business/Diversity Advocate
program and by active participation in outreach activities and other
related functions where participation is expected to expose new or
additional qualified concerns to the opportunities at the Rocky
Flats Environmental Technology Site.
Kaiser-Hill will continue its efforts to augment its source data of
SB/SDB/WOSB concerns. To the extent practicable, Kaiser-Hill will
use the following source data:
a. Government agency information
b. Small and small disadvantaged business trade information
c. Small and small disadvantaged business directories both
regional and multi-regional
d. Woman-owned business directories
e. Kaiser FLU internal source lists
f. Existing Rocky Flats vendor information
g. ProNet searches
h. Data provided by the SBA regarding HUBZone areas and HUBZone
subcontractors
4. Method of Identifying Potential Sources
Procurement personnel (and other site personnel as appropriate) will
have access to computerized data files on potential SB/SDB/W0SB
concerns that will be maintained by Kaiser-Hill.
a. Section 8(a) Subcontractors: When authorized by DOE,
Kaiser-Hill will subcontract directly with firms qualified
under Section 8(a) of the Small Business Act. Kaiser-Hill will
identify projects and procurements that appear appropriate for
subcontracting to 8(a) firms.
Lower tier subcontract awards to SB/SDB/WOSB concerns:
Kaiser-Hill will encourage its large business subcontractors
(whether or not their subcontracts require a subcontracting
plan) to provide lower-tier subcontracting opportunities to
SB/SDB/WOSB concerns. Kaiser-Hill will use the same data
sources as described in paragraph III of this plan to assist
large business subcontractors in identifying business sources.
In addition, procurement personnel will be encouraged to
attend procurement conferences, seminars, trade fairs and
other related functions where participation is expected to
expose new or additional qualified SB/SDB/WOSB concerns.
Use or disclosure of data contained Base Proposal
on this sheet is subject to the SB/SDB Subcontracting Plan -Page 8
restriction on title page of
this proposal.
<PAGE>
ROCKY FLATS CLOSURE CONTRACT NO. KAISER-HILL COMPANY, L.L.C.
DE-AC34-00RF01904
b. Access to solicitation sets and data. To the extent
practicable, Kaiser-Hill will assure that SB/SDB/WOSB concerns
have access to solicitations and are provided maximum
opportunity to participate in Kaiser-Hill subcontracts.
Kaiser-Hill will actively solicit and counsel SB/SDB/WOSB
concerns for the purpose of enhancing the potential for
participation in the Kaiser-Hill subcontracting program.
Kaiser-Hill will work toward the utilization of an Internet
home page or electronic bid board for identifying procurement
opportunities
5. Indirect Cost
Kaiser-Hill does not include indirect and Overhead posts in
establishing goals for its Subcontracting Plan for any subcontract
regardless if it is a large business, SB, SDB, or WOSB.
Signed: /s/ Norman B. Sandlin
-------------------------
Norman B. Sandlin
Title: Director, Contracts
Date: November 15,1999
Use or disclosure of data contained Base Proposal
on this sheet is subject to the SB/SDB Subcontracting Plan -Page 9
restriction on title page of
this proposal.
<PAGE>
SECTION J
ATTACHMENT D
REPRESENTATIONS AND CERTIFICATIONS
<PAGE>
ROCKY FLATS CLOSURE CONTRACT NO. KAISER-HILL COMPANY, L.L.C.
DE-AC34-00RF01904
SECTION J
ATTACHMENT D
REPRESENTATIONS, CERTIFICATIONS AND OTHER STATEMENTS OF OFFERORS
TABLE OF CONTENTS
Section Provision
K.1 NOTICE LISTING SOLICITATION PROVISIONS INCORPORATED BY
REFERENCE
K.2 FAR 52.204-3 TAXPAYER IDENTIFICATION (OCT 1998)
K.3 FAR 52.204-5 WOMEN-OWNED BUSINESS (OCT 1995)
K.4 FAR 52.209-5 CERTIFICATION REGARDING DEBARMENT, SUSPENSION,
PROPOSED DEBARMENT, AND OTHER RESPONSIBILITY MATTERS (MAR.
1996)
K.5 FAR 52.219-1 SMALL BUSINESS PROGRAM REPRESENTATIONS (OCT 1998)
ALTERNATE II (JAN 1999)
K.6 FAR 52.219-22 SMALL DISADVANTAGED BUSINESS STATUS (OCT 1998)
K.7 FAR 52.222-22 PREVIOUS CONTRACTS AND COMPLIANCE REPORTS (FEB
1999)
K.8 FAR 52.222-25 AFFIRMATIVE ACTION COMPLIANCE (APR 1984)
K.9 FAR 52.223-1 CLEAN AIR AND WATER CERTIFICATION (APR 1984)
K.10 FAR 52.223-13 CERTIFICATION OF TOXIC CHEMICAL RELEASE REPORTING
(OCT 1996)
K.11 FAR 52.227-6 ROYALTY INFORMATION (APR 1994)
K.12 FAR 52.227-15 REPRESENTATION OF LIMITED RIGHTS DATA AND
RESTRICTED COMPUTER SOFTWARE (JUN 1987)
K.13 FAR 52.230-1 COST ACCOUNTING STANDARDS NOTICES AND
CERTIFICATION (APR 1998)
K.14 FAR 52.252-1 SOLICITATION PROVISIONS INCORPORATED BY REFERENCE
(FEB 1998)
K.15 DEAR 952.204-73 FOREIGN OWNERSHIP, CONTROL, OR INFLUENCE OVER
CONTRACTOR (JUL 1997)
K.16 DEAR 952.209-8 ORGANIZATIONAL CONFLICTS OF INTEREST DISCLOSURE
(JUNE 1997)
K.17 DEAR 970.5204-57 AGREEMENT REGARDING WORKPLACE SUBSTANCE
ABUSE PROGRAMS AT DOE SITES (SEP 1997)
K.18 SIGNATURE/CERTIFICATION
Attachment - Standard Form 328 Certificate Pertaining to Foreign Interests
Use or disclosure of data contained Base Proposal
on this sheet is subject to the Representations and
restriction on title page of Certificates - Page 1
this proposal.
<PAGE>
ROCKY FLATS CLOSURE CONTRACT NO. KAISER-HILL COMPANY, L.L.C.
DE-AC34-00RF01904
K.1 NOTICE LISTING SOLICITATION PROVISIONS INCORPORATED BY
REFERENCE
The following solicitation provisions pertinent to this section are hereby
incorporated by reference (by Citation Number, Title, and Date) in
accordance with the FAR provision at FAR "52.252-1 SOLICITATION PROVISIONS
INCORPORATED BY REFERENCE (FEB 1998)."
NUMBER TITLE DATE
52.203-11 CERTIFICATION AND DISCLOSURE APR 1991
REGARDING PAYMENTS TO INFLUENCE
CERTAIN FEDERAL TRANSACTIONS
52.223-4 RECOVERED MATERIALS CERTIFICATION
OCT 1997
K2 FAR 52.204-3 TAXPAYER IDENTIFICATION (OCT 1998)
(a) Definitions.
"Common parent," as used in this provision, means that corporate
entity that owns or controls an affiliated group of corporations
that files its Federal income tax returns on a consolidated basis,
and of which the offeror is a member.
"Taxpayer Identification Number (TIN)," as used in this provision,
means the number required by the Internal Revenue Service (IRS) to
be used by the offeror in reporting income tax and other returns,
The TIN may be either a Social Security Number or in Employer
Identification Number.
(b) All offerors must submit the information required in paragraphs (d)
through (f) of this provision to comply with debt collection
requirements of 31 U.S.C. 770 1(c) and 3325(d), reporting
requirements of 26 U.S.C. 6041, 6041A, and 6050M, and implementing
regulations issued by the IRS. If the resulting contract is subject
to the payment reporting requirements described in Federal
Acquisition Regulation (FAR) 4.904, the failure or refusal by the
offeror to furnish the information may result in a 31 percent
reduction of payments otherwise due under the contract.
(c) The TIN may be used by the Government to collect and report on any
delinquent amounts arising out of the offeror's relationship with
the Government (31 U.S.C. 7701 (c)(3)). If the resulting contract is
subject to the payment reporting requirements described in FAR
4.904, the TIN provided hereunder may be matched with IRS records to
verify the accuracy of the offeror's TIN.
(d) Taxpayer Identification Number (TIN).
[X] TIN 84-1296851
Use or disclosure of data contained Base Proposal
on this sheet is subject to the Representations and
restriction on title page of Certificates - Page 2
this proposal.
<PAGE>
ROCKY FLATS CLOSURE CONTRACT NO. KAISER-HILL COMPANY, L.L.C.
DE-AC34-00RF01904
[ ] TIN has been applied for.
[ ] TIN is not required because:
[ ] Offeror is a nonresident alien, foreign corporation, or foreign
partnership that does not have income effectively connected with
the conduct of a trade or business in the United States and does
not have an office or place of business or a fiscal paying agent
in the United States;
[ ] Offeror is an agency or instrumentality of a foreign government;
[ ] Offeror is an agency or instrumentality of the Federal
Government
(e) Type of organization.
[ ] Sole proprietorship;
[ ] Partnership;
[ ] Corporate entity (not tax-exempt);
[ ] Corporate entity (tax-exempt);
[ ] Government entity (Federal, State, or local);
[ ] Foreign government;
[ ] International organization per 26 CFR 1.6049-4;
[X] Other A Limited Liability Company
(f) Common parent.
[X] Offeror is not owned or controlled by a common parent as defined
in paragraph (a) of this provision.
[ ] Name and TIN of common parent:
Name
------------------------------
TIN
------------------------------
K.3 FAR 52.204-5 WOMEN-OWNED BUSINESS (OCT 1995)
(a) Representation. The offeror represents that it [ ] is, [X] is not a
women-owned business concern.
Use or disclosure of data contained Base Proposal
on this sheet is subject to the Representations and
restriction on title page of Certificates - Page 3
this proposal.
<PAGE>
ROCKY FLATS CLOSURE CONTRACT NO. KAISER-HILL COMPANY, L.L.C.
DE-AC34-00RF01904
(b) Definition. "Women-owned business concern," as used in this
provision, means a concern which is at least 51 percent owned by one
or more women; or in the case of any publicly owned business, at
least 51 percent of the stock of which is owned by one or more women;
and whose management and daily business operations are controlled by
one or more women.
K.4 FAR 52.209-5 CERTIFICATION REGARDING DEBARMENT, SUSPENSION, PROPOSED
DEBARMENT, AND OTHER RESPONSIBILITY MATTERS (MAR 1996)
(a) (1) The Offeror certifies, to the best of its knowledge and belief,
that -
The Offeror and/or any of its Principals -
(A) Are [ ] are not [X] presently debarred, suspended,
proposed for debarment, or declared ineligible for
the award of contracts by any Federal agency;
(B) Have [ ] have not [X], within a 3-year period
preceding this offer, been convicted of or had a
civil judgment rendered against them for- commission
of fraud or a criminal offense in connection with
obtaining, attempting to obtain, or performing a
public (Federal, state, or local) contract or
subcontract; violation of Federal or state antitrust
statutes relating to the submission of offers; or
commission of embezzlement, theft, forgery, bribery,
falsification or destruction of records, making
false statements, tax evasion or receiving stolen
property; and
(C) Are [ ] are not [X] presently indicted for, or
otherwise criminally or civilly charged by a
governmental entity with, commission of any of the
offenses enumerated in subdivision (a)(1)(i)(B) of
this provision.
(ii) The Offeror has [ ] has not [X], within a 3-year period
preceding y this offer, had one or more contracts
terminated for default by an Federal agency.
(2) "Principals," for the purposes of this certification, means
officers; directors; owners; partners; and, persons having
primary management or supervisory responsibilities within a
business entity (e.g., general manager; plant manager; head
of a subsidiary, division, or business segment, and similar
positions).
THIS CERTIFICATION CONCERNS A MATTER WITHIN THE JURISDICTION OF
AN AGENCY OF THE UNITED STATES AND THE MAKING OF A FALSE,
FICTITIOUS, OR FRAUDULENT CERTIFICATION MAY RENDER THE MAKER
SUBJECT TO
Use or disclosure of data contained Base Proposal
on this sheet is subject to the Representations and
restriction on title page of Certificates - Page 4
this proposal.
<PAGE>
ROCKY FLATS CLOSURE CONTRACT NO. KAISER-HILL COMPANY, L.L.C.
DE-AC34-00RF01904
PROSECUTION UNDER SECTION 1001, TITLE 18, UNITED STATES CODE.
(b) The Offeror shall provide immediate written notice to the Contracting
Officer if, at any time prior to contract award, the Offeror learns
that its certification was erroneous when submitted or has become
erroneous by reason of changed circumstances.
(c) A certification that any of the items in paragraph (a) of this
provision exists will not necessarily result in withholding of an
award under this solicitation. However, the certification will be
considered in connection with a determination of the Offeror's
responsibility. Failure of the Offeror to furnish a certification or
provide such additional information as requested by the Contracting
Officer may render the Offeror nonresponsible.
(d) Nothing contained in the foregoing shall be construed to require
establishment of a system of records in order to render, in good
faith, the certification required by paragraph (a) of this provision.
The knowledge and information of an Offeror is not required to exceed
that which is normally possessed by a prudent person in the ordinary
course of business dealings.
(e) The certification in paragraph (a) of this provision is a material
representation of fact upon which reliance was placed when making
award. If it is later determined that the Offeror knowingly rendered
an erroneous certification, in addition to other remedies available
to the Government the Contracting Officer may terminate the contract
resulting from this solicitation for default.
K.5 FAR 52.219-1 SMALL BUSINESS PROGRAM REPRESENTATIONS (OCT 1998) - ALTERNATE
II (JAN 1999)
(a) (1) The standard industrial classification (SIC) code for this
acquisition is 8744.
(2) The small business size standard is 500 employees.
(3) The small business size standard for a concern which submits an
offer in its own name, other than on a construction or service
contract, but which proposes to furnish a product which it did
not itself manufacture, is 500 employees.
(b) Representations.
(1) The offeror represents as part of its offer that it is[ ], [X] is
not a small business concern.
(2) (Complete only if offeror represented itself as a small business
concern in paragraph (b)(1) of this provision) The offeror
represents, for general
Use or disclosure of data contained Base Proposal
on this sheet is subject to the Representations and
restriction on title page of Certificates - Page 5
this proposal.
<PAGE>
ROCKY FLATS CLOSURE CONTRACT NO. KAISER-HILL COMPANY, L.L.C.
DE-AC34-00RF01904
statistical purposes, it is [ ], is not [ ], a small
disadvantaged business concern as defined in 13 CFR 124.1002.
(3) (Complete only if offeror represented itself as a small business
concern in paragraph (b)(1) of this provision.) The offeror
represents as part of its offer that it is, is not a women-owned
small business concern.
(4) (Reserved)
(5) [Complete only if offeror represented itself as a small business
concern in paragraph (b)(1) of this provision.] The offeror
represents, as part of its offer, that
(i) it [ ] is, [ ] is not a HUBZone small business concern
listed, on the date of this representation, on the List
of Qualified HUBZone Small Business Concerns maintained
by the Small Business Administration, and no material
change in ownership and control, principal place of
ownership, or HUBZone employee percentage has occurred
since it was certified by the Small Business
Administration in accordance with 13 CFR part 126; and
(ii) It [ ] is, [ ] is not a joint venture that complies
with the requirements of 13 CFR part 126, and the
representation in paragraph (b)(5)(i) of this provision
is accurate for the HUBZone small business concern or
concerns that are participating in the joint venture.
[The offeror shaft enter the name or names of the
HUBZone small business concern or concerns that are
participating in the joint venture: _______________.]
Each HUBZone small business concern participating in
the joint venture shall submit a separate signed copy
of the HUBZone representation.
(c) Definitions.
"Small business concern", as used in this provision, means a concern,
including its affiliates, that is independently owned and operated,
not dominant in the field of operation in which it is bidding on
Government contracts, and qualified as a small business under the
criteria in 13 CFR Part 121 and the size standard in paragraph (a) of
this provision.
"Women-owned small business concern", as used in this provision, means
a small business concern
(1) Which is at least 51 percent owned by one or more women or, in
the case of any publicly owned business, at least 51 percent of
the stock of which is owned by one or more women; and
Use or disclosure of data contained Base Proposal
on this sheet is subject to the Representations and
restriction on title page of Certificates - Page 6
this proposal.
<PAGE>
ROCKY FLATS CLOSURE CONTRACT NO. KAISER-HILL COMPANY, L.L.C.
DE-AC34-00RF01904
(2) Whose management and daily business operations are controlled by
one or more women.
(d) Notice.
(1) If this solicitation is for supplies and has been set aside, in
whole or in part, for small business concerns, then the clause
in this solicitation providing notice of the set-aside contains
restrictions on the source of the end items to be furnished.
(2) Under 15 U.S.C. 645(d), any person who misrepresents a firm's
status as a small or small disadvantaged business concern in
order to obtain a contract to be awarded under the preference
programs established pursuant to sections 8(a), 8(d), 9, or 15
of the Small Business Act or any other provision of Federal law
that specifically references section 8(d) for a definition of
program eligibility, shall
(i) Be punished by imposition of fine, imprisonment, or both;
(ii) Be subject to administrative remedies, including suspension
and debarment; and
(iii) Be ineligible for participation in programs conducted
under the authority of the Act.
K.6 52.219-22 SMALL DISADVANTAGED BUSINESS STATUS (OCT 1998)
(a) General. This provision is used to assess an offeror's small
disadvantaged business status for the purpose of obtaining a benefit
on this solicitation. Status as a small business and status as a
small disadvantaged business for general statistical purposes is
covered by the provision at FAR 52.219-1, Small Business Program
Representation.
(b) Representations.
(1) General. The offeror represents, as part of its offer, that it
is a small business under the size standard applicable to this
acquisition; and either
[ ](i)It has received certification by the Small Business
Administration as a small disadvantaged business concern
consistent with 13 CFR 124, Subpart B; and
(A) No material change in disadvantaged ownership and
control has occurred since its certification;
(B) Where the concern is owned by one or more
disadvantaged individuals, the net worth of each
individual upon whom
Use or disclosure of data contained Base Proposal
on this sheet is subject to the Representations and
restriction on title page of Certificates - Page 7
this proposal.
<PAGE>
ROCKY FLATS CLOSURE CONTRACT NO. KAISER-HILL COMPANY, L.L.C.
DE-AC34-00RF01904
the certification is based does not exceed $750,000
after taking into account the applicable exclusions
set forth at 13 CFR 124.104(c)(2); and
(C) It is listed, on the date of this representation, on
the register of small disadvantaged business concerns
maintained by the Small Business Administration; or
(ii) It has submitted a completed application to the Small
Business Administration or a Private Certifier to be
certified as a small disadvantaged business concern in
accordance with 13 CFR 124, Subpart B, and a decision
on that application is pending, and that no material
change in disadvantaged ownership and control has
occurred since its application was submitted.
(2) [ ] For Joint Ventures. The offeror represents, as part of its
offer, that it is a joint venture that complies with the
requirements at 13 CFR 124.1002(f) and that the representation
in paragraph (b)(1) of this provision is accurate for the small
disadvantaged business concern that is participating in the
joint venture. [The offeror shall enter the name of the small
disadvantaged business concern that is participating in the
joint venture: _____________.]
(c) Penalties and Remedies. Anyone who misrepresents any aspects of the
disadvantaged status of a concern for the purposes of securing a
contract or subcontract shall
(1) Be punished by imposition of a fine, imprisonment, or both;
(2) Be subject to administrative remedies, including suspension and
debarment; and
(3) Be ineligible for participation in programs conducted under the
authority, of the Small Business Act.
K.7 FAR 52.222-22 PREVIOUS CONTRACTS AND COMPLIANCE REPORTS (FEB
1999)
The offeror represents that-
(a) It [X] has, [ ] has not participated in a previous contract or
subcontract subject to the Equal Opportunity clause of this
solicitation.
(b) It [X] has, [ ] has not filed all required compliance reports; and
(c) Representations indicating submission of required compliance
reports, signed by proposed subcontractors, will be obtained before
subcontract awards.
Use or disclosure of data contained Base Proposal
on this sheet is subject to the Representations and
restriction on title page of Certificates - Page 8
this proposal.
<PAGE>
ROCKY FLATS CLOSURE CONTRACT NO. KAISER-HILL COMPANY, L.L.C.
DE-AC34-00RF01904
K.8 FAR 52.222-25 AFFIRMATIVE ACTION COMPLIANCE (APR 1984)
The offeror represents that --
(a) It [X] has developed and has on file, [ ] has not developed and does
not have on file, at each establishment affirmative action programs
required by the rules and regulations of the Secretary of Labor (41
CFR 60-1 and 60-2), or,
(b) It [ ] has not previously had contracts subject to the written
affirmative action programs requirement of the rules and regulations
of the Secretary of Labor.
K.9 FAR 52.223-1 CLEAN AIR AND WATER CERTIFICATION (APR 1984)
The Offeror certifies that--
(a) Any facility to be used in the performance of this proposed contract
is [ ], is not [X] listed on the Environmental Protection Agency
(EPA) List of Violating Facilities;
(b) The Offeror will immediately notify the Contracting Officer, before
award, of the receipt of any communication from the Administrator, or
a designee, of the EPA, indicating that any facility that the Offeror
proposes to use for the performance of the contract is under
consideration to be listed on the (EPA) List of Violating Facilities;
and
(c) The Offeror will include a certification substantially the same as
this certification, including this paragraph (c), in every nonexempt
subcontract.
K.10 FAR 52.223-13 CERTIFICATION OF TOXIC CHEMICAL RELEASE
REPORTING (OCT 1996)
(a) Submission of this certification is a prerequisite for making or
entering into this contract imposed by Executive Order 12969, August
8, 1995.
(b) By signing this offer, the offeror certifies that
(1) As the owner or operator of facilities that will be used in the
performance of this contract that are subject to the filing and
reporting requirements described in section 313 of the
Emergency Planning and Community Right-to-Know Act of 1986
(EPCRA) (42 U.S.C. 11023) and section 6607 of the Pollution
Prevention Act of 1990 (PPA) (42 U.S.C. 13106), the offeror
will file and continue to file for such facilities for the life
of the contract the Toxic Chemical Release Inventory Form (Form
R) as described in sections 313(a) and (g) of EPCRA and section
6607 of PPA; or
Use or disclosure of data contained Base Proposal
on this sheet is subject to the Representations and
restriction on title page of Certificates - Page 9
this proposal.
<PAGE>
ROCKY FLATS CLOSURE CONTRACT NO. KAISER-HILL COMPANY, L.L.C.
DE-AC34-00RF01904
(2) None of its owned or operated facilities to be used in the
performance of this contract is subject to the Form R filing
and reporting requirements because each such facility is exempt
for at least one of the following reasons: (Check each block
that is applicable)
[ ] (i) The facility does not manufacture, process, or
otherwise use any toxic chemicals listed under
section 313(c) of EPCRA, 42 U.S.C. 11023(c);
[ ] (ii) The facility does not have 10 or more full-time
employees as specified in section 313(b)(1)(A) of
EPCRA, 42 U.S.C. 11023(b)(1)(A);
[ ] (iii) The facility does not meet the reporting thresholds
of toxic chemicals established under section 313(f)
of EPCRA, 42 U.S.C. 11023(f) (including the
alternate thresholds at 40 CFR 372.27, provided an
appropriate certification form has been filed with
EPA);
[ ] (iv) The facility does not fall within Standard
Industrial Classification Code (SIC) designations 20
through 39 as set forth in Section 19.102 of the
Federal Acquisition Regulation;
[ ] (v) The facility is not located within any State of the
United States, the District of Columbia, the
Commonwealth of Puerto Rico, Guam, American Samoa,
the United States Virgin Islands, the Northern
Mariana Islands, or any other territory or
possession over. which the United States has
jurisdiction.
K.11 FAR 52.227-6 ROYALTY INFORMATION (APR 1984)
(a) Cost or charges for royalties. When the response to this solicitation
contains costs or charges for royalties totaling more than $250, the
following information shall be included in the response relating to
each separate item of royalty or license fee:
(1) Name and address of licensor.
(2) Date of license agreement.
(3) Patent numbers, patent application serial numbers, or other
basis on which the royalty is payable.
(4) Brief description, including any part or model numbers of each
contract item or component on which the royalty is payable.
Use or disclosure of data contained Base Proposal
on this sheet is subject to the Representations and
restriction on title page of Certificates - Page 10
this proposal.
<PAGE>
ROCKY FLATS CLOSURE CONTRACT NO. KAISER-HILL COMPANY, L.L.C.
DE-AC34-00RF01904
(5) Percentage or dollar rate of royalty per unit.
(6) Unit price of contract item.
(7) Number of units.
(8) Total dollar amount of royalties.
(b) Copies of current licenses. In addition, if specifically requested
by the Contracting Officer before execution of the contract, the
offeror shall furnish a copy of the current license agreement and an
identification of applicable claims of specific patents.
K-12 FAR 52.227-15 REPRESENTATION OF LIMITED RIGHTS DATA AND
RESTRICTED COMPUTER SOFTWARE (JUN 1987)
(a) This solicitation sets forth the work to be performed if a contract
award results, and the Governments known delivery requirements for
data (as defined in FAR 27.401). Any resulting contract may also
provide the Government the option to order additional data under the
Additional Data Requirements clause at 52.227-16 of the FAR, if
included in the contract Any data delivered under the resulting
contract will be subject to the Rights in Data-General clause at
52.227-14 that is to be included in this contract. Under the latter
clause, a Contractor may withhold from delivery data that qualify as
limited rights data or restricted computer software, and deliver
form, fit, and function data in lieu thereof. the latter clause also
may be used with its Alternates II and/or III to obtain delivery of
limited rights data or restricted computer software, marked with
limited rights or restricted rights notices, as appropriate. In
addition, use of Alternate V with this latter clause provides the
Government the right to inspect such data at the Contractor's
facility.
(b) As an aid in determining the Government's need to include any of the
aforementioned Alternates in the clause at 52.227-14, Rights in
Data-General, the offeror's response to this solicitation shall, to
the extent feasible, complete the representation in paragraph (b) of
this provision to either state that none of the data qualify as
limited rights data or restricted computer software, or identify
which of the data qualifies as limited rights data or restricted
computer software. Any identification of limited rights data or
restricted computer software in the offeror's response is not
determinative of the status of such data should a contract be
awarded to the offeror.
REPRESENTATION CONCERNING DATA RIGHTS
Offeror has reviewed the requirements for the delivery of data or
software and states (offeror check appropriate block)
[X] None of the data proposed for fulfilling such requirements
qualifies as limited rights data or restricted computer
software.
Use or disclosure of data contained Base Proposal
on this sheet is subject to the Representations and
restriction on title page of Certificates - Page 11
this proposal.
<PAGE>
ROCKY FLATS CLOSURE CONTRACT NO. KAISER-HILL COMPANY, L.L.C.
DE-AC34-00RF01904
[ ] Data proposed for fulfilling such requirements qualify as
limited rights data or restricted computer software and are
identified as follows:_____________________________________
NOTE: "Limited rights data" and "Restricted computer software" are
defined in the contract clause entitled "Rights In Data-
General."
K.13 FAR 52.230-1 COST ACCOUNTING STANDARDS NOTICES AND CERTIFICATION (APR
1998)
Note: This notice does not apply to small businesses or foreign
governments. This notice is in three parts, identified by Roman numerals I
through III.
Offerors shall examine each part and provide the requested information in
order to determine Cost Accounting Standards (CAS) requirements applicable
to any resultant contract.
If the offeror is an educational institution, Part II does not apply
unless the contemplated contract will be subject to full or modified CAS
coverage pursuant to 48 CFR 9903.201-2(c)(5) or 9903.201-2(c)(6),
respectively.
I. DISCLOSURE STATEMENT-COST ACCOUNTING PRACTICES AND CERTIFICATION
(a) Any contract in excess of $500,000 resulting from this solicitation
will be subject to the requirements of the Cost Accounting Standards
Board (48 CFR Chapter 99), except for those contracts which are
exempt as specified in 48 CFR 9903.201-1.
(b) Any offeror submitting a proposal which, if accepted, will result in
a contract subject to the requirements of 48 CFR Chapter 99 must, as
a condition of contracting, submit a Disclosure Statement as required
by 48 CFR 9903.202. When required, the Disclosure Statement must be
submitted as a part of the offeror's proposal under this solicitation
unless the offeror has already submitted a Disclosure Statement
disclosing the practices used in connection with the pricing of this
proposal. If an applicable Disclosure Statement has already been
submitted, the offeror may satisfy the requirement for submission by
providing the information requested in paragraph (c) of Part I of
this provision. CAUTION: In the absence of specific regulations or
agreement, a practice disclosed in a Disclosure Statement shall not,
by virtue of such disclosure, be
Use or disclosure of data contained Base Proposal
on this sheet is subject to the Representations and
restriction on title page of Certificates - Page 12
this proposal.
<PAGE>
ROCKY FLATS CLOSURE CONTRACT NO. KAISER-HILL COMPANY, L.L.C.
DE-AC34-00RF01904
deemed to be a proper, approved, or agreed-to practice for pricing
proposals or accumulating and reporting contract performance cost
data.
(c) Check the appropriate box below:
[X] (1) Certificate of Concurrent Submission of Disclosure Statement.
The offeror hereby certifies that, as a part of the offer,
copies of the Disclosure Statement have been submitted as
follows:
(i) original and one copy to the cognizant Administrative
Contracting Officer (ACO) or cognizant Federal agency
official authorized to act in that capacity (Federal
official), as applicable, and
(ii) one copy to the cognizant Federal auditor.
(Disclosure must be on Form No. CASB DS-1 or CASB DS-2, as
applicable. Forms may be obtained from the cognizant ACO or
Federal official and/or from the loose-leaf version of the
Federal Acquisition Regulation.)
Date of Disclosure Statement: November 1, 1999
Name and Address of Cognizant ACO or Federal Official Where
Filed:
Steven Scott, Contracting Officer
U.S. Department of Energy, Rocky Flats Field Office
10808 Highway 93, Unit A
Golden, CO 80403-8200
The offeror further certifies that the practices used in
estimating costs in pricing this proposal are consistent with
the cost accounting practices disclosed in the applicable
Disclosure Statement.
[ ] (2) Certificate of Previously Submitted Disclosure Statement.
The offeror hereby certifies that the required Disclosure
Statement was filed as follows:
Date of Disclosure Statement:
Name and Address of Cognizant ACO or Federal Official Where
Filed:_____________________________________________________
___________________________________________________________
The offeror further certifies that the practices used in
estimating costs in. pricing this proposal are consistent with
the cost accounting practices disclosed in the applicable
Disclosure Statement.
[ ] (3) Certificate of Monetary Exemption.
Use or disclosure of data contained Base Proposal
on this sheet is subject to the Representations and
restriction on title page of Certificates - Page 13
this proposal.
<PAGE>
ROCKY FLATS CLOSURE CONTRACT NO. KAISER-HILL COMPANY, L.L.C.
DE-AC34-00RF01904
The offeror hereby certifies that the offeror, together with all
divisions, subsidiaries, and affiliates under common control, did
not receive net awards of negotiated prime contracts and
subcontracts subject to CAS totaling more than S25 million (of
which at least one award exceeded $1 million) in the cost
accounting period immediately preceding the period in which this
proposal was submitted. The offeror further certifies that if
such status changes before an award resulting from this proposal,
the offeror will advise the Contracting Officer immediately.
[ ] (4) Certificate of Interim Exemption.
The offeror hereby certifies that (i) the offeror first exceeded
the monetary exemption for disclosure, as defined in (3) of this
subsection, in the cost accounting period immediately preceding
the period in which this offer was submitted and (ii) in
accordance with 48 CFR 9903.202-1, the offeror is not yet
required to submit a Disclosure Statement. The offeror further
certifies that if an award resulting from this proposal has not
been made within 90 days after the end of that period, the
offeror Will immediately submit a revised certificate to the
Contracting Officer, in the form specified under subparagraph
(c)(1) or (c)(2) of Part I of this provision, as appropriate, to
verify submission of a completed Disclosure Statement.
CAUTION: Offerors currently required to disclose because they were awarded a
CAS-covered prime contract or subcontract of $25 million or more in the current
cost accounting period may not claim this exemption (4). Further, the exemption
applies only in connection with proposals submitted before expiration of the
90-day period following the cost accounting period in which the monetary
exemption was exceeded.
II. COST ACCOUNTING STANDARDS-ELIGIBILITY FOR MODIFIED CONTRACT COVERAGE
If the offeror is eligible to use the modified provisions of 48 CFR
9903.201-2(b) and elects to do so, the offeror shall indicate by checking
the box below. Checking the box below shall mean that the resultant
contract is subject to the Disclosure and Consistency of Cost Accounting
Practices clause in lieu of the Cost Accounting Standards clause.
[ ] The offeror hereby claims an exemption from the Cost Accounting
Standards clause under the provisions of 48 CFR 9903.201- 2(b) and
certifies that the offeror is eligible for use of the Disclosure and
Consistency of Cost Accounting Practices clause because during the
cost accounting period immediately preceding the period in which
this proposal was submitted, the offeror received less than $25
million in awards of CAS-covered prime contracts and subcontracts,
or the offeror did not receive a single CAS-covered award exceeding
$1 million. The offeror further certifies that if such status
changes before an award resulting from this proposal, the offeror
will advise the Contracting Officer immediately.
Use or disclosure of data contained Base Proposal
on this sheet is subject to the Representations and
restriction on title page of Certificates - Page 14
this proposal.
<PAGE>
ROCKY FLATS CLOSURE CONTRACT NO. KAISER-HILL COMPANY, L.L.C.
DE-AC34-00RF01904
CAUTION: An offeror may not claim the above eligibility for modified
contract coverage if this proposal is expected to result in the award of
a CAS-covered contract of S25 million or more or if during its current
cost accounting period, the offeror has been awarded a single
CAS-covered prime contract or subcontract of $25 million or more.
III. ADDITIONAL COST ACCOUNTING STANDARDS APPLICABLE TO EXISTING CONTRACTS
The offeror shall indicate below whether award of the contemplated
contract would, in accordance with subparagraph (a)(3) of the Cost
Accounting Standards clause, require a change in established cost
accounting practices affecting existing contracts and subcontracts.
[X] Yes [ ] No
K.14 FAR 52.252-1 SOLICITATION PROVISIONS INCORPORATED BY REFERENCE (FEB 1998)
This solicitation incorporates one or more solicitation provisions by
reference, with the same force and effect as if they were given in full text.
Upon request, the Contracting Officer will make their full text available. The
offeror is cautioned that the listed provisions may include blocks that must be
completed by the offeror and submitted with its quotation or offer. In lieu of
submitting the full text of those provisions, the offeror may identify the
provision by paragraph identifier and provide the appropriate information with
its quotation or offer. Also, the fall text of a solicitation provision may he
accessed electronically at this/these address(es):
Federal Acquisition Regulations http://www.arnet.gov/far/
Federal Acquisition Forms http://www.gsa.gov/forms/farnumer.htm
Department of Energy Acquisition http://www.pr.doe.gov/dear.html and
Regulations http://farsite.hill.af.mil/vfdoel.htm
K.15 DEAR 952.204-73 FOREIGN OWNERSHIP, CONTROL, OR INFLUENCE OVER CONTRACTOR
(JUL 1997) Alternate I (DEC 1993)
(a) For purposes of this provision, a foreign interest is defined as any of the
following:
(1) A foreign government or foreign government agency;
(2) Any form of business enterprise organized under the laws of any
country other than the United States or its possessions;
Use or disclosure of data contained Base Proposal
on this sheet is subject to the Representations and
restriction on title page of Certificates - Page 15
this proposal.
<PAGE>
ROCKY FLATS CLOSURE CONTRACT NO. KAISER-HILL COMPANY, L.L.C.
DE-AC34-00RF01904
(3) Any form of business enterprise organized or incorporated under the
laws of the U.S., or a State or other jurisdiction within the U.S.,
which is owned, controlled, or influenced by a foreign government,
agency, firm, corporation, or person; or
(4) Any person who is not a U.S. citizen.
(b) Foreign ownership, control, or influence (FOCI) means the situation
where the degree of ownership, control, or influence over a contractor by
a foreign interest is such that a reasonable basis exists for concluding
that compromise of classified information or significant quantity of
special nuclear material as defined in 10 CFR Part 710 may result.
(c) If the offeror has not previously submitted responses to the following
questions to DOE as part of the facility security clearance process, then
it shall answer the following questions. Answer each question in either
the "yes" or "no" column. If the answer is yes, furnish in detail on a
separate sheet of paper all the information requested in parentheses.
Copies of information which responds to these questions and which was
submitted to other Government agencies may be submitted as responses to
these questions if the earlier responses are accurate, complete, and
current.
Question Yes No
1. Does a foreign interest own or have beneficial ownership in X
5% of more of your organization's voting securities? (Identify
the percentage of any class of shares or other securities issued
which are owned by foreign interests, listed by country. If you
answer "Yes" and have received from an investor a copy of
Schedule 13D and/or Schedule 13G filed by the investors with the
Securities and Exchange Commission, you are to attach a copy of
Schedule 13D and/or Schedule 13G.)
2. Does your organization own 10% or more of any foreign interest? X
(Furnish the name of the foreign interest, address by country,
and the percentage owned. Include name and title of officials of
your organization who occupy positions with the foreign interest,
if any.)
3. Do any foreign interests have management positions such as X
directors, officers, or executive personnel in your organization?
(Furnish fall information concerning the of the foreign interest
and the position he/she holds in your organization.)
4. Does any foreign interest control or influence, or is any X
foreign interest in a position control or influence the election,
appointment, or tenure of any of your directors, officers, or
executive personnel? (Identify the foreign interest(s) and furnish
full details concerning the control or influence.)
5. Does your organization have any contracts, binding agreements, X
understandings, or X arrangements with a foreign interest(s) that
cumulatively represent 10% or more of your organization's gross
income? (Furnish the name of the foreign interest, country, nature
of agreement or involvement.
Agreements include licensing, sales, patent exchange, trade secrets,
agency, cartel, partnership, joint venture, proxy etc. Give overall
percentage by country as related to total income and type of
services or products in general terms. If you answer "Yes" and
have received from the foreign interest a copy of Schedule 13D
and/or Schedule 13G filed by the foreign interest with the
Securities and Exchange Commission, you are to attach a copy of
Schedule 13D and/or Schedule 13G.)
Use or disclosure of data contained Base Proposal
on this sheet is subject to the Representations and
restriction on title page of Certificates - Page 16
this proposal.
<PAGE>
ROCKY FLATS CLOSURE CONTRACT NO. KAISER-HILL COMPANY, L.L.C.
DE-AC34-00RF01904
YES NO
6. Is your organization indebted to foreign interests? (Furnish X
the amount of indebtedness related to the current assets of the
organization and identify the creditor. Include specifics as to
the type of indebtedness and what, if any, collateral, including
voting stock, been furnished or pledged. If any, and what will
be received after conversion are to furnished.)
7. Does your organization derive any income from Communist X
countries included in Country Groups Q, S, W, Y, and Z in
Supplement No. 1 in 15 CFR part 770? (Discuss in detail any
income derived from Communist countries, including percentage
from each such country as related to total income, and the
type of services or products involved.)
8. Is 5% or more of any class of your organization's securities X
hold in "nominee shares" in "street names" or in some other
method which does not disclose beneficial owner of table title?
(Identify each foreign institutional investor holding 5 percent
or more of voting stock. Identification should include the name
and address of the investor and percentage of stock held. State
whether the investor has attempted to, or has, exerted any
management control or influence over the appointment of directors,
officers, or other key management personnel, and whether such
investors have attempted to influence the policies of the
corporation. If you have received from the investor a copy of the
Schedule 13D and/or Schedule 13G filed by the investor with the
Securities and Exchange Commission, you are to attach a copy of
Schedule 13D and/or Schedule 13G.)
9. Does your organization have inter-locking directors with foreign X
interests? (Include identifying data on all such directors. If they
have a security clearance, so state. Also indicate the name and
address of all other corporations with which they serve in capacity.)
10. Are there any citizens of foreign countries employed by, or who X
may visit, your X offices or facilities in a capacity which may
permit them to have access to classified information or a
significant quantity of special nuclear material? (Provide complete
information by identifying the individuals and the country of which
they are citizens.)
11 . Does your organization have foreign involvement not otherwise X
covered in your answers to the above questions? (Describe the foreign
involvement in detail, including why the involvement would not be
reportable in the preceding questions.)
(d) Prior to award of a contract under this solicitation, the DOE must
determine that award of the contract to the offeror will not pose an undue
risk to the common defense and security as a result of its access to
classified information or a significant quantity of special nuclear
material in the performance of the contract. In making the determination,
the contracting officer may consider a voting trust or other arrangements
proposed by the offeror to mitigate or avoid FOCI. The contracting officer
may require the offeror to submit such additional information as deemed
pertinent to this determination.
(e) The offeror shall require any subcontractors having access to
classified information or a significant quantity of special nuclear
material to provide responses to the questions in paragraph (c) of this
provision directly to the DOE contracting officer.
(f) Information submitted by the offeror in response to the questions in
(c) above is to be used solely for purposes of evaluating foreign
ownership, control, or influence and shall be treated by
Use or disclosure of data contained Base Proposal
on this sheet is subject to the Representations and
restriction on title page of Certificates - Page 17
this proposal.
<PAGE>
ROCKY FLATS CLOSURE CONTRACT NO. KAISER-HILL COMPANY, L.L.C.
DE-AC34-00RF01904
DOE, to the extent permitted by law, as business or financial information
submitted in confidence.
NOTICE
Statute prohibits the award of a contract under a national security program to a
company owned by an entity controlled by a foreign government unless a waiver is
granted by the Secretary of Energy.
K.16 ORGANIZATIONAL CONFLICTS OF INTEREST DISCLOSURE-ADVISORY AND ASSISTANCE
SERVICES (JUN 1997)
(a) Organizational conflict of interest means that because of other activities
or relationships with other persons, a person is unable or potentially unable to
render impartial assistance or advice to the Government, or the person's
objectivity in performing the contract work is or might be otherwise impaired,
or a person has an unfair competitive advantage.
(b) An offeror notified that it is the apparent successful offeror shall provide
the statement described in paragraph (c) of this provision. For purposes of this
provision, "apparent successful offeror" means the proposer selected for final
negotiations or, where individual contracts are negotiated with all firms in the
competitive range, it means all such firms.
(c) The statement must contain the following:
(1) A statement of any past (within the past twelve months), present, or
currently planned financial, contractual, organizational, or other
interests relating to the performance of the statement of work. For
contractual interests, such statement must include the name, address
telephone number of the client or client(s), a description of the
services rendered to the previous client(s), and the name of a
responsible officer or employee of the offeror who is knowledgeable
about the services rendered to each client, if, in the 12 months
preceding the date of the statement services were rendered to the
Government or any other client (including a foreign government or
person) respecting the same subject matter of the instant solicitation,
or directly relating to such subject matter. The agency and contract
number under which the services were rendered must also be included, if
applicable. For financial interests, the statement must include the
nature and extent of the interest and any entity or entities involved
in the financial relationship. For these and any other interests enough
such information must be provided to allow a meaningful evaluation of
the potential effect of the interest on the performance of the
statement of work.
(2) A statement that no actual or potential conflict of interest or unfair
competitive advantage exists with respect to the advisory and
assistance services to be provided in connection with the instant
contract or that any actual or potential conflict of interest or unfair
competitive advantage that does or may exist with respect to the
contract in question has been communicated as part of the statement
required by (b) of this provision.
Use or disclosure of data contained Base Proposal
on this sheet is subject to the Representations and
restriction on title page of Certificates - Page 18
this proposal.
<PAGE>
ROCKY FLATS CLOSURE CONTRACT NO. KAISER-HILL COMPANY, L.L.C.
DE-AC34-00RF01904
(d) Failure of the offeror to provide the required statement may result in the
offeror being determined ineligible for award. Misrepresentation or failure to
report any fact may result in the assessment of penalties associated with false
statements or such other provisions provided for by law or regulation.
K17 DEAR 970.5204-57 AGREEMENT REGARDING WORKPLACE SUBSTANCE ABUSE PROGRAMS AT
DOE SITES (SEP 1997)
(a) Any contract awarded as a result of this solicitation will be subject
to the policies, criteria, and procedures of 10 CFR part 707,
Workplace Substance Abuse Programs at DOE Sites.
(b) By submission of its offer, the offeror agrees to provide to the
Contracting ,Officer, within 30 days after notification of selection
for award, or award of a contract, whichever occurs first, pursuant
to this solicitation, its written workplace substance abuse program
consistent with the requirements of 10 CFR part 707.
(c) Failure of the offeror to agree to the condition of responsibility
set forth in paragraph (b) of this provision, renders the offeror
unqualified and ineligible for award.
Use or disclosure of data contained Base Proposal
on this sheet is subject to the Representations and
restriction on title page of Certificates - Page 19
this proposal.
<PAGE>
ROCKY FLATS CLOSURE CONTRACT NO. KAISER-HILL COMPANY, L.L.C.
DE-AC34-00RF01904
K.18 SIGNATURE/CERTIFICATION
By signing below, the offeror certifies, under penalty of law, that the
representations and certifications are accurate, current, and complete.
The offeror further certifies that it will notify the Contacting Officer
of any changes to these representations and certifications. The
representations and certifications made by the offeror, as contained
herein, concern matters within the jurisdiction of an agency of the United
States and the making of a false, fictitious, or fraudulent representation
or certification may reader the maker subject to prosecution under Title
18, United States Code, Section 1001.
/s/ Robert G. Card November 15, 1999
---------------------------------------------------------------
Signature of the Officer or Employee Date of Execution
Responsible for the Offer
Robert G. Card. President and Chief Executive Officer
---------------------------------------------------------------
Typed Name and Title of the Officer or Employee
Responsible for the Offer
Kaiser-Hill Company L.L.C.
---------------------------------------------------------------
Name of Organization
10808 Highway 93, Unit B
---------------------------------------------------------------
Address
Golden. CO 80403-8200
---------------------------------------------------------------
City, State, ZIP
CONTRACT NUMBER DE-AC34-00RF01904
Rocky Flats Environmental Technology Site
Use or disclosure of data contained Base Proposal
on this sheet is subject to the Representations and
restriction on title page of Certificates - Page 20
this proposal.
<PAGE>
ROCKY FLATS CLOSURE CONTRACT NO. KAISER-HILL COMPANY, L.L.C.
DE-AC34-00RF01904
Supplemental Information
to
Section K-16, Organizational Conflict of Interest
of
Solicitation No. DE-AC34-OORF01904
Representations and Certifications
by
KAISER-HILL COMPANY, L.L.C.
I hereby certify that I have the authority to represent Kaiser-Hill Company,
L.L.C. and that, to the best of my knowledge and belief, and upon a good faith
investigation, no past (within the past twelve months), present or currently
planned financial, contractual, organizational or other interests exist relating
to the performance of the statement of work. Additionally, Kaiser-Hill Company,
L.L.C. has no actual or potential conflict of interest or unfair competitive
advantage with respect to the advisory and assistance services to be provided in
connection with the instant contract or that any actual or potential conflict of
interest or unfair competitive advantage that does or may exist with respect to
the contract in question has been communicated.
Signature:
/s/ Robert G. Card
------------------------------------
Robert G. Card
President and Chief Executive Officer
Kaiser-Hill Company, L.L.C.
November 15, 1999
Use or disclosure of data contained Base Proposal
on this sheet is subject to the Representations and
restriction on title page of Certificates - Page 21
this proposal.
<PAGE>
ROCKY FLATS CLOSURE CONTRACT NO. KAISER-HILL COMPANY, L.L.C.
DE-AC34-00RF01904
This page intentionally left blank.
Use or disclosure of data contained Base Proposal
on this sheet is subject to the Representations and
restriction on title page of Certificates - Page 22
this proposal.
<PAGE>
ROCKY FLATS CLOSURE CONTRACT NO. KAISER-HILL COMPANY, L.L.C.
DE-AC34-00RF01904
SECTION J
ATTACHMENT E
KEY PERSONNEL
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
SECTION J
ATTACHMENT E
KEY PERSONNEL
KAISER-HILL COMPANY, L.L.C.
- -------------------------------------------------------------------------
Name Title
- -------------------------------------------------------------------------
Card, Robert G. President and CEO
- -------------------------------------------------------------------------
Tiller, Robert E. Executive Vice President
- -------------------------------------------------------------------------
Parker, Alan M. Director, B771 Project
- -------------------------------------------------------------------------
Parker, Alan M. Director, B776 Project
- -------------------------------------------------------------------------
Fulton, John C. Director, B371 Project
- -------------------------------------------------------------------------
Fulton, John C. Director, B707 Project
- -------------------------------------------------------------------------
Tuor, Nancy R. Director, Industrial Buildings, Site Operations,
and ER Project
- -------------------------------------------------------------------------
Tuor, Nancy R. Director, Planning and Integration
- -------------------------------------------------------------------------
Brailsford, Marvin D. Director, Materials Stewardship Project
- -------------------------------------------------------------------------
Spears, Mark S. Director, Environmental, Safety, Health and Quality
- -------------------------------------------------------------------------
Martinez, Leonard A. Director of Administration
- -------------------------------------------------------------------------
Bensussen, Stanley J. General Counsel
- -------------------------------------------------------------------------
Section J, Attach E - Pg 2
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
SECTION J
ATTACHMENT F
REPORTING REQUIREMENTS CHECKLIST
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
Report Distribution List
------------------------
<TABLE>
<CAPTION>
Plan/Report Form No. * Frequency Level No. Copies Address
----------- ---------- --------- ----- ---------- -------
<S> <C> <C> <C> <C> <C>
Management Plan O,A Total project 5 A
Status Report Q PBD, total project 1,8,1 A,B,C
Summary Report 1332.2 Q PBD, total project 1,8,1 A,B,C
- ------------------------------------------------
Milestone Schedule Plan 1332.3 O,Q PBD, total project 1,8,1 A,B,C
Cost Plan 1332.7 O,Q PBD, total project 1,8,1 A,B,C
Milestone Schedule Status 1332.3 M PBD, total project 1,8,1 A,B,C
Cost Management Report 1332.9 M PBD, total project 1,8,1 A,B,C
- ------------------------------------------------
Management Control System Description O,X Total project 1,3,1 A,B,C
WBS Dictionary Index O,X Total project 1,3,1 A,B,C
Cost Performance Reports 1332.12 M M Control Account, PBD 1,8,1 A,B,C
1332.14 PDB 1,8,1 A,B,C
- ------------------------------------------------
Cash Flow Statement O,Q PBD, total project 1,2,2 A,B,C
Operating Budget O,Q PBD, total project 1,2,2 A,B,C
Supplementary Information A As required as required A
- ------------------------------------------------
Other (Quarterly Critical Analysis) Q PBD, total project 1,8,1 A,B,C
</TABLE>
* Alternate format may be authorized upon approval of the Contracting Officer
1
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF0-01904
Due Dates
---------
Within x Calendar
Code Event Days after event
- ---- ----- -----------------
A As requested As specified
M End of calendar month 30
O Contract award 30
Q End of calendar quarter 30
X Significant change 5
2
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF0-01904
List of
A. Contracting Officer
U.S. Department of Energy
Rocky Flats Field Office
10808 Highway 93, Unit A
Golden. CO 80402-8200
B. Assistant Manager for Closure Project management
U.S. Department of Energy
Rocky Flats Field Office
108M Highway 93, Unit A
Golden, CO 80402-8200
C. Field Chief Financial Officer
U.S. Department of Energy
Rocky Flats Field Office
10808 Highway 93, Unit A
Golden, CO 80402-8200
3
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF0-01904
SECTION J
ATTACHMENT G
AUTHORIZATION AGREEMENTS
<PAGE>
ROCKY FLATS ENVIRONMENTAL TECHNOLOGY SITE
-----------------------------------------
Building 991 Complex Authorization Agreement
--------------------------------------------
Authorization Agreement No. RFETS-014 Revision 1
1. Preamble
The purpose of this Authorization Agreement is to adopt the Building 991
Complex Authorization Basis (AB), as approved by the Department of Energy
(DOE), Rocky Flats Field Office (RFFO) and to authorize the performance of
activities in accordance with the Building 991 Complex AB.
Kaiser-Hill Company L.L.C. (the Contractor) inherited from EG&G Rocky
Flats, Inc., on July 1. 1995, aging facilities with existing hazards arid
outdated or non-existent authorization basis documentation. It is
recognized by the DOE, RFFO and the Contractor that on July 1, 1995, the
following conditions existed regarding Building 991: (a) the hazards,
design basis and construction detail knowledge of the system, structures
and components were incomplete, and (b) a new AB was needed to support the
new and current missions. The new AB was developed following appropriate
guidance contained in DOE Orders 5480.22 Technical Safety Requirements
(TSR) and DOE 5480.23 Nuclear Safety Analysis Reports (SAR) and DOE-STD-
3011-94, Guidance for Preparation of DOE 5480.22 (TSR) and DOE 5480.23
(SAR) Implementation Plans.
2. Scope of Agreement
This agreement authorizes the scope of activities identified and analyzed
in the AB subject to the terms and conditions in section 5 below.
3. Basis for Approval/Contractor Qualification
3.1. Based on the Review Report for the Building 991 Complex Final Safety
Analysis Report (FSAR) dated May 5, 1999, with specified technical
direction, the Department of Energy, Rocky Flats Field Office
concludes that the Building 991 Complex FSAR adequately documents
the operating safety basis and contains a control set, that when
implemented, provides reasonable assurance that the work activities
described in the Building 991 Complex FSAR can be conducted by the
Contractor without endangering the environment or the health and
safety of the workers or public.
3.2. The Department of Energy, Rocky Flats Field Office finds that there
is reasonable assurance that the Contractor is technically qualified
to engage in the activities authorized by this Authorization
Agreement
4. Authorization Basis
4.1. The effective Authorization Basis for the Building 991 Complex is
those documents identified as applicable to the Building 991 Complex
in the AB Document List (ABDL).
4.2. The DOE approved Building 991 Complex FSAR dated May 5. 1999, shall
be completely implemented, meeting the conditions of subsections 5.4
and 5.5, on or before October 28, 1999. The ABDL shall then be
modified to reflect this change.
Page 1 of 2
<PAGE>
Building 991 Complex Authorization Agreement - Continued
--------------------------------------------------------
5. Terms and Conditions
5.1 Applicable federal and state law, including implementing
regulations, and all contractual requirements regarding the Building
991 Complex, except as further defined for safety and health in
subsection 6.2 below, remain in force.
5.2. The Building 991 Complex AB Chapter 3 defines the specific Safety
Management Program commitments under this Authorization Agreement
which meet the applicable safety and health requirements of Section
J, Attachment F, of contract #DE-AC34-95PX-00825. The Administrative
Controls contained in the Building 991 Complex TSRs define the
specific Safety Management Program elements that shall be
implemented under this Authorization Agreement to support the
Building 991 Complex safety analyses.
5.3. The AB including the TSRs will be kept current by The Contractor
through performance of an annual review. As appropriate, changes to
or additional controls that may be needed to safely perform planned
activities will be developed. evaluated and implemented by the
Nuclear Safety Program in accordance with-the Site Integrated Safety
Management System. This change control process shall manage the
configuration of the AB to include timely update and dissemination
of the AB Document List to reflect DOE, RFFO approved AB documents.
5.4. The RFFO has accepted the strategy for implementation of the
Building 991 complex FSAR. The Contractor will approve an
implementation plan (IP) to achieve compliance with the controls and
commitments of the FSAR. The Contractor shall provide written
notification to RFFO of any substantive changes to the IP. This
notification shall include the basis for the change and any
appropriate recovery actions.
5.5. The Contractor will ensure completion of an Implementation
Validation Review prior to implementation of new controls under the
Building 991 Complex FSAR.
6. Special Conditions
None
7. Effective and Expiration Dates of Agreement
This Authorization Agreement is effective as of the date of the last
signature below and shall remain in effect through the life of contract
#DE-AC34-95RFO0825, unless modified in writing by both parties
8. Agreement
For Kaiser-Hill Company L.L.C. For the Department of Energy
Rocky Flats Environmental Technology Site Rocky Flats Field Office
/s/ Robert G. Card 9/1/99 /s/ Jessie M. Roberson 9/2/99
- ------------------------------- -------------------------------
Robert G. Card Date Jessie M. Roberson Date
President Manager
Page 2 of 2
<PAGE>
ROCKY FLATS ENVIRONMENTAL TECHNOLOGY SITE
-----------------------------------------
Building 774 Authorization Agreement
------------------------------------
Authorization Agreement No. RFETS-015
1. Preamble
The purpose of this Authorization Agreement is to adopt the Building 774
Authorization Basis (AB) as approved by the Department of Energy (DOE),
Rocky Flats Field Office (RFFO) and to authorize the performance of
activities in Building 774 in accordance with Building 774 AB.
Kaiser-Hill Company L.L.C. (the Contractor) inherited from EG&G Rocky
Flats, Inc., on July 1, 1995, aging facilities with existing hazards and
outdated or non-existent authorization basis documentation. It is
recognized by the DOE, RFFO and the Contractor that on July 1, 1995, the
following conditions existed regarding Building 774: (a) Building 774 was
over 40 years old and had aged and degraded structural and system
deficiencies from its original intended design capability, (b) there was
an incomplete knowledge regarding its design and condition of systems and
components due to less than adequate configuration control, (c) some
building systems and components had exceeded their original design life,
and (d) there was incomplete reliable/available data on building systems.
2. Authorization Scope
This agreement authorizes the scope of activities identified and analyzed
in the AB subject to the terms and conditions in section 5 below.
3. Basis for Approval/Contractor Qualification
3.1. Based on the review of the Building 774 Final Safety Analysis
Report (FSAR) and RFF0 reviews of documents listed In the AB
Document List (ABDL) for Building 774. the DOE, RFFO concludes
that the Building 774 AB adequately documents the operating safety
basis and contains a control set that, when implemented, provides
reasonable assurance that the work activities described in the
Building 774 AB can be conducted by the Contractor without
endangering the environment or the health and safety of the
workers or public
3.2. The DOE, RFFO finds that there is reasonable assurance that the
contractor is technically qualified to engage in the activities
authorized by this Authorization Agreement.
4. Authorization Basis
The effective Authorization Basis for the Building 774 is those documents
identified as applicable to the Building 774 in the ABDL.
Page 1 of 2
<PAGE>
Building 774 Authorization Agreement (Continued)
------------------------------------------------
5. Terms and Conditions
5.1. Applicable federal and state law, including implementing
regulations, and all contractual requirements regarding the
Building 774, except as further defined for safety and health in
subsection 5.2 below, remain in force.
5.2. The Building 774 FSAR, Chapters 9 through 14 define the Safety
Management Program commitments under this Authorization Agreement
which meet the applicable safety and health requirements of
Section J, Attachment F, of contract #DE-AC34-95RF00825. The
Administrative Controls contained in the Building 774 Operational
Safety Requirements (OSRs) define the specific, credited
programmatic elements that shall be implemented under this
Authorization Agreement to support the Building 774 safety
analyses.
5.3. The AB, including the OSRs, will be kept current by the Contractor
through the performance of an annual review. As appropriate,
changes to or additional controls that may be needed to safely
perform planned activities will be developed, evaluated and
implemented by the Nuclear Safety Program in accordance with the
Site Integrated Safety Management System. This change control
process shall manage the configuration of the AB to include timely
update of the AB Document List to reflect DOE, RFFO approved AB
documents.
6. Special Conditions
None
7. Effective and Expiration Dates of Agreement
This Authorization Agreement is effective as of the date of the last
signature below and shall remain in effect through the life of contract
#DE-AC34-95RFO0825, unless modified in writing by both parties
8. Agreement
For Kaiser-Hill Company L.L.C. For the Department of Energy
Rocky Flats Environmental Technology Site Rocky Flats Field Office
/s/ Robert G. Card 8/31/99 /s/ Jessie M. Roberson 8/31/99
- ------------------------------- -------------------------------
Robert G. Card Date Jessie M. Roberson Date
President Manager
Page 2 of 2
<PAGE>
ROCKY FLATS ENVIRONMENTAL TECHNOLOGY SITE
-----------------------------------------
750/904 Pads Authorization Agreement
------------------------------------
Authorization Agreement No. RFETS-013
1. Preamble
The purpose of this Authorization Agreement is to adopt the 750/904 Pads
Authorization Basis (AB), and to authorize the performance of activities
in the 750/904 Pads as analyzed in the AB.
Kaiser-Hill Company L. L. C. (Kaiser-Hill) inherited from EG&G Rocky
Flats, Inc., on July 1, 1995, aging facilities with existing hazards and
outdated or non-existent authorization basis documentation. It is
recognized by the Department of Energy, Rocky Flats Field Office (RFFO)
and Kaiser-Hill that on July 1, 1995, the following conditions existed
regarding the 750/904 Pads: (a) there was an absence of complete
knowledge regarding Its design basis, systems and components due to less
than adequate configuration control, (b) the facility required
modifications to meet the requirements of its future mission and (e) the
facility lacked an authorization basis for the current mission. As a
result of the revised mission to store additional waste types, the Final
Safety Analysis Report (FSAR) was revised to incorporate new analyses and
controls for this mission. This revision was developed following
appropriate guidance contained in DOE Orders 5480.22 Technical Safety
Requirements (TSR) and DOE 5480.23 Nuclear Safety Analysis Reports (SAR).
2. Scope of this Agreement
This agreement authorizes the scope of activities identified and analyzed
in the AB subject to the terms and conditions in section 5 below.
3. RFFO Basis for Approval/Contractor Qualification
3.1. Based on the 750/904 Pads Safety Evaluation Report dated September
27, 1995 and revisions up to and including April 5, 1999, the
Department of Energy, Rocky Flats Field Office concludes that the
amended FSAR adequately documents the operating safety basis and
contains a control set which when implemented, will provide
reasonable assurance that the work activities described in the
FSAR can be conducted by the contractor without endangering the
environment or the health and safety of the workers or public.
3.2. The Department of Energy, Rocky Flats Field Office finds that
there is reasonable assurance that the contractor is technically
qualified to engage in the activities authorized by this
Authorization Agreement.
4. Authorization Basis
The effective Authorization Basis for 750/904 Pads is those documents
identified as applicable to 750/904 Pads in the AB Document List (ABDL).
Page 1 of 2
<PAGE>
750/904 Pads Authorization Agreement (Continued)
------------------------------------------------
5. Terms and Conditions
5.1. Applicable federal and state law, including implementing
regulations, and all contractual requirements regarding 750/904
Pads; except as set out in section 5.2 below, remain in force.
5.2. The 750/904 Pads FSAR Chapter 5 describes the Safety Management
Program commitments under this Authorization Agreement which meet
the applicable safety and health requirements of Section J,
Attachment F, of contract #DE-AC34-95RF00825. The Administrative
Controls contained in the 750/904 Pads Technical Safety
Requirements (TSRs) define the specific, credited programmatic
elements that shall be implemented under this Authorization
Agreement to support the 750/904 Pads safety analyses.
5.3. The AB, including the TSRs, will be kept current by Kaiser-Hill
including the performance of an annual review. As appropriate,
changes to or additional controls that may be needed to safely
perform planned activities will be developed. evaluated and
implemented by the Nuclear Safety Program in accordance with the
Site Integrated Safety Management System. This change control
process shall manage the configuration of the 750/904 Pads AB to
Include timely update of the AB Document List to reflect RFFO
approved AB Documents.
6. Special Conditions
None
7. Effective and Expiration Dates
This Authorization Agreement is effective as of the date of the last
signature below and shall remain in effect through the life of contract
#DE-AC34-95RF00825, unless modified in writing by both parties.
8. Agreement
For Kaiser-Hill Company L.L.C. For the Department of Energy
Rocky Flats Environmental Technology Site Rocky Flats Field Office
/s/ Robert G. Card 4/13/99 /s/ Jessie M. Roberson 4/28/99
- ------------------------------- -------------------------------
Robert G. Card Date Jessie M. Roberson Date
President Manager
Page 2 of 2
<PAGE>
ROCKY FLATS ENVIRONMENTAL TECHNOLOGY SITE
-----------------------------------------
Building 664 Authorization Agreement
------------------------------------
Authorization Agreement No. RFETS-007
1. Preamble
The purpose of this Authorization Agreement is to adopt the Building 664
Authorization Basis (AB) as approved by the Department of Energy (DOE),
Rocky Flats Field Office (RFFO) and to authorize the performance of
activities in Building 664 in accordance with Building 664 AB.
Kaiser-Hill Company L.L.C. (the Contractor) inherited from EG&G Rocky
Flats, Inc., on July 1, 1995, aging facilities with existing hazards and
outdated or non-existent authorization basis documentation. It is
recognized by the DOE, RFFO and the Contractor that on July 1, 1995, the
following conditions existed regarding Building 664: (a) the hazards,
design basis and construction detail knowledge of the systems, structures
and components were incomplete, and (b) a new AB was needed to support
the new and current missions. The new AB was developed following
appropriate guidance contained in DOE Orders 5480.22 Technical Safety
Requirements (TSR) and DOE 5480.23 Nuclear Safety Analysis Reports (SAR)
2. Authorization Scope
This agreement authorizes the scope of activities identified and analyzed
in the AB subject to the terms and conditions in section 5 below.
3. Basis for Approval/Contractor Qualification
3.1. Based on the Building 664 Final Safety Analysis Report (FSAR)
Safety Evaluation Report approved on August 3,1995, the DOE, RFFO
concludes that the Building 664 FSAR adequately documents the
operating safety basis and contains a control set, that when
implemented, provides reasonable assurance that the work activities
described in the Building 664 FSAR can be conducted by the
Contractor without endangering the environment or the health and
safety of the workers or public.
3.2. The DOE, RFFO finds that there is reasonable assurance that the
contractor is technically qualified to engage in the activities
authorized by this Authorization Agreement.
4. Authorization Basis
The effective Authorization Basis for the Building 664 is those documents
identified as applicable to the Building 664 in the AB Document List
(ABDL).
5. Terms and Conditions
5.1. Applicable federal and state law, including implementing
regulations, and all contractual requirements regarding the
Building 664, except as further defined for safety and health in
subsection 5.2 below, remain in force.
Page 1 of 2
<PAGE>
Building 664 Authorization Agreement (Continued)
------------------------------------------------
5.2. The Building 664 FSAR defines the Safety Management Program
commitments under this Authorization Agreement which meet the
applicable safety and health requirements of Section J, Attachment
F, of contract #DE-AC34-95RFO0825. The Administrative Controls
contained in the Building 664 TSRs define the specific, credited
programmatic elements that shall be implemented under this
Authorization Agreement to support the Building 664 safety
analyses.
5.3. The AB, including the TSRs, will be kept current by the Contractor
through the performance of an annual review. As appropriate,
changes to or additional controls that may be needed to safely
perform planned activities will be developed, evaluated and
Implemented by the Nuclear Safety Program in accordance with the
Site Integrated Safety Management System. This change control
process shall manage the configuration of the AB to include timely
update of the AB Document List to reflect DOE, RFFO approved AB
documents.
6. Special Conditions
None
7. Effective and Expiration Dates of Agreement This Authorization Agreement
is effective as of the date of the last signature below and shall remain
in effect through the life of contract #DE-AC34-95RFO0825, unless modified
in writing by both parties
8. Agreement
For Kaiser-Hill Company L.L.C. For the Department of Energy
Rocky Flats Environmental Technology Site Rocky Flats Field Office
/s/ Robert G. Card 6/23/99 /s/ Jessie M. Roberson 7/13/99
- ------------------------------- -------------------------------
Robert G. Card Date Jessie M. Roberson Date
President Manager
Page 2 of 2
<PAGE>
ROCKY FLATS ENVIRONMENTAL TECHNOLOGY SITE
-----------------------------------------
Building 569 Authorization Agreement
------------------------------------
Authorization Agreement No. RFETS-008
1. Preamble
The purpose of this Authorization Agreement is to adopt the Building 569
Basis for Interim Operation (BIO), and to authorize the performance of
activities in Building 569 as analyzed in the BIO.
Kaiser-Hill Company L.L.C. (Kaiser-Hill) inherited from EG&G Rocky Flats,
Inc., on July 1, 1995, aging facilities with existing hazards and
outdated or non-existent authorization basis documentation. It is
recognized by the Department of Energy Rocky Flats Field Office (RFFO)
and Kaiser-Hill that on July 1, 1995, to following conditions existed
regarding Building 569: (a) there was an absence of complete knowledge
regarding Its design basis, systems and components due to less than
adequate configuration control, (b) the building required modifications
to meet the requirements of its future mission and (c) the building
lacked a formal authorization basis for operation. Based upon these
conditions a new authorization basis document the BIO, was developed to
meet DOE Standard 3011, Guidance for Preparation of DOE 5480.22 (TSR) and
DOE 5480.23 (SAR) Implementation Plans, and is the focus of this
agreement.
2. Scope of this Agreement
This agreement covers the scope of activities identified and analyzed in
the BIO.
3. RFF0 Basis for Approval/Contractor Qualification
3.1 Based on the Building 569 Review Report with specified conditions,
The Department of Energy, Rocky Flats Field Office concludes that
the BIO adequately documents the operating safety basis and
contains a control set, which when implemented, will provide
reasonable assurance that the work activities described in the BIO
can be conducted by the contractor without endangering the
environment or the health and safety of the workers or public.
32. The Department of Energy, Rocky Flats Field Office finds that there
is reasonable assurance that the contractor is technically
qualified to engage in the activities authorized by this
Authorization Agreement
4. Authorization Basis
4.1. The Authorization Basis (AB) for Building 569 is the DOE approved
BIO dated December 22,1997, the associated RFFO Review Report with
specified conditions dated February 18, 1998 and the Justification
for audibility deficiencies. The AB list for Building 569 will be
maintained current by the contractor in accordance with the
Nuclear Safety Manual as new activities or discovered conditions
result in DOE RFFO approved changes to the AB.
4.2. The BIO, when completely implemented, supersedes all previous
authorization basis documents for Building 569.
Page 1 of 2
<PAGE>
5. Terms and Conditions
5.1. Applicable federal and state law, including implementing
regulations, and all contractual requirements regarding Building
569, except as set out in section 52 below, remain in force.
5.2. The safety management controls contained in the Building 569
Technical Safety Requirements (TSRs) adequately define the extent
to which the Safety Management Programs shall be implemented under
this Authorization Agreement to meet the applicable requirements of
Section J, Attachment F, of contract #DE-AC34-95RF00825.
5.3. Building 569 operations are authorized to be accomplished in
accordance with the scope, applicable requirements and control set
of the BIO.
5.4. The BIO, including the TSRs, will be kept current by Kaiser-Hill
including the performance of an annual review. As appropriate,
changes to or additional controls that may be needed to safely
perform planned activities will be developed, evaluated and
Implemented by the Nuclear Safety Program in accordance with the
Site Integrated Safety Management System. This change control
process shall manage the configuration of Building 569 AB to
include timely update of the list to reflect RFFO approved changes
(e.g., page changes, USQ determinations, JCOs).
5.5. Kaiser-Hill will approve an implementation plan (IP) to achieve
full compliance with the TSRs. Provisional operation Is authorized
while Implementing the now TSRs. Installation, calibration and
demonstration of readiness of the Passive-Active Drum Counter
(PADC) and Low Specific Activity Counter (LOSAC) under the approved
IP are authorized. Kaiser-Hill will riot authorize operation of the
PA/DC until the completion of a satisfactory Management Review to
verify the safe operation of that equipment. Full compliance with
the TSRs will be achieved by April 20, 1998. Termination of other
authorized operations is not required if the implementation and
review of the new controls is not achieved by this date.
5.6. Kaiser-Hill will ensure completion of an Implementation Validation
Review prior to implementation of new controls under the BIO. RFFO
will perform an independent verification of the Implementation.
6. Special Conditions
None
7. Effective and Expiration Dates
This Authorization Agreement is effective as of the date of the last
signature below and shall remain in effect through the life of contract
#DE-AC34-95RF00825, unless modified in writing by both parties
8. Agreement
For Kaiser-Hill Company L.L.C. For the Department of Energy
Rocky Flats Environmental Technology Site Rocky Flats Field Office
/s/ Robert G. Card /s/ Jessie M. Roberson 3/24/98
- ------------------------------- -------------------------------
Robert G. Card Date Jessie M. Roberson Date
President Manager
Page 2 of 2
<PAGE>
ROCKY FLATS ENVIRONMENTAL TECHNOLOGY SITE
-----------------------------------------
Building 559 Authorization Agreement
------------------------------------
Authorization Agreement No. RFETS-006
1 Preamble
The purpose of this Authorization Agreement is to adopt the Building 559
Authorization Basis, hereinafter referred to as the AS, as approved by
the Department of Energy (DOE), Rocky Flats Field Office (RFFO), and to
authorize the performance of activities in Building 559 in accordance
with the Building 559 AB.
Kaiser-Hill Company L.L.C. (Kaiser-Hill) inherited from EG&G Rocky Flats,
Inc., on July 1, 1995, aging facilities with existing hazards and
outdated or non-exisistent authorization basis documentation. It is
recognized by the DOE RFFO and Kaiser-Hill that on July 1, 1995, the
following conditions existed regarding Building 559: the design basis and
construction detail knowledge of the systems, structures and components
were incomplete.
2. Authorization Scope
This agreement authorizes the scope of activities identified and analyzed
in the AB subject to the terms and conditions in section 5.
3. RFFO Basis for Approval/Contractor Qualification
3.1. Based on the December 1, 1998, Review Report findings and
technical direction, The DOE RFFO concludes that the AB adequately
documents the operating safety basis and contains a control set
that when implemented provides reasonable assurance that the work
activities described in the AB can be conducted by the contractor
without endangering the environment or the health and safety of
the workers or public.
3.2. The DOE RFFO finds that there is reasonable assurance that the
contractor is technically qualified to engage in the activities
authorized by this Authorization Agreement.
4. Authorization Basis
4.1. The effective Authorization Basis for Building 559 is those
documents identified as applicable to Building 559 in the AB
Document List (ABDL).
4.2. The DOE approved Building 559 AB, shall be implemented, meeting
the conditions of subsections 5.4 and 5.5, on or before March 19,
1999. The ABDL shall then be modified to reflect this change.
5. Terms and Conditions
5.1. Applicable federal and state law, including implementing
regulations, and all contractual requirements, except as further
defined for safety and health in subsection 5.2 below, remain in
force.
Page 1 of 2
<PAGE>
Building 559 Authorization Agreement (Continued)
------------------------------------------------
5.2. The Building 559 FSAR Chapter 9 defines the Safety Management
Program commitments under this Authorization Agreement which meet
the applicable safety and health requirements of Section J,
Attachment F, of contract #DE-AC34-95RF00825. The Administrative
Controls contained in the Building 559 Technical Safety
Requirements (TSRs) define the specific Safety Management Program
elements that shall be implemented under this Authorization
Agreement to support the Building 559 safety analyses.
5.3. The AB, including the TSRs, will be kept current by Kaiser-Hill
Including the performance of an annual review. As appropriate,
changes to or additional controls that may be needed to safely
perform planned activities will be developed, evaluated and
implemented by the Nuclear Safety Program in accordance with the
Site Integrated Safety Management System. This change control
process shall manage the configuration of the AB to include timely
update and dissemination of the AB Document List for Building 559
to reflect the DOE RFFO approved changes.
5.4. The DOE RFFO has accepted the strategy for implementation of the
Building 559 AB. Kaiser-Hill will approve an implementation plan to
achieve compliance with the TSRs by March 19, 1999. Subsequent to
the Fire Suppression System modification, the associated TSRs will
be implemented and reviewed by May 31, 1999. Written notification
to the DOE RFFO shall be made for any substantive changes to the
IP, reporting the basis for the change and any appropriate recovery
actions to the DOE RFFO.
5.5. Kaiser-Hill will ensure completion of an Implementation Validation
Review prior to implementation of these new controls under the
Building 559 AB.
6. Special Conditions
None
7. Effective and Expiration Dates
This Authorization Agreement is effective as of the date of the last
signature below and shall remain in effect through the life of contract
#DE-AC34-95RF00826, unless modified in writing by both parties
8. Agreement
For Kaiser-Hill Company L.L.C. For the Department of Energy
Rocky Flats Environmental Technology Site Rocky Flats Field Office
/s/ Robert G. Card 3/8/99 /s/ Jessie M. Roberson 3/17/99
- ------------------------------- -------------------------------
Robert G. Card Date Jessie M. Roberson Date
President Manager
Page 2 of 2
<PAGE>
ROCKY FLATS ENVIRONMENTAL TECHNOLOGY SITE
-----------------------------------------
Building 440 Authorization Agreement
------------------------------------
Authorization Agreement No. RFETS-002 Revision 1
Preamble
- --------
The purpose of this Authorization Agreement is to adopt the Building 440 Basis
For Operations and its Review Report, hereinafter referred to as the BFO, and to
authorize the performance of activities in Building 440 which are analyzed in
the Building 440 BFO.
Kaiser-Hill Company L.L.C. (Kaiser-Hill) inherited from EG&G Rocky Flats, Inc.
(EG&G), on July 1, 1995 aging facilities with existing hazards and outdated
authorization basis documentation. It is recognized by the Department of Energy,
Rocky Flats Field Office (RFFO) and Kaiser-Hill that on July 1, 1995, the
following conditions existed regarding Building 440: (a) there was an absence of
complete knowledge regarding its design basis, systems and components due to
less than adequate configuration control, (b) the building required
modifications to meet the requirements of its future mission. Based upon these
conditions a new authorization basis document, the Building 440 BFO, was
developed using DOE Manual DOE-M-450.3-1, The Department of Energy Closure
Process for Necessary and Sufficient Set of Standards and is the focus of this
agreement.
Agreement
- ---------
With respect to Building 440, the Department of Energy, Rocky Flats Field Office
and KaiserHill agree as follows:
A. All Building 440 operations, including mission program and baseline work
activities will be accomplished in accordance with the applicable
requirements and control set in the Building 440 BFO.
B. Except as set out in paragraph C., applicable federal and state law,
including implementing regulations, and all contractual requirements
regarding Building 440 remain in force.
C. The Building 440 BFO Subsection 4.6.3, Administrative Programs, defines the
Safety Management Program commitments under this Authorization Agreement
which meet the applicable safety and health requirements of Section J,
Attachment F, of contract #DE-AC34-95RF00825. The Administrative
Operational Controls contained in the Building 440 BFO Subsection 4.62,
define the specific Safety Management Program controls that shall be
implemented under this Authorization Agreement to support the Building 440
safety analyses.
D. The Building 440 BFO, when completely implemented, supersedes all previous
authorization basis documents for Building 440.
- 1 of 2 -
<PAGE>
Building 440 Authorization Agreement (continued)
------------------------------------------------
E. (Deleted by Revision 1)
F. The Building 440 BFO Operational Controls will be kept current by
Kaiser-Hill including the performance of an annual review. The change
control process indentified in the Building 440 BFO shall be used to add
new activities or to make changes (such as changes in activity
descriptions, status, related control sets or additional hazards analysis)
to existing activities identified in the Building 440 BFO.
G. (Deleted by Revision 1)
H. The Department of Energy, Rocky Flats Field Office concludes that the
Building 440 BFO adequately documents the operating safety basis and
contains a control set that if fully implemented, will provide reasonable
assurance that the work activities described in the BFO can be conducted
without endangering the environment or the health and safety of the workers
or public.
I. This Authorization Agreement is effective as of the date of the last
signature below and shall remain in effect through the life of contract
#DE-AC34-95RF00M, unless modified in writing by both parties
For Kaiser-Hill Company L.L.C. For the Department of Energy
Rocky Flats Environmental Technology Site Rocky Flats Field Office
/s/ Robert G. Card 1/25/99 /s/ Jessie M. Roberson 2/2/99
- ------------------------------- -------------------------------
Robert G. Card Date Jessie M. Roberson Date
President Manager
- 2of 2 -
<PAGE>
ROCKY FLATS ENVIRONMENTAL TECHNOLOGY SITE
-----------------------------------------
Building 371/374 Complex Authorization Agreement
------------------------------------------------
Authorization Agreement No. RFETS-005
Page 1 of 3
Preamble
- --------
The purpose of this Authorization Agreement is to adopt the Building 371/374
Complex Authorization Basis, hereinafter referred to as the AB, and to authorize
the performance of activities in the Complex which are enveloped by the analysis
in the AB.
On July 1, 1995 Kaiser-Hill Company L.L.C. (Kaiser-Hill) became the integrating
management contractor replacing EG&G Rocky Flats, Inc. It is recognized by
Kaiser-Hill and DOE-RFFO that (a) Building 371/374 Complex facilities were over
20 years old and had system deficiencies from its original intended design
capability, (b) there was incomplete knowledge and limited reliable/retrievable
data regarding its systems and components, (c) some Complex systems and
components required priority upgrades to perform the interim storage mission in
accordance with the Implementation Program Plan for DNFSB Recommendation 94-3,
(d) the planned Complex mission differs from its original design purpose, and
(e) additional upgrades were expected to result from the preparation of a new
authorization basis document. Based upon these conditions a now authorization
basis document, the Building 371/374 Complex Basis for Interim Operation (BIO),
was developed using DOE Standard 3011, Guidance for the Preparation of DOE
5408.22 (TSR) and DOE 5480.23 (SAR) implementation Plans and DOE Standard 3009,
Preparation Guide for the U. S. Department of Energy Nonreactor Nuclear Facility
Safety Analysis Reports, and is the focus of this agreement.
Agreement
- ---------
With respect to Building 371/374 Complex, the Department of Energy, Rocky Flats
Field Office and Kaiser-Hill agree as follows:
A. All BIO activities and operations conducted in the Complex will be
accomplished in accordance with the applicable control set requirements
established in the AB. These control set requirements have been
demonstrated to be adequate to perform the general and current operations
enveloped by the analysis in the AB. During the course of BIO
implementation, any additional controls and technical safety requirements
(TSRS) that may be needed to safely perform planned activities will be
developed and evaluated in accordance with the Activity Control and Nuclear
Safety programs described in the AB.
<PAGE>
Building 371/374
Authorization Agreement No. RFETS-005
Page 2 of 3
B. The AB contains a graded set of requirements consistent with the
requirements in DOE Order 5480.23. The requirements are suitable for
implementing Integrated Safety Management for the 371/374 Complex and its
planned mission, including storage of special nuclear material until 2002.
System Evaluation Reports support the BIO and document the means of
assuring compliance with the functional requirements of Complex safety
systems, structures, aid components. Adherence to these requirements is
required by the TSRs. Information copies of changes to the Building
371/374 Complex System Evaluation Report, Section 4.0. 5.0, and 8.0 shall
be provided to DOE, RFFO.
C. Applicable federal and state law, including implementing regulations, and
all contractual requirements regarding the Building 371/374 Complex remain
in force. The safety management controls in Site Program Plans as
referenced in Chapter 3 of the BIO, will enhance the ability of
Kaiser-Hill to meet the safety management requirements contained in the
Orders and Directives listed in Section J, Attachment F, of contract
#DE-AC34-95RF00825:
D. The Building 371/374 Complex BIO supersedes previous authorization basis
documents for the Complex. Existing Unreviewed Safety Question
Determinations (USQDs) were reviewed to determine the valid compensatory
measures which must be In place to meet the requirements of the proposed
control set and incorporated. Open USQDs and those which may be generated
during implementation of the BID will be addressed in updates to the AB,
as necessary.
E. Building 371/374 Complex TSRs and controls will be kept current by,
Kaiser-Hill including the performance of an annual review. The
Kaiser-Hill evaluation processes (e.g., the USQDs and USQ screens) shall
be used to add new activities or to make changes to existing activities
identified in the AB.
F. Controls in the AB will be implemented in a phased manner as described in
the BIO Implementation Plan (IP). An Information copy of any changes to
the BIO IP shall be provided to DOE, RFFO. The AB for BIO activities will
be unambiguous at any stage during the phased implementation. For each
phase, a readiness determination will be performed in accordance with
established Site protocol which implements DOE Order 425.1, Startup and
Restart of Nuclear Facilities. As of August 1, 1998, the BIO will be the
AB of record for all activities conducted in the Building 371/374 Complex.
<PAGE>
Building 371/374
Authorization Agreement No. RFETS-005
Page 3 of 3
G. The Department of Energy, Rocky Flats Field Office and Kaiser-Hill conclude
that the Building 371/374 Complex BIO adequately documents the operating
safety basis and contains controls (TSRs), that when fully implemented,
will provide reasonable assurance that the work activities described in the
AB can be conducted without endangering the environment or the health and
safety of the workers or public. The BIO Review Report developed by the
RFFO BIO Review Team using DOE-STD-1104, Review and Approval of Final
Safety Analysis Reports, documents the technical bases for RFFO approval of
the BIO and TSRs.
H. The Building 371 Safeguards and Security Plan provides specific direction
for related activities and operations in Building 371.
I. This Authorization Agreement is effective for implementation as of the date
of the last signature below and shall remain in effect through the life of
contract #DE-AC34-95RF00825, unless extended in writing by both parties.
For Kaiser-Hill Company L.L.C. For the Department of Energy
Rocky Flats Environmental Technology Site Rocky Flats Field Office
/s/ Robert G. Card 9/8/97 /s/ Jessie M. Roberson 9/11/97
- ------------------------------- -------------------------------
Robert G. Card Date Jessie M. Roberson Date
President Manager
<PAGE>
ROCKY FLATS ENVIRONMENTAL TECHNOLOGY SITE
-----------------------------------------
Building 776/777 Complex Authorization Agreement
------------------------------------------------
Authorization Agreement No. RFETS-012 Revision 1
1. Preamble
The purpose of this Authorization Agreement is to adopt the Building 776/777
Complex Authorization Basis (AB), and to authorize the performance of
activities in the Building 776/777 Complex as analyzed in the AB.
Kaiser-Hill Company L.L.C. (the Contractor) Inherited from EG&G Rocky Flats,
Inc., on July 1, 1995, aging facilities with existing hazards and outdated
or non-existent authorization basis documentation. It is recognized by the
Department of Energy (DOE), Rocky Flats Field Office (RFFO) and the
Contractor that on July 1, 1995, the following conditions existed regarding
the Building 776/777 Complex: (a) the Complex was nearly 40 years old and
had aged and degraded structural and system deficiencies from its original
intended design capability, including some systems and components that had
exceeded their original design life, (b) there was an absence of complete
knowledge regarding its design basis, systems, components and structure due
to less than adequate configuration control, further complicated by the 1969
fire, (c) the complex required modifications to most the requirements of its
future mission, and (d) the complex lacked an accurate authorization basis
for the current mission. Based upon these conditions a new authorization
basis document, the Basis for Interim Operation (BIO), was developed to meet
DOE Standard 3011, Guidance for Preparation of DOE 5480.22 (TSR) and DOE
5480.23 (SAR) Implementation Plans.
2. Scope of this Agreement
This agreement authorizes those activities identified and analyzed in the AB
subject to the terms and conditions in Section 5 below.
3. RFFO Basis for Approval/Contractor Qualification
3.1. Sued on the Building 776/777 Complex Review Report dated March 15,
1999, and addenda dated June 16, 1999 and July 1, 1999 with specified
conditions, the DOE, RFFO concludes that the BIO adequately documents
the operating safety basis and contains a control set which when
implemented, will provide reasonable assurance that the work activities
described in the BIO can be conducted by the Contractor without
endangering the environment or the health and safety of the workers or
public.
3.2. The DOE, RFFO Finds that there is reasonable assurance that the
Contractor is technically qualified to engage in the activities
authorized by this Authorization Agreement.
4. Authorization Basis
4.1. The effective Authorization Basis for the Building 776/777 Complex is
those documents identified as applicable to the Building 776/777
Complex in the AB Document List (ABDL).
4.2. The DOE approved Building 776/777 Complex BIO, Revision 2, shall be
completely implemented, meeting the conditions of subsections 5.4 and
5.5 on or before October 18, 1999. The ABDL shall then be modified to
reflect this change.
Page 1 of 2
<PAGE>
Building 776/777 Complex Authorization Agreement (Continued)
5. Terms and Conditions
5.1. Applicable federal and state law, including implementing regulations,
and all contractual requirements regarding the Building 776/777
Complex, except as set out in section 5.2 below, remain in force.
5.2. The Building 776/777 Complex BIO, Chapter 3 defines the Safety
Management Program commitments under this Authorization Agreement which
meet the applicable safety and health requirements of Section J.
Attachment F, of contract #DE-AC34-95RFO0825. The Administrative
Controls contained in the Building 776/777 Complex Technical Safety
Requirements (TSRs) define the specific, credited programmatic elements
that shall be implemented under this Authorization Agreement to support
the Building 776/777 Complex safety analyses.
5.3. The AB, including the TSRs, will be kept current by the Contractor
including the performance of an annual review. As appropriate, changes
to or additional controls that may be needed to safely perform planned
activities will be developed, evaluated and implemented by the Nuclear
Safety Program in accordance with the Site Integrated Safety Management
System. This change control process shall manage the configuration of
the Building 776/777 Complex AB to include timely update of the AB
Document List to reflect RFFO approved changes.
5.4. The RFFO has accepted the strategy for implementation of the Building
776/777 Complex BIO. The Contractor will approve an implementation plan
(IP) to achieve full compliance with the TSRs. The Contractor shall
provide written notification to RFFO of any substantive changes to the
IP. This notification shall include the basis for the change and any
appropriate recovery actions.
5.5. The Contractor will ensure the completion of an Implementation
Validation Review prior to implementation of these now controls under
the Building 776/777 Complex BIO.
6. Special Conditions
None
7. Effective and Expiration Dates
This Authorization Agreement is effective as of the date of the last
signature below and shall remain in effect through the life of contract
#DE-AC34-95RFO0825, unless modified in writing by both parties.
S. Agreement
For Kaiser-Hill Company L.L.C. For the Department of Energy
Rocky Flats Environmental Technology Site Rocky Flats Field Office
/s/ Robert G. Card 8/23/99 /s/ Jessie M. Roberson 8/25/99
- ------------------------------- -------------------------------
Robert G. Card Date Jessie M. Roberson Date
President Manager
Page 2 of 2
<PAGE>
ROCKY FLATS ENVIRONMENTAL TECHNOLOGY SITE
-----------------------------------------
Building 771 Authorization Agreement
------------------------------------
Authorization Agreement No. RFETS-003 Revision 2
Preamble
- --------
The purpose of this Authorization Agreement is to adopt the Building 771 Basis
For Operations and its Review Report, hereinafter referred to as the BFO, and to
authorize the performance of activities in Building 771 which are analyzed in
the Building 771 BFO.
Kaiser-Hill Company L.L.C. (Kaiser-Hill) inherited from EG&G Rocky Flats, Inc,
(EG&G), on July 1, 1995, aging facilities with existing hazards and outdated
authorization basis documentation. It is recognized by Kaiser-Hill and DOE-RFFO
that on July 1, 1995; the following conditions existed regarding Building 771:
(a) Building 771 was over 40 years old and had aged and degraded structural and
system deficiencies from its original intended design capability, (b) there was
an incomplete knowledge regarding its systems and components due to less than
adequate configuration control, (e) some building systems and components had
exceeded their original design life, (d) there was incomplete reliable/available
data on building systems, and (e) remaining and planned activities were limited
to maintaining safe current operations and the building habitable, and those
hazard reduction activities leading to a deactivation and decommissioning ready
state. Based upon these conditions a new authorization basis document the
Building 771 BFO, was developed using DOE Manual DOE-M-450-3-1, The Department
of Energy Closure Process for Necessary and Sufficient Set of Standards and is
the focus of this agreement.
Agreement
- ---------
With respect to Building 771, the Department of Energy. Rocky Flats Field Office
and Kaiser-Hill agree as follows:
A. All Building 771 operations, including mission program and baseline work
activities will be accomplished in accordance with the requirements and
control set in the Building 771 BFO.
B. Applicable federal and state law, including implementing regulations,
and all contractual requirements, except as set out in paragraph C.,
regarding Building 771 remain in force.
C. The Building 771 BFO Chapter 5 describes the Safety Management Program
commitments under this Authorization Agreement which meet the applicable
safety and health requirements of Section J, Attachment F, of contract
#DE-AC34-95RF00825. The Administrative Control Requirements contained in
the Building 771 Technical Safety Requirements (TSRs) define the
specific Safety Management Program controls that shall be implemented
under this Authorization Agreement to support the Building 771 safety
analyses.
- 1 of 2 -
<PAGE>
Building 771 Authorization Agreement (continued)
------------------------------------------------
D. The Building 771 BFO, when completely implemented, supersedes all
previous authorization basis documents for Building 771.
E. The Building 771 Safeguards and Security Plan provides specific
direction for related activities and operations in the Building 771.
F. (Deleted by Revision 2)
G. The Building 771 BFO TSRs will be kept current by Kaiser-Hill including
the performance of an annual review. The change control process
Identified in the Building 771 BFO shall be used to add now activities
or to make changes (such as changes In activity descriptions, deletion
of activities, addition of now activities, status, related control sets
or additional hazards analysis) to existing activities identified in the
Building 771 BFO.
H. (Deleted by Revision 2)
I. The Department of Energy, Rocky Flats Field Office concludes that the
Building 771 BFO adequately documents the operating safety basis and
contains a control set that if fully implemented, will provide
reasonable assurance that the work activities described in the BFO can
be conducted without endangering the environment or the health and
safety of the workers or public.
J. This Authorization Agreement is effective as of the date of the last
signature below and shall remain in effect through the life of contract
#DE-AC34-95RFOO825, unless modified in writing by both parties.
For Kaiser-Hill Company L.L.C. For the Department of Energy
Rocky Flats Environmental Technology Site Rocky Flats Field Office
/s/ Robert G. Card 1/28/99 /s/ Jessie M. Roberson 2/2/99
- ------------------------------- -------------------------------
Robert G. Card Date Jessie M. Roberson Date
President Manager
- 2 of 2 -
<PAGE>
ROCKY FLATS ENVIRONMENTAL TECHNOLOGY SITE
-----------------------------------------
779 Cluster Authorization Agreement
-----------------------------------
Authorization Agreement No. RFETS-009
1. Preamble
The purpose of this Authorization Agreement is to adopt the 779 Cluster
Authorization Basis, hereinafter referred to as the AB, as approved by
the Department of Energy (DOE), Rocky Flats Field Office (RFFO), and to
authorize the performance of activities in the 779 Cluster in accordance
with the 779 Cluster AB.
Kaiser-Hill Company L.L.C. (Kaiser-Hill) inherited from EG&G Rocky Flats,
Inc., on July 1. 1995, aging facilities with existing hazards and
outdated or non-existent authorization basis documentation. It is
recognized by the DOE, RFFO and Kaiser-Hill that on July 1, 1995, the
following conditions existed regarding the 779 Cluster (a) the hazards,
design basis and construction detail knowledge of the systems, structures
and components were incomplete, and (b) a new AB was needed to support
the new and current missions. The new AB was developed following
appropriate guidance contained in DOE Standard 3011, Guidance for
Preparation of DOE 5480.22 (TSR) and DOE 5480.23(SAR)Implementation
Plans.
2. Authorization Scope
This agreement authorizes the scope of activities identified and analyzed
in the AB with the terms and conditions in section 5.
3. Basis for Approval/Contractor Qualification
3.1. Based on the Review Report for the 779 Cluster Basis for Interim
Operation (BIO) dated April 28, 1998, with specified technical
direction, the Department of Energy, Rocky Flats Field Office
concludes that the 779 Cluster BIO adequately documents the
operating safety basis and contains a control set that when
implemented, provides reasonable assurance that the work activities
described in the 779 Cluster BIO can be conducted by the contractor
without endangering the environment or the health and safety of the
workers or public.
3.2. The Department of Energy, Rocky Flats Field Office finds that there
is reasonable assurance that the contractor is technically
qualified to engage in the activities authorized by this
Authorization Agreement.
4. Authorization Basis
4.1. The effective Authorization Basis for the 779 Cluster is those
documents identified as applicable to the 779 Cluster in the AB
Document List (ABDL).
4.2. The DOE approved 779 Cluster BIO dated April 28, 1998, shall be
completely implemented, meeting the conditions of subsections 5.4
and 5.5, on or before August 18, 1998. The ABDL shall then be
modified to reflect this change.
5. Terms and Conditions
5.1. Applicable federal and state law, including implementing
regulations, and all contractual requirements regarding the 779
Cluster, except as set out in subsection 5.2 below, remain in
force.
Page 1 of 2
<PAGE>
5.2. The Administrative Controls contained in the 779 Cluster TSRs
define the specific Safety Management Program elements that shall
be implemented under this Authorization Agreement to meet the
applicable requirements of Section J, Attachment F, of contract
#DE-AC34-95RF00825. The 779 Cluster BIO Section 1.5 and Chapter 4
further define what the balance of the Safety Management Programs
commitments are under this Authorization Agreement.
5.3. The AB, including the TSRs, will be kept current by K-H through
editorial revision within three months of the change (to reflect
corrections or Unreviewed Safety Question Determination driven
changes) in lieu of an annual review. As appropriate, changes to
or additional controls that may be needed to safety perform
planned activities will be developed, evaluated and implemented by
the Nuclear Safety Program in accordance with the Site integrated
Safety Management System. This change control process shall
manage the configuration of the AB to include timely update and
dissemination of the AB Document List to reflect RFFO approved
changes.
5.4. The RFFO has accepted the strategy for implementation of the 779
Cluster AB. Kaiser-Hill will approve an implementation plan (IP)
to achieve full compliance with the TSRs. Written notification to
RFFO shall be made for any substantive changes to the IP,
reporting the basis for the change and any appropriate recovery
actions to the RFFO.
5.5. Kaiser-Hill will ensure completion of an Implementation Validation
Review prior to implementation of new controls under the 779
Cluster BIO.
6. Special Conditions
6.1. Controls will be eliminated commensurate with a reduction in
hazards and managed per the Nuclear Safety Program.
6.2. Operations are subject to the provisions of the Decommissioning
Operating Plan, RF/RMRS-97-085.UN, Revision 0, Rocky Mountain
Remediation Services, L.L.C., February 6, 1998, or approved
revision.
7. Effective and Expiration Dates of Agreement
This Authorization Agreement is effective as of the date of the last
signature below and shall remain in effect through the life of contract
#DE-AC34-95RF00825, unless modified in writing by both parties
8. Agreement
For Kaiser-Hill Company L.L.C. For the Department of Energy
Rocky Flats Environmental Technology Site Rocky Flats Field Office
/s/ Robert G. Card 7/22/98 /s/ Jessie M. Roberson 7/21/98
- ------------------------------- -------------------------------
Robert G. Card Date Jessie M. Roberson Date
President Manager
Page 2 of 2
<PAGE>
ROCKY FLATS ENVIRONMENTAL TECHNOLOGY SITE
-----------------------------------------
Building 886 Authorization Agreement
------------------------------------
Authorization Agreement No. RFETS-010
1. Preamble
The purpose of this Authorization Agreement is to adopt the Building 886
Authorization Basis, hereinafter referred to as the AB, as approved by
the Department of Energy (DOE), Rocky Flats Field Office (RFFO) to
authorize the performance of activities in Building 886 in accordance
with Building 886 AB.
Kaiser-Hill Company L.L.C. (Kaiser-Hill) inherited from EG&G Rocky Flats,
Inc., on July 1, 1995, aging facilities with existing hazards and
outdated or non-existent authorization basis documentation. It is
recognized by the DOE, RFFO and Kaiser-Hill that on July 1, 1995, the
following conditions existed regarding Building 886: (a) the hazards,
design basis and construction detail knowledge of the systems, structures
and components were incomplete, and (b) a new AB was needed to support
the new and current missions. The new AB was developed following
appropriate guidance contained in DOE Standard 3011, Guidance for
Preparation of DOE 5480.22 (TSR) and DOE 5480.23 (SAR) Implementation
Plans, and DOE Orders 548,022 Technical Safety Requirements (TSR) and DOE
5480.23 Nuclear Safety Analysis Reports (SAR).
2. Authorization Scope
This agreement authorizes the scope of activities identified and analyzed
in the AB with the terms and conditions in section 5.
3. Basis for Approval/Contractor Qualification,
3.1. Based on the Building 886 Basis for Interim Operation (BIO) Review
Report approved October 10, 1995, and Addendum A approved April 9,
1997, the Department of Energy, Rocky Flats Field Office concludes
that the Building 886 BIO adequately documents the operating safety
basis and contains a control set, that when implemented, provides
reasonable assurance that the work activities described in the
Building 886 BIO can be conducted by the contractor without
endangering the environment or the health and safety of the workers
or public.
3.2. The Department of Energy, Rocky Flats Field Office finds that there
is reasonable assurance that the contractor is technically
qualified to engage in the activities authorized by this
Authorization Agreement.
4. Authorization Basis
The effective Authorization Basis for the Building 886 is those documents
identified as applicable to the Building 886 in the AB Document List
(ABDL).
5. Terms and Conditions
5.1. Applicable federal and state law, including implementing
regulations, and all contractual requirements regarding Building
886, except as set out in subsection 5.2 below, remain in force.
Page 1 of 2
<PAGE>
ROCKY FLATS ENVIRONMENTAL TECHNOLOGY SITE
-----------------------------------------
Site SAR Authorization Agreement
--------------------------------
Authorization Agreement No. RFETS-011
1. Preamble
The purpose of this Authorization Agreement is to adopt the Site Safety
Analysis Report Volume I (Site SAR) as approved by the Department of
Energy (DOE), Rocky Flats Field Office (RFFO), and to authorize the
performance of activities on the Rocky Flats Environmental Technology
Site (Site) in accordance with the Site SAR. Upon implementation of the
Site SAR this Authorization Agreement supersedes the Master Activity List
(MAL) Authorization Agreement.
Kaiser-Hill Company L.L.C. (the contractor) inherited from EG&G Rocky
Flats, Inc., on July 1, 1995, aging facilities with existing hazards and
outdated or non-existent authorization basis documentation. It is
recognized by the DOE, RFFO and the contractor that on July 1, 1995, the
following conditions existed regarding the Site: (a) the mission of the
site had changed from weapons production to providing safe storage and
management of wastes and special nuclear material, with the goal of
reducing existing hazards, decommissioning facilities and ceasing
operations, and (b) the existing safety documentation required updating
due to this change in mission. The Site SAR was developed as part of the
overall plan to provide authorization bases for activities at the Site
not covered by facility ABs and as the mechanism to provide the
appropriate safety documentation for facilities with less than nuclear
hazard Category 2 quantities of material. The Site SAR also identifies
the infrastructure systems inherently relied upon in the other nuclear
Hazard Category 2 and 3 facility AB documents. The Site SAR was developed
following appropriate guidance contained in DOE Standard 3009,
Preparation Guide for U.S. Department of Energy Nonreactor Nuclear
Facility Safety Analysis Report, DOE Standard 1027, Hazard Categorization
and Accident Analysis Techniques for Compliance with DOE Order 5480.23,
Nuclear Safety Reports; DOE Standard 3011, Guidance for Preparation of
DOE 5480.22 (TSR) and DOE Order 5480.23 (SAR) Implementation Plans; and
DOE Order 5481.1B, Safety Analysis and Review System.
2. Authorization Scope
This agreement authorizes those activities bounded by the Site SAR
(Volume 1), subject to the terms and conditions of Sections 6 and 6
below. These include Site infrastructure activities that support Hazard
Category 2 and 3 facility authorization bases, on-site hazardous and
radiological transportation activities and all other ongoing activities
currently governed by the MAL that are not governed by a separate
authorization agreement.
3. Basis for Approval/Contractor Qualification
3.1. Based on the Review Report for the Site Safety Analysis Report
dated November 30, 1998, with specified technical direction, the
DOE, RFFO concludes that the Site SAR adequately documents the
operating safety basis and contains a control set that, when
implemented, provides reasonable assurance that the work
activities bounded by the Site SAR can be conducted by the
contractor without endangering the environment or the health and
safety of the workers or public.
<PAGE>
Site SAR Authorization Agreement (Continued)
3.2. The DOE, RFFO finds that there is reasonable assurance that the
contractor is technically qualified to engage in the activities
authorized by this Authorization Agreement.
4. Authorization Basis
4.1. The effective Authorization Basis (AB) for Site-wide nuclear
activities is constituted by those documents identified as
applicable to the Site in the AB Document List (ABDL).
42. The DOE approved Site SAR and direction dated November 30, 1998
shall be implemented, subject to the conditions of subsections
5.4, 5.6 and section 6, on or before June 30,1999. On the
implementation date, the ABDL shall be modified to reflect the new
AB, and the Site SAR shall supersede the MAL
5. Terms and Conditions
5.1. Applicable federal and state law, including implementing
regulations, and all contractual requirements regarding the Site,
except as further defined for safety and health in subsection 52
below, remain in force.
5.2. The Site SAR Chapter 6 defines the Safety Management Programs
commitments under this Authorization Agreement which meet the
applicable requirements of Section J, Attachment F, of contract
#DE-AC34-95RF00825. The controls contained in Chapter 7 of the
Site SAR shall be implemented under this Authorization Agreement
to maintain the assumptions of the safety analyses.
5.3. The AB, including the above-specified controls, will be kept
current by the contractor through performance of an annual review.
As appropriate, changes to or additional controls that may be
needed to safely perform planned nuclear activities will be
developed, evaluated and implemented by the Nuclear Safety
Program. This change control process shall manage the
configuration of the AB to include timely update and dissemination
of the AB Document List (ABDL) to reflect RFFO approved AB
documents. The ABDL and the Integrated Safety Management System,
through the use of the Integrated Work Control Process and the
Nuclear Safety Unreviewed Safety Question Determination process,
shall ensure that the AB is identified and reviewed for adequacy
prior to performing nuclear activities.
5.4. The RFFO has accepted the strategy for implementation of the Site
SAR. The contractor will approve an implementation plan (IP) to
achieve compliance with the controls and commitments of the Site
SAR. The contractor shall provide written notification to RFFO of
any substantive changes to the IP. This notification shall include
the basis for the change and any appropriate recovery actions.
5.5. The contractor will complete an Implementation Validation Review
of the Implementation of new controls under the Site SAR.
Page 2 of 3
<PAGE>
Site SAR Authorization Agreement (Continued)
6. Special Conditions
6.1. Until the Site SAR approved transportation controls are
Implemented, those interim measures specified in the Appendix to
this Authorization Agreement shall be implemented.
6.2. The interim measures identified in the Appendix will be superseded
by implementation of the Site SAR controls per subsection 4.2
above.
7. Effective and Expiration Dates of Agreement
This Authorization Agreement is effective as of the date of the last
signature below and shall remain in effect through the life of contract
#DE-AC34-95RF00825, unless modified in writing by both parties.
8. Agreement
For Kaiser-Hill Company L.L.C. For the Department of Energy
Rocky Flats Environmental Technology Site Rocky Flats Field Office
/s/ Robert G. Card 6/7/99 /s/ Jessie M. Roberson 6/7/99
- ------------------------------- -------------------------------
Robert G. Card Date Jessie M. Roberson Date
President Manager
Page 3 of 3
<PAGE>
5.2. The Administrative Controls contained in the Building 886 TSRs
define the specific Safety Management Program elements that shall
be implemented under this Authorization Agreement to meet the
applicable requirements of Section J, Attachment F, of contract
#DE-AC34-95AF00825. The Building 886 BIO Chapter 3 further defines
the contractor's commitment to the balance of the Safety
Management Program elements under this Authorization Agreement.
5.3. The AB, including the TSRs, will be kept current by K-H through
the performance of an annual review. As appropriate, changes to or
additional controls that may be needed to safely perform planned
activities will be developed, evaluated and implemented by the
Nuclear Safety Program in accordance with the Site Integrated
Safety Management System. This change control process shall manage
the configuration of the AB to include timely update and
dissemination of the AB Document List to reflect RFFO approved
changes.
6. Special Conditions
None
7. Effective and Expiration Dates of Agreement
This Authorization Agreement is effective as of the date of the last
signature below and shall remain in effect through the life of contract
#DE-AC34-95RF00825, unless modified in writing by both parties
8. Agreement
For Kaiser-Hill Company L.L.C. For the Department of Energy
Rocky Flats Environmental Technology Site Rocky Flats Field Office
/s/ Robert G. Card 8/31/98 /s/ Jessie M. Roberson 9/9/98
- ------------------------------- -------------------------------
Robert G. Card Date Jessie M. Roberson Date
President Manager
Page 2 of 2
<PAGE>
Site SAR Authorization Agreement (Continued)
Appendix 1
Interim Measure Completion Action
Date
- ------------------------------------------------------------------------------
1. Implement the controls developed for the 2/28/99 Standing Order 55
Salt Stabilization Program Transportation (Completed)
Risk, Nuclear Safety Technical Report NSTR
015-97 for all >200 gram/packages of
aged weapons-grade plutonium equivalent,
non waste, on-site (outside/between
buildings/facilities) transfers of SNM not
packaged In Type B containers by
February 28,1999.
2. Establish route control for all on-site 2/28/99 Standing Orders 55
deliveries of bulk propane during the (Completed) and 56
on-site transfer of SNM not packaged In
Type B containers.
3. Limit all on-site transfers of TRU waste 2/28199 Standing Order 55
packaged in standard waste boxes (SWBs) to (Completed)
10 or less boxes per transfer. This control
limits on-site transfers to one-half the
Material at Risk (MAR) value assumed In the
analysis in the Site SAR.
4. Use only trucks with metal floors for all 2/28/99 Standing Order 55
on-site transfers of TRU waste packed in (Completed)
metal drums.
5. Adopt the applicable controls contained 2/28/99 Standing Order 55
within the LLW Crate JCO for on-site (Completed)
transportation activities involving wooden
waste crates. The applicable controls are
stated as follows: 1) limiting the
collection/assembly of unattended wooden
LLW crates to 10 or less; and 2) ensuring
no unnecessary combustibles are in the
vicinity of unattended wooden LLW crates
during loading, unloading and no unnecessary
combustibles are in the transporting vehicle.
6. Limit the on-site transfers of LLW packed 2/28/99 Standing Order 55
in metal drums to less than 100 drums per (Completed)
transfer and LLW packed in wooden crates to
10 or less per transfer.
7. Implement Site Engineered Control #7 and 2/28/99 Sixteen new signs
Technical Direction B-2(b) by February 28, (Completed) Installed "No
1999. These controls address parking and Parking Within 20
ignition sources near propane tanks. Feet"
Appendix - Page 1 of 2
<PAGE>
Site SAR Authorization Agreement (Continued)
Interim Measure Completion Action
Date
- ------------------------------------------------------------------------------
8. Modify the Air Products contract for 2/28/99 Letter to Air Products
Building 223 by February 28, 1999 to limit (Completed) Identifying concern &
the chemicals brought on Site and into this notifying them of
facility to quantities permitted by the Site contract modification.
SAR. Air Products agreed on
February 24, 1999 to
Contract amendment
No.7 incorporating
limits of hazardous
chemicals per
reportable quantities
reported in 40CFR302.
9. Increase Building Managers awareness 2/17/99 Letter from K-H
(through management bulletins) of the Site (Completed) Nuclear Safety
SAR requirements to limit quantifies of the Manager with
hazardous and radiological materials below guidelines for
threshold quantities to prevent changing the subcontractors'
facility classification. action dated February
17, 1999 (HEG-009-99)
10. Each industrial facility manager will 3/15/99 Reports from
conduct a review of their facility and (Completed) subcontractors on
assert that the current various dates
category classification for the facility is confirming
correct and that their current hazardous current hazard
material inventory does not exceed that categorizations.
allowed by the Site SAR.
Appendix - Page 2 of 2
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
SECTION J
ATTACHMENT H
SCHEDULE AND COST INCENTIVE GRAPHS
<PAGE>
Schedule Incentive
[GRAPH APPEARS HERE]
Schedule Incentive ($ millions)
3/31/06 20
12/15/06 15
3/31/07 0
3/31/08 (20)
3/31/06-12/15/06 = $19,230.77/day
12/16/06-3/31/07 = $141,509.43/day
4/1/07-3/31/08 = $54,794.52/day
SECTION J, ATTACHMENT H
<PAGE>
Cost Incentive
[GRAPH APPEARS HERE]
Max Fee $460M
Underrun/Positive Incentive:
Government share: 70%
Contractor share: 30%
Target Fee $340M
Overrrun/Penalty:
Government share: 70%
Contractor share: 30%
Min Fee $150M
Target Cost
$3,563,000,000 $3,963,000,000 $4,163,000,000 $4,796,333,333
NOTE: See Contract B.5(d) for schedule incentive adjustment(s) to fee.
SECTION J, ATTACHMENT H
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
SECTION J
ATTACHMENT I
LISTING OF CLAIMS
<PAGE>
SECTION J
ATTACHMENT I
LISTING OF CLAIMS
Introduction
This Attachment I identifies the actions to be taken and agreements reached in
order to achieve an early start date for contract DE-AC34-00RF01904 beginning on
February 1, 2000. The Contractor and Government agree to the following,
notwithstanding any other actions, requirements or steps necessary to close out
contract DE-AC34-95RF00825 and to transition to the start of contract
DE-AC34-00RF01904.
A. Contractor agrees as follows:
i. Cost Reduction Proposals
In consideration of the commencement of contract DE-AC34-00RF01904 on February
1, 2000, and the Target Fee identified in Clause B.2(a) therein, Contractor
agrees and acknowledges that it has received adequate compensation and
consideration for all Cost Savings Proposals previously submitted DOE under
Clause H.6 of contract DE-AC34-95RF00825 through the payment of Superstretch
Performance Measure fees paid by DOE from 1996 and thereafter. In addition,
Contractor agrees that the CRP program has been superceded by the Superstretch
Performance measure program and Contractor is not entitled to pursue or seek
compensation for CRPs under contract DE-AC34-95RF00825 or DE-AC34-00RF01904.
ii. Claims for Performance Measure Fee
In consideration of the commencement of contract DE-AC34-00RF01904 on February
1, 2000 and the Target Fee identified in Clause B.2(a) therein, Contractor
agrees to withdraw its claim for unpaid Performance Measure Fee for performance
measure 97-S8.17R presently pending before the Energy Board of Contract Appeals
(EBCA No. C-990228). Additionally, in consideration of the payment by DOE in the
amount of $18,075,292, representing the payment of all unpaid fee earned under
contract DE-AC34-95RF00825 for performance measures, Contractor agrees to
forever give up any claims, whether known or unknown for any unpaid or unearned
performance measure fee Contractor may believe it is entitled to under contract
DE-AC34-95RF00825. The performance measure fee amount is based upon projected
quantities to be delivered by the conclusion of contract DE-AC34-95RF00825. This
amount is subject to adjustment if the quantity of performance actually
delivered would have resulted in a payment amount difference of more than five
percent from the projected quantities. The Contracting Officer may elect to make
partial payments for performance measure fee prior to February 1, 2000, based on
previously submitted completion reports.
B. DOE agrees as follows:
i. McCarty and Collateral Litigation Expenses
In consideration for the withdrawal of CRP and Performance Measure Fee claim,
the DOE agrees to withdraw its notice of intend to disallow costs in the McCarty
case and other miscellaneous litigation expenses as specified in a letter to
Contractor dated October 19, 1999, subject: 1999 Audit Report: Kaiser-Hill Legal
Office. DOE agrees that the $66,199.11 identified in that letter and the costs
incurred in defending the McCarty case shall be allowed as reimbursable costs
under contract DE-AC34-95RF00825. Nothing in this subparagraph should be
construed to alleviate the Contractor from compliance with its DOE approved
litigation management procedures.
Section J, Attach I - Pg 1
<PAGE>
Rocky Flats Closure Contract No. DE-AC34-00RF01904
ii. Fee Payments
DOE agrees that all fees paid and earned including Cost Reduction Proposal
payments under contract DE-AC34-95RF00825 shall not be subject to reduction or
deduction notwithstanding any other provision in contract DE-AC34-95RF00825, and
except for (a) Category 1, 2, 3 events/incidents identified, and (b)
circumstances evidencing an intentional failure by Contractor to disclose
material information which would have affected DOE's determination of
entitlement to fee or other obvious administrative or clerical error in
calculating the amount of fee earned.
Section J, Attach I - Pg 2
<PAGE>
1.PROGRAM/PROJECT TITLE Rocky 2. IDENTIFICATION NUMBER
Flats Closure Projects DE-AC34-00RF01904
3. PARTICIPANT NAME AND ADDRESS
Kaiser-Hill Company, L.L.C.
4. PLANNING AND REPORTING REQUIREMENTS
A. General Management Frequency
[X] Management Plan 0, A
[X] Status Report VN Q, A
[X] Summary Report Q
B. Schedule/Labor/Cost
[X] Milestone Schedule/Plan O, Q
[ ] Labor Plan
[ ] Facilities Capital Cost of Money Factors
Computation
[ ] Contract Facilities Cost of Money
[X] Cost Plan O, Q
[X] Milestone Schedule/Status M
[ ] Labor Management Report
[X] Cost Management Report M
C. Exception Reports
[ ] Conference Record
[ ] Hot Line Report
D. Performance Measurement
[X] Management Control System Description
[X] WBS Dictionary O, X
[X] Index O, X
[ ] Element Definition
[X] Cost Performance Reports
[ ] Format 1-WBS M
[ ] Format 2-Function
[ ] Format 3-Baseline M
E. Financial Incentives
[ ] Statement of Income and Expense
[ ] Balance Sheet
[X] Cash Flow Statement O, Q
[ ] Statement of changes in Financial Position
[ ] Loan Drawdown Report
[X] Operating Budget O, Q
[X] Supplementary Information A
F. Technical
[ ] Notice of Energy RD&D Project
(Required with any of the following)
[ ] Technical Progress Report
[ ] Draft for Review
[ ] Final for Approval
[ ] Topical Report
[ ] Final Technical Report
[ ] Draft for Review
[ ] Final for Approval
[ ] Software
[X] Other(Specify): See Attached Q
<TABLE>
<CAPTION>
<S> <C> <C>
5. FREQUENCY CODES
A--As required M--Monthly S--Semi-Annually
C--Change to Contractual Agreement O--Once After Award X--With Proposal/Bid/Application or with Significant Changes
F-Final (end of effort) (end of effort) 0--Quarterly Y--Yearly or Upon Renewal or Contractual Agreement
6. SPECIAL INSTRUCTIONS (ATTACHMENTS)
[X] Report Distribution List/Addressees [X] Due Dates [ ] Work Breakdown
[X] Reporting Elements [ ] Analysis Thresholds [X] Other
</TABLE>
7. PREPARED BY (SIGNATURE AND DATE) 8. PREPARED BY (SIGNATURE AND DATE)
/S/ Signature illegible 1/14/00 /S/ Signature illegible 1/14/00
198
<PAGE>
Exhibit 10.13
CH2M HILL Companies, Ltd.
Deferred Compensation Retirement Program
Plan Summary
Plan Objectives
CH2M HILL Companies, Ltd.'s Deferred Compensation Retirement Program (DCRP) is
effective December 1, 1995 and has the following major objectives:
. To provide you with a universal life policy with cash values which would help
restore retirement benefits otherwise payable to you if not for governmental
limitations
. To provide senior executives with a competitive retirement program
. To provide you with a wide array of payout options at retirement
Eligibility
Senior executive officers of CH2M HILL Companies, Ltd. and its subsidiaries who
have base salaries $10,000 above the federally allowed maximum contribution and
who have been selected by the Board of Directors as being eligible for
participation in this Plan. The following positions have been approved by the
Board for participation if the salary requirements have been obtained:
President and CEO
Chairman of the Board
Chief Financial Officer
Subsidiary Presidents
Other positions meeting the salary requirements and approved by the Board will
be eligible for participation. The maximum participation level is such that
total participant salaries may not exceed one percent of the total payroll of
CH2M HILL Companies, Ltd.
<PAGE>
Exhibit 10.14
CH2M HILL COMPANIES, LTD.
DEFERRED COMPENSATION PROGRAM
CH2M HILL COMPANIES, LTD. hereby established the CH2M HILL COMPANIES, LTD.
Deferred Compensation Program (the "Program") for select group of its senior
executives eligible to participate in the Program to its terms, effective as of
January 1, 1997.
1. Purpose:
--------
The purpose of this program is to provide for an unfunded,
nonqualified deferred compensation arrangement for a select group of senior
executives of the Company in order to assist in attracting and retaining such
senior executives and to encourage such senior executives to devote their best
efforts to the business of the Company.
2. Definitions:
------------
2.01 "Agreement" means the Deferred Compensation Agreement between
the Company and the Employee. Each Plan Year deferral will be covered by a
separate Agreement.
2.02 "Beneficiary" means the person or persons or other entity or
entities that have been designated by the Employee to receive, after his death,
benefits under the Program in accordance with the terms of the Program. The
designation by the Employee must be on forms prescribed by the Company and must
be filed with the Company. Should the Employee fail to designate a Beneficiary,
or should the designated Beneficiary fail to survive the Employee, the benefits
due hereunder shall be paid to the Employee's estate. Beneficiary designations
may be revoked or changed by filing a new Beneficiary designation with the
company.
2.03 "Change of Control" shall be deemed to have occurred upon the
purchase or other acquisition by any person, entity or group of persons, within
the meaning of section 13(d) or 14(d) of the Securities Exchange Ace of 1934
(the "Act"), or any comparable successor provisions, of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Act) of 30 percent or
more of either the outstanding shares of common stock or the combined voting
power of Company's then outstanding voting securities entitled to vote
generally, or the approval by the stockholders of Company of a reorganization,
merger, or consolidation, in each case, with respect to which persons who were
stockholders of Company immediately prior to such reorganization, merger, or
consolidation do not, immediately thereafter, own more than 50 percent of the
combined voting power entitled to vote generally in the election of directors of
the reorganized, merged or consolidated Company's then outstanding securities,
or a liquidation or dissolution of Company or of the sale of all or
substantially all of Company's assets.
2.04 "Commencement Date" means the first day of the Plan Year with
respect to which a Compensation deferral occurs.
<PAGE>
2.05 "Committee" shall mean the Compensation and Work Force Committee
of the Board of Directors.
2.06 "Compensation" means the Employee's base salary to be received
during a Plan Year from the Company and any bonus or unused vacation earned by
and payable to the Employee with respect to any Plan Year.
2.07 "Company" means CH2M HILL COMPANIES, LTD. and any subsidiaries,
affiliates or members of a controlled group, as defined in Internal Revenue Code
Section 1563 and the related regulations.
2.08 "Disability" means any disability of the Employee pursuant to
which the Employee is entitled to benefits under the Company's long term
disability program.
2.09 "Deferred Compensation Amount" means the cumulative deferrals of
the Employee, plus the accretions for earnings, and minus any previous payments
made to the Employee in accordance with the provisions of section 6 of the
Program.
2.10 "Employee" or "eligible employee" means an employee of the
Company who is designated as eligible for participation in the Program pursuant
to the terms hereof.
2.11 "Plan Year" means a calendar year.
2.12 "Serious Financial Hardship" means an immediate and heavy
financial need if the hardship is caused by one or more of the following:
(a) Accident or illness involving the participant, a member of the
participant's immediate family or household or another dependent, (as
defined in Code Section 152) if medical expenses would be deductible
under Section 213(d) of the Internal Revenue Code;
(b) The current cost of post-secondary education of a member of the
Participant's immediate family;
(c) The cost of buying the principal residence of the Participant,
not including making mortgage payments;
(d) The cost of preventing an eviction or mortgage foreclosure on
the principal residence of the Participant, or;
(e) Any other deemed immediate and heavy financial need which the
Internal Revenue Service may designate.
2.13 "Unused Vacation" means those hours of "time off with pay"
(TOWP) or vacation fringe benefit hours accumulated to the benefit account of
the eligible Employee of the beginning of a plan year in which compensation is
deferred. Unused vacation hours will be converted to compensation at the
employee's hourly base pay rate for the year previous to the plan year.
<PAGE>
3. Administration:
---------------
The Committee shall have full power and authority to administer and
interpret the Program, subject to the provisions of the Program and to such
matters as are reserved under the Program to the Board of Directors of the
Company. The Committee may adopt such administrative guidelines and procedures
as it deems necessary or helpful in administering the Program.
4. Eligibility:
------------
The Committee based on recommendations from management, shall
designate the Employees who may participate in the Program for a Plan Year from
among those employees of the Company who meet the criteria for designation. The
employees who are eligible for designation for participation shall be those
employees who are members of a select group of management or highly compensated
employees. Participation in the Plan will be on a Plan Year by Plan Year basis,
and participation for any Plan Year will not, in and of itself, entitle an
employee to participate for any other Plan Year.
5. Compensation Deferred:
----------------------
5.01 Compensation to be deferred - An Employee may elect to
defer part of his Compensation for a Plan Year, except that:
(a) the maximum deferral is 50% of base salary and 100% of any cash
bonus and unused vacation in excess of two weeks TOWP, unless a higher
percentage is approved by the Committee;
(b) the minimum deferral for a Plan Year when deferral is elected
shall be 10% of base salary or excess vacation with a compensation of
$5000.
Deferrals from base salary shall be withheld in substantially equal amounts from
the base salary otherwise payable for the Plan Year for which the deferral is
made. Deferrals from bonuses and unused vacation shall be withheld from the
bonus or unused vacation otherwise payable for the Plan Year for which the
deferral is made.
5.02 Time and Method of Election to Defer - Election to defer shall
be made at any time prior to the beginning of the Plan Year for which the
Compensation shall be deferred. Any election so made shall be irrevocable with
respect to that Plan Year. If no election is made, all Compensation shall be
paid on a regular basis during the Plan Year. Election shall be by written
notice to the Company.
6. Payment:
--------
6.01 Payment of the Deferred Compensation Amount shall be governed by
the irrevocable elections made by the employee with each Plan Year's Agreement.
Payment shall commence after the earlier of the Employee's death, disability,
attainment of the age selected in the Agreement, or termination of employment
with the Company.
<PAGE>
6.02 In the event of the Employee's death prior to commencement of
distribution of the Deferred Compensation Amount, the entire Deferred
Compensation Amount shall be paid to the Employee's Beneficiary as soon as
practical after the death of the Employee.
6.03 In the event of the Employee's death after commencement of
distribution of benefits, but prior to the complete distribution of all benefits
to which the Employee is entitled, then payment of the remaining balance of the
Deferred Compensation Amount shall be governed by the irrevocable elections made
by the Employee with each Plan Year's Agreement.
6.04 Each Plan Year's deferrals shall be accounted for separately and
payment of the deferred amounts shall be governed by the Agreement for the year
of deferral. Notwithstanding the fact that election may have been made to have
the Deferred Compensation Amounts paid in installments, in the event that the
total monthly installments for all Plan Year Deferrals is less than $1000, then
the monthly payment shall be increased to $1000, with the excess charged against
the earliest Plan Year's deferral, with a corresponding reduction in the number
of monthly installments. The Committee may adjust this minimum monthly payment
from time to time, at its sole discretion.
6.05 Notwithstanding the irrevocable elections made by the
participant, the Committee, in their sole and absolute discretion, may modify
the payment of any Deferred Compensation Amounts which the Participant has
elected to have paid in a lump sum. Such modification shall not result in the
payment of such Deferred Compensation Amounts over a period of greater than five
years. Payments shall be in substantially equal monthly installments, and the
unpaid Deferred Compensation Amounts shall continue to earn interest as provided
in section 9, until such Deferred Compensation Amounts have been paid in full.
6.06 In the event of Serious Financial Hardship of a Participant, the
Participant may request distribution of some or all of the Participant's
Deferred Compensation Amount. The Committee may require such evidence as it
deems necessary to determine if a distribution is warranted. The Committee
shall have the power to cease further deferrals by the Participant in lieu of or
in addition to permitting a distribution. Payment shall not be made to the
extent that the hardship is or may be relieved through reimbursement or
compensation by insurance or otherwise, or by liquidation of the Participant's
assets, to the extent such liquidation would not itself cause Serious Financial
Hardship. Distribution shall be limited to the amount necessary to meet the
emergency and the anticipated income taxes that would arise from the
distribution.
7. Termination of Employment after Change of Control:
--------------------------------------------------
Notwithstanding section 6 of the Program, if the employment of an
Employee is terminated, other than by death, disability or normal retirement,
within three years after a Change of Control, payment of the entire Deferred
Compensation Amount shall be made in a lump sum as soon as practical after
termination of employment.
<PAGE>
8. Nature of Company's Obligation:
-------------------------------
This Program is intended and shall be construed as an unfunded plan
maintained by the Company primarily for the purpose of providing deferred
compensation for a select group of management or highly compensated employees.
The benefits provided under this Program shall be a general, unsecured
obligation of the Company payable solely from the general assets of the Company,
and neither the Employee nor the Employee's Beneficiaries or estate shall have
any interest in any assets of the Company by virtue of this Program. No fund or
other assets will ever be set aside or segregated for the benefit of the
Employee or the Employee's Beneficiaries under this Program. The adoption of
this Program and any setting aside of amounts by the Company with which to
discharge its obligations hereunder shall not be deemed to create a trust; legal
and equitable title to any funds so set aside shall remain subject to the
general creditors of the Company. If it becomes necessary for Employee to
institute a claim, by litigation or otherwise, to enforce his rights under the
Program, the Company agrees to indemnify Employee from and against all costs and
expenses, including legal fees, incurred by him in instituting and maintaining
such claim.
9. Earnings:
---------
9.01 The Deferred Compensation Amount shall be credited with interest
computed based upon 125 percent of the Long Term Corporate Bonds of Aaa Quality
as determined by Moody's. The interest rate shall be adjusted on January 1 and
July 1 of each year based upon the Moody's rate for the immediately preceding
month. In the event that Moody's ceases publishing its Long Term Corporate Bond
rates, then the Committee shall substitute a reasonably comparable rate.
9.02 In the event that an Employee has commenced distribution of the
Deferred Compensation Amount, the crediting of interest on the unpaid balance
shall continue until the Deferred Compensation Amount has been distributed in
full.
9.03 Interest shall be computed and credited monthly based upon the
balance of the Deferred Compensation Amount as of the last day of the
immediately preceding month.
10. Miscellaneous Provisions:
-------------------------
10.01 Amendment - This Program may be amended from time to time or
terminated by the Compensation and Work Force Committee of the Board of
Directors of the Company (or such successor Board Committee as may subsequently
be assigned similar jurisdiction), but no such amendment or termination, other
than as provided in 10.02 of this Program, may change an election which an
Employee has made, nor any rights and obligations thereunder.
10.02 Termination - The Company may terminate further deferrals under
the Program for any reason with respect to deferrals for Plan Years beginning
after the date of the Company's termination of the Program. In the event of
such cessation of deferrals, all other rights and obligations shall continue
until all Deferred Compensation Amounts have
<PAGE>
been paid to all Employees under the terms of the Program. At any time following
a Change in Control, the Company may terminate the Program, but only if either
the federal tax laws change or are construed in such a manner as to adversely
affect the Company's after tax cost to provide the benefits under the Program or
the provisions of the Employee Retirement Income Security Act of 1974 (other
than reporting and disclosure requirements) become applicable to deferrals under
the Program. In the event of such termination, each Employee's Deferred
Compensation Amount shall become immediately due and payable.
10.03 Successors, Mergers, or Consolidations - Any Agreement under
the Program shall inure to the benefit of and be binding upon (i) the Company
and its successors and assigns and upon any corporation into which the Company
may be merged or consolidated, and (ii) the Employee, and his heirs, executors,
administrators and legal representatives.
10.04 Termination of Employment during Plan Year - If any Employee
terminates his employment for any reason during a Plan Year for which
compensation is to be deferred, the actual deferral specified in his Agreement
for the Plan Year shall be adjusted to equal the actual amounts deferred under
the Agreement prior to such termination.
10.05 Assignment of Rights - The Program, and the rights, interests
and benefits hereunder, shall not be assigned, transferred, pledged, sold,
conveyed, or otherwise alienated or encumbered in any way by the Employee or his
Beneficiary, and shall not be subject to execution, attachment or similar
process. Any attempted sale, conveyance, transfer, assignment, pledge or
encumbrance of the rights, interests or benefits provided pursuant to the terms
of the Program, contrary to the terms of the forgoing sentence, or the levy of
any attachment or similar process thereupon, shall by null and void and without
effect.
10.06 Entire Agreement - This Program constitutes the entire
agreement between the parties and the benefits hereunder shall be independent
of, and in addition to, any other benefits or compensation payable under any
other agreements that now exist or may hereafter exist from time to time between
Company and Employee.
10.07 Construction - The Program shall be governed by, and
interpreted and enforced in accordance with, the laws of the State of Colorado.
CH2M HILL COMPANIES, LTD.
- -------------------- ------------------------------------
Date
BY:_________________________________
- -------------------- ------------------------------------
Date
BY:_________________________________
<PAGE>
CH2M HILL COMPANIES, LTD.
DEFERRED COMPENSATION PROGRAM
INDIVIDUAL DEFERRED COMPENSATION AGREEMENT
I. I hereby elect to participate in the CH2M HILL COMPANIES, LTD. Deferred
Income Program for the plan year ended December 31, 19__. I authorize CH2M HILL
COMPANIES, LTD. to defer from my salary, bonus, and unused vacation the
percentage and/or amounts shown below:
From my base pay -_______ percent or _________ dollars. (Not to exceed 50%,
unless approved by the Committee, with a minimum annual deferral of 10% of
base salary.)
From my cash bonus (if any) -_________ percent or _______ dollars. (Not to
exceed 100%.)
II. I also irrevocably elect that distribution of the amounts deferred,
together with accumulated earnings, shall commence as soon as practicable after
(initial and complete, as appropriate, one of the following):
________ January 1 of the year following the year in which I terminate
service as an employee of CH2M HILL COMPANIES, LTD.
________ The first day of the month after I attain age ____, but not to
exceed age 70, or,
________ At the same time as I elected for the immediately preceding
plan year.
III. I also irrevocably elect to have the amounts deferred, together with the
accumulated earnings, be distributed in the following manner on the date elected
above (initial and complete, as appropriate, one of the following):
________ The entire account balance in one lump sum,
________ A lump sum payment of (not to exceed the Deferred Compensation
Amount) with the remaining balance distributed in __________
(not to exceed 120) approximately equal monthly installments,
beginning with the first day of the first month after payment
of the lump sum,
________ Approximately equal monthly installments for a period of
__________ (not to exceed 120) months, or,
________ In the same manner as I elected for the immediately preceding
plan year.
<PAGE>
IV. In the event of my death after commencement of distribution of the Deferred
Compensation Amount, but prior to the distribution of the entire Deferred
Compensation Amount, the balance shall be paid to my designated beneficiary or
beneficiaries, as follows:
________ In a single lump sum payment, or,
________ By continuing the election in section III above.
I understand that an election to defer salary or bonus shall become irrevocable
of the last day prior to the beginning of such year. The elections as to the
timing and amount of distributions become irrevocable as to the amounts deferred
in any giving year at such time as the related deferral election becomes
irrevocable. I also understand that any election to defer shall only continue
for one plan year, and that deferrals in future plan years will require a new
election and will be dependent upon being selected for participation in this
Deferred Compensation Program for that year by the Company.
_______________________________________________
Signed
_______________________________________________
Date
Printed or typed name _____________________________________
Social Security Number _____________________________________
Date of Birth _____________________________________
Date of Hire _____________________________________
<PAGE>
EXHIBIT 21
Subsidiaries of CH2M HILL Companies, Ltd.
- -------------------------------------------------------------------------------
1. CH2M HILL Industrial Design Corporation, an Oregon corporation
2. Operations Management International, Inc., a California corporation
3. CH2M HILL, Inc., a Florida corporation
4. CH2M HILL Hanford Group, Inc., a Delaware corporation
5. Kaiser-Hill Company, LLC, a Colorado limited liability company
6. CH2M HILL Corp., an Oregon corporation
7. CH2M HILL Holding, Inc., a Delaware corporation
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AND RELATED CONSOLIDATED STATEMENTS OF INCOME AND
CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 12,557,000
<SECURITIES> 0
<RECEIVABLES> 266,454,000
<ALLOWANCES> 9,121,000
<INVENTORY> 0
<CURRENT-ASSETS> 286,923,000
<PP&E> 41,150,000
<DEPRECIATION> 26,876,000
<TOTAL-ASSETS> 357,155,000
<CURRENT-LIABILITIES> 212,240,000
<BONDS> 0
0
242,000
<COMMON> 172,000
<OTHER-SE> 96,678,000
<TOTAL-LIABILITY-AND-EQUITY> 357,155,000
<SALES> 1,184,528,000
<TOTAL-REVENUES> 1,184,528,000
<CGS> 845,050,000
<TOTAL-COSTS> 1,158,541,000
<OTHER-EXPENSES> (1,977,000)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,194,000
<INCOME-PRETAX> 26,770,000
<INCOME-TAX> 13,144,000
<INCOME-CONTINUING> 13,626,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13,626,000
<EPS-BASIC> .46
<EPS-DILUTED> .46
</TABLE>
<PAGE>
Exhibit 99.2
INDEPENDENT AUDITOR'S REPORT
The Board of Directors
CH2M HILL INDUSTRIAL DESIGN
CORPORATION:
We have audited the accompanying consolidated balance sheets of CH2M HILL
INDUSTRIAL DESIGN CORPORATION and subsidiaries as of December 31, 1999 and 1998,
and the related consolidated statements of income and retained earnings,
comprehensive income, and cash flows for each of the years in the three-year
period ended December 31, 1999. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of CH2M HILL INDUSTRIAL
DESIGN CORPORATION and subsidiaries as of December 31, 1999 and 1998, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1999 in conformity with generally accepted
accounting principles.
KPMG LLP
Portland, Oregon
January 21, 2000
