Exhibit 10.6


 


EXECUTIVE CHANGE OF CONTROL AGREEMENT


 


THIS EXECUTIVE CHANGE OF
CONTROL AGREEMENT is executed to be effective as of the 1st day of July, 2008 (“Effective Date”), by and between CH2M HILL Companies,
Ltd., an Oregon corporation (“CH2M HILL”), and Michael E. McKelvy (“Executive”).


 


RECITALS


 


A.                                 The Board of
Directors of CH2M HILL considers the establishment and maintenance of a sound
and vital management team to be essential to protecting and enhancing the best
interests of CH2M HILL and its stockholders; and


 


B.                                   The Board of
Directors recognizes that the possibility of a change in control may arise and
that such possibility, and the uncertainty and questions which it may raise
among senior management, may result in the departure or distraction of senior
management personnel to the detriment of CH2M HILL and its stockholders; and


 


C.                                   Executive
currently serves as an officer or director of CH2M HILL or one of its
subsidiaries; and


 


D.                                  The Board of
Directors has determined that it is in the best interests of CH2M HILL and its
stockholders to secure Executive’s continued services and to ensure Executive’s
continued and undivided dedication to duties in the event of any threat of or
occurrence of events that could lead to a change in control of CH2M HILL,
without being influenced by the Executive’s uncertainty of his/her own
situation; and


 


E.                                    The Board of
Directors has authorized the undersigned to enter into this Agreement on behalf
of CH2M HILL.


 


For and in consideration of
the premises and the mutual covenants and agreements herein contained, CH2M
HILL and Executive hereby agree as follows.


 


AGREEMENT


 


Article 1.  Definitions


 


As used in this Agreement,
the following terms shall have the respective meanings set forth below:


 


1.1          “Board” means
the Board of Directors of CH2M HILL.


 


1.2          “Cause” means:


 


a.                                     A material
breach by Executive of his/her duties and responsibilities (other than as a
result of incapacity due to physical or mental illness) which is (i) demonstrably
willful, continued and deliberate on Executive’s part, or (ii) committed
in bad faith and without reasonable belief that such breach is in the best
interests of CH2M HILL; or (iii) a willful failure to follow the lawful
and reasonable directions of the Board, that remain uncured five (5) business
days following the Board’s provision of written notice regarding such failure
to the Executive.  For purposes of clause
(a)(ii), any act, 


 

















 


or failure to act, based
upon authority given pursuant to a resolution duly adopted by the Board or
based upon the advice of counsel for CH2M HILL shall be conclusively presumed
to be done, or omitted to be done, by Executive in good faith and in the best
interests of CH2M HILL; or


 


b.                                    The Executive’s
conviction of, or plea of nolo contendere
to, a felony involving willful misconduct which is materially and demonstrably
injurious to CH2M HILL.


 


c.                                     “Cause” shall
not exist unless and until CH2M HILL has delivered to Executive a copy of a
resolution duly adopted by three-quarters (3/4) of the entire Board at a meeting
of the Board called and held for such purpose (after thirty (30) calendar days’
notice to Executive and an opportunity for Executive, together with counsel, to
be heard before the Board), finding that in the good faith opinion of the Board
an event set forth in clause (a) or (b) above has occurred and
specifying the particulars thereof in detail. 
CH2M HILL must first notify Executive of any event believed to
constitute Cause within thirty (30) calendar days following CH2M HILL’s
knowledge of its existence or such event shall not constitute “Cause” under
this Agreement.


 


1.3                               “Change of Control Event” or “COC”
means the occurrence of any one of the following events:


 


a.                                     Any one person, or more than one person acting as a group, acquires
ownership of stock of CH2M HILL that, together with stock held by such person
or group, constitutes more than 50% of the total Fair Market Value of CH2M HILL
stock.  However, if any one person or
more than one person acting as a group, owns more than 50% of the total Fair
Market Value of CH2M HILL stock, the acquisition of additional stock by the
same person or persons is not considered to cause a change in the ownership of
CH2M HILL (or to cause a change in the effective control of CH2M HILL).


 


b.                                    There is a change in the effective control of CH2M HILL.  A change in the effective control of CH2M
HILL occurs on the date that either:


 


(i)                  Any one person, or more than one person acting as a group, acquires (or has
acquired during the 12-month period ending on the date of the most recent
acquisition by such person or persons) ownership of stock of CH2M HILL that
represents 30% or more of the total voting power of CH2M HILL stock; or


 


(ii)               a majority of members of CH2M HILL ‘s board of directors is replaced during
any 12-month period by directors whose appointment or election is not endorsed
by a majority of the members of CH2M HILL ‘s board of directors prior to the
date of the appointment or election.


 


c.                                     Any one person, or more than one person acting as a group, acquires ownership
of all or substantially all of the assets of CH2M HILL.


 


d.                                    The stockholders of CH2M HILL approve a plan of liquidation or dissolution
of CH2M HILL and such transaction is consummated.


 

















 


For purposes of the definition in this Section 1.3
Persons Acting as a Group shall have the following meaning: Persons will not be
considered to be acting as a group solely because they purchased stock of CH2M
HILL at the same time, or as a result of the same public offering.  However, persons will be considered to be
acting as a group if they are owners of a corporation that enters into a
merger, consolidation, purchase or acquisition of stock, or similar business
transaction with the corporation.  If a
person, including an entity, owns stock in both corporations that enter into a
merger, consolidation, purchase or acquisition of stock, or similar
transaction, such shareholder is considered to be acting as a group with other
shareholders in a corporation prior to the transaction giving rise to the
change and not with respect to the ownership interest in the other corporation.


 


For the avoidance of doubt, this Section shall be
interpreted in accordance with Treasury guidance for the definition of Change
in Control under Section 409A of the Code (“Section 409A”).


 


e.                                     Termination Ahead of COC.   Notwithstanding
anything in this Agreement to the contrary, if Executive’s employment is
terminated (actually or pursuant to a Constructive Termination as described in
section 1.8 below) prior to a Change of Control Event, and Executive reasonably
demonstrates that such termination was at the request or suggestion of a third
party who has indicated an intention or taken steps reasonably calculated to
effect a Change of Control Event and a Change of Control Event involving such
third party occurs, then for all purposes of this Agreement, the date of a
Change of Control Event shall mean the date immediately prior to the date of
such termination of employment.


 


1.4                               “COC Period” means the period of time
beginning with a Change of Control Event and ending two (2) years
following such Change of Control Event.


 


1.5                               “Code” means the United States Internal
Revenue Code of 1986, as amended.


 


1.6                                 “Date of Termination” means:


 


a.                                     The effective date on which Executive’s employment by CH2M HILL or successor
terminates as specified in a written notice to the other by CH2M HILL,
successor, or Executive, as the case may be, delivered pursuant to section 9.7,
or


 


b.                                    If Executive’s employment with CH2M HILL or successor terminates by reason
of death, the date of death of Executive, or


 


c.                                     In case of Constructive Termination, the date on which CH2M HILL or
successor notifies the Executive of the action that constitutes Constructive
Termination (section 1.8).


 


d.                                      A Date of Termination shall not occur unless the Executive Separates from
Service with the Company.


 


1.7                               “ELTI” means the incentive offered under
the Executive Officers Long Term Incentive Plan or similar incentive that may
replace ELTI that provides performance-based 


 

















 


compensation to select senior executive officers and ensures full deductibility of
benefits paid under the Plan as performance-based compensation under Code §162(m).


 


1.8                               “Good Reason” or “Constructive
Termination” means, without Executive’s express written consent, the
occurrence of any of the following after a Change of Control Event or as
provided in section 1.3(e):


 


a.                                     Change in Responsibilities:


 


(i)                                    the assignment to Executive of any duties or responsibilities inconsistent
in any material adverse respect with Executive’s position(s), duties,
responsibilities or status immediately prior to such Change of Control Event
(including any diminution of such duties or responsibilities); or


 


(ii)                                 a material adverse change in
Executive’s reporting responsibilities, titles or offices with CH2M HILL or
successor as in effect immediately prior to such Change of Control Event.


 


b.                                    Change in Compensation.  Any material reduction by CH2M HILL or
successor in Executive’s total compensation package, including any material
adverse change in the annual salary, the incentive bonus ranges and targets, or
the timing of payment of same as compared to the compensation package in effect
immediately prior to such Change of Control Event.


 


c.                                       Change in Location.    Any requirement of CH2M HILL or successor that Executive:


 


(i)                                    be based anywhere more than
twenty-five (25) miles from the facility where Executive is located at the time
of the Change of Control Event; or


 


(ii)                                 travel on CH2M
HILL or successor’s business to an extent substantially greater than the travel
obligations of Executive immediately prior to such Change of Control Event.


 


d.                                      Change in Benefits:


 


(i)                                   the failure of CH2M HILL or successor to continue in effect any employee
benefit and fringe benefit plans and policies or deferred compensation plans in
which Executive is participating immediately prior to such Change of Control
Event, unless Executive is permitted to participate in other plans
providing Executive with substantially comparable benefits; or


 


(ii)                                the taking of any action by CH2M HILL or successor which would adversely
affect Executive’s prior participation in or reduce Executive’s accrued
benefits under any employee benefit and fringe plans or deferred compensation
plans in which Executive is participating immediately prior to such Change of
Control Event; or


 


(iii)                             the failure of CH2M HILL or
successor to provide Executive and Executive’s dependents welfare benefits that
are substantially comparable 


 

















 


to the benefits available to them immediately prior to such Change of Control
Event at a substantially comparable cost to Executive; or


 


(iv)                            the failure of CH2M HILL or successor to provide Executive with paid
vacation at levels in effect for Executive immediately prior to such Change of
Control Event or as the same may be increased from time to time thereafter.


 


e.                                       Office and Support Staff.  A material negative change in the office or offices, personal secretarial
and other assistance, provided to Executive compared to the most favorable of
the foregoing provided to the Executive by CH2M HILL at any time during the
120-day period immediately preceding the Change of Control Event or, if more
favorable to the Executive, as provided generally at any time thereafter with
respect to other peer executives of CH2M HILL or successor.


 


f.                                       Assumption of this Agreement.  The failure of CH2M HILL to assign and obtain the assumption of this
Agreement from any successor as contemplated in section 3.5 below.


 


g.                                    Inadvertent Action.  An action taken in good faith and which is
remedied by CH2M HILL or successor within thirty (30) calendar days after
receipt of notice thereof given by Executive shall not constitute Good Reason
or Constructive Termination under this Agreement.  Executive must provide notice of termination
of employment within thirty (30) calendar days of Executive’s knowledge of an
event constituting “Good Reason” or such event shall not constitute Good Reason
or Constructive Termination under this Agreement.   To constitute Good Reason or Constructive
Termination the Executive must terminate employment within 2 years from the
date of the initial occurrence of an event described in Section 1.8.


 


1.9                               “ISVEU” means stock value equivalent
units offered under the CH2M HILL Companies, Ltd. International Deferred
Compensation Plan.


 


1.10                         “LTI” means the incentive offered under
the Long-Term Incentive Plan to selected senior executives of CH2M HILL or
similar bonus that may replace LTI at a future date.  In current form this incentive bonus is tied
to specific three-year performance targets with payments made during the year
immediately following the year in which the target performance period
terminated.


 


1.11                         “Phantom Stock” means contractual rights
to amounts equal to value of CH2M HILL Stock over time provided to selected
employees pursuant to CH2M HILL Phantom Stock Plan, as amended from time to
time, and any successor plan.


 


1.12                         “SAR”  means
contractual rights to amounts equal in value to CH2M HILL Stock appreciation
over time provided to selected employees pursuant to CH2M HILL Stock Appreciation
Rights Plan, as amended from time to time, and any successor plan.


 


1.13                         “Separation from Service” means a
termination of services provided by the Executive whether voluntarily or
involuntarily, other than by reason of death or disability, as determined by
CH2M HILL in accordance with Treas. Reg. §1.409A-1(h).  In determining whether the Executive has
experienced a Separation from Service, the following 


 

















 


provisions shall apply:


 


A Separation from Service shall occur when the Executive has
experienced a termination of employment with CH2M HILL.  The Executive shall be considered to have
experienced a termination of employment when the facts and circumstances
indicate that the Executive and CH2M HILL reasonably anticipate that either (i) no
further services will be performed for CH2M HILL after a certain date, or (ii) that
the level of bona fide services the Executive will perform for CH2M HILL after
such date (whether as an employee or as an independent contractor) will
permanently decrease to no more than 20% of the average level of bona fide
services performed by the Executive (whether as an employee or an independent
contractor) over the immediately preceding 36-month period (or the full period
of services to the Executive if the Executive has been providing services to
CH2M HILL less than 36 months).


 


1.14                         “Specified Employee”  shall mean any Executive who is determined to be a “key employee”
(generally the top 50 ranked employees by compensation for the prior calendar
year) for the applicable period, as determined annually by CH2M HILL in
accordance with Treas. Reg. §1.409A-1(i).


 


1.15                         “STI” means the incentive offered under
the Short-Term Incentive Plan to selected CH2M HILL employees on an annual
basis or similar bonus that may replace STI at a future date.  STI bonus is historically paid in the first
quarter of the year immediately following the year with respect to which it is
awarded.


 


1.16                         “Stock” means CH2M HILL common stock.


 


1.17                         “Stock Options” means options to purchase
CH2M HILL stock at an agreed strike price granted from time to time to selected
CH2M HILL employees pursuant to CH2M HILL Stock Option Plans.


 


1.18                         “Subsidiary” means any corporation or
other entity in which CH2M HILL has a direct or indirect ownership interest of
fifty percent (50%) or more of the total combined voting power of the
then-outstanding securities of such corporation or other entity entitled to
vote generally in the election of directors or in which CH2M HILL has the right
to receive fifty percent (50%) or more of the distribution of profits or of the
assets on liquidation or dissolution.


 


1.19                         “SVEUs” means stock value equivalent
units offered under the CH2M HILL Pre-Tax and Post-Tax Deferred Compensation
Plans.


 


1.20                         “VAR” means a Value Appreciation Right
bonus offered to a selected group of senior management and technologists in the
Communications Group of CH2M HILL pursuant to the CH2M HILL Communications
Group Value Appreciation Incentive Plan, as amended from time to time, and any
successor plan.


 


1.21                         “Window Period” means the period of at
least ten (10) business days commencing on the business day next following
signing of the agreement or plan of organization which will result in a COC and
during which the Executive will be required to make certain elections described
in this Agreement.


 

















 


Article 2.  Obligations of Executive


 


2.1                               Continuing Employment.  Executive agrees that in the event of any
threat or occurrence of or negotiation or other action that could reasonably
lead to, or create the possibility of a Change of Control Event, Executive
shall not voluntarily leave the employ of CH2M HILL without Good Reason for a
period of thirty (30) calendar days following the Change of Control Event
unless CH2M HILL or successor specifically agrees otherwise


 


2.2                               Assistance with Transition.  The Executive agrees that in the event of
termination (by the Executive voluntarily or by CH2M HILL or successor
subsequent to the Change of Control Event, but not in case of a Constructive
Termination) he/she shall act diligently to assist CH2M HILL or successor with
transition of his/her responsibilities to another executive designated by CH2M
HILL or successor.  Such assistance
obligation shall not extend beyond thirty (30) calendar days after the Date of
Termination and shall be limited in scope to tasks and consultations necessary
for orderly transition and shall not unduly burden the Executive or interfere
in any way whatsoever in his/her pursuits of alternative employment.  All expenses of the Executive related to such
assistance shall be promptly reimbursed by CH2M HILL or successor.


 


2.3                               Confidentiality.  Executive agrees to hold in a fiduciary
capacity for the benefit of CH2M HILL all secrets or confidential information,
knowledge or data relating to CH2M HILL, any of its Subsidiaries and their
respective businesses, which shall have been obtained by the Executive during
the Executive’s employment by CH2M HILL or its Subsidiaries, and which shall
not be or become public knowledge (other than by acts by the Executive or representatives
of the Executive in violation of this Agreement).  After termination of the Executive’s
employment with CH2M HILL, the Executive shall not, without the prior written
consent of CH2M HILL or successor or as may otherwise be required by law or
legal process, communicate or divulge any such information, knowledge or data
to anyone other than CH2M HILL or successor and those designated by it.


 


2.4                               In no event shall an asserted violation of the provisions of sections 2.2
or 2.3 constitute a basis for deferring or withholding any amounts otherwise
payable to the Executive under this Agreement.


 


Article 3.  Obligations of CH2M HILL
and/or Successor


 


3.1                               Payment on COC.  The “COC Year” is
defined for this article as the fiscal year in which a Change of Control Event
occurs.  At closing of the transaction
resulting in the Change of Control Event or, if there is no such closing,
within thirty (30) calendar days of the Change of Control Event becoming
effective, CH2M HILL or successor shall pay to the Executive in immediately
available funds, a lump sum cash amount equal to the sum of:


 


a.                                     Prior Year STI.  If not yet paid, the
Executive’s annual STI bonus due for the fiscal year immediately preceding the
COC Year.  To the extent that the
STI amount due for such prior fiscal year has not yet been determined by the
Board, the amount shall be deemed to be the target STI bonus designated for the
Executive for that fiscal year; and


 


b.                                    Prior Year LTI.  If not yet paid, the Executive’s LTI bonus
due for the LTI period that terminates in the fiscal year immediately preceding
the COC Year, calculated as provided in the LTI Plan; and


 
















 


c.                                     Prior Year ELTI.  If not yet paid, the Executive’s ELTI bonus due for the ELTI period that
terminates in the fiscal year immediately preceding the COC year, calculated as
provided in the ELTI Plan; and


 


d.                                    Pro-rata Current Year STI.  A pro rata portion, as of the date of COC, of
Executive’s annual STI bonus in an amount at least equal to:


 


(i)                                   the Executive’s target STI
bonus for the COC Year; multiplied by


 


(ii)                                a fraction, the numerator of which is the number of days in the COC Year
through the date when COC becomes effective and the denominator of which is
three hundred sixty-five (365).


 


e.                                     Pro-rata Current LTI.  A pro-rata portion, as of the date of COC, of
Executive’s LTI bonus payouts for open bonus periods that include the COC Year,
calculated as provided in the LTI Plan; and


 


f.                                       Pro-rata Current ELTI.   A pro-rata portion, as of the date of COC, of Executive’s ELTI bonus
payouts for open bonus periods that include the COC year, calculated as
provided in the ELTI Plan; and


 


g.                                    Deferred Compensation.  Pursuant to a written election of the
Executive during the Window Period selecting such payment, any compensation
previously deferred by Executive other than pursuant to a tax-qualified plan
(together with any interest and earnings thereon) and any accrued vacation, in
each case to the extent not yet paid for all amounts deferred or accrued prior
to October 3, 2004, and the earnings credited thereto.


 


If no
amount is paid with respect to this paragraph (g) in connection with the
COC, then the deferred compensation described in this paragraph (g) shall
continue to be administered in accordance with the terms of the applicable
deferred compensation plans or programs and the existing elections of the
Executive under such plans or programs. 
Unless the Executive agrees otherwise, CH2M HILL or successor shall
establish separate rabbi trusts or a separate structure within its existing
rabbi trusts to fund CH2M HILL’s or successor’s obligations to the Executive
with respect to such unpaid deferred compensation.


 


h.                                    Offsets. 
Any amounts paid under paragraphs (a) through (f) immediately
above shall be a respective offset to any amounts remaining to be paid to the
Executive for the COC Year, in the case of the STI bonus, and for the open
bonus periods that include the COC Year, in the case of the LTI bonus and the
ELTI bonus.  In no event shall the
Executive be required to return all or any portion of payments under paragraphs
(a) through (f) above.


 


3.2                               Treatment of Stock Options, SARs, VARs, Stock and SVEU Holdings.  At closing
of the transaction resulting in the Change of Control Event or, if there is no
such closing, within thirty (30) calendar days of Change of Control Event
becoming effective, CH2M HILL or successor shall cause the following:


 


a.                                     Vesting. 
With respect to any Stock Options, SARs, VARs, Stock, Phantom Stock,
SVEUs, ISVEUs and instruments tied directly or indirectly to the value of
Stock, held by the Executive on the date COC becomes effective, (i) cancellation
of all 


 

















 


restrictions
on awards of restricted Stock, Phantom Stock or ISVEUs and (ii) full and
immediate vesting (to the extent not already vested) of, and application of
immediate exerciseability or unrestricted redemption rights with respect to,
all outstanding Stock Options, SARs, VARs, SVEUs, ISVEUs and other stock-based
awards.  The period for exercising Stock
Options shall be extended by ninety (90) calendar days following the date when
COC becomes effective.


 


b.                                      Redemption. 
To the extent such awards are not subject to Section 409A, the redemption of all Phantom Stock, SARs, SVEUs and ISVEUs
of the Executive at the greater of (i) the price per share of Stock which
was paid to secure the COC or (ii) the Stock price in effect immediately
prior to the Change of Control Event.


 


c.                                       Cashout. 
Provided that at the time immediately prior to COC, Stock does not have
a public market and continues to be traded through a CH2M HILL internal market
or equivalent, CH2M HILL or successor shall cash out the Executive’s Stock and
Stock Option holdings at the greater of (i) the price per share of Stock
which was paid to secure the COC or (ii) the Stock price in effect
immediately prior to the Change of Control Event.


 


3.3                                 Payment on COC Termination.  If during the COC Period the Executive
terminates employment with CH2M HILL for Good Reason, or if CH2M HILL or
successor terminates the employment of Executive (actually or through
Constructive Termination) other than


 


(w)                             for Cause; or


 


(x)                               as a result of Executive’s
death; or


 


(y)                               due to Executive’s absence from Executive’s duties with CH2M HILL or
successor on a full-time basis for at least one hundred eighty (180)
consecutive days as a result of Executive’s incapacity due to physical or
mental illness; or


 


(z)                                 as a result of Executive’s mandatory retirement (not including any
mandatory early retirement) in accordance with CH2M HILL’s or successor’s
retirement policy generally applicable to its salaried employees of
responsibilities and rank similar to the Executive’s as in effect immediately
prior to the Change of Control Event, or in accordance with any retirement
arrangement established with respect to Executive with Executive’s written
consent;


 


then, CH2M HILL or successor shall
pay to Executive within thirty (30) calendar days following the Date of Termination,
as compensation for services rendered to CH2M HILL and/or successor, in
immediately available funds:


 


a.                                     Salary. 
Executive’s base salary, accrued vacation, and any accrued compensation
previously deferred by Executive other than pursuant to a tax-qualified plan
(together with any interest and earnings thereon), through the Date of
Termination, in each case to the extent not yet paid; plus


 

















 


b.                                    Severance. 
A lump-sum severance amount equal to 2.99 times:


 


(i)                                    Executive’s highest annual rate of base salary in effect during the twelve
(12) month period prior to the Date of Termination, plus


 


(ii)                                 Executive’s target STI bonus for the fiscal year in which Executive’s Date
of Termination occurs.


 


c.                                     Continuation of Benefits.  In addition to severance payment listed
above, CH2M HILL or successor shall continue to provide, for a period equal to
the period the Executive would be entitled to continuation coverage under a
group health plan of CH2M HILL under Code §4980B following the Date of
Termination but in no event after Executive’s attainment of age sixty-five
(65), Executive (and Executive’s dependents if applicable) with the same level
of medical, dental, benefits and through the end of the last day of the second
taxable year of CH2M HILL following the Date of Terminations for accident,
disability, life insurance and any other similar welfare benefits in place as
of the Date of Termination upon substantially the same terms and conditions
(including contributions required by the Executive for such benefits) as
existed immediately prior to Executive’s Date of Termination (or, if more
favorable to Executive, as such benefits and terms and conditions existed
immediately prior to the COC); provided that, if Executive cannot continue to
participate in CH2M HILL’s or successor plans providing such benefits, CH2M
HILL or successor shall otherwise provide such benefits on the same after-tax
basis as if continued participation had been permitted.  Notwithstanding the foregoing, in the event
Executive becomes employed with another employer and becomes eligible to
receive welfare benefits from such employer, the welfare benefits described
herein shall be secondary to such benefits during the period of Executive’s
eligibility, but only to the extent that CH2M HILL or successor reimburses
Executive for any increased cost and provides any additional benefits necessary
to give Executive the benefits provided hereunder.


 


d.                                    Vesting in Retirement Plans.  On the Date of Termination, all amounts
contributed by CH2M HILL for the account of the Executive pursuant to CH2M HILL’s
retirement plans, including the Defined Contribution Pension Plan, Deferred
Compensation Retirement Plan, Employee Stock Plan and Tax-Deferred Savings Plan
(401(k)), or successor’s equivalents, shall fully vest, and the Executive will
be paid in cash an amount equal to all CH2M HILL or successor contributions
that would have been made by CH2M HILL or successor during the entire COC
Period assuming the company paid the contributions at rates comparable to those
in the two years preceding the Date of Termination; provided that if full
vesting in the CH2M HILL retirement plans would violate applicable provisions
of the plans or the Code, the Executive will be paid in cash an amount equal to
the amount forfeited by the Executive in such retirement plans.


 


e.                                     Cashout.  Amounts due from the cashout or redemption of all Executive’s Stock, Stock
Options, Phantom Stock, SARs, SVEUs, and ISVEUs if any, not otherwise cashed
out or redeemed pursuant to sections 3.2(b) and (c) and/or obtained
thereafter, at the price per share of Stock which was paid to secure the COC.


 


f.                                         Section 409A.  Anything in this
Agreement to the contrary notwithstanding, if (A) 


 

















 


on the date of termination of Executive’s employment with
CH2M HILL or a subsidiary, any of CH2M HILL’s stock is publicly traded on an
established securities market or otherwise, (B) the Executive is
determined to be  a Specified Employee”, (C) the
payments exceed the amounts permitted to be paid pursuant to Treasury Regulations
section 1.409A-1(b)(9)(iii) and (D) such delay is required to avoid
the imposition of the tax set forth in Section 409A as a result of such
termination, the Executive would receive any payment that, absent the
application of this Section 3(f), would be subject to interest and
additional tax imposed pursuant to Section 409A as a result of the
application of Section 409A, then no such payment shall be payable prior
to the date that is the earliest of (1) 6 months and 1 day after the
Executive’s termination date, (2) the Executive’s death or (3) such
other date as will cause such payment not to be subject to such interest and
additional tax (with a catch-up payment equal to the sum of all amounts that
have been delayed to be made as of the date of the initial payment).  It is the intention of CH2M HILL and the
Executive that payments or benefits payable under this Agreement not be subject
to the additional tax imposed pursuant to Section 409A.  To the extent such potential payments or
benefits could become subject to such Section, CH2M HILL and the Executive
shall cooperate to structure the payments with the goal of giving the Executive
the economic benefits described herein in a manner that does not result in such
tax being imposed.


 


3.4                               Greatest Net Benefit.  Anything in this Agreement to the contrary notwithstanding, in the event
that the Executive determines (at his/her expense) that the receipt of any
payments hereunder would subject the Executive to tax under Code §4999 or a
successor provision, CH2M HILL or successor shall reduce the payment due to the
Executive hereunder to the extent necessary, if at all, so that the net (after
tax) benefit of the payments to the Executive is maximized.  In order to comply with Section 409A,
the reduction or elimination will be performed in the order in which each
dollar of value subject to an Award reduces the parachute payment for purposes
of  Code §280G  to the greatest extent.


 


3.5                               Assignment of Agreement.  Concurrently with any Change of Control, CH2M
HILL shall cause any successor or transferee unconditionally to assume, by
written instrument delivered to Executive (or his beneficiary or estate), all
of the obligations of CH2M HILL hereunder. 
Failure of CH2M HILL to obtain such assumption prior to the effectiveness
of any such Change of Control shall be a breach of this Agreement and shall
constitute Good Reason entitling the Executive to resign, within thirty (30)
calendar days of consummation of such Change of Control, and receive
compensation hereunder.


 


Article 4.  Withholding Taxes


 


CH2M HILL
or successor may withhold from all payments due to Executive (or his
beneficiary or estate) hereunder all taxes which, by applicable federal, state,
local or other law, CH2M HILL or successor is required to withhold therefrom.


 


Article 5.  Term and Termination


 


5.1                                 a.             This Agreement replaces and
supercedes all COC agreements the Executive holds with CH2M HILL as of the
Effective Date.  Execution of this
Agreement 


 

















 


constitutes notice and acceptance of termination (including any requisite waivers of
notice periods for such termination) of all outstanding COC agreements.


 


b.                                    Term. 
This Agreement shall be effective as of the Effective Date and shall
continue in effect for twelve (12) months thereafter.  The Agreement shall automatically renew for
an indefinite number of twelve (12) months consecutive terms unless and
until CH2M HILL provides the Executive with written notice of cancellation
of the Agreement at least thirty (30) calendar days prior to such automatic renewal.  Notwithstanding the delivery of any such
cancellation notice, however, this Agreement shall continue in effect until the
end of the COC Period, if the COC shall have occurred during the term of this
Agreement or within six months following the termination date stated in the
cancellation notice.


 


5.2          Termination.  This
Agreement shall terminate upon :


 


a.                                     Termination prior to COC.  Termination of Executive’s employment with CH2M HILL prior to a Change of
Control Event (except as otherwise provided in section 1.3(d) above);


 


b.                                    Termination after COC.


 


(i)                                   Executive’s termination of his/her employment with CH2M HILL for any reason
except for Good Reason;


 


(ii)                                Termination of Executive employment by CH2M HILL or successor for Cause;


 


(iii)                             Termination of Executive employment as a result of his/her death;


 


(iv)                            Absence, as outlined in section 3.3; or


 


(v)                               Retirement, as outlined in section 3.3;


 


c.                                     The end of the COC Period; or


 


d.                                    Cancellation in accordance with section 5.1.


 


Article 6.  Agreement Survives Changes
of Control


 


6.1                               This Agreement shall not be terminated by any Change of Control.  In the event of any Change of Control, the
provisions of this Agreement shall be binding upon the surviving or resulting
corporation.  If the person or entity to
which such assets are transferred has not agreed to be bound by the provisions
of this Agreement, this Agreement will continue to be binding upon CH2M HILL.


 


6.2                               This Agreement shall inure to the benefit of and be enforceable by
Executive’s personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.  If Executive shall die while any amounts
would be payable to Executive hereunder had Executive continued to live, all
such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to such person or persons appointed in writing
by Executive to receive such amounts or, if no person is so appointed, to
Executive’s estate.


 

















 


Article 7.  Full Settlement


 


CH2M HILL’s
or successor’s obligation to make payments provided for in this Agreement and
otherwise to perform its obligations hereunder shall be in lieu and in full
settlement of all other separation payments to Executive under any previous
severance or employment agreement between the Executive and CH2M HILL or a
successor, and, with respect to amounts payable in connection with a
termination of employment within the COC Period, such agreements shall be null
and void.  In addition, payments made
under Section 3.1 and 3.2 shall be in full settlement of the compensation
and benefit obligations to which the payments relate under the plan, program or
agreement under which such promises, awards or grants were made.  As a condition of payment of amounts due the
Executive under this Agreement in connection with a termination of employment,
the Executive shall be required to execute a Release and Settlement Agreement
within 30 days of his/her termination of employment, in the
form reasonably determined by CH2M HILL or successor, in which the Executive
shall acknowledge satisfaction of CH2M HILL’s or successor’s obligations under
this Agreement and such programs, plans, and agreements under which such
promises, awards or grants were made.


 


Article 8.  Employment With Subsidiaries


 


Employment
with CH2M HILL for purposes of this Agreement shall include employment with any
Subsidiary or successors in interest of CH2M HILL.


 


Article 9.  Miscellaneous


 


9.1                               Mitigation. 
In no event shall Executive be obligated to seek other employment or
take other action by way of mitigation of the amounts payable to Executive
under any of the provisions of this Agreement and, except as provided in
section 3.4, such amounts shall not be reduced whether or not Executive obtains
other employment.


 


9.2                               Setoff. 
CH2M HILL’s or successor’s obligations hereunder shall not be affected
by any setoff, counterclaim, recoupment, defense or other claim, right or
action that CH2M HILL or successor may have against Executive or others.


 


9.3                               Governing Law; Validity.  The interpretation, construction and
performance of this agreement shall be governed by and construed and enforced
in accordance with the internal laws of the state of Colorado without regard to
the principle of conflicts of laws.  The
invalidity or unenforceability of any provision of this agreement shall not
affect the validity or enforceability of any other provision of this agreement,
which other provisions shall remain in full force and effect.


 


9.4                               Counterparts. 
This Agreement may be executed in counterparts, each of which shall be
deemed to be an original and all of which together shall constitute one and the
same instrument.


 


9.5                               Indemnification and Reimbursement of Expenses.  If any contest or dispute shall
arise under this Agreement involving termination of Executive’s employment with
CH2M HILL or successor or involving the failure or refusal of CH2M HILL or
successor to perform fully in accordance with the terms hereof, CH2M HILL or
successor shall, to the fullest extent permitted by law, indemnify and
reimburse Executive for all legal fees and expenses incurred by Executive in
connection with such contest or dispute (regardless of the lack of finality or
the result thereof), within thirty (30) calendar days of receipt of 


 

















 


evidence thereof, together with interest in an amount equal to the prime rate
published in the Wall Street Journal, but in no event higher than the
maximum legal rate permissible under applicable law, such interest to accrue
from the end of such 30 day period through the date of payment thereof.  To the extent that a final order subject to
no further appeal determines that all or any part of the position taken by
Executive was frivolous or advanced in bad faith, the court shall order the
Executive to repay an amount to CH2M HILL or its successor as the court shall
equitably determine.


 


9.6                               Waivers. 
No provision of this Agreement may be modified or waived unless such
modification or waiver is agreed to in writing and signed by Executive and by a
duly authorized officer of CH2M HILL or successor.  No waiver by either party hereto at any time
of any breach by the other party hereto of, or compliance with, any condition
or provision of this Agreement to be performed by such other party shall be
deemed a waiver of similar or dissimilar provisions or conditions at the same
or at any prior or subsequent time. 
Failure by Executive or CH2M HILL or successor to insist upon strict
compliance with any provision of this Agreement or to assert any right
Executive or CH2M HILL or successor may have hereunder, including without
limitation, the right of Executive to terminate employment for Good Reason,
shall not be deemed to be a waiver of such provision or right or any other
provision or right of this Agreement.


 


9.7.                            Notice.


 


a.                                     For purposes of this Agreement, all notices and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given when delivered or five (5) business days after deposit in
the U.S.  mail,
certified and return receipt requested, postage prepaid, addressed as follows:


 


If to the
Executive:                                                                                          Michael E. McKelvy

3 Salford Way

Simpsonville, SC 29681


 


If to CH2M
HILL:                                                                                            CH2M HILL Companies, Ltd.  or successor

9191 South Jamaica Street

Englewood, CO   80112

Attn: Corporate Secretary


 


or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.


 


b.                                    A written notice of Executive’s Date of Termination by CH2M HILL or
Executive, as the case may be, to the other, shall:


 


(i)                                    indicate the specific termination provision in this Agreement relied upon;


 


(ii)                                 to the extent applicable, set
forth in reasonable detail the facts and circumstances claimed to provide a basis
for termination of Executive’s employment under the provision so indicated; and


 


(iii)                              specify the
termination date (which date shall be not less than fifteen (15) nor more than
sixty (60) calendar days after the giving of such notice).


 

















 


The failure by Executive or CH2M
HILL or successor to set forth in such notice any fact or circumstance which
contributes to a showing of Good Reason or Cause shall not waive any right of
Executive or CH2M HILL or successor hereunder or preclude Executive or CH2M HILL
or successor from asserting such fact or circumstance in enforcing Executive’s
or CH2M HILL’s or successor’s rights hereunder.


 


9.8.                            Section 409A.  With respect to payments under
this Agreement, for purposes of Section 409A, each severance payment and
reimbursement payment will be considered one of a series of separate payments.


 


IN WITNESS
WHEREOF, CH2M HILL has caused this Agreement to be executed by a duly
authorized officer of CH2M HILL and Executive has executed this Agreement as of
the day and year first above written.


 


 


	
  CH2M HILL COMPANIES, LTD.

  	
   

  	
  EXECUTIVE

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ M. Catherine Santee

  	
   

  	
  /s/ Michael E. McKelvy

  
	
   

  	
  M. Catherine Santee

  	
   

  	
  Name:  Michael E.
  McKelvy

  
	
   

  	
  Chief Financial Officer and Secretary