Document:

Exhibit 10.2

 

ALL COMMUNICATIONS SHOULD INCLUDE THE CONTRACT NUMBER SHOWN IN BLOCK 5
BELOW

 

	
  NOTICE OF AWARD, STATEMENT, AND RELEASE DOCUMENT

  	
  1.

  	
  PAGE 01 OF

  
	
  2.            FROM: (Name and address of Sales Office)

  	
  3.

  	
  DATE OF AWARD

  
	
  DEFENSE REUTILIZATION & MARKETING SERVICE

  	
   

  	
  06/09/05

  
	
  NATIONAL SALES OFFICE

  	
  4.

  	
  INVITATION
  NO.

  
	
  74 N. WASHINGTON

  	
   

  	
  99-4001
  (TERM)

  
	
  BATTLE CREEK                    MI 49017-3092

  	
  5.

  	
  CONTRACT NO.

  
	
   

  	
   

  	
  99-4001-0004

  
	
  6.            TO:
  (Name and address of Purchaser)

  	
  7.

  	
  BIDDER NO.

  
	
   

  	
   

  	
  3001287933

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  8.

  	
  (PAID
  STAMP)

  
	
  LIQUIDITY SVC INC

  	
   

  	
   

  
	
  2131 K ST NW 4TH FLOOR

  	
   

  	
   

  
	
  WASHINGTON DC 20037

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Phone

  	
  FAX

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (For Release of Property
  Only)

  
	
  This is to inform you that your firm has been
  awarded a contract of sale for the following materials as a result of the
  above numbered invitation to Bid.

  	
  9. PROPERTY MUST BE REMOVED BY (Final
  date of removal)

  
	
  10.

  	
  SURPLUS AND/OR EXCHANGE/SALE ITEMS

  
	
  ITEM

  NO.

  	
  DESCRIPTION

  	
  QUANTITY

  	
  UNIT

  	
  UNIT PRICE

  	
  TOTAL PRICE

  	
  QUANTITY

  RELEASED

  
	
  a

  	
  b

  	
  c

  	
  d

  	
  e

  	
  f

  	
  g

  
	
   

  	
  PLEASE SEE ITEM
  DESCRIPTION FOR LOCATION

  BATTLE CREEK, MI 49017

  	
  (ESTIMATED)

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  01

  	
  METALLIS AND NON-ME

  	
  *******

  	
  LB

  	
  0.0001

  	
  210,082.19

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Billings will be
  monthly.

  DURATION: From 06/09/05 To 06/08/12

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  The following Bid
  Deposit is required prior to first removal and will be held for duration of
  contract. Bid Deposit will be applied to last payment on contract

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Item 0001

  	
  $20,000.00

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
  RELEASE

  	
  12.

  	
  STATEMENT
  OF ACCOUNT

  
	
  An agent of the purchaser obtaining release of the
  material must present purchaser authorization.

  	
  Payment of amount due the U.S. Government must be
  made prior to removal of any material. 
  Refer to the IFB for all methods of acceptable payment

  
	
  A.

  	
  I HAVE RECEIVED THE ABOVE LISTED MATERIALS IN THE

  	
  A. TOTAL CONTRACT PRICE

  	
  $

  	
  210,082.19

  
	
   

  	
  QUANTITY INDICATED AND HAVE ACCEPTED SAME IN 

  	
  B. LESS DEPOSIT

  	
  $

  	
   

  
	
   

  	
  COMPLIANCE WITH THE TERMS OF ABOVE NUMBERED
  CONTRACT.

  	
  C. BALANCE DUE

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  TYPED OR PRINTED NAME AND SIGNATURE OF PURCHASER
  OR AUTHORIZED AGENT

  	
  D. REFUND DUE

  	
  $

  	
   

  
	
  B.

  	
  RELEASED BY (Signature)

  	
  E. STORAGE CHARGES

  	
  $

  	
   

  
	
   

  	
   

  	
  F. PAYMENT RECEIVED

  	
  $

  	
   

  
	
  C.

  	
  DATE

  	
  D.  VOCHER NO.

  	
  G. REFUND MADE

  	
  $

  	
   

  
	
  13.

  	
  SALES CONTRACTING OFFICER (Typed or
  stamped name and signature)

  	
   

  	
   

  	
   

  
	
   

  	
  /s/ GREGORY E.
  ORTIZ                              GE

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
																					

(Previous edition to be used until exhausted.)

 

DRMS FORM
1427 AUG 98

IMPORTANT NOTICE ON REVERSE

 

 

 

MULTI-YEAR SALE OF SURPLUS SCRAP
MATERIAL

AT LOCATIONS NATIONWIDE

 

DEFENSE REUTILIZATION AND
MARKETING SERVICE

 

INVITATION FOR BIDS

NO. 99-4001

 

STEP TWO OF TWO - STEP SOLICITATION

 

BIDS ARE DUE WITH BID DEPOSITS AT 9:00 AM ON

TUESDAY, DECEMBER 7, 2004

 

 

 

MULTI-YEAR SALE OF SCRAP AT
LOCATIONS NATIONWIDE

 

INVITATION FOR BIDS

No. 99-4001

 

TABLE OF CONTENTS

 

	
  I. STEP TWO OF
  TWO-STEP SEALED BIDDING

  	
   

  
	
  II. GENERAL
  STATEMENTS OF CONTRACT TERMS

  	
   

  
	
   

  	
  A.

  	
  INTRODUCTION

  	
   

  
	
   

  	
  B.

  	
  PRODUCT POOL
  AND PROPERTY FLOW

  	
   

  
	
   

  	
  C.

  	
  DESIGNATION OF
  SCRAP VS. USEABLE ITEMS

  	
   

  
	
   

  	
  D.

  	
  PERFORMANCE
  PERIOD

  	
   

  
	
   

  	
  E.

  	
  PURCHASER AND
  CONTRACTOR RESPONSIBILITIES

  	
   

  
	
   

  	
  F.

  	
  PRICING

  	
   

  
	
   

  	
  G.

  	
  BID PRICE

  	
   

  
	
   

  	
  H.

  	
  BIDDER DUE
  DILIGENCE

  	
   

  
	
   

  	
  I.

  	
  NET PROCEEDS AND DIRECT COSTS

  	
   

  
	
   

  	
  J.

  	
  SELLER INDIRECT
  COSTS

  	
   

  
	
   

  	
  J.1

  	
  RESOURCE
  RECOVERY AND RECYCLING PROGRAM (RRRP)

  	
   

  
	
   

  	
  K.

  	
  OPERATING
  ACCOUNT AND DISTRIBUTIONS

  	
   

  
	
   

  	
  L.

  	
  WORKING
  CAPITAL ADVANCES AND REPAYMENTS

  	
   

  
	
   

  	
  M.

  	
  DISTRIBUTIONS
  AND PAYMENTS

  	
   

  
	
   

  	
  N.

  	
  EARLY
  CANCELLATION OPTION

  	
   

  
	
   

  	
  O.

  	
  PURCHASE ACCOUNT

  	
   

  
	
   

  	
  P.

  	
  PAYMENT DEPOSIT

  	
   

  
	
   

  	
  Q.

  	
  RETENTION FUND
  AND FINANCIAL GUARANTEE BOND

  	
   

  
	
   

  	
  R.

  	
  ABSENCE OF
  DRMS PRE-APPROVALS, AUTHORIZATIONS AND OPERATIONAL CONTROL

  	
   

  
	
   

  	
  S.

  	
  COMPLIANCE
  MONITORING AND DISPUTE RESOLUTION

  	
   

  
	
   

  	
  T.

  	
  DELIVERY POINTS

  	
   

  
	
   

  	
  U.

  	
  LOGISTICS

  	
   

  
	
   

  	
  U.1

  	
  ADDITIONAL
  MATERIAL

  	
   

  
	
   

  	
  V.

  	
  DEMIL “B” AND
  “Q” PROPERTY

  	
   

  
	
   

  	
  W.

  	
  DEMILITARIZATION

  	
   

  
	
   

  	
  X.

  	
  MISCELLANEOUS

  	
   

  
	
   

  	
  Y.

  	
  RISK FACTORS

  	
   

  
	
  III. BID SCHEDULE

  	
   

  
	
   

  	
  A.

  	
  BACKGROUND
  INFORMATION

  	
   

  
	
   

  	
  B.

  	
  BID PROCESS

  	
   

  
	
   

  	
  C.

  	
  ILLUSTRATIVE
  FINANCIAL MODEL

  	
   

  

 

ii

 

	
   

  	
  IV.

  	
  ITEM
  DESCRIPTION

  	
   

  
	
   

  	
  V.

  	
  TERMS AND CONDITIONS
  OF SALE

  	
   

  
	
   

  	
  VI.

  	
  ADDITIONAL
  TERMS AND CONDITIONS OF SALE

  	
   

  
	
   

  	
   

  	
  ARTICLE ONE.
  BIDDING AND CONTRACT AWARD

  	
   

  
	
   

  	
   

  	
  Section 1. Bid Deposit

  	
   

  
	
   

  	
   

  	
  Section 2.
  Bids and Bid Evaluation

  	
   

  
	
   

  	
   

  	
  (A)

  	
  Bid
  Price

  	
   

  
	
   

  	
   

  	
  (B)

  	
  Award

  	
   

  
	
   

  	
   

  	
  Section 3.
  Contractor Credit Facility; Key Persons; Contract Award

  	
   

  
	
   

  	
   

  	
  (A)

  	
  Contractor Credit
  Facility

  	
   

  
	
   

  	
   

  	
  (B)

  	
  Key
  Persons

  	
   

  
	
   

  	
   

  	
  (C)

  	
  Contract
  Award

  	
   

  
	
   

  	
   

  	
  (D)

  	
  Failure of
  Apparent Successful Offeror to Pay Bid Price

  	
   

  
	
   

  	
   

  	
  Section 4.
  Post-Award Conference

  	
   

  
	
   

  	
   

  	
  Section 5.
  Purchaser Information

  	
   

  
	
   

  	
   

  	
  Section 6.
  Formation of Purchaser; Covenant of Contractor

  	
   

  
	
   

  	
   

  	
  (A)

  	
  Formation of Purchaser

  	
   

  
	
   

  	
   

  	
  (B)

  	
  Covenant of Contractor

  	
   

  
	
   

  	
   

  	
  Section 7.
  Transfer and Hypothecation

  	
   

  
	
   

  	
   

  	
  (A)

  	
  General Prohibition

  	
   

  
	
   

  	
   

  	
  (B)

  	
  Attempted Transfer

  	
   

  
	
   

  	
   

  	
  (C)

  	
  Consolidation with CV

  	
   

  
	
   

  	
   

  	
  Section 8. Contract
  of Sale

  	
   

  
	
   

  	
   

  	
  (A)

  	
  Relationship of Parties

  	
   

  
	
   

  	
   

  	
  (B)

  	
  Parties to Contract

  	
   

  
	
   

  	
   

  	
  Section 9.
  Authority of Sales Contracting Officer

  	
   

  
	
   

  	
   

  	
  Section 10.
  Execution by Purchaser

  	
   

  
	
   

  	
   

  	
  Section 11.
  Replacement Contractor

  	
   

  
	
   

  	
   

  	
  ARTICLE TWO.
  PERFORMANCE PERIOD; EARLY CANCELLATION

  	
   

  
	
   

  	
   

  	
   

  	
  OPTION; DRMS
  OPTION TO EXTEND

  	
   

  
	
   

  	
   

  	
  Section 1.
  Performance Period

  	
   

  
	
   

  	
   

  	
  Section 2.
  Early Cancellation Option

  	
   

  
	
   

  	
   

  	
  Section 3. Indexed Prices

  	
   

  
	
   

  	
   

  	
  (A)

  	
  Price Indexes

  	
   

  
	
   

  	
   

  	
  (B)

  	
  Reporting Dates

  	
   

  
	
   

  	
   

  	
  (C)

  	
  Indexed Price

  	
   

  
	
   

  	
   

  	
  (D)

  	
  Indexing Report

  	
   

  
	
   

  	
   

  	
  Section 4. DRMS Option to Extend
  Performance

  	
   

  
	
   

  	
   

  	
  Section 5. DRMS Options to Include
  Additional Property

  	
   

  
	
   

  	
   

  	
  ARTICLE 2A. SMALL BUSINESS SALES PLAN

  	
   

  
	
   

  	
   

  	
  Section 1. Applicability

  	
   

  
	
   

  	
   

  	
  Section 2. Explanation of Terms. As used in
  this clause—

  	
   

  
	
   

  	
   

  	
  (A)

  	
  “Affiliates.”

  	
   

  
	
   

  	
   

  	
  (B)

  	
  “Small Business Concern”

  	
   

  
							

 

iii

 

	
   

  	
   

  	
  (C)

  	
  “Failure
  to make a good faith effort to comply with the small business sales plan”

  	
   

  
	
   

  	
   

  	
  Section 3.
  Small Business Sales Plan

  	
   

  
	
   

  	
   

  	
  Section 4. Content
  of Plan

  	
   

  
	
   

  	
   

  	
  Section 5.
  Incentive Provisions

  	
   

  
	
   

  	
   

  	
  (A)

  	
  Incentive 1

  	
   

  
	
   

  	
   

  	
  (B)

  	
  Incentive
  2

  	
   

  
	
   

  	
   

  	
  (C)

  	
  Funding of Incentive
  Payments

  	
   

  
	
   

  	
   

  	
  Section 6.
  Quarterly Reports

  	
   

  
	
   

  	
   

  	
  Section 7. Failure
  to Comply

  	
   

  
	
   

  	
   

  	
  Section 8. Review
  of Records

  	
   

  
	
   

  	
   

  	
  ARTICLE THREE.
  REFERRAL AND REMOVAL OR ABANDONMENT OF

  PROPERTY; SPECIAL SITUATION PROPERTY; TITLE TO

  PROPERTY; RISK OF LOSS

  	
   

  
	
   

  	
   

  	
  Section 1.
  Pickup Notices and Invoices

  	
   

  
	
   

  	
   

  	
  (A)

  	
  Exclusive Sale

  	
   

  
	
   

  	
   

  	
  (B)

  	
  Pickup Notices

  	
   

  
	
   

  	
   

  	
  (C)

  	
  Outstanding Pickup
  Notice List

  	
   

  
	
   

  	
   

  	
  (D)

  	
  Invoices

  	
   

  
	
   

  	
   

  	
  Section 2.
  Delivery Points; DRMS Customer Liaison; Phase-In Period; DRMS Infrastructure

  	
   

  
	
   

  	
   

  	
   

  	
  Reduction

  	
   

  
	
   

  	
   

  	
  (A)

  	
  Delivery Points

  	
   

  
	
   

  	
   

  	
  (B)

  	
  Delivery
  Point Directory; DRMS Customer Liaison

  	
   

  
	
   

  	
   

  	
  (C)

  	
  Phase-In
  Period

  	
   

  
	
   

  	
   

  	
  (D)

  	
  DRMS
  Infrastructure

  	
   

  
	
   

  	
   

  	
  (E)

  	
  Maximum
  Number of DRMOs, DRMO Scrap Yards and DRMS Scrap Operations

  	
   

  
	
   

  	
   

  	
  Section 3.
  Property Storage; Delivery of Property to Purchaser and Passage of Title

  	
   

  
	
   

  	
   

  	
  (A)

  	
  Property Storage

  	
   

  
	
   

  	
   

  	
  (B)

  	
  Receipt
  of Property by Purchaser

  	
   

  
	
   

  	
   

  	
  (C)

  	
  Discrepancies;
  Correction of DEMIL Codes; Duty to Cooperate; Duties of 

  	
   

  
	
   

  	
   

  	
   

  	
  Care and Loyalty; Administrative Efficiencies

  	
   

  
	
   

  	
   

  	
  (D)

  	
  Title

  	
   

  
	
   

  	
   

  	
  Section 4.
  Access to Property; Removal; On-Site Processing; Costs of Removal;
  Refrigerants

  	
   

  
	
   

  	
   

  	
  (A)

  	
  Purchaser’s
  Access to Property

  	
   

  
	
   

  	
   

  	
  (B)

  	
  Re-Sale
  Buyers’ Access to Property

  	
   

  
	
   

  	
   

  	
  (C)

  	
  Removal;
  Packing and Loading

  	
   

  
	
   

  	
   

  	
  (D)

  	
  On-Site
  Processing

  	
   

  
	
   

  	
   

  	
  (E)

  	
  DRMS Option to Permit On-Site Processing

  	
   

  
	
   

  	
   

  	
  (F)

  	
  Costs of Removal

  	
   

  
	
   

  	
   

  	
  (G)

  	
  Government Furnished Equipment

  	
   

  
	
   

  	
   

  	
  (H)

  	
  Base
  Closures

  	
   

  
	
   

  	
   

  	
  (I)

  	
  Damage to Government Property; Clean-Ups of
  Spills

  	
   

  
						

 

iv

 

	
   

  	
   

  	
  Section 5. Delivery Documentation

  	
   

  
	
   

  	
   

  	
  Section 6. Risk of Loss

  	
   

  
	
   

  	
   

  	
  Section 7. Initial Property Sales

  	
   

  
	
   

  	
   

  	
  Section 8. Withdrawal or Re-Purchase of
  Property

  	
   

  
	
   

  	
   

  	
  ARTICLE FOUR. PICKUP NOTICES

  	
   

  
	
   

  	
   

  	
  Section 1. Content of Pickup Notices

  	
   

  
	
   

  	
   

  	
  (A)

  	
  DRMO Name (DRMO_NAME)

  	
   

  
	
   

  	
   

  	
  (B)

  	
  DRMO RIC and RIC Suffix (DRMO_RIC and RIC_SFX)

  	
   

  
	
   

  	
   

  	
  (C)

  	
  Disposal Turn in Document Number (DTID_NO)

  	
   

  
	
   

  	
   

  	
  (D)

  	
  SCL Code

  	
   

  
	
   

  	
   

  	
  (E)

  	
  National Stock Number [or] Local Stock Number.

  	
   

  
	
   

  	
   

  	
  (F)

  	
  Inventory Item Name (INV_ITM_NAME)

  	
   

  
	
   

  	
   

  	
  (G)

  	
  Item Unit of
  Issue (ITM_UI)

  	
   

  
	
   

  	
   

  	
  (H)

  	
  Quantity
  Available (QTY_AVAIL)

  	
   

  
	
   

  	
   

  	
  (1)

  	
  Property
  Storage Location

  	
   

  
	
   

  	
   

  	
  (J)

  	
  Reimbursement
  Code

  	
   

  
	
   

  	
   

  	
  (K)

  	
  Hazardous
  Material Code

  	
   

  
	
   

  	
   

  	
  (L)

  	
  DEMIL Code

  	
   

  
	
   

  	
   

  	
  Section 2.
  Documentation and References

  	
   

  
	
   

  	
   

  	
  ARTICLE FIVE.
  PAYMENT BY PURCHASER FOR PROPERTY

  	
   

  
	
   

  	
   

  	
  Section 1.
  Payment of Bid Price and Payment Deposit

  	
   

  
	
   

  	
   

  	
  (A)

  	
  Payment of Bid
  Price

  	
   

  
	
   

  	
   

  	
  (B)

  	
  Refund of
  Fractional Portion of Bid Price upon Contract Cancellation

  	
   

  
	
   

  	
   

  	
  (C)

  	
  Refund of
  Fractional Portion of Bid Price upon Contract Termination

  	
   

  
	
   

  	
   

  	
  (D)

  	
  Payment Deposit

  	
   

  
	
   

  	
   

  	
  Section 2.
  Quarterly Payment by Purchaser

  	
   

  
	
   

  	
   

  	
  (A)

  	
  Invoices

  	
   

  
	
   

  	
   

  	
  (B)

  	
  Amounts
  Payable to DRMS and to KGP; Timing of Payments

  	
   

  
	
   

  	
   

  	
  (C)

  	
  Quarterly
  Purchase Price

  	
   

  
	
   

  	
   

  	
  Section 3.
  Failure to Make Timely Payments

  	
   

  
	
   

  	
   

  	
  Section 4.
  Payments

  	
   

  
	
   

  	
   

  	
  (A)

  	
  Instructions
  for Payments to DRMS

  	
   

  
	
   

  	
   

  	
  (B)

  	
  Instructions
  for Payments to KGP

  	
   

  
	
   

  	
   

  	
  ARTICLE SIX.
  QUANTITY DELIVERABLE; DISCREPANCIES AND ANNUAL PRICING CORRECTION;
  DESIGNATION OF ITEMS

  	
   

  
	
   

  	
   

  	
  Section 1.
  Sale by Reference Conditions

  	
   

  
	
   

  	
   

  	
  Section 2.
  Discrepancies

  	
   

  
	
   

  	
   

  	
  Section 3.
  Items not Available for Removal

  	
   

  
	
   

  	
   

  	
  Section 4.
  Designation of Useable, Scrap and Refuse

  	
   

  
	
   

  	
   

  	
  (A)

  	
  Downgrades
  Upon Receipt

  	
   

  
	
   

  	
   

  	
  (B)

  	
  Upgrades

  	
   

  
	
   

  	
   

  	
  (C)

  	
  Refuse

  	
   

  
	
   

  	
   

  	
  Section 5.
  Resource Recovery and Recycling Program

  	
   

  
	
   

  	
   

  	
  ARTICLE SEVEN.
  OPERATIONS

  	
   

  
	
   

  	
   

  	
  Section 1.
  Compliance with Applicable Law and Regulations

  	
   

  

 

v

 

	
   

  	
   

  	
  (A)

  	
  Compliance
  with Applicable Law

  	
   

  
	
   

  	
   

  	
  (B)

  	
  Licenses and
  Permits

  	
   

  
	
   

  	
   

  	
  (C)

  	
  Responsibility
  for Keys

  	
   

  
	
   

  	
   

  	
  Section 2.
  Duties of Care and Loyalty

  	
   

  
	
   

  	
   

  	
  (A)

  	
  Duty of Care

  	
   

  
	
   

  	
   

  	
  (B)

  	
  Duty of Loyalty

  	
   

  
	
   

  	
   

  	
  Section 3.
  Prohibited Activities

  	
   

  
	
   

  	
   

  	
  Section 4.
  Classified, Radioactive and Certain Other Material

  	
   

  
	
   

  	
   

  	
  (A)

  	
  Classified and
  Certain Dangerous Material

  	
   

  
	
   

  	
   

  	
  (B)

  	
  Radioactive Material

  	
   

  
	
   

  	
   

  	
  (C)

  	
  Fluorocarbons

  	
   

  
	
   

  	
   

  	
  Section 5.
  Munitions List Items and Commerce Control List Items

  	
   

  
	
   

  	
   

  	
  (A)

  	
  Acknowledgment
  of Export Restrictions

  	
   

  
	
   

  	
   

  	
  (B)

  	
  Purchaser’s
  TSC Clearance and End Use Certificate

  	
   

  
	
   

  	
   

  	
  (C)

  	
  Re-Sale Procedures

  	
   

  
	
   

  	
   

  	
  (D)

  	
  Compliance with
  EUC Requirements

  	
   

  
	
   

  	
   

  	
  (E)

  	
  Shipping Containers

  	
   

  
	
   

  	
   

  	
  (F)

  	
  Compliance
  with New Trade Security Control Requirements

  	
   

  
	
   

  	
   

  	
  (G)

  	
  Trade Security
  Control Records

  	
   

  
	
   

  	
   

  	
  Section 6.
  Employee Compensation

  	
   

  
	
   

  	
   

  	
  (A)

  	
  Base Compensation

  	
   

  
	
   

  	
   

  	
  (B)

  	
  Bonuses

  	
   

  
	
   

  	
   

  	
  (C)

  	
  Benefits

  	
   

  
	
   

  	
   

  	
  Section 7.
  Employee Expenses and Purchaser’s Supplies, Furniture and Equipment

  	
   

  
	
   

  	
   

  	
  (A)

  	
  Employee Expenses

  	
   

  
	
   

  	
   

  	
  (B)

  	
  Supplies,
  Furniture and Equipment

  	
   

  
	
   

  	
   

  	
  Section 8.
  Commerce Control List Items (CCLI)

  	
   

  
	
   

  	
   

  	
  Section 9.
  Munitions and Commerce Control List Item (MLI/CCLI) Compliance

  	
   

  
	
   

  	
   

  	
  ARTICLE EIGHT.
  PURCHASER’S RECORDS; INSPECTION AND AUDIT BY

  GOVERNMENT AND INDEPENDENT AUDITOR; ACCOUNTING

  PRINCIPLES AND REQUIRED REPORTS TO GOVERNMENT

  	
   

  
	
   

  	
   

  	
  Section 1.
  Contractor Records Retention

  	
   

  
	
   

  	
   

  	
  Section 2.
  Inspection of Records and Workplace by Government

  	
   

  
	
   

  	
   

  	
  Section 3.
  Records Maintenance

  	
   

  
	
   

  	
   

  	
  Section 4.
  Contracts with Third Parties

  	
   

  
	
   

  	
   

  	
  Section 5.
  Purchaser’s Books of Account; Financial Reports

  	
   

  
	
   

  	
   

  	
  (A)

  	
  Transition Report

  	
   

  
	
   

  	
   

  	
  (B)

  	
  Monthly Report

  	
   

  
	
   

  	
   

  	
  (C)

  	
  Quarterly Report

  	
   

  
	
   

  	
   

  	
  (D)

  	
  Annual Report

  	
   

  
	
   

  	
   

  	
  (E)

  	
  Closing Report

  	
   

  
	
   

  	
   

  	
  (F)

  	
  Reporting Schedule

  	
   

  
	
   

  	
   

  	
  ARTICLE NINE.
  DIRECT COSTS

  	
   

  
	
   

  	
   

  	
  Section 1.

  	
  Definitions

  	
   

  
	
   

  	
   

  	
  (A) 

  	
  Direct Costs

  	
   

  
						

 

vi

 

	
   

  	
   

  	
  (B)

  	
  Seller Indirect Costs

  	
   

  
	
   

  	
   

  	
  (C)

  	
  Contractor Indirect
  Costs

  	
   

  
	
   

  	
   

  	
  Section 2.Documentation and Payment of Direct Costs and Seller Indirect
  Costs

  	
   

  
	
   

  	
   

  	
  (A)

  	
  Disbursements

  	
   

  
	
   

  	
   

  	
  (B)

  	
  Supporting
  Documentation

  	
   

  
	
   

  	
   

  	
  (C)

  	
  Documentation
  Requirements

  	
   

  
	
   

  	
   

  	
  (D)

  	
  Payment

  	
   

  
	
   

  	
   

  	
  (E)

  	
  Written
  Certification to DRMS

  	
   

  
	
   

  	
   

  	
  (F)

  	
  Contractor Indirect
  Costs

  	
   

  
	
   

  	
   

  	
  ARTICLE TEN.
  CONFLICTS OF INTEREST

  	
   

  
	
   

  	
   

  	
  Section 1.
  Restriction on Participation

  	
   

  
	
   

  	
   

  	
  Section 2.
  Benefits to Contractor and Affiliated Parties

  	
   

  
	
   

  	
   

  	
  ARTICLE ELEVEN. FIDELITY
  BOND REQUIREMENTS; INSURANCE

  	
   

  
	
   

  	
   

  	
  Section 1. Modification of
  Special Circumstance Conditions

  	
   

  
	
   

  	
   

  	
  Section 2. Further
  Modifications

  	
   

  
	
   

  	
   

  	
  ARTICLE TWELVE. SOFTWARE
  AND SYSTEMS

  	
   

  
	
   

  	
   

  	
  Section 1. Identification
  of Systems and Software Developed with Contractor Funds

  	
   

  
	
   

  	
   

  	
  Section 2. License in Contractor
  Systems and Software

  	
   

  
	
   

  	
   

  	
  Section 3. Systems and
  Software Developed

  	
   

  
	
   

  	
   

  	
  Section 4. Third-Party
  Software

  	
   

  
	
   

  	
   

  	
  Section 5. Software
  Documentation and Maintenance

  	
   

  
	
   

  	
   

  	
  ARTICLE THIRTEEN.
  OPERATING ACCOUNT; WORKING CAPITAL

  	
   

  
	
   

  	
   

  	
  Section 1. Operating
  Account

  	
   

  
	
   

  	
   

  	
  (A)

  	
  Establishment

  	
   

  
	
   

  	
   

  	
  (B)

  	
  Maintenance of Sufficient Funds

  	
   

  
	
   

  	
   

  	
  Section 2. Working Capital

  	
   

  
	
   

  	
   

  	
  Section 3. Funds in the
  Operating Account; Treatment of Interest

  	
   

  
	
   

  	
   

  	
  Section 4. Working Capital
  Advances

  	
   

  
	
   

  	
   

  	
  Section 5. Limited Right
  to Borrow Funds

  	
   

  
	
   

  	
   

  	
  Section 6. Deposits to
  Operating Account

  	
   

  
	
   

  	
   

  	
  (A)

  	
  Receipts

  	
   

  
	
   

  	
   

  	
  (B)

  	
  Working Capital Advances

  	
   

  
	
   

  	
   

  	
  (C)

  	
  Contractor’s Responsibility for
  Funds

  	
   

  
	
   

  	
   

  	
  Section 7. Disbursements
  from Operating Account

  	
   

  
	
   

  	
   

  	
  (A)

  	
  Costs Payable from Operating
  Account

  	
   

  
	
   

  	
   

  	
  (B)

  	
  Limitation on Disbursements

  	
   

  
	
   

  	
   

  	
  (C)

  	
  Signatures

  	
   

  
	
   

  	
   

  	
  Section 8. Transfer
  Accounts

  	
   

  
	
   

  	
   

  	
  Section 9. Seller Indirect
  Cost Deductions and Reserves

  	
   

  
	
   

  	
   

  	
  ARTICLE FOURTEEN. PURCHASE
  ACCOUNT

  	
   

  
	
   

  	
   

  	
  Section 1. Purchase
  Account

  	
   

  
	
   

  	
   

  	
  (A)

  	
  Establishment

  	
   

  
	
   

  	
   

  	
  (B)

  	
  Maintenance of Sufficient Funds

  	
   

  
	
   

  	
   

  	
  Section 2. Purchase
  Advances

  	
   

  

 

vii

 

	
   

  	
   

  	
  Section 3. Funds in the
  Purchase Account; Treatment of lnterest

  	
   

  
	
   

  	
   

  	
  Section 4. Treatment of
  Purchase Advances

  	
   

  
	
   

  	
   

  	
  Section 5. Disbursements
  from Purchase Account

  	
   

  
	
   

  	
   

  	
  Section 6. Purchase
  Transfers

  	
   

  
	
   

  	
   

  	
  ARTICLE FIFTEEN. FINANCIAL GUARANTEE BOND;
  RETENTION FUND;

  ESTIMATED CONTINGENT LIABILITIES RESERVE

  	
   

  
	
   

  	
   

  	
  Section 1. Election of
  Contractor to Provide Financial Guarantee Bond in Lieu of Retention

  	
   

  
	
   

  	
   

  	
  Section 2. Financial Guarantee
  Bond

  	
   

  
	
   

  	
   

  	
  (A)

  	
  Surety and Form of Bond

  	
   

  
	
   

  	
   

  	
  (B)

  	
  Issuance and Renewal

  	
   

  
	
   

  	
   

  	
  (C)

  	
  Liability and Release of Surety

  	
   

  
	
   

  	
   

  	
  Section 3. Retention Fund

  	
   

  
	
   

  	
   

  	
  (A)

  	
  Establishment of Retention;
  Retention Rate; Retention Fund; Required Retention Fund Balance

  	
   

  
	
   

  	
   

  	
  (B)

  	
  Insolvency of Contractor

  	
   

  
	
   

  	
   

  	
  (C)

  	
  Increased Retention

  	
   

  
	
   

  	
   

  	
  (D)

  	
  Release of Retention Fund

  	
   

  
	
   

  	
   

  	
  Section 4. Estimated
  Contingent Liabilities Reserve

  	
   

  
	
   

  	
   

  	
  ARTICLE SIXTEEN.
  DISTRIBUTIONS

  	
   

  
	
   

  	
   

  	
  Section 1. Monthly
  Distribution Statement

  	
   

  
	
   

  	
   

  	
  Section 2. Calculate Cash
  Available for Distribution and Operating Net Worth

  	
   

  
	
   

  	
   

  	
  (A)

  	
  Calculate Cash Available for
  Distribution

  	
   

  
	
   

  	
   

  	
  (B)

  	
  Calculate Operating Net Worth

  	
   

  
	
   

  	
   

  	
  Section 3. Calculate Net
  Worth Allocations

  	
   

  
	
   

  	
   

  	
  (A)

  	
  Calculate Contractor Net Worth
  Allocation

  	
   

  
	
   

  	
   

  	
  (B)

  	
  Calculate DRMS Net Worth
  Allocation

  	
   

  
	
   

  	
   

  	
  (C)

  	
  Calculate KGP Net Worth
  Allocation

  	
   

  
	
   

  	
   

  	
  Section 4. Distribution
  Payments

  	
   

  
	
   

  	
   

  	
  ARTICLE SEVENTEEN.
  COMPLIANCE AND MONITORING

  	
   

  
	
   

  	
   

  	
  Section 1. Purpose and
  Content of Compliance Reviews and Further Reviews

  	
   

  
	
   

  	
   

  	
  (A)

  	
  Compliance Reviews and Further
  Reviews

  	
   

  
	
   

  	
   

  	
  (B)

  	
  Methods

  	
   

  
	
   

  	
   

  	
  Section 2. Procedures for
  Compliance Reviews

  	
   

  
	
   

  	
   

  	
  (A)

  	
  Procedures and Notice

  	
   

  
	
   

  	
   

  	
  (B)

  	
  Scope

  	
   

  
	
   

  	
   

  	
  Section 3. Further Reviews

  	
   

  
	
   

  	
   

  	
  Section 4. Compliance
  Notification

  	
   

  
	
   

  	
   

  	
  Section 5. Costs of
  Oversight

  	
   

  
	
   

  	
   

  	
  ARTICLE EIGHTEEN. AUDIT
  ADJUSTMENTS

  	
   

  
	
   

  	
   

  	
  Section 1. Notice of Audit
  Adjustment

  	
   

  
	
   

  	
   

  	
  Section 2. Procedures for
  Adjudication of Audit Adjustments

  	
   

  
	
   

  	
   

  	
  Section 3. Remedies for
  Audit Adjustments

  	
   

  
	
   

  	
   

  	
  ARTICLE NINETEEN. MATERIAL
  BREACH

  	
   

  
	
   

  	
   

  	
  Section 1. Notice of
  Material Breach

  	
   

  

 

viii

 

	
   

  	
   

  	
  Section 2. Response to
  Notice

  	
   

  
	
   

  	
   

  	
  (A)

  	
  Cure

  	
   

  
	
   

  	
   

  	
  (B)

  	
  Submission of Dispute to
  Dispute Resolution Panel

  	
   

  
	
   

  	
   

  	
  Section 3.
  Termination

  	
   

  
	
   

  	
   

  	
  Section 4.
  Intentional Breach

  	
   

  
	
   

  	
   

  	
  Section 5.
  DRMS Remedies for Material Breach by Contractor or Purchaser

  	
   

  
	
   

  	
   

  	
  Section 6.
  Indemnification of DRMS by Contractor and Purchaser

  	
   

  
	
   

  	
   

  	
  Section 7.
  Indemnification of Contractor by DRMS

  	
   

  
	
   

  	
   

  	
  ARTICLE TWENTY.
  DISPUTE RESOLUTION

  	
   

  
	
   

  	
   

  	
  Section 1.
  Selection of Dispute Resolution Panel

  	
   

  
	
   

  	
   

  	
  (A)

  	
  Appointment of Arbitrators

  	
   

  
	
   

  	
   

  	
  (B)

  	
  Service of Arbitrators

  	
   

  
	
   

  	
   

  	
  (C)

  	
  Expenses

  	
   

  
	
   

  	
   

  	
  Section 2.
  Location and Governing Rules

  	
   

  
	
   

  	
   

  	
  Section 3.
  Jurisdiction of the Dispute Resolution Panel

  	
   

  
	
   

  	
   

  	
  (A)

  	
  Matters
  Committed to the Dispute Resolution Panel

  	
   

  
	
   

  	
   

  	
  (B)

  	
  Availability
  of Judicial Relief

  	
   

  
	
   

  	
   

  	
  Section 4.
  Submission of Disputes to the Dispute Resolution Panel

  	
   

  
	
   

  	
   

  	
  (A)

  	
  Dispute

  	
   

  
	
   

  	
   

  	
  (B)

  	
  Process

  	
   

  
	
   

  	
   

  	
  Section 5. Decision

  	
   

  
	
   

  	
   

  	
  Section 6.
  Remedies Available to Dispute Resolution Panel

  	
   

  
	
   

  	
   

  	
  (A)

  	
  Remedies
  in the Case of Disputes

  	
   

  
	
   

  	
   

  	
  (B)

  	
  Remedies
  for Ineligible Disbursements

  	
   

  
	
   

  	
   

  	
  (C)

  	
  Award of Costs

  	
   

  
	
   

  	
   

  	
  Section 7.
  Effective Date

  	
   

  
	
   

  	
   

  	
  ARTICLE TWENTY-ONE.
  WIND-UP OF PURCHASER

  	
   

  
	
   

  	
   

  	
  Section 1. Wind-Up
  Commencement Date

  	
   

  
	
   

  	
   

  	
  Section 2.
  Cessation of Property Referrals

  	
   

  
	
   

  	
   

  	
  Section 3.
  Conduct of Wind-Up

  	
   

  
	
   

  	
   

  	
  Section 4.
  Submission and Approval of Closing Report

  	
   

  
	
   

  	
   

  	
  (A)

  	
  Preparation
  by Contractor

  	
   

  
	
   

  	
   

  	
  (B)

  	
  Preparation
  by DRMS

  	
   

  
	
   

  	
   

  	
  Section 5. Final Distributions; Refund of Remaining
  Balance of Payment Deposit

  and
  Remaining Balance of Retention Fund

  	
   

  
	
   

  	
   

  	
  (A)

  	
  Final
  Distributions; Dissolution of Purchaser

  	
   

  
	
   

  	
   

  	
  (B)

  	
  Refund of
  Payment Deposit and Retention Fund

  	
   

  
	
   

  	
   

  	
  (C)

  	
  Early Refund of Retention Fund

  	
   

  
	
   

  	
   

  	
  ARTICLE TWENTY-TWO.
  MISCELLANEOUS PROVISIONS

  	
   

  
	
   

  	
   

  	
  Section 1. Binding Effect

  	
   

  
	
   

  	
   

  	
  Section 2. Notices

  	
   

  
	
   

  	
   

  	
  Section 3. Severability;
  Consolidation with CV

  	
   

  
	
   

  	
   

  	
  Section 4. Headings

  	
   

  
	
   

  	
   

  	
  Section 5. Survival

  	
   

  
	
   

  	
   

  	
  Section 6. Waiver

  	
   

  

 

ix

 

	
   

  	
   

  	
  Section 7.
  Force Majeure

  	
   

  
	
   

  	
   

  	
  Section 8.
  Use of DRMS Name; Public Communications

  	
   

  
	
   

  	
   

  	
  Section 9.
  Tense and Gender

  	
   

  
	
   

  	
   

  	
  Section 10.
  Entire Agreement; Modification

  	
   

  
	
   

  	
   

  	
  Section 11.
  Computation of Time

  	
   

  
	
   

  	
   

  	
  Section 12.
  Electronic Communication

  	
   

  
	
   

  	
   

  	
  ARTICLE TWENTY-THREE.
  DEFINITIONS AND CROSS-REFERENCES TO DEFINITIONS

  	
   

  
	
  VII. ATTACHMENTS AND SCHEDULES

  	
   

  
	
  ATTACHMENT II.U

  	
   

  
	
  ATTACHMENT II.W

  	
   

  
	
  ATTACHMENT IV

  	
   

  
	
  ATTACHMENT V

  	
   

  
	
  ATTACHMENT VI.1.10

  	
   

  
	
  SCHEDULE VI.2.2(B)

  	
   

  
	
  SCHEDULE VI.3.1(B)(2)

  	
   

  
	
  SCHEDULE VI.3.3.B(1)

  	
   

  
	
  ATTACHMENT VI.3.4.G

  	
   

  
	
  ATTACHMENT VI.3.11

  	
   

  
	
  ATTACHMENT VI.5.4.A

  	
   

  
	
  ATTACHMENT VI.7.5.B

  	
   

  
	
  SCHEDULE VI.9.1.A

  	
   

  
	
  ATTACHMENT V1.9.1.A(1)

  	
   

  
	
  ATTACHMENT
  VI.9.2.E

  	
   

  
	
  SCHEDULE VI.12.1.A

  	
   

  
	
  SCHEDULE VI.12.4

  	
   

  
	
  ATTACHMENT
  VI.16.1

  	
   

  

 

x

 

 

 

 

 

 

MULTI-YEAR
SALE OF SCRAP AT LOCATIONS NATIONWIDE

 

INVITATION
FOR BIDS

No. 99-4001

 

 

I. STEP TWO OF TWO-STEP SEALED BIDDING

 

This Invitation For Bids (IFB) is issued to initiate
Step Two of two-step sealed bidding. The only bids that the DRMS Sales Contracting
Officer (“SCO”) may consider for award of a contract are those received from
bidders that have submitted acceptable technical proposals in Step One of this
solicitation under RFTP 99-4001.

 

The Key Personnel
designations in the successful bidder’s technical proposal shall be
incorporated into any contract awarded in response to this IFB. In all other respects, the
provisions of this IFB shall govern the contract contemplated hereby without
regard to assumptions, plans, forecasts, conditions or any other matters set
forth in any prospective bidder’s technical proposal submitted in Step One.

 

Instructions and forms for submitting a bid are set
forth in the accompanying “Bidding Instructions and Bid Forms.” Your Bid Forms
and Bid Deposit in the form of immediately available funds (credit card,
cashier’s check or money order) payable to US Treasury in the amount of Twenty
Thousand Dollars ($20,000) must be delivered to and received by DRMS before the
bid opening at 9:00 a.m. EST on Tuesday, December 7, 2004. Address
your Bid Forms and Bid Deposit to:

 

	
  Defense Realization and
  Marketing

  
	
  Service (DRMS)

  
	
  Federal Center,
  Room 2-4-4

  
	
  74 Washington Avenue N.

  
	
  Battle Creek, MI
  49017-3092

  
	
  ATTN: Mr. Greg
  Ortiz

  

 

1

 

II.
GENERAL STATEMENTS OF CONTRACT TERMS

 

Certain of the contents and provisions of Parts III through
VI of this IFB, including Appendices, Attachments and Schedules, are described
in general and summary terms in this Part II. Statements in this Part II as to
such contents and provisions are not intended to be complete. Reference is made
to such contents and provisions for a complete description of the matters
involved, and each suck statement shall be deemed qualified in its entirety by
such reference.

 

A.          
INTRODUCTION

 

The structure of
the sales described in this IFB are similar in many pertinent respects to the
earlier sale contracts for surplus usable property that were awarded by DRMS in
July of 1998 to Levy/Latham LLC, and in June of 2001 to Surplus
Acquisition Venture, LLC. Those sales are called the DRMS “Commercial Ventures”
or “CVs.” As is described more specifically below, the CV-type structure is a
“pipeline” sale, so named because the successful bidder pre-commits to purchase
all of certain types of property that emerge from the DRMS “pipeline” at
designated DRMS locations over a specified period of time. As is also described
more specifically below, the CV-type structure is also a “net proceeds sharing
sale” in that the successful bidder is obligated to share with DRMS a portion
of the net proceeds realized from the re-sale of the property after deducting
all of the costs of managing, transporting, protecting, improving and marketing
the property. The CV-type sale structure is based upon a design originally
developed for Resolution Trust Corporation and that RTC implemented in its
largest and most successful asset sale transactions.

 

This IFB for the
DRMS “Scrap Venture” or “SV” sale concerns almost all “Scrap” material (as is
more completely described in Section B below) that is designated as such
by DRMS and that emerges from the DRMS “pipeline” at DRMS Scrap Yards(1) and at
other locations in the Continental United States (“CONUS”; but excluding
locations in the “Control Group” as set forth below), plus locations in Alaska.

 

All locations
within the states of Tennessee, North Carolina, and South Carolina are
considered the DRMS Scrap “Control Group.” All sites in the Control Group will
employ traditional sales methods and are presently excluded from this Scrap
Venture initiative. As set forth below, DRMS plans to conduct a 24-month review
of the results of Scrap operations within the Control Group and may determine
to combine the three-state Control Group into this SV sale transaction.

 

The pertinent
Scrap material is categorized as subject either to a DEMIL Code of “A,” “B,”
“E” or “Q,” or to “DEMIL as a Condition of Sale” (see Section W below). As
is the case in both CV sales, SV excludes Hazardous Material, Hazardous Waste,
material in certain Scrap

 

(1)     DRMO Scrap Yards are listed in Part VII at Attachment
IV.

 

2

 

Classification List (SCL)
codes and Federal Supply Classification (FSC) codes that present special
hazards or handling difficulties, and certain types of Scrap that are excluded
for other reasons.

 

The successful
offeror that is awarded the SV sale contract is termed the “Contractor.” The
Contractor is required to establish a single-purpose Subchapter S corporation
or limited liability company, termed the “Purchaser,” to perform the contract.

 

Described very generally,
under this proceeds-sharing sale contract structure, the Contractor pays to
DRMS at the time that the contract is
awarded a single “Bid Price” equal to the Contractor’s bid. In
addition, the Contractor will provide funds to the Purchaser to enable the
Purchaser to pay to DRMS each calendar quarter the “Quarterly Purchase Price”
for the Property. In return, the Contractor is entitled to receive twenty
percent (20%) of all Distributions of “Net Proceeds.” Net Proceeds equals all
revenues obtained by the Purchaser (“Gross Proceeds”) less all of the
Purchaser’s operating costs (“Direct Costs”).

 

B.           
PRODUCT POOL AND PROPERTY FLOW

 

The Scrap products
sold under this IFB are categorized by Scrap Classification List (SCL) code and
DEMIL Code. The included material identified by SCL Code and DEMIL Code
constitutes the “Product Pool.”(2) Described generally, the Property in the
Product Pool is (i) all
“Scrap” material, and all items that are subject to “Demilitarization as a
Condition of Sale,” for which DRMS is accountable,(3) (ii) other than material and items in
the list of excluded SCLs(4) and FSCs set forth in Part IV,(5) (iii) with DEMIL Codes “A,” “B,” “E”
or “Q” or that are subject to “Demilitarization as a Condition of Sale,” (iv) and a Hazardous Materials Code
other than “W” (Hazardous Waste) or “M” (Hazardous Material), (v) that become available in the
Continental United States (other than Tennessee and the Carolinas) or in
Alaska.

 

The flow of
Property in the Product Pool has varied since 1985. The data exhibited in
Figures II-2 through II-17 present the scope of DRMS Scrap transactions in the
pertinent geographic area by SCL Group,(6) Term Sales v. Spot Sales, and DEMIL
Code (excluding DEMIL

 

(2)     Items that are subject to
Demilitarization as a Condition
of Sale are identified by FSC and by DEMIL Code, but not by SCL.

(3)     See Section II.C, “Designation of
Scrap vs. Useable Items;” see also Section II.J. I, “Resource Recovery and
Recycling Program (RRRP).”

(4)     SCLs D5A, D5B, D5C, D5G, H15, HI6,
H17, & HI8 contain Hazardous Material and are excluded from this sale.

(5)     In addition to certain FSCs, the sale
will exclude SCLs beginning with P or V (precious metals) and SCL B00, B01,
B02, B03 and B04 (rubbish, trash or any type of debris scheduled for A/D). The
sale of tire material, classified in SCL Codes G01, G02, G03, G04, G05 and GST,
wood material, classified in SCL Codes F01 and FSW, and glass material,
classified in SCL Code H06, is subject to the provisions of Section 4(K)
of Art. 3 to support DRMS solid waste management goals.

(6)     An “SCL Group” is a grouping of SCL Codes
determined by DRMS to have similar market characteristics.

 

3

 

as a Condition of Sale).(7) These data, and other data presented
herein, are derived using sources that DRMS believes are reliable, but DRMS
cannot guarantee the accuracy of such data. Prospective offerors should note
that DRMS cannot predict either the volume of items that the Purchaser will
sell, or the revenues obtainable therefrom, or whether the revenues from the
disposition of Scrap will exceed the costs thereof. Each prospective offeror,
therefore, must account for this risk in its bidding. DRMS expressly disavows
any implicit prediction, projection or suggestion to the contrary.

 

Three primary descriptive variables are of interest in
DRMS historical data:

 

(1)     Weight (in pounds)

(2)     Gross Proceeds (in dollars)

(3)     Gross Proceeds per Pound.

 

Figures II-2
through II-4 summarize DRMS Scrap data for these variables for Fiscal Years
1985-2003. (Figure II-1 is reserved and is not used in this IFB.) These three
measures, plus the associated proportions expressed as percentages for Weight
and Gross Proceeds, are exhibited repeatedly throughout the figures in the
following dimensions:

 

•                         
by SCL Group (Figs.
II-5 through II-7)

•                         
by Sale Type (Figs.
II-8 through II-12)

•                         
by DEMIL Code (Figs.
II-13 through II-17).

 

Figures II-5 through
II-7 show Scrap sales by SCL Group for the three primary variables. Nine SCL
Groups are shown:

 

(1)     Aluminum

(2)     Brass and Copper

(3)     Steel and Iron

(4)     High Temp Alloys

(5)     Stainless Steel

(6)     Paper

(7)     Other (Metallic)

(8)     Other

(9)     Misc. Scrap, Not Otherwise Classified (SCL Code H13).

 

Each SCL Group is
composed of individual SCL Codes. (This mapping is detailed in Part IV,
Table IV-l(a).) The SCL Codes were assigned to SCL Groups in such a way as to
reduce the variability in Gross Proceeds and Proceeds per Pound within each
Group.

 

(7)     These data include all DRMS sales of
“Scrap” material included in this SV sale in CONUS (excluding Tennessee and the
Carolinas), plus the non-CONUS facilities as noted above in Section A.
These data generally understate the total weights and sales revenues pertinent
to this SV sale by excluding Demilitarization as a Condition of Sale material.
These items generally account for an additional 5% to 15% measured by Gross Proceeds.
See Table II-9 in Section W, “Demilitarization,” for these estimates.

 

4

 

Figure II-2

DRMS NATIONAL SCRAP SALES

Total Weight, FY 1985 - 2003

 

4.1

 

Figure
II-3

DRMS
NATIONAL SCRAP SALES

Gross
Proceeds

National Total, FY 1985 - 2003

 

4.2

 

Figure II-4

DRMS NATIONAL SCRAP SALES

Proceeds per Pound

FY 1985 - 2003

 

4.3

 

Figure
II-5(a)

DRMS
NATIONAL SCRAP SALES

FY 1985 - 2003

Total
Weight and Weight by SCL Group

All SCL Groups

 

 

4.4

Figure
II-5(b)

DRMS
NATIONAL SCRAP SALES

FY
1985 - 2003

Total
Weight and Weight by SCL Group

Selected
SCL Groups

 

4.5

 

Figure
II-5(c)

DRMS
NATIONAL SCRAP SALES

FY
1985 - 2003

Total
Weight and Weight by SCL Group

Selected SCL Groups

 

 

4.6

 

 

 

 

Figure
II-6(a)

DRMS
NATIONAL SCRAP SALES

FY
1985 - 2003

Gross
Proceeds by SCL Group

All SCL Groups

 

4.7

 

Figure
II-6(b)

DRMS
NATIONAL SCRAP SALES

FY
1985 - 2003

Gross
Proceeds by SCL Group

Selected SCL Groups

 

 

4.8

 

Figure
II-6(c)

DRMS
NATIONAL SCRAP SALES

FY
1985 - 2003

Gross
Proceeds by SCL Group

Selected SCL Groups

 

4.9

 

Figure
II-7(a)

DRMS
NATIONAL SCRAP SALES

FY
1985 - 2003

Proceeds
per Pound by SCL Group

All SCL Groups

 

4.10

 

Figure
II-7(b)

DRMS
NATIONAL SCRAP SALES

FY
1985 - 2003

Proceeds
per Pound by SCL Group

Selected SCL Groups

 

4.11

 

Figure
II-7(c)

DRMS
NATIONAL SCRAP SALES

FY
1985 - 2003

Proceeds
per Pound by SCL Group

Selected SCL Groups

 

4.12

 

Figure
II-8

DRMS
NATIONAL SCRAP SALES

FY
1985 - 2003

Total
Weight and Weight by Sale Type

(Spot or Term)

 

4.13

 

Figure
II-9

DRMS
NATIONAL SCRAP SALES

FY
1985 - 2003

Percentage
of Total Weight by Sale Type

(Spot or Term)

 

4.14

 

Figure
II-10

DRMS
NATIONAL SCRAP SALES

FY
1985 - 2003

Gross
Proceeds - Total and by Sale Type

(Spot or Term)

 

4.15

 

 

 

 

Figure
II-11

DRMS
NATIONAL SCRAP SALES

FY
1985 - 2003

Percentage
of Gross Proceeds by Sale Type

(Spot or Term)

 

 

4.16

 

Figure
II-12

DRMS
NATIONAL SCRAP SALES

FY
1985 - 2003

Proceeds
per Pound by Sale Type

(Spot
or Term)

 

 

 

 

4.17

 

Figure
II-13

DRMS
NATIONAL SCRAP SALES

FY
1985 - 2003

Total
Weight and Weight by DEMIL Code

 

 

 

4.18

 

Figure
II-14

DRMS
NATIONAL SCRAP SALES

FY
1985 - 2003

Percentage of Total Weight by DEMIL Code

 

 

4.19

 

Figure
II-15

DRMS
NATIONAL SCRAP SALES

FY
1985 - 2003

Gross
Proceeds - Total and by DEMIL Code

 

 

4.20

 

Figure II-16

DRMS NATIONAL SCRAP SALES

FY 1985 - 2003

Percentage of Gross Proceeds by DEMIL
Code

 

 

4.21

 

Figure
II-17

DRMS
NATIONAL SCRAP SALES

FY
1985 - 2003

Proceeds
per Pound by DEMIL Code (Excluding “Other”)

 

4.22

 

 

 

 

 

Notice that Figures II-5 through II-7 are exhibited using a “zoom”
technique. That is, they focus at the broadest level (where the largest SCL
Groups dominate) in the first figure, and then increase their focus in
successive figures until the smallest SCL Groups dominate. For example, Figure
II-5(a) shows all nine SCL Groups, no matter how large or small the
volume; Figure II-5(b) shows a subset of these with moderate volumes
(close up); and Figure II-5(c) shows the subset of these with the smallest
volumes (close up even further).

 

Figures II-8 through II-12 present Scrap sales by Sale Type. Spot Sales
(non-Term Sales) are shown relative to Term Sales (those involving time-period
contracts). This distinction indicates the market conditions and institutional
norms effecting DRMS’s transactions.

 

Figures II-13 through II-17 show Scrap sales by DEMIL Group. For
example, Figure II-16 shows that DEMIL Groups “A,” “B,” and “Other” have
maintained relatively stable shares of Gross Proceeds with respect to each other
over the years.

 

Throughout the Performance Period of the contract, DRMS will have the
contractual obligation to refer all such
Property on DRMS records for purchase under the contract. The initial
Performance Period is eighty-four (84) months, but DRMS may elect to exercise
options to extend the Performance Period for up to an additional thirty-six
months.

 

The Purchaser will have the exclusive right to purchase all of the flow of such Property, and DRMS
will not be able to divert any such Property to another buyer. Subject to
certain limited exceptions, the Purchaser will have the corresponding
contractual obligation to purchase all of
the flow of Property in the Product Pool after an initial six-month Phase-In
Period. (See Part VI, “Additional Terms and Conditions of Sale,”
Article 3; references to Articles in Part VI are hereinafter
abbreviated “Art,         .”) The
Purchaser is encouraged to market the Property to traditional DRMS buyers.

 

C.            DESIGNATION
OF SCRAP VS. USEABLE ITEMS

 

An entity that turns property into DRMS for disposition is termed a
“generator.” There are three ways that DRMS acquires Scrap from the military
and from other federal activities that are generators.

 

First, the generator tentatively designates an item as Useable or Scrap
when the item is presented for turn-in to DRMS. The DRMS receiving personnel
may either accept a Scrap designation or upgrade the item to Useable (an
“Upgrade Upon Receipt”). The DRMS receiving personnel similarly may either
accept a Useable designation or downgrade the item to Scrap (a “Downgrade Upon
Receipt”). All items that are initially designated as Scrap by DRMS (either by
reason of DRMS accepting the generator’s Scrap determination or by way of a
Downgrade Upon Receipt) are presently sold as such by DRMS to Scrap purchasers
by weight and SCL.

 

Second, under DRMS operations, items that are designated as Useable
upon receipt are offered at no charge to certain prospective claimants
(“Reutilization, Transfer and Donation” or “R/T/D” claimants) such as other
U.S. military organizations. Those items that are not claimed

 

 

5

 

 

and removed during the R/T/D
process are sold by DRMS to the Commercial Venture (CV) Purchaser. Some items,
however, are withdrawn from the sale process because DRMS personnel believe
that they are not saleable. All of these unsold items are downgraded to Scrap
and sold as such (each, a “Post-Receipt Downgrade”), also by weight and SCL.(8)

 

Third, many items of military property require demilitarization for
reasons of safety, national security, or both. Such “DEMIL-required” items are
turned in to DRMS identified as such by the generator. DRMS either performs the
required destruction itself before sale of the residue as Scrap or obligates
the buyer to do so before title passes to the item.(9) See Section W for
more information about demilitarization.

 

D.            PERFORMANCE
PERIOD

 

The successful offeror will have three months (3) after award to
arrange for the facilities, staffing and equipment that will initially be
required to receive and process Property. (See Art. 3.)

 

The minimum Performance Period for the contract is eighty-four (84)
months. (See Art. 2.) DRMS may exercise options to extend the Performance
Period for up to an additional thirty-six (36) months. (See Art. 2.)

 

The Purchaser will be required to accept referrals of Property
initially at certain of the largest Scrap Yards measured by Gross Proceeds (the
“Initial Delivery Points”). This list of Scrap Yards is specified in Art. 3.
The Purchaser must begin accepting Property at these initial sites no later
than three (3) months after the post-award conference. Moreover, the
Purchaser may request an even more accelerated schedule. Subject to its ability
to conclude existing term sale contracts to accommodate such a request, and
subject to certain other factors, DRMS will respond to such a request in the
exercise of its sole discretion. (See Art. 3 and Table VI.3.2.C.)

 

Subject to staffing and facilities constraints, DRMS intends to
accumulate Property at a particular site in advance of the scheduled first
referral of Property at that site. In other words, DRMS intends to provide the
Purchaser with some beginning inventory to enable the Purchaser to begin its
operations without necessarily waiting to accumulate a particular level of
inventory. This applies to the Initial Delivery Points and to sites phased in
later. (See Art. 3.)

 

Within three (3) months of the post-award conference, the
Purchaser must provide to DRMS a proposed schedule for phasing in
referrals at the balance of all Scrap operations that are the subject of this
sale. Unless DRMS exercises its sole discretion to extend the proposed
schedule, such referrals must be accomplished no later than six (6) months
after the post-award

 

(8)           The CV Purchaser also abandons Useable items to DRMS that DRMS
downgrades to Scrap through Post-Receipt Downgrades.

(9)           A small portion, ranging in recent
years between approximately 5% and 15% of total DRMS Scrap Gross Proceeds, of
DRMS Scrap items are sold subject to “Demilitarization as a Condition of Sale.”
and the buyers must perform the demilitarization process themselves. See
Section W.

 

 

6

 

 

conference. The Purchaser
may request an even more accelerated phase-in of the balance of the Scrap
operations, and DRMS will respond to such a request in the exercise of its sole
discretion.

 

DRMS and the Contractor will have an objectively defined early
cancellation option discussed in Section II.N below. (See Art. 2.)

 

E.             PURCHASER
AND CONTRACTOR RESPONSIBILITIES

 

The successful offeror is referred to as the “Contractor”. The
Contractor must form a single purpose Subchapter S corporation or limited
liability company referred to as the “Purchaser.” The Contractor must own at
least a fifty-one percent (51%) interest in the Purchaser and must control the
Purchaser. (See Art. 1).

 

The Purchaser will be the entity that purchases the Property, manages
and disposes of the Property, and manages all financial affairs including
receipts, payments, accounting systems, cashflow management, audits and cash
distributions to the Contractor and DRMS. As provided in Part VI, the
Purchaser also pays a portion of each DRMS Distribution to Kormendi \ Gardner
Partners (“KGP”). (See Art. 16.)

 

Although the Purchaser is the operational entity, both the Contractor
and Purchaser are jointly responsible for the operations of the Purchaser. In
particular, while the Contractor does not guarantee the business success of the
Purchaser in any way, the Contractor does guarantee that the Purchaser will
operate in total compliance with the contract. (See Art. 19.)

 

The Contractor’s guarantee is secured in part by its Bid Deposit of
Twenty Thousand Dollars ($20,000.00). Upon award the Bid Deposit is retained by
DRMS as a “Payment Deposit” (see Art. 5) and, unless the Contractor posts a
“Financial Guarantee Bond” in the amount of $1 million, by a provision for
retaining a portion of the Contractor’s distributions in a “Retention Fund” held
by DRMS up to a maximum of $500,000 in most circumstances (see Art. 15).

 

F.             PRICING

 

All of the Property will be sold to the Purchaser at a Quarterly
Purchase Price equal to .01 cents per pound multiplied by Delivery Weight but
not less than 1 cent per “DTID”.(10) The purpose of this pricing is to insulate
both DRMS and the Contractor from the business risk presented by volatile
re-sale prices in the recycling marketplace. Instead of bidding a per-pound
price, therefore, offerors must offer a “Bid Price” as explained in the
following section.

 

(10)         The “DTID” is the official form (DD 1348-1) used by all
military services to turn in excess property. Material or objects grouped
together on a single DTID collectively constitute a single “Line Item” of Property.

 

 

7

 

G.            BID PRICE

 

Each offeror must specify a Bid Price that is a single lump-sum dollar
amount to be paid by the successful offeror to DRMS upon award of the sale
contract. The Bid Price will be “repaid” from the Contractor’s 20% share of
“Net Proceeds.” Apart from the Bid Price, the contract will be profitable each
calendar quarter if (1) Gross Proceeds exceed Direct Costs (i.e., Net
Proceeds exceed zero) and (2) the Contractor’s 20% share of Net Proceeds
exceeds the Quarterly Purchase Price equal to the greater of .01 cents per
pound or 1 cent per DTID. The amount of that profit will be affected in turn by
the volume of the Property referred for sale to the Purchaser and the mix of
relatively high-value and low-value Property that is referred. Offerors should
carefully assess the risks inherent in these factors when determining their Bid
Prices.

 

H.            BIDDER DUE
DILIGENCE

 

Prospective bidders will be provided detailed annual data on DRMS’s
Scrap sales for weight, gross proceeds, and average proceeds per pound, by,
SCL, SCL Group, Sale Type, DEMIL Code, and Scrap Yard for fiscal years 1994 –
2004 in a data supplement that will be issued with or shortly after this IFB.
Sales data for DRMS “National” Scrap sales for FY 1994 – 2003 in CONUS and
Alaska but excluding the Control Group are presented in Tables II-1 through
II-5 on the following pages. (Table II-6 is reserved and is not used in this
IFB.) Prospective bidders may also be provided available data on recent DRMS
Scrap inventory to assist prospective bidders with due diligence.

 

Prospective bidders will be provided access to Scrap material in the
physical custody of Scrap Yards in CONUS to be pre-arranged by DRMS. Contact
Greg Ortiz at (269) 961-7558 to make arrangements.

 

I.              NET
PROCEEDS AND DIRECT COSTS

 

Described generally, the Purchaser’s “Net Proceeds” is the Purchaser’s
Gross Proceeds (obtained by the Purchaser from the Property’s sale, buyer’s
premiums, insurance proceeds or by any other means), less all “Direct Costs.”
Direct Costs are, generally, all costs, other than the cost of purchasing the
Property and the compensation and travel expenses of the Purchaser’s Chief
Executive Officer, that are actually incurred by the Purchaser solely for the
management, preservation, handling, storage, improvement, transportation and
disposition of the Property (e.g., payroll, office rent, travel, etc.,
including all costs commonly termed “overhead costs”), and paid either to a
third party (including employees) or to an affiliate in connection with a
“Permitted Affiliate Transaction.” (See Art. 9.)

 

DRMS recognizes that a particular Contractor may own, or have access
through an Affiliated Party to, facilities for the shredding, smelting or other
processing of scrap material. If

 

 

8

 

Table II-1

DRMS National Scrap Sales

Weight, Gross Proceeds and Gross Proceeds per Pound

FY 1994 - 2003

 

Weight
(Thousands of Pounds)

 

	
   

  	
   

  	
  1994

  	
   

  	
  1995

  	
   

  	
  1996

  	
   

  	
  1997

  	
   

  	
  1998

  	
   

  	
  1999

  	
   

  	
  2000

  	
   

  	
  2001

  	
   

  	
  2002

  	
   

  	
  2003

  	
   

  	
  Average

  FY 2001-03

  	
   

  
	
  Weight (Thousands of Pounds)

  	
   

  	
  1,046,583

  	
   

  	
  871,173

  	
   

  	
  749,215

  	
   

  	
  680,102

  	
   

  	
  594,224

  	
   

  	
  516,334

  	
   

  	
  443,235

  	
   

  	
  314,031

  	
   

  	
  285,630

  	
   

  	
  249,487

  	
   

  	
  283,049

  	
   

  

 

Gross
Proceeds ($000s)

 

	
   

  	
   

  	
  1994

  	
   

  	
  1995

  	
   

  	
  1996

  	
   

  	
  1997

  	
   

  	
  1998

  	
   

  	
  1999

  	
   

  	
  2000

  	
   

  	
  2001

  	
   

  	
  2002

  	
   

  	
  2003

  	
   

  	
  Average

  FY 2001-03

  	
   

  
	
  Gross Proceeds ($000s)

  	
   

  	
  71,842

  	
   

  	
  97,982

  	
   

  	
  74,219

  	
   

  	
  66,084

  	
   

  	
  50,995

  	
   

  	
  29,269

  	
   

  	
  28,327

  	
   

  	
  16,388

  	
   

  	
  14,341

  	
   

  	
  15,883

  	
   

  	
  15,537

  	
   

  

 

Gross
Proceeds per Pound

 

	
   

  	
   

  	
  1994

  	
   

  	
  1995

  	
   

  	
  1996

  	
   

  	
  1997

  	
   

  	
  1998

  	
   

  	
  1999

  	
   

  	
  2000

  	
   

  	
  2001

  	
   

  	
  2002

  	
   

  	
  2003

  	
   

  	
  Average

  FY 2001-03

  	
   

  
	
  Gross Proceeds per Pound

  	
   

  	
  $

  	
  0.069

  	
   

  	
  $

  	
  0.112

  	
   

  	
  $

  	
  0.099

  	
   

  	
  $

  	
  0.097

  	
   

  	
  $

  	
  0.086

  	
   

  	
  $

  	
  0.057

  	
   

  	
  $

  	
  0.064

  	
   

  	
  $

  	
  0.052

  	
   

  	
  $

  	
  0.050

  	
   

  	
  $

  	
  0.064

  	
   

  	
  $

  	
  0.055

  	
   

  
																																			

 

8.1

 

Table II-2(a)

DRMS National Scrap Sales

Weight by SCL Group

FY 1994 - 2003

 

Weight (Thousands of Pounds)

 

	
  SCL
  Group

  	
   

  	
  1994

  	
   

  	
  1995

  	
   

  	
  1996

  	
   

  	
  1997

  	
   

  	
  1998

  	
   

  	
  1999

  	
   

  	
  2000

  	
   

  	
  2001

  	
   

  	
  2002

  	
   

  	
  2003

  	
   

  	
  Average

  FY 2001-03

  	
   

  
	
  Aluminum

  	
   

  	
  51,731

  	
   

  	
  43,814

  	
   

  	
  34,661

  	
   

  	
  37,778

  	
   

  	
  32,339

  	
   

  	
  33,256

  	
   

  	
  20,603

  	
   

  	
  14,940

  	
   

  	
  14,939

  	
   

  	
  10,896

  	
   

  	
  13,592

  	
   

  
	
  Brass and Copper

  	
   

  	
  39,471

  	
   

  	
  26,974

  	
   

  	
  23,555

  	
   

  	
  18,865

  	
   

  	
  18,522

  	
   

  	
  12,358

  	
   

  	
  12,051

  	
   

  	
  7,884

  	
   

  	
  8,146

  	
   

  	
  7,053

  	
   

  	
  7,695

  	
   

  
	
  Steel and Iron

  	
   

  	
  549,631

  	
   

  	
  466,908

  	
   

  	
  403,445

  	
   

  	
  392,292

  	
   

  	
  343,491

  	
   

  	
  300,038

  	
   

  	
  279,745

  	
   

  	
  186,628

  	
   

  	
  170,030

  	
   

  	
  142,006

  	
   

  	
  186,221

  	
   

  
	
  High Temp Alloys

  	
   

  	
  2,926

  	
   

  	
  1,967

  	
   

  	
  1,890

  	
   

  	
  2,015

  	
   

  	
  2,593

  	
   

  	
  1,723

  	
   

  	
  2,412

  	
   

  	
  1,855

  	
   

  	
  1,410

  	
   

  	
  2,227

  	
   

  	
  1,830

  	
   

  
	
  Stainless Steel

  	
   

  	
  11,617

  	
   

  	
  5,939

  	
   

  	
  4,890

  	
   

  	
  3,376

  	
   

  	
  4,000

  	
   

  	
  2,635

  	
   

  	
  2,926

  	
   

  	
  1,891

  	
   

  	
  1,359

  	
   

  	
  1,131

  	
   

  	
  1,460

  	
   

  
	
  Paper

  	
   

  	
  177,121

  	
   

  	
  152,146

  	
   

  	
  137,976

  	
   

  	
  111,769

  	
   

  	
  91,058

  	
   

  	
  80,659

  	
   

  	
  63,273

  	
   

  	
  40,420

  	
   

  	
  28,558

  	
   

  	
  17,332

  	
   

  	
  28,770

  	
   

  
	
  Other (Metallic)

  	
   

  	
  59,779

  	
   

  	
  54,349

  	
   

  	
  39,836

  	
   

  	
  40,550

  	
   

  	
  37,350

  	
   

  	
  27,787

  	
   

  	
  14,567

  	
   

  	
  9,934

  	
   

  	
  8,982

  	
   

  	
  6,520

  	
   

  	
  8,479

  	
   

  
	
  Other

  	
   

  	
  134,363

  	
   

  	
  102,463

  	
   

  	
  89,544

  	
   

  	
  60,252

  	
   

  	
  56,639

  	
   

  	
  51,641

  	
   

  	
  34,946

  	
   

  	
  24,757

  	
   

  	
  22,895

  	
   

  	
  17,289

  	
   

  	
  21,647

  	
   

  
	
  Miscellaneous
  (H13)

  	
   

  	
  19,944

  	
   

  	
  16,614

  	
   

  	
  13,418

  	
   

  	
  13,205

  	
   

  	
  8,233

  	
   

  	
  6,257

  	
   

  	
  12,712

  	
   

  	
  25,722

  	
   

  	
  29,311

  	
   

  	
  45,032

  	
   

  	
  33,355

  	
   

  
	
  Total

  	
   

  	
  1,046,583

  	
   

  	
  871,173

  	
   

  	
  749,215

  	
   

  	
  680,102

  	
   

  	
  594,224

  	
   

  	
  516,334

  	
   

  	
  443,235

  	
   

  	
  314,031

  	
   

  	
  285,630

  	
   

  	
  249,487

  	
   

  	
  283,049

  	
   

  

 

 

Table II-2(b)

DRMS National Scrap Sales

Percentage Weight by SCL Group

FY 1994 - 2003

 

	
  SCL
  Group

  	
   

  	
  1994

  	
   

  	
  1995

  	
   

  	
  1996

  	
   

  	
  1997

  	
   

  	
  1998

  	
   

  	
  1999

  	
   

  	
  2000

  	
   

  	
  2001

  	
   

  	
  2002

  	
   

  	
  2003

  	
   

  	
  Average

  FY 2001-03

  	
   

  
	
  Aluminum

  	
   

  	
  4.9

  	
  %

  	
  5.0

  	
  %

  	
  4.6

  	
  %

  	
  5.6

  	
  %

  	
  5.4

  	
  %

  	
  6.4

  	
  %

  	
  4.6

  	
  %

  	
  4.8

  	
  %

  	
  5.2

  	
  %

  	
  4.4

  	
  %

  	
  4.8

  	
  %

  
	
  Brass and Copper

  	
   

  	
  3.8

  	
  %

  	
  3.1

  	
  %

  	
  3.1

  	
  %

  	
  2.8

  	
  %

  	
  3.1

  	
  %

  	
  2.4

  	
  %

  	
  2.7

  	
  %

  	
  2.5

  	
  %

  	
  2.9

  	
  %

  	
  2.8

  	
  %

  	
  2.7

  	
  %

  
	
  Steel and Iron

  	
   

  	
  52.5

  	
  %

  	
  53.6

  	
  %

  	
  53.8

  	
  %

  	
  57.7

  	
  %

  	
  57.8

  	
  %

  	
  58.1

  	
  %

  	
  63.1

  	
  %

  	
  59.4

  	
  %

  	
  59.5

  	
  %

  	
  56.9

  	
  %

  	
  58.7

  	
  %

  
	
  High Temp Alloys

  	
   

  	
  0.3

  	
  %

  	
  0.2

  	
  %

  	
  0.3

  	
  %

  	
  0.3

  	
  %

  	
  0.4

  	
  %

  	
  0.3

  	
  %

  	
  0.5

  	
  %

  	
  0.6

  	
  %

  	
  0.5

  	
  %

  	
  0.9

  	
  %

  	
  0.6

  	
  %

  
	
  Stainless Steel

  	
   

  	
  1.1

  	
  %

  	
  0.7

  	
  %

  	
  0.7

  	
  %

  	
  0.5

  	
  %

  	
  0.7

  	
  %

  	
  0.5

  	
  %

  	
  0.7

  	
  %

  	
  0.6

  	
  %

  	
  0.5

  	
  %

  	
  0.5

  	
  %

  	
  0.5

  	
  %

  
	
  Paper

  	
   

  	
  16.9

  	
  %

  	
  17.5

  	
  %

  	
  18.4

  	
  %

  	
  16.4

  	
  %

  	
  15.3

  	
  %

  	
  15.6

  	
  %

  	
  14.3

  	
  %

  	
  12.9

  	
  %

  	
  10.0

  	
  %

  	
  6.9

  	
  %

  	
  10.2

  	
  %

  
	
  Other (Metallic)

  	
   

  	
  5.7

  	
  %

  	
  6.2

  	
  %

  	
  5.3

  	
  %

  	
  8.0

  	
  %

  	
  6.3

  	
  %

  	
  5.4

  	
  %

  	
  3.3

  	
  %

  	
  3.2

  	
  %

  	
  3.1

  	
  %

  	
  2.6

  	
  %

  	
  3.0

  	
  %

  
	
  Other

  	
   

  	
  12.8

  	
  %

  	
  11.8

  	
  %

  	
  12.0

  	
  %

  	
  8.9

  	
  %

  	
  9.5

  	
  %

  	
  10.0

  	
  %

  	
  7.9

  	
  %

  	
  7.9

  	
  %

  	
  8.0

  	
  %

  	
  6.9

  	
  %

  	
  7.6

  	
  %

  
	
  Miscellaneous
  (H13)

  	
   

  	
  1.9

  	
  %

  	
  1.9

  	
  %

  	
  1.8

  	
  %

  	
  1.9

  	
  %

  	
  1.4

  	
  %

  	
  1.2

  	
  %

  	
  2.9

  	
  %

  	
  8.2

  	
  %

  	
  10.3

  	
  %

  	
  18.0

  	
  %

  	
  11.8

  	
  %

  
	
  Total

  	
   

  	
  100.0

  	
  %

  	
  100.0

  	
  %

  	
  100.0

  	
  %

  	
  100.0

  	
  %

  	
  100.0

  	
  %

  	
  100.0

  	
  %

  	
  100.0

  	
  %

  	
  100.0

  	
  %

  	
  100.0

  	
  %

  	
  100.0

  	
  %

  	
  100.0

  	
  %

  

 

8.2

 

Table II-3(a)

DRMS National Scrap Sales

Gross Proceeds by SCL Group

FY 1994 - 2003

Proceeds ($000s)

 

	
  SCL
  Group

  	
   

  	
  1994

  	
   

  	
  1995

  	
   

  	
  1996

  	
   

  	
  1997

  	
   

  	
  1998

  	
   

  	
  1999

  	
   

  	
  2000

  	
   

  	
  2001

  	
   

  	
  2002

  	
   

  	
  2003

  	
   

  	
  Average

  FY 2001-03

  	
   

  
	
  Aluminium

  	
   

  	
  $

  	
  11,650

  	
   

  	
  $

  	
  15,558

  	
   

  	
  $

  	
  11,744

  	
   

  	
  $

  	
  13,302

  	
   

  	
  $

  	
  10,519

  	
   

  	
  $

  	
  8,726

  	
   

  	
  $

  	
  5,832

  	
   

  	
  $

  	
  3,326

  	
   

  	
  $

  	
  3,048

  	
   

  	
  $

  	
  2,414

  	
   

  	
  $

  	
  2,930

  	
   

  
	
  Brass and Copper

  	
   

  	
  $

  	
  16,625

  	
   

  	
  $

  	
  16,645

  	
   

  	
  $

  	
  14,395

  	
   

  	
  $

  	
  10,400

  	
   

  	
  $

  	
  7,526

  	
   

  	
  $

  	
  4,327

  	
   

  	
  $

  	
  4,908

  	
   

  	
  $

  	
  2,925

  	
   

  	
  $

  	
  2,820

  	
   

  	
  $

  	
  2,841

  	
   

  	
  $

  	
  2,862

  	
   

  
	
  Steel and Iron

  	
   

  	
  $

  	
  17,403

  	
   

  	
  $

  	
  18,036

  	
   

  	
  $

  	
  20,261

  	
   

  	
  $

  	
  20,485

  	
   

  	
  $

  	
  14,279

  	
   

  	
  $

  	
  8,361

  	
   

  	
  $

  	
  6,155

  	
   

  	
  $

  	
  3,958

  	
   

  	
  $

  	
  2,697

  	
   

  	
  $

  	
  3,254

  	
   

  	
  $

  	
  3,303

  	
   

  
	
  High Temp Alloys

  	
   

  	
  $

  	
  3,667

  	
   

  	
  $

  	
  4,180

  	
   

  	
  $

  	
  4,111

  	
   

  	
  $

  	
  4,992

  	
   

  	
  $

  	
  4,508

  	
   

  	
  $

  	
  1,931

  	
   

  	
  $

  	
  3,909

  	
   

  	
  $

  	
  2,413

  	
   

  	
  $

  	
  2,302

  	
   

  	
  $

  	
  3,849

  	
   

  	
  $

  	
  2,855

  	
   

  
	
  Stainless Steel

  	
   

  	
  $

  	
  1,973

  	
   

  	
  $

  	
  2,146

  	
   

  	
  $

  	
  1,636

  	
   

  	
  $

  	
  967

  	
   

  	
  $

  	
  969

  	
   

  	
  $

  	
  440

  	
   

  	
  $

  	
  946

  	
   

  	
  $

  	
  408

  	
   

  	
  $

  	
  191

  	
   

  	
  $

  	
  299

  	
   

  	
  $

  	
  299

  	
   

  
	
  Paper

  	
   

  	
  $

  	
  3,691

  	
   

  	
  $

  	
  10,281

  	
   

  	
  $

  	
  4,290

  	
   

  	
  $

  	
  2,923

  	
   

  	
  $

  	
  3,049

  	
   

  	
  $

  	
  1,684

  	
   

  	
  $

  	
  2,425

  	
   

  	
  $

  	
  784

  	
   

  	
  $

  	
  419

  	
   

  	
  $

  	
  316

  	
   

  	
  $

  	
  506

  	
   

  
	
  Other (Metallic)

  	
   

  	
  $

  	
  6,702

  	
   

  	
  $

  	
  11,805

  	
   

  	
  $

  	
  7,676

  	
   

  	
  $

  	
  7,345

  	
   

  	
  $

  	
  5,958

  	
   

  	
  $

  	
  3,610

  	
   

  	
  $

  	
  1,675

  	
   

  	
  $

  	
  1,008

  	
   

  	
  $

  	
  824

  	
   

  	
  $

  	
  751

  	
   

  	
  $

  	
  861

  	
   

  
	
  Other

  	
   

  	
  $

  	
  8,763

  	
   

  	
  $

  	
  17,227

  	
   

  	
  $

  	
  54,488

  	
   

  	
  $

  	
  1,360

  	
   

  	
  $

  	
  1,455

  	
   

  	
  $

  	
  746

  	
   

  	
  $

  	
  773

  	
   

  	
  $

  	
  435

  	
   

  	
  $

  	
  235

  	
   

  	
  $

  	
  173

  	
   

  	
  $

  	
  281

  	
   

  
	
  Miscellaneous (H13)

  	
   

  	
  $

  	
  1,368

  	
   

  	
  $

  	
  2,105

  	
   

  	
  $

  	
  4,617

  	
   

  	
  $

  	
  4,330

  	
   

  	
  $

  	
  2,730

  	
   

  	
  $

  	
  1,444

  	
   

  	
  $

  	
  1,705

  	
   

  	
  $

  	
  1,131

  	
   

  	
  $

  	
  1,804

  	
   

  	
  $

  	
  1,986

  	
   

  	
  $

  	
  1,640

  	
   

  
	
  Total

  	
   

  	
  $

  	
  71,842

  	
   

  	
  $

  	
  97,982

  	
   

  	
  $

  	
  74,219

  	
   

  	
  $

  	
  66,084

  	
   

  	
  $

  	
  50,995

  	
   

  	
  $

  	
  29,269

  	
   

  	
  $

  	
  28,327

  	
   

  	
  $

  	
  16,388

  	
   

  	
  $

  	
  14,341

  	
   

  	
  $

  	
  15,883

  	
   

  	
  $

  	
  15,537

  	
   

  

 

Table II-3(b)

DRMS National Scrap Sales

Percentage Gross Proceeds by SCL Group

FY 1994 - 2003

 

	
  SCL
  Group

  	
   

  	
  1994

  	
   

  	
  1995

  	
   

  	
  1996

  	
   

  	
  1997

  	
   

  	
  1998

  	
   

  	
  1999

  	
   

  	
  2000

  	
   

  	
  2001

  	
   

  	
  2002

  	
   

  	
  2003

  	
   

  	
  Average

  FY 2001-03

  	
   

  
	
  Aluminium

  	
   

  	
  16.2

  	
  %

  	
  15.9

  	
  %

  	
  15.8

  	
  %

  	
  20.1

  	
  %

  	
  20.6

  	
  %

  	
  29.8

  	
  %

  	
  20.6

  	
  %

  	
  20.3

  	
  %

  	
  21.3

  	
  %

  	
  15.2

  	
  %

  	
  18.9

  	
  %

  
	
  Brass and Copper

  	
   

  	
  23.1

  	
  %

  	
  17.0

  	
  %

  	
  19.4

  	
  %

  	
  15.7

  	
  %

  	
  14.8

  	
  %

  	
  14.8

  	
  %

  	
  17.3

  	
  %

  	
  17.8

  	
  %

  	
  19.7

  	
  %

  	
  17.9

  	
  %

  	
  18.4

  	
  %

  
	
  Steel and Iron

  	
   

  	
  24.2

  	
  %

  	
  18.4

  	
  %

  	
  27.3

  	
  %

  	
  31.0

  	
  %

  	
  28.0

  	
  %

  	
  21.7

  	
  %

  	
  21.7

  	
  %

  	
  24.2

  	
  %

  	
  18.8

  	
  %

  	
  20.5

  	
  %

  	
  21.3

  	
  %

  
	
  High Temp Alloys

  	
   

  	
  5.1

  	
  %

  	
  4.3

  	
  %

  	
  5.5

  	
  %

  	
  7.8

  	
  %

  	
  8.8

  	
  %

  	
  6.6

  	
  %

  	
  13.8

  	
  %

  	
  14.7

  	
  %

  	
  16.1

  	
  %

  	
  24.2

  	
  %

  	
  18.4

  	
  %

  
	
  Stainless Steel

  	
   

  	
  2.7

  	
  %

  	
  2.2

  	
  %

  	
  2.2

  	
  %

  	
  1.5

  	
  %

  	
  1.9

  	
  %

  	
  1.5

  	
  %

  	
  3.3

  	
  %

  	
  2.5

  	
  %

  	
  1.3

  	
  %

  	
  1.9

  	
  %

  	
  1.9

  	
  %

  
	
  Paper

  	
   

  	
  5.1

  	
  %

  	
  10.5

  	
  %

  	
  5.8

  	
  %

  	
  4.4

  	
  %

  	
  6.0

  	
  %

  	
  5.8

  	
  %

  	
  8.6

  	
  %

  	
  4.8

  	
  %

  	
  2.9

  	
  %

  	
  2.0

  	
  %

  	
  3.3

  	
  %

  
	
  Other (Metallic)

  	
   

  	
  9.3

  	
  %

  	
  12.0

  	
  %

  	
  10.3

  	
  %

  	
  11.1

  	
  %

  	
  11.7

  	
  %

  	
  12.3

  	
  %

  	
  5.9

  	
  %

  	
  6.2

  	
  %

  	
  5.7

  	
  %

  	
  4.7

  	
  %

  	
  5.5

  	
  %

  
	
  Other

  	
   

  	
  12.2

  	
  %

  	
  17.6

  	
  %

  	
  7.4

  	
  %

  	
  2.1

  	
  %

  	
  2.9

  	
  %

  	
  2.5

  	
  %

  	
  2.7

  	
  %

  	
  2.7

  	
  %

  	
  1.6

  	
  %

  	
  1.1

  	
  %

  	
  1.8

  	
  %

  
	
  Miscellaneous (H13)

  	
   

  	
  1.9

  	
  %

  	
  2.1

  	
  %

  	
  6.2

  	
  %

  	
  6.6

  	
  %

  	
  5.4

  	
  %

  	
  4.9

  	
  %

  	
  8.0

  	
  %

  	
  6.9

  	
  %

  	
  12.8

  	
  %

  	
  12.5

  	
  %

  	
  10.6

  	
  %

  
	
  Total

  	
   

  	
  100.0

  	
  %

  	
  100.0

  	
  %

  	
  100.0

  	
  %

  	
  100.0

  	
  %

  	
  100.0

  	
  %

  	
  100.0

  	
  %

  	
  100.0

  	
  %

  	
  100.00

  	
  %

  	
  100.0

  	
  %

  	
  100.0

  	
  %

  	
  100.0

  	
  %

  

 

 

 

8.3

 

Table II-4

DRMS National Scrap Sales

Proceeds per Pound by SCL Group

FY 1994 - 2003

 

(Gross Proceeds per Pound)

 

	
  SCL
  Group

  	
   

  	
  1994

  	
   

  	
  1995

  	
   

  	
  1996

  	
   

  	
  1997

  	
   

  	
  1998

  	
   

  	
  1999

  	
   

  	
  2000

  	
   

  	
  2001

  	
   

  	
  2002

  	
   

  	
  2003

  	
   

  	
  Average

  FY 2001-03

  	
   

  
	
  Aluminium

  	
   

  	
  $

  	
  0.23

  	
   

  	
  $

  	
  0.36

  	
   

  	
  $

  	
  0.34

  	
   

  	
  $

  	
  0.35

  	
   

  	
  $

  	
  0.33

  	
   

  	
  $

  	
  0.26

  	
   

  	
  $

  	
  0.28

  	
   

  	
  $

  	
  0.22

  	
   

  	
  $

  	
  0.20

  	
   

  	
  $

  	
  0.22

  	
   

  	
  $

  	
  0.22

  	
   

  
	
  Brass and Copper

  	
   

  	
  $

  	
  0.42

  	
   

  	
  $

  	
  0.62

  	
   

  	
  $

  	
  0.61

  	
   

  	
  $

  	
  0.55

  	
   

  	
  $

  	
  0.41

  	
   

  	
  $

  	
  0.35

  	
   

  	
  $

  	
  0.41

  	
   

  	
  $

  	
  0.37

  	
   

  	
  $

  	
  0.35

  	
   

  	
  $

  	
  0.40

  	
   

  	
  $

  	
  0.37

  	
   

  
	
  Steel and Iron

  	
   

  	
  $

  	
  0.03

  	
   

  	
  $

  	
  0.04

  	
   

  	
  $

  	
  0.05

  	
   

  	
  $

  	
  0.05

  	
   

  	
  $

  	
  0.04

  	
   

  	
  $

  	
  0.02

  	
   

  	
  $

  	
  0.02

  	
   

  	
  $

  	
  0.02

  	
   

  	
  $

  	
  0.02

  	
   

  	
  $

  	
  0.02

  	
   

  	
  $

  	
  0.02

  	
   

  
	
  High Temp Alloys

  	
   

  	
  $

  	
  1.25

  	
   

  	
  $

  	
  2.12

  	
   

  	
  $

  	
  2.18

  	
   

  	
  $

  	
  2.48

  	
   

  	
  $

  	
  1.74

  	
   

  	
  $

  	
  1.12

  	
   

  	
  $

  	
  1.62

  	
   

  	
  $

  	
  1.30

  	
   

  	
  $

  	
  1.63

  	
   

  	
  $

  	
  1.73

  	
   

  	
  $

  	
  1.55

  	
   

  
	
  Stainless Steel

  	
   

  	
  $

  	
  0.17

  	
   

  	
  $

  	
  0.36

  	
   

  	
  $

  	
  0.33

  	
   

  	
  $

  	
  0.29

  	
   

  	
  $

  	
  0.24

  	
   

  	
  $

  	
  0.17

  	
   

  	
  $

  	
  0.32

  	
   

  	
  $

  	
  0.22

  	
   

  	
  $

  	
  0.14

  	
   

  	
  $

  	
  0.26

  	
   

  	
  $

  	
  0.21

  	
   

  
	
  Paper

  	
   

  	
  $

  	
  0.02

  	
   

  	
  $

  	
  0.07

  	
   

  	
  $

  	
  0.03

  	
   

  	
  $

  	
  0.03

  	
   

  	
  $

  	
  0.03

  	
   

  	
  $

  	
  0.02

  	
   

  	
  $

  	
  0.04

  	
   

  	
  $

  	
  0.02

  	
   

  	
  $

  	
  0.01

  	
   

  	
  $

  	
  0.02

  	
   

  	
  $

  	
  0.02

  	
   

  
	
  Other (Metallic)

  	
   

  	
  $

  	
  0.11

  	
   

  	
  $

  	
  0.22

  	
   

  	
  $

  	
  0.19

  	
   

  	
  $

  	
  0.18

  	
   

  	
  $

  	
  0.16

  	
   

  	
  $

  	
  0.13

  	
   

  	
  $

  	
  0.11

  	
   

  	
  $

  	
  0.10

  	
   

  	
  $

  	
  0.09

  	
   

  	
  $

  	
  0.12

  	
   

  	
  $

  	
  0.10

  	
   

  
	
  Other

  	
   

  	
  $

  	
  0.07

  	
   

  	
  $

  	
  0.17

  	
   

  	
  $

  	
  0.06

  	
   

  	
  $

  	
  0.02

  	
   

  	
  $

  	
  0.03

  	
   

  	
  $

  	
  0.01

  	
   

  	
  $

  	
  0.02

  	
   

  	
  $

  	
  0.02

  	
   

  	
  $

  	
  0.01

  	
   

  	
  $

  	
  0.01

  	
   

  	
  $

  	
  0.01

  	
   

  
	
  Miscellaneous (H13)

  	
   

  	
  $

  	
  0.07

  	
   

  	
  $

  	
  0.13

  	
   

  	
  $

  	
  0.34

  	
   

  	
  $

  	
  0.33

  	
   

  	
  $

  	
  0.33

  	
   

  	
  $

  	
  0.23

  	
   

  	
  $

  	
  0.13

  	
   

  	
  $

  	
  0.04

  	
   

  	
  $

  	
  0.06

  	
   

  	
  $

  	
  0.04

  	
   

  	
  $

  	
  0.05

  	
   

  
	
  Average

  	
   

  	
  $

  	
  0.07

  	
   

  	
  $

  	
  0.11

  	
   

  	
  $

  	
  0.10

  	
   

  	
  $

  	
  0.10

  	
   

  	
  $

  	
  0.09

  	
   

  	
  $

  	
  0.06

  	
   

  	
  $

  	
  0.06

  	
   

  	
  $

  	
  0.05

  	
   

  	
  $

  	
  0.05

  	
   

  	
  $

  	
  0.06

  	
   

  	
  $

  	
  0.0554

  	
   

  

 

 

8.4

 

Table II-5(a)

DRMS National Scrap Sales

Weight and Percentage Weight by DEMIL Group

FY 1994 - 2003

 

Weight (Thousands of Pounds)

 

	
  DEMIL
  Group

  	
   

  	
  1994

  	
   

  	
  1995

  	
   

  	
  1996

  	
   

  	
  1997

  	
   

  	
  1998

  	
   

  	
  1999

  	
   

  	
  2000

  	
   

  	
  2001

  	
   

  	
  2002

  	
   

  	
  2003

  	
   

  	
  Average

  FY 2001-03

  	
   

  
	
  DEMIL A

  	
   

  	
  293,748

  	
   

  	
  249,378

  	
   

  	
  228.349

  	
   

  	
  179,280

  	
   

  	
  151,122

  	
   

  	
  143,204

  	
   

  	
  140,568

  	
   

  	
  66,713

  	
   

  	
  52,633

  	
   

  	
  27,480

  	
   

  	
  48,942

  	
   

  
	
  All DEMIL except A

  	
   

  	
  752,835

  	
   

  	
  621,795

  	
   

  	
  520,866

  	
   

  	
  500,843

  	
   

  	
  443,102

  	
   

  	
  373,130

  	
   

  	
  302,667

  	
   

  	
  247,319

  	
   

  	
  232,997

  	
   

  	
  222,007

  	
   

  	
  234,107

  	
   

  
	
  Total

  	
   

  	
  1,046,583

  	
   

  	
  871,173

  	
   

  	
  749,215

  	
   

  	
  680,102

  	
   

  	
  594,224

  	
   

  	
  516,334

  	
   

  	
  443,235

  	
   

  	
  314,031

  	
   

  	
  285,630

  	
   

  	
  249,487

  	
   

  	
  283,049

  	
   

  

 

% Weight

 

	
  DEMIL
  Group

  	
   

  	
  1994

  	
   

  	
  1995

  	
   

  	
  1996

  	
   

  	
  1997

  	
   

  	
  1998

  	
   

  	
  1999

  	
   

  	
  2000

  	
   

  	
  2001

  	
   

  	
  2002

  	
   

  	
  2003

  	
   

  	
  Average

  FY 2001-03

  	
   

  
	
  DEMIL A

  	
   

  	
  28.1

  	
  %

  	
  28.6

  	
  %

  	
  30.5

  	
  %

  	
  26.4

  	
  %

  	
  25.4

  	
  %

  	
  27.7

  	
  %

  	
  31.7

  	
  %

  	
  21.2

  	
  %

  	
  18.4

  	
  %

  	
  11.0

  	
  %

  	
  17.3

  	
  %

  
	
  All DEMIL except A

  	
   

  	
  71.9

  	
  %

  	
  71.4

  	
  %

  	
  69.5

  	
  %

  	
  73.6

  	
  %

  	
  74.6

  	
  %

  	
  72.3

  	
  %

  	
  68.3

  	
  %

  	
  78.8

  	
  %

  	
  81.6

  	
  %

  	
  89.0

  	
  %

  	
  82.7

  	
  %

  
	
  Total

  	
   

  	
  100.0

  	
  %

  	
  100.0

  	
  %

  	
  100.00

  	
  %

  	
  100.00

  	
  %

  	
  100.00

  	
  %

  	
  100.00

  	
  %

  	
  100.00

  	
  %

  	
  100.00

  	
  %

  	
  100.00

  	
  %

  	
  100.00

  	
  %

  	
  100.00

  	
  %

  

 

Table II-5(b)

DRMS National Scrap Sales

Gross Proceeds and Percentage of Gross Proceeds by
DEMIL Group

FY 1994 - 2003

 

Gross Proceeds ($000s)

 

	
  DEMIL
  Group

  	
   

  	
  1994

  	
   

  	
  1995

  	
   

  	
  1996

  	
   

  	
  1997

  	
   

  	
  1998

  	
   

  	
  1999

  	
   

  	
  2000

  	
   

  	
  2001

  	
   

  	
  2002

  	
   

  	
  2003

  	
   

  	
  Average

  FY 2001-03

  	
   

  
	
  DEMIL A

  	
   

  	
  $

  	
  16,267

  	
   

  	
  $

  	
  27,508

  	
   

  	
  $

  	
  14,385

  	
   

  	
  $

  	
  8,423

  	
   

  	
  $

  	
  8,495

  	
   

  	
  $

  	
  6,325

  	
   

  	
  $

  	
  5,567

  	
   

  	
  $

  	
  2,263

  	
   

  	
  $

  	
  1,138

  	
   

  	
  $

  	
  893.851

  	
   

  	
  $1,431

  	
   

  
	
  All DEMIL except A

  	
   

  	
  $

  	
  55,575

  	
   

  	
  $

  	
  70,474

  	
   

  	
  $

  	
  59,834

  	
   

  	
  $

  	
  57,661

  	
   

  	
  $

  	
  42,500

  	
   

  	
  $

  	
  22,944

  	
   

  	
  $

  	
  22,760

  	
   

  	
  $

  	
  14,125

  	
   

  	
  $

  	
  13,203

  	
   

  	
  $

  	
  14,989

  	
   

  	
  $14,106

  	
   

  
	
  Total

  	
   

  	
  $

  	
  71,842

  	
   

  	
  $

  	
  97,982

  	
   

  	
  $

  	
  74,219

  	
   

  	
  $

  	
  66,084

  	
   

  	
  $

  	
  50,995

  	
   

  	
  $

  	
  29,269

  	
   

  	
  $

  	
  28,327

  	
   

  	
  $

  	
  16,388

  	
   

  	
  $

  	
  14,341

  	
   

  	
  $

  	
  15,883

  	
   

  	
  $15,537

  	
   

  

 

% Gross Proceeds

 

	
  DEMIL
  Group

  	
   

  	
  1994

  	
   

  	
  1995

  	
   

  	
  1996

  	
   

  	
  1997

  	
   

  	
  1998

  	
   

  	
  1999

  	
   

  	
  2000

  	
   

  	
  2001

  	
   

  	
  2002

  	
   

  	
  2003

  	
   

  	
  Average

  FY 2001-03

  	
   

  
	
  DEMIL A

  	
   

  	
  22.6

  	
  %

  	
  28.1

  	
  %

  	
  19.4

  	
  %

  	
  12.7

  	
  %

  	
  16.7

  	
  %

  	
  21.6

  	
  %

  	
  19.7

  	
  %

  	
  13.8

  	
  %

  	
  7.9

  	
  %

  	
  5.6

  	
  %

  	
  9.2

  	
  %

  
	
  All DEMIL except A

  	
   

  	
  77.4

  	
  %

  	
  71.9

  	
  %

  	
  80.6

  	
  %

  	
  87.3

  	
  %

  	
  83.3

  	
  %

  	
  78.4

  	
  %

  	
  80.3

  	
  %

  	
  86.2

  	
  %

  	
  92.1

  	
  %

  	
  94.4

  	
  %

  	
  90.8

  	
  %

  
	
  Total

  	
   

  	
  100.0

  	
  %

  	
  100.0

  	
  %

  	
  100.0

  	
  %

  	
  100.0

  	
  %

  	
  100.0

  	
  %

  	
  100.0

  	
  %

  	
  100.0

  	
  %

  	
  100.0

  	
  %

  	
  100.0

  	
  %

  	
  100.0

  	
  %

  	
  100.0

  	
  %

  

 

Table II-5(c)

DRMS National Scrap Sales

Proceeds per Pounds by DEMIL Group

FY 1994 - 2003

 

Gross Proceeds per Pound

 

	
  DEMIL
  Group

  	
   

  	
  1994

  	
   

  	
  1995

  	
   

  	
  1996

  	
   

  	
  1997

  	
   

  	
  1998

  	
   

  	
  1999

  	
   

  	
  2000

  	
   

  	
  2001

  	
   

  	
  2002

  	
   

  	
  2003

  	
   

  	
  Average

  FY 2001-03

  	
   

  
	
  DEMIL A

  	
   

  	
  $

  	
  0.06

  	
   

  	
  $

  	
  0.11

  	
   

  	
  $

  	
  0.06

  	
   

  	
  $

  	
  0.05

  	
   

  	
  $

  	
  0.06

  	
   

  	
  $

  	
  0.04

  	
   

  	
  $

  	
  0.04

  	
   

  	
  $

  	
  0.03

  	
   

  	
  $

  	
  0.02

  	
   

  	
  $

  	
  0.03

  	
   

  	
  $

  	
  0.03

  	
   

  
	
  All DEMIL except A

  	
   

  	
  $

  	
  0.07

  	
   

  	
  $

  	
  0.11

  	
   

  	
  $

  	
  0.11

  	
   

  	
  $

  	
  0.12

  	
   

  	
  $

  	
  0.10

  	
   

  	
  $

  	
  0.06

  	
   

  	
  $

  	
  0.08

  	
   

  	
  $

  	
  0.06

  	
   

  	
  $

  	
  0.0?

  	
   

  	
  $

  	
  0.07

  	
   

  	
  $

  	
  0.06

  	
   

  
	
  Total

  	
   

  	
  $

  	
  0.07

  	
   

  	
  $

  	
  0.11

  	
   

  	
  $

  	
  0.10

  	
   

  	
  $

  	
  0.10

  	
   

  	
  $

  	
  0.09

  	
   

  	
  $

  	
  0.06

  	
   

  	
  $

  	
  0.06

  	
   

  	
  $

  	
  0.05

  	
   

  	
  $

  	
  0.05

  	
   

  	
  $

  	
  0.06

  	
   

  	
  $

  	
  0.06

  	
   

  

 

 

8.5

 

the Purchaser were to pay
the Contractor or an Affiliated Party for such processing, that would be an
Affiliate Transaction and generally prohibited as such. However, the Contractor
may request DRMS approval for a Permitted Affiliate Transaction at any time
after award. (See Article 9.) Such a request should fully specify the
details of the proposed transaction, the opportunity presented to enhance Net
Proceeds, any inherent risks to the Government in terms of pricing,
accountability for Property or otherwise, and the controls to be put in place
to offset such risks.

 

The costs of any transaction with an “Affiliated Party” (as such term
is defined in Art. 23) will not be considered Direct Costs unless such
transaction is a Permitted Affiliate Transaction (see Art. 9).

 

Direct Costs are directly payable by the Purchaser out of Gross
Proceeds and deductible from Gross Proceeds when calculating distributions
payable to DRMS and the Contractor. (See Sections K, L and M below; see also
Art. 9 and Art. 16.)

 

J.             SELLER
INDIRECT COSTS

 

The nature of DRMS’s business and the nature of the Property itself are
such that, absent special provisions in this IFB, there would be certain
business risks inherent in this sale structure that would be very difficult or
impossible for prospective bidders to accept. As set forth below, these risks
principally relate to the logistics costs of removing Property that the
Purchaser might be obligated to pick up from “off-site” locations. This IFB
accordingly provides that certain of the Purchaser’s costs are to be deemed
“Seller Indirect Costs” and deducted in their entirety from Distributions
otherwise payable to DRMS (rather than shared between DRMS and the Contractor
as Direct Costs). This mechanism largely leaves the risks associated with these
issues with DRMS (where they are today) and accordingly should considerably
ameliorate these concerns for prospective offerors.

 

The logistics business risk that is addressed through the Seller
Indirect Costs provisions is as follows: DRMS presently expects that Delivery
of the majority of the Property that is referred for sale to the Purchaser will
be at Scrap Yards and at generator locations accumulated in roll-offs, hoppers
or other Containers. Subject to space constraints that are specific to each
Scrap Yard and that may change over time, all Scrap Yards will be available to
the Purchaser for use subject to Host Installation constraints.  
Moreover, the Purchaser will be able to sell and deliver Property to buyers
directly at the Scrap Yard without transporting the Property any further. (If
the Purchaser so elects, of course, it may instead move Property to another
location for storage, consolidation, processing, re-sale or for any other
purpose that does not contravene the express provisions of this IFB.)

 

Thus, DRMS generally expects that the Purchaser’s field activities will
principally be located at Scrap Yards except to the extent that, in exercising
its business judgment, the Purchaser decides to transport the Property to other
locations before re-sale. Nevertheless, there will often be circumstances in
which Delivery at a Scrap Yard is not possible. An illustrative example is the
sale of heavy material that does not require demilitarization and that would be

 

 

9

 

very expensive to move to
the Scrap Yard from the generator’s premises. Ideally the Delivery of the
material would be “in place” without moving it at all, and its re-sale would
also be at the generator’s site. This may not be possible in all situations,
however, especially in view of national security requirements and
understandable limitations at particular military facilities. The Purchaser
would then be required to take Delivery of the Property “in place” and to
transport it (either to its Purchaser’s Dedicated Storage at a nearby Scrap
Yard or to another Purchaser facility) before re-selling it.

 

DRMS recognizes that the prospect of the Purchaser being obligated to
incur inestimable (at the time of submitting a bid) and possibly very harmful
transport costs for material that, for any reason, cannot be referred for sale
and processed for re-sale at a Scrap Yard (or referred for sale and processed
for re-sale “in place”) presents prospective bidders with a significant
business risk. DRMS’s market research revealed that the magnitude of this risk
is such that many potential bidders would simply not bid at all if subject to
this risk, while others would deeply discount their Bid Prices to account for
it. In either event, this risk would threaten the viability of a transaction
that otherwise is viewed as extremely mutually beneficial.

 

DRMS accordingly has significantly reduced this risk from the
transaction through the mechanism of Seller Indirect Costs. Thus, one example
of Seller Indirect Costs, described very generally, is comprised of the minimum
reasonable costs incurred by the Purchaser for loading and removing Property
from Restricted Access Facilities, and for removing Property from Special
Situation Locations when On-Site Processing is not permitted by DRMS. The
Purchaser deducts the amount of Seller Indirect Costs incurred in a particular
month, if any, from the Distribution Payment to DRMS for the month. (See Art. 9
and Art. 16.)

 

DRMS intends that the Seller Indirect Costs mechanism should moderate
much of the risk posed by “in place” or “off-site” referrals. Nevertheless,
prospective offerors should be aware that DRMS increasingly receives items from
generators at locations that are not full service Scrap Yards and that have
only minimal part time staffs and limited operations. The Purchaser’s operating
costs at these Special Situation Locations, termed “Receive In Place Locations”
(“RIPLs,” of which there are 43 locations around CONUS), may be relatively
higher than at Scrap Yards. Because RIPLs generally permit On-Site Processing,
the Purchaser’s costs will be deemed Direct Costs. Prospective offerors should
weigh this factor when formulating their bids.

 

In addition, there is one site, Puget Sound Naval Shipyard (“PSNS”),
where the Scrap operations are both substantial and specialized (the
dismantling of ships), and where the Seller Indirect Costs mechanism will not
apply. The Purchaser will be required to provide barges, railcars or other
Containers on site as set forth in Schedule IV.3.1.B(2), into which
employees of the shipyard or of demolition contractors will load the Scrap
material, and to remove such Containers as they fill. The costs of the Containers
and their removal will be Direct Costs, even though the material is delivered
on-site and On-Site Processing is not permitted. (See Art. 3.)

 

Moreover, DRMS presently utilizes approximately 300 Containers of
various sorts at locations other than PSNS. Some of these are owned and
provided by generators or DRMS, but

 

 

10

 

the majority are owned and
provided by term sale re-sale buyers. The SV Purchaser will generally be free
to determine where to utilize Containers other than at PSNS as a matter of
business judgment, and the costs thereof will be deemed Direct Costs. There may
be instances, however, in which DRMS will require the Purchaser to utilize one
or more Containers at particular locations in response to a request from a Host
Installation or for another reason. To the extent that DRMS does require the
Purchaser to utilize Containers such that the Purchaser is required to utilize
more than 300 other than at PSNS, the actual and reasonable cost of providing
the additional Containers will be deemed Seller Indirect Costs. (See Art. 3.)

 

Provisions
relating to Seller Indirect Costs are contained in Articles 3, 9 and 16.
Prospective offerors are encouraged to review them in detail. In addition,
prospective offerors should note that the prohibition on Affiliate Transactions
extends to Seller Indirect Costs as well as to Direct Costs. (See Art. 9.)

 

J.1          RESOURCE
RECOVERY AND RECYCLING PROGRAM (RRRP)

 

Certain Scrap material qualifies as Resource Recovery and Recycling
Program material (“RRRP Material”). This includes ferrous, non-ferrous, and
non-metallic materials. Those generators having a Qualified Recycling Program
(“QRP”) may elect to sell the RRRP Material themselves. When QRPs elect this
option, the material is not considered part of this sale contract and the
Purchaser has no right or claim to material sold directly by QRPs.

 

When the generator chooses to turn the RRRP Material into a DRMO
instead of selling it directly to re-sale buyers, the generator is entitled to
“reimbursement” from DRMS (but not from the Purchaser) in the amount of the
Gross Proceeds obtained from sale of the Scrap. When turned in to a DRMO, this
material is designated as “reimbursable” on the accompanying form, the “Disposal
Turn-In Document,” or “DTID.” DRMS desires that QRPs receive payment for RRRP
Material as soon as reasonably possible after turn-in. Thus, twice monthly or
on such other schedule as DRMS and the Purchaser agree, the Purchaser is
required to notify DRMS of each receipt of RRRP Material and of the pricing
received by the Purchaser and the Gross Proceeds obtained by the Purchaser for
the sale of such quantity of corresponding material. This will enable DRMS to
process a reimbursement to the generator as soon as is reasonably possible
after turn-in (See Article 6.).

 

DRMS will make all RRRP “reimbursement” payments to generators out of
DRMS funds. Neither the Contractor nor the Purchaser will make these payments,
and these payments will not affect the Purchaser’s calculations of Gross
Proceeds, Net Proceeds, or Distribution Payments.

 

K.            OPERATING
ACCOUNT AND DISTRIBUTIONS

 

The Contractor is generally required to cause the Purchaser to maintain
sufficient cash in the Operating Account to meet the Purchaser’s immediate cash
needs. (See Art. 13.) Moreover, at the end of each month, the Purchaser must
evaluate its ability to make cash Distributions.

 

 

11

 

Described generally, on the
one hand the Purchaser may not make any Distributions unless there is cash on
hand in excess of the sum of (i) any
amount owed to the Contractor for Working Capital Advances (the Working Capital
Advance Balance), (ii) its
liabilities under Generally Accepted Accounting Principles (“GAAP”), (iii) the “Estimated Contingent
Liability Reserve” (defined in Art. 15), and (iv) the
expected Direct Costs for the next month. On the other hand, again described
generally, the Purchaser must
distribute all of such excess.

 

The
net effect of these cash reserve requirements is that all Net Proceeds will be
distributed each month to DRMS and the Contractor except for increases in the
cash reserve due to increases in GAAP liabilities, contingent liabilities or
provisions for Direct Costs. If the required end-of-month cash reserve in the
Operating Account is reduced due to reductions in GAAP liabilities, contingent
liabilities or provisions for Direct Costs, the distributions that month will
exceed Net Proceeds for the month by the amount of that reduction in the
required cash balance.

 

Note that provisions relating to Seller Indirect Costs affect DRMS
Distributions. See Art. 16 for the complete provisions governing Distributions.

 

L.            WORKING
CAPITAL ADVANCES AND REPAYMENTS

 

Direct Costs and Seller Indirect Costs, as noted, are payable directly
out of the Purchaser’s Gross Proceeds as such are available, or out of the
Purchaser’s available cash reserves. From time to time, however, and especially
during the initial phase of the Performance Period, the Contractor must advance
funds to the Purchaser to pay for Direct Costs and Seller Indirect Costs. These
advances are termed “Working Capital Advances.” (See Art. 13.)

 

Working Capital Advances receive priority repayment directly out of
available Gross Proceeds in the following month or months until fully repaid,
but without interest thereon.

 

M.           DISTRIBUTIONS
AND PAYMENTS

 

The payment of Net Proceeds from the Purchaser to the Contractor is the
source of return on the Contractor’s investment of capital and expertise in
setting up the Purchaser as an operational entity. The payment of Net Proceeds
to DRMS,(11) and the Bid Price and the Quarterly Purchase Price, are the
sources of recovery enhancement for DRMS.

 

The Purchaser will pay to DRMS the Quarterly Purchase Price in
accordance with the provisions of Art. 5. The Contractor is responsible for
providing the Purchaser with the necessary funds for such purchases (“Purchase
Advances;” see Art. 14 ).

 

(11)         A portion of each payment due to DRMS
is paid directly to DRMS’s financial advisor, Kormendi\ Gardner Partners
(“KGP”); see Art. 16.

 

 

12

 

Note that the Quarterly Purchase Price is not a
Direct Cost, and as such is borne solely by the Contractor and not by DRMS.

 

The Purchaser must pay to DRMS eighty percent (80%)(12) of all Net
Proceeds (less any required increase in the cash reserve). The Purchaser must
pay to the Contractor twenty percent (20%) of all Net Proceeds (less any such
increase in the cash reserve). (See Art. 16.)

 

The Contractor thus pays the Quarterly Purchase Price and receives 20%
of all Net Proceeds. In this transactional structure, therefore, the
Contractor’s financial incentives are fully aligned with those of DRMS (and
thereby with those of the taxpayers) to maximize the Net Proceeds recovered
from the management and disposition of the Property.

 

N.            EARLY
CANCELLATION OPTION

 

Described generally, under this option either party may terminate the
contract after twelve months, upon 30 days written notice, if the mandatory
minimum SV Performance Ratio threshold is not exceeded. The first time the
option can be exercised is twelve (12) months after the initial Pickup Notice,
then quarterly thereafter. (See Art. 2.)

 

The cancellation option threshold is set by formula with reference to
the historical correlation of DRMS revenues with published price indices and is
specified with respect to the sale proceeds achievable through the sale at
Indexed Prices of specified material comparable to that sold by the Purchaser
during a particular period of time. (See Art. 2.)

 

O.            PURCHASE
ACCOUNT

 

The Purchaser must establish a Purchase Account for funding the
Quarterly Purchase Price. (See Art. 14.) Described generally, the Contractor
must transfer funds to the Purchase Account (“Purchase Advances”) in amounts
sufficient to enable the Purchaser to pay DRMS for Property when payment is
due. (See Art. 5 and Art. 14). Moreover, when cash is available for Distributions,
the Purchaser must transfer Contractor Distributions into the Purchase Account
as specified in Art. 14 to minimize the Purchase Advances required from the
Contractor.

 

(12)         See Art. 16 for the calculation of the
portion of DRMS’s 80% payment that is paid directly to KGP.

 

 

13

 

P.            PAYMENT
DEPOSIT

 

Upon award of the contract, the Contractor’s $20,000 Bid Deposit
becomes a Payment Deposit that will be held by DRMS until the conclusion of the
“Wind-Up” of the Purchaser (Art. 21) to secure DRMS claims against the
Purchaser and/or Contractor for Material Breaches of the contract, including
specifically late payment for Property. If the Purchaser fails to pay for
Property when payment is due, DRMS may apply the funds in the Payment Deposit
against the late payment and the Purchaser must “cure” this breach by
replenishing the Payment Deposit to its original level plus 20% of the
amount of the late payment. The amount of the Payment Deposit is estimated to be
approximately equal to the Quarterly Purchase Price for one average year’s flow
of Property. At the conclusion of the Wind-Up, DRMS will return the Payment
Deposit to the Contractor without interest and less the amount necessary
to cover its claims, if any, against the Contractor.

 

Q.            RETENTION
FUND AND FINANCIAL GUARANTEE BOND

 

To ensure that DRMS is protected against the adverse financial effects
of a Material Breach of the contract by either the Purchaser or the Contractor,
the Contractor will be required to capitalize a source of security for DRMS
claims. To this end, the Contractor will have the option of either providing a
Financial Guarantee Bond at the inception of the contract or instituting a
Retention Fund. (See Art. 15.)

 

The Financial Guarantee Bond must be in the amount of $1 million and
issued for at least a full year at a time. DRMS must approve the form of the
bond and the issuing surety.

 

As more completely described in Art. 15, if a Financial Guarantee Bond
cannot be obtained or if it is terminated without a replacement, the contract
provides for a Retention Fund as follows:

 

1)                                      Once all of the Contractor’s Working Capital
Advances have been repaid and the cumulative amount of the Contractor
Distribution Payments equals or exceeds the cumulative amount of Purchase
Advances — i.e., once cumulative cashflow to the Contractor is positive — 10%
of each month’s Contractor Distribution Payment (net of certain adjustments)
will be diverted into a Retention Fund held by DRMS.

 

2)            The maximum amount in the Retention Fund will be
$500,000.

 

3)                                      At the end of the contract, DRMS will return
the Retention Fund to the Contractor without interest and less the
amount necessary to cover its claims, if any, against the Contractor. The
Contractor may obtain the Retention Fund earlier only by providing a $1 million
Financial Guarantee Bond issued for the entirety of the remaining overall
contract period and that is otherwise acceptable to DRMS.

 

 

14

 

R.            ABSENCE OF
DRMS PRE-APPROVALS, AUTHORIZATIONS AND OPERATIONAL CONTROL

 

Subject to the conditions of this contract, full control of all aspects
of operations rests with the Purchaser and Contractor. There are no required pre-approvals or authorizations
from DRMS.(13)  The transaction is a sale transaction and title
to the Property passes to the Purchaser upon its “Delivery” to the
Purchaser.(14) (See Art. 1, Art. 3)

 

The Purchaser, however, will have to work effectively with designated
Government representatives with respect to logistics (see Section U below)
and trade security controls (see Section V below), and both the Purchaser
and the Contractor must interact with DRMS personnel with respect to
administration of contract terms and conditions, financial reporting,
compliance monitoring and, perhaps, dispute resolution (see Section II.S
below). Nonetheless, there are no
requirements for including DRMS in any way in the Purchaser’s operational
decision-making.

 

The contract does provide for the Purchaser to fulfill certain
requirements related to compliance review and financial auditing in certain
provisions including: accounting statements (see Art. 8), inventory control and
asset tracking procedures (see Art. 8), maintaining adequate insurance coverage
(see Art. 11), employee compensation (see Art. 7), returning classified items
(see Art. 7), dealing appropriately with hazardous materials (see Art. 7),
complying with federal, state and local laws and regulations (see Art. 7), etc.
The contract also contains certain provisions regarding the logistical
interface with DRMS and its generators in Art. 3. Such requirements
notwithstanding, as long as the Purchaser and
Contractor operate within the bounds of the contract, they will have full
operational control.

 

S.            COMPLIANCE
MONITORING AND DISPUTE RESOLUTION

 

While full operational control resides with the Purchaser and
Contractor, DRMS or its authorized representative will have the right under the
contract to monitor performance in three ways. First, the Purchaser will be
required to have audited financial statements and follow Generally Accepted
Accounting Principles. (See Art. 8.) Second, DRMS will have the right to
conduct (or contract for that service) Compliance Reviews of the Purchaser’s
general compliance with the terms of the contract. (See Art. 17.) Third, DRMS
may conduct audits of the Purchaser. (See Art. 8.)

 

DRMS will have the option of conducting Compliance Reviews on a
quarterly basis and the expectation should be that DRMS will exercise that
option. The focus of a Compliance Review will be less with financial flows,
which are the focus of the Purchaser’s financial audits, and more on observance
of contractual terms such as those concerned with Affiliate

 

(13)         An exception is Permitted Affiliate Transactions, which
require DRMS approval. See Article 9.

(14)         DRMS reserves the right, however, to re-purchase for the
full amount of the applicable Quarterly Purchase Price any material that DRMS
determines is critical to the mission of a military activity and that has not
already been re-sold by the Purchaser to a re-sale buyer. See Article 7.

 

 

15

 

Transactions, Direct Costs,
inventory control and asset tracking, revenue tracking, the Purchase Account,
cash reserves and the Estimated Contingent Liabilities Reserve (“ECLR”). In
addition, DRMS may elect to review compliance with environmental, security and
safety requirements. (See Art. 17.)

 

In the event that disputes arise relating to contract compliance, the
contract provides for a voluntary but binding dispute resolution mechanism.
Under this elective mechanism, a panel of three arbitrators -- one chosen by
the Contractor, one chosen by DRMS, and one jointly chosen by the Contractor
and DRMS -- will receive the arguments
from both sides and resolve the dispute by majority decision. It is anticipated
that this mechanism will minimize conflict and reduce the cost of resolving any
disagreements that arise. In addition, both Alternative Dispute Resolution and
litigation are avenues available as necessary to resolve disagreements. (See
Art. 20.)

 

T.            DELIVERY
POINTS

 

The following outline
presents certain background information relevant to logistics.

 

1.             Scrap Yards

 

a.                                       There are presently 63 DRMO Scrap Yards in
CONUS outside of the Control Group (see Attachment IV).

 

b.                                      DRMS is currently in the process of reducing
its infrastructure. Thus, it is possible that there will be a reduction in the
number of Scrap Yards over the Performance Period of the contract.

 

c.                                       The flow of Property in the Product Pool has
been somewhat concentrated in certain Scrap Yards. For example, Table II-7 on
the next page shows the sale of material in the Product Pool by Scrap Yard
for fiscal 2003.

 

2.             Generators and Turn-ins

 

a.                                       Every military and reserve activity is a
potential “generator” of surplus Scrap material. Because the number of active
generators is subject to change, the exact number cannot be known with
precision. While the vast majority of generators are military related, there
are some federal agencies that turn property in to DRMS as well.

 

b.                                      A “Line Item” is an object or group of
objects, all with the same SCL, turned in individually or together by a
generator, and either identified on a single Disposal Turn-In Document (“DTID,”
a Department of Defense form), or on “Scrap Tally-in Sheets.” A Scrap Line Item
will have a “quantity” expressed in weight (lbs.).

 

 

16

 

Table II-7

DRMS National Scrap Sales

Weight, Proceeds per Pound, and Gross Proceeds

Top 15 DRMOs, FY 2003

Ranked by Total Gross Proceeds

Weight (Pounds 000’s), Proceeds ($000’s)

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  DRMO
  Location

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Cumulative
  %

  of Proceeds

  	
   

  
	
  Rank

  	
   

  	
  PLR

  	
   

  	
  DRMO
  Name

  	
   

  	
  City

  	
   

  	
  State

  	
   

  	
  Weight

  	
   

  	
  Proceeds/Lb.

  	
   

  	
  Proceeds

  	
   

  	
  %
  of Proceeds

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1

  	
   

  	
  SZPA

  	
   

  	
  LEWIS

  	
   

  	
  Seattle

  	
   

  	
  WA

  	
   

  	
  38,012,844

  	
   

  	
  $

  	
  0.08

  	
   

  	
  $

  	
  3,009,277

  	
   

  	
  19.04

  	
  %

  	
  19.04

  	
  %

  
	
  2

  	
   

  	
  SWEA

  	
   

  	
  ANNISTON

  	
   

  	
  Anniston

  	
   

  	
  AL

  	
   

  	
  14,828,306

  	
   

  	
  $

  	
  0.15

  	
   

  	
  $

  	
  2,275,052

  	
   

  	
  14.39

  	
  %

  	
  33.43

  	
  %

  
	
  3

  	
   

  	
  SY5A

  	
   

  	
  TEXARKANA

  	
   

  	
  Hooks

  	
   

  	
  TX

  	
   

  	
  15,970,595

  	
   

  	
  $

  	
  0.11

  	
   

  	
  $

  	
  1,757,193

  	
   

  	
  11.12

  	
  %

  	
  44.55

  	
  %

  
	
  4

  	
   

  	
  SY5D

  	
   

  	
  TEXARKANA DEMIL CENTER

  	
   

  	
  Hooks

  	
   

  	
  TX

  	
   

  	
  1,173,680

  	
   

  	
  $

  	
  0.97

  	
   

  	
  $

  	
  1,138,814

  	
   

  	
  7.20

  	
  %

  	
  51.75

  	
  %

  
	
  5

  	
   

  	
  ST1J

  	
   

  	
  ST JULIENS

  	
   

  	
  Portsmouth

  	
   

  	
  VA

  	
   

  	
  8,115,858

  	
   

  	
  $

  	
  0.07

  	
   

  	
  $

  	
  592,470

  	
   

  	
  3.75

  	
  %

  	
  55.50

  	
  %

  
	
  6

  	
   

  	
  SVKC

  	
   

  	
  SCOTT

  	
   

  	
  Belleville

  	
   

  	
  IL

  	
   

  	
  10,346,127

  	
   

  	
  $

  	
  0.06

  	
   

  	
  $

  	
  578,564

  	
   

  	
  3.66

  	
  %

  	
  59.16

  	
  %

  
	
  7

  	
   

  	
  SXGA

  	
   

  	
  JACKSONVILLE

  	
   

  	
  Jacksonville

  	
   

  	
  FL

  	
   

  	
  2,692,851

  	
   

  	
  $

  	
  0.17

  	
   

  	
  $

  	
  457,173

  	
   

  	
  2.89

  	
  %

  	
  62.05

  	
  %

  
	
  8

  	
   

  	
  SY3D

  	
   

  	
  RIPL SILL

  	
   

  	
  Lawton

  	
   

  	
  OK

  	
   

  	
  3,363,576

  	
   

  	
  $

  	
  0.11

  	
   

  	
  $

  	
  372,588

  	
   

  	
  2.36

  	
  %

  	
  64.41

  	
  %

  
	
  9

  	
   

  	
  SVQA

  	
   

  	
  CRANE

  	
   

  	
  Crane

  	
   

  	
  IN

  	
   

  	
  8,439,148

  	
   

  	
  $

  	
  0.04

  	
   

  	
  $

  	
  359,194

  	
   

  	
  2.27

  	
  %

  	
  66.68

  	
  %

  
	
  10

  	
   

  	
  SZ7A

  	
   

  	
  HOOD

  	
   

  	
  Killeen

  	
   

  	
  TX

  	
   

  	
  7,870,405

  	
   

  	
  $

  	
  0.04

  	
   

  	
  $

  	
  334,444

  	
   

  	
  2.12

  	
  %

  	
  68.80

  	
  %

  
	
  11

  	
   

  	
  SY3A

  	
   

  	
  OKLAHOMA CITY

  	
   

  	
  Oklahoma City

  	
   

  	
  OK

  	
   

  	
  3,260,370

  	
   

  	
  $

  	
  0.10

  	
   

  	
  $

  	
  310,190

  	
   

  	
  1.96

  	
  %

  	
  70.76

  	
  %

  
	
  12

  	
   

  	
  SXGS

  	
   

  	
  CAPE CANAVERAL

  	
   

  	
  Coco Beach

  	
   

  	
  FL

  	
   

  	
  3,004,069

  	
   

  	
  $

  	
  0.10

  	
   

  	
  $

  	
  308,423

  	
   

  	
  1.95

  	
  %

  	
  72.71

  	
  %

  
	
  13

  	
   

  	
  SYBA

  	
   

  	
  HILL

  	
   

  	
  Ogden

  	
   

  	
  UT

  	
   

  	
  5,533,050

  	
   

  	
  $

  	
  0.05

  	
   

  	
  $

  	
  253,570

  	
   

  	
  1.60

  	
  %

  	
  74.32

  	
  %

  
	
  14

  	
   

  	
  SWMA

  	
   

  	
  BENNING

  	
   

  	
  Columbus

  	
   

  	
  GA

  	
   

  	
  3,072,379

  	
   

  	
  $

  	
  0.08

  	
   

  	
  $

  	
  252,747

  	
   

  	
  1.60

  	
  %

  	
  75.92

  	
  %

  
	
  15

  	
   

  	
  SZSA

  	
   

  	
  TUCSON

  	
   

  	
  Tucson

  	
   

  	
  AZ

  	
   

  	
  1,311,605

  	
   

  	
  $

  	
  0.18

  	
   

  	
  $

  	
  241,745

  	
   

  	
  1.53

  	
  %

  	
  77.45

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Top 15

  	
   

  	
   

  	
   

  	
  126,994,863

  	
   

  	
  $

  	
  0.10

  	
   

  	
  $

  	
  12,241,441

  	
   

  	
  77.45

  	
  %

  	
  77.45

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  All other DRMOs

  	
   

  	
   

  	
   

  	
  117,496,912

  	
   

  	
  $

  	
  0.03

  	
   

  	
  $

  	
  3,565,116

  	
   

  	
  22.55

  	
  %

  	
  100.00

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Total

  	
   

  	
   

  	
   

  	
  244,491,775

  	
   

  	
  $

  	
  0.06

  	
   

  	
  $

  	
  15,806,557

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

16

 

c.                                       All Scrap Yards are presently on military
bases. Any given Scrap Yard will service its base generators as well as all
other generators in its area. Scrap Yards are generally located so as to be
near significant amounts of turn-ins of material. Table II-8 lists the DRMOs
and FRAs pertinent to this sale.

 

3.             Property Flows

 

a.                                       Between approximately 5% and 15% of recent
DRMS Scrap Gross Revenues was from the sale of material with Demilitarization
as a Condition of Sale (“DCS”; see Section II.W).

 

b.                                      Recently approximately 50% of DCS material is
demilitarized by the buyer “in place” at generator sites. The other 50% is
removed to the buyers’ facilities for demilitarization.

 

c.                                       DRMS data sources indicate that, in FY 2003,
approximately 80% of all DRMS Scrap Gross Proceeds derived from the top 20
Scrap Yards.

 

See Art. 3 for more completely specified contractual provisions
relating to logistics. Attachment II.U, Summary of Logistics Provisions,
summarizes certain provisions set forth in Art. 3 that are pertinent to
logistics.

 

U.            LOGISTICS

 

Attachment II.U details many pertinent provisions of Art. 3 that govern
logistical arrangements for handling the flow of Property. Except as otherwise
provided, all of the Purchaser’s “logistics costs” — the costs incurred by the
Purchaser for moving, storing, packing and removing Property — are Direct
Costs.

 

Most Property is turned in to DRMS by generators at a Scrap Yard.
Subject to Host Installation and DRMS approval, all or part of the Scrap Yard
may be available, and subject to DRMS use requirements, DRMS will provide use
of the Scrap Yards without charge to the Purchaser. The Purchaser’s personnel
will have access to the Scrap Yard during periods that it is open, which is
usually five days per week. There is no fixed deadline for removing Property
from the Scrap Yard, but the Purchaser or re-sale buyer must accomplish removal
as necessary to accommodate the inflow of Property. The Purchaser may also be
required to remove Property at the direction of the SCO. If the SCO provides a
notice requiring property to be removed in less than 120 days, all associated
costs will be deemed Seller Indirect Costs. DRMS will neither pack nor unpack,
nor load or unload, Property for re-sale buyers.

 

Because DRMS itself is in fact only a tenant on a military base, DRMS
must follow the desires of the Base Commander when it comes to the appearance
of the facilities. Certain

 

 

17

 

Table II-8

DRMS National Scrap Sales*

National DRMOs and FRAs

FY 2003 DRMOs

 

	
  Count

  	
   

  	
  PLR**

  	
   

  	
  DRMO
  Name ***

  	
   

  	
  City

  	
   

  	
  State

  
	
  1

  	
   

  	
  ST1A

  	
   

  	
  Norfolk

  	
   

  	
  Norfolk

  	
   

  	
  VA

  
	
  2

  	
   

  	
  ST1J

  	
   

  	
  St.
  Julien’s Creek

  	
   

  	
  Portsmouth

  	
   

  	
  VA

  
	
  3

  	
   

  	
  ST4A

  	
   

  	
  Richmond

  	
   

  	
  Richmond

  	
   

  	
  VA

  
	
  4

  	
   

  	
  STHA

  	
   

  	
  Portsmouth

  	
   

  	
  Portsmouth

  	
   

  	
  NH

  
	
  5

  	
   

  	
  STHG

  	
   

  	
  Groton

  	
   

  	
  New
  London

  	
   

  	
  CT

  
	
  6

  	
   

  	
  STWA

  	
   

  	
  Meade

  	
   

  	
  Baltimore

  	
   

  	
  MD

  
	
  7

  	
   

  	
  STWC

  	
   

  	
  FRA
  Aberdeen

  	
   

  	
  Aberdeen

  	
   

  	
  MD

  
	
  8

  	
   

  	
  SVCA

  	
   

  	
  Lakehurst

  	
   

  	
  Lakehurst

  	
   

  	
  NJ

  
	
  9

  	
   

  	
  SVCT

  	
   

  	
  Tobyhanna

  	
   

  	
  Tobyhanna

  	
   

  	
  PA

  
	
  10

  	
   

  	
  SVEA

  	
   

  	
  Mechanicsburg

  	
   

  	
  Mechanicsburg

  	
   

  	
  PA

  
	
  11

  	
   

  	
  SVEC

  	
   

  	
  Letterkenny

  	
   

  	
  Chambersburg

  	
   

  	
  PA

  
	
  12

  	
   

  	
  SVED

  	
   

  	
  Drum

  	
   

  	
  Fort
  Drum

  	
   

  	
  NY

  
	
  13

  	
   

  	
  SVKA

  	
   

  	
  Rock
  Island

  	
   

  	
  Rock
  Island

  	
   

  	
  IL

  
	
  14

  	
   

  	
  SVKC

  	
   

  	
  Scott

  	
   

  	
  Belleville

  	
   

  	
  IL

  
	
  15

  	
   

  	
  SVKD

  	
   

  	
  Duluth

  	
   

  	
  Duluth

  	
   

  	
  MN

  
	
  16

  	
   

  	
  SVKG

  	
   

  	
  Great
  Lakes

  	
   

  	
  Great
  Lakes

  	
   

  	
  IL

  
	
  17

  	
   

  	
  SVKT

  	
   

  	
  Sparta

  	
   

  	
  Sparta

  	
   

  	
  WI

  
	
  18

  	
   

  	
  SVKW

  	
   

  	
  Whiteman

  	
   

  	
  Knob
  Noster

  	
   

  	
  MO

  
	
  19

  	
   

  	
  SVQA

  	
   

  	
  Crane

  	
   

  	
  Crane

  	
   

  	
  IN

  
	
  20

  	
   

  	
  SVQE

  	
   

  	
  Crane
  Demil Center

  	
   

  	
  Crane

  	
   

  	
  IN

  
	
  21

  	
   

  	
  SVXA

  	
   

  	
  Columbus,
  OH

  	
   

  	
  Columbus,
  OH

  	
   

  	
  OH

  
	
  22

  	
   

  	
  SVXP

  	
   

  	
  Wright-Patterson

  	
   

  	
  Dayton

  	
   

  	
  OH

  
	
  23

  	
   

  	
  SVXS

  	
   

  	
  Selfridge

  	
   

  	
  Mt.
  Clements

  	
   

  	
  MI

  
	
  24

  	
   

  	
  SWEA

  	
   

  	
  Anniston

  	
   

  	
  Anniston

  	
   

  	
  AL

  
	
  25

  	
   

  	
  SWEC

  	
   

  	
  Huntsville

  	
   

  	
  Huntsville

  	
   

  	
  AL

  
	
  26

  	
   

  	
  SWED

  	
   

  	
  Anniston
  Demil Center

  	
   

  	
  Anniston

  	
   

  	
  AL

  
	
  27

  	
   

  	
  SWEK

  	
   

  	
  Keesler

  	
   

  	
  Biloxi

  	
   

  	
  MS

  
	
  28

  	
   

  	
  SWEM

  	
   

  	
  FRA
  Montgomery

  	
   

  	
  Montgomery

  	
   

  	
  AL

  
	
  29

  	
   

  	
  SWMA

  	
   

  	
  Benning

  	
   

  	
  Columbus

  	
   

  	
  GA

  
	
  30

  	
   

  	
  SWRA

  	
   

  	
  Warner
  Robbins

  	
   

  	
  Warner
  Robbins

  	
   

  	
  GA

  
	
  31

  	
   

  	
  SWRB

  	
   

  	
  FRA
  Albany

  	
   

  	
  Albany

  	
   

  	
  GA

  
	
  32

  	
   

  	
  SWRF

  	
   

  	
  Forest
  Park

  	
   

  	
  Forest
  Park

  	
   

  	
  GA

  
	
  33

  	
   

  	
  SWRM

  	
   

  	
  Valdosta
  Old

  	
   

  	
  Valdosta

  	
   

  	
  GA

  
	
  34

  	
   

  	
  SWRS

  	
   

  	
  Stewart

  	
   

  	
  Hinesville

  	
   

  	
  GA

  
	
  35

  	
   

  	
  SXGA

  	
   

  	
  Jacksonville

  	
   

  	
  Jacksonville

  	
   

  	
  FL

  
	
  36

  	
   

  	
  SXGD

  	
   

  	
  FRA
  Rucker

  	
   

  	
  Ozark

  	
   

  	
  AL

  
	
  37

  	
   

  	
  SXGE

  	
   

  	
  RIPL
  Pensacola

  	
   

  	
  Pensacola

  	
   

  	
  FL

  
	
  38

  	
   

  	
  SXGF

  	
   

  	
  Eglin

  	
   

  	
  Ft.
  Walton Beach

  	
   

  	
  FL

  
	
  39

  	
   

  	
  SXGH

  	
   

  	
  Homestead

  	
   

  	
  Homestead

  	
   

  	
  FL

  
	
  40

  	
   

  	
  SXGK

  	
   

  	
  FRA
  Kings Bay

  	
   

  	
  Kings
  Bay

  	
   

  	
  GA

  
	
  41

  	
   

  	
  SXGS

  	
   

  	
  Cape
  Canaveral

  	
   

  	
  Coco
  Beach

  	
   

  	
  FL

  
	
  42

  	
   

  	
  SXGT

  	
   

  	
  FRA
  Tampa

  	
   

  	
  Tampa

  	
   

  	
  FL

  
	
  43

  	
   

  	
  SXVA

  	
   

  	
  Campbell

  	
   

  	
  Clarksville

  	
   

  	
  KY

  
	
  44

  	
   

  	
  SXVB

  	
   

  	
  FRA
  Blue Grass

  	
   

  	
  Lexington

  	
   

  	
  KY

  
	
  45

  	
   

  	
  SXVK

  	
   

  	
  Knox

  	
   

  	
  Elizabethtown

  	
   

  	
  KY

  
	
  46

  	
   

  	
  SY3A

  	
   

  	
  Oklahoma
  City

  	
   

  	
  Oklahoma
  City

  	
   

  	
  OK

  
	
  47

  	
   

  	
  SY3B

  	
   

  	
  Mcalester

  	
   

  	
  Mcalester

  	
   

  	
  OK

  
	
  48

  	
   

  	
  SY3D

  	
   

  	
  FRA
  Sill

  	
   

  	
  Lawton

  	
   

  	
  OK

  
	
  49

  	
   

  	
  SY3E

  	
   

  	
  FRA
  Sheppard

  	
   

  	
  Wichita
  Falls

  	
   

  	
  TX

  
	
  50

  	
   

  	
  SY4A

  	
   

  	
  Riley

  	
   

  	
  Fort
  Riley

  	
   

  	
  KS

  

 

	
  *

  	
   

  	
  For
  “DEMIL as a Condition of Sale” Property, the corresponding list of DRMOs is
  found in Table II-10.

  
	
  **

  	
   

  	
  “PLR”
  means Property Locator RIC.

  
	
  ***

  	
   

  	
  “FRA”
  means Forward Receiving Area.

  

 

 

17.1

 

Table II-8

DRMS National Scrap Sales*

National DRMOs and FRAs

FY 2003 DRMOs

 

	
  Count

  	
   

  	
  PLR**

  	
   

  	
  DRMO
  Name ***

  	
   

  	
  City

  	
   

  	
  State

  
	
  51

  	
   

  	
  SY4M

  	
   

  	
  Whiteman

  	
   

  	
  Knob
  Noster

  	
   

  	
  MO

  
	
  52

  	
   

  	
  SY5A

  	
   

  	
  Texarkana

  	
   

  	
  Hooks

  	
   

  	
  TX

  
	
  53

  	
   

  	
  SY5D

  	
   

  	
  TEXARKANA
  DEMIL CENTER

  	
   

  	
  Hooks

  	
   

  	
  TX

  
	
  54

  	
   

  	
  SY6A

  	
   

  	
  San
  Antonio

  	
   

  	
  San
  Antonio

  	
   

  	
  TX

  
	
  55

  	
   

  	
  SY6C

  	
   

  	
  Corpus
  Christi

  	
   

  	
  Corpus
  Christi

  	
   

  	
  TX

  
	
  56

  	
   

  	
  SY6P

  	
   

  	
  Polk

  	
   

  	
  Leesville

  	
   

  	
  LA

  
	
  57

  	
   

  	
  SYBA

  	
   

  	
  Hill

  	
   

  	
  Ogden

  	
   

  	
  UT

  
	
  58

  	
   

  	
  SYBC

  	
   

  	
  Mountain
  Home

  	
   

  	
  Mountain
  Home

  	
   

  	
  ID

  
	
  59

  	
   

  	
  SYCA

  	
   

  	
  Colorado
  Springs

  	
   

  	
  Colorado
  Springs

  	
   

  	
  CO

  
	
  60

  	
   

  	
  SYKA

  	
   

  	
  Ellsworth

  	
   

  	
  Rapid
  City

  	
   

  	
  CA

  
	
  61

  	
   

  	
  SYKE

  	
   

  	
  Great
  Falls

  	
   

  	
  Great
  Falls

  	
   

  	
  CA

  
	
  62

  	
   

  	
  SYKF

  	
   

  	
  Offutt

  	
   

  	
  Offutt

  	
   

  	
  CA

  
	
  63

  	
   

  	
  SYKM

  	
   

  	
  Minot

  	
   

  	
  Minot

  	
   

  	
  CA

  
	
  64

  	
   

  	
  SYMA

  	
   

  	
  Barstow

  	
   

  	
  Barstow

  	
   

  	
  CA

  
	
  65

  	
   

  	
  SYMC

  	
   

  	
  China
  Lake

  	
   

  	
  China
  Lake

  	
   

  	
  CA

  
	
  66

  	
   

  	
  SYMD

  	
   

  	
  Twenty-Nine
  Palms

  	
   

  	
  Palm
  Springs

  	
   

  	
  CA

  
	
  67

  	
   

  	
  SYME

  	
   

  	
  FRA
  Edwards

  	
   

  	
  Rosamond

  	
   

  	
  CA

  
	
  68

  	
   

  	
  SYMN

  	
   

  	
  Nellis

  	
   

  	
  Las
  Vegas

  	
   

  	
  NV

  
	
  69

  	
   

  	
  SYTA

  	
   

  	
  Port
  Hueneme

  	
   

  	
  Port
  Hueneme

  	
   

  	
  CA

  
	
  70

  	
   

  	
  SYUM

  	
   

  	
  March

  	
   

  	
  Riverside

  	
   

  	
  CA

  
	
  71

  	
   

  	
  SYUP

  	
   

  	
  FRA
  Pendleton

  	
   

  	
  Oceanside

  	
   

  	
  CA

  
	
  72

  	
   

  	
  SZ7A

  	
   

  	
  Hood

  	
   

  	
  Killeen

  	
   

  	
  TX

  
	
  73

  	
   

  	
  SZ7C

  	
   

  	
  Dyess

  	
   

  	
  Abilene

  	
   

  	
  TX

  
	
  74

  	
   

  	
  SZ7F

  	
   

  	
  FRA
  Barksdale

  	
   

  	
  Bossier
  City

  	
   

  	
  CA

  
	
  75

  	
   

  	
  SZ7L

  	
   

  	
  FRA
  Little Rock

  	
   

  	
  Little
  Rock

  	
   

  	
  CA

  
	
  76

  	
   

  	
  SZAA

  	
   

  	
  Holloman

  	
   

  	
  Alamagordo

  	
   

  	
  NM

  
	
  77

  	
   

  	
  SZAC

  	
   

  	
  Cannon

  	
   

  	
  Clovis

  	
   

  	
  NM

  
	
  78

  	
   

  	
  SZAK

  	
   

  	
  Kirtland

  	
   

  	
  Alburquerque

  	
   

  	
  NM

  
	
  79

  	
   

  	
  SZCA

  	
   

  	
  Stockton

  	
   

  	
  Stockton

  	
   

  	
  CA

  
	
  80

  	
   

  	
  SZCF

  	
   

  	
  Vandenberg

  	
   

  	
  Lompoc

  	
   

  	
  CA

  
	
  81

  	
   

  	
  SZCH

  	
   

  	
  Travis

  	
   

  	
  Fairfield

  	
   

  	
  CA

  
	
  82

  	
   

  	
  SZCS

  	
   

  	
  Sierra

  	
   

  	
  Herlong

  	
   

  	
  CA

  
	
  83

  	
   

  	
  SZPA

  	
   

  	
  Lewis

  	
   

  	
  Seattle

  	
   

  	
  WA

  
	
  84

  	
   

  	
  SZPD

  	
   

  	
  Fairchild

  	
   

  	
  Spokane

  	
   

  	
  WA

  
	
  85

  	
   

  	
  SZQH

  	
   

  	
  FRA
  Gordon

  	
   

  	
  Augusta

  	
   

  	
  CA

  
	
  86

  	
   

  	
  SZSA

  	
   

  	
  Tucson

  	
   

  	
  Tucson

  	
   

  	
  CA

  
	
  87

  	
   

  	
  SZSB

  	
   

  	
  Huachuca

  	
   

  	
  Huachuca

  	
   

  	
  AZ

  
	
  88

  	
   

  	
  SZSC

  	
   

  	
  RIPL
  Bliss

  	
   

  	
  EI
  Paso

  	
   

  	
  TX

  
	
  89

  	
   

  	
  SZSL

  	
   

  	
  RIPL
  Luke

  	
   

  	
  Glendale

  	
   

  	
  AZ

  
	
  90

  	
   

  	
  SZVA

  	
   

  	
  Anchorage

  	
   

  	
  Anchorage

  	
   

  	
  AK

  
	
  91

  	
   

  	
  SZVF

  	
   

  	
  Fairbanks

  	
   

  	
  Fairbanks

  	
   

  	
  AK

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

	
  *

  	
   

  	
  For
  “DEMIL as a Condition of Sale” Property, the corresponding list of DRMOs is
  found in Table II-10.

  
	
  **

  	
   

  	
  “PLR”
  means Property Locator RIC.

  
	
  ***

  	
   

  	
  “FRA”
  means Forward Receiving Area.

  

 

 

17.2

 

installations place limits
on the amounts of Scrap that are allowed in the Scrap Yard at any one time.

 

The Purchaser may use and store its materials handling equipment in the
Scrap Yards. Subject to applicable law and Host Installation regulations, the
Purchaser may utilize without charge such government owned materials handling
equipment (“GFE”) as is available at a particular Scrap Yard, but the Purchaser
is responsible for required inspections, repairs, maintenance and as necessary
replacement (and the costs thereof are Direct Costs), and DRMS may at any time
relocate such equipment to another location for government use as determined by
DRMS in the exercise of its sole discretion. The Purchaser shall request
disposition instructions from the SCO when the Purchaser has determined that a
particular item of GFE Equipment is no longer needed. See Art. 3, Sections 4
(A) and (G).

 

The Purchaser is permitted to perform resorting and segregation of the
Property on the Scrap Yard premises. Any industrial operation, such as
shredding or baling, must be approved by DRMS. Subject to Host Installation
constraints, generally speaking, if such an operation was in practice at the
DRMO prior to award of this contract, the Purchaser will be permitted to
continue such operation.(15) Any new industrial operation may require
permission of the Base Commander. The Purchaser may permit re-sale customers to
inspect the Property in the Scrap Yard, but a representative of the Purchaser
must accompany customers at all times. Purchaser will be required to escort
re-sale customers from installation gates to the Scrap Yard when it is
required, and permitted, by the Host Installation.

 

DCS Property is referred for sale at either a DRMS site or the
generator’s site. The Purchaser will not be responsible for surveillance,
verification or certification of demilitarization, as only properly trained
government employees may perform these functions. The Purchaser will, however,
coordinate with DRMS, the generator and the re-sale buyer to enable proper
demilitarization and removal (or removal for demilitarization at the buyer’s
facilities).

 

There may be Property referred for sale at and requiring removal from
Special Situation Locations and Restricted Access Facilities. Described very
generally and subject to certain limitations and conditions, and as discussed
more completely in Section II.J above, the actual and minimum reasonable
costs incurred by the Purchaser for the packing, loading and removal of
Property from such locations will be deducted from Distribution Payments to
DRMS as Seller Indirect Costs unless DRMS arranges for the Purchaser to conduct
On-Site Processing of such items. On-Site Processing means that, subject to
certain conditions and described very generally, that the Purchaser and its
prospective re-sale buyers are provided access to the site to allow the
placement of a roll-off or similar Container. As described above, Puget Sound
Naval Shipyard is treated uniquely under this contract, and it is not a Special
Situation Location for the purpose of determining Seller Indirect Costs.

 

The Purchaser is responsible to DRMS for any damage that is caused to
any government equipment or facilities that arises out of the negligence of the
Purchaser, its vendors or re-sale

 

 

18

 

buyers, and the Purchaser
must clean up any spills of Hazardous Materials and arrange for their proper
disposal.

 

U.1          ADDITIONAL
MATERIAL

 

Certain additional material
may be included within this contract, as follows.

 

Additional Property. DRMS may elect
in the exercise of its sole discretion to refer for sale under this contract
such additional material or items (“Additional Property”) as DRMS determines
would be in the best interest of the Government. (See Art. 2.)

 

V.            DEMIL “B”
AND “Q” PROPERTY

 

Some of the material in the Product Pool is subject to trade security
controls (i.e., export restrictions) because it could contain sensitive
technology. This material is comprised of Munitions List Items (“MLI”) or
Commerce Control List Items (“CCLI”) that have a DEMIL Code of “B” or “Q.”
Prior to award of this contract, the Purchaser will be required to submit to
the SCO a properly completed End Use Certificate (“EUC”) and obtain a Trade
Security Control clearance.

 

Described generally, export of this material requires an export license
issued by the Department of State. DRMS presently sells such material within
CONUS pursuant to the procedures described below. As is also described below
and as is set forth in Art. 7, the Purchaser will also be required to comply
with certain trade security control procedures. In addition, the Purchaser will
be required to comply with any new trade security control requirements that may
be mandated during the Performance Period. Such new requirements may impose
new, higher costs upon the Purchaser. Prospective offerors should weigh this
risk factor when determining their Bid Prices.

 

All Property offered under this contract requires Mutilation, unless
specifically excluded from Mutilation by the Government. The Mutilation
requirement includes metallic DEMIL Code “A” Property. DEMIL Code “A” Property
generally excluded from the Mutilation requirement includes: tires, lockers,
ammunition cans, production stock/residue (bars, plate rod, wire, borings and
turnings), wire and cable, pipe and tube construction material/residue (lumber,
block, brick, windows, I-beams), vehicles, wood products, furniture, and white
goods (appliances, e.g., refrigerators). The Purchaser may request from the SCO
that other DEMIL “A” property be excluded from the Mutilation requirement. DRMS
will evaluate such requests in the exercise of its sole discretion.

 

19

 

 

Described
very generally, pursuant to current DRMS procedures the winning bidder for
DEMIL “B” and “Q” material is required before award of a sale contract
(i) to be cleared by the Defense Logistics Agency (“DLA”) Trade Security
Controls Office as a buyer of DEMIL “B”or “Q” material (clearances must be
renewed every five years), and (ii) to submit to the SCO a properly
completed “End-Use Certificate” (or “EUC”) in the form of DLA Form 1822 (A
copy of this form is attached as Attachment VI.7.5.B.). Described generally,
the EUC requires the prospective buyer to identify itself and the subject
property, to describe the nature of the buyer’s business, to specify the
expected disposition and specific end-use of the subject property, to
acknowledge the applicability of the pertinent trade security export controls,
and to certify that the information on the EUC is true.

 

Prior
to award of this contract, the Purchaser will be required to obtain a trade
security control clearance and to submit to the SCO a properly completed EUC.
The clearance will be effective for a five-year period unless the information
in the EUC is materially changed (i.e., change of Purchaser’s officers, change
of physical address, etc.). The clearance investigation determines that the
entity is who it claims to be, doing business at the name and location claimed
and that there are no disqualifying factors present (i.e., convictions for
illegal export of military technology, debarment by a Government activity,
etc.). All secondary purchasers of MLI and CCLI from this contract will undergo
a similar clearance.

 

Re-sale
trade security control procedures applicable to the Purchaser will be generally
as follows. The Purchaser will be required to notify prospective buyers in
catalogs and re-sale documents of the necessity to comply with TSC requirements
and export controls. The Purchaser will be required to obtain a properly
completed EUC from the prospective re-sale buyer of each lot (or group of lots
at a single re-sale event) of DEMIL “B” or “Q” material before releasing such
material to the prospective re-sale buyer. Upon receipt of the properly
completed EUC, the Purchaser must confirm with the SCO that the prospective
re-sale buyer is currently cleared to purchase export-controlled material. If not,
the buyer must submit such information to the SCO who will submit the completed
EUC to the DLA Trade Security Controls enforcement office as may be required
for the buyer to be cleared before the buyer can receive any export controlled
material. The DLA Trade Security Controls Office is the clearance authority and
the determining authority relative to the proper completeness of EUCs.

 

Material
that has already been destructively “scrapped” before re-sale, either by the
generator or by the Purchaser, in a manner that prevents recognition or
reconstruction of the original item, will be considered DEMIL “A” and can then
be immediately sold and/or released to a re-sale buyer without an EUC or
further clearance processing. The Purchaser must place a certification of the
destructive scrapping in the Records and make them available for review by
appropriate authorities. (See Art. 7)

 

If
the material (DEMIL “B” and “Q” Property) has not been destructively scrapped
before re-sale, the Purchaser must obtain from the (cleared) re-sale buyer an
executed acknowledgement of the buyer’s responsibility to do so and of its
responsibility to submit to the Purchaser a post-scrapping certification that
the scrapping has been accomplished. (See Art. 7.)

 

 

 

20

 

In
recent years a significant portion of the DRMS Scrap Gross Proceeds was
associated with items with a DEMIL Code of “B”. (See Figs. II-13 through II-l
7, and Tables II-5(a) through II-5(c) above.)

 

W.           DEMILITARIZATION

 

Federal
law and/or DoD regulation or policy require that any item with a DEMIL Code
other than “A,” “B” or “Q” must be “demilitarized” through such methods as
melting, cutting, crushing, etc. before the resulting demilitarization
“residue” is sold for its material content. In some cases of such
“DEMIL-required” items, the military itself demilitarizes the item before
turning in the residue to DRMS as Scrap. For most DEMIL-required items,
however, either the demilitarization is performed at one of the four DRMS
Demilitarization Centers (“DEMIL Centers”) within CONUS or DRMS sells the
property with “Demilitarization as a Condition of Sale” (“DCS”; such property
is termed “DCS Property”). As the term “Demilitarization as a Condition of
Sale” suggests, the re-sale buyer itself must perform the destructive DEMIL
procedure before title to the residue passes to the buyer. (See Part 6,
Sections A and B of Attachment V.)

 

The
DRMS DEMIL Centers are presently located at Crane Naval Surface Warfare Center,
Crane, Indiana; Red River Army Depot (Texarkana), Hooks, Texas; Anniston Army
Depot, Anniston, Alabama; and Davis-Monthan Air Force Base, Tucson, Arizona.
DRMS transports certain lighter DEMIL-required items received at other
locations to one of these DEMIL Centers to be demilitarized. Demilitarization
is, and throughout the SV Performance Period will be, performed by federal
employees or federal contractors. The resulting “DEMIL residue” will be
referred for sale to the Purchaser as Scrap at Red River (Texarkana). At Anniston,
Davis-Monthan (Tuscon) and Crane, however, the federal contractor that
presently performs the demilitarization also sells the DEMIL residue on behalf
of DRMS and, accordingly, such DEMIL residue is not available to be referred to
Purchaser for sale. At any time during the Performance Period, DRMS may elect
in its sole discretion to refer the DEMIL residue at Anniston, Davis-Monthan
(Tucson) and Crane for sale to the Purchaser under this sale contract as
“Additional Property.” (See Art. 2.) In addition, DRMS may change the number
and locations of its DEMIL centers from time to time in its sole discretion.
Nevertheless, throughout the Performance Period all DEMIL residue that is
produced at locations other than Anniston, Davis-Monthan (Texarkana) and Crane
that are subject to an SV contract will be referred for sale to the Purchaser.
Please note that all Property classified as “weapons” is excluded from this
contract. 

 

Most
DEMIL residue has a DEMIL Code of “B,” meaning that export controls apply to its
sale. (See Section V.) Some DEMIL residue can receive a DEMIL Code of “A,”
but it must be coded as “B” if it is commingled with other “B” items.

 

A
certain quantity of DEMIL-required items is sold by DRMS at locations other
than DEMIL Centers without either the military or DRMS having performed the
required demilitarization procedure. Instead such items are sold as DCS
Property. Such DCS Property is generally too heavy to transport economically to
a DEMIL Center. Examples could be naval gun

 

21

 

turrets or substantial
quantities of large caliber fired shell casings. Some DCS Property is
demilitarized “in place” at the generating site by the buyer using equipment
that it brings on-site. Other DCS Property is transferred at the buyer’s
expense to an off-site facility subject to the provisions of Section B of
Part 6 of Attachment V.

 

Some
Property is designated with DEMIL Code “E.” This material includes, but is not
limited to, items such as expended small arms cartridge cases, tank track, and
road wheels. To be eligible to receive material with a DEMIL Code of “E,” all
bidders must complete and submit the Certification, an example of which is
attached at Attachment II. W.

 

Table
II-9 below presents DCS Acquisition Values and Gross Proceeds for fiscal years
1998 – 2003,

 

Table
II-10 presents the DRMOs that currently use DCS.

 

X.            MISCELLANEOUS

 

Prospective
bidders should note that work performed on government premises, such as at
DRMOs and other Delivery Points, may be subject to the provisions of Public Law
89-176, September 10, 1965 (18 U.S.C. 4082(c)(2)) and Executive Order
11755, December 29, 1973 (convict labor), and/or the Contract Work Hours
and Safety Standards Act (40 U.S.C. 327-333) and regulations of the Secretary
of Labor thereunder (overtime compensation).

 

Prospective
bidders should also note that, under applicable law, the export of property
either directly or indirectly to the following countries is prohibited: Cuba,
Iran, Iraq, Libya, North Korea, Sudan and UNITA (Angola). Moreover, the list of
prohibited countries may change over the course of the Performance Period.

 

RESOURCE
CONSERVATION AND RECOVERY ACT NOTICE: EPA Hazardous Waste Regulations, 40 CFR
Part 260 et seq. published at 45 Federal Register 33063-33285,
May 19, 1980, became effective on November 19, 1980. These
cradle-to-grave regulations detail the responsibilities of generators,
transporters, treaters, storers and disposers of hazardous waste. Civil and
criminal penalties are available for noncompliance. DRMS does not intend to
transfer any RCRA regulated hazardous waste under this contract as regulated
waste is disposed of under DRMS’s hazardous waste contracts. However, DRMS can
make no representations as to when and under what circumstances state, federal
or local environmental regulations may be applicable to Property transferred to
and held by the Purchaser.

 

CHEMICAL
AGENT RESISTANT COATING (CARC) PAINT: Prospective offerors are cautioned that
some items are, or likely to contain or be coated with a chemical agent
resistant coatings containing trivalent chrome, lead, cobalt-zinc hexamethylene
disocyanate and other chemicals which are a hazard to human health if not
processed properly. The Government brings the following precautions/warnings to
the attention of prospective offerors who plan to disturb the coating on the
property in any way:

 

 

22

 

Table II-9

DRMS National Scrap Sales

DEMIL as a Condition of Sale

FY 1998 - 2003

 

	
   

  	
   

  	
  1998

  	
   

  	
  1999

  	
   

  	
  2000

  	
   

  	
  2001

  	
   

  	
  2002

  	
   

  	
  2003

  	
   

  
	
  Quantity Removed

  	
   

  	
  3,103,470

  	
   

  	
  1,282,186

  	
   

  	
  151,906

  	
   

  	
  189,536

  	
   

  	
  214,067

  	
   

  	
  307,257

  	
   

  
	
  Unadjusted Acquisition Value ($000s)

  	
   

  	
  $

  	
  871,070

  	
   

  	
  $

  	
  716,406

  	
   

  	
  $

  	
  506,609

  	
   

  	
  $

  	
  571,126

  	
   

  	
  $

  	
  328,339

  	
   

  	
  $

  	
  2,214,989

  	
   

  
	
  Gross Proceeds ($000s)

  	
   

  	
  $

  	
  4,205

  	
   

  	
  $

  	
  1,725

  	
   

  	
  $

  	
  2,008

  	
   

  	
  $

  	
  1,065

  	
   

  	
  $

  	
  351

  	
   

  	
  $

  	
  569

  	
   

  
	
  Gross Unadjusted RORs

  	
   

  	
  0.48

  	
  %

  	
  0.24

  	
  %

  	
  0.40

  	
  %

  	
  0.19

  	
  %

  	
  0.11

  	
  %

  	
  0.03

  	
  %

  

 

 

22.1

 

Table II-10

DRMS National Scrap Sales

DEMIL as a Condition of Sale

National DRMOs

FY 2003 DRMOs

 

	
  Count

  	
   

  	
  PLR*

  	
   

  	
  DRMO
  Name

  	
   

  	
  City

  	
   

  	
  State

  
	
  1

  	
   

  	
  ST4A

  	
   

  	
  Richmond

  	
   

  	
  Richmond

  	
   

  	
  VA

  
	
  2

  	
   

  	
  STWA

  	
   

  	
  Meade

  	
   

  	
  Baltimore

  	
   

  	
  MD

  
	
  3

  	
   

  	
  SVCT

  	
   

  	
  Tobyhanna

  	
   

  	
  Tobyhanna

  	
   

  	
  PA

  
	
  4

  	
   

  	
  SVEC

  	
   

  	
  Letterkenny

  	
   

  	
  Chambersburg

  	
   

  	
  PA

  
	
  5

  	
   

  	
  SVQA

  	
   

  	
  Crane

  	
   

  	
  Crane

  	
   

  	
  IN

  
	
  6

  	
   

  	
  SWRA

  	
   

  	
  Warner
  Robbins

  	
   

  	
  Warner
  Robbins

  	
   

  	
  GA

  
	
  7

  	
   

  	
  SY3B

  	
   

  	
  Mcalester

  	
   

  	
  Mcalester

  	
   

  	
  OK

  
	
  8

  	
   

  	
  SYUA

  	
   

  	
  San
  Diego

  	
   

  	
  Imperial
  Beach

  	
   

  	
  CA

  
	
  9

  	
   

  	
  SZCA

  	
   

  	
  Stockton

  	
   

  	
  Stockton

  	
   

  	
  CA

  
	
  10

  	
   

  	
  SZPA

  	
   

  	
  Lewis

  	
   

  	
  Seattle

  	
   

  	
  WA

  
	
  11

  	
   

  	
  SZSA

  	
   

  	
  Tucson

  	
   

  	
  Tucson

  	
   

  	
  AZ

  
	
  12

  	
   

  	
  SZSD

  	
   

  	
  Tuson
  Demil Center

  	
   

  	
  Tuscon

  	
   

  	
  AZ

  

 

*                  “PLR” stands for
Property Locator RIC.

 

 

22.2

 

(1)                                  Air sampling must be conducted to determine
the correct type of respirator to be used when processing (applying/sanding/torch
cutting, etc.) metals treated or painted with CARC paint.

 

(2)                                  CARC paint should be isolated from heat,
electrical equipment, sparks and open flame during storage or application.
Local exhaust ventilation should be used for inside processing.

 

(3)                                  Exposure to vapor/mist/dust or fumes can
cause irritation to respiratory tract (lung, nose, throat), edema, dermatitis,
dizziness, rash, itching, swelling of extremities, eye irritation or damage to
nervous system, kidney or liver. Coating may be fatal if swallowed.

 

REFRIGERANT:
Refrigeration equipment and appliances are subject to the Clean Air Act (CAA)
Amendments of 1990 which prohibit the venting or release to the environment of
Class I or Class II ozone depleting substances, and are also subject
to the Refrigerant Recycling Rule in 40 Code of Federal Regulations (CFR)
Subpart F 82.150-166, requiring the recovery and verification of refrigerant
removal by a certified technician, using certified recovery equipment prior to
final disposal as scrap or in a landfill. A copy of these records will be
available for inspection by government personnel.

 

AIRCRAFT
INSIGNIA AND MARKINGS: The Purchaser will be required to permanently remove or
obliterate all Military Service distinctive markings from aircraft prior to
removal from the Government premises. The Purchaser may remove or obliterate
the markings by scraping, grinding, use of paint removers, or by other means
upon approval of the SCO. This requirement does not apply to aircraft which are
required to be demilitarized.

 

KITCHEN
STOVES: In the event of sale or re-sale of Property identified on a Pickup
Notice as “Article LN Kitchen Stoves,” Purchaser shall ensure that the
warning statement which is affixed to such items regarding their design
features and reuse will not be removed prior to sale to an ultimate user, and
Purchaser shall include this clause in its entirety in any later sale or
transfer of title, unless Purchaser modifies, replaces or repairs the stoves to
remove or eliminate the hazard.

 

Prospective
offerors should also note that there are certain Public Laws that may impact
the flow of items that otherwise would become “Property” that is subject to
this sale:

 

Public Law 98-575, Commercial Space Launch Act (“CSLA”), dated October 30, 1984. The purposes
of the CSLA are to promote economic growth and entrepreneurial activity through
the utilization of the space environment for peaceful purposes; encourage the
private sector to provide launch vehicles and associated launch services;
facilitate/encourage the acquisition (sale, lease, transaction in lieu of sale,
or otherwise) by the private sector of launch property of the U.S. which is
“excess or otherwise not needed for public use,” in consultation with Secretary
of Transportation. Donation screening is not required prior to sale.

 

 

23

 

Wildfire Suppression Aircraft Transfer Act of 1996, dated January 3, 1996.

This act authorizes the sale
of excess Department of Defense (DoD) aircraft and aircraft parts to facilitate
the suppression of wildfire. Prior to the sale, the Secretary of Agriculture
must certify that the person or entity is capable of meeting the terms and
conditions of a contract to deliver fire retardant by air. The buyer must
certify that the aircraft and aircraft parts will be used only for wildfire
suppression purposes.

 

Public Law 106-181, Oil Spill Containment Act.

This statute, also known as
“The Wendell H. Ford Aviation Investment and Reform Act for the 21st Century,”
allows DoD, during the period 4 April 2000 through 30 September 2002,
to sell aircraft and aircraft parts to a person or entity that provides oil
spill response services (including the application of oil dispersants by air).

 

Y.            RISK
FACTORS

 

A
prospective offeror should be aware of certain risk factors that could affect
an offeror’s assessment of this contract and the calculations supporting the
offeror’s bid. Although DRMS does not represent that it has identified all such
risk factors, the following, in addition to those risks identified elsewhere in
this IFB, should be considered by a prospective offeror:

 

The
future volume, quality, condition, market value, types (i.e., distribution of
Property referrals across SCLs), and geographic concentrations (i.e., referrals
for sale at particular Delivery Points) of the Property cannot be predicted.
Variability in any of these dimensions could adversely affect the Purchaser’s
re-sale proceeds and costs, thereby reducing the prospective Contractor’s
investment gains or increasing its losses.

 

DRMS
has endeavored to present historical data in this IFB that, subject to the
descriptions and qualifications accompanying presentation of the data, are
accurate. Nevertheless, DRMS cannot guarantee the accuracy of these data, and
the data may contain material inaccuracies or omissions.

 

The
amounts and timing of Seller Indirect Costs incurred by the Purchaser cannot be
predicted. Because the provisions of the contract require initial funding of
Seller Indirect Costs by the Purchaser and/or the Contractor, unexpectedly high
expenditures for Seller Indirect Costs may temporarily reduce investment gains
or increase losses for the prospective Contractor.

 

The
amounts and timing of Direct Costs incurred by the Purchaser cannot be
predicted. Moreover, historical data on proceeds obtained by DRMS from the sale
of items in the pertinent SCLs are not necessarily accurate predictors of the
re-sale proceeds obtainable by the Purchaser.

 

 

24

 

Inflows
of Property at particular Scrap Yards may be sufficiently high relative to
space availability as to cause removal and/or re-sale by the Purchaser on an
expedited and less efficient schedule than desired by the Purchaser.
Moreover, some Scrap Yards are likely to be closed during the prospective
Performance Period as part of the DRMS infrastructure reduction program. This
may lead to referrals of Property in place at Special Situation Locations, thus
causing the Purchaser to incur above normal costs (if allowed to sell in place)
or to incur Seller Indirect Costs that must be funded by the Purchaser and/or
the prospective Contractor until such time as amounts otherwise distributable
to DRMS are sufficient to reimburse such expenditures.

 

Costs
incurred to phase in Property purchases and re-sales, both during the Phase-In
Period and beyond, may be higher than expected by the prospective Contractor.
Moreover, the re-sale of Property, both during the Phase-In Period and
thereafter, may take longer than anticipated by the prospective Contractor.

 

DRMS
may not be able to add particular Delivery Points to the Phase-In
Schedule as quickly as expected or desired by the prospective Contractor.

 

The
Purchaser is responsible for the cost associated with the disposal of material
that is unsaleable.

 

In
several respects this contract requires cooperation between DRMS and the
Purchaser, especially as regards the logistics of referring Property for sale
to Purchaser, Delivery of the Property, arranging access to the Property for
Purchaser and prospective re-sale buyers, removing Property from certain
Delivery Points upon request or notice from DRMS, and in other respects.
Moreover, the contract provides that DRMS may exercise its sole discretion to
grant or deny certain requests by the Purchaser, including without limitation
requests for On-Site Processing at certain Delivery Points. A prospective
offeror should consider the risks that such cooperation may be less
forthcoming, and that such requests are granted less often, or with respect to
less important matters or subject to more burdensome conditions, than the
prospective offeror had expected.

 

The
inflow of items to DRMS from generators cannot be predicted in terms of the
initial designation of Property as “Scrap” or “Useable,” and DRMS policies and
procedures with respect to such designations may change during the Performance
Period. The pertinent provisions of the contract may not insulate the
Contractor and Purchaser from the adverse consequences of such factors to the
extent expected by the prospective Contractor.

 

The complexity and costs of implementing, maintaining and operating the
accounting and inventory control systems as required by pertinent provisions of
the contract may be greater than anticipated by the prospective Contractor. In
addition, the costs of complying with the contract’s requirements with respect
to reporting, financial

 

25

 

auditing and compliance
auditing may be greater than anticipated by the prospective offeror.

 

Subject
to provisions governing early cancellation and termination, the Performance
Period is seven years (84 months) with three - one (1) year options for
the Government to extend the Performance Period. The Government can not
exercise an extension of the contract beyond ten years. It may be more
difficult or more costly for the Purchaser to hire and retain employees,
especially near the end of the Performance Period, than anticipated by the
prospective Contractor.

 

The
costs of compliance with present or future trade security control procedures
may be higher than anticipated by the prospective Contractor, and such
procedures may cause the revenue obtainable from the sale of material that is
subject to trade security controls to be reduced or delayed.

 

Described
generally, applicable statutes and regulations grant DRMS less flexibility to
agree to amend a contract after award than a prospective offeror may have
experienced in other contractual settings. Prospective offerors should assume
that the provisions of the contract cannot be significantly amended after
award.

 

This
IFB presents several examples of illustrative financial calculations based upon
certain purely hypothetical assumptions concerning such matters as revenues,
costs and other assumptions. These calculations are presented solely for the
purpose of illustrating certain of the mechanics of the contract. DRMS cannot
predict, and makes no representation concerning, any assumption that is
material to projecting or calculating the performance of the Purchaser or the
investment gains or losses for the prospective Contractor under this contract.
Moreover, the illustrative calculations presented in this IFB are simplified
for the purpose of illustrating certain mechanics of the contract and are not intended
to identify all material assumptions or factors that may affect the performance
of the Purchaser or investment gains or losses for the prospective Contractor.

 

This
IFB may be the subject of one or more protests to the U.S. General Accounting
Office. Moreover, it is possible that, either pending or after award, one or
more third parties that object to this contract could institute litigation
involving both DRMS and the Contractor. DRMS cannot predict the likelihood or
the possible outcome of such litigation.

 

Applicable
statutes, regulations, policies and inter-service agreements govern whether the
disposition of particular items of surplus is through DRMS or through other
disposition modes. The volume and nature of the Property referred for sale under
this contract could be affected by changes in such governing statutes,
regulations, policies and inter-service agreements.

 

 

26

 

III. BID SCHEDULE

 

A.            BACKGROUND
INFORMATION

 

Most
Scrap to be sold under this IFB is categorized by Scrap Classification Code
(SCL) and DEMIL Code. The remainder of Scrap to be sold is DCS Property, which
is categorized by Federal Supply Classification Code (FSC). The complete
listing of SCL Codes and FSC Codes included in the contract is detailed in
Table IV-1(a) and IV-l(b) respectively in Part IV
below.

 

B.           BID
PROCESS

 

A bid must offer a Bid Price
to be paid to DRMS upon award of a sale contract. The “Item Bid Page” in the
Attachment to the accompanying “Bidding Instructions and Bid Forms” is for
formally registering the offeror’s Bid Price. Award of the SV sale contract
will be made to the responsive, responsible bidder that offers the highest Bid
Price. The winning bid will be determined from the offered Bid Prices as set forth
in Section Two of Article One (Bidding and Contract Award) below.

 

The
accompanying “Bidding Instructions and Bid Forms” provide an illustration of
the determination of the winning bid.

 

C.           ILLUSTRATIVE
FINANCIAL MODEL

 

Table III-l below presents a
scenario for a monthly illustrative financial model of the proposed transaction
with certain assumptions listed at the beginning of each table.

 

Figures used in this table, and all
other forward-looking figures in the IFB, are for illustrative purposes only.
DRMS cannot predict the flow of Property to be sold under this contract and
DRMS expressly disavows any implication to the contrary. Moreover, historic
DRMS operating data are not necessarily reliable indicators of future Property
deliveries under this contract, the quality or resale value of such Property or
future operating costs. DRMS does not make any representation of any character
concerning the Property to be sold hereunder.

 

27

 

[PAGE
INTENTIONALLY LEFT BLANK]

 

28

 

ASSUMPTIONS AND PARAMETERS IN ILLUSTRATIVE 7 YEAR FINANCIAL MODEL

Five-Month Phase-In

0% - 4% - 8% Purchaser Enhancement

 

Weight of scrap Referred for Sale to Purchaser
(Pounds, 000s)

 

	
  Year 1

  	
   

  	
  Year 2

  	
   

  	
  Year 3

  	
   

  	
  Year 4

  	
   

  	
  Year 5

  	
   

  	
  Year 6

  	
   

  	
  Year 7

  	
   

  
	
  250,000

  	
   

  	
  225,000

  	
   

  	
  202,500

  	
   

  	
  182,250

  	
   

  	
  164,025

  	
   

  	
  147,623

  	
   

  	
  132,860

  	
   

  

 

Annual decline in weight of scrap Referred
for Sale to Purchaser

 

	
  Year 1

  	
   

  	
  Year 2

  	
   

  	
  Year 3

  	
   

  	
  Year 4

  	
   

  	
  Year 5

  	
   

  	
  Year 6

  	
   

  	
  Year 7

  	
   

  
	
  NA

  	
   

  	
  10

  	
  %

  	
  10

  	
  %

  	
  10

  	
  %

  	
  10

  	
  %

  	
  10

  	
  %

  	
  10

  	
  %

  

 

During the 1st year of
operation, the Purchaser receives an increasing percentage of the Property:

 

	
   

  	
   

  	
  Month 1

  	
   

  	
  Month 2

  	
   

  	
  Month 3

  	
   

  	
  Month 4

  	
   

  	
  Month 5

  	
   

  	
  Month 6

  	
   

  	
  Month 7

  	
   

  	
  Month 8

  	
   

  	
  Month 9

  	
   

  	
  Month 10

  	
   

  
	
  Phase-in
  percentages

  	
   

  	
  50

  	
  %

  	
  75

  	
  %

  	
  80

  	
  %

  	
  90

  	
  %

  	
  100

  	
  %

  	
  100

  	
  %

  	
  100

  	
  %

  	
  100

  	
  %

  	
  100

  	
  %

  	
  100

  	
  %

  

 

Weight of Scrap Re-Sold by Purchaser

 

	
  Months

  	
   

  	
   

  
	
  1

  	
   

  	
  No Scrap re-sold while the Purchaser sets
  up operations

  
	
  2 - 85

  	
   

  	
  Scrap referred 1 months earlier.

  
	
  7 - 12

  	
   

  	
  100% a weighted average of scrap Referred
  2, 3, and 4 months earlier.

  
	
  13 - 85

  	
   

  	
  100% a weighted average of scrap Referred
  2, 3, and 4 months earlier.

  
	
  86

  	
   

  	
  50% of the weight of the scrap remaining in
  inventory.

  
	
  87

  	
   

  	
  100% of the weight of the scrap remaining
  in inventory.

  

 

DRMS Baseline Gross Proceeds

$0.055 for
every pound of scrap Referred for Sale

 

DRMS Baseline Expenses

70% of DRMS
Baseline Gross Proceeds ($0.0385 for every pound of scrap sold)

 

DRMS Baseline Net Proceeds

DRMS Baseline Gross Proceeds minus DRMS
Baseline Expenses

$0.0165 for every pound of scrap Referred for
Sale

 

Revenue per pound of scrap sold by Purchaser

 

	
  Months

  	
   

  	
  Price recv’d by DRMS

  	
   

  	
  Purchaser Enhancement

  	
   

  	
  Price received by Purchaser

  	
   

  
	
  1-6

  	
   

  	
  $

  	
  0.055

  	
   

  	
  0

  	
  %

  	
  $

  	
  0.055

  	
   

  
	
  7-12

  	
   

  	
  $

  	
  0.055

  	
   

  	
  4

  	
  %

  	
  $

  	
  0.057

  	
   

  
	
  13 +

  	
   

  	
  $

  	
  0.055

  	
   

  	
  6

  	
  %

  	
  $

  	
  0.059

  	
   

  

 

Purchaser Gross Proceeds

This is the product of the weight of scrap
re-sold by purchaser and the price per pound received by the Purchaser.

 

Purchaser Start Up Expenses

 

	
  Month

  	
   

  	
  Start Up Expenses

  	
   

  
	
  1

  	
   

  	
  $

  	
  400

  	
   

  
	
  2

  	
   

  	
  $

  	
  250

  	
   

  
	
  3

  	
   

  	
  $

  	
  150

  	
   

  

 

Total Purchaser Expenses

 

Total Purchaser Expenses are the sum of
Start-up Costs and Purchaser Expenses.

 

Purchaser Expenses are based upon DRMS
Baseline Expenses.

The formula for Purchaser Expenses is:

weight of scrap * 3.85 cents per pound * 88%

 

Where:                                 weight
of scrap is the greater of (a) scrap Referred for Sale, or (b) scrap
re-sold 88% represents the cost savings of 12% by the Purchaser over DRMS
Baseline

 

Purchaser Net Proceeds (Working Capital
Advance)

Calculated as the difference between
Purchaser Gross Proceeds and Total Purchaser Expenses.

 

Purchaser Operating Cash Balance

Equals Total Purchaser Expenses for the
following month.

 

Payments to DRMS: Bid Price

$2,000                                       Equals
the Contractor’s Estimated Bid Price. (i.e $2,000,000.00)

 

28.1

 

 

Table III-1

Scrap
Venture Illustrative 7 Year Financial Model

 

	
   

  	
   

  	
   

  	
   

  	
  Year 1

  	
   

  
	
  All Figures (000s)

  	
   

  	
  At Award

  0

  	
   

  	
  Month

  1

  	
   

  	
  Month

  2

  	
   

  	
  Month

  3

  	
   

  	
  Month

  4

  	
   

  	
  Month

  5

  	
   

  	
  Month

  6

  	
   

  	
  Month

  7

  	
   

  	
  Month

  8

  	
   

  	
  Month

  9

  	
   

  	
  Month

  10

  	
   

  	
  Month

  11

  	
   

  	
  Month

  12

  	
   

  
	
  I. Assumptions & Cash Flows

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  A. Purchaser Inventory

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1. Weight of Scrap Delivered

  	
   

  	
  0

  	
   

  	
  10,417

  	
   

  	
  15,625

  	
   

  	
  16,667

  	
   

  	
  18,750

  	
   

  	
  20,833

  	
   

  	
  20,833

  	
   

  	
  20,833

  	
   

  	
  20,833

  	
   

  	
  20,833

  	
   

  	
  20,833

  	
   

  	
  20,833

  	
   

  	
  20,833

  	
   

  
	
  2. Weight of Scrap Sold

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  10,417

  	
   

  	
  15,625

  	
   

  	
  16,667

  	
   

  	
  18,750

  	
   

  	
  20,833

  	
   

  	
  20,833

  	
   

  	
  20,833

  	
   

  	
  20,833

  	
   

  	
  20,833

  	
   

  	
  20,833

  	
   

  	
  20,833

  	
   

  
	
  3. Weight of Scrap in Inventory

  	
   

  	
  0

  	
   

  	
  10,417

  	
   

  	
  15,625

  	
   

  	
  16,667

  	
   

  	
  18,750

  	
   

  	
  20,833

  	
   

  	
  20,833

  	
   

  	
  20,833

  	
   

  	
  20,833

  	
   

  	
  20,833

  	
   

  	
  20,833

  	
   

  	
  20,833

  	
   

  	
  20,833

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B. DRMS Baseline Proceeds

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1. DRMS Baseline Gross Proceeds

  	
   

  	
   

  	
   

  	
  573

  	
   

  	
  859

  	
   

  	
  917

  	
   

  	
  1,031

  	
   

  	
  1,146

  	
   

  	
  1,146

  	
   

  	
  1,146

  	
   

  	
  1,146

  	
   

  	
  1,146

  	
   

  	
  1,146

  	
   

  	
  1,146

  	
   

  	
  1,146

  	
   

  
	
  2. DRMS Baseline Expenses

  	
   

  	
   

  	
   

  	
  (401

  	
  )

  	
  (602

  	
  )

  	
  (642

  	
  )

  	
  (722

  	
  )

  	
  (802

  	
  )

  	
  (802

  	
  )

  	
  (802

  	
  )

  	
  (802

  	
  )

  	
  (802

  	
  )

  	
  (802

  	
  )

  	
  (802

  	
  )

  	
  (802

  	
  )

  
	
  3. DRMS Baseline Net Proceeds

  	
   

  	
   

  	
   

  	
  172

  	
   

  	
  258

  	
   

  	
  275

  	
   

  	
  309

  	
   

  	
  344

  	
   

  	
  344

  	
   

  	
  344

  	
   

  	
  344

  	
   

  	
  344

  	
   

  	
  344

  	
   

  	
  344

  	
   

  	
  344

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C. Purchaser Cashflows

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1. Purchaser Gross Proceeds

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  573

  	
   

  	
  859

  	
   

  	
  917

  	
   

  	
  1,031

  	
   

  	
  1,146

  	
   

  	
  1,192

  	
   

  	
  1,192

  	
   

  	
  1,192

  	
   

  	
  1,192

  	
   

  	
  1,192

  	
   

  	
  1,192

  	
   

  
	
      Purchaser
  Start Up Expenses

  	
   

  	
   

  	
   

  	
  (400

  	
  )

  	
  (250

  	
  )

  	
  (150

  	
  )

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
      Purchaser
  Expenses

  	
   

  	
   

  	
   

  	
  (353

  	
  )

  	
  (529

  	
  )

  	
  (565

  	
  )

  	
  (635

  	
  )

  	
  (706

  	
  )

  	
  (706

  	
  )

  	
  (706

  	
  )

  	
  (706

  	
  )

  	
  (706

  	
  )

  	
  (706

  	
  )

  	
  (706

  	
  )

  	
  (706

  	
  )

  
	
  2. Total Purchaser Expenses

  	
   

  	
  0

  	
   

  	
  (753

  	
  )

  	
  (779

  	
  )

  	
  (715

  	
  )

  	
  (635

  	
  )

  	
  (706

  	
  )

  	
  (706

  	
  )

  	
  (706

  	
  )

  	
  (706

  	
  )

  	
  (706

  	
  )

  	
  (706

  	
  )

  	
  (706

  	
  )

  	
  (706

  	
  )

  
	
  3. Purchaser Net Proceeds (Direct Cost Advance)

  	
   

  	
  0

  	
   

  	
  (753

  	
  )

  	
  (206

  	
  )

  	
  145

  	
   

  	
  281

  	
   

  	
  325

  	
   

  	
  440

  	
   

  	
  486

  	
   

  	
  486

  	
   

  	
  486

  	
   

  	
  486

  	
   

  	
  486

  	
   

  	
  486

  	
   

  
	
  4. Purchaser Operating Cash Balance

  	
   

  	
   

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  232

  	
   

  	
  706

  	
   

  	
  706

  	
   

  	
  706

  	
   

  	
  706

  	
   

  	
  706

  	
   

  	
  706

  	
   

  
	
  5. Purchaser Working Capital Advance Balance

  	
   

  	
   

  	
   

  	
  (753

  	
  )

  	
  (959

  	
  )

  	
  (815

  	
  )

  	
  (533

  	
  )

  	
  (208

  	
  )

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  6. Available for Distribution

  	
   

  	
   

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  12

  	
   

  	
  486

  	
   

  	
  486

  	
   

  	
  486

  	
   

  	
  486

  	
   

  	
  486

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  II. Recap of Payments & Distributions

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  A. Contractor Cashflows

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1. Payments to DRMS: Bid Price

  	
   

  	
  (2,000

  	
  )

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  2. Payments to DRMS: Quarterly Purchase Price

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  (2.6

  	
  )

  	
  0

  	
   

  	
  0

  	
   

  	
  (5.6

  	
  )

  	
  0

  	
   

  	
  0

  	
   

  	
  (6.3

  	
  )

  	
  0

  	
   

  	
  0

  	
   

  	
  (6.3

  	
  )

  
	
  3. Direct Cost (Advances) Repayments

  	
   

  	
  0

  	
   

  	
  (753

  	
  )

  	
  (206

  	
  )

  	
  145

  	
   

  	
  281

  	
   

  	
  325

  	
   

  	
  208

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  4. Cumulative Direct Cost (Advances) Repayments

  	
   

  	
  0

  	
   

  	
  (753

  	
  )

  	
  (959

  	
  )

  	
  (815

  	
  )

  	
  (533

  	
  )

  	
  (208

  	
  )

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  5. Distributions = 20% of Net Proceeds

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  2

  	
   

  	
  97

  	
   

  	
  97

  	
   

  	
  97

  	
   

  	
  97

  	
   

  	
  97

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6. Payment Deposit

  	
   

  	
  (30

  	
  )

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  7. Retention Fund (Payments) Credits

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  8. Retention Fund - Balance

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9. Contractor Net Cashflow - This Month

  	
   

  	
  (2,030

  	
  )

  	
  (753

  	
  )

  	
  (206

  	
  )

  	
  142

  	
   

  	
  281

  	
   

  	
  325

  	
   

  	
  202

  	
   

  	
  2

  	
   

  	
  97

  	
   

  	
  91

  	
   

  	
  97

  	
   

  	
  97

  	
   

  	
  91

  	
   

  
	
  10. Contractor Cumulative Net Cashflow

  	
   

  	
  (2,030

  	
  )

  	
  (2,783

  	
  )

  	
  (2,989

  	
  )

  	
  (2,847

  	
  )

  	
  (2,566

  	
  )

  	
  (2,240

  	
  )

  	
  (2,038

  	
  )

  	
  (2,036

  	
  )

  	
  (1,939

  	
  )

  	
  (1,848

  	
  )

  	
  (1,751

  	
  )

  	
  (1,653

  	
  )

  	
  (1,562

  	
  )

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B. DRMS Cashflows

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1. Payments from Contractor for Bid Price + Qtrly
  Purchase Price

  	
   

  	
  2,000

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  3

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  6

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  6

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  6

  	
   

  
	
  2. Gross Distribution Payments [80% of Net Proceeds]

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  10

  	
   

  	
  389

  	
   

  	
  389

  	
   

  	
  389

  	
   

  	
  389

  	
   

  	
  389

  	
   

  
	
  3. Purchase Price + Gross Distributions

  	
   

  	
   

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  3

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  6

  	
   

  	
  10

  	
   

  	
  389

  	
   

  	
  395

  	
   

  	
  389

  	
   

  	
  389

  	
   

  	
  395

  	
   

  
	
  4. Payment Deposit

  	
   

  	
  30

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  5. Retention Fund (Payments) Credits

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  6. Less Seller Indirect Costs

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7. DRMS Net Cashflow - This Month

  	
   

  	
  2,030

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  3

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  6

  	
   

  	
  10

  	
   

  	
  389

  	
   

  	
  395

  	
   

  	
  389

  	
   

  	
  389

  	
   

  	
  395

  	
   

  
	
  8. DRMS Cumulative Cashflow

  	
   

  	
  2,030

  	
   

  	
  2,030

  	
   

  	
  2,030

  	
   

  	
  2,033

  	
   

  	
  2,033

  	
   

  	
  2,033

  	
   

  	
  2,038

  	
   

  	
  2,048

  	
   

  	
  2,437

  	
   

  	
  2,832

  	
   

  	
  3,220

  	
   

  	
  3,609

  	
   

  	
  4,004

  	
   

  

 

28.2

 

Table
III-1

Scrap Venture Illustrative 7 Year Financial Model

 

	
   

  	
   

  	
  Year 2

  	
   

  
	
  All
  Figures (000s)

  	
   

  	
  Month

  13

  	
   

  	
  Month

  14

  	
   

  	
  Month

  15

  	
   

  	
  Month

  16

  	
   

  	
  Month

  17

  	
   

  	
  Month

  18

  	
   

  	
  Month

  19

  	
   

  	
  Month

  20

  	
   

  	
  Month

  21

  	
   

  	
  Month

  22

  	
   

  	
  Month

  23

  	
   

  	
  Month

  24

  	
   

  
	
  I.
  Assumptions & Cash Flows

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  A. Purchaser Inventory

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1. Weight of Scrap Delivered

  	
   

  	
  18,750

  	
   

  	
  18,750

  	
   

  	
  18,750

  	
   

  	
  18,750

  	
   

  	
  18,750

  	
   

  	
  18,750

  	
   

  	
  18,750

  	
   

  	
  18,750

  	
   

  	
  18,750

  	
   

  	
  18,750

  	
   

  	
  18,750

  	
   

  	
  18,750

  	
   

  
	
  2. Weight of Scrap Sold

  	
   

  	
  20,833

  	
   

  	
  18,750

  	
   

  	
  18,750

  	
   

  	
  18,750

  	
   

  	
  18,750

  	
   

  	
  18,750

  	
   

  	
  18,750

  	
   

  	
  18,750

  	
   

  	
  18,750

  	
   

  	
  18,750

  	
   

  	
  18,750

  	
   

  	
  18,750

  	
   

  
	
  3. Weight of Scrap in Inventory

  	
   

  	
  18,750

  	
   

  	
  18,750

  	
   

  	
  18,750

  	
   

  	
  18,750

  	
   

  	
  18,750

  	
   

  	
  18,750

  	
   

  	
  18,750

  	
   

  	
  18,750

  	
   

  	
  18,750

  	
   

  	
  18,750

  	
   

  	
  18,750

  	
   

  	
  18,750

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B. DRMS Baseline Proceeds

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1. DRMS Baseline Gross Proceeds

  	
   

  	
  1,031

  	
   

  	
  1,031

  	
   

  	
  1,031

  	
   

  	
  1,031

  	
   

  	
  1,031

  	
   

  	
  1,031

  	
   

  	
  1,031

  	
   

  	
  1,031

  	
   

  	
  1,031

  	
   

  	
  1,031

  	
   

  	
  1,031

  	
   

  	
  1,031

  	
   

  
	
  2. DRMS Baseline Expenses

  	
   

  	
  (722

  	
  )

  	
  (722

  	
  )

  	
  (722

  	
  )

  	
  (722

  	
  )

  	
  (722

  	
  )

  	
  (722

  	
  )

  	
  (722

  	
  )

  	
  (722

  	
  )

  	
  (722

  	
  )

  	
  (722

  	
  )

  	
  (722

  	
  )

  	
  (722

  	
  )

  
	
  3. DRMS Baseline Net Proceeds

  	
   

  	
  309

  	
   

  	
  309

  	
   

  	
  309

  	
   

  	
  309

  	
   

  	
  309

  	
   

  	
  309

  	
   

  	
  309

  	
   

  	
  309

  	
   

  	
  309

  	
   

  	
  309

  	
   

  	
  309

  	
   

  	
  309

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C. Purchaser Cashflows

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1. Purchaser Gross Proceeds

  	
   

  	
  1,238

  	
   

  	
  1,114

  	
   

  	
  1,114

  	
   

  	
  1,114

  	
   

  	
  1,114

  	
   

  	
  1,114

  	
   

  	
  1,114

  	
   

  	
  1,114

  	
   

  	
  1,114

  	
   

  	
  1,114

  	
   

  	
  1,114

  	
   

  	
  1,114

  	
   

  
	
      Purchaser
  Start Up Expenses

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
      Purchaser
  Expenses

  	
   

  	
  (706

  	
  )

  	
  (635

  	
  )

  	
  (635

  	
  )

  	
  (635

  	
  )

  	
  (635

  	
  )

  	
  (635

  	
  )

  	
  (635

  	
  )

  	
  (635

  	
  )

  	
  (635

  	
  )

  	
  (635

  	
  )

  	
  (635

  	
  )

  	
  (635

  	
  )

  
	
  2. Total Purchaser Expenses

  	
   

  	
  (706

  	
  )

  	
  (635

  	
  )

  	
  (635

  	
  )

  	
  (635

  	
  )

  	
  (635

  	
  )

  	
  (635

  	
  )

  	
  (635

  	
  )

  	
  (635

  	
  )

  	
  (635

  	
  )

  	
  (635

  	
  )

  	
  (635

  	
  )

  	
  (635

  	
  )

  
	
  3. Purchaser Net Proceeds (Direct Cost Advance)

  	
   

  	
  532

  	
   

  	
  479

  	
   

  	
  479

  	
   

  	
  479

  	
   

  	
  479

  	
   

  	
  479

  	
   

  	
  479

  	
   

  	
  479

  	
   

  	
  479

  	
   

  	
  479

  	
   

  	
  479

  	
   

  	
  479

  	
   

  
	
  4. Purchaser Operating Cash Balance

  	
   

  	
  635

  	
   

  	
  635

  	
   

  	
  635

  	
   

  	
  635

  	
   

  	
  635

  	
   

  	
  635

  	
   

  	
  635

  	
   

  	
  635

  	
   

  	
  635

  	
   

  	
  635

  	
   

  	
  635

  	
   

  	
  635

  	
   

  
	
  5. Purchaser Working Capital Advance Balance

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  6. Available for Distribution

  	
   

  	
  602

  	
   

  	
  479

  	
   

  	
  479

  	
   

  	
  479

  	
   

  	
  479

  	
   

  	
  479

  	
   

  	
  479

  	
   

  	
  479

  	
   

  	
  479

  	
   

  	
  479

  	
   

  	
  479

  	
   

  	
  479

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  II.
  Recap of Payments & Distributions

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  A. Contractor Cashflows

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1. Payments to DRMS: Bid Price

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  2. Payments to DRMS: Quarterly Purchase Price

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  (5.8

  	
  )

  	
  0

  	
   

  	
  0

  	
   

  	
  (5.6

  	
  )

  	
  0

  	
   

  	
  0

  	
   

  	
  (5.6

  	
  )

  	
  0

  	
   

  	
  0

  	
   

  	
  (5.6

  	
  )

  
	
  3. Direct Cost (Advances) Repayments

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  4. Cumulative Direct Cost (Advances) Repayments

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  5. Distributions = 20% of Net Proceeds

  	
   

  	
  120

  	
   

  	
  96

  	
   

  	
  96

  	
   

  	
  96

  	
   

  	
  96

  	
   

  	
  96

  	
   

  	
  96

  	
   

  	
  96

  	
   

  	
  96

  	
   

  	
  96

  	
   

  	
  96

  	
   

  	
  96

  	
   

  
	
  6. Payment Deposit

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  7. Retention Fund (Payments) Credits

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  8. Retention Fund - Balance

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  9. Contractor Net Cashflow - This Month

  	
   

  	
  120

  	
   

  	
  96

  	
   

  	
  90

  	
   

  	
  96

  	
   

  	
  96

  	
   

  	
  90

  	
   

  	
  96

  	
   

  	
  96

  	
   

  	
  90

  	
   

  	
  96

  	
   

  	
  96

  	
   

  	
  90

  	
   

  
	
  10. Contractor Cumulative Net Cashflow

  	
   

  	
  (1,442

  	
  )

  	
  (1,346

  	
  )

  	
  (1,256

  	
  )

  	
  (1,161

  	
  )

  	
  (1,065

  	
  )

  	
  (975

  	
  )

  	
  (879

  	
  )

  	
  (784

  	
  )

  	
  (693

  	
  )

  	
  (598

  	
  )

  	
  (502

  	
  )

  	
  (412

  	
  )

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B. DRMS Cashflows

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1. Payments from Contractor for Bid Price + Qtrly
  Purchase Price

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  6

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  6

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  6

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  6

  	
   

  
	
  2. Gross Distribution Payments [80% of Net Proceeds]

  	
   

  	
  482

  	
   

  	
  383

  	
   

  	
  383

  	
   

  	
  383

  	
   

  	
  383

  	
   

  	
  383

  	
   

  	
  383

  	
   

  	
  383

  	
   

  	
  383

  	
   

  	
  383

  	
   

  	
  383

  	
   

  	
  383

  	
   

  
	
  3. Purchase Price + Gross Distributions

  	
   

  	
  482

  	
   

  	
  383

  	
   

  	
  389

  	
   

  	
  383

  	
   

  	
  383

  	
   

  	
  388

  	
   

  	
  383

  	
   

  	
  383

  	
   

  	
  388

  	
   

  	
  383

  	
   

  	
  383

  	
   

  	
  388

  	
   

  
	
  4. Payment Deposit

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  5. Retention Fund (Payments) Credits

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  6. Less Seller Indirect Costs

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  7. DRMS Net Cashflow - This Month

  	
   

  	
  482

  	
   

  	
  383

  	
   

  	
  389

  	
   

  	
  383

  	
   

  	
  383

  	
   

  	
  388

  	
   

  	
  383

  	
   

  	
  383

  	
   

  	
  388

  	
   

  	
  383

  	
   

  	
  383

  	
   

  	
  388

  	
   

  
	
  8. DRMS Cumulative Cashflow

  	
   

  	
  4,486

  	
   

  	
  4,868

  	
   

  	
  5,257

  	
   

  	
  5,640

  	
   

  	
  6,023

  	
   

  	
  6,411

  	
   

  	
  6,794

  	
   

  	
  7,177

  	
   

  	
  7,565

  	
   

  	
  7,948

  	
   

  	
  8,331

  	
   

  	
  8,719

  	
   

  

 

28.3

 

Table
III-1

Scrap Venture Illustrative 7 Year Financial Model

 

	
   

  	
   

  	
  Year 3

  	
   

  
	
  All
  Figures (000s)

  	
   

  	
  Month

  25

  	
   

  	
  Month

  26

  	
   

  	
  Month

  27

  	
   

  	
  Month

  28

  	
   

  	
  Month

  29

  	
   

  	
  Month

  30

  	
   

  	
  Month

  31

  	
   

  	
  Month

  32

  	
   

  	
  Month

  33

  	
   

  	
  Month

  34

  	
   

  	
  Month

  35

  	
   

  	
  Month

  36

  	
   

  
	
  I.
  Assumptions & Cash Flows

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  A. Purchaser Inventory

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1. Weight of Scrap Delivered

  	
   

  	
  16,875

  	
   

  	
  16,875

  	
   

  	
  16,875

  	
   

  	
  16,875

  	
   

  	
  16,875

  	
   

  	
  16,875

  	
   

  	
  16,875

  	
   

  	
  16,875

  	
   

  	
  16,875

  	
   

  	
  16,875

  	
   

  	
  16,875

  	
   

  	
  16,875

  	
   

  
	
  2. Weight of Scrap Sold

  	
   

  	
  18,750

  	
   

  	
  16,875

  	
   

  	
  16,875

  	
   

  	
  16,875

  	
   

  	
  16,875

  	
   

  	
  16,875

  	
   

  	
  16,875

  	
   

  	
  16,875

  	
   

  	
  16,875

  	
   

  	
  16,875

  	
   

  	
  16,875

  	
   

  	
  16,875

  	
   

  
	
  3. Weight of Scrap in Inventory

  	
   

  	
  16,875

  	
   

  	
  16,875

  	
   

  	
  16,875

  	
   

  	
  16,875

  	
   

  	
  16,875

  	
   

  	
  16,875

  	
   

  	
  16,875

  	
   

  	
  16,875

  	
   

  	
  16,875

  	
   

  	
  16,875

  	
   

  	
  16,875

  	
   

  	
  16,875

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B. DRMS Baseline Proceeds

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1. DRMS Baseline Gross Proceeds

  	
   

  	
  928

  	
   

  	
  928

  	
   

  	
  928

  	
   

  	
  928

  	
   

  	
  928

  	
   

  	
  928

  	
   

  	
  928

  	
   

  	
  928

  	
   

  	
  928

  	
   

  	
  928

  	
   

  	
  928

  	
   

  	
  928

  	
   

  
	
  2. DRMS Baseline Expenses

  	
   

  	
  (650

  	
  )

  	
  (650

  	
  )

  	
  (650

  	
  )

  	
  (650

  	
  )

  	
  (650

  	
  )

  	
  (650

  	
  )

  	
  (650

  	
  )

  	
  (650

  	
  )

  	
  (650

  	
  )

  	
  (650

  	
  )

  	
  (650

  	
  )

  	
  (650

  	
  )

  
	
  3. DRMS Baseline Net Proceeds

  	
   

  	
  278

  	
   

  	
  278

  	
   

  	
  278

  	
   

  	
  278

  	
   

  	
  278

  	
   

  	
  278

  	
   

  	
  278

  	
   

  	
  278

  	
   

  	
  278

  	
   

  	
  278

  	
   

  	
  278

  	
   

  	
  278

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C. Purchaser Cashflows

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1. Purchaser Gross Proceeds

  	
   

  	
  1,114

  	
   

  	
  1,002

  	
   

  	
  1,002

  	
   

  	
  1,002

  	
   

  	
  1,002

  	
   

  	
  1,002

  	
   

  	
  1,002

  	
   

  	
  1,002

  	
   

  	
  1,002

  	
   

  	
  1,002

  	
   

  	
  1,002

  	
   

  	
  1,002

  	
   

  
	
      Purchaser
  Start Up Expenses

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
      Purchaser
  Expenses

  	
   

  	
  (635

  	
  )

  	
  (572

  	
  )

  	
  (572

  	
  )

  	
  (572

  	
  )

  	
  (572

  	
  )

  	
  (572

  	
  )

  	
  (572

  	
  )

  	
  (572

  	
  )

  	
  (572

  	
  )

  	
  (572

  	
  )

  	
  (572

  	
  )

  	
  (572

  	
  )

  
	
  2. Total Purchaser Expenses

  	
   

  	
  (635

  	
  )

  	
  (572

  	
  )

  	
  (572

  	
  )

  	
  (572

  	
  )

  	
  (572

  	
  )

  	
  (572

  	
  )

  	
  (572

  	
  )

  	
  (572

  	
  )

  	
  (572

  	
  )

  	
  (572

  	
  )

  	
  (572

  	
  )

  	
  (572

  	
  )

  
	
  3. Purchaser Net Proceeds (Direct Cost Advance)

  	
   

  	
  479

  	
   

  	
  431

  	
   

  	
  431

  	
   

  	
  431

  	
   

  	
  431

  	
   

  	
  431

  	
   

  	
  431

  	
   

  	
  431

  	
   

  	
  431

  	
   

  	
  431

  	
   

  	
  431

  	
   

  	
  431

  	
   

  
	
  4. Purchaser Operating Cash Balance

  	
   

  	
  572

  	
   

  	
  572

  	
   

  	
  572

  	
   

  	
  572

  	
   

  	
  572

  	
   

  	
  572

  	
   

  	
  572

  	
   

  	
  572

  	
   

  	
  572

  	
   

  	
  572

  	
   

  	
  572

  	
   

  	
  572

  	
   

  
	
  5. Purchaser Working Capital Advance Balance

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  6. Available for Distribution

  	
   

  	
  542

  	
   

  	
  431

  	
   

  	
  431

  	
   

  	
  431

  	
   

  	
  431

  	
   

  	
  431

  	
   

  	
  431

  	
   

  	
  431

  	
   

  	
  431

  	
   

  	
  431

  	
   

  	
  431

  	
   

  	
  431

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  II.
  Recap of Payments & Distributions

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  A. Contractor Cashflows

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1. Payments to DRMS: Bid Price

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  2. Payments to DRMS: Quarterly Purchase Price

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  (5.3

  	
  )

  	
  0

  	
   

  	
  0

  	
   

  	
  (5.1

  	
  )

  	
  0

  	
   

  	
  0

  	
   

  	
  (5.1

  	
  )

  	
  0

  	
   

  	
  0

  	
   

  	
  (5.1

  	
  )

  
	
  3. Direct Cost (Advances) Repayments

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  4. Cumulative Direct Cost (Advances) Repayments

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  5. Distributions = 20% of Net Proceeds

  	
   

  	
  108

  	
   

  	
  86

  	
   

  	
  86

  	
   

  	
  86

  	
   

  	
  86

  	
   

  	
  86

  	
   

  	
  86

  	
   

  	
  86

  	
   

  	
  86

  	
   

  	
  86

  	
   

  	
  86

  	
   

  	
  86

  	
   

  
	
  6. Payment Deposit

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  7. Retention Fund (Payments) Credits

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  (9

  	
  )

  	
  (9

  	
  )

  	
  (9

  	
  )

  	
  (9

  	
  )

  	
  (9

  	
  )

  	
  (9

  	
  )

  	
  (9

  	
  )

  	
  (9

  	
  )

  
	
  8. Retention Fund - Balance

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  (9

  	
  )

  	
  (17

  	
  )

  	
  (26

  	
  )

  	
  (34

  	
  )

  	
  (43

  	
  )

  	
  (52

  	
  )

  	
  (60

  	
  )

  	
  (69

  	
  )

  
	
  9. Contractor Net Cashflow - This Month

  	
   

  	
  108

  	
   

  	
  86

  	
   

  	
  81

  	
   

  	
  86

  	
   

  	
  78

  	
   

  	
  72

  	
   

  	
  78

  	
   

  	
  78

  	
   

  	
  72

  	
   

  	
  78

  	
   

  	
  78

  	
   

  	
  72

  	
   

  
	
  10. Contractor Cumulative Net Cashflow

  	
   

  	
  (304

  	
  )

  	
  (217

  	
  )

  	
  (137

  	
  )

  	
  (50

  	
  )

  	
  27

  	
   

  	
  99

  	
   

  	
  177

  	
   

  	
  255

  	
   

  	
  327

  	
   

  	
  405

  	
   

  	
  482

  	
   

  	
  554

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B. DRMS Cashflows

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1. Payments from Contractor for Bid Price + Qtrly
  Purchase Price

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  5

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  5

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  5

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  5

  	
   

  
	
  2. Gross Distribution Payments [80% of Net Proceeds]

  	
   

  	
  434

  	
   

  	
  345

  	
   

  	
  345

  	
   

  	
  345

  	
   

  	
  345

  	
   

  	
  345

  	
   

  	
  345

  	
   

  	
  345

  	
   

  	
  345

  	
   

  	
  345

  	
   

  	
  345

  	
   

  	
  345

  	
   

  
	
  3. Purchase Price + Gross Distributions

  	
   

  	
  434

  	
   

  	
  345

  	
   

  	
  350

  	
   

  	
  345

  	
   

  	
  345

  	
   

  	
  350

  	
   

  	
  345

  	
   

  	
  345

  	
   

  	
  350

  	
   

  	
  345

  	
   

  	
  345

  	
   

  	
  350

  	
   

  
	
  4. Payment Deposit

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  5. Retention Fund (Payments) Credits

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  9

  	
   

  	
  9

  	
   

  	
  9

  	
   

  	
  9

  	
   

  	
  9

  	
   

  	
  9

  	
   

  	
  9

  	
   

  	
  9

  	
   

  
	
  6. Less Seller Indirect Costs

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  7. DRMS Net Cashflow - This Month

  	
   

  	
  434

  	
   

  	
  345

  	
   

  	
  350

  	
   

  	
  345

  	
   

  	
  353

  	
   

  	
  358

  	
   

  	
  353

  	
   

  	
  353

  	
   

  	
  358

  	
   

  	
  353

  	
   

  	
  353

  	
   

  	
  358

  	
   

  
	
  8. DRMS Cumulative Cashflow

  	
   

  	
  9,153

  	
   

  	
  9,497

  	
   

  	
  9,847

  	
   

  	
  10,192

  	
   

  	
  10,545

  	
   

  	
  10,903

  	
   

  	
  11,256

  	
   

  	
  11,609

  	
   

  	
  11,967

  	
   

  	
  12,320

  	
   

  	
  12,674

  	
   

  	
  13,032

  	
   

  

 

28.4

 

Table
III-1

Scrap Venture Illustrative 7 Year Financial Model

 

	
   

  	
   

  	
  Year 4

  	
   

  
	
  All
  Figures (000s)

  	
   

  	
  Month

  37

  	
   

  	
  Month

  38

  	
   

  	
  Month

  39

  	
   

  	
  Month

  40

  	
   

  	
  Month

  41

  	
   

  	
  Month

  42

  	
   

  	
  Month

  43

  	
   

  	
  Month

  44

  	
   

  	
  Month

  45

  	
   

  	
  Month

  46

  	
   

  	
  Month

  47

  	
   

  	
  Month

  48

  	
   

  
	
  I.
  Assumptions & Cash Flows

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  A. Purchaser Inventory

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1. Weight of Scrap Delivered

  	
   

  	
  15,188

  	
   

  	
  15,188

  	
   

  	
  15,188

  	
   

  	
  15,188

  	
   

  	
  15,188

  	
   

  	
  15,188

  	
   

  	
  15,188

  	
   

  	
  15,188

  	
   

  	
  15,188

  	
   

  	
  15,188

  	
   

  	
  15,188

  	
   

  	
  15,188

  	
   

  
	
  2. Weight of Scrap Sold

  	
   

  	
  16,875

  	
   

  	
  15,188

  	
   

  	
  15,188

  	
   

  	
  15,188

  	
   

  	
  15,188

  	
   

  	
  15,188

  	
   

  	
  15,188

  	
   

  	
  15,188

  	
   

  	
  15,188

  	
   

  	
  15,188

  	
   

  	
  15,188

  	
   

  	
  15,188

  	
   

  
	
  3. Weight of Scrap in Inventory

  	
   

  	
  15,188

  	
   

  	
  15,188

  	
   

  	
  15,188

  	
   

  	
  15,188

  	
   

  	
  15,188

  	
   

  	
  15,188

  	
   

  	
  15,188

  	
   

  	
  15,188

  	
   

  	
  15,188

  	
   

  	
  15,188

  	
   

  	
  15,188

  	
   

  	
  15,188

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B. DRMS Baseline Proceeds

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1. DRMS Baseline Gross Proceeds

  	
   

  	
  835

  	
   

  	
  835

  	
   

  	
  835

  	
   

  	
  835

  	
   

  	
  835

  	
   

  	
  835

  	
   

  	
  835

  	
   

  	
  835

  	
   

  	
  835

  	
   

  	
  835

  	
   

  	
  835

  	
   

  	
  835

  	
   

  
	
  2. DRMS Baseline Expenses

  	
   

  	
  (585

  	
  )

  	
  (585

  	
  )

  	
  (585

  	
  )

  	
  (585

  	
  )

  	
  (585

  	
  )

  	
  (585

  	
  )

  	
  (585

  	
  )

  	
  (585

  	
  )

  	
  (585

  	
  )

  	
  (585

  	
  )

  	
  (585

  	
  )

  	
  (585

  	
  )

  
	
  3. DRMS Baseline Net Proceeds

  	
   

  	
  251

  	
   

  	
  251

  	
   

  	
  251

  	
   

  	
  251

  	
   

  	
  251

  	
   

  	
  251

  	
   

  	
  251

  	
   

  	
  251

  	
   

  	
  251

  	
   

  	
  251

  	
   

  	
  251

  	
   

  	
  251

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C. Purchaser Cashflows

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1. Purchaser Gross Proceeds

  	
   

  	
  1,002

  	
   

  	
  902

  	
   

  	
  902

  	
   

  	
  902

  	
   

  	
  902

  	
   

  	
  902

  	
   

  	
  902

  	
   

  	
  902

  	
   

  	
  902

  	
   

  	
  902

  	
   

  	
  902

  	
   

  	
  902

  	
   

  
	
      Purchaser
  Start Up Expenses

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
      Purchaser
  Expenses

  	
   

  	
  (572

  	
  )

  	
  (515

  	
  )

  	
  (515

  	
  )

  	
  (515

  	
  )

  	
  (515

  	
  )

  	
  (515

  	
  )

  	
  (515

  	
  )

  	
  (515

  	
  )

  	
  (515

  	
  )

  	
  (515

  	
  )

  	
  (515

  	
  )

  	
  (515

  	
  )

  
	
  2. Total Purchaser Expenses

  	
   

  	
  (572

  	
  )

  	
  (515

  	
  )

  	
  (515

  	
  )

  	
  (515

  	
  )

  	
  (515

  	
  )

  	
  (515

  	
  )

  	
  (515

  	
  )

  	
  (515

  	
  )

  	
  (515

  	
  )

  	
  (515

  	
  )

  	
  (515

  	
  )

  	
  (515

  	
  )

  
	
  3. Purchaser Net Proceeds (Direct Cost Advance)

  	
   

  	
  431

  	
   

  	
  388

  	
   

  	
  388

  	
   

  	
  388

  	
   

  	
  388

  	
   

  	
  388

  	
   

  	
  388

  	
   

  	
  388

  	
   

  	
  388

  	
   

  	
  388

  	
   

  	
  388

  	
   

  	
  388

  	
   

  
	
  4. Purchaser Operating Cash Balance

  	
   

  	
  515

  	
   

  	
  515

  	
   

  	
  515

  	
   

  	
  515

  	
   

  	
  515

  	
   

  	
  515

  	
   

  	
  515

  	
   

  	
  515

  	
   

  	
  515

  	
   

  	
  515

  	
   

  	
  515

  	
   

  	
  515

  	
   

  
	
  5. Purchaser Working Capital Advance Balance

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  6. Available for Distribution

  	
   

  	
  488

  	
   

  	
  388

  	
   

  	
  388

  	
   

  	
  388

  	
   

  	
  388

  	
   

  	
  388

  	
   

  	
  388

  	
   

  	
  388

  	
   

  	
  388

  	
   

  	
  388

  	
   

  	
  388

  	
   

  	
  388

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  II.
  Recap of Payments & Distributions

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  A. Contractor Cashflows

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1. Payments to DRMS: Bid Price

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  2. Payments to DRMS: Quarterly Purchase Price

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  (4.7

  	
  )

  	
  0

  	
   

  	
  0

  	
   

  	
  (4.6

  	
  )

  	
  0

  	
   

  	
  0

  	
   

  	
  (4.6

  	
  )

  	
  0

  	
   

  	
  0

  	
   

  	
  (4.6

  	
  )

  
	
  3. Direct Cost (Advances) Repayments

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  4. Cumulative Direct Cost (Advances) Repayments

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  5. Distributions = 20% of Net Proceeds

  	
   

  	
  98

  	
   

  	
  78

  	
   

  	
  78

  	
   

  	
  78

  	
   

  	
  78

  	
   

  	
  78

  	
   

  	
  78

  	
   

  	
  78

  	
   

  	
  78

  	
   

  	
  78

  	
   

  	
  78

  	
   

  	
  78

  	
   

  
	
  6. Payment Deposit

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  7. Retention Fund (Payments) Credits

  	
   

  	
  (10

  	
  )

  	
  (8

  	
  )

  	
  (8

  	
  )

  	
  (8

  	
  )

  	
  (8

  	
  )

  	
  (8

  	
  )

  	
  (8

  	
  )

  	
  (8

  	
  )

  	
  (8

  	
  )

  	
  (8

  	
  )

  	
  (8

  	
  )

  	
  (8

  	
  )

  
	
  8. Retention Fund - Balance

  	
   

  	
  (79

  	
  )

  	
  (86

  	
  )

  	
  (94

  	
  )

  	
  (102

  	
  )

  	
  (110

  	
  )

  	
  (117

  	
  )

  	
  (125

  	
  )

  	
  (133

  	
  )

  	
  (141

  	
  )

  	
  (148

  	
  )

  	
  (156

  	
  )

  	
  (164

  	
  )

  
	
  9. Contractor Net Cashflow - This Month

  	
   

  	
  88

  	
   

  	
  70

  	
   

  	
  65

  	
   

  	
  70

  	
   

  	
  70

  	
   

  	
  65

  	
   

  	
  70

  	
   

  	
  70

  	
   

  	
  65

  	
   

  	
  70

  	
   

  	
  70

  	
   

  	
  65

  	
   

  
	
  10. Contractor Cumulative Net Cashflow

  	
   

  	
  642

  	
   

  	
  712

  	
   

  	
  777

  	
   

  	
  847

  	
   

  	
  917

  	
   

  	
  982

  	
   

  	
  1,052

  	
   

  	
  1,121

  	
   

  	
  1,187

  	
   

  	
  1,256

  	
   

  	
  1,326

  	
   

  	
  1,391

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B. DRMS Cashflows

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1. Payments from Contractor for Bid Price + Qtrly
  Purchase Price

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  5

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  5

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  5

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  5

  	
   

  
	
  2. Gross Distribution Payments [80% of Net Proceeds]

  	
   

  	
  390

  	
   

  	
  310

  	
   

  	
  310

  	
   

  	
  310

  	
   

  	
  310

  	
   

  	
  310

  	
   

  	
  310

  	
   

  	
  310

  	
   

  	
  310

  	
   

  	
  310

  	
   

  	
  310

  	
   

  	
  310

  	
   

  
	
  3. Purchase Price + Gross Distributions

  	
   

  	
  390

  	
   

  	
  310

  	
   

  	
  315

  	
   

  	
  310

  	
   

  	
  310

  	
   

  	
  315

  	
   

  	
  310

  	
   

  	
  310

  	
   

  	
  315

  	
   

  	
  310

  	
   

  	
  310

  	
   

  	
  315

  	
   

  
	
  4. Payment Deposit

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  5. Retention Fund (Payments) Credits

  	
   

  	
  10

  	
   

  	
  8

  	
   

  	
  8

  	
   

  	
  8

  	
   

  	
  8

  	
   

  	
  8

  	
   

  	
  8

  	
   

  	
  8

  	
   

  	
  8

  	
   

  	
  8

  	
   

  	
  8

  	
   

  	
  8

  	
   

  
	
  6. Less Seller Indirect Costs

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  7. DRMS Net Cashflow - This Month

  	
   

  	
  400

  	
   

  	
  318

  	
   

  	
  323

  	
   

  	
  318

  	
   

  	
  318

  	
   

  	
  322

  	
   

  	
  318

  	
   

  	
  318

  	
   

  	
  322

  	
   

  	
  318

  	
   

  	
  318

  	
   

  	
  322

  	
   

  
	
  8. DRMS Cumulative Cashflow

  	
   

  	
  13,432

  	
   

  	
  13,750

  	
   

  	
  14,072

  	
   

  	
  14,390

  	
   

  	
  14,708

  	
   

  	
  15,030

  	
   

  	
  15,348

  	
   

  	
  15,666

  	
   

  	
  15,988

  	
   

  	
  16,306

  	
   

  	
  16,624

  	
   

  	
  16,946

  	
   

  

 

28.5

Table
III-1

Scrap Venture Illustrative 7 Year Financial Model

 

	
   

  	
   

  	
  Year 5

  	
   

  
	
  All
  Figures (000s)

  	
   

  	
  Month

  49

  	
   

  	
  Month

  50

  	
   

  	
  Month

  51

  	
   

  	
  Month

  52

  	
   

  	
  Month

  53

  	
   

  	
  Month

  54

  	
   

  	
  Month

  55

  	
   

  	
  Month

  56

  	
   

  	
  Month

  57

  	
   

  	
  Month

  58

  	
   

  	
  Month

  59

  	
   

  	
  Month

  60

  	
   

  
	
  I.
  Assumptions & Cash Flows

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  A. Purchaser Inventory

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1. Weight of Scrap Delivered

  	
   

  	
  13,669

  	
   

  	
  13,669

  	
   

  	
  13,669

  	
   

  	
  13,669

  	
   

  	
  13,669

  	
   

  	
  13,669

  	
   

  	
  13,669

  	
   

  	
  13,669

  	
   

  	
  13,669

  	
   

  	
  13,669

  	
   

  	
  13,669

  	
   

  	
  13,669

  	
   

  
	
  2. Weight of Scrap Sold

  	
   

  	
  15,188

  	
   

  	
  13,669

  	
   

  	
  13,669

  	
   

  	
  13,669

  	
   

  	
  13,669

  	
   

  	
  13,669

  	
   

  	
  13,669

  	
   

  	
  13,669

  	
   

  	
  13,669

  	
   

  	
  13,669

  	
   

  	
  13,669

  	
   

  	
  13,669

  	
   

  
	
  3. Weight of Scrap in Inventory

  	
   

  	
  13,669

  	
   

  	
  13,669

  	
   

  	
  13,669

  	
   

  	
  13,669

  	
   

  	
  13,669

  	
   

  	
  13,669

  	
   

  	
  13,669

  	
   

  	
  13,669

  	
   

  	
  13,669

  	
   

  	
  13,669

  	
   

  	
  13,669

  	
   

  	
  13,669

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B. DRMS Baseline Proceeds

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1. DRMS Baseline Gross Proceeds

  	
   

  	
  752

  	
   

  	
  752

  	
   

  	
  752

  	
   

  	
  752

  	
   

  	
  752

  	
   

  	
  752

  	
   

  	
  752

  	
   

  	
  752

  	
   

  	
  752

  	
   

  	
  752

  	
   

  	
  752

  	
   

  	
  752

  	
   

  
	
  2. DRMS Baseline Expenses

  	
   

  	
  (526

  	
  )

  	
  (526

  	
  )

  	
  (526

  	
  )

  	
  (526

  	
  )

  	
  (526

  	
  )

  	
  (526

  	
  )

  	
  (526

  	
  )

  	
  (526

  	
  )

  	
  (526

  	
  )

  	
  (526

  	
  )

  	
  (526

  	
  )

  	
  (526

  	
  )

  
	
  3. DRMS Baseline Net Proceeds

  	
   

  	
  226

  	
   

  	
  226

  	
   

  	
  226

  	
   

  	
  226

  	
   

  	
  226

  	
   

  	
  226

  	
   

  	
  226

  	
   

  	
  226

  	
   

  	
  226

  	
   

  	
  226

  	
   

  	
  226

  	
   

  	
  226

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C. Purchaser Cashflows

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1. Purchaser Gross Proceeds

  	
   

  	
  902

  	
   

  	
  812

  	
   

  	
  812

  	
   

  	
  812

  	
   

  	
  812

  	
   

  	
  812

  	
   

  	
  812

  	
   

  	
  812

  	
   

  	
  812

  	
   

  	
  812

  	
   

  	
  812

  	
   

  	
  812

  	
   

  
	
      Purchaser
  Start Up Expenses

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
      Purchaser
  Expenses

  	
   

  	
  (515

  	
  )

  	
  (463

  	
  )

  	
  (463

  	
  )

  	
  (463

  	
  )

  	
  (463

  	
  )

  	
  (463

  	
  )

  	
  (463

  	
  )

  	
  (463

  	
  )

  	
  (463

  	
  )

  	
  (463

  	
  )

  	
  (463

  	
  )

  	
  (463

  	
  )

  
	
  2. Total Purchaser Expenses

  	
   

  	
  (515

  	
  )

  	
  (463

  	
  )

  	
  (463

  	
  )

  	
  (463

  	
  )

  	
  (463

  	
  )

  	
  (463

  	
  )

  	
  (463

  	
  )

  	
  (463

  	
  )

  	
  (463

  	
  )

  	
  (463

  	
  )

  	
  (463

  	
  )

  	
  (463

  	
  )

  
	
  3. Purchaser Net Proceeds (Direct Cost Advance)

  	
   

  	
  388

  	
   

  	
  349

  	
   

  	
  349

  	
   

  	
  349

  	
   

  	
  349

  	
   

  	
  349

  	
   

  	
  349

  	
   

  	
  349

  	
   

  	
  349

  	
   

  	
  349

  	
   

  	
  349

  	
   

  	
  349

  	
   

  
	
  4. Purchaser Operating Cash Balance

  	
   

  	
  463

  	
   

  	
  463

  	
   

  	
  463

  	
   

  	
  463

  	
   

  	
  463

  	
   

  	
  463

  	
   

  	
  463

  	
   

  	
  463

  	
   

  	
  463

  	
   

  	
  463

  	
   

  	
  463

  	
   

  	
  463

  	
   

  
	
  5. Purchaser Working Capital Advance Balance

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  6. Available for Distribution

  	
   

  	
  439

  	
   

  	
  349

  	
   

  	
  349

  	
   

  	
  349

  	
   

  	
  349

  	
   

  	
  349

  	
   

  	
  349

  	
   

  	
  349

  	
   

  	
  349

  	
   

  	
  349

  	
   

  	
  349

  	
   

  	
  349

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  II.
  Recap of Payments & Distributions

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  A. Contractor Cashflows

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1. Payments to DRMS: Bid Price

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  2. Payments to DRMS: Quaterly Purchase Price

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  (4.3

  	
  )

  	
  0

  	
   

  	
  0

  	
   

  	
  (4.1

  	
  )

  	
  0

  	
   

  	
  0

  	
   

  	
  (4.1

  	
  )

  	
  0

  	
   

  	
  0

  	
   

  	
  (4.1

  	
  )

  
	
  3. Direct Cost (Advances) Repayments

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  4. Cumulative Direct Cost (Advances) Repayments

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  5. Distributions = 20% of Net Proceeds

  	
   

  	
  88

  	
   

  	
  70

  	
   

  	
  70

  	
   

  	
  70

  	
   

  	
  70

  	
   

  	
  70

  	
   

  	
  70

  	
   

  	
  70

  	
   

  	
  70

  	
   

  	
  70

  	
   

  	
  70

  	
   

  	
  70

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6. Payment Deposit

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  7. Retention Fund (Payments) Credits

  	
   

  	
  (9

  	
  )

  	
  (7

  	
  )

  	
  (7

  	
  )

  	
  (7

  	
  )

  	
  (7

  	
  )

  	
  (7

  	
  )

  	
  (7

  	
  )

  	
  (7

  	
  )

  	
  (7

  	
  )

  	
  (7

  	
  )

  	
  (7

  	
  )

  	
  (7

  	
  )

  
	
  8. Retention Fund - Balance

  	
   

  	
  (173

  	
  )

  	
  (180

  	
  )

  	
  (187

  	
  )

  	
  (194

  	
  )

  	
  (201

  	
  )

  	
  (208

  	
  )

  	
  (215

  	
  )

  	
  (222

  	
  )

  	
  (229

  	
  )

  	
  (235

  	
  )

  	
  (242

  	
  )

  	
  (249

  	
  )

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9. Contractor Net Cashflow - This Month

  	
   

  	
  79

  	
   

  	
  63

  	
   

  	
  59

  	
   

  	
  63

  	
   

  	
  63

  	
   

  	
  59

  	
   

  	
  63

  	
   

  	
  63

  	
   

  	
  59

  	
   

  	
  63

  	
   

  	
  63

  	
   

  	
  59

  	
   

  
	
  10. Contractor Cumulative Net Cashflow

  	
   

  	
  1,470

  	
   

  	
  1,533

  	
   

  	
  1,592

  	
   

  	
  1,654

  	
   

  	
  1,717

  	
   

  	
  1,776

  	
   

  	
  1,839

  	
   

  	
  1,902

  	
   

  	
  1,960

  	
   

  	
  2,023

  	
   

  	
  2,086

  	
   

  	
  2,144

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B. DRMS Cashflows

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1. Payments from Contractor for Bid Price + Qtrly
  Purchase Price

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  4

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  4

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  4

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  4

  	
   

  
	
  2. Gross Distribution Payments [80% of Net Proceeds]

  	
   

  	
  351

  	
   

  	
  279

  	
   

  	
  279

  	
   

  	
  279

  	
   

  	
  279

  	
   

  	
  279

  	
   

  	
  279

  	
   

  	
  279

  	
   

  	
  279

  	
   

  	
  279

  	
   

  	
  279

  	
   

  	
  279

  	
   

  
	
  3. Purchase Price + Gross Distributions

  	
   

  	
  351

  	
   

  	
  279

  	
   

  	
  283

  	
   

  	
  279

  	
   

  	
  279

  	
   

  	
  283

  	
   

  	
  279

  	
   

  	
  279

  	
   

  	
  283

  	
   

  	
  279

  	
   

  	
  279

  	
   

  	
  283

  	
   

  
	
  4. Payment Deposit

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  5. Retention Fund (Payments) Credits

  	
   

  	
  9

  	
   

  	
  7

  	
   

  	
  7

  	
   

  	
  7

  	
   

  	
  7

  	
   

  	
  7

  	
   

  	
  7

  	
   

  	
  7

  	
   

  	
  7

  	
   

  	
  7

  	
   

  	
  7

  	
   

  	
  7

  	
   

  
	
  6. Less Seller Indirect Costs

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  7. DRMS Net Cashflows This Month

  	
   

  	
  360

  	
   

  	
  286

  	
   

  	
  290

  	
   

  	
  286

  	
   

  	
  286

  	
   

  	
  290

  	
   

  	
  286

  	
   

  	
  286

  	
   

  	
  290

  	
   

  	
  286

  	
   

  	
  286

  	
   

  	
  290

  	
   

  
	
  8. DRMS Cumulative Cashflow

  	
   

  	
  17,306

  	
   

  	
  17,592

  	
   

  	
  17,883

  	
   

  	
  18,169

  	
   

  	
  18,455

  	
   

  	
  18,745

  	
   

  	
  19,031

  	
   

  	
  19,317

  	
   

  	
  19,607

  	
   

  	
  19,893

  	
   

  	
  20,179

  	
   

  	
  20,469

  	
   

  

 

28.6

Table
III-1

Scrap Venture Illustrative 7 Year Financial Model

 

	
   

  	
   

  	
  Year 6

  	
   

  
	
  All
  Figures (000s)

  	
   

  	
  Month

  61

  	
   

  	
  Month

  62

  	
   

  	
  Month

  63

  	
   

  	
  Month

  64

  	
   

  	
  Month

  65

  	
   

  	
  Month

  66

  	
   

  	
  Month

  67

  	
   

  	
  Month

  68

  	
   

  	
  Month

  69

  	
   

  	
  Month

  70

  	
   

  	
  Month

  71

  	
   

  	
  Month

  72

  	
   

  
	
  I. Assumptions &
  Cash Flows

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  A. Purchaser Inventory

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1. Weight of Scrap Delivered

  	
   

  	
  12,302

  	
   

  	
  12,302

  	
   

  	
  12,302

  	
   

  	
  12,302

  	
   

  	
  12,302

  	
   

  	
  12,302

  	
   

  	
  12,302

  	
   

  	
  12,302

  	
   

  	
  12,302

  	
   

  	
  12,302

  	
   

  	
  12,302

  	
   

  	
  12,302

  	
   

  
	
  2. Weight of Scrap Sold

  	
   

  	
  13,669

  	
   

  	
  12,302

  	
   

  	
  12,302

  	
   

  	
  12,302

  	
   

  	
  12,302

  	
   

  	
  12,302

  	
   

  	
  12,302

  	
   

  	
  12,302

  	
   

  	
  12,302

  	
   

  	
  12,302

  	
   

  	
  12,302

  	
   

  	
  12,302

  	
   

  
	
  3. Weight of Scrap in Inventory

  	
   

  	
  12,302

  	
   

  	
  12,302

  	
   

  	
  12,302

  	
   

  	
  12,302

  	
   

  	
  12,302

  	
   

  	
  12,302

  	
   

  	
  12,302

  	
   

  	
  12,302

  	
   

  	
  12,302

  	
   

  	
  12,302

  	
   

  	
  12,302

  	
   

  	
  12,302

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B. DRMS Baseline Proceeds

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1. DRMS Baseline Gross Proceeds

  	
   

  	
  677

  	
   

  	
  677

  	
   

  	
  677

  	
   

  	
  677

  	
   

  	
  677

  	
   

  	
  677

  	
   

  	
  677

  	
   

  	
  677

  	
   

  	
  677

  	
   

  	
  677

  	
   

  	
  677

  	
   

  	
  677

  	
   

  
	
  2. DRMS Baseline Expenses

  	
   

  	
  (474

  	
  )

  	
  (474

  	
  )

  	
  (474

  	
  )

  	
  (474

  	
  )

  	
  (474

  	
  )

  	
  (474

  	
  )

  	
  (474

  	
  )

  	
  (474

  	
  )

  	
  (474

  	
  )

  	
  (474

  	
  )

  	
  (474

  	
  )

  	
  (474

  	
  )

  
	
  3. DRMS Baseline Net Proceeds

  	
   

  	
  203

  	
   

  	
  203

  	
   

  	
  203

  	
   

  	
  203

  	
   

  	
  203

  	
   

  	
  203

  	
   

  	
  203

  	
   

  	
  203

  	
   

  	
  203

  	
   

  	
  203

  	
   

  	
  203

  	
   

  	
  203

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C. Purchaser Cashflows

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1. Purchaser Gross Proceeds

  	
   

  	
  812

  	
   

  	
  731

  	
   

  	
  731

  	
   

  	
  731

  	
   

  	
  731

  	
   

  	
  731

  	
   

  	
  731

  	
   

  	
  731

  	
   

  	
  731

  	
   

  	
  731

  	
   

  	
  731

  	
   

  	
  731

  	
   

  
	
      Purchaser
  Start Up Expenses

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
      Purchaser
  Expenses

  	
   

  	
  (463

  	
  )

  	
  (417

  	
  )

  	
  (417

  	
  )

  	
  (417

  	
  )

  	
  (417

  	
  )

  	
  (417

  	
  )

  	
  (417

  	
  )

  	
  (417

  	
  )

  	
  (417

  	
  )

  	
  (417

  	
  )

  	
  (417

  	
  )

  	
  (417

  	
  )

  
	
  2. Total Purchaser Expenses

  	
   

  	
  (463

  	
  )

  	
  (417

  	
  )

  	
  (417

  	
  )

  	
  (417

  	
  )

  	
  (417

  	
  )

  	
  (417

  	
  )

  	
  (417

  	
  )

  	
  (417

  	
  )

  	
  (417

  	
  )

  	
  (417

  	
  )

  	
  (417

  	
  )

  	
  (417

  	
  )

  
	
  3. Purchaser Net Proceeds (Direct Cost Advance)

  	
   

  	
  349

  	
   

  	
  314

  	
   

  	
  314

  	
   

  	
  314

  	
   

  	
  314

  	
   

  	
  314

  	
   

  	
  314

  	
   

  	
  314

  	
   

  	
  314

  	
   

  	
  314

  	
   

  	
  314

  	
   

  	
  314

  	
   

  
	
  4. Purchaser Operating Cash Balance

  	
   

  	
  417

  	
   

  	
  417

  	
   

  	
  417

  	
   

  	
  417

  	
   

  	
  417

  	
   

  	
  417

  	
   

  	
  417

  	
   

  	
  417

  	
   

  	
  417

  	
   

  	
  417

  	
   

  	
  417

  	
   

  	
  417

  	
   

  
	
  5. Purchaser Working Capital Advance Balance

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  6. Available for Distribution

  	
   

  	
  395

  	
   

  	
  314

  	
   

  	
  314

  	
   

  	
  314

  	
   

  	
  314

  	
   

  	
  314

  	
   

  	
  314

  	
   

  	
  314

  	
   

  	
  314

  	
   

  	
  314

  	
   

  	
  314

  	
   

  	
  314

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  II.
  Recap of Payments & Distributions

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  A. Contractor Cashflows

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1. Payments to DRMS: Bid Price

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  2. Payments to DRMS: Quarterly Purchase Price

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  (3.8

  	
  )

  	
  0

  	
   

  	
  0

  	
   

  	
  (3.7

  	
  )

  	
  0

  	
   

  	
  0

  	
   

  	
  (3.7

  	
  )

  	
  0

  	
   

  	
  0

  	
   

  	
  (3.7

  	
  )

  
	
  3. Direct Cost (Advances) Repayments

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  4. Cumulative Direct Cost (Advances) Repayments

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  5. Distributions = 20% of Net Proceeds

  	
   

  	
  79

  	
   

  	
  63

  	
   

  	
  63

  	
   

  	
  63

  	
   

  	
  63

  	
   

  	
  63

  	
   

  	
  63

  	
   

  	
  63

  	
   

  	
  63

  	
   

  	
  63

  	
   

  	
  63

  	
   

  	
  63

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6. Payment Deposit

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  7. Retention Fund (Payments) Credits

  	
   

  	
  (1

  	
  )

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  8. Retention Fund - Balance

  	
   

  	
  (250

  	
  )

  	
  (250

  	
  )

  	
  (250

  	
  )

  	
  (250

  	
  )

  	
  (250

  	
  )

  	
  (250

  	
  )

  	
  (250

  	
  )

  	
  (250

  	
  )

  	
  (250

  	
  )

  	
  (250

  	
  )

  	
  (250

  	
  )

  	
  (250

  	
  )

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9. Contractor Net Cashflow - This Month

  	
   

  	
  78

  	
   

  	
  63

  	
   

  	
  69

  	
   

  	
  63

  	
   

  	
  63

  	
   

  	
  69

  	
   

  	
  63

  	
   

  	
  63

  	
   

  	
  63

  	
   

  	
  63

  	
   

  	
  63

  	
   

  	
  69

  	
   

  
	
  10. Contractor Cumulative Net Cashflow

  	
   

  	
  2,223

  	
   

  	
  2,286

  	
   

  	
  2,345

  	
   

  	
  2,407

  	
   

  	
  2,470

  	
   

  	
  2,592

  	
   

  	
  2,592

  	
   

  	
  2,555

  	
   

  	
  2,714

  	
   

  	
  2,777

  	
   

  	
  2,840

  	
   

  	
  2,899

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B. DRMS Cashflows

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.Payments from Contractor for Bid Price + Qtrly
  Purchase Price

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  4

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  4

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  4

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  4

  	
   

  
	
  2.Gross Distribution Payments [80% of Net Proceeds]

  	
   

  	
  316

  	
   

  	
  251

  	
   

  	
  251

  	
   

  	
  251

  	
   

  	
  251

  	
   

  	
  251

  	
   

  	
  251

  	
   

  	
  251

  	
   

  	
  251

  	
   

  	
  251

  	
   

  	
  251

  	
   

  	
  251

  	
   

  
	
  3.Purchase Price + Gross Distributions

  	
   

  	
  316

  	
   

  	
  251

  	
   

  	
  255

  	
   

  	
  251

  	
   

  	
  251

  	
   

  	
  255

  	
   

  	
  251

  	
   

  	
  251

  	
   

  	
  255

  	
   

  	
  251

  	
   

  	
  251

  	
   

  	
  255

  	
   

  
	
  4.Payment Deposit

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  5.Retention Fund (Payments) Credits

  	
   

  	
  1

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  6.Less Seller Indirect Costs

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  7.DRMS Net Cashflows - This Month

  	
   

  	
  317

  	
   

  	
  251

  	
   

  	
  251

  	
   

  	
  251

  	
   

  	
  251

  	
   

  	
  255

  	
   

  	
  251

  	
   

  	
  251

  	
   

  	
  251

  	
   

  	
  251

  	
   

  	
  251

  	
   

  	
  251

  	
   

  
	
  8.DRMS Cumulative Cashflow

  	
   

  	
  20,786

  	
   

  	
  21,037

  	
   

  	
  21,292

  	
   

  	
  21,543

  	
   

  	
  21,794

  	
   

  	
  22,049

  	
   

  	
  22,300

  	
   

  	
  22,661

  	
   

  	
  22,606

  	
   

  	
  23,057

  	
   

  	
  23,309

  	
   

  	
  23,563

  	
   

  

 

28.7

Table
III-1

Scrap Venture Illustrative 7 Year Financial Model

 

	
   

  	
   

  	
  Year 7

  	
   

  
	
  All
  Figures (000s)

  	
   

  	
  Month

  73

  	
   

  	
  Month

  74

  	
   

  	
  Month

  75

  	
   

  	
  Month

  76

  	
   

  	
  Month

  77

  	
   

  	
  Month

  78

  	
   

  	
  Month

  79

  	
   

  	
  Month

  80

  	
   

  	
  Month

  81

  	
   

  	
  Month

  82

  	
   

  	
  Month

  83

  	
   

  	
  Month

  84

  	
   

  
	
  I.
  Assumptions & Cash Flows

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  A. Purchaser Inventory

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1. Weight of Scrap Delivered

  	
   

  	
  11,072

  	
   

  	
  11,072

  	
   

  	
  11,072

  	
   

  	
  11,072

  	
   

  	
  11,072

  	
   

  	
  11,072

  	
   

  	
  11,072

  	
   

  	
  11,072

  	
   

  	
  11,072

  	
   

  	
  11,072

  	
   

  	
  11,072

  	
   

  	
  11,072

  	
   

  
	
  2. Weight of Scrap Sold

  	
   

  	
  12,302

  	
   

  	
  11,072

  	
   

  	
  11,072

  	
   

  	
  11,072

  	
   

  	
  11,072

  	
   

  	
  11,072

  	
   

  	
  11,072

  	
   

  	
  11,072

  	
   

  	
  11,072

  	
   

  	
  11,072

  	
   

  	
  11,072

  	
   

  	
  11,072

  	
   

  
	
  3. Weight of Scrap in Inventory

  	
   

  	
  11,072

  	
   

  	
  11,072

  	
   

  	
  11,072

  	
   

  	
  11,072

  	
   

  	
  11,072

  	
   

  	
  11,072

  	
   

  	
  11,072

  	
   

  	
  11,072

  	
   

  	
  11,072

  	
   

  	
  11,072

  	
   

  	
  11,072

  	
   

  	
  11,072

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B. DRMS Baseline Proceeds

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1. DRMS Baseline Gross Proceeds

  	
   

  	
  609

  	
   

  	
  609

  	
   

  	
  609

  	
   

  	
  609

  	
   

  	
  609

  	
   

  	
  609

  	
   

  	
  609

  	
   

  	
  609

  	
   

  	
  609

  	
   

  	
  609

  	
   

  	
  609

  	
   

  	
  609

  	
   

  
	
  2. DRMS Baseline Expenses

  	
   

  	
  (426

  	
  )

  	
  (426

  	
  )

  	
  (426

  	
  )

  	
  (426

  	
  )

  	
  (426

  	
  )

  	
  (426

  	
  )

  	
  (426

  	
  )

  	
  (426

  	
  )

  	
  (426

  	
  )

  	
  (426

  	
  )

  	
  (426

  	
  )

  	
  (426

  	
  )

  
	
  3. DRMS Baseline Net Proceeds

  	
   

  	
  183

  	
   

  	
  183

  	
   

  	
  183

  	
   

  	
  183

  	
   

  	
  183

  	
   

  	
  183

  	
   

  	
  183

  	
   

  	
  183

  	
   

  	
  183

  	
   

  	
  183

  	
   

  	
  183

  	
   

  	
  183

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C. Purchaser Cashflows

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1. Purchaser Gross Proceeds

  	
   

  	
  701

  	
   

  	
  658

  	
   

  	
  658

  	
   

  	
  658

  	
   

  	
  658

  	
   

  	
  658

  	
   

  	
  658

  	
   

  	
  658

  	
   

  	
  658

  	
   

  	
  658

  	
   

  	
  658

  	
   

  	
  658

  	
   

  
	
      Purchaser
  Start Up Expenses

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
      Purchaser
  Expenses

  	
   

  	
  (417

  	
  )

  	
  (375

  	
  )

  	
  (375

  	
  )

  	
  (375

  	
  )

  	
  (375

  	
  )

  	
  (375

  	
  )

  	
  (375

  	
  )

  	
  (375

  	
  )

  	
  (375

  	
  )

  	
  (375

  	
  )

  	
  (375

  	
  )

  	
  (375

  	
  )

  
	
  2. Total Purchaser Expenses

  	
   

  	
  (417

  	
  )

  	
  (375

  	
  )

  	
  (375

  	
  )

  	
  (375

  	
  )

  	
  (375

  	
  )

  	
  (375

  	
  )

  	
  (375

  	
  )

  	
  (375

  	
  )

  	
  (375

  	
  )

  	
  (375

  	
  )

  	
  (375

  	
  )

  	
  (375

  	
  )

  
	
  3. Purchaser Net Proceeds (Direct Cost Advance)

  	
   

  	
  314

  	
   

  	
  283

  	
   

  	
  283

  	
   

  	
  283

  	
   

  	
  283

  	
   

  	
  283

  	
   

  	
  283

  	
   

  	
  283

  	
   

  	
  283

  	
   

  	
  283

  	
   

  	
  283

  	
   

  	
  283

  	
   

  
	
  4. Purchaser Operating Cash Balance

  	
   

  	
  375

  	
   

  	
  375

  	
   

  	
  375

  	
   

  	
  375

  	
   

  	
  375

  	
   

  	
  375

  	
   

  	
  375

  	
   

  	
  375

  	
   

  	
  375

  	
   

  	
  375

  	
   

  	
  375

  	
   

  	
  375

  	
   

  
	
  5. Purchaser Working Capital Advance Balance

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  6. Available for Distribution

  	
   

  	
  356

  	
   

  	
  283

  	
   

  	
  283

  	
   

  	
  283

  	
   

  	
  283

  	
   

  	
  283

  	
   

  	
  283

  	
   

  	
  283

  	
   

  	
  283

  	
   

  	
  283

  	
   

  	
  283

  	
   

  	
  283

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  II.
  Recap of Payments & Distributions

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  A. Contractor Cashflows

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1. Payments to DRMS: Bid Price

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  2. Payments to DRMS: Quaterly Purchase Price

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  (3.4

  	
  )

  	
  0

  	
   

  	
  0

  	
   

  	
  (3.3

  	
  )

  	
  0

  	
   

  	
  0

  	
   

  	
  (3.3

  	
  )

  	
  0

  	
   

  	
  0

  	
   

  	
  (4.4

  	
  )

  
	
  3. Detect Cost (Advances) Repayments

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  4. Cumulative Direct Cost (Advances) Repayments

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  5. Distributions = 20% of Net Proceeds

  	
   

  	
  71

  	
   

  	
  57

  	
   

  	
  57

  	
   

  	
  57

  	
   

  	
  57

  	
   

  	
  57

  	
   

  	
  57

  	
   

  	
  57

  	
   

  	
  57

  	
   

  	
  57

  	
   

  	
  57

  	
   

  	
  57

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6. Payment Deposit

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  7. Retention Fund (Payments) Credits

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  8. Retention Fund - Balance

  	
   

  	
  (250

  	
  )

  	
  (250

  	
  )

  	
  (250

  	
  )

  	
  (250

  	
  )

  	
  (250

  	
  )

  	
  (250

  	
  )

  	
  (250

  	
  )

  	
  (250

  	
  )

  	
  (250

  	
  )

  	
  (250

  	
  )

  	
  (250

  	
  )

  	
  (250

  	
  )

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9. Contractor Net Cashflow - This Month

  	
   

  	
  71

  	
   

  	
  57

  	
   

  	
  53

  	
   

  	
  57

  	
   

  	
  57

  	
   

  	
  53

  	
   

  	
  57

  	
   

  	
  57

  	
   

  	
  53

  	
   

  	
  57

  	
   

  	
  57

  	
   

  	
  52

  	
   

  
	
  10. Contractor Cumulative Net Cashflow

  	
   

  	
  2,970

  	
   

  	
  3,026

  	
   

  	
  3,079

  	
   

  	
  3,136

  	
   

  	
  3,192

  	
   

  	
  3,246

  	
   

  	
  3,302

  	
   

  	
  3,359

  	
   

  	
  3,412

  	
   

  	
  3,468

  	
   

  	
  3,525

  	
   

  	
  3,577

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B. DRMS Cashflows

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1. Payments from Contractor for Bid Price + Qtrly
  Purchase Price

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  3

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  3

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  3

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  4

  	
   

  
	
  2. Gross Distribution Payments [80% of Net Proceeds]

  	
   

  	
  284

  	
   

  	
  226

  	
   

  	
  226

  	
   

  	
  226

  	
   

  	
  226

  	
   

  	
  226

  	
   

  	
  226

  	
   

  	
  226

  	
   

  	
  226

  	
   

  	
  226

  	
   

  	
  226

  	
   

  	
  226

  	
   

  
	
  3. Purchase Price + Gross Distributions

  	
   

  	
  284

  	
   

  	
  226

  	
   

  	
  229

  	
   

  	
  226

  	
   

  	
  226

  	
   

  	
  229

  	
   

  	
  226

  	
   

  	
  226

  	
   

  	
  229

  	
   

  	
  226

  	
   

  	
  226

  	
   

  	
  230

  	
   

  
	
  4. Payment Deposit

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  5. Retention Fund (Payments) Credits

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  6. Less Seller Indirect Costs

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  7. DRMS Net Cashflow - This Month

  	
   

  	
  284

  	
   

  	
  226

  	
   

  	
  229

  	
   

  	
  226

  	
   

  	
  226

  	
   

  	
  229

  	
   

  	
  226

  	
   

  	
  226

  	
   

  	
  229

  	
   

  	
  226

  	
   

  	
  226

  	
   

  	
  230

  	
   

  
	
  8. DRMS Cumulative Cashflow

  	
   

  	
  23,848

  	
   

  	
  24,074

  	
   

  	
  24,303

  	
   

  	
  24,530

  	
   

  	
  24,756

  	
   

  	
  24,985

  	
   

  	
  25,211

  	
   

  	
  25,437

  	
   

  	
  25,666

  	
   

  	
  25,892

  	
   

  	
  26,118

  	
   

  	
  26,349

  	
   

  

 

28.8

 

Table III-1

Scrap Venture Illustrative 7 Year Financial Model

 

	
   

  	
   

  	
  Wind-Up

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Month

  	
   

  	
  Month

  	
   

  	
  Month

  	
   

  	
  Month

  	
   

  	
  Totals /

  	
   

  
	
  All Figures (000s)

  	
   

  	
  85

  	
   

  	
  86

  	
   

  	
  87

  	
   

  	
  88

  	
   

  	
  Balances

  	
   

  
	
  I.                 Assumptions & Cash Flows

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  A.           Purchaser Inventory

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.               Weight of Scrap Delivered

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  1,282,383

  	
   

  
	
  2.               Weight of Scrap Sold

  	
   

  	
  11,072

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  1,282,383

  	
   

  
	
  3.               Weight of Scrap in Inventory

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B.             DRMS Baseline Proceeds

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.               DRMS Baseline Gross Proceeds

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  70,531

  	
   

  
	
  2.               DRMS Baseline Expenses

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  (49,372

  	
  )

  
	
  3.               DRMS Baseline Net Proceeds

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  21,159

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C.             Purchaser Cashflows

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.               Purchaser Gross Proceeds

  	
   

  	
  658

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  75,536

  	
   

  
	
  Purchaser Start Up Expenses

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  (800

  	
  )

  
	
  Purchaser Expenses

  	
   

  	
  (375

  	
  )

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  (44,153

  	
  )

  
	
  2.               Total Purchaser Expenses

  	
   

  	
  (375

  	
  )

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  (44,953

  	
  )

  
	
  3.               Purchaser Net Proceeds (Direct Cost
  Advance)

  	
   

  	
  283

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  30,583

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.               Purchaser Operating Cash Balance

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  5.               Purchaser Working Capital Advance Balance

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  6.               Available for Distribution

  	
   

  	
  658

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  30,583

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  II.             Recap
  of Payments & Distributions

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  A.           Contractor Cashflows

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.               Payments to DRMS: Bid Price

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  (2,000

  	
  )

  
	
  2.               Payments to DRMS: Quarterly Purchase Price

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0.0

  	
   

  	
  0

  	
   

  	
  (128

  	
  )

  
	
  3.               Direct Cost (Advances) Repayments

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  4.               Cumulative Direct Cost (Advances)
  Repayments

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  5.               Distributions = 20% of Net Proceeds

  	
   

  	
  132

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  6,117

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.               Payment Deposit

  	
   

  	
  0

  	
   

  	
  30

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  7.               Retention Fund (Payments) Credits

  	
   

  	
  0

  	
   

  	
  250

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  8.               Retention Fund - Balance

  	
   

  	
  (250

  	
  )

  	
  0

  	
   

  	
  0

  	
   

  	
   

  	
   

  	
  0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.               Contractor Net Cashflow - This Month

  	
   

  	
  132

  	
   

  	
  280

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  3,988

  	
   

  
	
  10.           Contractor Cumulative Net Cashflow

  	
   

  	
  3,708

  	
   

  	
  3,988

  	
   

  	
  3,988

  	
   

  	
  3,988

  	
   

  	
  3,988

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B.             DRMS Cashflows

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.               Payments from Contractor for Bid Price +
  Qtrly Purchase Price

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  2,128

  	
   

  
	
  2.               Gross Distribution Payments [80% of Net
  Proceeds]

  	
   

  	
  526

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  24,467

  	
   

  
	
  3.               Purchase Price + Gross Distributions

  	
   

  	
  526

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  24,595

  	
   

  
	
  4.               Payment Deposit

  	
   

  	
  0

  	
   

  	
  (30

  	
  )

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  5.               Retention Fund (Payments) Credits

  	
   

  	
  0

  	
   

  	
  (250

  	
  )

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  6.               Less Seller Indirect Costs

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  
	
  7.               DRMS Net Cashflow - This Month

  	
   

  	
  526

  	
   

  	
  (280

  	
  )

  	
  0

  	
   

  	
  0

  	
   

  	
  26,595

  	
   

  
	
  8.               DRMS Cumulative Cashflow

  	
   

  	
  26,875

  	
   

  	
  26,595

  	
   

  	
  26,595

  	
   

  	
  26,595

  	
   

  	
  26,595

  	
   

  

 

28.9

 

IV. 
ITEM DESCRIPTION

 

It has been determined that the material with the SCL Codes presented
in Table IV is no longer needed by the Federal Government.  The data presented in and accompanying this
IFB present a sales history of the subject SCL Codes and DEMIL Codes and other
related information.  Bidders are advised
that any sales history information is provided for informational purposes only.
Prior year material generations and sales data are not predictors of future
generations or sales.

 

29

Table
IV-1(a)

Product Pool SCL Codes, SCL Group and SCL Code Description

Sorted by SCL Code

 

	
  SCL

  	
   

  	
   

  	
   

  	
   

  
	
  Code

  	
   

  	
  SCL Group

  	
   

  	
  SCL Code Description

  
	
  A01

  	
   

  	
  Other

  	
   

  	
  TABULATING CARDS

  
	
  A02

  	
   

  	
  Paper

  	
   

  	
  LEDGER

  
	
  A03

  	
   

  	
  Other

  	
   

  	
  NEWSPAPER

  
	
  A04

  	
   

  	
  Other

  	
   

  	
  BOOKS AND MAGAZINES

  
	
  A05

  	
   

  	
  Paper

  	
   

  	
  PAPER MIXED

  
	
  A06

  	
   

  	
  Paper

  	
   

  	
  PLAIN AND CORRUGATED
  CARDBOARD

  
	
  A07

  	
   

  	
  Other

  	
   

  	
  PAPER, MAP, SCRAP

  
	
  A08

  	
   

  	
  Other

  	
   

  	
  COMPUTER PAPER

  
	
  AB6

  	
   

  	
  Paper

  	
   

  	
  BALED/SHREDDED CARDBOARD

  
	
  AB9

  	
   

  	
  Paper

  	
   

  	
  BALED/SHREDDED PAPER

  
	
  C01

  	
   

  	
  Other

  	
   

  	
  BURLAP, INCLUDES OSNABURG

  
	
  C02

  	
   

  	
  Other

  	
   

  	
  CANVAS

  
	
  C03

  	
   

  	
  Other

  	
   

  	
  RAGS, MISCELLANEOUS, NOT
  COVERED IN OTHER SCL CODES

  
	
  C04

  	
   

  	
  Other

  	
   

  	
  WEBBING

  
	
  C05

  	
   

  	
  Other

  	
   

  	
  ROPE

  
	
  C06

  	
   

  	
  Other

  	
   

  	
  RAYON RAGS

  
	
  C07

  	
   

  	
  Other

  	
   

  	
  NYLON RAGS

  
	
  C08

  	
   

  	
  Other

  	
   

  	
  WOOL RAGS

  
	
  C09

  	
   

  	
  Other

  	
   

  	
  COTTON RAGS

  
	
  C10

  	
   

  	
  Other

  	
   

  	
  SILK RAGS

  
	
  C1A

  	
   

  	
  Other

  	
   

  	
  TEXTILE SCRAP,
  MISCELLANEOUS

  
	
  C1B

  	
   

  	
  Other

  	
   

  	
  COTTON COMFORTERS, SCRAP

  
	
  C1C

  	
   

  	
  Other

  	
   

  	
  COTTON MATTRESSES, SCRAP

  
	
  C1D

  	
   

  	
  Other

  	
   

  	
  HAWSER, SCRAP

  
	
  C1E

  	
   

  	
  Other

  	
   

  	
  POLYESTER, SCRAP

  
	
  C1F

  	
   

  	
  Other

  	
   

  	
  PONCHO

  
	
  C1G

  	
   

  	
  Other

  	
   

  	
  RUBBERIZED CLOTHING AND
  EQUIPMENT SCRAP

  
	
  C1H

  	
   

  	
  Other

  	
   

  	
  SLEEPING BAGS SCRAP

  
	
  CB6

  	
   

  	
  Other

  	
   

  	
  BALED/SHREDDED RAYON SCRAP

  
	
  CB7

  	
   

  	
  Other

  	
   

  	
  BALED/SHREDDED NYLON SCRAP

  
	
  CB8

  	
   

  	
  Other

  	
   

  	
  BALED/SHREDDED WOOL SCRAP

  
	
  CB9

  	
   

  	
  Other

  	
   

  	
  BALED/SHREDDED COTTON
  SCRAP

  
	
  D03

  	
   

  	
  Other (Metallic)

  	
   

  	
  BULLET METAL

  
	
  D06

  	
   

  	
  Other (Metallic)

  	
   

  	
  MAGNESIUM

  
	
  D09

  	
   

  	
  Other (Metallic)

  	
   

  	
  ZINC SCRAP

  
	
  D1A

  	
   

  	
  Aluminum

  	
   

  	
  ALUMINUM SHEET

  
	
  D1B

  	
   

  	
  Other (Metallic)

  	
   

  	
  ALUMINUM FOIL

  
	
  D1C

  	
   

  	
  Aluminum

  	
   

  	
  ALUMINUM SOLIDS

  
	
  D1D

  	
   

  	
  Aluminum

  	
   

  	
  IRONY ALUMINUM

  
	
  D1E

  	
   

  	
  Other (Metallic)

  	
   

  	
  WRECKED AIRCRAFT

  
	
  D1F

  	
   

  	
  Aluminum

  	
   

  	
  SWEATED ALUMINUM PIGS AND
  INGOTS

  
	
  D1G

  	
   

  	
  Other (Metallic)

  	
   

  	
  ALUMINUM DROSS

  
	
  D1H

  	
   

  	
  Other (Metallic)

  	
   

  	
  WRECKED HELICOPTERS

  
	
  D1I

  	
   

  	
  Aluminum

  	
   

  	
  FIRED ALUMINUM

  
	
  D1J

  	
   

  	
  Aluminum

  	
   

  	
  ALUMINUM, CAST

  
	
  D1K

  	
   

  	
  Other (Metallic)

  	
   

  	
  ALUMINUM RADIATORS

  
	
  D22

  	
   

  	
  Brass and Copper

  	
   

  	
  SMALL ARMS BRASS, .22
  CALIBER EXPENDED CARTRIDGE CASES

  
	
  D2A

  	
   

  	
  Brass and Copper

  	
   

  	
  MIXED CLEAN COPPER ALLOYS

  

 

29.1

Table IV-1(a)

Product Pool SCL Codes, SCL Group and SCL Code Description

Sorted by SCL Code

 

	
  SCL

  	
   

  	
   

  	
   

  	
   

  
	
  Code

  	
   

  	
  SCL Group

  	
   

  	
  SCL Code Description

  
	
  D2B

  	
   

  	
  Brass and Copper

  	
   

  	
  MIXED COPPER ALLOYS WITH
  FOREIGN ATTACHMENTS

  
	
  D2C

  	
   

  	
  Brass and Copper

  	
   

  	
  MIXED COPPER BASED ALLOY
  BORINGS AND TRIMMINGS

  
	
  D2D

  	
   

  	
  Brass and Copper

  	
   

  	
  RADIATORS, MADE OF COPPER
  BASE ALLOYS

  
	
  D2E

  	
   

  	
  Brass and Copper

  	
   

  	
  BRASS FIRED TO INCLUDE
  BLANKS AND CARTRIDGE CASES

  
	
  D30

  	
   

  	
  Brass and Copper

  	
   

  	
  SMALL ARMS BRASS, .30
  CALIBER EXPENDED CARTRIDGE CASES

  
	
  D38

  	
   

  	
  Brass and Copper

  	
   

  	
  SMALL ARMS BRASS, .38
  CALIBER EXPENDED CARTRIDGE CASES

  
	
  D3I

  	
   

  	
  Brass and Copper

  	
   

  	
  12 GAUGE SHOTGUN SHELLS,
  EXPENDED

  
	
  D45

  	
   

  	
  Brass and Copper

  	
   

  	
  SMALL ARMS BRASS, .45
  CALIBER EXPENDED CARTRIDGE CASES

  
	
  D4A

  	
   

  	
  Brass and Copper

  	
   

  	
  CLEAN COPPER W/O
  ATTACHMENT

  
	
  D4B

  	
   

  	
  Brass and Copper

  	
   

  	
  COPPER CABLE, LEAD COVERED

  
	
  D4C

  	
   

  	
  Brass and Copper

  	
   

  	
  INSULATED COPPER WIRE
  CABLE

  
	
  D4D

  	
   

  	
  Brass and Copper

  	
   

  	
  COPPER, WITH FOREIGN
  ATTACHMENTS

  
	
  D4E

  	
   

  	
  Brass and Copper

  	
   

  	
  BRASS, WITHOUT FOREIGN
  ATTACHMENTS

  
	
  D4F

  	
   

  	
  Brass and Copper

  	
   

  	
  BRASS, WITH FOREIGN
  ATTACHMENTS

  
	
  D4H

  	
   

  	
  Brass and Copper

  	
   

  	
  BRONZE, WITHOUT FOREIGN
  ATTACHMENTS

  
	
  D4I

  	
   

  	
  Brass and Copper

  	
   

  	
  BRONZE, WITH FOREIGN
  ATTACHMENTS

  
	
  D4J

  	
   

  	
  Other (Metallic)

  	
   

  	
  ELECTRIC MOTOR, SCRAP,
  COPPER BEARING

  
	
  D4K

  	
   

  	
  Other (Metallic)

  	
   

  	
  ARMOR CABLE, SCRAP

  
	
  D4L

  	
   

  	
  Other (Metallic)

  	
   

  	
  TRANSFORMERS, SCRAP

  
	
  D4M

  	
   

  	
  Brass and Copper

  	
   

  	
  CUPRO-NICKEL, WITHOUT
  FOREIGN ATTACHMENTS

  
	
  D4N

  	
   

  	
  Other (Metallic)

  	
   

  	
  GILDING METAL

  
	
  D4P

  	
   

  	
  Brass and Copper

  	
   

  	
  CUPRO-NICKEL, WITH FOREIGN
  ATTACHMENTS

  
	
  D4R

  	
   

  	
  Other (Metallic)

  	
   

  	
  ELECTRIC AND ELECTRONIC
  RESIDUE NOT CONTAING PRECIOUS METALS

  
	
  D50

  	
   

  	
  Brass and Copper

  	
   

  	
  SMALL ARMS BRASS, .50
  CALIBER EXPENDED CARTRIDGE CASES

  
	
  D5D

  	
   

  	
  Other (Metallic)

  	
   

  	
  LEAD WITHOUT FOREIGN
  ATTACHMENTS

  
	
  D5E

  	
   

  	
  Other (Metallic)

  	
   

  	
  OTHER GRADES OF LEAD

  
	
  D5M

  	
   

  	
  Brass and Copper

  	
   

  	
  SMALL ARMS BRASS, 5.56 MM
  EXPENDED CARTRIDGE CASES

  
	
  D7M

  	
   

  	
  Brass and Copper

  	
   

  	
  SMALL ARMS BRASS, 7.62 MM
  EXPENDED CARTRIDGE CASES

  
	
  D9M

  	
   

  	
  Brass and Copper

  	
   

  	
  SMALL ARMS BRASS, 9.00 MM
  EXPENDED CARTRIDGE CASES

  
	
  DLA

  	
   

  	
  Aluminum

  	
   

  	
  LOGGED/BUNDLED ALUMINUM

  
	
  DLD

  	
   

  	
  Aluminum

  	
   

  	
  LOGGED/BUNDLED IRONY
  ALUMINUM

  
	
  E1A

  	
   

  	
  Steel and Iron

  	
   

  	
  NO. 1 HEAVY MELTING STEEL

  
	
  E1B

  	
   

  	
  Steel and Iron

  	
   

  	
  NO. 2 HEAVY MELTING STEEL

  
	
  E1C

  	
   

  	
  Steel and Iron

  	
   

  	
  NO. 1 STEEL BUSHELING

  
	
  E1D

  	
   

  	
  Steel and Iron

  	
   

  	
  NO. 2 STEEL BUSHELING

  
	
  E1E

  	
   

  	
  Steel and Iron

  	
   

  	
  NO. 1 STEEL BUNDLES

  
	
  E1F

  	
   

  	
  Steel and Iron

  	
   

  	
  NO. 2 STEEL BUNDLES

  
	
  E1G

  	
   

  	
  Steel and Iron

  	
   

  	
  MIXED IRON AND STEEL
  BORINGS AND TURNINGS

  
	
  E1H

  	
   

  	
  Other

  	
   

  	
  TIN CAN AND TERNE PLATE

  
	
  E1I

  	
   

  	
  Steel and Iron

  	
   

  	
  UNPREPARED HEAVY MELTING
  IRON AND STEEL SCRAP

  
	
  E1J

  	
   

  	
  Steel and Iron

  	
   

  	
  UNPREPARED LIGHT MELTING
  STEEL SUITABLE FOR COMP INTO NO. 1 BUNDLES

  
	
  E1K

  	
   

  	
  Steel and Iron

  	
   

  	
  UNPREPARED LIGHT MELTING
  STEEL SUITABLE FOR COMM INTO NO. 2 BUNDLES

  
	
  E1L

  	
   

  	
  Steel and Iron

  	
   

  	
  IRON AND STEEL SCRAP,
  MIXED WITH FOREIGN ATTACHMENTS

  
	
  E1M

  	
   

  	
  Steel and Iron

  	
   

  	
  MISCELLANEOUS STEEL SCRAP

  
	
  E1N

  	
   

  	
  Steel and Iron

  	
   

  	
  ENGINE BLOCKS, STRIPPED

  
	
  E1O

  	
   

  	
  Steel and Iron

  	
   

  	
  STOVE SCRAP

  
	
  E1Q

  	
   

  	
  Steel and Iron

  	
   

  	
  HEAVY BREAKABLE CAST

  
	
  E1R

  	
   

  	
  Steel and Iron

  	
   

  	
  MIXED CAST

  

 

29.2

Table IV-1(a)

Product Pool SCL Codes, SCL Group and SCL Code Description

Sorted by SCL Code

 

	
  SCL

  	
   

  	
   

  	
   

  	
   

  
	
  Code

  	
   

  	
  SCL Group

  	
   

  	
  SCL Code Description

  
	
  E1S

  	
   

  	
  Steel and Iron

  	
   

  	
  TOOL STEEL

  
	
  E1T

  	
   

  	
  Steel and Iron

  	
   

  	
  SMALL ARM PARTS REQUIRING
  FURTHER PROCESSING

  
	
  E1U

  	
   

  	
  Steel and Iron

  	
   

  	
  STEEL TANK TRACK WITHOUT
  RUBBER PADS

  
	
  E1V

  	
   

  	
  Other

  	
   

  	
  STEEL TANK TRACK WITH
  RUBBER PADS

  
	
  E1W

  	
   

  	
  Steel and Iron

  	
   

  	
  STEEL CHAIN, ANCHORS

  
	
  E2A

  	
   

  	
  Steel and Iron

  	
   

  	
  VEHICLES, COMMERCIAL
  AUTOS/TRUCKS

  
	
  E2C

  	
   

  	
  Steel and Iron

  	
   

  	
  VEHICLES, TACTICAL, ALL
  TYPES

  
	
  E2D

  	
   

  	
  Steel and Iron

  	
   

  	
  VEHICLES, ARMORED

  
	
  E2E

  	
   

  	
  Steel and Iron

  	
   

  	
  VEHICLES, SPECIAL PURPOSE

  
	
  E2F

  	
   

  	
  Steel and Iron

  	
   

  	
  TANK TRAILERS

  
	
  ELS

  	
   

  	
  Steel and Iron

  	
   

  	
  LOGGED/BUNDLED LIGHT STEEL

  
	
  ENA

  	
   

  	
  Steel and Iron

  	
   

  	
  APPLIANCES ELECTRICAL

  
	
  EWG

  	
   

  	
  Other

  	
   

  	
  WHITE APPLIANCE GOODS

  
	
  F01

  	
   

  	
  Other

  	
   

  	
  WOOD SCRAP

  
	
  FSW

  	
   

  	
  Other

  	
   

  	
  SHREDDED WOOD

  
	
  G01

  	
   

  	
  Other

  	
   

  	
  RUBBER TIRES, AIRCRAFT

  
	
  G02

  	
   

  	
  Other

  	
   

  	
  RUBBER TIRES, VEHICULAR

  
	
  G03

  	
   

  	
  Other

  	
   

  	
  RUBBER INNER TUBES,
  AIRCRAFT

  
	
  G04

  	
   

  	
  Other

  	
   

  	
  RUBBER INNER TUBES,
  VEHICULAR

  
	
  G05

  	
   

  	
  Other

  	
   

  	
  RUBBER SCRAP NOT OTHERWISE
  CLASSIFIABLE

  
	
  GST

  	
   

  	
  Other

  	
   

  	
  SHREDDED RUBBER TIRES

  
	
  H02

  	
   

  	
  Other

  	
   

  	
  CHEMICAL SCRAP AND RELATED
  MATERIALS NON PRECIOUS METAL BEARING

  
	
  H03

  	
   

  	
  Other

  	
   

  	
  DEHYDRATING AGENT, GRADE A

  
	
  H05

  	
   

  	
  Other

  	
   

  	
  CULLET

  
	
  H06

  	
   

  	
  Other

  	
   

  	
  TILE, CONCRETE, BRICKS,
  CLAY AND CROCKERY

  
	
  H07

  	
   

  	
  Other

  	
   

  	
  LEATHER

  
	
  H08

  	
   

  	
  Other

  	
   

  	
  PLASTIC

  
	
  H10

  	
   

  	
  Other

  	
   

  	
  ASHES, WASTE (COAL OR
  WOOD)

  
	
  H11

  	
   

  	
  Other

  	
   

  	
  ELECTRONIC TUBE RESIDUE

  
	
  H13

  	
   

  	
  none

  	
   

  	
  MISCELLANEOUS SCRAP NOT
  OTHERWISE CLASSIFIABLE

  
	
  H14

  	
   

  	
  Other

  	
   

  	
  MAGNETIC TAPE

  
	
  H19

  	
   

  	
  Other

  	
   

  	
  WAX SCRAP, AND RELATED
  MATERIALS

  
	
  H24

  	
   

  	
  none

  	
   

  	
  UNSEGREGATED SCRAP

  
	
  R1K

  	
   

  	
  Other

  	
   

  	
  MIXED RANGE RESIDUE

  
	
  RET

  	
   

  	
  Other

  	
   

  	
  PROPERTY FOR RETAIL SALE

  
	
  S00

  	
   

  	
  Stainless Steel

  	
   

  	
  STAINLESS STEEL SCRAP

  
	
  S01

  	
   

  	
  Stainless Steel

  	
   

  	
  STAINLESS STEEL ALLOY
  GROUP 1, 7-13% NI, 17-19% CR

  
	
  S02

  	
   

  	
  Stainless Steel

  	
   

  	
  STAINLESS STEEL ALLOY
  GROUP 2, 0-2% NI, 12-16% CR

  
	
  S12

  	
   

  	
  Stainless Steel

  	
   

  	
  STAINLESS STEEL ALLOY
  GROUP 12, 4% NI, 17% CR

  
	
  S17

  	
   

  	
  Stainless Steel

  	
   

  	
  STAINLESS STEEL ALLOY
  GROUP 17, 209% NI, 12-20% CR

  
	
  S21

  	
   

  	
  Stainless Steel

  	
   

  	
  STAINLESS STEEL ALLOY
  GROUP 21, 14% NI, 14% CR

  
	
  S24

  	
   

  	
  Stainless Steel

  	
   

  	
  STAINLESS STEEL ALLOY
  GROUP 24, 12% NI, 25% CR

  
	
  S3A

  	
   

  	
  Stainless Steel

  	
   

  	
  STAINLESS STEEL,
  NONMAGNETIC

  
	
  S3B

  	
   

  	
  Other

  	
   

  	
  STAINLESS STEEL, MAGNETIC

  
	
  S3C

  	
   

  	
  Stainless Steel

  	
   

  	
  CHROME NICKEL

  
	
  S3D

  	
   

  	
  Stainless Steel

  	
   

  	
  NICKEL, MISCELLANEOUS

  
	
  SLO

  	
   

  	
  Stainless Steel

  	
   

  	
  LOGGED/BUNDLED STAINLESS
  STEEL

  

 

29.3

Table IV-1(a)

Product Pool SCL Codes, SCL Group and SCL Code Description

Sorted by SCL Code

 

	
  SCL

  	
   

  	
   

  	
   

  	
   

  
	
  Code

  	
   

  	
  SCL Group

  	
   

  	
  SCL Code Description

  
	
  T01

  	
   

  	
  High Temp Alloys

  	
   

  	
  HIGH TEMP ALLOYS NOT
  ASSIGNABLE TO A GROUP

  
	
  T03

  	
   

  	
  High Temp Alloys

  	
   

  	
  HIGH TEMP ALLOY GROUP 3,
  1010% NI, 12-16% CR, 50-67% CO

  
	
  T04

  	
   

  	
  High Temp Alloys

  	
   

  	
  HIGH TEMP ALLOY GROUP 4,
  55% NI, 16% CR

  
	
  T05

  	
   

  	
  High Temp Alloys

  	
   

  	
  HIGH TEMP ALLOY GROUP 5,
  2020% NI, 13-27% CR, 10-60% CO

  
	
  T06

  	
   

  	
  High Temp Alloys

  	
   

  	
  HIGH TEMP ALLOY GROUP 6,
  25% NI, 16% CR

  
	
  T07

  	
   

  	
  High Temp Alloys

  	
   

  	
  HIGH TEMP ALLOY GROUP 7,
  1-25% NI, 8-16% CR

  
	
  T08

  	
   

  	
  High Temp Alloys

  	
   

  	
  HIGH TEMP ALLOY GROUP 8,
  70-74% NI, 15% CR-IN CONEL

  
	
  T09

  	
   

  	
  High Temp Alloys

  	
   

  	
  HIGH TEMP ALLOY GROUP 9,
  20% NI, 20% CR, 40% CO

  
	
  T10

  	
   

  	
  High Temp Alloys

  	
   

  	
  HIGH TEMP ALLOY GROUP 10,
  60% NI, 30% CU-MONEL NOMINALLY

  
	
  T14

  	
   

  	
  High Temp Alloys

  	
   

  	
  HIGH TEMP ALLOY GROUP 14,
  12020% NI, 24-25% CR

  
	
  T15

  	
   

  	
  High Temp Alloys

  	
   

  	
  HIGH TEMP ALLOY GROUP 15,
  2-15% NI, 26-27% CR, 50-60% CO

  
	
  T16

  	
   

  	
  High Temp Alloys

  	
   

  	
  HIGH TEMP ALLOY GROUP 16,
  75-80% NI, 20-21% CR

  
	
  T18

  	
   

  	
  High Temp Alloys

  	
   

  	
  HIGH TEMP ALLOY GROUP 18,
  55% NI, 199% CR, 13% CO

  
	
  T20

  	
   

  	
  High Temp Alloys

  	
   

  	
  HIGH TEMP ALLOY GROUP 20,
  37% NI, 18% CR, 20% CO

  
	
  T22

  	
   

  	
  High Temp Alloys

  	
   

  	
  HIGH TEMP ALLOY GROUP 22,
  75% NI, 20% CR

  
	
  T23

  	
   

  	
  High Temp Alloys

  	
   

  	
  HIGH TEMP ALLOY GROUP 23,
  26-30% NI, 13-20% CR

  
	
  T24

  	
   

  	
  High Temp Alloys

  	
   

  	
  UNSEGREGATED HIGH
  TEMPERATURE ALLOYS

  
	
  T25

  	
   

  	
  High Temp Alloys

  	
   

  	
  HIGH TEMP ALLOY GROUP 25,
  30% NI, 25% CR, 30% CO

  
	
  T26

  	
   

  	
  High Temp Alloys

  	
   

  	
  HIGH TEMP ALLOY GROUP 26,
  36% NI

  
	
  T27

  	
   

  	
  High Temp Alloys

  	
   

  	
  HIGH TEMP ALLOY GROUP 27,
  60% NI, 15% CR

  
	
  T28

  	
   

  	
  High Temp Alloys

  	
   

  	
  HIGH TEMP ALLOY GROUP 28,
  60% NI, 25% CR, 12% CO

  
	
  T29

  	
   

  	
  High Temp Alloys

  	
   

  	
  HIGH TEMP ALLOY GROUP 29,
  58% NI, 19% CR, 18% CO

  
	
  T30

  	
   

  	
  High Temp Alloys

  	
   

  	
  HIGH TEMP ALLOY GROUP 30,
  64% NI, 8% CR, 10% CO

  
	
  T32

  	
   

  	
  High Temp Alloys

  	
   

  	
  HIGH TEMP ALLOY GROUP 32,
  45% NI, 22% CR, 1.5% CO

  
	
  T33

  	
   

  	
  High Temp Alloys

  	
   

  	
  HIGH TEMP ALLOY GROUP 33,
  35% NI, 15% CR

  
	
  T55

  	
   

  	
  High Temp Alloys

  	
   

  	
  HIGH TEMP ALLOY GROUP 55,
  90% W (TUNGSTEN)

  
	
  T60

  	
   

  	
  High Temp Alloys

  	
   

  	
  HIGH TEMP ALLOY GROUP 60,
  80% TI (TITANIUM)

  
	
  T62

  	
   

  	
  High Temp Alloys

  	
   

  	
  HIGH TEMP ALLOY GROUP 62,
  BERYLLIUM (BE)

  
	
  T65

  	
   

  	
  High Temp Alloys

  	
   

  	
  TANTALUM

  
	
  T66

  	
   

  	
  High Temp Alloys

  	
   

  	
  GERMANIUM

  

 

29.4

Table
IV-1(b)

Product Pool SCL Codes, SCL Group and SCL Code Description

Sorted by SCL Group

 

	
  SCL

  	
   

  	
   

  	
   

  	
   

  
	
  Code

  	
   

  	
  SCL Group

  	
   

  	
  SCL Code Description

  
	
  D1A

  	
   

  	
  Aluminum

  	
   

  	
  ALUMINUM SHEET

  
	
  D1C

  	
   

  	
  Aluminum

  	
   

  	
  ALUMINUM SOLIDS

  
	
  D1D

  	
   

  	
  Aluminum

  	
   

  	
  IRONY ALUMINUM

  
	
  D1F

  	
   

  	
  Aluminum

  	
   

  	
  SWEATED ALUMINUM PIGS AND
  INGOTS

  
	
  D1I

  	
   

  	
  Aluminum

  	
   

  	
  FIRED ALUMINUM

  
	
  D1J

  	
   

  	
  Aluminum

  	
   

  	
  ALUMINUM, CAST

  
	
  DLA

  	
   

  	
  Aluminum

  	
   

  	
  LOGGED/BUNDLED ALUMINUM

  
	
  DLD

  	
   

  	
  Aluminum

  	
   

  	
  LOGGED/BUNDLED IRONY
  ALUMINUM

  
	
  D22

  	
   

  	
  Brass and Copper

  	
   

  	
  SMALL ARMS BRASS, .22
  CALIBER EXPENDED CARTRIDGE CASES

  
	
  D2A

  	
   

  	
  Brass and Copper

  	
   

  	
  MIXED CLEAN COPPER ALLOYS

  
	
  D2B

  	
   

  	
  Brass and Copper

  	
   

  	
  MIXED COPPER ALLOYS WITH
  FOREIGN ATTACHMENTS

  
	
  D2C

  	
   

  	
  Brass and Copper

  	
   

  	
  MIXED COPPER BASED ALLOY
  BORINGS AND TRIMMINGS

  
	
  D2D

  	
   

  	
  Brass and Copper

  	
   

  	
  RADIATORS, MADE OF COPPERS
  BASE ALLOYS

  
	
  D2E

  	
   

  	
  Brass and Copper

  	
   

  	
  BRASS, FIRED, TO INCLUDE
  BLANKS AND CARTRIDGE CASES

  
	
  D30

  	
   

  	
  Brass and Copper

  	
   

  	
  SMALL ARMS BRASS, .30
  CALIBER EXPENDED CARTRIDGE CASES

  
	
  D38

  	
   

  	
  Brass and Copper

  	
   

  	
  SMALL ARMS BRASS, .38
  CALIBER EXPENDED CARTRIDGE CASES

  
	
  D3I

  	
   

  	
  Brass and Copper

  	
   

  	
  12 GAUGE SHOTGUN SHELLS,
  EXPENDED

  
	
  D45

  	
   

  	
  Brass and Copper

  	
   

  	
  SMALL ARMS BRASS, .45
  CALIBER EXPENDED CARTRIDGE CASES

  
	
  D4A

  	
   

  	
  Brass and Copper

  	
   

  	
  CLEAN COPPER W/O
  ATTACHMENT

  
	
  D4B

  	
   

  	
  Brass and Copper

  	
   

  	
  COPPER CABLE, LEAD COVERED

  
	
  D4C

  	
   

  	
  Brass and Copper

  	
   

  	
  INSULATED COPPERS WIRE
  CABLE

  
	
  D4D

  	
   

  	
  Brass and Copper

  	
   

  	
  COPPER, WITH FOREIGN
  ATTACHMENTS

  
	
  D4E

  	
   

  	
  Brass and Copper

  	
   

  	
  BRASS, WITHOUT FOREIGN
  ATTACHMENTS

  
	
  D4F

  	
   

  	
  Brass and Copper

  	
   

  	
  BRASS, WITH FOREIGN
  ATTACHMENTS

  
	
  D4H

  	
   

  	
  Brass and Copper

  	
   

  	
  BRONZE, WITHOUT FOREIGN
  ATTACHMENTS

  
	
  D4I

  	
   

  	
  Brass and Copper

  	
   

  	
  BRONZE, WITH FOREIGN
  ATTACHMENTS

  
	
  D4M

  	
   

  	
  Brass and Copper

  	
   

  	
  CUPRO-NICKEL, WITHOUT
  FOREIGN ATTACHMENTS

  
	
  D4P

  	
   

  	
  Brass and Copper

  	
   

  	
  CUPRO-NICKEL, WITH FOREIGN
  ATTACHMENTS

  
	
  D50

  	
   

  	
  Brass and Copper

  	
   

  	
  SMALL ARMS BRASS, .50
  CALIBER EXPENDED CARTRIDGE CASES

  
	
  D5M

  	
   

  	
  Brass and Copper

  	
   

  	
  SMALL ARMS BRASS, 5.56 MM
  EXPENDED CARTRIDGE CASES

  
	
  D7M

  	
   

  	
  Brass and Copper

  	
   

  	
  SMALL ARMS BRASS, 7.62 MM
  EXPENDED CARTRIDGE CASES

  
	
  D9M

  	
   

  	
  Brass and Copper

  	
   

  	
  SMALL ARMS BRASS, 9.00 MM
  EXPENDED CARTRIDGE CASES

  
	
  E1A

  	
   

  	
  Steel and Iron

  	
   

  	
  NO. 1 HEAVY MELTING STEEL

  
	
  E1B

  	
   

  	
  Steel and Iron

  	
   

  	
  NO. 2 HEAVY MELTING STEEL

  
	
  E1C

  	
   

  	
  Steel and Iron

  	
   

  	
  NO. 1 STEEL BUSHELING

  
	
  E1D

  	
   

  	
  Steel and Iron

  	
   

  	
  NO. 2 STEEL BUSHELING

  
	
  E1E

  	
   

  	
  Steel and Iron

  	
   

  	
  NO. 1 STEEL BUNDLES

  
	
  E1F

  	
   

  	
  Steel and Iron

  	
   

  	
  NO. 2 STEEL BUNDLES

  
	
  E1G

  	
   

  	
  Steel and Iron

  	
   

  	
  MIXED IRON AND STEEL
  BORINGS AND TURNINGS

  
	
  E1I

  	
   

  	
  Steel and Iron

  	
   

  	
  UNPREPARED HEAVY MELTING
  IRON AND STEEL SCRAP

  
	
  E1J

  	
   

  	
  Steel and Iron

  	
   

  	
  UNPREPARED LIGHT MELTING STEEL
  SUITABLE FOR COMP INTO NO. 1 BUNDLES

  
	
  E1K

  	
   

  	
  Steel and Iron

  	
   

  	
  UNPREPARED LIGHT MELTING STEEL
  SUITABLE FOR COMM INTO NO. 2 BUNDLES

  
	
  E1L

  	
   

  	
  Steel and Iron

  	
   

  	
  IRON AND STTEEL SCRAP,
  MIXED WITH FOREIGN ATTACHMENTS

  
	
  E1M

  	
   

  	
  Steel and Iron

  	
   

  	
  MISCELLANEOUS STEEL SCRAP

  
	
  E1N

  	
   

  	
  Steel and Iron

  	
   

  	
  ENGINE BLOCKS STRIPPED

  

 

29.5

Table IV-1(b)

Product Pool SCL Codes, SCL Group and SCL Code Description

Sorted by SCL Group

 

	
  SCL

  	
   

  	
   

  	
   

  	
   

  
	
  Code

  	
   

  	
  SCL Group

  	
   

  	
  SCL Code Description

  
	
  E1O

  	
   

  	
  Steel and Iron

  	
   

  	
  STOVE SCRAP

  
	
  E1Q

  	
   

  	
  Steel and Iron

  	
   

  	
  HEAVY BREAKABLE CAST

  
	
  E1R

  	
   

  	
  Steel and Iron

  	
   

  	
  MIXED CAST

  
	
  E1S

  	
   

  	
  Steel and Iron

  	
   

  	
  TOOL STEEL

  
	
  E1T

  	
   

  	
  Steel and Iron

  	
   

  	
  SMALL ARM PARTS REQUIRING
  FURTHER PROCESSING

  
	
  E1U

  	
   

  	
  Steel and Iron

  	
   

  	
  STEEL TANK TRACK WITHOUT
  RUBBER PADS

  
	
  E1W

  	
   

  	
  Steel and Iron

  	
   

  	
  STEEL CHAIN, ANCHORS

  
	
  E2A

  	
   

  	
  Steel and Iron

  	
   

  	
  VEHICLES, COMMERCIAL
  AUTOS/TRUCKS

  
	
  E2C

  	
   

  	
  Steel and Iron

  	
   

  	
  VEHICLES, TACTICAL, ALL
  TYPES

  
	
  E2D

  	
   

  	
  Steel and Iron

  	
   

  	
  VEHICLES, ARMORED

  
	
  E2E

  	
   

  	
  Steel and Iron

  	
   

  	
  VEHICLES, SPECIAL PURPOSE

  
	
  E2F

  	
   

  	
  Steel and Iron

  	
   

  	
  TANK TRAILERS

  
	
  ELS

  	
   

  	
  Steel and Iron

  	
   

  	
  LOGGED/BUNDLED LIGHT STEEL

  
	
  ENA

  	
   

  	
  Steel and Iron

  	
   

  	
  APPLIANCES ELECTRICAL

  
	
  T01

  	
   

  	
  High Temp Alloys

  	
   

  	
  HIGH TEMP ALLOYS NOT
  ASSIGNABLE TO A GROUP

  
	
  T03

  	
   

  	
  High Temp Alloys

  	
   

  	
  HIGH TEMP ALLOY GROUP 3,
  1010% NI, 12-16% CR, 50-67% CO

  
	
  T04

  	
   

  	
  High Temp Alloys

  	
   

  	
  HIGH TEMP ALLOY GROUP 4,
  55% NI, 16% CR

  
	
  T05

  	
   

  	
  High Temp Alloys

  	
   

  	
  HIGH TEMP ALLOY GROUP 5,
  2020% NI, 13-27% CR, 10-60% CO

  
	
  T06

  	
   

  	
  High Temp Alloys

  	
   

  	
  HIGH TEMP ALLOY GROUP 6,
  25% NI, 16% CR

  
	
  T07

  	
   

  	
  High Temp Alloys

  	
   

  	
  HIGH TEMP ALLOY GROUP 7,
  1-25% NI, 8-16% CR

  
	
  T08

  	
   

  	
  High Temp Alloys

  	
   

  	
  HIGH TEMP ALLOY GROUP 8,
  70-74% NI, 15% CR-IN CONEL

  
	
  T09

  	
   

  	
  High Temp Alloys

  	
   

  	
  HIGH TEMP ALLOY GROUP 9,
  20% NI, 20% CR, 40% CO

  
	
  T10

  	
   

  	
  High Temp Alloys

  	
   

  	
  HIGH TEMP ALLOY GROUP 10,
  60% NI, 30% CU-MONEL NOMINALLY

  
	
  T14

  	
   

  	
  High Temp Alloys

  	
   

  	
  HIGH TEMP ALLOY GROUP 14,
  12020% NI, 24-25% CR

  
	
  T15

  	
   

  	
  High Temp Alloys

  	
   

  	
  HIGH TEMP ALLOY GROUP 15,
  2-15% NI, 26-27% CR, 50-60% CO

  
	
  T16

  	
   

  	
  High Temp Alloys

  	
   

  	
  HIGH TEMP ALLOY GROUP 16,
  75-80% NI, 20-21% CR

  
	
  T18

  	
   

  	
  High Temp Alloys

  	
   

  	
  HIGH TEMP ALLOY GROUP 18,
  55% NI, 199% CR, 13% CO

  
	
  T20

  	
   

  	
  High Temp Alloys

  	
   

  	
  HIGH TEMP ALLOY GROUP 20,
  37% NI, 18% CR, 20% CO

  
	
  T22

  	
   

  	
  High Temp Alloys

  	
   

  	
  HIGH TEMP ALLOY GROUP 22,
  75% NI, 20% CR

  
	
  T23

  	
   

  	
  High Temp Alloys

  	
   

  	
  HIGH TEMP ALLOY GROUP 23,
  26-30% NI, 13-20% CR

  
	
  T24

  	
   

  	
  High Temp Alloys

  	
   

  	
  UNSEGREGATED HIGH
  TEMPERATURE ALLOYS

  
	
  T25

  	
   

  	
  High Temp Alloys

  	
   

  	
  HIGH TEMP ALLOY GROUP 25,
  30% NI, 25% CR, 30% CO

  
	
  T26

  	
   

  	
  High Temp Alloys

  	
   

  	
  HIGH TEMP ALLOY GROUP 26,
  36% NI

  
	
  T27

  	
   

  	
  High Temp Alloys

  	
   

  	
  HIGH TEMP ALLOY GROUP 27,
  60% NI, 15% CR

  
	
  T28

  	
   

  	
  High Temp Alloys

  	
   

  	
  HIGH TEMP ALLOY GROUP 28,
  60% NI, 25% CR, 12% CO

  
	
  T29

  	
   

  	
  High Temp Alloys

  	
   

  	
  HIGH TEMP ALLOY GROUP 29,
  58% NI, 19% CR, 18% CO

  
	
  T30

  	
   

  	
  High Temp Alloys

  	
   

  	
  HIGH TEMP ALLOY GROUP 30,
  64% NI, 8% CR, 10% CO

  
	
  T32

  	
   

  	
  High Temp Alloys

  	
   

  	
  HIGH TEMP ALLOY GROUP 32,
  45% NI, 22% CR, 1.5% CO

  
	
  T33

  	
   

  	
  High Temp Alloys

  	
   

  	
  HIGH TEMP ALLOY GROUP 33,
  35% NI, 15% CR

  
	
  T55

  	
   

  	
  High Temp Alloys

  	
   

  	
  HIGH TEMP ALLOY GROUP 55,
  90% W (TUNGSTEN)

  
	
  T60

  	
   

  	
  High Temp Alloys

  	
   

  	
  HIGH TEMP ALLOY GROUP 60,
  80% TI (TITANIUM)

  
	
  T62

  	
   

  	
  High Temp Alloys

  	
   

  	
  HIGH TEMP ALLOY GROUP 62,
  BERYLLIUM (BE)

  
	
  T65

  	
   

  	
  High Temp Alloys

  	
   

  	
  TANTALUM

  
	
  T66

  	
   

  	
  High Temp Alloys

  	
   

  	
  GERMANIUM

  

 

29.6

Table IV-1(b)

Product Pool SCL Codes, SCL Group and SCL Code Description

Sorted by SCL Group

 

	
  SCL

  	
   

  	
   

  	
   

  	
   

  
	
  Code

  	
   

  	
  SCL Group

  	
   

  	
  SCL Code Description

  
	
  S00

  	
   

  	
  Stainless
  Steel

  	
   

  	
  STAINLESS STEEL SCRAP

  
	
  S01

  	
   

  	
  Stainless
  Steel

  	
   

  	
  STAINLESS STEEL ALLOY GROUP 1, 7-13% NI,
  17-19% CR

  
	
  S02

  	
   

  	
  Stainless
  Steel

  	
   

  	
  STAINLESS STEEL ALLOY GROUP 2, 0-2% NI,
  12-16% CR

  
	
  S12

  	
   

  	
  Stainless
  Steel

  	
   

  	
  STAINLESS STEEL ALLOY GROUP 12, 4% NI, 17%
  CR

  
	
  S17

  	
   

  	
  Stainless
  Steel

  	
   

  	
  STAINLESS STEEL ALLOY GROUP 17, 209% NI,
  12-20% CR

  
	
  S21

  	
   

  	
  Stainless
  Steel

  	
   

  	
  STAINLESS STEEL ALLOY GROUP 21, 14% NI, 14%
  CR

  
	
  S24

  	
   

  	
  Stainless
  Steel

  	
   

  	
  STAINLESS STEEL ALLOY GROUP 24, 12% NI, 25%
  CR

  
	
  S3A

  	
   

  	
  Stainless
  Steel

  	
   

  	
  STAINLESS STEEL, NONMAGNETIC

  
	
  S3C

  	
   

  	
  Stainless
  Steel

  	
   

  	
  CHROME NICKEL

  
	
  S3D

  	
   

  	
  Stainless
  Steel

  	
   

  	
  NICKEL, MISCELLANEOUS

  
	
  SLO

  	
   

  	
  Stainless
  Steel

  	
   

  	
  LOGGED/BUNDLED STAINLESS STEEL

  
	
  A02

  	
   

  	
  Paper

  	
   

  	
  LEDGER

  
	
  A05

  	
   

  	
  Paper

  	
   

  	
  PAPER MIXED

  
	
  A06

  	
   

  	
  Paper

  	
   

  	
  PLAIN AND CORRUGATED CARDBOARD

  
	
  AB6

  	
   

  	
  Paper

  	
   

  	
  BALED/SHREDDED CARDBOARD

  
	
  AB9

  	
   

  	
  Paper

  	
   

  	
  BALED/SHREDDED PAPER

  
	
  D03

  	
   

  	
  Other
  (Metallic)

  	
   

  	
  BULLET METAL

  
	
  D06

  	
   

  	
  Other
  (Metallic)

  	
   

  	
  MAGNESIUM

  
	
  D09

  	
   

  	
  Other
  (Metallic)

  	
   

  	
  ZINC SCRAP

  
	
  D1B

  	
   

  	
  Other
  (Metallic)

  	
   

  	
  ALUMINUM FOIL

  
	
  D1E

  	
   

  	
  Other
  (Metallic)

  	
   

  	
  WRECKED AIRCRAFT

  
	
  D1G

  	
   

  	
  Other
  (Metallic)

  	
   

  	
  ALUMINUM DROSS

  
	
  D1H

  	
   

  	
  Other
  (Metallic)

  	
   

  	
  WRECKED HELICOPTERS

  
	
  D1K

  	
   

  	
  Other
  (Metallic)

  	
   

  	
  ALUMINUM RADIATORS

  
	
  D4J

  	
   

  	
  Other
  (Metallic)

  	
   

  	
  ELECTRIC MOTOR, SCRAP, COPPER BEARING

  
	
  D4K

  	
   

  	
  Other
  (Metallic)

  	
   

  	
  ARMOR CABLE, SCRAP

  
	
  D4L

  	
   

  	
  Other
  (Metallic)

  	
   

  	
  TRANSFORMERS, SCRAP

  
	
  D4N

  	
   

  	
  Other
  (Metallic)

  	
   

  	
  GILDING METAL

  
	
  D4R

  	
   

  	
  Other (Metallic)

  	
   

  	
  ELECTRIC AND ELECTRONIC RESIDUE NOT
  CONTAING PRECIOUS METALS

  
	
  D5D

  	
   

  	
  Other
  (Metallic)

  	
   

  	
  LEAD WITHOUT FOREIGN ATTACHMENTS

  
	
  D5E

  	
   

  	
  Other
  (Metallic)

  	
   

  	
  OTHER GRADES OF LEAD

  
	
  A01

  	
   

  	
  Other

  	
   

  	
  TABULATING CARDS

  
	
  A03

  	
   

  	
  Other

  	
   

  	
  NEWSPAPER

  
	
  A04

  	
   

  	
  Other

  	
   

  	
  BOOKS AND MAGAZINES

  
	
  A07

  	
   

  	
  Other

  	
   

  	
  PAPER, MAP, SCRAP

  
	
  A08

  	
   

  	
  Other

  	
   

  	
  COMPUTER PAPER

  
	
  C01

  	
   

  	
  Other

  	
   

  	
  BURLAP, INCLUDES OSNABURG

  
	
  C02

  	
   

  	
  Other

  	
   

  	
  CANVAS

  
	
  C03

  	
   

  	
  Other

  	
   

  	
  RAGS, MISCELLANEOUS, NOT COVERED IN OTHER
  SCL CODES

  
	
  C04

  	
   

  	
  Other

  	
   

  	
  WEBBING

  
	
  C05

  	
   

  	
  Other

  	
   

  	
  ROPE

  
	
  C06

  	
   

  	
  Other

  	
   

  	
  RAYON RAGS

  
	
  C07

  	
   

  	
  Other

  	
   

  	
  NYLON RAGS

  
	
  C08

  	
   

  	
  Other

  	
   

  	
  WOOL RAGS

  
	
  C09

  	
   

  	
  Other

  	
   

  	
  COTTON RAGS

  
	
  C10

  	
   

  	
  Other

  	
   

  	
  SILK RAGS

  

 

29.7

Table IV-1(b)

Product Pool SCL Codes, SCL Group and SCL Code Description

Sorted by SCL Group

 

	
  SCL

  	
   

  	
   

  	
   

  	
   

  
	
  Code

  	
   

  	
  SCL Group

  	
   

  	
  SCL Code Description

  
	
  C1A

  	
   

  	
  OTHER

  	
   

  	
  TEXTILE SCRAP, MISCELLANEOUS

  
	
  C1B

  	
   

  	
  OTHER

  	
   

  	
  COTTON COMFORTERS, SCRAP

  
	
  C1C

  	
   

  	
  OTHER

  	
   

  	
  COTTON MATTRESSES, SCRAP

  
	
  C1D

  	
   

  	
  OTHER

  	
   

  	
  HAWSER, SCRAP

  
	
  C1E

  	
   

  	
  OTHER

  	
   

  	
  POLYESTER, SCRAP

  
	
  C1F

  	
   

  	
  OTHER

  	
   

  	
  PONCHO

  
	
  C1G

  	
   

  	
  OTHER

  	
   

  	
  RUBBERIZED CLOTHING AND EQUIPMENT SCRAP

  
	
  C1H

  	
   

  	
  OTHER

  	
   

  	
  SLEEPING BAGS SCRAP

  
	
  CB6

  	
   

  	
  OTHER

  	
   

  	
  BALED/SHREDDED RAYON SCRAP

  
	
  CB7

  	
   

  	
  OTHER

  	
   

  	
  BALED/SHREDDED NYLON SCRAP

  
	
  CB8

  	
   

  	
  OTHER

  	
   

  	
  BALED/SHREDDED WOOL SCRAP

  
	
  CB9

  	
   

  	
  OTHER

  	
   

  	
  BALED/SHREDDED COTTON SCRAP

  
	
  E1H

  	
   

  	
  OTHER

  	
   

  	
  TIN CAN AND TERNE PLATE

  
	
  E1V

  	
   

  	
  OTHER

  	
   

  	
  STEEL TANK TRACK WITH RUBBER PADS

  
	
  EWG

  	
   

  	
  OTHER

  	
   

  	
  WHITE APPLIANCE GOODS

  
	
  F01

  	
   

  	
  OTHER

  	
   

  	
  WOOD SCRAP

  
	
  FSW

  	
   

  	
  OTHER

  	
   

  	
  SHREDDED WOOD

  
	
  G01

  	
   

  	
  OTHER

  	
   

  	
  RUBBER TIRES, AIRCRAFT

  
	
  G02

  	
   

  	
  OTHER

  	
   

  	
  RUBBER TIRES, VEHICULAR

  
	
  G03

  	
   

  	
  OTHER

  	
   

  	
  RUBBER INNER TUBES, AIRCRAFT

  
	
  G04

  	
   

  	
  OTHER

  	
   

  	
  RUBBER INNER TUNES, VEHICULAR

  
	
  G05

  	
   

  	
  OTHER

  	
   

  	
  RUBBER SCRAP NOT OTHERWISE CLASSIFIABLE

  
	
  GST

  	
   

  	
  OTHER

  	
   

  	
  SHREDDED RUBBER TIRES

  
	
  H02

  	
   

  	
  OTHER

  	
   

  	
  CHEMICAL SCRAP AND RELATED MATERIALS NON
  PRECIOUS METAL BEARING

  
	
  H03

  	
   

  	
  OTHER

  	
   

  	
  DEHYDRATING AGENT, GRADE A

  
	
  H05

  	
   

  	
  OTHER

  	
   

  	
  CULLET

  
	
  H06

  	
   

  	
  OTHER

  	
   

  	
  TILE, CONCRETE, BRICKS, CLAY AND CROCKERY

  
	
  H07

  	
   

  	
  OTHER

  	
   

  	
  LEATHER

  
	
  H08

  	
   

  	
  OTHER

  	
   

  	
  PLASTIC

  
	
  H10

  	
   

  	
  OTHER

  	
   

  	
  ASHES, WASTE (COAL, OR WOOD)

  
	
  H11

  	
   

  	
  OTHER

  	
   

  	
  ELECTRONIC TUBE RESIDUE

  
	
  H14

  	
   

  	
  OTHER

  	
   

  	
  MAGNETIC TAPE

  
	
  H19

  	
   

  	
  OTHER

  	
   

  	
  WAX SCRAP, AND RELATED MATERIALS

  
	
  R1K

  	
   

  	
  OTHER

  	
   

  	
  MIXED RANGE RESIDUE

  
	
  RET

  	
   

  	
  OTHER

  	
   

  	
  PROPERTY FOR RETAIL SALE

  
	
  S3B

  	
   

  	
  OTHER

  	
   

  	
  STAINLESS STEEL, MAGNETIC

  
	
  H13

  	
   

  	
  Miscellaneous

  	
   

  	
  MISCELLANEOUS SCRAP NOT OTHERWISE
  CLASSIFIABLE

  
	
  H24

  	
   

  	
  Miscellaneous

  	
   

  	
  UNSEGREGATED SCRAP

  

 

29.8

Table IV-2

Product Pool Item Descriptions for “DEMIL as a Condition of Sale”

by DRMS Commodity Group and FSC Code

 

	
  FSC

  	
   

  	
  DRMS Commodity Group

  	
   

  	
  FSC Description

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1005 - 1450

  	
   

  	
  Various

  	
   

  	
  Textual labels applied by procurement authorities to these FSCs employ
  military ordinance terminology that would mislead prospective offerors if
  read literally.  The items included in
  this sale from these FSCs are various types of equipment and materials that
  serve ordinary commercial or industrial purposes.  There is no weaponry or ordinance included
  in this sale from these FSCs or from any other FSC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1510

  	
   

  	
  Aircraft Related

  	
   

  	
  AIRCRAFT, FIXED WING

  	
   

  
	
  1520

  	
   

  	
  Aircraft Related

  	
   

  	
  AIRCRAFT, ROTARY WING

  	
   

  
	
  1560

  	
   

  	
  Aircraft Related

  	
   

  	
  AIRFRAME STRUCTURAL COMPONENTS

  	
   

  
	
  1610

  	
   

  	
  Aircraft Related

  	
   

  	
  AIRCRAFT PROPELLERS

  	
   

  
	
  1615

  	
   

  	
  Aircraft Related

  	
   

  	
  HELICOPTER ROTOR BLADES, DRIVE MECHANISMS AND COMPONENTS

  	
   

  
	
  1620

  	
   

  	
  Aircraft Related

  	
   

  	
  AIRCRAFT LANDING GEAR COMPONENTS

  	
   

  
	
  1630

  	
   

  	
  Aircraft Related

  	
   

  	
  AIRCRAFT WHEEL AND BRAKE SYSTEMS

  	
   

  
	
  1650

  	
   

  	
  Aircraft Related

  	
   

  	
  AIRCRAFT HYDRAULIC, VACUUM AND DE-ICING SYSTEM COMPONENTS

  	
   

  
	
  1660

  	
   

  	
  Aircraft Related

  	
   

  	
  AIRCRAFT AIR CONDITION, HEATING AND PRESSURIZING EQUIPMENT

  	
   

  
	
  1670

  	
   

  	
  Aircraft Related

  	
   

  	
  PARACHUTES, AERIAL PICK UP, DELIVERY, RECOVERY SYSTEMS

  	
   

  
	
  1680

  	
   

  	
  Aircraft Related

  	
   

  	
  MISCELLANEOUS AIRCRAFT ACCESSORIES AND COMPONENTS

  	
   

  
	
  1710

  	
   

  	
  Guided Missile, Launching
  Equip

  	
   

  	
  AIRCRAFT ARRESTING, BARRIER AND BARRICADE EQUIPMENT

  	
   

  
	
  1720

  	
   

  	
  Guided Missile, Launching
  Equip

  	
   

  	
  AIRCRAFT LAUNCHING EQUIPMENT

  	
   

  
	
  1730

  	
   

  	
  Guided Missile, Launching
  Equip

  	
   

  	
  AIRCRAFT GROUND SERVICING EQUIPMENT

  	
   

  
	
  1740

  	
   

  	
  Guided Missile, Launching
  Equip

  	
   

  	
  AIRFIELD SPECIALIZED TRUCKS AND TRAILERS

  	
   

  
	
  1830

  	
   

  	
  Aircraft Related

  	
   

  	
  SPACE VEHICLE REMOTE CONTROL SYSTEMS

  	
   

  
	
  1905

  	
   

  	
  Marine & Support
  Equipment

  	
   

  	
  COMBAT SHIPS AND LANDING VESSELS

  	
   

  
	
  2010

  	
   

  	
  Marine & Support
  Equipment

  	
   

  	
  SHIP AND BOAT PROPULSION COMPONENTS

  	
   

  
	
  2320

  	
   

  	
  Vehicles

  	
   

  	
  TRUCKS AND TRUCK TRACTORS, WHEELED

  	
   

  
	
  2350

  	
   

  	
  Vehicles

  	
   

  	
  COMBAT, ASSAULT AND TACTICAL VEHICLES, TRACKED

  	
   

  
	
  2510

  	
   

  	
  Vehicles

  	
   

  	
  VEHICULAR CAB, BODY AND FRAME STRUCTURAL COMPONENTS

  	
   

  
	
  2520

  	
   

  	
  Vehicles

  	
   

  	
  VEHICULAR POWER TRANSMISSION COMPONENTS

  	
   

  
	
  2530

  	
   

  	
  Vehicles

  	
   

  	
  VEHICULAR BRAKE, STEERING, AXLE, WHEEL AND TRACT COMPONENTS

  	
   

  
	
  2540

  	
   

  	
  Vehicles

  	
   

  	
  VEHICULAR FURNITURE AND ACCESSORIES

  	
   

  
	
  2590

  	
   

  	
  Vehicles

  	
   

  	
  MISCELLANEOUS VEHICULAR COMPONENTS

  	
   

  
	
  2815

  	
   

  	
  Vehicles

  	
   

  	
  DIESEL ENGINES AND COMPONENTS

  	
   

  
	
  2825

  	
   

  	
  Vehicles

  	
   

  	
  STEAM TURBINES AND COMPONENTS

  	
   

  
	
  2835

  	
   

  	
  Vehicles

  	
   

  	
  GAS TURBINES AND JET ENGINES, EXCEPT AIRCRAFT AND COMPONENTS

  	
   

  
	
  2840

  	
   

  	
  Vehicles

  	
   

  	
  GAS TURBINES AND JET ENGINES, AIRCRAFT AND COMPONENTS

  	
   

  
	
  2915

  	
   

  	
  Vehicles

  	
   

  	
  ENGINE FUEL SYSTEM COMPONENTS, AIRCRAFT 

  	
   

  
	
  2920

  	
   

  	
  Vehicles

  	
   

  	
  ENGINE ELECTRICAL SYSTEM COMPONENTS, NONAIRCRAFT 

  	
   

  
	
  2925

  	
   

  	
  Vehicles

  	
   

  	
  ENGINE ELECTRICAL SYSTEM COMPONENTS, AIRCRAFT 

  	
   

  
	
  2935

  	
   

  	
  Vehicles

  	
   

  	
  ENGINE COOLING SYSTEM COMPONENTS, AIRCRAFT 

  	
   

  
	
  2945

  	
   

  	
  Vehicles

  	
   

  	
  ENGINE AIR AND OIL FILTERS, STRAINERS AND CLEANERS, AIRCRAFT 

  	
   

  
	
  2950

  	
   

  	
  Vehicles

  	
   

  	
  TURBOSUPERCHARGERS

  	
   

  
	
  2990

  	
   

  	
  Vehicles

  	
   

  	
  MISCELLANEOUS ENGINE ACCESSORIES, NONAIRCRAFT 

  	
   

  
	
  2995

  	
   

  	
  Vehicles

  	
   

  	
  MISCELLANEOUS ENGINE ACCESSORIES, AIRCRAFT

  	
   

  
	
  3010

  	
   

  	
  Machinery &
  Industry Equipment

  	
   

  	
  TORQUE CONVERTERS AND SPEED CHANGERS

  	
   

  
	
  3020

  	
   

  	
  Machinery &
  Industry Equipment

  	
   

  	
  GEARS, PULLEYS, SPROCKETS AND TRANSMISSION CHAIN

  	
   

  
	
  3040

  	
   

  	
  Machinery &
  Industry Equipment

  	
   

  	
  MISCELLANEOUS POWER TRANSMISSION EQUIPMENT

  	
   

  
	
  3110

  	
   

  	
  Bearings

  	
   

  	
  BEARINGS, ANTIFRICTION, UNMOUNTED

  	
   

  
	
  3120

  	
   

  	
  Bearings

  	
   

  	
  BEARINGS, PLAIN, UNMOUNTED

  	
   

  
	
  3130

  	
   

  	
  Bearings

  	
   

  	
  BEARINGS, MOUNTED

  	
   

  
	
  3419

  	
   

  	
  Machinery &
  Industry Equipment

  	
   

  	
  MISCELLANEOUS MACHINE TOOLS

  	
   

  
	
  3441

  	
   

  	
  Machinery &
  Industry Equipment

  	
   

  	
  BENDING AND FORMING MACHINES

  	
   

  
	
  3655

  	
   

  	
  Service, Trade &
  Special Industry Equipment

  	
   

  	
  GAS GENERATING AND DISPENSING SYSTEMS, FIXED OR MOBILE

  	
   

  
	
  3835

  	
   

  	
  Tractors, Railroad &
  Construction Equipment

  	
   

  	
  PETROLEUM PRODUCTION AND DISTRIBUTION EQUIPMENT 

  	
   

  
	
  3990

  	
   

  	
  Agricultural, MHE &
  Support Equipment

  	
   

  	
  MISC MATERIALS HANDLING EQUIPMENT 

  	
   

  
	
  4010

  	
   

  	
  Marine & Support
  Equipment

  	
   

  	
  CHAIN AND WIRE ROPE

  	
   

  
	
  4140

  	
   

  	
  Plumbing & Air
  Treatment Equipment

  	
   

  	
  FANS, AIR CIRCULATORS AND BLOWER EQUIPMENT 

  	
   

  
	
  4210

  	
   

  	
  Service, Trade &
  Special Industry Equipment

  	
   

  	
  FIRE FIGHTING EQUIPMENT

  	
   

  
	
  4220

  	
   

  	
  Service, Trade &
  Special Industry Equipment

  	
   

  	
  MARINE LIFESAVING AND DIVING EQUIPMENT

  	
   

  
	
  4230

  	
   

  	
  Service, Trade &
  Special Industry Equipment

  	
   

  	
  DECONTAMINATING AND IMPREGNATING EQUIPMENT

  	
   

  
	
  4240

  	
   

  	
  Service, Trade &
  Special Industry Equipment

  	
   

  	
  SAFETY AND RESCUE EQUIPMENT

  	
   

  
	
  4320

  	
   

  	
  Plumbing & Air Treatment
  Equipment

  	
   

  	
  POWER AND HAND PUMPS

  	
   

  
	
  4330

  	
   

  	
  Plumbing & Air
  Treatment Equipment

  	
   

  	
  CENTRIFUGALS, SEPARATORS AND PRESSURE AND VACUUM FILTERS

  	
   

  
	
  4420

  	
   

  	
  Plumbing & Air
  Treatment Equipment

  	
   

  	
  HEAT EXCHANGERS AND STEAM CONDENSERS

  	
   

  

 

29.9

Table IV-2

Product
Pool Item Descriptions for “DEMIL as a Condition of Sale”

by DRMS
Commodity Group and FSC Code

 

	
  FSC

  	
   

  	
  DRMS Commodity Group

  	
   

  	
  FSC Description

  	
   

  
	
  4710

  	
   

  	
  Plumbing & Air
  Treatment Equipment

  	
   

  	
  PIPE AND TUBE

  	
   

  
	
  4720

  	
   

  	
  Plumbing & Air
  Treatment Equipment

  	
   

  	
  HOSE AND TUBING, FLEXIBLE

  	
   

  
	
  4730

  	
   

  	
  Plumbing & Air
  Treatment Equipment

  	
   

  	
  FITTINGS AND SPECIALTIES; HOSE, PIPE AND TUBE

  	
   

  
	
  4810

  	
   

  	
  Plumbing & Air
  Treatment Equipment

  	
   

  	
  VALVES, POWERED

  	
   

  
	
  4820

  	
   

  	
  Plumbing & Air
  Treatment Equipment

  	
   

  	
  VALVES, NONPOWERED

  	
   

  
	
  4910

  	
   

  	
  Agricultural, MHE &
  Support Equipment

  	
   

  	
  MOTOR VEHICLE MAINTENANCE AND REPAIR SHOP SPECIALIZED EQUIPMENT

  	
   

  
	
  4920

  	
   

  	
  Agricultural, MHE &
  Support Equipment

  	
   

  	
  AIRCRAFT MAINTENANCE AND REPAIR SHOP SPECIALIZED EQUIPMENT

  	
   

  
	
  4921

  	
   

  	
  Agricultural, MHE &
  Support Equipment

  	
   

  	
  TORPEDO MAINTENANCE, REPAIR AND CHECKOUT SPECIALIZED EQUIPMENT

  	
   

  
	
  4925

  	
   

  	
  Agricultural, MHE &
  Support Equipment

  	
   

  	
  AMMO MAINTENANCE, REPAIR AND CHECKOUT SPECIALIZED EQUIPMENT

  	
   

  
	
  4930

  	
   

  	
  Agricultural, MHE &
  Support Equipment

  	
   

  	
  LUBRICATION AND FUEL DISPENSING EQUIPMENT

  	
   

  
	
  4931

  	
   

  	
  Agricultural, MHE &
  Support Equipment

  	
   

  	
  FIRE CONTROL MAINTENANCE AND REPAIR SHOP SPECIALIZED EQUIPMENT

  	
   

  
	
  4933

  	
   

  	
  Agricultural, MHE &
  Support Equipment

  	
   

  	
  WEAPONS MAINTENANCE AND REPAIR SHOP SPECIALIZED EQUIPMENT

  	
   

  
	
  4935

  	
   

  	
  Agricultural, MHE &
  Support Equipment

  	
   

  	
  GUIDED MISSILE MAINTENANCE, REPAIR CHECKOUT SPECIALIZED EQUIP

  	
   

  
	
  4940

  	
   

  	
  Agricultural, MHE &
  Support Equipment

  	
   

  	
  MISC MAINTENANCE AND REPAIR SHOP SPECIALIZED EQUIPMENT

  	
   

  
	
  5110

  	
   

  	
  Misc

  	
   

  	
  HAND TOOLS, EDGED, NONPOWERED

  	
   

  
	
  5180

  	
   

  	
  Misc

  	
   

  	
  SETS, KITS AND OUTFITS OF HAND TOOLS

  	
   

  
	
  5305

  	
   

  	
  Building Materials, Construction Materials, & Prefab

  	
   

  	
  SCREWS

  	
   

  
	
  5306

  	
   

  	
  Building Materials, Construction Materials, & Prefab

  	
   

  	
  BOLTS

  	
   

  
	
  5310

  	
   

  	
  Building Materials, Construction Materials, & Prefab

  	
   

  	
  NUTS AND WASHERS

  	
   

  
	
  5315

  	
   

  	
  Building Materials, Construction Materials, & Prefab

  	
   

  	
  NAILS, KEYS AND PINS

  	
   

  
	
  5320

  	
   

  	
  Building Materials, Construction Materials, & Prefab

  	
   

  	
  RIVETS

  	
   

  
	
  5325

  	
   

  	
  Building Materials, Construction Materials, & Prefab

  	
   

  	
  FASTENING DEVICES

  	
   

  
	
  5330

  	
   

  	
  Building Materials, Construction Materials, & Prefab

  	
   

  	
  PACKING AND GASKET MATERIALS

  	
   

  
	
  5340

  	
   

  	
  Building Materials, Construction Materials, & Prefab

  	
   

  	
  MISCELLANEOUS HARDWARE

  	
   

  
	
  5342

  	
   

  	
  Building Materials, Construction Materials, & Prefab

  	
   

  	
  HARDWARE, WEAPON SYSTEM

  	
   

  
	
  5355

  	
   

  	
  Building Materials, Construction Materials, & Prefab

  	
   

  	
  KNOBS AND POINTERS

  	
   

  
	
  5360

  	
   

  	
  Building Materials, Construction Materials, & Prefab

  	
   

  	
  COIL, FLAT AND WIRE SPRINGS

  	
   

  
	
  5365

  	
   

  	
  Building Materials, Construction Materials, & Prefab

  	
   

  	
  RINGS, SHIMS AND SPACERS

  	
   

  
	
  5420

  	
   

  	
  Building Materials, Construction Materials, & Prefab

  	
   

  	
  BRIDGES, FIXED AND FLOATING

  	
   

  
	
  5805

  	
   

  	
  Electrical & Electronics

  	
   

  	
  TELEPHONE AND TELEGRAPH EQUIPMENT

  	
   

  
	
  5810

  	
   

  	
  Electrical & Electronics

  	
   

  	
  COMMUNICATIONS SECURITY EQUIPMENT AND COMPONENTS

  	
   

  
	
  5811

  	
   

  	
  Electrical & Electronics

  	
   

  	
  OTHER CRYPTOLOGIC EQUIPMENT AND COMPONENTS

  	
   

  
	
  5815

  	
   

  	
  Electrical & Electronics

  	
   

  	
  TELETYPE AND FACSIMILE EQUIPMENT

  	
   

  
	
  5820

  	
   

  	
  Electrical & Electronics

  	
   

  	
  RADIO AND TELEVISION COMMUNICATION EQUIPMENT, EXCEPT AIRBORNE

  	
   

  
	
  5821

  	
   

  	
  Electrical & Electronics

  	
   

  	
  RADIO AND TELEVISION COMMUNICATION EQUIPMENT, AIRBORNE

  	
   

  
	
  5825

  	
   

  	
  Electrical & Electronics

  	
   

  	
  RADIO NAVIGATION EQUIPMENT, EXCEPT AIRBORNE

  	
   

  
	
  5826

  	
   

  	
  Electrical & Electronics

  	
   

  	
  RADIO NAVIGATION EQUIPMENT, AIRBORNE

  	
   

  
	
  5830

  	
   

  	
  Electrical & Electronics

  	
   

  	
  INTERCOMMUNICATION AND PUBLIC ADDRESS SYSTEMS, EXCEPT AIRBORNE

  	
   

  
	
  5831

  	
   

  	
  Electrical & Electronics

  	
   

  	
  INTERCOMMUNICATION AND PUBLIC ADDRESS SYSTEMS, AIRBORNE

  	
   

  
	
  5835

  	
   

  	
  Electrical & Electronics

  	
   

  	
  SOUND RECORDING AND REPRODUCING EQUIPMENT

  	
   

  
	
  5836

  	
   

  	
  Electrical & Electronics

  	
   

  	
  VIDEO RECORDING AND REPRODUCING EQUIPMENT

  	
   

  
	
  5840

  	
   

  	
  Electrical & Electronics

  	
   

  	
  RADAR EQUIPMENT, EXCEPT AIRBORNE

  	
   

  
	
  5841

  	
   

  	
  Electrical & Electronics

  	
   

  	
  RADAR EQUIPMENT, AIRBORNE

  	
   

  
	
  5845

  	
   

  	
  Electrical & Electronics

  	
   

  	
  UNDERWATER SOUND EQUIPMENT

  	
   

  
	
  5850

  	
   

  	
  Electrical & Electronics

  	
   

  	
  VISIBLE AND INVISIBLE LIGHT COMMUNICATION EQUIPMENT

  	
   

  
	
  5855

  	
   

  	
  Electrical & Electronics

  	
   

  	
  NIGHT VISION EQUIPMENT, EMITTED AND REFLECTED RADIATION

  	
   

  
	
  5860

  	
   

  	
  Electrical & Electronics

  	
   

  	
  STIMULATED COHERENT RADIATION DEVICES COMPONENTS/ACCESSORIES

  	
   

  
	
  5865

  	
   

  	
  Electrical & Electronics

  	
   

  	
  ELECTRONIC COUNTERMEASURES, COUNTER-COUNTER MEASURES

  	
   

  
	
  5895

  	
   

  	
  Electrical & Electronics

  	
   

  	
  MISCELLANEOUS COMMUNICATION EQUIPMENT

  	
   

  
	
  5915

  	
   

  	
  Electrical & Electronics

  	
   

  	
  FILTERS AND NETWORKS

  	
   

  
	
  5920

  	
   

  	
  Electrical & Electronics

  	
   

  	
  FUSES AND LIGHTNING ARRESTERS

  	
   

  
	
  5930

  	
   

  	
  Electrical & Electronics

  	
   

  	
  SWITCHES

  	
   

  
	
  5935

  	
   

  	
  Electrical & Electronics

  	
   

  	
  CONNECTORS, ELECTRICAL

  	
   

  
	
  5940

  	
   

  	
  Electrical & Electronics

  	
   

  	
  LUGS, TERMINALS AND TERMINAL STRIPS

  	
   

  
	
  5945

  	
   

  	
  Electrical & Electronics

  	
   

  	
  RELAYS AND SOLENOIDS

  	
   

  
	
  5955

  	
   

  	
  Electrical & Electronics

  	
   

  	
  PIEZOELECTRIC CRYSTALS

  	
   

  
	
  5960

  	
   

  	
  Electrical & Electronics

  	
   

  	
  ELECTRON TUBES AND ASSOCIATED HARDWARE

  	
   

  
	
  5961

  	
   

  	
  Electrical & Electronics

  	
   

  	
  SEMICONDUCTOR DEVICES AND ASSOCIATED HARDWARE

  	
   

  
	
  5962

  	
   

  	
  Electrical & Electronics

  	
   

  	
  MICROCIRCUITS, ELECTRONIC

  	
   

  
	
  5963

  	
   

  	
  Electrical & Electronics

  	
   

  	
  ELECTRONIC MODULES

  	
   

  
	
  5965

  	
   

  	
  Electrical & Electronics

  	
   

  	
  HEADSETS, HANDSETS, MICROPHONES AND SPEAKERS

  	
   

  
	
  5975

  	
   

  	
  Electrical & Electronics

  	
   

  	
  ELECTRICAL HARDWARE AND SUPPLIES

  	
   

  
	
  5985

  	
   

  	
  Electrical & Electronics

  	
   

  	
  ANTENNAS, WAVEGUIDE AND RELATED EQUIPMENT

  	
   

  
	
  5990

  	
   

  	
  Electrical & Electronics

  	
   

  	
  SYNCHROS AND RESOLVERS

  	
   

  

 

29.10

Table IV-2

Product
Pool Item Descriptions for “DEMIL as a Condition of Sale”

by DRMS
Commodity Group and FSC Code

 

	
  FSC

  	
   

  	
  DRMS Commodity Group

  	
   

  	
  FSC Description

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5995

  	
   

  	
  Electrical &
  Electronics

  	
   

  	
  CABLE, CORD AND WIRE ASSEMBLIES, COMMUNICATION EQUIPMENT

  	
   

  
	
  5996

  	
   

  	
  Electrical & Electronics

  	
   

  	
  AMPLIFIERS

  	
   

  
	
  5998

  	
   

  	
  Electrical & Electronics

  	
   

  	
  ELECTRICAL AND ELECTRONIC ASSEMBLIES, BOARDS, CARDS, AND ASSOC
  HARDWARE

  	
   

  
	
  5999

  	
   

  	
  Electrical & Electronics

  	
   

  	
  MISCELLANEOUS ELECTRICAL AND ELECTRONIC COMPONENTS

  	
   

  
	
  6035

  	
   

  	
  Electrical & Electronics

  	
   

  	
  FIBER OPTIC LIGHT TRANSFER AND IMAGE TRANSFER DEVICES

  	
   

  
	
  6105

  	
   

  	
  Electrical & Electronics

  	
   

  	
  MOTORS, ELECTRICAL

  	
   

  
	
  6110

  	
   

  	
  Electrical & Electronics

  	
   

  	
  ELECTRICAL CONTROL EQUIPMENT

  	
   

  
	
  6115

  	
   

  	
  Electrical & Electronics

  	
   

  	
  GENERATORS AND GENERATOR SETS, ELECTRICAL

  	
   

  
	
  6125

  	
   

  	
  Electrical & Electronics

  	
   

  	
  CONVERTERS, ELECTRICAL, ROTATING

  	
   

  
	
  6130

  	
   

  	
  Electrical & Electronics

  	
   

  	
  CONVERTERS, ELECTRICAL, NONROTATING

  	
   

  
	
  6150

  	
   

  	
  Electrical & Electronics

  	
   

  	
  MISCELLANEOUS ELECTRIC POWER AND DISTRIBUTION EQUIPMENT

  	
   

  
	
  6160

  	
   

  	
  Electrical & Electronics

  	
   

  	
  MISCELLANEOUS BATTERY RETAINING FIXTURES AND LINERS

  	
   

  
	
  6210

  	
   

  	
  Electrical & Electronics

  	
   

  	
  INDOOR AND OUTDOOR ELECTRIC LIGHTING FIXTURES

  	
   

  
	
  6220

  	
   

  	
  Electrical & Electronics

  	
   

  	
  ELECTRIC VEHICULAR LIGHTS AND FIXTURES

  	
   

  
	
  6230

  	
   

  	
  Electrical & Electronics

  	
   

  	
  ELECTRIC PORTABLE AND HAND LIGHTING EQUIPMENT

  	
   

  
	
  6320

  	
   

  	
  Electrical & Electronics

  	
   

  	
  SHIPBOARD ALARM AND SIGNAL SYSTEMS

  	
   

  
	
  6340

  	
   

  	
  Electrical & Electronics

  	
   

  	
  AIRCRAFT ALARM AND SIGNAL SYSTEMS

  	
   

  
	
  6350

  	
   

  	
  Electrical & Electronics

  	
   

  	
  MISCELLANEOUS ALARM, SIGNAL AND SECURITY DETECTION SYSTEMS

  	
   

  
	
  6605

  	
   

  	
  Marine & Support
  Equipment

  	
   

  	
  NAVIGATIONAL INSTRUMENTS

  	
   

  
	
  6610

  	
   

  	
  Marine & Support
  Equipment

  	
   

  	
  FLIGHT INSTRUMENTS

  	
   

  
	
  6615

  	
   

  	
  Marine & Support
  Equipment

  	
   

  	
  AUTOMATIC PILOT MECHANISMS AND AIRBORNE GYRO COMPONENTS

  	
   

  
	
  6620

  	
   

  	
  Marine & Support
  Equipment

  	
   

  	
  ENGINE INSTRUMENTS

  	
   

  
	
  6625

  	
   

  	
  Marine & Support
  Equipment

  	
   

  	
  ELECTRICAL/ELECTRONIC PROPERTIES

  MEASURING/TESTING INSTRUMENTS

  	
   

  
	
  6635

  	
   

  	
  Marine & Support
  Equipment

  	
   

  	
  PHYSICAL PROPERTIES TESTING EQUIPMENT

  	
   

  
	
  6645

  	
   

  	
  Marine & Support
  Equipment

  	
   

  	
  TIME MEASURING INSTRUMENTS

  	
   

  
	
  6650

  	
   

  	
  Marine & Support
  Equipment

  	
   

  	
  OPTICAL INSTRUMENTS

  	
   

  
	
  6660

  	
   

  	
  Marine & Support
  Equipment

  	
   

  	
  METEOROLOGICAL INSTRUMENTS AND APPARATUS

  	
   

  
	
  6665

  	
   

  	
  Marine & Support
  Equipment

  	
   

  	
  HAZARD-DETECTING INSTRUMENTS AND APPARATUS

  	
   

  
	
  6675

  	
   

  	
  Marine & Support
  Equipment

  	
   

  	
  DRAFTING, SURVEYING AND MAPPING INSTRUMENTS

  	
   

  
	
  6680

  	
   

  	
  Marine & Support
  Equipment

  	
   

  	
  LIQUID/GAS FLOW, LIQUID LEVEL/MECHANICAL MOTION MEASURING INSTRUMENTS

  	
   

  
	
  6685

  	
   

  	
  Marine & Support
  Equipment

  	
   

  	
  PRESSURE, TEMPERATURE/HUMIDITY MEASURING/CONTROLLING INSTRUMENT

  	
   

  
	
  6695

  	
   

  	
  Marine & Support
  Equipment

  	
   

  	
  COMBINATION AND MISCELLANEOUS INSTRUMENTS

  	
   

  
	
  6720

  	
   

  	
  Misc

  	
   

  	
  CAMERAS, STILL PICTURE

  	
   

  
	
  6760

  	
   

  	
  Misc

  	
   

  	
  PHOTOGRAPHIC EQUIPMENT AND ACCESSORIES

  	
   

  
	
  6910

  	
   

  	
  Office Machines & some military training equip

  	
   

  	
  TRAINING AIDS

  	
   

  
	
  6920

  	
   

  	
  Office Machines & some military training equip

  	
   

  	
  ARMAMENT TRAINING DEVICES

  	
   

  
	
  6930

  	
   

  	
  Office Machines & some military training equip

  	
   

  	
  OPERATION TRAINING DEVICES

  	
   

  
	
  6940

  	
   

  	
  Office Machines & some military training equip

  	
   

  	
  COMMUNICATION TRAINING DEVICES

  	
   

  
	
  7010

  	
   

  	
  Electrical & Electronics

  	
   

  	
  ADPE SYSTEM CONFIGURATION 

  	
   

  
	
  7021

  	
   

  	
  Electrical & Electronics

  	
   

  	
  ADP CENTRAL PROCESSING UNIT, DIGITAL

  	
   

  
	
  7025

  	
   

  	
  Electrical & Electronics

  	
   

  	
  ADP INPUT/OUTPUT AND STORAGE DEVICES

  	
   

  
	
  7035

  	
   

  	
  Electrical & Electronics

  	
   

  	
  ADP SUPPORT EQUIPMENT

  	
   

  
	
  7045

  	
   

  	
  Electrical & Electronics

  	
   

  	
  ADP SUPPLIES AND SUPPORT EQUIPMENT

  	
   

  
	
  7050

  	
   

  	
  Electrical & Electronics

  	
   

  	
  ADP COMPONENTS

  	
   

  
	
  7220

  	
   

  	
  Household

  	
   

  	
  FLOOR COVERINGS

  	
   

  
	
  8105

  	
   

  	
  Building Materials, Construction Materials, & Prefab

  	
   

  	
  BAGS AND SACKS

  	
   

  
	
  8140

  	
   

  	
  Building Materials, Construction Materials, & Prefab

  	
   

  	
  AMMO AND NUCLEAR ORDNANCE BOXES, PACKAGES AND SPECIAL CONTAINERS

  	
   

  
	
  8470

  	
   

  	
  Textiles, clothing,
  footware

  	
   

  	
  ARMOR, PERSONAL 

  	
   

  
	
  8475

  	
   

  	
  Textiles, clothing,
  footware

  	
   

  	
  SPECIALIZED FLIGHT CLOTHING AND ACCESSORIES

  	
   

  
	
  9515

  	
   

  	
  Ferrous Materials

  	
   

  	
  PLATE, SHEET, STRIP AND FOIL IRON AND STEEL

  	
   

  
	
  9999

  	
   

  	
  Misc

  	
   

  	
  MISCELLANEOUS ITEMS (CANNOT CONCEIVABLY BE CLASSIFIED ELSEWHERE)

  	
   

  

 

29.11

V.
TERMS AND CONDITIONS OF SALE

 

The following General
Information and Instructions and Special Conditions of Sale contained in the
Defense Reutilization and Marketing Service pamphlet entitled “Sale by
Reference - Instructions, Terms and Conditions Applicable to Department of
Defense Personal Property Offered for Sale by Defense Reutilization and
Marketing Service, March 1994” (hereinafter, “Sale by Reference”; a copy
of the Sale by Reference is included as Attachment V), are hereby incorporated
by reference and become a part of this IFB and any resulting contract:

 

Part 1: General
Information and Instructions: All Conditions, except Condition Nos. 3 and 4;
and, No. 6 should conclude with, “. . .paid by the Purchaser.”

 

Part 2: General Sale
Terms and Conditions: All Conditions, except Condition Nos. 4, 7, 12, 14, 28,
29, 30, and 33.

 

Part 4: Special Sealed
Bid - Term Conditions: All Conditions, except Articles A, D and E.

 

Part 5: Additional
Special Circumstance Conditions, as follows:

	
  Article D:

  	
   

  	
  Liability and Insurance

  
	
  Article F:

  	
   

  	
  Privacy Act Materials

  
	
  Article H:

  	
   

  	
  Radio Frequency Devices

  
	
  Article L:

  	
   

  	
  Medical Devices

  

 

Part 6:
Demilitarization and Mutilation: Articles A, B, G, H and I.

 

The following Conditions
from Part 7: Additional Special Circumstance Conditions -Hazardous and
Dangerous Property:

	
  Article E:

  	
   

  	
  Dangerous Property

  
	
  Article Q:

  	
   

  	
  Cartridge Cases

  
	
  Article V:

  	
   

  	
  Certified and Non-Certified Radiation Emitting Electronic Products

  

 

30

 

VI.
ADDITIONAL TERMS AND CONDITIONS OF SALE

 

The following Articles (not
part of the Sale By Reference) also apply and constitute terms and conditions
of sale.

 

ARTICLE ONE.
BIDDING AND CONTRACT AWARD

 

Section 1.  Bid Deposit.

 

Each bid must be accompanied
by a refundable Bid Deposit in the form of a guaranteed instrument (credit
card, cashier’s check or money order) payable to “U.S. Treasury,” in the amount
of twenty thousand dollars ($20,000,00).

 

Section 2.  Bids and Bid
Evaluation.

 

(A)                               Bid Price.

 

Award of the sale contract
will be made to the technically acceptable, responsive, responsible bidder that
offers the bid with the highest “Bid Price” for the Property and tenders
payment of the “Bid Price” as provided in Section 1(A) of Article 5.
The “Bid Price” shall be as set forth on the bidder’s Bid Forms, must be
expressed in whole U.S. dollars, and must exceed zero.

 

(B)                               Award.

 

The Government reserves the
right (i) not to award a contract if
such contract is deemed not to be in the Government’s best interest, or (ii) to reject any particular bid if DRMS determines
that accepting such bid would not be in the Government’s best interest.

 

Section 3. Contractor Credit Facility; Key Persons; Contract
Award.

 

(A)                               Contractor Credit Facility.

 

After the bids are opened
and evaluated by DRMS, the SCO will serve notice (“Notice of Intent to Award”)
to the bidder offering the bid with the highest Bid Price (the “Apparent
Successful Offeror”). The Notice of Intent to Award shall notify the Apparent
Successful Offeror that, within ten (10) days of such notice, the bidder
must submit to the SCO a written commitment from a federally insured financial
institution that, if a contract is awarded by DRMS to the bidder within the
subsequent four months, and subject to such reasonable conditions that the
financial institution specifies, such financial institution will provide to the
bidder a credit facility available to finance operations under the contract for
a minimum of one year in an amount not less than one million dollars ($1,000,000).
If the Apparent Successful Offeror does not deliver the commitment within such
time, or within such extended time that DRMS in its sole discretion specifies,
or if DRMS in its sole discretion determines that the commitment is subject to
an unreasonable condition, the SCO will so notify all bidders, the original
Notice of Intent to Award shall be deemed withdrawn, and the SCO shall serve a
replacement Notice of

 

31

 

Intent to
Award to the bidder offering the next highest Bid Price, which bidder shall
thereupon become the Apparent Successful Offeror.

 

(B)                               Key Persons.

 

The “Key
Persons” provisions of Contractor’s technical proposal are incorporated into,
and made part of, the resultant contract. Substitutions of Key Persons will be
permitted only with the approval of the Sales Contracting Officer “(SCO”), and
such substitutions will be approved only if the replacement individual is as
well or better qualified for a particular position as the original designee.

 

(C)                               Contract Award.

 

Prior to award
of the contract, the SCO will determine whether the potential Contractor is a
responsive, responsible prospective Contractor. If the SCO determines that a
particular potential Contractor is not a responsive, responsible bidder, the
responsibility of the bidder offering the bid with the next highest Bid Price
shall be evaluated by the SCO to determine whether such bidder is a responsible
prospective Contractor, and the SCO may award the contract to such next highest
bidder if such award is otherwise determined to be in the Government’s best
interest, price and other factors considered.

 

(D)                               Failure of Apparent
Successful Offeror to Pay Bid Price

 

If the
Apparent Successful Offeror does not tender payment of the Bid Price as
provided in Section 1(A) of Article 5, the SCO will so notify
all bidders, the original Notice of Intent to Award shall be deemed withdrawn,
and the SCO shall serve a replacement Notice of Intent to Award to the bidder
offering the next highest Bid Price, which bidder thereupon shall become the
Apparent Successful Offeror.

 

Section 4. Post-Award Conference.

 

The Government
shall conduct a post-award conference within approximately two weeks of award
to ensure that Contractor understands the terms and conditions of the contract.
The location and date of the conference will be determined by the Government
and the costs incurred by personnel affiliated with Contractor and/or Purchaser
to attend shall be Contractor Indirect Costs, paid by Contractor without reimbursement
by DRMS or Purchaser.

 

Section 5. Purchaser Information.

 

Within thirty
(30) Days of the date of award, Contractor shall provide the following to DRMS
(collectively, the “Purchaser Information”), and Purchaser shall provide to
DRMS updated Purchaser Information within ten (10) Days of any change
thereto:

 

(A)                              Notice
to DRMS of Purchaser’s complete legal name, type of business organization
(corporation or limited liability company), place of formation, (e.g.,

 

32

 

Delaware), Federal Employer
Identification Number, and principal place of business.

 

(B)                               Copies to DRMS of all documents evidencing: (i) Purchaser’s legal formation and internal
governance; (ii) if Purchaser is a
corporation, Purchaser’s election of Subchapter S status for federal income tax
purposes; and (iii) appointment of
Purchaser’s Registered Agent.

 

(C)                               Notice to DRMS of Purchaser’s Operating
Account and Purchase Account, including the name, address and telephone contact
information of the bank(s) of deposit, account numbers, and identification of
the signatories on the accounts.

 

(D)                               Copies of all documents evidencing the
opening of the Operating and Purchase Accounts, including without limitation
copies of the signature card(s), resolutions and instructions to the bank.

 

(E)                                 Notice to DRMS of the designation of Key
Persons, if any, in addition to those identified in Contractor’s technical
proposal. Two (2) Key Persons, including Purchaser’s Chief Executive
Officer, are required pursuant to the provisions of Article 13 to
authorize certain payments and transfers from the Operating Account.

 

Section 6.  Formation of Purchaser; Covenant of
Contractor.

 

(A)                               Formation of Purchaser.

 

Upon award of the contract
to Contractor, Contractor shall cause the formation of a single purpose
Subchapter S corporation or limited liability company (the “Purchaser”), over
which Contractor shall retain control and in which Contractor shall retain at
least a majority (51%) ownership interest throughout the Performance Period and
until completion of the Wind-up, to perform the contract as provided herein.

 

(B)                               Covenant of Contractor.

 

Contractor hereby covenants
and agrees that, from and after the date of award and until completion of the
Wind-Up, Purchaser will remain a single purpose Subchapter S corporation or
limited liability company, the sole purpose of which is to perform this
contract, and which will not form or acquire any subsidiary business entity
without written approval therefore by DRMS, which approval may be granted or
withheld by DRMS in the exercise of the sole discretion.

 

Section 7. Transfer and Hypothecation.

 

(A)                               General Prohibition.

 

Except as specifically
provided herein or specifically approved by DRMS in writing, neither Purchaser
nor Contractor may directly or indirectly sell, transfer, assign, pledge, offer
as collateral or otherwise hypothecate all or any part of its rights or
obligations under the contract, or, with respect to Contractor, its

 

33

 

ownership interest in
Purchaser, provided, however, that (i) Contractor
may convey or hypothecate a portion of its ownership interest in Purchaser if,
after such conveyance, or after transfer in accordance with such hypothecation,
Contractor retains control over and a majority (51%) ownership interest in
Purchaser; and (ii) hypothecation of
Contractor’s Distribution Payments for the sole purpose of obtaining financing
necessary to perform the contract shall not be deemed violative of the provisions
of this Article, and (iii) such
sale, transfer, assignment or hypothecation is not to any individual or firm
that is suspended, debarred or otherwise prohibited from participation in
government contracts. For purposes of the general prohibition set forth in this
Section 7(A), the sale, transfer or hypothecation by Contractor of any
voting stock of any corporation that directly or indirectly owns any interest
in Purchaser or of any partnership interest in any general or limited
partnership that directly or indirectly owns any interest in Purchaser shall
constitute an assignment or transfer of an interest in Purchaser within the
meaning of this Section 7(A).

 

(B)                               Attempted Transfer.

 

Any attempted transfer in
violation of the provisions of this Article shall be null and void, ab
initio, and shall constitute a Material Breach of this contract.

 

(C)                               Consolidation with CV.

 

The Contractor shall not
consolidate its contract or operations with the CV-2 transaction without the
written consent of DRMS. Any Contractor that proposes any such consolidation
shall submit a written proposal to the SCO that presents the business case that
the Contractor advances in support of the proposed consolidation. The business
case must present an analysis of and projections, for each year or portion
thereof through the then remaining balance of the term of the Performance
Period, of Gross Revenues, Direct Costs, Net Proceeds, and Distributions to
DRMS. The business case shall expressly set forth reasonable assumptions
underlying such projections and shall present the basis for each assumption. In
addition to any other factors that the Contractor identifies as material to the
business analysis of the proposed consolidation, the Contractor’s business case
shall analyze any prospective cost savings and economies of scale that the
Contractor expects from the consolidation. The SCO shall project the effects
that DRMS expects from such consolidation upon DRMS costs, including without
limitation its headquarters and field costs for SV and CV administration,
monitoring, and reporting. The SCO shall assess the proposed consolidation with
respect to the goal of maximizing Distributions to DRMS net of such costs,
provided, however, that a Contractor proposing any such consolidation should
not expect DRMS to contribute directly or indirectly to the cost thereof.

 

34

 

Section 8.  Contract of
Sale.

 

(A)                               Relationship of Parties.

 

This contract is an
agreement for the proceeds-sharing sale of the Property by DRMS as seller to
Purchaser as buyer. Contractor and DRMS expressly disavow the creation of any
other relationship, including without limitation principal-agent,
master-servant, employer-employee, general or limited partnership, or joint
venture, between DRMS and either Contractor or Purchaser.

 

(B)                               Parties to Contract.

 

The parties to this contract
are DRMS, Contractor and, pursuant to the provisions of Section 10 of this
Article 1, Purchaser. The exclusive representative of DRMS for all
purposes under this contract is the SCO, and all notices, demands, requests,
consents, approvals, declarations, reports and other communications to DRMS
from Contractor or Purchaser shall be deemed ineffective unless addressed to
the SCO and delivered in compliance with the provisions of Article 22, Section 2.
Kormendi\Gardner Partners (“KGP”) is the DRMS Financial Advisor. KGP is neither
a party to the contract nor an agent of DRMS for any purpose. Communications
from Contractor or Purchaser to KGP shall not be deemed received by DRMS unless
provided to DRMS in compliance with the provisions of Article 22, Section 2.

 

Section 9.  Authority of Sales Contracting Officer.

 

The SCO has the authority on
behalf of DRMS (i) with respect to matters
committed by the provisions of this contract to the exercise of DRMS’s sole
discretion, to exercise such discretion, (ii) with
respect to all matters hereunder, to represent DRMS and to commit DRMS to take
such actions as are permitted or required hereunder, and (iii) to
extend, waive or amend timing requirements, deadlines or administrative
requirements as may reasonably be required under the circumstances.

 

Section 10.  Execution by
Purchaser.

 

Within thirty (30) Days of
the date of award, Contractor shall cause Purchaser’s Chief Executive Officer
to execute on behalf of Purchaser and deliver to DRMS the Confirmation of
Purchaser as Co-Signatory and Co-Obligor, the form of which is attached as
Attachment VI.1.10. Notwithstanding the failure to deliver or delay in
delivering such properly executed document to DRMS, Purchaser shall be deemed
to be a co-signatory and co-obligor with Contractor with respect to this
contract effective from the date of award and Purchaser and Contractor shall be
jointly and severally liable for the performance of their respective
obligations under this contract.

 

Section 11.  Replacement Contractor.

 

(A)                               All bids must remain open and awardable for
no less than one hundred twenty days after bid opening.

 

35

 

(B)                               In
the event of a Termination (as defined in Section 3 of Article 19) of
the original Contractor within sixty (60) Days of the date of award, the SCO
may award the contract to the next highest bidder that is determined by the SCO
to be responsible if such award is otherwise determined to be in the Government’s
best interest, price and other factors considered.

 

ARTICLE TWO. PERFORMANCE PERIOD; EARLY CANCELLATION
OPTION;

DRMS OPTION
TO EXTEND

 

Section 1. 
Performance Period.

 

Subject to the
early cancellation option provisions of Section 2 of this Article 2,
and the DRMS extension option provisions of Section 4 of this Article 2,
the Government shall provide the Property for an eighty-four (84) month period
(the “Performance Period”) from the date of submission to Purchaser of the
initial Pickup Notice. 

 

Section 2.  Early Cancellation Option.

 

(A)                               Beginning
with the fourth (4th) Quarterly Report and in each Quarterly Report thereafter,
Purchaser shall calculate and report the “SV Performance Ratio” for “Performance
Ratio Property” (as such terms are defined below) with respect to the
immediately preceding four-calendar quarter period and for each of the two
immediately preceding calendar quarter periods.

 

(B)                               The “SV Performance
Ratio” equals (i) the amount of Gross
Proceeds obtained by Purchaser during a particular such period from the sale of
“Performance Ratio Property”,
divided by (ii) the amount of the DRMS
Benchmark Performance Ratio Proceeds for such period. The “DRMS Benchmark
Performance Ratio Proceeds” equals the sum of the products, determined with
respect to and weighted by the particular weights of Performance Ratio Property
identified by the particular combinations of SCL Code and DEMIL Code sold by
the Purchaser during such period, of (x) the weight
of such Property sold during such period, multiplied by (y) the “Indexed Price”
(defined below) of such type of Performance Ratio Property. “Performance Ratio
Property” means Property with the combinations of SCL Code and DEMIL Code
identified in the attached Schedule VI.2.2(B).

 

(C)                               If
the SV Performance Ratios for such four-calendar quarter period and for both
such calendar quarter periods are less than unity (1.0), either DRMS or
Contractor may in its sole discretion cause Termination by notice served within
ninety (90) Days of the delivery to DRMS of such Quarterly Report and effective
five (5) Days after the date of service of the notice.

 

(D)                               The
provisions governing this cancellation option may be modified as DRMS and the
Contractor may from time agree in response to changes in the computation or
reporting of Price Indices, market conditions or other factors.

 

36

 

affiliation exists,
consideration is given to all appropriate factors including common ownership,
common management, and contractual relationships; provided, that restraints imposed by a franchise agreement
are not considered in determining whether the franchiser controls or has the
power to control the franchisee, if the franchisee has the right to profit from
its effort, commensurate with ownership, and bears the risk of loss or failure.
Any business entity may be found to be an affiliate, whether or not it is
organized for profit or located inside the United States. (Refer to Article 23
for the definition of “Affiliate” as such term relates to the provisions of
this Article 2A.)

 

(B)                               “Small Business Concern”

 

“Small business concern”
means a concern, including its affiliates, that is independently owned and
operated. For the purposes of this contract DRMS has classified small business
concerns into two levels:

 

(1)                                 Concerns with 100 or fewer employees.

(2)                                 Concerns with 25 or fewer employees.

 

(C)                               “Failure to make a good faith
effort to comply with the small business sales plan”

 

As used in this clause,
“failure to make a good faith effort to comply with the small business sales
plan” means a willful or intentional failure to perform in accordance with the
requirements of the small business sales plan approved and included in this
contract, or willful or intentional action to frustrate the plan.

 

Section 3.  Small Business Sales Plan.

 

Within fifteen (15) days
after bid opening, each apparent successful bidder shall submit a small
business sales plan to the SCO for approval. The plan shall be included in and
made a part of any resultant contract with the bidder. Failure to obtain
approval of a small business sales plan shall make the bidder ineligible for
the award of the contract until such approval is obtained.

 

Section 4.  Content of Plan.

 

Bidder’s small business
sales plan shall include, at a minimum, the following:

 

(A)                               A description of the efforts the offeror will
make to assure the small business sales goals are met (Section 5 below)
and that small businesses have an equitable opportunity to compete for
contracts.

 

(B)                               A description of how size information on the
firms will be collected. (Note, self-certification is acceptable. Any firm that
does not provide a certification (if self-certification is the method utilized)
would be assumed to be a large business).

 

(C)                               The name or title of the position of the
individual employed by the bidder who will administer the small business sales
plan.

 

(D)                               A description of the types of records that
will be maintained concerning procedures that have been adopted to comply with
the requirements and goals in

 

39

 

the plan, including
establishing source lists; and a description of the bidder’s efforts to locate
small business, i.e., source lists, organizations contacted, internal guidance
and encouragement provided to individuals responsible for the arrangement of
sales.

 

(E)                                 DRMS has established small business sales
goals of 40 percent of the total gross proceeds to concerns with 100 or fewer
employees and 20 percent of total gross proceeds to firms with fewer than 25
employees.

 

Section 5.  Incentive Provisions.

 

Commencing with the first
12-month anniversary of the date of award, and each anniversary thereafter, an
adjustment based on gross sales to small business may be made to the amount of
Distributions paid to the Contractor. These adjustments will be calculated if
the Contractor achieves the following:

 

(A)                               Incentive 1.

 

If the Contractor exceeds
the small business sales goal by achieving gross sales of 60 percent or more to
concerns with 100 or fewer employees, the Contractor will be entitled to an
incentive payment in the amount of five percent (5%) of the total Distributions
to the Contractor for the previous 12 months.

 

(B)                               Incentive 2.

 

If the Contractor meets the
criterion for Incentive I above, and also sells 50 percent or more of all small
business sales to firms with 25 or fewer employees, me Contractor will be
entitled to an additional incentive payment equal to the incentive payment for
Incentive 1.

 

(C)                               Funding of Incentive Payments.

 

Incentive payments shall be
funded and accounted for as Seller Indirect Costs.

 

Section 6.  Quarterly Reports.

 

The Purchaser shall submit
quarterly a report that contains, at a minimum, the following information:

 

•                                          Company Name

•                                          Address

•                                          Contract Identification Number

•                                          Date of Report

•                                          Reporting Period

•                                          Proceeds:

 

•                  Total gross proceeds during the reporting
period

•                  Total gross proceeds from sales to businesses
with 100 or fewer employees and businesses with 25 or fewer employees during
the reporting period

•                  Percent of total gross proceeds sold to
businesses with 100 or fewer employees and businesses with 25 or fewer
employees during the reporting period.

 

 

40

 

•                                            Volume:

•                  Total
lbs. sold during the reporting period

•                  Total
lbs. sold to businesses with 100 or fewer employees and businesses with 25 or
fewer employees during the reporting period

•                  Percent
of total lbs. sold to businesses with 100 or fewer employee and businesses with
25 or fewer employees during the reporting period.

•                                            Contract
Dispersion-

•                  Total
number of re-sale contracts during the reporting period.

•                  Total
number of re-sale contracts with businesses with 100 or fewer employees and
businesses with 25 or fewer employees during the reporting period.

•                                            Annual
incentive payments made as the result of Section (5) above.

 

Section 7.  Failure to Comply.

 

The failure to
comply in good faith with the approved plan required by this clause shall be a
Material Breach and DRMS shall have all rights and remedies afforded by the
provisions of Article 19 below.

 

Section 8.  Review
of Records.

 

The Government
has the right to review the Contractor’s Records to ensure compliance with its
small business sales plan.

 

ARTICLE THREE. REFERRAL AND REMOVAL OR ABANDONMENT OF

PROPERTY; SPECIAL SITUATION PROPERTY; TITLE TO PROPERTY; RISK
OF

LOSS

 

Section 1.  Pickup Notices
and
Invoices

 

(A)                               Exclusive Sale.

 

All DRMS
material that conforms to the definition of the “Property” shall be sold by
DRMS only to Purchaser as provided herein.

 

(B)                               Pickup Notices.

 

(1)                                 Purchaser
shall receive written notices (each, a “Pickup Notice”) from generators or DRMS
with respect to all Property referred for sale to Purchaser at locations other
than at DRMO Scrap Yards that are not Restricted Access Facilities. Such Pickup
Notices shall pertain to all Property referred for sale to Purchaser at
Restricted Access Facilities, via Rolloffs and in-place (including at Puget
Sound Naval Shipyard), and to all Demilitarization Residue and DCS Property.

 

(2)                                 Special
loading, notification, Container, environmental, demurrage, work safety, and
other requirements apply to Property referred for sale to

 

41

 

Purchaser at Puget Sound
Naval Shipyard (“PSNS”) as set forth at Schedule VI.3.1.B(2). The
provisions of Schedule VI.3.1.B(2) may be changed by DRMS from time
to time upon reasonable notice as may reasonably be required by the
installation. DRMS shall from time to time designate a person as a Government
Representative whom Purchaser shall treat as its point-of-contact for resolving
administrative and logistical matters at PSNS that this sale contract does not
reserve exclusively for decision by the SCO. All costs, if any, of providing,
picking up and transporting Containers at PSNS as required in such Schedule shall
be Direct Costs, provided, however, that, for the convenience of the
Government, DRMS and Purchaser may agree that certain costs shall be treated as
Seller Indirect Costs, Any Property referred for sale to Purchaser at PSNS that
Purchaser in its sole discretion determines is unsaleable or cannot be sold
without reducing Net Proceeds shall be removed by Purchaser on a timely basis
and the actual and reasonable costs of loading and transporting such Property
shall be deemed Seller Indirect Costs, provided, however, that Purchaser shall
notify the SCO thereof in advance before removing such Property.

 

(3)                                 Twice per calendar month, Purchaser shall
provide to the SCO, or the SCO’s designee, copies of all Pickup Notices
received. Such copies may be electronic, xerographic or facsimile.

 

(C)                               Outstanding Pickup Notice
List.

 

At least once per calendar
quarter, and no more than monthly, DRMS will issue an “Outstanding Pickup
Notice List” to Purchaser that identifies Pickup Notices for which DRMS has not
received documentation of the Delivery of Property to Purchaser in a form
sufficient to create an Invoice to Purchaser therefor (“Delivery
Documentation”). Within thirty (30) Days thereof, Purchaser shall provide to
DRMS in writing either the corresponding Delivery Documentation, certification
of disposal, or justification for Delivery not having yet occurred.

 

(D)                               Invoices.

 

Once per calendar quarter,
DRMS shall issue an Invoice to Purchaser based upon the Delivery Documentation
received by DRMS during the preceding calendar quarter. The Invoice shall
itemize all Deliveries effected during such quarter, and for each shall state
location (DRMO name or other suitable identifier), SCL Code, Delivery Weight,
and Quarterly Purchase Price of the subject Property. Preparation of the
initial Delivery Documentation at particular locations, and of the initial
Invoice to Purchaser under this contract, shall be governed by the provisions
of Section 7 of this Article 3.

 

42

Section 2.  Delivery Points; DRMS Customer
Liaison; Phase-In Period; DRMS Infrastructure Reduction.

 

(A)                               Delivery Points.

 

(1)                                 Property
that is referred for sale to Purchaser shall be located within the United
States, including Alaska but excluding Hawaii, North Carolina, South Carolina
and Tennessee, at (i) a DRMO
Scrap Yard, (ii) a scrap operation other
than a DRMO that is operated by or on behalf of DRMS (“DRMS Warehouse”), (iii) other governmental locations, including without
limitation military facilities and such other locations as may be designated in
its sole discretion by DRMS (collectively, “Special Situation Locations”), (iv) a scrap operation operated by or on behalf of
Purchaser, or (v) PSNS. (DRMOs, DLA Depots,
DRMS Warehouses, Special Situation Locations, Purchaser operations, and PSNS
are hereinafter collectively termed “Delivery Points.”) DRMS may elect in its
sole discretion and at its sole expense to pack, load and transport Property to
any Delivery Point either before or in connection with referring such Property
for sale to Purchaser. DRMS and Purchaser may jointly decide to have material
shipped by or on behalf of DRMS directly to Purchaser’s re-sale buyers and to
allocate the costs thereof between DRMS and Purchaser as the parties may agree.

 

(2)                                 DRMS
may elect in the exercise of its sole discretion to delete PSNS as a Delivery
Point, and the Property there may be eliminated from this sale contract, if
Purchaser or its re-sale buyers create repeated instances of work stoppages there
that, after notice thereof, Purchaser fails to cure on a timely basis. The
provisions of Article 19 shall govern such notice and cure.

 

(B)                               Delivery
Point Directory; DRMS Customer Liaison.

 

(1)                                 Within
thirty (30) days of award of this contract, DRMS shall provide to Contractor,
in writing and in machine readable MS Office word processing (*.doc) or
spreadsheet (*.xls) file format, (i) the
listing (the “Delivery Point Directory”) as of the date of award of all
operating DRMOs and DRMS Scrap Operations in the pertinent geographic area with
DRMO Name, DRMO RIC and RIC Suffix, the address and telephone for each such
facility, an indication of whether such facility is initially designated by
DRMS as a Restricted Access Facility, and with respect to each listed facility,
the name of the DRMS employee or other government representative designated by
DRMS to serve as the principal point of contact for Purchaser with respect to
such facility (each, the “DRMS Customer Liaison” for such facility), the
address and telephone of the DRMS Customer Liaison if either differs from that
for the facility itself, the electronic mail address for the DRMS Customer
Liaison if

 

43

 

available, a supervisory
contact for the DRMS Customer Liaison, and the date, if applicable, and if
publicly available, that such facility is scheduled to be closed, and (ii) the listing, for each operating DRMO and other
DRMS Scrap Operation, of all Scrap or DCS Property term sale contracts that are
active as of approximately sixty (60) Days prior to the award date, which
listing shall include for each DRMO and other DRMS Scrap Operation the
following information if available:

 

•                                          SCL Code or other identifier of the material
that is the subject of the term contract;

•                                          Contract number;

•                                          Contract performance period;

•                                          Company name;

•                                          Contact name;

•                                          Company telephone number;

•                                          Company fax number;

•                                          Company address;

•                                          Email contact; and

•                                          Approximate dollar volume in preceding twelve
months or life of contract, whichever period is shorter.

 

(2)                                 Throughout the Performance Period, DRMS shall
provide notice to Purchaser reasonably promptly of changes in the Delivery
Point Directory, including without limitation notice of any scheduled or actual
establishment or closure of any DRMO or DRMS Scrap Operation in the pertinent
geographic area, such notice to be provided within thirty (30) Days of the date
that knowledge of such scheduled or actual establishment or closure becomes
available to the public.

 

(3)                                 The DRMS Customer Liaison for the DRMO or
DRMS Scrap Operation that is identified on a Pickup Notice as the accountable
DRMS facility for particular Property shall arrange or permit reasonable access
for Purchaser to such Property as provided herein.

 

(C)                               Phase-In Period.

 

Purchaser shall phase in its
performance of the contract as provided in this Section.

 

(1)                                 Purchaser and DRMS shall make reasonable
efforts to agree on a schedule for Purchaser to begin accepting Delivery
of Property such that, no later than three (3) months after the post-award
conference, Purchaser shall be accepting Delivery of Property at each of the
fourteen (14) “Initial Delivery Points” identified in Table VI.3.2.C below.
Also within three (3) months of the post-award conference, Purchaser shall
serve notice to DRMS of Purchaser’s proposed schedule for accepting
referrals of Property at the balance of the locations in the Delivery Point
Directory.

 

44

 

Table VI.3.2.C

Initial Delivery Points

 

	
  No.

  	
   

  	
  Name

  	
   

  	
  City

  	
   

  	
  State

  	
   

  
	
  1

  	
   

  	
  Lewis

  	
   

  	
  Tacoma

  	
   

  	
  WA

  	
   

  
	
  2

  	
   

  	
  Oklahoma
  City

  	
   

  	
  Oklahoma
  City

  	
   

  	
  OK

  	
   

  
	
  3

  	
   

  	
  Anniston

  	
   

  	
  Anniston

  	
   

  	
  AL

  	
   

  
	
  4

  	
   

  	
  Texarkana

  	
   

  	
  Hooks

  	
   

  	
  TX

  	
   

  
	
  5

  	
   

  	
  Hood

  	
   

  	
  Killeen

  	
   

  	
  TX

  	
   

  
	
  6

  	
   

  	
  Lakehurst

  	
   

  	
  Lakehurst

  	
   

  	
  NJ

  	
   

  
	
  7

  	
   

  	
  Mechanicsburg

  	
   

  	
  Mechanicsburg

  	
   

  	
  PA

  	
   

  
	
  8

  	
   

  	
  St. Juliens

  	
   

  	
  Portsmouth

  	
   

  	
  VA

  	
   

  
	
  9

  	
   

  	
  Tucson

  	
   

  	
  Tucson

  	
   

  	
  AZ

  	
   

  
	
  10

  	
   

  	
  Crane

  	
   

  	
  Crane

  	
   

  	
  IN

  	
   

  
	
  11

  	
   

  	
  San Antonio

  	
   

  	
  San Antonio

  	
   

  	
  TX

  	
   

  
	
  12

  	
   

  	
  Benning

  	
   

  	
  Columbus

  	
   

  	
  GA

  	
   

  
	
  13

  	
   

  	
  Jacksonville

  	
   

  	
  Jacksonville

  	
   

  	
  FL

  	
   

  
	
  14

  	
   

  	
  Puget Sound
  Naval Shipyard

  	
   

  	
  Bremerton

  	
   

  	
  WA

  	
   

  

 

(2)                                 Within fifteen (15) Days after receipt of such
notice, DRMS shall serve notice to Purchaser of the schedule (the
“Phase-In Schedule”) for phasing in referrals at all Delivery Points other than
the Initial Delivery Points. Unless DRMS in the exercise of its sole discretion
elects to extend the Purchaser’s proposed timetable, the Phase-In Schedule shall
provide for referrals to begin at all such Delivery Points no later than six (6) months
after the post-award conference.

 

(3)                                 Purchaser may request that DRMS begin
referrals at certain Delivery Points earlier than three (3) months after
the post-award conference by serving its request therefor, and at any time
Purchaser may request acceleration of referrals at any Delivery Point. DRMS
shall respond to such requests in the exercise of its sole discretion, and DRMS
and Purchaser shall cooperate to effect orderly cancellation of existing term
sale contracts and an effective transition that does not unnecessarily impact
service to generators.

 

(4)                                 DRMS shall refer Property for sale to
Purchaser only as provided on the Phase-In Schedule until the date that is
six (6) months after the date that the initial Pickup Notice is submitted
to Purchaser (such six month

 

45

 

period being the “Phase-In
Period”) except as the Phase-In Schedule may be modified by agreement
reached by the parties in the exercise of the sole discretion of each. During
the Phase-In Period DRMS reserves the right to sell to buyers, other than
Purchaser, such Property that is located at Delivery Points that, pursuant to
the Phase-In Schedule, are at the time not yet scheduled for referrals of
Property for sale to Purchaser.

 

(5)                                 Subject to staffing and facilities
constraints, DRMS intends to accumulate Property at each particular Delivery
Point in advance of the scheduled first referral of Property there to provide
the Purchaser with some beginning inventory with which to begin its operations.
Nevertheless, DRMS cannot and does not represent that there will be any
particular level of inventory, or necessarily any at all, at any particular
site when referrals of Property begin there.

 

(6)                                 During the Phase-In Period, DRMS shall not
refer Property that is located at Special Situation Locations for sale to
Purchaser, provided, however, that Purchaser may request to receive Property at
any such location by so notifying DRMS, and DRMS shall exercise reasonable
efforts to accommodate any such request.

 

(7)                                 Upon the conclusion of the Phase-In Period
and thereafter during the balance of the Performance Period, DRMS shall refer
all Property at all Delivery Points for sale to Purchaser under the contract.

 

(8)                                 All costs of providing, picking up and
transporting Containers that Purchaser elects to utilize in the exercise of its
sole discretion shall be deemed Direct Costs, provided, however, that the
provisions of Section 1(B)(2) of this Article 3 shall apply to
PSNS. In addition, DRMS in the exercise of its sole discretion may direct
Purchaser upon reasonable notice to utilize a particular Container at any other
Delivery Point. If, as a result, the number of Containers utilized by Purchaser
other than at PSNS exceeds three hundred (300), including Containers provided
by generators or the Government, the actual and reasonable costs of providing,
picking up and transporting any such additional Container shall be deemed
Seller Indirect Costs.

 

(D)                               DRMS Infrastructure.

 

Contractor acknowledges that
DRMS intends to reduce its infrastructure, including without limitation by
closure of some or all DRMOs and DRMO Scrap Yards and/or reduction of operating
hours at particular DRMOs and DRMO Scrap Yards, or by establishment of DRMS
Scrap Operation, or by other methods or combinations of methods. Contractor
further acknowledges that this contract shall remain in force notwithstanding
such infrastructure reduction measures that DRMS in its sole discretion may
effect.

 

46

 

(E)                                 Maximum Number of DRMOs, DRMO
Scrap Yards and DRMS Scrap Operations.

 

DRMS does not expect to
operate in excess of sixty-nine (69) DRMOs, DRMO Scrap Yards, and DRMS Scrap
Operations, or in excess of forty (40) RIPLs, at any time during the
Performance Period. At any time that such number is exceeded, all Property
referred for sale to Purchaser at such facilities that are the then most
recently established such facilities and comprise the excess thereof shall be
deemed to be referred for sale at Special Situation Locations and not made
available for On-Site Processing for the purpose of determining Seller Indirect
Costs pursuant to the provisions of Section 4(F) of this Article 3.

 

Section 3.  Property
Storage; Delivery of Property to Purchaser and Passage of Title.

 

(A)                               Property Storage.

 

(1)                                 Each DRMO, DRMS Scrap Yard and DRMS Scrap
Operation other than Restricted Access Facilities shall provide to Purchaser (i) a portion of its administrative space to the extent
that DRMS determines in the exercise of its sole discretion that such space can
be made available, and (ii) a
contiguous portion of its outdoor storage space (“Purchaser’s Dedicated
Storage”). DRMS shall specify on the Phase-In Schedule the initial space
allocations for the facilities designated thereon, and DRMS shall notify
Purchaser of the initial space allocations at all other DRMOs, DRMS Scrap Yards
and DRMS Operations within ninety (90) Days of submission of the initial Pickup
Notice to Purchaser. Such initial space allocations shall be specified by DRMS
in the exercise of its sole discretion, provided, however, that DRMS expects
that, except in unusual circumstances, the entirety of each DRMO Scrap Yard
will be designated as Purchaser’s Designated Storage. After referrals of
Property for sale to Purchaser have begun at any particular facility, including
facilities established by DRMS after the date of award, DRMS and Purchaser
shall adjust space allocations from time to time as is reasonably required in
the circumstances to accommodate relative inflows to the facility of Property
and other DRMS items. Purchaser may use Purchaser’s Dedicated Storage to store,
inspect, lot, tag, sort, pack and load Property as provided herein, or for any
other purpose that is desired by Purchaser in the exercise of its sole
discretion and that is not inconsistent with the express provisions of this
contract. Subject to Host Installation requirements and DRMS approval,
Purchaser may use Purchaser’s Dedicated Storage for shredding, baling or other
processing of the Property.

 

(2)                                 At DRMOs, DRMO Scrap Yards and DRMS
Operations other than Restricted Access Facilities, DRMS shall provide
reasonably necessary utility services to Purchaser to the extent that DRMS
determines in the

 

47

 

exercise of its sole
discretion that such services, including water, electricity, heat and
telephones, are available at a particular facility. Subject to approval by
DRMS, which approval shall not be unreasonably withheld, and subject to Host
Installation restrictions, Purchaser may arrange for additional services at any
particular such facility in the exercise of its sole discretion and at
Purchaser’s sole expense.

 

(3)                                 Subject to approval by DRMS, which approval
shall not be unreasonably withheld, and subject to Host Installation
restrictions, Purchaser may install fixtures or make other improvements to the
premises at any particular DRMO, DRMO Scrap Yard or DRMS Operation other than
Restricted Access Facilities, provided, however that any such improvements
permanently affixed to such premises shall become the property of the
Government at the conclusion of the Wind-Up if so designated by DRMS in the
exercise of its sole discretion at any time during the final ninety (90) Days
of the Performance Period.

 

(4)                                 Except as otherwise provided herein,
Purchaser shall not be provided Purchaser’s Dedicated Storage or administrative
space at Special Situation Locations or Restricted Access Facilities except as
a particular facility’s restrictions permit.

 

(B)                               Receipt of Property by
Purchaser

 

(1)                                 DRMO Scrap Yards other than
Restricted Access Facilities.

 

The Purchaser is responsible
for assisting generators in unloading material at Government scrap operations.
Receipt of Property at DRMO Scrap Yards other than Restricted Access Facilities
shall be as follows. The personnel of DRMS and Purchaser shall cooperate as is
reasonably required to implement these provisions.

 

a.                                       If the Contracting Officer’s Representative
(“COR”) is available, the COR shall receive the Property from the generator on
behalf of DRMS; for Property properly identified by one of the “High Value SCL
Codes,” set forth in the attached Schedule VI.3.3.B(1), confirm or correct
its SCL Code; for all SCL Codes, confirm or correct its DEMIL Code and Delivery
Weight, create or correct the turn-in documentation; and approve the load for
unloading by the Purchaser.

 

b.                                      If the COR is unavailable, the generator
shall be deemed to be referring the Property on behalf of DRMS. Purchaser
shall, for Property properly identified by one of the High Value SCL Codes,
confirm or correct its SCL Code; for all SCL Codes, confirm or correct the
Property’s Delivery Weight, and create or correct the turn-in documentation as
necessary, provided, however, that the generator concurs with the final entries
thereon and proceed with

 

48

 

the unloading.
Absent such concurrence, Purchaser shall accept the Property on behalf of DRMS
subject to the provisions of Section (3)(C) below.

 

c.                                       The
turn-in documentation shall serve as the Delivery Documentation for such
Property.

 

(2)                                 Containers.

 

Receipt of
Property in Containers shall be as follows:

 

a.                                       Purchaser shall pick up the full Container,
and replace it with an empty Container, within five (5) Business Days of
its receipt of a Pickup Notice, unless otherwise agreed to by the parties.

 

b.                                      Purchaser shall have its transport vehicle
and Container weighed immediately before and after pickup at a Scrap Yard if
reasonably available or, if not, at a commercial scale. The difference in such
weights shall be deemed to equal the Delivery Weight of the subject Property
for pricing the Property on an Invoice.

 

c.                                       Purchaser shall create or correct the subject
turn-in documentation as necessary, provided, however, that the generator
concurs with the final entries thereon. Absent such concurrence, Purchaser shall
accept the Property on behalf of DRMS subject to the provisions of Section (3)(C) below.
Purchaser shall note the Delivery Weight and identify the corresponding Pickup
Notice on the turn-in documentation, and, if the Delivery Weight was determined
commercially, shall attach a copy of the documentation thereof. The turn-in
documentation with its attachments shall collectively constitute the Delivery
Documentation for such Property.

 

(3)                                 Referral In-Place and at
Restricted Access Facilities. 

 

Receipt of Property
in-place and at Restricted Access Facilities at the generator’s premises shall
be as follows:

 

a.                                       Purchaser shall have custody of and control
over the Property upon receipt of a Pickup Notice from DRMS or the generator.

 

b.                                      The Property shall be weighed and the turn-in
documentation completed upon removal of the Property.

 

c.                                       Purchaser shall have its transport vehicle
weighed immediately before and after pickup at a DRMO Scrap Yard if reasonably
available or, if not, at a commercial scale. The difference in such weights
shall be deemed to equal the Delivery

 

49

 

Weight of the subject
Property for pricing the Property on an Invoice.

 

d.                                      Purchaser shall create or correct the subject
turn-in documentation as necessary, provided, however, that the generator
concurs with the final entries thereon. Absent such concurrence, Purchaser
shall accept the Property on behalf of DRMS subject to the provisions of Section (3)(C) below.
Purchaser shall note the Delivery Weight and identify the corresponding Pickup
Notice on the turn-in documentation, and, if the Delivery Weight was determined
commercially, shall attach a copy of the documentation thereof. The turn-in
documentation with its attachments shall collectively constitute the Delivery
Documentation for such Property.

 

(4)                                 Demilitarization Residue.

 

Receipt at a DEMIL Center of
residue that results from demilitarization (“DEMIL Residue”) shall be as
follows:

 

a.                                       Purchaser shall pick up the full Container,
and replace it with an empty Container, within five (5) Business Days of
its receipt of a Pickup Notice.

 

b.                                       Purchaser shall have its transport vehicle
and Container weighed immediately before and after pickup at the DEMIL Center
scale. If a DEMIL Center scale is not reasonably available or, if not, at a
commercial scale. The difference in such weights shall be deemed to equal the
Delivery Weight of the subject Property for pricing the Property on an Invoice.

 

c.                                       The Pick-up Notice and documentation of the
Delivery Weight shall collectively constitute the Delivery Documentation for
such Property.

 

(5)                                 Puget Sound Naval Shipyard. Receipt of Property at PSNS shall be as set
forth in Schedule VI.3.1.B(2). As provided in Schedule VI.3.1.B(2) and
in Section 1(B)(2) above of this Article 3, employees of the
shipyard or of the shipyard’s demolition contractors shall load the Scrap
material into Containers provided by Purchaser and Purchaser is required to
remove such Containers as they fill. The costs of the Containers and their
removal shall be Direct Costs.

 

(C)                               Discrepancies; Correction of
DEMIL Codes; Duty to Cooperate; Duties of Care and Loyalty; Administrative
Efficiencies

 

(1)                                 Discrepancies. Any dispute concerning the
proper description of Property on Delivery Documentation shall be governed by
the provisions of Section 2 of Article 6 concerning “Discrepancies.”

 

50

 

(2)                                 Correction of DEMIL Codes. In no event shall
Purchaser be responsible for determining or correcting the DEMIL Code assigned
to particular Property. Property that is received by Purchaser directly from a
generator shall be deemed to be DEMIL “B” unless the generator specifies
another DEMIL Code.

 

(3)                                 Duty to Cooperate. Purchaser shall cooperate
reasonably with generator personnel to effect the receipt of Property.

 

(4)                                 Duties of Care and Loyalty. Purchaser may
negotiate with generator personnel to resolve disagreements concerning the
proper SCL Code applicable to particular Property received directly by Purchaser,
provided, however, that in resolving such disagreements Purchaser is subject to
the provisions of Section 2 of Article 7 that concern Purchaser’s
duty of care and duty of loyalty toward DRMS.

 

(5)                                 The SCO may propose by notice such simplified
administrative procedures for determining SCL Code and Delivery Weight at
particular installations, with respect to certain types of Property, or in any
other respect that the SCO determines would enhance Net Proceeds, provided,
however, that such procedures would not unreasonably reduce Purchaser’s accountability
for Property, and such procedures shall take effect upon notice of concurrence
therewith by Purchaser.

 

(D)                               Title

 

(1)                                 DRMS
shall transfer title to particular Property as provided in this Section 3(D).

 

a.                                       Except for DCS Property and Property that is
referred for sale in-place at a generator’s premises or at a Restricted Access
Facility, title shall pass to Purchaser upon receipt of the Property by
Purchaser.

 

b.                                      Title to Property referred for sale in-place
at a generator’s premises or at a Restricted Access Facility shall pass to
Purchaser upon the removal by or on behalf of Purchaser or a re-sale buyer from
its Delivery Point.

 

c.                                       Title to DCS Property shall pass to Purchaser
upon the completion and documentation of the required demilitarization and
removal of the residue by or on behalf of Purchaser or a re-sale buyer from its
Delivery Point, and removal of DCS Property is not permitted before the
completion and documentation of the required demilitarization absent advance
written permission from DRMS.

 

(2)                                 Any
subsequent re-sale transactions are between Purchaser and the re-sale buyers,
not between the Government and the re-sale buyers. Any disputes or claims
resulting from such transactions are between Purchaser and re-sale buyers, not
the Government.

 

51

 

Section 4.  Access to Property; Removal; On-Site
Processing; Costs of Removal; Refrigerants

 

(A)                               Purchaser’s Access to Property.

 

(1)                                 Purchaser, Purchaser’s subcontractors and
Contractor shall have access to Property at each DRMO Scrap Yard and DRMS Scrap
Operation during all hours that such facility normally staffs sales,
warehousing, receiving or other functions, to inspect, lot, tag, sort, process,
pack, load or ship such Property, and, except as otherwise provided herein, for
such other purposes as Purchaser deems appropriate in its sole discretion.
Purchaser shall coordinate such access with the management of each particular
Scrap Yard. Except as otherwise provided herein, and subject to applicable law
and Host Installation regulations, Purchaser may store and use Purchaser’s
materials handling equipment, on an as is if available basis, at DRMO Scrap
Yards other than Restricted Access Facilities.

 

(2)                                 Due to Host Installation restrictions or for
other reasons, a particular Scrap Yard may occasionally and temporarily be
unable to provide storage as provided in Section 3 above of this Article 3
or access as provided in Subsection (1) above of this Section 4(A).
Any such facility that is not reasonably able to provide such storage or access
other than occasionally and temporarily shall be deemed a “Restricted Access
Facility.” Concurrently with award of this contract, DRMS shall provide to
Contractor in writing a list of DRMO Scrap Yards that DRMS initially designates
as Restricted Access Facilities. DRMS may add or delete entries on that list
from time to time by written notice to Purchaser.

 

(3)                                 Except as provided in Sections 4(C) and
4(E) below of this Article 3, Purchaser shall not be permitted access
at any time to any Property at Special Situation Locations and Restricted
Access Facilities, other than such access as is reasonably necessary for
removal of Property when removal of such Property is requested by DRMS. Except
as otherwise provided herein, Purchaser shall neither use nor store Purchaser’s
materials handling equipment at Special Situation Locations and Restricted
Access Facilities. Subject to applicable law and Host Installation regulations,
DRMS shall provide to Purchaser, at government expense and at any such Delivery
Point, the use of such materials handling equipment as is available for the
materials handling tasks that are reasonably required of Purchaser at such
Delivery Points.

 

(4)                                 Purchaser shall comply with all applicable
inspection and safety regulations at Host Installations, including, without
limitation, regulations pertaining to materials handling equipment.

 

52

 

(B)                               Re-Sale Buyers’ Access to
Property.

 

Except as provided in
Sections (4)(C), 4(D) and 4(E) below of this Article 3,
Purchaser’s prospective re-sale buyers shall not be permitted access to
Property at any Delivery Point at any time.

 

(C)                               Removal; Packing and Loading.

 

(1)                                 Removal. Except as provided in Section 4(E) below,
and except in special circumstances that reasonably delay removal, Purchaser
shall cause removal of Property as follows:

 

a.                                       With respect to Property that is located at a
Scrap Yard, as is reasonably necessary from time to time to accommodate the
inflow of Property to Purchaser’s Dedicated Storage at any particular such
facility, provided, however, that, except by special arrangement with a
particular Restricted Access Facility, Property referred for sale at Restricted
Access Facilities shall be removed no later than the earlier of (i) sixty
(60) Days after submission to Purchaser of the corresponding Pickup Notice, or (ii) reasonably
promptly upon request by DRMS.

 

b.                                       With respect to Property that is located at a
Special Situation Location, within thirty (30) Days of delivery of the
corresponding Pickup Notice unless DRMS directs earlier removal pursuant to the
provisions of Subsection (c) below of this Section 4(C)(1). The
DRMS Customer Liaison shall timely notify Purchaser of whether Purchaser will
be required to pack and/or load such Property. If Purchaser’s initial attempt
to remove the Property is unsuccessful because, notwithstanding such notice,
the Property is inadequately packed by government personnel or loading by
government personnel is unexpectedly unavailable, Purchaser shall return within
thirty (30) Days with materials and equipment necessary to effect removal.

 

c.                                       Occasionally and as circumstances reasonably
require, DRMS may direct removal of Property within shorter time periods than
those provided in Subsections (b) and (c) above of this Section 4(C)(1).
All such Property shall be deemed to be referred for sale at a Restricted
Access Facility for the purpose of applying the provisions of Section 4(F)(2) below
of this Article 3.

 

(2)                                 Packing and Loading.

 

a.                                       Property at Scrap Yards. Purchaser shall both
pack and load Property at Scrap Yards for removal by Purchaser’s re-sale
buyers, and removal of Property from Scrap Yards other than Restricted Access
Facilities by Purchaser’s re-sale buyers shall be permitted throughout the
Performance Period. Costs incurred by

 

53

 

Purchaser for packing and
loading Property at DRMOs and DRMS Operations shall be Direct Costs.

 

b.                                      Special Situation Locations; Restricted
Access Facilities. Property referred for sale at Special Situation Locations
and Restricted Access Facilities shall be packed and loaded suitably for
transport by DRMS or other government personnel at government expense,
provided, however, that Purchaser shall pack and/or load such Property as
requested by DRMS upon reasonable notice, and the actual and minimum reasonable
costs thereof shall be Seller Indirect Costs. Except as provided in Section 4(E) of
this Article 3 below, Purchaser’s re-sale buyers may not pick up Property
at Special Situation Locations and Restricted Access Facilities.

 

(D)                               On-Site Processing.

 

Purchaser’s prospective
re-sale buyers shall be permitted access subject to Host Installation
restrictions to each Scrap Yard other than Restricted Access Facilities to
inspect the Property in connection with Purchaser’s processing and marketing
activities, including without limitation sorting, packing, processing, off-site
auctions and negotiated sales. Such prospective re-sale buyers shall be
accompanied within the Scrap Yard at all times by Purchaser or its designee,
and Purchaser will be required to escort re-sale customers from installation
gates to the Scrap Yard when it is required, and permitted, by the Host
Installation. Re-sale buyer access at a particular Scrap Yard shall be
permitted for at least two (2) Business Days each calendar week for at
least eight (8) hours each, provided, however, that (i) Purchaser
shall coordinate such access with the management of each particular Scrap Yard,
(ii) Purchaser shall conduct such
re-sale buyer access in a manner that is not unreasonably disruptive of the
facility’s operations, and (iii) such
re-sale buyer access shall be permitted only during such times as Purchaser
access is permitted pursuant to the provisions of Section (4)(A)(1) above
of this Article 3. (Re-sale buyer access to Property as provided in this Section 4(D) is
hereinafter termed “On-Site Processing.”)

 

(E)                                 DRMS Option to Permit On-Site
Processing.

 

Throughout the Performance
Period, DRMS in the exercise of its sole discretion may designate particular
Property at a particular Special Situation Location or Restricted Access
Facility as available for On-Site Processing by serving notice thereof upon or
after delivery of the Pickup Notice and before removal of such Property by
Purchaser. On-Site Processing of such Property at such location shall be
permitted for sixty (60) Days following service of such notice, and Purchaser
shall cause removal of such Property within such sixty (60) Day period. The
DRMS Customer Liaison for such Property shall arrange access to the Property
for Purchaser and for prospective re-sale buyers throughout such

 

54

 

sixty (60) Day
period that is consistent with the provisions of Sections 4(A)(1) and 4(D) above
of this Article 3.

 

(F)                                 Costs
of Removal.

 

(1)                                 On-Site Processing. With respect to Property that is made
available to Purchaser for On-Site Processing, the costs incurred by Purchaser
to transport such Property from its Delivery Point are Direct Costs.

 

(2)                                 Other Property. With respect to Property referred for sale
at (i) Special Situation Locations
that is not made available for On-Site Processing, and (ii) Restricted
Access Facilities, the actual and minimum reasonable costs incurred by
Purchaser to pack, load and surface transport such Property from its Delivery
Point to Purchaser’s nearest storage facility (including a DRMO Scrap Yard) are
Seller Indirect Costs, provided, however, that transport costs for transport in
excess of five hundred (500) miles from the Delivery Point, shall be deemed
Direct Costs. Purchaser shall notify DRMS within fifteen (15) Days of the
establishment or closure of each storage facility operated by or for Purchaser,
and for each newly established facility such notice shall include address,
telephone and on-site management contact information.

 

(G)                               Government Furnished
Equipment

 

(1)                                 Attachment
VI.3.4.G identifies government-owned equipment that that may be available to
the Contractor (“GFE”). DRMS does not represent or warrant that such GFE is
completely or accurately identified on such Attachment or is in fact available
at the locations specified or any of them, that such equipment is useable or
could be made useable for any particular purpose with any particular amount of
parts, repairs or maintenance, that such equipment has received an appropriate
amount of repairs or maintenance or any amount of repairs or maintenance
whatsoever, or that such equipment is safe to operate.

 

(2)                                 Subject
to applicable law and Host Installation instructions, including without
limitation any required inspections, DRMS hereby grants a license to Purchaser
to use, maintain, repair or modify such GFE as is identified in such Attachment
to the extent and in the manner that Purchaser elects in the exercise of its
sole discretion, and the costs thereof shall be Direct Costs, provided,
however, that such GFE shall be used solely to perform Purchaser’s obligations
under this contract, and provided further that DRMS may at any time relocate
such GFE to another location for government use as determined by DRMS in the
exercise of its sole discretion. Should any GFE require replacement due to
misuse and negligence by Purchaser, Purchaser shall be responsible for such
replacement at no cost to the Government.

 

55

 

(3)                                 At such time that Purchaser determines that a
particular item of GFE is not economically repairable (defined as requiring
repair costs in excess of 75 percent of the cost to replace such item), the
Purchaser and a DRMS COR shall certify it to be in condemned condition and
submit a report to the SCO. Before the conclusion of the Wind-Up, the remaining
GFE shall be reported to the SCO according to FAR 45.6 or in such other format
as the parties may agree.

 

(4)                                 Within ninety (90) Days of award, Purchaser
shall submit a report to DRMS that (i) identifies and provides a
photograph of each particular item of GFE by location, and (ii) provides a
good faith assessment of the condition of each such item of GFE. DRMS shall
notify Purchaser of any objections to such report within ninety (90) Days of
its receipt by DRMS. The parties shall cooperate in good faith to resolve such
objections and, with respect to objections that are resolved, shall document
the resolution in writing. Reasonably promptly when so requested, Purchaser
shall acknowledge receipt of the GFE in writing by executing, and annotating to
the extent that Purchaser deems appropriate, a DLA Form 1311 (or similar
form) prepared by DRMS for property accountability.

 

(H)                               Base Closures.

 

(1)                                 Contractor acknowledges that certain defense
installations may be scheduled for closure (each, a “Base Closure”) during the
prospective Performance Period of this contract. Contractor further
acknowledges that Base Closures often generate substantially increased volumes
of surplus material that must be processed on accelerated schedules.

 

(2)                                 DRMS and Purchaser shall cooperate and
institute special procedures as reasonably necessary in connection with Base
Closures to process and re-sell Property efficiently. Such cooperation shall
include, without limitation, extended access for Purchaser and re-sale buyers,
on-site calls of auctions and spot bidding, and other special procedures as
reasonably required to remove all property by the established closure date.

 

(I)                                    Damage to Government
Property; Clean-Ups of Spills.

 

(1)                                 Purchaser shall be responsible to DRMS for
any physical damage that is caused to any government equipment or facility or
Scrap Yard that arises out of the negligence of Purchaser, its vendors or its
re-sale buyers. Purchaser shall be responsible for cleaning up spills of
hazardous material on a government installation that are caused by Purchaser,
its vendors or its re-sale buyers, including spills from hydraulic lines on
GFE, without regard to degree of culpability, and, for any spill that occurs on
a government installation that has provided to Purchaser its Spill Prevention
Control and Countermeasures Plan and Spill Contingency Plan, such clean-up
shall be in accordance with such plans. Purchaser shall notify the

 

56

 

SCO or COR
reasonably promptly of any such spill on a government installation that is
caused by Purchaser, its vendors or a re-sale buyer and shall cooperate with
the SCO to support the installation’s requirements for a report thereof.

 

(2)                                 DRMS
shall indemnify, defend, and hold harmless Purchaser, Contractor, Affiliated
Parties, and their owners, officers, employees, agents, vendors and
subcontractors with respect to any claim brought by any third party, including
without limitation any local, state, or federal governmental entity, that
arises or is alleged to arise, directly or indirectly, from environmental
contamination at any federally owned or controlled property or facility,
provided, however, that DRMS shall be entitled to recover from Purchaser any
amounts found by a court of competent jurisdiction and identified as such in
its final judgment as having been caused solely by Purchaser’s failure to
comply with applicable local, state or federal environmental law.

 

(J)                                 Refrigerants. Purchaser shall remove and
arrange for the proper disposal of refrigerants in accordance with applicable
law, regulation and Host Installation requirements. The actual and minimum
reasonable costs of such removal and disposal shall be Seller Indirect Costs.

 

(K)                               Tire, Wood, Glass and Unsaleable Material

 

Purchaser is
required to make reasonable periodic efforts to sell tire material, classified
in SCL Codes G01, G02, G03, G04, G05 and GST, wood material, classified in SCL
Codes F01 and FSW, and glass material, classified in SCL Code H06, that is referred
for sale to Purchaser at locations that are subject to this sale transaction
and that will generate Net Proceeds after deducting related costs. Purchaser
shall accordingly confer periodically with the SCO about the availability of
such material at particular locations and the markets for such material, and
Purchaser shall prepare, and periodically update, for the SCO’s review and
approval a plan for attempting sale of such material to reduce the DRMS solid
waste stream and maximize Net Proceeds. Provided that Purchaser attempts such
sale in accordance with such plan, Purchaser in its sole discretion may elect
to take Delivery of all or part of such material that is available at any such
location on such terms as the parties agree and DRMS shall then include such
material on a subsequent Invoice. Should Purchaser determine in its sole
discretion that any such material, or other material classified in another SCL
Code, is unsaleable at particular locations or saleable only at such pricing or
on such terms such that Net Proceeds would be reduced by such sale, Purchaser
shall make such material available to DRMS for disposal in lieu of removal by
Purchaser, provided, however, that, should the SCO so direct, Purchaser shall
dispose of such material within such reasonable time as the SCO requires and
the actual and reasonable costs thereof shall be deemed Seller Indirect Costs.

 

57

 

Purchaser
acknowledges that it is responsible for compliance with all federal, state,
local and installation laws and regulations pertaining to such material,
including particularly applicable law governing the storage of tire material.

 

Section 5.  Delivery
Documentation.

 

Purchaser
shall forward to the SCO photocopies of all Delivery Documentation obtained by
Purchaser that was not previously furnished to the SCO. This will usually occur
when Purchaser receives material from generator on behalf of DRMS.

 

Section 6.  Risk of Loss.

 

DRMS shall
bear the risk of loss, damage or destruction of the Property until title
thereto transfers to Purchaser in accordance with the provisions of Section 3(C) above
of this Article 3, and Purchaser shall bear such risk thereafter,
provided, however, that (i) Purchaser
shall pay to DRMS the full amount of the Quarterly Purchase Price for any item
of Property lost or damaged before passage of title as a result of Purchaser’s
negligence, but DRMS shall have no claim for consequential damages against
Purchaser or Contractor based upon such loss or damage, and (ii) Purchaser shall be entitled to a refund for the
full amount of the Quarterly Purchase Price for any item of Property that is
lost or damaged while located at a Delivery Point as a result of negligence on
the part of the Government or any contractor of the Government, but neither
Purchaser nor Contractor shall have a claim against the Government for
consequential damages based upon such loss or damage, and (iii) the
party asserting a claim under the provisions of this Section 6 shall serve
notice thereof to the other party within a reasonable time after the facts
underlying such claim are discovered or, in the circumstances, should have been
discovered.

 

Section 7.  Initial Property
Sales.

 

(A)                               DRMS
and Purchaser shall meet at a particular Scrap Yard on the date that is
provided therefor in the Phase-In Schedule, or as agreed between DRMS and the
Purchaser, and conduct an inventory (the “Initial Inventory” for that
location), by SCL Code and approximate weight and, for DCS Property, DTID, NSN
or LSN and DEMIL Code, of the initial Property at such location that DRMS
elects in the exercise of its sole discretion to refer for sale to Purchaser.
The Initial Inventories for the Initial Delivery Points shall be completed no
later than the date that is three (3) months after the date of the
post-award conference. The Initial Inventory for a particular location shall be
deemed the initial Pickup Notice for that location, effective as of the date
specified in the Phase-In Schedule or as otherwise agreed by DRMS and
Purchaser, each in the exercise of its respective sole discretion.

 

(B)                               Purchaser
shall not remove any Property from any Scrap Yard before the Initial Inventory
of Property at such Scrap Yard is created by DRMS and Purchaser. The Initial
Inventory, as supplemented by documentation of receipts of

 

58

 

Property at
such location subsequent to the Initial Inventory but before Purchaser begins
receiving referrals of Property at such location, shall constitute the Delivery
Documentation for the initial Property referred for sale to Purchaser.

 

(C)                               The
Phase-In Schedule shall be delayed as necessary to enable DRMS to receive
and, as required in certain respects by the provisions of this contract, to
approve, all of the materials and information required to be provided to DRMS
under the provisions hereof. Such provisions include but are not necessarily
limited to the provisions of Article 1 (Purchaser Information and
Confirmation of Purchaser as Co-Signatory and Co-Obligor), Article 5
(Pre-Payment), Article 11 (evidence of required insurance coverage), and Article 20
(designation of Contractor’s Appointed Arbitrator).

 

Section 8. 
Withdrawal or Re-Purchase of Property.

 

Any Property
that has been referred for sale to Purchaser may be withdrawn by the SCO upon
notice at any time before Delivery of such Property. After Delivery of
particular Property, but before its re-sale to a re-sale buyer, the SCO may by
notice direct the re-purchase thereof by DRMS, and Purchaser shall receive a
credit on the next Invoice, for the amount of the corresponding Quarterly
Purchase Price. In the cases of both withdrawal and re-purchase of Property,
the costs of compliance with the SCO’s directions shall be deemed Seller
Indirect Costs.

 

ARTICLE FOUR. PICKUP NOTICES

 

Section 1.  Content of Pickup Notices.

 

At least twice
monthly and no more often than weekly, DRMS shall provide to Purchaser, in
machine readable, comma delimited text format, delivered by electronic mail or
on a removable magnetic or optical storage medium, such as a CD-ROM, a
“Consolidated Pickup Notice” for all Property referred for sale under this
contract since the issuance of the preceding Consolidated Pickup Notice that
Purchaser has not received and for which no Pickup Notice has been issued by
DRMS or a generator. All Pickup Notices, including Consolidated Pickup Notices,
shall contain the following information:

 

(A)                               DRMO Name (DRMO_NAME).

 

The name of
the accountable DRMO, DRMS Operation or DLA Depot in a 19 character field.

 

(B)                                DRMO RIC and RIC Suffix (DRMO_RIC and RIC_SFX). 

 

Together these
3 and 1 character, respectively, alphanumeric fields provide the electronic
name of the DRMO, DRMS Operation or DLA Depot where the turn-in of Property was
processed.

 

59

 

(C)                               Disposal
Turn in Document Number (DTID_NO).

 

The “DTID” is
the official form (DD 1348-1) used by all military services to turn in excess
property. DTID_NO is a 14 or 15 character alphanumeric code in a 15 character
field. It consists of:

 

(1)                                 a
6 character Department of Defense Activity Account Code (DODAAC) that
identifies the turn-in activity

(2)                                 a
4 digit Julian date

(3)                                 a
4 to 5 digit serial number.

(4)                                 in
some cases, a one-character suffix

 

A particular
value for DTID_NO may be assigned to any weight of a particular material that
is properly identified by a single SCL Code, or to any quantity of items of DCS
Property that are properly identified by a single FSC. Material or objects
grouped together on a single DTID_NO collectively constitute a single “Line
Item” of Property. Thus, a single DTID form, each of which bears a unique
combination of DTID_NO, DRMO_RIC and RIC_SFX, could list any quantity or weight
of a particular type of Property. That quantity constitutes one Line Item.

 

(D)                               SCL
Code.

 

This three
character alphanumeric field identifies the material content.

 

(E)                                 National
Stock Number (or) Local Stock Number.

 

This 13
character code identifies the particular type of DCS Property that comprises
the Line Item and is constructed using the following two fields:

 

(1)                                 Federal
Supply Classification (FSC). This 4 digit numerical code identifies the
general type of property (e.g., FSC 3411 is Boring Machines).

 

(2)                                 National
Item Identification Number Local Stock Number (NIIN_LSN). A 9 position field that contains either:

 

(a)                                  National
Item Identification Number (NIIN). The federally assigned numerical code
that identifies an item of Property as meeting certain specifications. Items
that are not perfectly identical, and/or were produced by different
manufacturers, but which meet identical procurement specifications, may be
identified by the same NIIN.

 

— or —

 

(b)                                  Local
Stock Number (LSN): Items for which the NIIN is unknown or unavailable (in
many cases, items that were locally purchased or fabricated) have a text
identifier assigned by the generator or at the DRMO in this 9 character field.

 

(F)                                 Inventory
Item Name (INV_ITM_NAME).

 

For DCS
Property, this 29 character field contains the name officially assigned to the
item (e.g., Computer, Digital).

 

60

 

 

(G)          Item Unit
of Issue (ITM_U1).

 

For
DCS Property, this 2 character field describes how all quantities are counted
(e.g., each, box, dozen, hundred count, gross, etc.).

 

(H)          Quantity
Available (QTY_AVAIL).

 

For
DCS Property, a 9 position numeric field containing the quantity (measured in
the unit of issue) that is referred for sale to Purchaser.

 

(I)             Property Storage Location.

 

This
11 character code provides the physical location of the Property as assigned by
the accountable DRMO. It is constructed of the following two fields:

 

(1)            Site Location Code (SITE_LOC_CD). This 2 character
alphanumeric field identifies the storage site.

 

(2)           Storage
Location Code (STG_LOC_CD). This 9 character alphanumeric field identifies the actual storage
location within the site.

 

(J)           Reimbursement
Code.

 

This
one character alphanumeric field identifies whether or not a particular turn-in
is reimbursable to a Qualified Recycling Program. A “1” indicates the item is
reimbursable and a blank field indicates the item is non-reimbursable.

 

(K)          Hazardous
Material Code.

 

This
one character field contains an “M” or a “W” if the corresponding item is
deemed to be, or to be contaminated by, hazardous material or hazardous waste,
respectively. The Property does not include any “M” or “W” items, so this
field should always be blank.

 

(L)           DEMIL
Code.

 

This
one character field contains the material’s DEMIL Code. If the DEMIL code is
other than “A”, “B,” “E” or “Q”, the Property is DCS, and demilitarization
instructions will be provided by DRMS to Purchaser.

 

Section 2.  Documentation and References.

 

DRMS shall provide training (based on availability of training slots),
documentation, manuals and references as reasonably requested by Purchaser to
allow Purchaser to determine the meaning of coded information.

 

ARTICLE FIVE. PAYMENT BY PURCHASER FOR PROPERTY

 

Section 1.  Payment of Bid Price and Payment
Deposit.

 

(A)          Payment of
Bid Price.

 

Upon
contract award, Contractor shall pay to DRMS the amount of the Bid Price. The
Bid Price is non-refundable except as provided in this Section 1,
Sub-Sections (B) and (C). The Bid Price must be paid via guaranteed
instrument

 

 

61

 

(cashier’s or certified
check), wire transfer or electronic funds transfer (“EFT”). The SCO shall
provide no less than ten Business Days notice to the Apparent Successful
Offeror of the date that the Bid Price is due to be paid.

 

(B)           Refund of Fractional Portion
of Bid Price upon Contract Cancellation.

 

Upon
issuance or receipt by Contractor of a notice of Cancellation of the contract,
Purchaser shall withhold from subsequent Distributions to DRMS and pay to
Contractor as Seller Indirect Costs amounts sufficient to return to Contractor,
without interest thereon, (i) that
fractional portion of its Bid Price determined by dividing (x) the number of whole or partial months
between the date of award and the effective date of such notice by (y) eighty-four (84), minus (ii) any amounts then owed to DRMS or
to KGP for Invoice Payments or otherwise.

 

(C)           Refund of Fractional Portion
of Bid Price upon Contract Termination.

 

Upon
Termination of the contract, DRMS and Contractor shall negotiate the amount, if
any, of the refund of a portion of the Contractor’s Bid Price net of any DRMS
claims against Contractor or Purchaser.

 

(D)                              
Payment
Deposit.

 

Upon
award of the contract, the amount of the Contractor’s Bid Deposit shall be
retained by DRMS as a “Payment Deposit” until the completion of the Wind-Up.
DRMS will use the Payment Deposit to offset unpaid invoices or to offset any
other claims by DRMS against Contractor or Purchaser. The Government shall
return any available balance of the Payment Deposit, without interest thereon,
to Contractor at the completion of the Wind-Up as provided in Article 21.

 

Section 2.  Quarterly Payment by Purchaser.

 

(A)          Invoices.

 

DRMS
shall submit to Purchaser in machine readable, comma delimited ASCII file
format, delivered by electronic mail or on a removable magnetic or optical
storage medium, such as a CD-ROM, a quarterly billing (“Invoice”) for payment
for the Property referred for sale to Purchaser since the last preceding
Invoice. The Invoice shall be in the total amount of the Quarterly Purchase
Price of the subject Property, determined pursuant to the provisions of
Section 2 (C) below, less any credits to which the Purchaser is
entitled and plus any debits to which DRMS is entitled (the balance being the
“Total Invoiced Amount”).

 

(B)          Amounts
Payable to DRMS and to KGP; Timing of Payments.

 

Each
Invoice shall identify (i) an
amount (the “DRMS Invoiced Amount”) equal to ninety-seven and seventy-five
one-hundredths percent (97.75%) of the Total Invoiced Amount, and (ii) an amount (the “KGP Invoiced
Amount”) equal

 

 

62

 

to two and twenty-five
one-hundredths percent (2.25%) of the Total Invoiced Amount. Purchaser shall
pay to DRMS and to KGP the full amounts of the DRMS Invoiced Amount and the KGP
Invoiced Amount, respectively, on or before the date that is fifteen (15) Days
after each Invoice is submitted to Purchaser.

 

(C)          Quarterly
Purchase Price.

 

The
amount of the “Quarterly Purchase Price” with respect to a particular calendar
quarter or portion thereof is the sum, determined with respect to all Line
Items of Property referred for sale to the Purchaser during such period, of the
greater of (i) the Delivery Weight of such Line Item multiplied by one
one-hundredth of one cent per pound (.01¢/lb.), or (ii) one cent (1¢).

 

Section 3.  Failure to Make Timely Payments.

 

With respect to any particular Invoice, should Purchaser fail to pay to
DRMS and to KGP the full amounts of the DRMS Invoiced Amount and the KGP
Invoiced Amount, respectively, on or before the date that such payments are
due, DRMS may, in its sole discretion, (i) apply
that portion of the Payment Deposit that is necessary to pay the Total Invoiced
Amount, in which event DRMS shall pay to KGP the subject KGP Invoiced Amount,
and (ii) notify Purchaser
that such failure constitutes a Material Breach that Purchaser may cure within
ten (10) Days of service of notice thereof by paying to DRMS an amount
calculated based on Part 2, Condition 11 of the SBR of the subject Total
Invoiced Amount, which payment shall be applied by DRMS to replenish and
increase the amount of the Payment Deposit.

 

Section 4.  Payments.

 

Unless otherwise provided by notice, all payments to DRMS and to KGP
shall be made and delivered pursuant to the following instructions, which
instructions may be changed by written notice to Purchaser.

 

(A)           Instructions for Payments to
DRMS.

 

DRMS prefers payment be made
via EFT; however, payments may also be made via wire transfer, cashier’s check
payable to “U.S. Treasury,” or credit card. EFT and wire transfers should be
made to the following account:

 

Mellon Bank

043000261

Account # 9101019

 

Include in the addendum field of the EFT the following information:

 

DRMS #99-4001

Type of payment (i.e., Bid
Price, Invoice payment, Distribution or other)

 

 

63

 

A separate EFT transaction
must be processed for each type of payment.

 

A cashier’s check should be
sent to:

 

DRMS-RF ATTN: Cashier

74 N. Washington Ave.

Battle Creek, MI 49017-3092

 

Include in the memorandum field of the check the following information:

 

DRMS #99-4001

Type of payment (i.e., Bid
Price, Invoice payment, Distribution or other)

 

Payments by credit card can be made by facsimile using the credit card
form attached as Attachment VI.5.4.A and transmitted to (269) 961-7314. Credit
card payments can also be made through the DRMS website at http://www.drms.com.
Within the sale customer area, select the payments bar. Cards accepted are
VISA, Discover, MasterCard and American Express.

 

(B               Instructions for Payments to
KGP.

 

By: Wire transfer

[KGP to provide details
after award]

 

ARTICLE SIX. QUANTITY DELIVERABLE; DISCREPANCIES
AND ANNUAL

PRICING
CORRECTION; DESIGNATION OF ITEMS

 

Section 1.  Sale by Reference Conditions.

 

Sale by Reference, Part 4, Condition D, Adjustment for Variation
in Quantity or Weight Special Sealed Bid-Term Conditions (Standard
Form 114C-2) is deleted, and Part 2, Condition No. 12,
Adjustment for Variation or Weight (Standard Form 114-C) is modified to
authorize the Government to vary the quantity or weight delivered as provided
in Section 2 of this Article 6.

 

Section 2.  Discrepancies.

 

(A)                               With respect to each discrepancy noted by
Purchaser in terms of a Line Item of DCS Property on a Pickup Notice that is
available for removal, but for which there is a material underage or overage in
the “Quantity Available [QTY_AVAIL],” or product misidentification with respect
to any High Value

 

64

 

SCL Code on a Pickup Notice
or DTID with respect to any Property (any such underage, overage, or
misidentification being a “Discrepancy”), Purchaser shall provide notice to
DRMS thereof with documentation of such Discrepancy within thirty (30) Days of
issuance of the subject Pickup Notice and while such Property can be made
available for inspection by DRMS at either a Delivery Point or a storage
facility maintained by Purchaser. Failure to provide notice of an alleged
Discrepancy in accordance with the criteria set forth in this subparagraph
shall preclude inclusion thereof in any reports described in subsequent
provisions of this Section 2 or assertion of any claim based thereupon.
Within a reasonable period of time after such notification, DRMS shall review
the asserted Discrepancy and notify Purchaser of acceptance or rejection
thereof in whole or in part. Purchaser shall maintain such documentation as
part of Purchaser’s Records.

 

(B)           Purchaser
shall include with the initial Annual Report, with each Annual Report
thereafter, and with the Closing Report, a compilation of all asserted
Discrepancies during the period with respect to which such report is prepared,
grouped by the DRMO or other location of the Property, which compilation
includes a complete description of (i) each such Discrepancy accepted by
DRMS in whole or in part and a calculation of the effect on the Quarterly
Purchase Price of the corresponding Invoice if the Discrepancy were adjusted
accordingly (a “Pricing Correction”), and (ii) each such Discrepancy
rejected by DRMS in whole or in part.

 

(C)          If the sum of the Pricing Corrections for the
subject time period (the “Total Pricing Discrepancy”) exceeds the amount that
is three percent (3%) of the total of the Quarterly Purchase Prices billed by
DRMS to Purchaser with respect to Property sold to Purchaser during such period
(the “Pricing Discrepancy Benchmark”), the amount of Purchaser’s next payment
of an Invoice shall be increased or decreased by the amount of such Total
Pricing Discrepancy minus the Pricing Discrepancy Benchmark (the “Annual
Pricing Correction”). If there are no more Invoices forthcoming, the next
Distributions shall be adjusted for such Annual Pricing Correction.

 

(D)           If
the Total Pricing Discrepancy for the subject time period is equal to or less
than the Pricing Discrepancy Benchmark, the Annual Pricing Correction for the
subject time period shall be zero.

 

(E)             Purchaser may seek administrative or judicial relief pursuant to the
procedures specified in Part VI, Article 20 with respect to any
asserted Discrepancy that is rejected in whole or in part by DRMS, provided,
however, that no such action shall be commenced by Purchaser more than thirty
(30) Days after submission to DRMS of the corresponding compilation of such
Discrepancies required to be reported to DRMS pursuant to the provisions of
Section 2(B) above of this Article 6 unless the SCO serves
notice of extending such deadline.

 

65

 

Section 3.  Items not Available for Removal.

 

(A)                              
Purchaser shall be
credited the amount of the Quarterly Purchase Price attributable to any Line
Item that is listed on a Pickup Notice or Invoice but that is not made
available by DRMS for removal. Purchaser shall notify DRMS within thirty (30)
Days of issuance of a particular Pickup Notice of Purchaser’s determination
that a Line Item thereon was unavailable for removal. DRMS shall review the
underlying facts within a reasonable time after receipt of such notification
and shall notify Purchaser of the resulting amount, if any, to be credited to
Purchaser.

 

(B)           The
amount of any credit to which Purchaser is entitled pursuant to the provisions
of this Section 4 shall be deducted from the amount of Purchaser’s next
Invoice. If there are no more Invoices forthcoming, the next Distributions
shall be adjusted for such credit.

 

(C)                               Purchaser may seek administrative or judicial
relief pursuant to the procedures specified in Part 2, Article 20
with respect to any credit sought pursuant to the provisions of this
Section 4 that is rejected by DRMS.

 

Section 4.  Designation of Useable, Scrap and
Refuse.

 

(A)          Downgrades
Upon Receipt.

 

Contractor
acknowledges that DRMS reviews items that are designated as “Useable” by the
generator when turned in to DRMS and, in the exercise of its sole discretion
upon receipt of such items, DRMS downgrades certain items for sale as “Scrap”
(each, a “Downgrade Upon Receipt,” and coded as such in the DRMS automated
inventory control records). Throughout the Performance Period DRMS shall
exercise its sole discretion to determine the policies and procedures governing
Downgrade Upon Receipt decisions, and Purchaser shall not be entitled to affect
such policies, procedures or decisions.

 

(B)          Upgrades.

 

Contractor
acknowledges that (i) DRMS
reviews items that are designated as “Scrap” by the generator when turned in to
DRMS and, in the exercise of its sole discretion upon receipt of such items,
DRMS upgrades certain items to “Useable” (each, an “Upgrade Upon Receipt”), and
(ii) from time to time in the
exercise of its sole discretion DRMS reviews items received and accepted as
“Scrap” and upgrades certain such items after receipt to “Useable” (each, a
“Post-Receipt Upgrade”). Throughout the Performance Period DRMS shall exercise
its sole discretion to determine the policies and procedures governing Upgrade
Upon Receipt and Post-Receipt Upgrade decisions by DRMS receiving personnel,
and Purchaser shall not be entitled to affect such policies or procedures,
provided, however, that such policies and procedures, and such decisions as
implemented by receiving personnel at any particular DRMS facility, shall
designate “Scrap” and “Useable” items and determine Upgrades Upon Receipt and
Post-Receipt

 

66

 

Upgrades reasonably and in
good faith pursuant to the usage of such terms in the particular marketplace
for a particular item at the time, Purchaser is due an adjustment to the
Quarterly Purchase Price paid for items upgraded to Useable.

 

(C)                               Refuse.

 

(1)            Contractor
acknowledges that DRMS reviews materials that are designated as “Scrap” by the
generator when turned in to DRMS and, in the exercise of its sole discretion
upon receipt of such items, DRMS reclassifies certain material to “Refuse”
because it has zero or negative value, and DRMS disposes of it accordingly
through means of disposal other than sale. Throughout the Performance Period
DRMS shall exercise its sole discretion to determine the policies and
procedures governing such decisions by DRMS receiving personnel, and Purchaser
shall not be entitled to affect such policies or procedures, provided, however,
that such policies and procedures, and such decisions as implemented by
receiving personnel at any particular DRMS facility, shall designate “Scrap”
and “Refuse” items reasonably and in good faith pursuant to the usage of such terms
in the scrap marketplace at the time.

 

(2)            By
written notice served upon the SCO, Purchaser may challenge the designation of
a particular delivery of material as “Scrap” rather than “Refuse.” DRMS may
respond to such challenge in the exercise of its sole discretion, including
without limitation by referring the challenge to the DRMO Chief or to another
DRMS official for determination of a recommendation to the SCO. If DRMS upholds
the challenge, DRMS shall dispose of the material at the sole expense of DRMS.

 

Section 5.  Resource Recovery and Recycling
Program.

 

(A)          RRRP
Material; Qualified Recycling Programs. Certain Scrap material qualifies as Resource
Recovery and Recycling Program material (“RRRP Material”). Those generators
having a Qualified Recycling Program (“QRP”) may elect to sell the RRRP
Material themselves. When QRPs elect this option, the material is not included
within the definition of the Property and the Purchaser has no right or claim
to such material sold directly by QRPs.

 

(B)          Reimbursable
Property. When QRPs
elect to turn the RRRP Material in to DRMS, such material is therefore included
within the definition of the Property and deemed referred for sale to Purchaser
under this contract. RRRP Material is properly identified as “Reimbursable” on
the Pickup Notice.

 

(C)           Reporting. Twice monthly, or on such other
schedule as DRMS and Purchaser agree, Purchaser shall report to DRMS the
weight and SCL of each turn-in of RRRP Material, the generator DoDAAC, the QRP
DoDAAC, and the unit pricing and amount of Gross Proceeds available from the
sale of such material based upon Purchaser’s sales records. Note: the generator DoDAAC

 

67

 

and QRP
DoDAAC will be different in many cases. It is important to give DRMS the QRP
DoDAAC for proper reimbursements to occur.

 

ARTICLE SEVEN. OPERATIONS

 

Section 1.  Compliance with Applicable Law and
Regulations.

 

(A)          Compliance
with Applicable Law.

 

Contractor,
Purchaser and its subcontractors shall comply with the requirements of all
applicable federal, state, and local laws, regulations, ordinances, directives
and instructions connected with the performance of this contract, including
without limitation such requirements pertaining to income and payroll taxes, environmental
matters and occupational safety.

 

(B)          Licenses
and Permits.

 

Purchaser
shall obtain any necessary licenses and permits, and comply with all federal,
state, and local laws and regulations in connection with the prosecution of the
work. This responsibility requirement will be a matter of inquiry during the
SCO’s pre-award evaluation of the bidder’s capability to perform the contract
satisfactorily. It will also be a continuing matter of inquiry by the SCO
during the performance of the contract.

 

(C)          Responsibility
for Keys.

 

Issuance
of “Keys” (as such term is defined below) will be at the Government’s sole
discretion. Contractor shall establish and implement procedures that will
preclude the loss, misplacement, or unauthorized use of all “Keys” issued to
the Contractor or Purchaser by the Government for access to dedicated warehouse
space. The term “Keys” shall be understood to include not only physical devices
for opening or operating a locked item or space but also other types of
individual authenticators such as key cards and passwords. Contractor will be
responsible for any costs incurred from the loss, misplacement or unauthorized
use of Keys. These costs will include but will not be limited to the costs of
changing an individual lock and key. 

 

Section 2.  Duties of Care and Loyalty.

 

(A)          Duty
of Care.

 

Neither
Contractor nor Purchaser shall cause or permit any action or omission in the
course of performing the contract that damages Purchaser and constitutes gross
negligence, recklessness or intentional harm.

 

68

 

(B)          Duty of
Loyalty.

 

Contractor
and Purchaser shall carry out their responsibilities under the contract with
honesty, good faith and fairness toward DRMS.

 

Section 3.  Prohibited Activities.

 

Purchaser shall not undertake the following activities without written
permission from the SCO, which permission may be granted or withheld by DRMS in
the exercise of its sole discretion:

 

(A            Enter into a partnership, joint venture or
other arrangement the purpose or effect of which is to engage indirectly in a
transaction that would be prohibited by the provisions of this contract if
undertaken by Purchaser directly; or

 

(B)           Acquire
any asset not related to DRMS or enter into any transaction not related to
DRMS; or

 

(C)          Engage in any Affiliate Transaction, except
for the Affiliate Transactions identified at Schedule VI.9.1.A, which are
permissible on the terms and conditions set forth in such Schedule, provided,
however, that Contractor may at any time request in writing a Permitted
Affiliate Transaction in addition to those identified in such Schedule, and
DRMS may approve, disapprove, or conditionally approve such request in the
exercise of its sole discretion; or

 

(D)           Enter
into any transaction (i) other
than on an arms-length basis or (ii) with
pricing or other terms less favorable to Purchaser than otherwise reasonably
obtainable; or

 

(E)            Give
any representations or warranties to a re-sale buyer concerning the condition
or quality of an item of Property or re-sell any Property without a written
affirmative disclaimer of any implied warranties of merchantability or fitness
for a particular purpose, provided, however, that Purchaser may offer such
representation or warranty as to a particular item or type of Property if
Purchaser notifies the SCO of its intent to do so and the SCO does not object
thereto within thirty (30) Days of such notice, which objection or lack of
objection shall be determined by DRMS in the exercise of its sole discretion; or

 

(F)           Enter into any transaction with respect to
any item of Property under terms that could obligate Purchaser to reacquire
such Property after the Performance Period; or

 

(G)           Initiate,
renew or extend any rental or lease of Property for a term that begins or ends
on a date beyond the Performance Period; or

 

(H)           Enter
into contracts or other arrangements that would assign all or substantially all
responsibility for and control of performance of the contract to another party
or parties, without the prior written approval of DRMS which will consider such
request in accordance with the Assignment of Claims Act of 1940, as amended, 41
U.S.C. sec. 15, and the Government’s best interests. In the event of any
improper assignment without the written approval of DRMS, this contract

 

69

shall be voidable at the option of the Government in
the exercise of its sole discretion; or

 

(I)           
File a voluntary petition seeking liquidation, reorganization, arrangement or
readjustment, in any form, of its debts under Title 11 of the United States Code
(or corresponding provisions of future law) or any other federal or state
insolvency law; file an answer consenting to or acquiescing in any such
petition; make any assignment for the benefit of Purchaser’s creditors; or
admit in writing Purchaser’s inability to pay its debts as they mature, without
prior written notice to DRMS.

 

Section 4.  Classified,
Radioactive and Certain Other Material.

 

(A)          Classified
and Certain Dangerous Material

 

Classified material,
demilitarization required (other than DCS property), other hazardous and AEDA
(ordinance / explosives) material is not within the meaning of the term “Property,”
and is not material that is the subject of or sold pursuant to this contract.
Title to such material does not pass to the Purchaser under any circumstances,
and any such material found in the possession of Contractor, Purchaser or any
subcontractor(s) in or among the Property must be immediately returned to
government control as directed by the SCO at government expense. Purchaser
shall be credited for such expense and for the Quarterly Purchase Price
attributable to any such item on an Invoice submitted by the Government in the
ordinary course of administering this contract within a reasonable time after
the return of such Property. If there are no more Invoices forthcoming, the
next Distributions shall be adjusted for such credit.

 

(B)          Radioactive
Material.

 

The Government shall
indemnify, defend and hold harmless Contractor, Purchaser, and all of their
representative employees, officers, agents and subcontractors with respect to
any claims presented by third parties that allege damage arising out of
radioactive Property. Purchaser shall exercise reasonable care in the
circumstances to avoid accepting from DRMS or generators any material that available
radioactivity test equipment indicates is radioactive above applicable legal
limits. Any such material shall be returned to DRMS or the generator as
directed by the SCO at government expense. Purchaser shall be credited for such
expense and for the Quarterly Purchase Price of any such item on an Invoice
submitted by the Government in the ordinary course of administering this
contract within a reasonable time after the return of such Property. If there
are no more Invoices forthcoming, the next Distributions shall be adjusted for
such credit.

 

(C)          Fluorocarbons

 

The minimum reasonable
costs of fluorocarbon removal by Purchaser as directed by DRMS shall be deemed
Seller Indirect Costs.

 

 

70

 

Section 5.  Munitions
List Items and Commerce Control List Items.

 

(A)          Acknowledgment of Export Restrictions.

 

Contractor and Purchaser
acknowledge that much of the subject material is subject to trade security
controls (i.e., export restrictions), including both (i) Commerce Control
List Items (“CCLI”) that are designated by the Department of Commerce pursuant
to the provisions of the Export Administration Act of 1979, Executive Order
12924 and regulations promulgated thereunder and that have a DEMIL Code of “Q,”
and (ii) Munitions List Items (“MLI”) that are designated by the
Department of State pursuant to the provisions of the Arms Export Control Act
and implementing regulations and that have a DEMIL Code of “B.”

 

(B)          Purchaser’s TSC Clearance and End Use Certificate.

 

Prior to award of this
sale contract, (i) Purchaser shall submit to the SCO a properly completed
End-Use Certificate (EUC) DLA Form 1822 (copy of which form is attached as
Attachment VI.7.5.B), and (ii) Purchaser shall obtain clearance from the
DLA Trade Security Controls enforcement office as a buyer of DEMIL “B” and/or “Q”
items. Such clearance and EUC shall be deemed effective for five (5) years
unless there are material changes in the information on the EUC.

 

(C)          Re-Sale
Procedures.

 

(1)           For
all MLI and CCLI (i.e., DEMIL “B” and “Q”) Property not mutilated by the
Purchaser, the Purchaser shall promulgate in all re-sale advertisements and
catalogs, as well as in the terms and conditions of sale, a notice to
prospective buyers that the terms may require export permits. The wording of
such notice shall be approved in advance by DRMS in the exercise of its sole
discretion. Before releasing a particular item of DEMIL “B” or “Q” Property to
a prospective re-sale buyer, (i) Purchaser shall obtain a completed EUC
from such buyer for each lot (or group of lots at a single re-sale event) of
such Property and furnish a copy thereof to DRMS, (ii) Purchaser shall
confirm with DRMS through the SCO that such buyer is cleared for the purchase
of DEMIL “B” and “Q” items, and, no later than the release of the material for
removal by the re-sale buyer, Purchaser shall obtain from the re-sale buyer and
place in the Records an acknowledgement executed by the re-sale buyer of the
buyer’s responsibility to destructively “scrap” the material in a manner that
prevents recognition or reconstruction of the original item and of its
responsibility to submit to the Purchaser a written post-scrapping
certification that the scrapping has been accomplished. Purchaser shall place
the completed post-scrapping certification in the Records and make it available
for review by the appropriate authorities.

 

(2)           Material
(DEMIL “A” metallic and DEMIL “B” and “Q”) that has already been destructively “scrapped”
before re-sale, either by the

 

 

71

 

generator or by the Purchaser, in a manner that
prevents recognition or reconstruction of the original item will be considered
DEMIL “A” and can then be sold and/or released to a re-sale buyer without an
EUC or TSC clearance. The Purchaser shall place a certification of the
destructive scrapping in the Records and make it available for review by the
appropriate authorities.

 

(D)          Compliance with EUC Requirements.

 

Subject to such
additional or different requirements pertaining to DEMIL “B” and “Q” Property
that DRMS may prescribe in its sole discretion, Purchaser shall comply with all
of the provisions set forth on the EUC that Purchaser submits to DRMS through
the SCO.

 

(E)           Shipping
Containers.

 

Purchaser shall notify
the SCO or, in the alternative, the Trade Security Control Residence Office
designated in a notice from the SCO, whenever a “Shipping Container” is used by
a re-sale buyer to pick up MLI/CCLI material. A “Shipping Container” is defined
as a 20 or 40 foot all steel receptacle, enclosable/sealable, used for
transport of property by rail, sea, or ground. As much identification
information as the Purchaser can reasonably obtain should be provided including
the container number, container company, trucking company name/address, any
other identification data known, date(s) of removal, and any interim or final
destination port information. The SCO will serve notice to Purchaser of
specific instructions regarding whom and how to notify (i.e., via fax or
phone), to include identification and contact information and geographic areas
of responsibility for each TSC investigator.

 

(F)           Compliance with New Trade Security Control Requirements

 

Purchaser shall comply
with all trade security control procedures, requirements and restrictions that
DRMS prescribes in its sole discretion. All costs of such compliance shall be
deemed Direct Costs.

 

(G)          Trade Security Control Records

 

The documentation
required by the provisions of this Section 5 of Article 7 shall be placed
in the Records and shall be kept available for review by DRMS or trade security
control authorities throughout the Performance Period and until the conclusion
of the Wind-Up and retained in accordance with Article 8, Section 1.

 

Section 6.  Employee Compensation

 

(A)          Base
Compensation.

 

Compensation of Purchaser’s
employees (including fringe benefits) that is determined on a salaried or
hourly basis, and paid in an amount determined without regard for the
performance of the employee, or the profitability or other performance of
Purchaser or of Contractor (“Base Compensation”), shall be

 

 

72

 

deemed a Direct Cost, provided, however, that no
employee’s Base Compensation shall be plainly excessive when evaluated with
regard for Purchaser’s circumstances and such employee’s qualifications and
responsibilities.

 

(B)          Bonuses.

 

Compensation of Purchaser’s
employees other than Base Compensation, including without limitation, the total
amount of any bonuses paid within any calendar year to a particular employee in
excess of one-quarter (25%) of such employee’s total compensation for such
year, is a Contractor Indirect Cost and shall be borne solely by Contractor.

 

(C)          Benefits.

 

The cost of employer-paid
benefits shall be deemed a Direct Cost, provided, however, that no employee’s
benefits shall be plainly excessive when evaluated with regard for Purchaser’s
circumstances and such employee’s qualifications and responsibilities. The
provision of luxury automobiles and travel other than in economy class shall
conclusively be deemed plainly excessive, and all of the costs thereof shall be
deemed Contractor Indirect Costs.

 

Section 7.  Employee
Expenses and Purchaser’s Supplies, Furniture and Equipment.

 

(A)          Employee
Expenses.

 

If any employee or former
employee of Purchaser is hired by an Affiliated Party during the term of such
employee’s employment with Purchaser or within twelve (12) months following the
termination of such employment, Contractor will pay to Purchaser a reasonable
pro rata share of such employee’s training costs, relocation expenses, and
employment agency fees to the extent paid, reimbursed, or otherwise incurred by
Purchaser in connection with such employee, provided, however, that no such
reimbursement will be required if such employee had been employed by Purchaser
continuously for eighteen (18) months or longer after the date of award.

 

(B)          Supplies, Furniture and Equipment.

 

Purchaser shall not
purchase supplies, furniture or equipment except to the extent that such
supplies, furniture or equipment will be used solely by Purchaser, and upon the
sale of such furniture or equipment, the proceeds shall be the property of
Purchaser. Purchaser shall not sell such supplies, furniture or equipment to an
Affiliated Party. During the Wind-Up Purchaser shall sell any remaining
supplies, furniture or equipment to a third party or parties.

 

Section 8.  Commerce
Control List Items (CCLI).

 

(A)          Purchaser
warrants and covenants that none of the CCLI items identified in this
Invitation for Bids and listed on its sale contract will be directly or
indirectly used or disposed of for military use or exported.

 

 

73

 

(B)          Purchaser
understands and agrees that all material other than the categories listed in
Section V require Mutilation and the Office of Export Administration may
require the Purchaser to have or obtain an export license before mutilated
Property may be exported outside of the United States, Puerto Rico, American Samoa,
Guam the Trust Territory of the Pacific Islands or the Virgin Islands. The
disclosure must reference this Invitation for Bids and sale contract number,
and be submitted to:

 

Office of Export Administration

P.O. Box 273

Washington, DC 20044

 

Section 9.  Munitions
and Commerce Control List Item (MLI/CCLI) Compliance.

 

(A)          The
use, disposition, export and re-export of MLI/CCLI property is subject to all
applicable United States laws and regulations, including the Export
Administration Control Act of 1979 (50 U.S.C. Appx. 2401, et seq.); Arms Export
Control Act (22 U.S.C. 2651, et seq.); International Traffic in Arms Regulation
(22 C.F.R.121); and Export Administration Regulation (15 C.F.R. 368, et seq.),
which in part prohibit:

 

(1)           Making
false statements and concealment of any material information regarding the use,
disposition, export or re-export of the property;

 

(2)           Any
use, disposition, export or re-export of the property not authorized in
accordance with the provisions of this contract.

 

(B)          Any
false information provided and/or concealment of any material information
regarding the use, disposition, or export of this property may constitute a
violation of:

 

(1)           The
provisions of 18 U.S.C. 1001, which provides a maximum penalty of five years
imprisonment and/or a maximum fine of $10,000;

 

(2)           The
provisions of 22 U.S.C. 22778, which provides a maximum penalty of ten years
imprisonment and/or a maximum fine of $1,000,000; or,

 

(3)           The
provisions of 50 U.S.C. Appx. 2410, which provides a maximum penalty of ten
years imprisonment and/or a maximum fine of five times the value of the
property exported or $1,000,000, whichever is greater, and which also provides
for administrative sanctions, including civil penalties.

 

Section 10.  Large
Caliber (over 30 mm) Shell Cases, Demilitarization as a Condition of Sale, and
Hazardous Components/Constituents.

 

(A)          Large Caliber (over 30mm) Shell Cases

 

The sale of the Property
is entered into by the United States with the expressed declaration that the
United States awards the Property to Purchaser relying on the

 

 

74

 

following representation, warranties and covenants by
Purchaser: Purchaser herein certifies that it is not purchasing any of the
items (large caliber (over 30mm) shell cases) for military use; Purchaser
warrants and covenants that it will not, directly or indirectly, use or dispose
of in any fashion the items for military use; Purchaser warrants and covenants
that it will include this clause in its entirety in any later sale or transfer
of title, or possession by Purchaser herein or its successor in title or
interest; Purchaser warrants and covenants that the items will not be exported
for military use, and if exported for any reason a full disclosure of their
origin by reference to this IFB number will be made to the appropriate export
licensing department or agency.

 

(B)          Demilitarization as a Condition of Sale.

 

Property requiring
demilitarization as a condition of sale will be demilitarized by Purchaser or by
the re-sale buyer when approved by the SCO. All demilitarization and
surveillance plans must be coordinated with and approved by the SCO. All costs
incurred by Purchaser to effect demilitarization shall be deemed Direct Costs.
Costs incurred by the re-sale buyer are the sole responsibility of the re-sale
buyer. Demilitarization will be effected by melting, popping, crushing,
deforming or otherwise mutilating the property so as to completely destroy its
lethal purposes. The use of precision torch fixtures, saws, tools of any kind
to minimize mutilation/demilitarization is forbidden.

 

(C)          Hazardous Components/Constituents.

 

The government cautions
that the Property may have components, parts, constituents or ingredients that
may be corrosive, reactive, ignitable or exhibit other hazardous or toxic
properties. Purchaser is cautioned to use and ultimately dispose of any
hazardous components or constituents according to all applicable local,
national or international laws and regulations in a manner safe for the public
and the environment.

 

Section 11.  Statutory
and Regulatory Notices

 

The provisions of Attachment VI.3.11 are incorporated
by reference.

 

ARTICLE EIGHT. PURCHASER’S
RECORDS; INSPECTION AND AUDIT BY

GOVERNMENT AND INDEPENDENT
AUDITOR; ACCOUNTING PRINCIPLES AND

REQUIRED REPORTS TO GOVERNMENT

 

Section 1.  Contractor
Records Retention.

 

Contractor shall make available Purchaser’s books,
records, documents, and other supporting evidence, including without limitation
all items required by the provisions of Article 9 (the “Records”), to
satisfy contract administration and audit requirements of the Department of
Defense and the Comptroller General for six (6) years after the Wind-Up is
concluded, or for such period of time as Contractor, for its own purposes,
retains its books, records, documents, and other supporting evidence, whichever
is longer.

 

 

75

 

Section 2.  Inspection
of Records and Workplace by Government.

 

To ensure that DRMS has a means to verify accuracy of
the Records and inventory, DRMS or its authorized representative has the right
to audit the Records and inventory the Property and to review Purchaser’s
operations with reasonable advance notice. The audit may consist of a complete
or random sample examination. Purchaser must ensure that, prior to re-sale, the
Property is readily identifiable as formerly Government property. Inspections
may be conducted by DLA Trade Security Control personnel with no notice.

 

Section 3.  Records
Maintenance.

 

Contractor shall maintain the Records accurately and
in a manner that will allow clear and accurate auditing. The Records pertaining
to all Deliveries, inventory, re-sales of Property and removal of Property
shall contain, at a minimum, National Stock Number or Local Stock Number and
quantity, if applicable, SCL Code, Disposal Turn-In Document Number, weight
ticket, Re-sale Weight, re-sale price per unit of weight, date removed from the
Delivery Point, date sold, price in total per re-sale transaction and, for each,
re-sale price per unit of Re-sale Weight, date Purchaser received payment from
the re-sale buyer, name and address of re-sale buyer, and storage location
prior to re-sale. A separate inventory list must be maintained for each Scrap
Yard and each of Purchaser’s storage facilities. The Government reserves the
right to request and inspect these documents as it deems necessary with
reasonable notice. In the event that Purchaser fails to maintain or provide any
of these documents to the Government, the Government may in its sole discretion
cause Termination.

 

Section 4.  Contracts
with Third Parties.

 

Purchaser shall ensure that all contracts entered into
by Purchaser shall expire or shall be terminable by Purchaser within the
Performance Period. If Purchaser reasonably anticipates that the annualized
cost of payments by Purchaser to a particular third party will exceed one
hundred thousand dollars ($100,000.00), Purchaser shall enter into a written
contract with such third party that includes a provision requiring that, during
the life of such contract and for a period of three (3) years following
final payment under such contract, DRMS or its designated representative shall
have access to, and the right to examine and copy, any directly pertinent books,
documents, papers, records or other recorded information, and to examine any
directly pertinent property within such third party’s possession or control,
involving transactions related to the contract.

 

Section 5.  Purchaser’s
Books of Account; Financial Reports.

 

Purchaser shall maintain true and correct books and
records of account. The books and records of account shall be maintained on an
accrual basis in accordance with Generally Accepted Accounting Principles (“GAAP”),
and reports by Purchaser to DRMS and KGP (“Purchaser’s Reports”) shall consist
of the following:

 

(A)          Transition
Report.

 

Within one hundred eighty
(180) Days of the date of award, or on such date thereafter as DRMS specifies
in the exercise of its sole discretion, Purchaser

 

76

 

shall provide to DRMS in machine readable, comma delimited ASCII file
format or, as appropriate, word processing (*.doc) file format, delivered on a
removable magnetic or optical storage medium, such as a CD-ROM, a report (the “Transition
Report”) that specifies Purchaser’s operating plan for performing the contract
through the balance of the Performance Period. The Transition Report shall
address the following topics:

 

(1)           Storage
facilities in place and projected.

(2)           Shipping
arrangements in place and projected.

(3)           Logistical
or administrative difficulties encountered to date, and proposed or effected
resolution thereof.

(4)           Marketing
opportunities and problems encountered to date, proposed resolution of the
problems, and plans for adding value to the Property.

(5)           Any
other logistical, administrative, marketing or other issues that Purchaser
determines should be brought to the attention of DRMS.

 

(B)          Monthly Report.

 

By the fifteenth (15th) Day of each calendar month,
Purchaser shall provide to DRMS in machine readable, comma delimited ASCII file
format or, as appropriate, word processing (*.doc) file format, delivered on a
removable magnetic or optical storage medium, such as a CD-ROM, both financial
statements (including a statement of cash flows) prepared according to GAAP and
the following information (collectively, the “Monthly Report”) with respect to
the preceding calendar month, provided, however, that the initial Monthly
Report shall pertain to the period from the date of award through the last Day
of the calendar month that includes the date of award:

 

(1)           An
“Inventory Status Report” that includes the following for each item of
Property:

a.             Amounts
and date(s) of all revenues received with respect to each sale of Property sold
during the month, including, for each re-sale of Property, re-sale date, total
re-sale revenue and re-sale price per unit of weight, weight (“Re-Sale Weight”),
identification by SCL Code(s), and identification of the re-sale buyer of each
such item.

b.             Inventory
on hand at the close of the month,

(2)           Seller
Indirect Costs

(3)           ECLR
statement

(4)           Income
statement

(5)           Detail
and summary of:

a.             Distributions

b.             Working
Capital Advances and repayments thereof, and the Working Capital Advance Balance

 

77

 

c.             Purchase
Advances and Purchase Transfers

(6)           Status
report of progress in correcting any deficiencies identified by a DRMS
inspection, regulatory inspection, audit or Compliance Review or Further
Review, which must include Purchaser’s plan to comply with discrepancies noted
or questions asked in writing by the SCO or Independent Auditor.

 

(C)          Quarterly Report.

 

Purchaser shall provide to DRMS and to KGP the
following quarterly financial information (the “Quarterly Report”), in machine
readable, comma delimited ASCII file format or, as appropriate, word processing
(*.doc) file format, delivered on a removable magnetic or optical storage
medium, such as a CD-ROM, and prepared in accordance with GAAP, within
forty-five (45) Days of the close of each calendar quarter with respect to such
calendar quarter, provided, however, that the initial Quarterly Report shall
pertain to the period from the date of award through the last Day of the
calendar quarter that includes the date of award:

 

(1)           Income
statement

(2)           Balance
sheet

(3)           Statement
of cash flows

(4)           Notes
to financial statements

(5)           Inventory
status and disposition report

(6)           Detail
and summary of:

a.             Distributions

b.             Working
Capital Advances and repayments thereof, and the Working Capital Advance
Balance

c.             Purchase
Advances and Purchase Transfers

(7)           ECLR
statement

 

(D)          Annual Report.

 

Purchaser shall provide to DRMS and to KGP the
following annual financial information (the “Annual Report”), in machine
readable, comma delimited ASCII file format or, as appropriate, word processing
(*.doc) file format, delivered on a removable magnetic or optical storage
medium, such as a CD-ROM, prepared in accordance with GAAP and audited by an
independent national accounting firm (the “Independent Auditor”) pursuant to
American Institute of Certified Public Accountants (“AICPA”) standards, within
one hundred twenty (120) Days of the close of each twelve (12) calendar month
period with respect to such period, provided, however, that the initial Annual
Report shall pertain to the period from the date of award through 30
September 2004:

 

(1)           Income
statement

(2)           Balance
sheet

(3)           Statement
of cash flows

 

 

78

(4)           Notes to financial
statements

(5)           Inventory status and
disposition report

(6)           Detail and summary of:

a.             Distributions

b.             Working Capital Advances and repayments thereof, and
the Working Capital Advance Balance

c.             Purchase Advances and Purchase Transfers

(7)           ECLR statement

(8)           The Independent Auditor’s (i) Management Letter and (ii) list
of Audit Adjustments whether posted to the Records or not

(9)           As soon as available, but no
later than the last day permitted by law, Federal tax returns and all supporting
schedules

 

(E)           Closing
Report.

 

(1)           Purchaser shall provide to
DRMS and to KGP the following financial information (the “Closing Report”)
pursuant to the provisions of Section 4 of Article 21, in machine
readable, comma delimited ASCII file format or, as appropriate, word processing
(*.doc) file format, delivered on a removable magnetic or optical storage
medium, such as a CD-ROM, prepared in accordance with GAAP and audited by the
Independent Auditor pursuant to AICPA standards, with respect to the period
since the then most recently filed Annual Report:

 

a.             Income statement

b.             Balance sheet

c.             Statement of cash flows

d.             Notes to financial statements

e.             Inventory status and disposition report

f.              Detail and summary of:

(i)            Distributions

(ii)           Working Capital Advances and
repayments thereof, and the Working Capital Advance Balance

(iii)         Purchase Advances and
Purchase Transfers

g.             ECLR statement

h.             The Independent Auditor’s (i) Management Letter and (ii) list
of Audit Adjustments whether posted to the Records or not

i.              As soon as available, but no
later than the last day permitted by law, closing Federal tax returns and all
supporting schedules

 

(2)           Within sixty (60) Days of
submission of the Closing Report or, as the case may be, within sixty (60) Days
of the re-submission of a Closing Report initially disapproved by DRMS, DRMS
shall either serve notice of its disapproval of the Closing Report and state
the reasons therefor, or

 

 

79

 

serve notice of its
approval. The Closing Report shall not be deemed final until approved
by DRMS, which approval shall not be unreasonably withheld.

 

(F)           Reporting
Schedule.

 

Purchaser shall submit
Monthly, Quarterly and Annual Reports in accordance with the provisions of this
Section 5 to DRMS and to KGP with respect to each calendar month, each
calendar quarter and each twelve (12) month period ending 30 September,
respectively, from the date of award until DRMS approval of the Closing Report.

 

ARTICLE NINE.
DIRECT COSTS

 

Section 1.              Definitions.

 

(A)          Direct
Costs.

 

Except as otherwise provided
herein, “Direct Costs” are all costs other than (i) amounts paid to DRMS
and KGP for the purchase of Property, (ii) Seller Indirect Costs and
(iii) compensation and transportation expenses of Purchaser’s Chief
Executive Officer, that are actually incurred by Purchaser for the sole purpose
of performing this contract, including without limitation costs incurred for
the management, storage, marketing, preservation, improvement, transportation
and disposition of the Property (including all costs commonly termed “overhead
costs”) and either (x) paid to any Person that is not an Affiliated Party or
(y) paid to an Affiliated Party and constituting one of the “Permitted
Affiliate Transactions” identified at Schedule VI.9.1.A. At any time after
award, the Purchaser may request that a particular transaction with an
Affiliated Party be deemed a Permitted Affiliate Transaction. DRMS may grant,
deny or condition approval thereof as it determines in the exercise of its sole
discretion. Such a request should fully specify the details of the proposed
transaction, the opportunity presented to enhance Net Proceeds, any inherent
risks to the Government in terms of pricing, accountability for Property or
otherwise, and the controls to be put in place to offset such risks.

 

(B)          Seller
Indirect Costs.

 

“Seller Indirect Costs” are
(i) subject to the provisions and limitations of Section 4(F) of
Article 3, all costs that are actually incurred by Purchaser for the
packing, loading and transport of Property referred for sale to Purchaser at a
Restricted Access Facility or Special Situation Location, that does not allow
on-site processing, and either (x) paid to any Person that is not an Affiliated
Party or (y) paid to an Affiliated Party and constituting one of the “Permitted
Affiliate Transactions” identified at Schedule VI.9.1.A, or (ii) as
otherwise provided herein.

 

80

 

(C)          Contractor Indirect Costs.

 

“Contractor Indirect Costs”
are all costs that are neither Direct Costs nor Seller Indirect Costs, and
there shall be no amounts paid or payable by Purchaser therefor.

 

Section 2.  Documentation and Payment of Direct Costs and
Seller Indirect Costs.

 

(A)          Disbursements.

 

Purchaser shall make all
disbursements from the Operating Account or a Transfer Account. Disbursements
for Direct Costs and Seller Indirect Costs shall be made pursuant to the
provisions of Article 13; disbursements for Distributions and other
adjustments shall be made pursuant to the provisions of Article 16;
disbursements for repayment of Working Capital Advances shall be made pursuant
to the provisions of Article 13; and Purchase Transfers shall be made
pursuant to the provisions of Article 14.

 

(B)          Supporting Documentation.

 

Subject to
subsection (C) of this Article 9, each disbursement for a Direct
Cost and a Seller Indirect Cost shall be supported in the Records by bona fide
documentation (including, if appropriate, records in an electronic or magnetic
medium) that adequately demonstrates that each such disbursement is in the
proper amount for goods or services actually provided in advance of such
disbursement if the disbursement is to an Affiliated Party or, if the
disbursement is to a third party that is not an Affiliated Party, for goods or
services actually provided or to be provided, or costs actually incurred or to
be incurred. Purchaser shall place such documentation in the Records in advance
of, or contemporaneously with, each such disbursement.

 

(C)          Documentation Requirements.

 

Except in the case of a
disbursement in the amount of Fifty Dollars ($50) or less, the supporting
documentation required under this Article 9 shall include, at a minimum, a
written invoice or comparable document from the provider that
(i) identifies the payee and itemizes each particular invoiced product or
service and the provider thereof, if different from the payee; and
(ii) states the pricing and relevant terms as to each such product or
service. Although the foregoing bona fide documentation shall as a matter of
general principle be required for all disbursements, where the amount at issue
is less than One Thousand Dollars ($1,000) and where the documentation is
missing or was inadvertently omitted. Purchaser may, in lieu of such
documentation, provide a certificate in the Records executed by an authorized
officer that: (x) identifies the payee and itemizes each particular invoiced
product or service and the provider thereof, if different from the payee, and
(y) states the pricing and relevant terms as to each such product or service.

 

81

 

(D)          Payment.

 

Upon placing the
documentation and/or certificate required by this Article 9 in the
Records, Purchaser shall pay the proper amount of each Direct Cost and Seller
Indirect Cost.

 

(E)           Written
Certification to DRMS.

 

Within fifteen (15) Days
after the end of each calendar month that is in whole or in part within the
Performance Period or the Wind-Up, Purchaser shall provide written
certification to DRMS, in the form specified at Attachment VI.9.2.E and
executed by a Key Person, that all disbursements have complied with the
provisions of this contract.

 

(F)           Contractor
Indirect Costs.

 

Contractor shall pay from
its own funds before imposition of fine or penalty amounts due and payable for
Contractor Indirect Costs. Contractor shall have no right of reimbursement for,
and shall not use the Operating Account or any Transfer Account for, the
payment of costs within the scope of this Section 2(F).

 

ARTICLE TEN. CONFLICTS OF INTEREST

 

Section 1. 
Restriction on Participation.

 

Once Property under this
contract is re-sold by Purchaser, neither Purchaser nor an Affiliated Party
shall knowingly purchase such material directly or indirectly for a period of
one year after the completion of the Wind-Up. All re-sales of Property shall be
bona fide, arms-length transactions intended to provide both the Government and
Purchaser maximum Net Proceeds. Purchaser may not re-sell Property directly or
indirectly to an Affiliated Party. Purchaser shall not sell, consign, let,
rent, lend or donate Property on terms that directly or indirectly provide any
benefit to an Affiliated Party.

 

Section 2.  Benefits to Contractor and Affiliated Parties.

 

Contractor shall assure that
neither Contractor nor any Affiliated Party obtains goods, assets, tangible or
intangible property or services from third-party vendors to Purchaser at prices
or on terms more favorable than those that would otherwise be available to
Contractor or the Affiliated Party absent the relationship between Purchaser
and such third-party vendors. The foregoing requirement shall not apply to
benefits from volume purchasing of goods, assets, tangible or intangible
property or services by Contractor, Affiliated Parties and Purchaser where such
volume purchasing does not benefit one purchasing party over another.

 

82

 

ARTICLE ELEVEN. FIDELITY BOND
REQUIREMENTS; INSURANCE

 

Section 1. Modification of Special Circumstance
Conditions.

 

Sale by Reference (Attachment V) Part 5:
Additional Special Circumstance Conditions - Miscellaneous (DRMS Form 86,
Oct 93), Article D, Liability and Insurance, paragraphs (a)(2) and
(a)(3,) are modified as follows:

 

(2)             Bodily Injury Insurance in an amount of not less than
two hundred fifty thousand dollars ($250,000.00) any one individual and one
million dollars ($1,000,000) any one accident or occurrence.

 

(3)             Property Damage Liability Insurance in the amount of
two hundred fifty thousand dollars ($250,000.00) (which shall include any and
all property whether or not in the care, custody or control of Purchaser). The
annual coverage shall be not less than one million dollars ($1,000,000).

 

Section 2. Further Modifications.

 

Sale by Reference Part 5, Article D,
paragraph (a) is also amended as follows:

 

(4)             “All-Risk” coverage for fire and other property perils
for all property owned by Purchaser with aggregate coverage of one million
dollars ($1,000,000.00).

 

(5)             Umbrella liability coverage up to two million dollars
($2,000,000.00).

 

(6)             Fidelity Blanket Bond. Purchaser shall obtain, and
maintain at all times until the completion of the Wind-Up, fidelity or blanket
bond coverage in the amount of at least one million dollars ($1,000,000.00)
(the “Fidelity Bond”). Purchaser shall obtain and maintain such coverage with a
responsible surety company with respect to all of Purchaser’s employees, officers
and directors to protect Purchaser against losses, including, without
limitation, those arising from theft, embezzlement, fraud, or misplacement of
funds, money, or documents. The issuer, policy terms and forms and amounts of
coverage, including applicable deductibles, shall be satisfactory to DRMS, and
the policy shall include a provision that the issuer shall notify DRMS in
writing within five (5) Business Days of the cancellation or termination
of any such coverage or of any modification of such coverage. Purchaser shall
notify DRMS in writing within five (5) Business Days after filing a claim
under such coverage.

 

(7)             Other Insurance. Purchaser shall obtain, and maintain
at all times until the completion of the Wind-Up, such comprehensive general
liability, automobile liability, umbrella liability, worker’s compensation and
other insurance coverage as may be required by law. At its option, Purchaser
may obtain and maintain such additional insurance, including directors and
officers coverage and errors and omissions coverage, as Purchaser deems
appropriate.

 

(8)             Costs of Required and Other Coverage. Purchaser shall
pay from the Operating Account pursuant to the provisions of Article 13
all premiums and deductibles incurred for all insurance coverage (which shall
be deemed to be Direct Costs) except directors and officers coverage and errors
and omissions coverage, and such disbursements shall be

 

 

83

 

 

treated as Direct Costs.
Premiums and deductibles for directors and officers coverage and errors and
omissions coverage shall be considered an Indirect Cost and such insurance
shall be obtained and maintained at Contractor’s sole cost and expense.

 

(9)             Evidence of Insurance. Within thirty (30) Days of the
date of award, and annually thereafter, Purchaser shall provide to DRMS copies
of policies, certificates of insurance or other proof evidencing the coverages
required.

 

(10)           Purchaser must obtain the minimum coverages specified
herein unless DRMS approves a variance from such minimum coverages. In the
event that a specified coverage or limit is or in the future becomes
commercially impractical, such approval shall not be unreasonably withheld.

 

ARTICLE TWELVE. SOFTWARE AND
SYSTEMS

 

Section 1. Identification of Systems and Software
Developed with Contractor Funds.

 

(A)          All accounting or reporting systems (other than
hardware and other equipment) or software (and all related User Documentation
relating to such systems and software) owned by Contractor, or otherwise
obtained or developed by Contractor solely at Contractor’s expense, excluding
Third-Party Software, that Contractor or Purchaser uses in the performance of
this Contract (collectively, “Contractor Systems and Software”) shall be the
sole property of Contractor. Schedule VI.12.1.A identifies all Contractor
Systems and Software that Contractor anticipates being used in the performance
of this contract. From the date of award until completion of the Wind-Up,
Contractor or Purchaser shall update Schedule VI.12.1.A to the extent
necessary to reflect the use of Contractor Systems and Software accurately and
shall quarterly inform DRMS in writing of any changes to
Schedule VI.12.1.A.

 

(B)          Contractor may use, license, sublicense, assign,
transfer or otherwise market Contractor Systems and Software to any other
Person (including without limitation to any Affiliated Party) without DRMS’s
consent. Such use or marketing of Contractor Systems and Software shall be made
upon such terms and conditions as Contractor may determine in its sole
discretion and without compensation to Purchaser or to DRMS, provided, however,
that such terms and conditions shall not prejudice DRMS’s rights to use
Contractor Systems and Software as set forth in Section 2 below.

 

Section 2. License in Contractor Systems and Software.

 

(A)          DRMS shall have a non-exclusive, irrevocable and
unconditional license, until the completion of the Wind-Up and for a period of
three (3) years thereafter, and without additional cost to DRMS (except as
otherwise provided herein), and a right to have delivered to it for DRMS and
its designated representatives to use,

 

84

 

solely on DRMS’s own
behalf in managing any “Remaining Assets” (as such term is defined in
Article 21 below) and in reviewing Contractor’s and Purchaser’s
performance of their obligations under this contract, any and all Contractor
Systems and Software used in the performance of Contractor’s and Purchaser’s
services under this contract; provided, however, that such
delivery shall be only in the format and structure that is used by Contractor
and/or Purchaser in performing their services under this contract.

 

(B)          Contractor makes no representations, warranties or
indemnities with respect to such Contractor Systems and Software, provided,
however, that Contractor will use its best efforts to assure that
Purchaser’s computer data retention and transfer procedures maintain the
integrity, reliability and security of the original data. Contractor shall be
responsible for training or for conversion or installation of such Contractor
Systems and Software to Purchaser’s systems or equipment, and shall cause such
training, conversion or installation to be performed from time to time as may
be reasonably necessary for the effective and efficient operation of Purchaser’s
business. To the extent that such services are performed by an Affiliated
Party, the costs thereof shall be Indirect Costs and borne solely by
Contractor. Contractor shall not be responsible for training or for conversion
or installation of such Contractor Systems and Software to DRMS’s systems or
equipment or for any costs or expenses thereof.

 

(C)          Contractor shall not be responsible for maintaining or
enhancing Contractor Systems and Software, either before or after completion of
the Wind-Up, but Contractor shall cause such maintenance of Contractor Systems
and Software to be performed as may be necessary for the effective and
efficient operation of Purchaser’s business. To the extent that such
maintenance is performed by an Affiliated Party, the costs thereof shall be
Indirect Costs borne solely by Contractor. To the extent that Contractor causes
enhancements of Contractor Systems and Software to be performed, if Contractor
elects to make them at its own expense, they shall be the property of
Contractor and shall be subject to the provisions of Section 1 and this
Section 2 pertaining to Contractor Systems and Software; if Contractor
elects to make enhancements at Purchaser expense so that they fall within the
definition of Purchaser Systems and Software set forth in Section 3, they
shall be subject to the provisions of that Section.

 

Section 3. Systems and Software Developed.

 

(A)          Costs associated with the development of any
accounting or recording systems (other than hardware and equipment),
application software or any other software or documentation in connection with
this contract are deemed to be the sole responsibility of the Contractor and
not to be reimbursed as part of this transaction.

 

85

 

(B)          Contractor shall have a non-exclusive, irrevocable and
unconditional license, and without additional cost to Contractor, and a right
to have delivered to it, to use, sublicense, transfer or otherwise market
Purchaser Systems and Software.

 

(C)          If Purchaser develops any accounting or recording
systems (other than hardware and equipment) or application software or any
other software or documentation for use in connection with Purchaser’s business
that do not fall within the definition of Purchaser Systems and Software in
this Section 3 (“Other Systems and Software”), such Other Systems and
Software shall be the sole property of Contractor. Contractor may use, license,
sublicense, assign, transfer or otherwise market Other Systems and Software to
any other Person (including, without limitation, to any Affiliated Party)
without DRMS’s consent. Such use or marketing of Other Systems and Software
shall be made upon such terms and conditions as Contractor may determine in its
sole discretion and without compensation to Purchaser or to DRMS, provided,
however, that such terms and conditions shall not prejudice DRMS’s
rights to use Contractor Systems and Software as set forth in Section 2,
above.

 

(D)          DRMS shall have a non-exclusive, irrevocable and
unconditional license, until completion of the Wind-Up and for a period of six
(6) years thereafter, and without additional cost to Purchaser or to DRMS
(except as otherwise provided herein), and a right to have delivered to it for
DRMS and its designated representatives to use, solely on DRMS’s own behalf in
managing any Remaining Assets and in reviewing Contractor’s and Purchaser’s
performance of their obligations under this contract, Other Systems and
Software; provided, however, that such delivery shall be only in
the format and structure that is used by Contractor and/or Purchaser in
performing their services under this contract.

 

(E)             Contractor makes no representations, warranties, or
indemnities with respect to Purchaser Systems and Software or Other Systems and
Software, provided, however, that Contractor agrees that it will use its best
efforts to assure that computer data retention and transfer procedures maintain
the integrity, reliability and security of the original data. Contractor shall
not be responsible for maintaining or enhancing Purchaser Systems and Software
or Other Systems and Software, either before or after completion of the
Wind-Up, but Contractor shall cause such maintenance of Purchaser Systems and
Software and Other Systems and Software to be performed until completion of the
Wind-Up as may be reasonably necessary for the effective and efficient
operation of Purchaser’s business. To the extent that Contractor causes
enhancements of Purchaser Systems and Software or Other Systems and Software to
be performed at Purchaser’s expense, such enhancements shall be the property of
Purchaser until completion of the Wind-Up.

 

 

86

 

Section 4. Third-Party Software.

 

All third party software that Contractor uses in the
performance of its services under this contract is referred to herein
collectively as “Third-Party Software.” Schedule VI.12.4 identifies all
Third-Party Software that Contractor anticipates will be used by Purchaser in
the performance of its services under this Agreement. Until completion of the
Wind-Up, Contractor shall update Schedule VI.12.4 to the extent necessary
to reflect its use of Third-Party Software accurately and shall quarterly inform
DRMS in writing of any such additions to Schedule VI.12.4. To the extent
that Contractor elects to use any Third-Party Software under which it holds a
use license on the date of award in connection with Purchaser’s business,
Contractor shall transfer to Purchaser any such existing use license for such
Third-Party Software as soon as possible after the date of award. In addition,
it shall use reasonable efforts to obtain, as part of such transfer and at the
expense of Purchaser as a Direct Cost, a sublicense for DRMS and its designated
representatives to access and use the Third-Party Software. To the extent that
Contractor or Purchaser elects to acquire Third-Party Software for use in
connection with Purchaser’s business following the date of award, Contractor
shall, at the expense of Purchaser as a Direct Cost, obtain a use license for
such Third-Party Software for Purchaser along with a sublicense for DRMS and
its designated representatives to access and use the Third-Party Software.

 

Section 5. Software Documentation and Maintenance.

 

(A)          Contractor or Purchaser shall retain all user
documentation relating to any application or use of any and all accounting or
recording systems or software, including without limitation all training
manuals used or developed in connection with Contractor’s or Purchaser’s
performance of services under this contract (the “User Documentation”).
Contractor or Purchaser shall provide the originals or copies of such User
Documentation, along with any updated non-third party source code with any
related narratives, design level documents and schematics to all Contractor
Systems and Software, all Other Systems and Software, and all Purchaser Systems
and Software, to DRMS upon completion of the Wind-Up at DRMS’s request; provided,
however, that delivery of such User Documentation, source code and other
materials by Contractor to DRMS shall be only in the format and structure that
is used by Contractor and/or Purchaser in the performance of services under
this Contract.

 

(B)          Contractor makes no representations, warranties, or
indemnities with respect to such User Documentation, source code and other
materials, provided, however, that Contractor agrees that it will
use its best efforts to assure that the User Documentation, source code and
other materials will be maintained to ensure the integrity, reliability and
security of those items. Contractor shall not be responsible for any training,
maintenance or enhancement with respect to such User Documentation, source code
or other materials, either before or after completion of the Wind-Up, but
Contractor shall cause such maintenance of the User Documentation to be
performed until completion of the Wind-Up as may be

 

 

87

 

reasonably necessary for
the effective and efficient operation of Purchaser’s business. To the extent
that such training, maintenance or enhancements are performed by an Affiliated
Party, the costs thereof shall be Indirect Costs and born solely by Contractor.
To the extent that Contractor causes enhancements of User Documentation to be
undertaken at Purchaser expense as a Direct Cost, such enhancements shall be
the property of Purchaser until completion of the Wind-Up.

 

ARTICLE THIRTEEN. OPERATING
ACCOUNT; WORKING CAPITAL

 

Section 1.
Operating Account.

 

(A)          Establishment.

 

Within thirty (30)
Days of the date of award Purchaser shall establish, and shall maintain
throughout the Performance Period and for so long as may be necessary during
the Wind-Up, a demand deposit account, interest bearing if possible (the “Operating
Account”), for the benefit of Purchaser, in such federally insured financial
institution as Purchaser may select, provided, however, that such institution
shall not be an Affiliated Party.

 

(B)          Maintenance of Sufficient Funds.

 

Contractor shall
cause Purchaser to maintain sufficient funds in the Operating Account to meet
the cash needs of Purchaser for the payment of Direct Costs and Seller Indirect
Costs.

 

Section 2.
Working Capital.

 

If Purchaser determines on any Business Day during the
Performance Period or Wind-Up that there is a shortfall in the amount of funds
required to meet Purchaser’s immediate cash needs for the payment of Direct
Costs and Seller Indirect Costs, Contractor shall advance funds to the Operating
Account to the extent necessary to fund such shortfall.

 

Section 3.
Funds in the Operating Account; Treatment of Interest.

 

The funds in the Operating Account, and all interest
earned thereon, shall be funds of Purchaser and no funds other than Purchaser
funds shall be deposited into such account.

 

Section 4.
Working Capital Advances.

 

Amounts transferred by Contractor to Purchaser to fund
the payment of Direct Costs and Seller Indirect Costs are “Working Capital
Advances” (the un-repaid balance being the “Working Capital Advance Balance”).
Working Capital Advances are repayable to Contractor by Purchaser, but without
interest thereon, as funds become available to Purchaser and as Contractor
shall direct. Repayments of Working Capital Advances are not Direct Costs, and
the Working Capital Advance Balance is not a Purchaser Liability.

 

 

88

 

Section 5.
Limited Right to Borrow Funds.

 

Other than Working Capital Advances obtained from
Contractor, Purchaser shall not borrow funds for any other purpose or from any
party other than Contractor, and Purchaser shall not pledge or grant any
security interest in the Property for any purpose whatsoever. Notwithstanding
the foregoing, Purchaser shall have the right (i) to
accept unsecured short-term trade credit only from suppliers or vendors to
Purchaser, which trade credit is extended in the ordinary course of such
suppliers’ or vendors’ businesses, and (ii) to
finance the purchase or lease of equipment and to grant a corresponding
security interest therein.

 

Section 6.
Deposits to Operating Account.

 

(A)          Receipts.

 

Purchaser shall
deposit all receipts of funds into the Operating Account or Sales Deposit
Account reasonably promptly as determined with respect to prevailing commercial
standards at the time.

 

(B)          Working Capital Advances.

 

No later than the
close of business on the next Business Day following the Day of receipt of a
Working Capital Advance, Purchaser shall deposit all such funds into the
Operating Account.

 

(C)          Contractor’s Responsibility for
Funds.

 

Contractor shall
act as a fiduciary to Purchaser with respect to all funds that Purchaser
receives, holds and/or disburses.

 

Section 7.
Disbursements from Operating Account.

 

(A)          Costs Payable from Operating Account.

 

Purchaser shall
timely pay from the Operating Account or a Transfer Account, and in accordance
with the requirements of this Article 13, all amounts payable for Direct
Costs and Seller Indirect Costs, which shall be paid in full when goods and services
are provided or, in the case of suppliers extending trade credit pursuant to
the provisions of Section 5, when invoiced.

 

(B)          Limitation on Disbursements.

 

Purchaser shall
make no disbursements from the Operating Account except for (i) payment of Distribution Payments
and other adjustments pursuant to the provisions of Article 16, (ii) payment of Direct Costs and
Seller Indirect Costs pursuant to the provisions of Article 9 and this
Article 13, (iii) repayment
of Working Capital Advances pursuant to the provisions of this Article 13,
(iv) Purchase Transfers
pursuant to the provisions of Article 14, and (v) transfer of funds to a Transfer Account pursuant to
the provisions of Article 9 and this Article 13. Except as
specifically provided in this contract, no other expense shall be paid, money
lent or reimbursement made by Purchaser to any party.

 

 

89

 

(C)          Signatures.

 

Any payment,
including a transfer, from the Operating Account shall require the signature of
an employee of Purchaser who is a Key Person. Any payment in excess of
twenty-five thousand dollars ($25,000.00) shall require the signatures of two
of Purchaser’s employees who are Key Persons, one of whom must be Purchaser’s
Chief Executive Officer.

 

Section 8.
Transfer Accounts.

 

Purchaser may in the exercise of its sole discretion
establish a zero balance bank account to facilitate third party payroll
administration (a “Payroll Account”), zero balance purchase card bank accounts
(“P-Card Accounts”) to facilitate delegation of authority for expenditures and
a zero balance sales depository account (a “Sales Deposit Account”) to
facilitate deposits and payments from earned income (each Payroll Account,
P-Card Account, Sales Deposit Account, and the “Reserve Account” that may be
established pursuant to the provisions of Section 9 below, being a “Transfer
Account”). Each Transfer Account shall be established in such federally insured
financial institution as Purchaser may select, provided, however, that such
institution shall not be an Affiliated Party.

 

Section 9.
Seller Indirect Cost Deductions and Reserves.

 

DRMS may elect in the exercise of its sole discretion
to direct Purchaser from time to time to deduct from Distribution Payments to
DRMS funds to serve as a source of payment for Seller Indirect Costs (each such
deduction being a “Seller Indirect Cost Deduction”). As of any particular date,
the unexpended cumulative amount of such Seller Indirect Cost Deductions shall
be the amount of the “Seller Indirect Cost Reserve.”

 

ARTICLE FOURTEEN. PURCHASE
ACCOUNT

 

Section 1.
Purchase Account

 

(A)          Establishment.

 

Within thirty (30)
Days of the date of award Purchaser shall establish, and shall maintain
throughout the Performance Period and for so long as may be necessary during
the Wind-Up, a demand deposit account, interest bearing if possible (the “Purchase
Account”) for the benefit of Purchaser, in such federally insured financial
institution as Purchaser may select, provided, however, that such institution
shall not be an Affiliated Party.

 

(B)          Maintenance of Sufficient Funds.

 

Contractor shall
cause Purchaser to maintain sufficient funds in the Purchase Account to meet
the cash needs of Purchaser for the timely payment of Invoices for the purchase
of Property.

 

90

 

Section 2.
Purchase Advances.

 

If Purchaser determines on any Business Day during the
Performance Period or Wind-Up that Purchaser requires additional funds in the
Purchase Account to meet Purchaser’s immediate cash needs for the payment of an
Invoice, Contractor shall transfer funds to the Purchase Account (each such
transfer, a “Purchase Advance”) immediately to the extent necessary to fund
such shortfall.

 

Section 3.
Funds in the Purchase Account; Treatment of Interest.

 

The funds in the Purchase Account, and all interest
earned thereon, shall be funds of Purchaser. Interest earned thereon shall be
applied to defray the amounts of Purchase Advances and Purchase Transfers that
would otherwise be required.

 

Section 4.
Treatment of Purchase Advances.

 

Purchase Advances shall not be treated as Purchaser
Liabilities, and shall not be repaid by Purchaser other than through Contractor
Distributions. Purchaser shall not pay to Contractor any interest on Purchase
Advances.

 

Section 5. Disbursements from Purchase Account.

 

Except during the Wind-Up as provided in
Article 21, Purchaser shall make no disbursements or transfers from the
Purchase Account other than payments to DRMS and to KGP for Invoices.

 

Section 6.
Purchase Transfers.

 

At each time that a Contractor Distribution Payment is
payable in an amount greater than zero after adjustment pursuant to the
provisions of Subsections (1) and (2) of Section 4(D) of
Article 16, Purchaser shall withhold therefrom and transfer from the
Operating Account to the Purchase Account (a “Purchase Transfer”) the amount
reasonably estimated by Purchaser that, when added to the balance then
available in the Purchase Account, will be required during the next succeeding
thirty (30) Days for the timely payment of Invoices, provided, however, that
the balance payable to Contractor shall not be less than zero. At any time that
the Working Capital Advance Balance exceeds zero, Contractor in the exercise of
its sole discretion may cause Purchaser to fund a Purchase Transfer in an
amount less than or equal to the amount of the Working Capital Advance Balance,
and the amount of the Working Capital Advance Balance shall be deemed reduced
by the amount of such Purchase Transfer.

 

91

 

ARTICLE FIFTEEN. FINANCIAL
GUARANTEE BOND; RETENTION FUND;

ESTIMATED CONTINGENT LIABILITIES
RESERVE

 

Section 1. Election of Contractor to Provide Financial
Guarantee Bond in Lieu of Retention.

 

Contractor shall either (i) obtain a performance bond or financial guarantee bond
(the “Financial Guarantee Bond”) issued within thirty (30) Days of the date of
award in favor of DRMS and Purchaser on this contract in the amount of one
million dollars ($1,000,000.00), or (ii) be
subject to the withholding of a portion of Contractor Distributions as provided
in Section 3 hereof. The purpose of the Financial Guarantee Bond and the
Retention Fund shall be to provide a source of payment to DRMS and/or to
Purchaser in an amount reasonably sufficient to satisfy the financial
obligations of Contractor. In lieu of a Financial Guarantee Bond, Contractor
may post such alternative security, including without limitation a letter of
credit, that is approved by the SCO.

 

Section 2.
Financial Guarantee Bond.

 

(A)          Surety and Form of Bond.

 

The Financial
Guarantee Bond shall be issued by such surety and in such form that are
acceptable to DRMS in the exercise of its sole discretion.

 

(B)          Issuance and Renewal.

 

The Financial
Guarantee Bond shall be issued and, if applicable, renewed for periods of at
least one year, renewable at the sole option of the surety.

 

(C)          Liability and Release of Surety.

 

The surety shall
be liable to DRMS for damages arising out of a Material Breach by Contractor or
Purchaser, and the surety’s liability on the Financial Guarantee Bond shall
terminate with respect to a particular period of time upon approval by DRMS of
Purchaser’s Annual Report or, if applicable, the Closing Report, pertaining to
such period of time, provided, however, that such approval may be conditioned
by DRMS upon the final resolution of claims that may arise or have arisen out
of occurrences specified by DRMS in its notice of such conditional approval,
which occurrences fall in whole or in part within such period of time, and the
surety shall remain liable until such claims are finally resolved.

 

Section 3.
Retention Fund.

 

(A)          Establishment of Retention; Retention
Rate; Retention Fund; Required Retention Fund Balance.

 

Except as
otherwise provided herein, beginning with the first calendar month (the “Retention
Trigger Month”) following the later of (i) the
calendar month with respect to which the cumulative amount of Contractor
Distribution Payments exceeds the cumulative amount of Purchase Advances or (ii) if

 

 

92

 

applicable, the calendar
month in which the Financial Guarantee Bond lapses or is terminated, ten
percent (10%) (the “Retention Rate”) of all Contractor Distribution Payments
otherwise payable to Contractor in an amount greater than zero after adjustment
pursuant to the provisions of Subsections (1), (2) and (3) of
Section 4(D) of Article 16 shall be paid to DRMS (“Retention
Payments”) to hold in a fund.

 

(1)             At the time of award and throughout the Performance
Period and Wind-Up except as otherwise provided herein, the target balance for
the Retention Fund (the “Required Retention Fund Balance”) shall be two hundred
and fifty thousand dollars ($250,000.00).

 

(2)             Except as otherwise provided herein, while a Financial
Guarantee Bond that complies with the provisions of Sections 1 and 2 above of
this Article 15 remains in effect, the Retention Rate shall be zero and
the Required Retention Fund Balance shall be zero.

 

(3)             Retention Payments shall continue from the Retention
Trigger Month until the balance in the Retention Fund equals the amount of the
Required Retention Fund Balance, provided, however, that the amount of the
Retention Payment shall be zero with respect to any month for which the Contractor
Net Worth Allocation Balance exceeds zero.

 

(B)          Insolvency of Contractor.

 

If Contractor
voluntarily places itself or is involuntarily placed in proceedings under Title
11 of the United States Code (or corresponding provisions of future law) or any
other federal or state insolvency law, Contractor shall so notify DRMS and
Purchaser within two (2) Days of the commencement of such proceedings.

 

(C)          Increased Retention.

 

If DRMS at any
time after the Retention Trigger Month determines that the amount in the
Retention Fund will likely not be sufficient to satisfy its purpose, it may
submit the issues of the sufficiency of the amount of the Retention Fund or of
the Retention Rate to the Dispute Resolution Panel in accordance with the
provisions of Article 20 below. The Dispute Resolution Panel shall
determine whether the total amount of the Retention Fund and/or the Retention
Rate shall be increased in order to effectuate the purpose of Retention.

 

(D)          Release of Retention Fund.

 

The balance in the
Retention Fund shall be released to Contractor without interest thereon as
provided in Article 21.

 

Section 4.
Estimated Contingent Liabilities Reserve.

 

Effective as of the date of award, Purchaser shall
establish an estimated contingent liabilities reserve account (the “ECLR”) on
its books of account. The ECLR shall represent an amount reasonably deemed from
time to time by Purchaser to be sufficient to satisfy all of

 

 

93

 

Purchaser’s
contingent, conditional and/or un-matured claims, liabilities and obligations
that have not otherwise been accrued in accordance with GAAP. The ECLR shall be
carried on the books of Purchaser as a liability, but shall not be included in
the computation of Purchaser Liabilities. Purchaser shall maintain the ECLR
throughout the Performance Period and Wind-Up until Contractor reasonably
determines that all of the contingent, conditional and/or un-matured claims,
liabilities and obligations of Purchaser have been satisfied, it being expressly
understood that DRMS may submit to the Dispute Resolution Panel in accordance
with the provisions of Article 20 a Dispute as to the appropriate duration
or amount of the ECLR. So long as Purchaser maintains the ECLR on its books, it
shall include within its Monthly, Quarterly and Annual Reports a written
statement (the “ECLR Statement”) of the amount of the ECLR and an itemization
specifying the contingent, conditional and un-matured claims and obligations of
Purchaser that the ECLR is intended to satisfy.

 

ARTICLE SIXTEEN. DISTRIBUTIONS

 

Section 1.
Monthly Distribution Statement.

 

Within fifteen (15) Days after the last Day of each
calendar month that is in whole or in part within the Performance Period and
Wind-Up, Purchaser shall prepare and submit to DRMS, KGP and Contractor the “Monthly
Distribution Statement” with respect to such month in the form specified at
Attachment VI.16.1. Purchaser shall perform the following calculations in
preparing the Monthly Distribution Statement. Except as otherwise provided
herein, all amounts shall be determined as of the close of business on the last
Day of the subject month.

 

Section 2.
Calculate Cash Available for Distribution and Operating Net Worth.

 

(A)          Calculate Cash Available for
Distribution.

 

Purchaser shall
calculate the amount of Purchaser’s “Cash Available for Distribution,” equal to
(x) the sum of the cash balances
in the Operating Account and the Transfer Accounts (Purchaser’s “Operating Cash
Balance”) minus  (y) the sum
of (i) the Working Capital
Advance Balance, (ii) the
amount of Purchaser Liabilities, (iii) Purchaser’s
reasonable estimate of the amount of cash required for the payment of Direct
Costs for the next succeeding calendar month, (iv) Purchaser’s
reasonable estimate of the amount of cash required for the payment of Seller
Indirect Costs during the next succeeding calendar month, and (v) the Estimated Contingent Liability
Reserve (ECLR).

 

(B)          Calculate Operating Net Worth.

 

(1)             Cash Available for Distribution is
Less Than or Equal to Zero.

 

If Cash Available
for Distribution is less than or equal to zero, the amount of Purchaser’s “Operating
Net Worth” shall equal the amount of Seller Indirect Costs paid during the
subject month.

 

 

94

 

(2)             Cash Available for Distribution is
Greater Than Zero.
If Cash Available for Distribution is greater than zero, the amount of
Purchaser’s “Operating Net Worth” shall equal (x)
the Cash Available for Distribution plus  (y) the amount of Seller Indirect Costs paid during the
subject month.

 

Section 3.
Calculate Net Worth Allocations.

 

(A)          Calculate Contractor Net Worth
Allocation.

 

Purchaser shall
calculate the amount of the “Contractor Net Worth Allocation” as Operating Net
Worth multiplied  by twenty percent (20.00%).

 

(B)          Calculate DRMS Net Worth Allocation.

 

Purchaser shall
calculate the amount of the “DRMS Net Worth Allocation” as Operating Net Worth multiplied
by seventy-eight and twenty one-hundredths percent (78.20%).

 

(C)          Calculate KGP Net Worth Allocation.

 

Purchaser shall
calculate the amount of the “KGP Net Worth Allocation” as Operating Net Worth multiplied
by one and eighty one-hundredths percent (1.80%).

 

Section 4.
Distribution Payments.

 

Purchaser shall make payments of Distributions (each,
a “Distribution Payment”) to DRMS, KGP and Contractor contemporaneously in
accordance with the following provisions within fifteen (15) Days after the
last Day of each calendar month that is in whole or in part within the
Performance Period and Wind-Up:

 

(A)          As of the inception of the contract, the “Net Worth
Allocation Balance” for DRMS, Contractor and KGP, respectively, shall be deemed
equal to zero.

 

(B)                               DRMS Net Worth
Allocation is Greater Than or Equal to the Sum of Seller Indirect Costs and
DRMS Net Worth Allocation Balance.

 

If the DRMS Net
Worth Allocation is greater than or equal to the sum of Seller Indirect Costs
paid during the subject month and DRMS Net Worth Allocation Balance for the
preceding calendar month, Purchaser shall calculate the amounts of the Distribution
Payments and the Net Worth Allocation Balances for the subject month as
follows.

 

(1)             Calculate Contractor Distribution
Payment and Contractor Net Worth Allocation Balance.

 

(a)             Purchaser shall calculate the amount, of the “Contractor
Distribution Payment” as the amount of (i) the
Contractor Net Worth Allocation, plus  (ii) the
preceding calendar month’s Contractor Net Worth Allocation Balance.

 

(b)             The Contractor Net Worth Allocation Balance for the
subject month shall equal zero.

 

 

95

 

(2)             Calculate DRMS Distribution Payment
and DRMS Net Worth Allocation Balance.

 

(a)             Purchaser shall calculate the amount, of the “DRMS
Distribution Payment” as the amount of (i) the
DRMS Net Worth Allocation, minus  (ii) the
preceding calendar month’s DRMS Net Worth Allocation Balance, minus  (iii) Seller Indirect Costs paid
during the subject month.

 

(b)             The DRMS Net Worth Allocation Balance for the subject
month shall equal zero.

 

(3)             Calculate KGP Distribution Payment
and KGP Net Worth Allocation Balance.

 

(a)             Purchaser shall calculate the amount, of the “KGP
Distribution Payment” as the amount of (i) the
KGP Net Worth Allocation, plus  (ii) the
preceding calendar month’s KGP Net Worth Allocation Balance.

 

(b)             The KGP Net Worth Allocation Balance for the subject
month shall equal zero.

 

(C)                               DRMS Net Worth
Allocation is Less Than the Sum of Seller Indirect Costs and DRMS Net Worth
Allocation Balance.

 

If the DRMS Net
Worth Allocation is less than the sum of Seller Indirect Costs paid during the
subject month and DRMS Net Worth Allocation Balance for the preceding calendar
month, Purchaser shall calculate the amounts of Distribution Payments and Net
Worth Allocation Balances as follows.

 

(1)                                  Calculate Contractor Distribution
Payment and Contractor Net Worth Allocation Balance.

 

(a)             Purchaser shall calculate the amount of the “Contractor
Distribution Payment” as the amount of (i) ninety-one
and seventy-four one-hundredths percent (91.74%), multiplied by  (ii) Cash Available for Distribution,
provided, however, that the Contractor Distribution Payment shall not be less
than zero.

 

(b)             Purchaser shall calculate the amount of the “Contractor
Net Worth Allocation Balance” as the amount of (i) the Contractor Net
Worth Allocation, plus  (ii) the
Contractor Net Worth Allocation Balance for the preceding calendar month, minus
(iii) the Contractor
Distribution Payment.

 

(2)           Calculate DRMS Distribution Payment
and DRMS Net Worth Allocation Balance.

 

(a)             The amount of the “DRMS Distribution Payment” shall
equal zero.

 

(b)             Purchaser shall calculate the amount of the “DRMS Net
Worth Allocation Balance” as the amount of (i) the
DRMS Net

 

 

96

 

Worth Allocation Balance
for the preceding calendar month, minus  (ii) the DRMS Net Worth Allocation, plus  (iii) Seller Indirect Costs paid
during the subject month.

 

(3)             Calculate KGP Distribution Payment
and KGP Net Worth Allocation Balance.

 

(a)             Purchaser shall calculate the amount of the “KGP
Distribution Payment” as eight and twenty-six one-hundredths percent (8.26%) of
the Cash Available for Distribution, provided, however, that the KGP
Distribution Payment shall not be less than zero.

 

(b)             Purchaser shall calculate the amount of the “KGP Net
Worth Allocation Balance” as the amount of (i) the
KGP Net Worth Allocation, plus  (ii) the
KGP Net Worth Allocation Balance for the preceding calendar month, minus
(iii) the KGP Distribution
Payment.

 

(D)          Adjustments to Distributions.

 

(1)             Purchaser shall deduct from the DRMS Distribution
Payment and add to the Contractor Distribution Payment the amount of any credit
for overpayments of Invoices owed by DRMS as required by the provisions hereof,
provided, however, that the balance payable to DRMS shall not be less than
zero.

 

(2)             Any amount that Contractor owes to Purchaser as the
result of an undisputed Audit Adjustment, a Decision of the Dispute Resolution
Panel, a final judgment or other undisputed obligation in an amount certain,
shall be deducted from the Contractor Distribution Payment, provided, however,
that the balance payable to Contractor shall not be less than zero.

 

(3)             Purchaser shall deduct from the Contractor
Distribution Payment the amount of any Purchase Transfer required by the provisions
of Article 14.

 

(4)             Purchaser shall deduct from the Contractor
Distribution Payment and add to the DRMS Distribution Payment the amount, if
any, of Retention required by the provisions of Article 15.

 

ARTICLE SEVENTEEN. COMPLIANCE
AND MONITORING

 

Section I.
Purpose and Content of Compliance Reviews and Further Reviews.

 

(A)          Compliance Reviews and Further
Reviews.

 

DRMS shall have
the right to conduct “Compliance Reviews” of Purchaser in accordance with, and
as limited by, the provisions of this Article 17. DRMS may actually
conduct the Compliance Reviews, or use other Government agencies

 

 

97

 

or private firms, as the
SCO deems appropriate. DRMS shall also have the right to conduct “Further
Reviews” as provided herein. The purpose of such Compliance Reviews and Further
Reviews is to determine, after the fact, the extent of Purchaser’s compliance
with the terms and provisions of the contract, applicable laws and regulations,
and applicable Host Installation requirements, including without limitation
compliance with applicable environmental, security and safety laws, regulations
and requirements. Such Compliance Reviews and Further Reviews are not intended
to provide a mechanism for DRMS participation or involvement in ongoing
decision-making regarding the affairs of Purchaser. No-notice Trade Security
Control reviews and inspections conducted by DLA Trade Security Control
personnel are separate and distinct from the Compliance Reviews described in
this Section.

 

(B)          Methods.

 

Compliance Reviews
may include, without limitation: (i) examination
of the Records, and (ii) personal
interviews of persons who may have knowledge of facts regarding Purchaser’s
compliance with the provisions of this contract, including employees of
Purchaser or of any supplier or re-sale buyer.

 

Section 2.
Procedures for Compliance Reviews.

 

(A)          Procedures and Notice.

 

A Compliance
Review shall be conducted at any time during normal business hours and on any
Business Day upon reasonable notice. It is expressly agreed that a period of at
least ten (10) Business Days shall constitute reasonable notice before a
Compliance Review. Purchaser shall permit inspection of any physical location
used by Purchaser, including, without limitation, the inventory (including the
Records relating thereto), examination of the Records, making copies and
abstracts therefrom, and discussions of the affairs, finances and accounts of
Purchaser with any employee, subcontracting attorney or certified public accountant
of Purchaser. DRMS shall use its best efforts to assure that Compliance Reviews
are conducted in a manner that does not unduly burden or unreasonably impinge
upon the efficient operation of the affairs of Purchaser.

 

(B)          Scope.

 

The scope of
Compliance Reviews shall be as necessary to confirm Purchaser’s and Contractor’s
compliance with the provisions of the contract.

 

Section 3.
Further Reviews.

 

If a Compliance Review determines that there is a
reasonable basis to believe that a default or breach of this contract has
occurred, DRMS, upon written notice to Contractor, may conduct any such further
investigation that it deems appropriate under the circumstances, using such
outside consultants, including attorneys, as it deems necessary or advisable (“Further
Review”). Purchaser shall permit such persons as are designated by DRMS to
visit and inspect

 

 

98

 

any
physical location used by Purchaser, including, without limitation, the
inventory (including the Records relating thereto), and to examine the Records,
make copies and abstracts therefrom, and discuss the affairs, finances and
accounts of Purchaser with any employee, attorney or certified public
accountant of Purchaser. Notwithstanding the foregoing, if Contractor gives
notice to DRMS stating that a Further Review is not justified, DRMS shall delay
the commencement of any such Further Review for a period of fourteen (14) Days
after the delivery of its notice thereof to Purchaser to permit Contractor to seek
a determination of the appropriateness of the Further Review pursuant to the
provisions of Article 20.

 

Section 4.
Compliance Notification.

 

After completing the Compliance Review and/or Further
Review, DRMS shall notify Contractor in writing of any breach or default
identified during the Compliance Review and/or Further Review.

 

Section 5. Costs of Oversight.

 

Except as provided in Article 20, DRMS shall pay
all fees, costs and expenses incurred in connection with its Compliance Reviews
and Further Reviews.

 

ARTICLE EIGHTEEN. AUDIT
ADJUSTMENTS

 

Section 1. Notice of Audit Adjustment.

 

If any party determines that the Records reflect any
inaccuracies requiring entry of an adjustment thereto (an “Audit Adjustment”),
including, without limitation, the disbursement of any amount from the
Operating Account or a Transfer Account that is inconsistent with any provision
of the contract (“Ineligible Disbursement”) or the disposition of an item of
Property that is inconsistent with any provision of the contract (“Ineligible
Disposition”), such party shall give written notice thereof to the other party
or parties (a “Notice of Audit Adjustment”).

 

Section 2. Procedures for Adjudication of Audit
Adjustments.

 

If either Contractor or DRMS disputes an asserted
Audit Adjustment, it may submit such dispute for resolution pursuant to the
provisions of Article 20. Upon resolution of such dispute or, if no party
submits a dispute for resolution pursuant to the provisions of Article 20
within sixty (60) Days of the Notice of Audit Adjustment, the Audit Adjustment
shall be deemed confirmed as asserted.

 

Section 3. Remedies for Audit Adjustments.

 

Upon confirmation of an Audit Adjustment, (i) Purchaser will pay to the party in
question, or the party will pay to Purchaser, as the case may be, the amount
required to restore the parties to their respective positions status  quo
ante, and (ii) Purchaser
will correct the Records in accordance with the Audit Adjustment as confirmed.
If, as a result of the Audit Adjustment,

 

 

99

 

Contractor
is to pay Purchaser or Purchaser is to pay DRMS, each such payment shall
include interest at the treasury rate as computed and adjusted in accordance
with SBR condition 11.

 

ARTICLE NINETEEN. MATERIAL BREACH

 

Section 1. Notice of Material Breach.

 

In the event of a material failure to perform the
provisions of the contract by Purchaser, Contractor or DRMS (“Material Breach”),
the party asserting such Material Breach (the “Non-Breaching Party”) shall
serve notice thereof upon the party that committed or is alleged in the notice
to have committed such Material Breach (the “Breaching Party”).

 

Section 2. Response to Notice.

 

(A)          Cure.

 

Except as
otherwise provided herein, the Breaching Party may cure the Material Breach
within thirty (30) Days of such notice (the “Cure Period”) or within such
longer Cure Period as the notice may provide unless, within the Cure Period,
the Non-Breaching Party withdraws the notice in writing or extends the Cure
Period in writing.

 

(B)          Submission of Dispute to Dispute
Resolution Panel.

 

Except as
otherwise provided herein, the Breaching Party may dispute the asserted
Material Breach by presenting such Dispute to the Dispute Resolution Panel as
provided in Article 20.

 

Section 3. Termination.

 

Except as otherwise provided herein, referrals of
Property by DRMS for sale to Purchaser hereunder shall terminate (a “Termination”)
upon notice thereof by the Non-Breaching Party to the Breaching Party served
upon or after expiration of the Cure Period if the Breaching Party fails to
cure within the Cure Period or, if the Non-Breaching Party submits the asserted
Material Breach to the Dispute Resolution Panel as provided in Article 20
and the Dispute Resolution Panel issues a Decision confirming the asserted
Material Breach, Termination shall be effective upon notice thereof by the
Non-Breaching Party to the Breaching Party served upon or after the date of
such Decision. Except as otherwise provided herein, Contractor, Purchaser and
DRMS shall continue to perform their respective duties under the contract
during the Cure Period and while a Dispute is pending before the Dispute
Resolution Panel.

 

Section 4. Intentional Breach.

 

An asserted Material Breach comprised of an
intentional breach of the Duty of Loyalty or the Duty of Care prescribed in
Article 7 (an “Intentional Breach”) may not be cured unless DRMS, in its
sole discretion, specifies a Cure Period in the notice thereof. Termination
shall be effective upon the later of the date of service of such notice or the
expiration of the Cure Period,

 

 

100

 

if
any, unless Contractor or Purchaser presents a Dispute regarding such asserted
Intentional Breach to the Dispute Resolution Panel as provided in Article 20
within five (5) Days of such notice or within the Cure Period specified in
such notice, if any, whichever is longer. If such Dispute is presented to the
Dispute Resolution Panel and the Dispute Resolution Panel issues a Decision
confirming such Intentional Breach, Termination shall be effective upon the
date of such Decision.

 

Section 5. DRMS Remedies for Material Breach by
Contractor or Purchaser.

 

If the Breaching Party is Purchaser or Contractor,
DRMS may take any one, any combination or all of the following actions to
satisfy its claims for any non-payments or other damages:

 

(i)              Apply the proceeds of the sale of Purchaser’s
property;

 

(ii)             Apply the Payment Deposit and/or Retention;

 

(iii)           Present a claim for indemnity against Contractor as
provided in Section 6 below;

 

(iv)          Present a claim upon the Fidelity or Blanket Bond or
any other applicable insurance or surety policy;

 

(v)              Seek appointment of a receiver or trustee for
Purchaser;

 

(vi)          Seek monetary damages, restitution or any other legal
or equitable remedy to which it is entitled;

 

(vii)           Assert any other right, claim, or remedy available
pursuant to the Contract Disputes Act.

 

(viii)        Termination.

 

Section 6. Indemnification of DRMS by Contractor and
Purchaser.

 

Contractor guarantees that Purchaser will comply fully
with the provisions of this contract. If the Breaching Party is Purchaser or
Contractor, both Purchaser and Contractor shall indemnify and hold DRMS
harmless for all damages arising therefrom.

 

Section 7. Indemnification of Contractor by DRMS.

 

If the Breaching Party is DRMS, DRMS shall indemnify
and hold Contractor harmless for its damages.

 

ARTICLE TWENTY. DISPUTE
RESOLUTION

 

The procedure provided in this Article is
intended to be elective and not to supplant any Contract Disputes Act rights of
any party. DRMS’s Sale by Reference, Part 2, Condition 32, continues to
apply.

 

 

101

 

Section 1. Selection of Dispute Resolution Panel.

 

The Dispute Resolution
Panel shall consist of three (3) persons chosen as follows:

 

(A)          Appointment of Arbitrators.

 

Within thirty (30)
Days following service of notice of a “Dispute” (as such term is defined in

Section 4(A) below of this Article 20), DRMS and Contractor
shall each notify the other of its designee to serve as its representative
(each, an “Appointed Arbitrator”) on the Dispute Resolution Panel. Within
thirty (30) Days thereafter, the two Appointed Arbitrators shall agree to
designate a third person (the “Neutral Arbitrator”) to serve on the Dispute
Resolution Panel and each party shall provide notice to the other confirming
such designation. If the two Appointed Arbitrators cannot agree on the Neutral
Arbitrator, either party may submit to the Washington, D.C. office of the
American Arbitration Association (the “AAA”) a written joint request for the
selection of the Neutral Arbitrator pursuant to AAA’s Rules for Commercial
Arbitration (“AAA Rules”).

 

(B)          Service of Arbitrators.

 

DRMS and
Contractor each may replace its respective Appointed Arbitrator at any time
except during the pendency of a proceeding before the Dispute Resolution Panel
(unless such replacement is necessitated by the death or disability of the
Appointed Arbitrator or, in the case of DRMS’s Appointed Arbitrator, by reason
of job transfer, reassignment or similar circumstance, or in the case of
Contractor’s Appointed Arbitrator, by reason of termination of employment or
resignation by the Appointed Arbitrator). The Neutral Arbitrator shall serve on
the Dispute Resolution Panel for a one year term unless reappointed or unless
replaced by the mutual consent of DRMS and Contractor. At the end of each
one-year term, the Appointed Arbitrators may agree either to reappoint the
Neutral Arbitrator for another one-year term, or select a replacement as
Neutral Arbitrator as provided in Section 1(A) above. If at any time
the Neutral Arbitrator becomes unable or unwilling to continue service on the
Dispute Resolution Panel, the parties shall, within thirty (30) Days of receipt
of notice thereof from the Neutral Arbitrator (or if the Neutral Arbitrator
fails to give such notice, from the Appointed Arbitrators), designate a
replacement as provided in Section 1(A) above.

 

(C)          Expenses.

 

Contractor and
DRMS shall each bear the costs of its respective Appointed Arbitrator and shall
equally share the costs of the Neutral Arbitrator. Neither such costs nor any
other cost, fee or expense of any character whatsoever that is incurred to
support, present or document a party’s position in a proceeding before a court,
Board, the Dispute Resolution Panel or any other tribunal shall be a Direct
Cost.

 

 

102

 

Section 2. Location and Governing Rules.

 

The Dispute Resolution
Panel shall conduct proceedings in Battle Creek, Michigan pursuant to the AAA
Rules.

 

Section 3. Jurisdiction of the Dispute Resolution Panel.

 

(A)          Matters Committed to the Dispute
Resolution Panel.

 

Except as set
forth in Section 3(B) below, any Dispute may be submitted to the
Dispute Resolution Panel for voluntary, binding arbitration.

 

(B)          Availability of Judicial Relief.

 

Either DRMS or
Contractor may bypass the Dispute Resolution Panel and seek relief in
connection with a Dispute including, without limitation, emergency relief,
monetary damages, and/or the Wind-Up of Purchaser, from a court of competent
jurisdiction. It is expressly provided, however, that the party seeking such
relief shall provide written notice to the opposing party specifying the facts
giving rise to the Dispute, and, except in emergency circumstances or unless
otherwise provided herein, the opposing party shall have thirty (30) Days
following receipt of such notice in which to cure the facts underlying the
Dispute before the party serving such notice may seek such judicial relief.

 

Section 4. Submission of Disputes to the Dispute
Resolution Panel.

 

(A)          Dispute.

 

Any dispute,
controversy or claim arising under or relating to this contract between the
parties, including, but not limited to, a dispute relating to the interpretation
of any provision of this contract, a dispute relating to the scope or conduct
of Purchaser’s or Contractor’s duties under this contract, a dispute regarding
DRMS’s exercise of its oversight powers under Article 17, and a dispute
relating to any Audit Adjustment, shall constitute a “Dispute”.

 

(B)          Process.

 

(1)           Notice. Except as to matters explicitly
committed to the “discretion” or “option” of a party, as to which such party’s
exercise of its discretion or option shall not be subject to the following
dispute resolution process, if a Dispute arises between the parties, either may
serve notice upon the other that it wishes to present the Dispute to the
Dispute Resolution Panel for resolution, provided,  however, that
no such notice shall be served beyond completion of the Wind-Up.

 

(2)           Response. Within fifteen (15) Days after service
of a notice, the party upon which it is served shall respond in writing (“Response”).
The Response shall state whether such responding party agrees to binding
arbitration as provided in this Article 20 and, if such party so agrees,
the Response shall describe the responding parry’s position with respect to
such matter and shall designate the attorney(s) or other representative

 

103

 

(“Designated
Representative”) that such party has selected to represent it in connection
with such matter. A Response that does not expressly state that the responding
party does not agree to binding arbitration shall be deemed to constitute such party’s
agreement to participate in binding arbitration as provided in this
Article 20.

 

(3)           Negotiation. Within fifteen (15) Days after service
of the Response, the Designated Representatives shall meet and attempt to
resolve the matter. Within the same fifteen (15) Day period, the Designated
Representatives also shall deliver copies of their respective notices and
Responses to each member of the Dispute Resolution Panel. If the Designated
Representatives fail to resolve the dispute within ten (10) Business Days
after service of the Response, each party shall within five (5) Business
Days so notify the Dispute Resolution Panel and deliver to the Dispute
Resolution Panel such written information, arguments, documentary evidence, and
other written documentation, as it may deem appropriate.

 

(4)           Request for Immediate Action by the
Dispute Resolution Panel. If a party believes that a situation has arisen that
requires immediate action by the Dispute Resolution Panel, any party may serve
a notice upon each member of the Dispute Resolution Panel and upon the other
party to request such immediate action.

 

Section 5. Decision.

 

The Dispute Resolution Panel shall issue a written
decision (the “Decision”) endorsed by a majority of the Dispute Resolution
Panel as promptly as possible, but in no event later than forty-five (45) Days
after the close of the arbitration hearing for the matter. Within thirty (30)
Days of the issuance of a Decision, either party may bring suit in a court of
competent jurisdiction under the federal Contract Disputes Act for enforcement
of the Decision. It is not the intent of the parties that such court will
engage in de  novo review of the underlying matter. Absent such
suit, upon the expiration of such thirty (30) Day period the Decision shall be
binding on both parties and enforceable by a court of competent jurisdiction.
Immediately upon expiration of such thirty (30) Day period, Purchaser shall
correct the Records as necessary to comply with the Decision, the respective
parties shall pay to the other such sums as ordered by the Decision, and the
parties shall cooperate to take all such actions that in other respects may be
necessary to comply with the Decision.

 

Section 6. Remedies Available to Dispute Resolution
Panel.

 

(A)          Remedies in the Case of Disputes.

 

Upon the request
of either party, the Dispute Resolution Panel may issue a Decision declaring
the rights and obligations of the parties with respect to any

 

 

104

 

Dispute submitted to the
Dispute Resolution Panel, or a Decision ordering either party to take any
action that the Dispute Resolution Panel deems appropriate within the scope of
the contract, including without limitation payment of damages, or to refrain
from taking certain actions specified by the Dispute Resolution Panel. In
addition, and without limiting the foregoing, the Dispute Resolution Panel also
may issue an order directing any party to comply with the requirements of the
contract and may specify the actions necessary to constitute compliance.

 

(B)          Remedies for Ineligible
Disbursements.

 

If the Dispute
Resolution Panel confirms a disputed Audit Adjustment arising out of an
Ineligible Disbursement, the Dispute Resolution Panel may order Contractor to
pay Purchaser from Contractor’s own funds the amount of any such Ineligible
Disbursement.

 

(C)          Award of Costs.

 

In addition to the
remedies described in Subsections (A) and (B) above, the Dispute
Resolution Panel shall award the reasonable fees, costs and expenses (“Awarded
Costs”) actually incurred in the prosecution or defense of a Dispute to the
prevailing party. Awarded Costs shall be calculated from the commencement of
preparation of the notice as defined in Section 4(B) through the
conclusion of proceedings before the Dispute Resolution Panel. Awarded Costs
shall not constitute Direct Costs and shall be borne by the non-prevailing
party.

 

Section 7. Effective Date.

 

Disputes that are resolved or confirmed by a Decision
shall be deemed confirmed as of the date that is thirty (30) Days after the
date of issuance of the relevant Decision.

 

Section 8. Agreement to Use Alternative Dispute
Resolution.

 

The parties agree to use their best efforts to resolve
any disputes that may arise without litigation. If unassisted negotiations are unsuccessful,
the parties will use alternative dispute resolution (“ADR”) techniques in an
attempt to resolve the dispute. Litigation will only be considered as a last
resort when ADR is unsuccessful or has been documented by the party rejecting
ADR to be inappropriate for resolving the dispute. If the ADR is not
successful, the parties retain their existing rights.

 

ARTICLE TWENTY-ONE. WIND-UP OF
PURCHASER

 

Section 1. Wind-Up Commencement Date.

 

Beginning with the date (the “Wind-Up Commencement
Date”) that is the earlier of (1) the end of the Performance Period or
(2) the effective date of Termination by reason of DRMS or

 

 

105

 

Contractor
exercising the early cancellation option as provided in Article 2 or by
reason of a Material Breach, the contract shall be wound up as provided herein.18

 

Section 2. Cessation of Property Referrals.

 

There shall be no further referrals of Property by
DRMS for sale to Purchaser from the Wind-Up Commencement Date forward. Submission
of Monthly, Quarterly and Annual Reports shall continue as before the Wind-Up
Commencement Date until the Wind-Up is completed. DRMS will no longer make it’s
facilities available 30 days following termination. Purchaser will have to
relocate any remaining property. Any costs incurred to dispose of property will
be charged as Purchaser Direct Costs.

 

Section 3. Conduct of Wind-Up.

 

From the Wind-Up Commencement Date forward, Purchaser
and Contractor shall perform their remaining obligations hereunder in
accordance with the provisions of this contract. If Purchaser and Contractor
are unable or unwilling to do so, or if DRMS reasonably concludes that the
value of its remaining interest in Purchaser’s Net Proceeds is at risk by
reason of actual or threatened failure to comply with provisions of the
contract, DRMS may seek administrative or judicial relief to preserve the value
of such remaining interest in Purchaser’s Net Proceeds.

 

Section 4. Submission and Approval of Closing Report.

 

(A)          Preparation by Contractor.

 

Within one hundred
twenty (120) Days of Contractor’s determination that (i) the sale or other
disposition of all of Property and all other assets owned by Purchaser as of
the Wind-Up Commencement Date (the “Remaining Assets,” including such Property
that, as of the Wind-Up Commencement Date, has been referred for sale to
Purchaser but as to which the Purchaser has not taken Delivery) has been
completed, (ii) all Purchaser Liabilities have been paid in full,
(iii) the ECLR has properly been removed from Purchaser’s books of account
as provided in Article 15, and (iv) all amounts owed by Purchaser
have been paid in full, Contractor shall prepare and submit to DRMS and to KGP
the Closing Report.

 

18 DRMS and or DRMS contractors may need
Government scrap facilities to conduct continued scrap processing operations
during the Wind-Up period. Accordingly, Purchaser should recognize that DRMS
might require the use of space and equipment previously used by Purchaser.
Purchaser shall vacate and turn over equipment during the Wind-Up period
reasonably soon after the SCO so requests.

 

 

106

 

(B)          Preparation by DRMS.

 

If Contractor is
unable or unwilling to prepare the Closing Report, DRMS may take such steps as
are reasonably necessary to enable the calculation and payment of final amounts
payable to DRMS, KGP and Contractor as determined by application of the
provisions of Article 16 and of Section 5(B) below of this
Article 21.

 

Section 5. Final Distributions; Refund of Remaining
Balance of Payment Deposit and Remaining Balance of Retention Fund.

 

(A)          Final Distributions; Dissolution of
Purchaser.

 

Upon DRMS approval
of the Closing Report, Contractor shall take, or as may be appropriate,
Contractor shall cause Purchaser to take, each of the following actions:

 

(1)           Final Distributions. Distribute all of Purchaser’s remaining
cash in accordance with the provisions of Article 16, and refund to
Contractor the remaining cash in the Purchase Account, if any.

 

(2)           Close Operating Account and Purchase
Account. Close
Purchaser’s Operating Account, Transfer Accounts and Purchase Account.

 

(3)           Final Tax Returns. File closing tax returns and any other
documents required by applicable law.

 

(4)           Dissolution of Purchaser. File such documents as are necessary to
conclude Purchaser’s legal existence.

 

(5)           Documentation and Payment Provided to
DRMS. Provide to
DRMS and to KGP copies of all documents evidencing compliance with the
provisions of this Article 21 and payment of any Distribution Payments
owed to DRMS under Article 16.

 

(B)          Refund of Payment Deposit and
Retention Fund.

 

Upon receipt by
DRMS and KGP of all amounts payable thereto and all documentation to be
provided pursuant to the provisions hereof, DRMS shall pay to Contractor the
remaining balances, if any, of the Payment Deposit and Retention Fund without
interest.

 

(C)          Early Refund of Retention Fund.

 

Contractor may
obtain payment from DRMS of the balance in the Retention Fund without interest
at any time before conclusion of the Wind-Up by providing a Financial Guarantee
Bond in the amount of one million dollars ($1,000,000.00) that is issued for
the remaining Performance Period through the conclusion of the Wind-Up, or in
such other amount and on such terms that are otherwise acceptable to DRMS in
the exercise of its sole discretion.

 

 

107

 

ARTICLE TWENTY-TWO.
MISCELLANEOUS PROVISIONS

 

Section 1. Binding Effect.

 

Subject to the restrictions on transfers and
encumbrances set forth herein, this contract shall inure to the benefit of and
be binding upon DRMS, Contractor and Purchaser, and their respective legal
representatives, successors and assigns. Whenever this contract refers to any
party, such reference shall be deemed to include a reference to the legal
representatives, successors and assigns of such party.

 

Section 2. Notices.

 

All notices, demands, requests, consents, approvals,
declarations, reports and other communications required hereunder shall be in
writing except as otherwise provided herein and addressed as follows, and the
same shall be given and shall be deemed to have been served and given if (i) delivered in person, (ii) delivered by registered or
certified U.S. mail, return receipt requested, postage prepaid, (iii) deposited into the custody of
Federal Express Corporation or other reputable overnight carrier (“Overnight
Carrier”) for next Business Day delivery, (iv) telecopied,
or (iv) electronically
transmitted:

 

If to DRMS:

 

Greg Ortiz

Sales Contracting Officer

DRMS - BP

74 Washington Avenue N

Battle Creek, Ml 49017-3092

Telecopy No. (269) 961-4162

 

With a copy of each such
material communication to:

 

Kormendi \ Gardner
Partners

1025 Connecticut Avenue, N.W.

Suite 308

Washington, D.C. 20036

 

Attention: Cyrus J.
Gardner and Roger C. Kormendi

Telecopy No. (202)331-1151

 

 

108

 

If to Contractor or
Purchaser to:

 

[CONTRACTOR
CONTACT INFORMATION FROM CONTRACTOR’S ITEM BID AND AWARD PAGE; MAY BE
AMENDED BY CONTRACTOR AFTER AWARD AS PROVIDED BELOW]

 

With a copy of each such
material communication to:

 

Kormendi \ Gardner
Partners

1025 Connecticut Avenue, N.W.

Suite 308

Washington, D.C. 20036

 

Attention: Cyrus J.
Gardner and Roger C. Kormendi

Telecopy No. (202)331-1151

 

or at
such other address as may be substituted by giving not less than five
(5) Business Days advance written notice of such change of address in
accordance with the provisions hereof. The giving of any notice required
hereunder may be waived in writing by the party entitled to receive such
notice. Except as otherwise provided in this contract, every notice, demand,
request, consent, approval, declaration or other communication provided
pursuant to the provisions hereof shall be acknowledged by the recipient by an
original writing or photocopy thereof, by telecopy or by electronic
transmission, with date of receipt indicated thereon, and shall be deemed to
have been duly served, delivered and received on the earlier of (x) the date of such acknowledgement of
receipt by an original writing or photocopy thereof, by telecopy or by
electronic transmission, regardless of the original mode of delivery, or (y) the date on which telecopied and
confirmed by telecopy answerback, or on the second Business Day after being
deposited with an Overnight Carrier, or five (5) Business Days after being
deposited in the U.S. mail, provided, however, that Invoices, Pickup Notices,
and Purchaser’s Reports delivered electronically need not be acknowledged and
shall be deemed received, delivered and served upon such transmission. Failure
or delay in delivering any notice, demand, request, consent, approval,
declaration or other communication to a party or to any persons designated
above to receive a copy thereof shall in no way adversely affect the
effectiveness of such notice, demand, request, consent, approval, declaration
or other communication.

 

Section 3.
Severability; Consolidation with CV

 

(A)          If any provision of this contract or the application
thereof to any Person or circumstance shall be invalid or unenforceable to any
extent, the remainder of this contract and the application of such provisions
to other Persons or circumstances

 

 

109

 

shall not be affected
thereby, and the intent of this contract shall be enforced to the greatest
extent permitted by law, provided, however, that, if any of the provisions of
Article 5, Section 1 (“Payment Deposit”) or the application thereof
to any Person or circumstance shall be determined in a final judgment rendered
by a court or other tribunal of competent jurisdiction to be invalid or
unenforceable to any extent, DRMS may in the exercise of its sole discretion
cause Termination by notice served within thirty (30) days of the date upon
which such judgment becomes final, such Termination to be effective five
(5) Days after the date of service of such notice.

 

(B)          In the event that a CV transaction or operations are
consolidated in whole or in part with this SV sale contract, conflicting
provisions of the respective contracts shall be resolved as the parties shall
reasonably agree.

 

Section 4. Headings.

 

The headings appearing in this contract are inserted
only as a matter of convenience and in no way define, limit, construe or
describe the scope or intent of any article or section of this
contract.

 

Section 5. Survival.

 

The rights and obligations of the parties under this
contract shall survive for a period of six (6) years after the completion
of the Wind-Up.

 

Section 6. Waiver.

 

No consent or waiver, express or implied, by any party
to or of any breach or default by any other party in the performance by such
other party of its obligations under this contract shall be deemed or construed
to be a consent or waiver to or of any other breach or default in the
performance by such other party of the same or any other obligations of such
other party under this contract. Failure on the part of any party to complain
of any act or failure to act by any of the other parties or to declare any of
the other parties in default, regardless of how long such failure continues,
shall not constitute a waiver by such party of its rights hereunder.

 

Section 7. Force Majeure.

 

The parties shall be excused for the period of any
delay in the performance of any obligations under this contract when prevented
from performing such obligations by cause or causes beyond their reasonable
control, including, without limitation, civil commotion, war, invasion,
rebellion, hostilities, military or usurped power, sabotage, pestilence, riots,
fire or other casualty or acts of God.

 

Section 8. Use of DRMS Name; Public Communications.

 

Neither Contractor nor Purchaser shall use the name of
DRMS or its logos for any marketing or other purposes without the express prior
written consent of DRMS, which consent

 

 

110

 

may be withheld for any
reason whatsoever and is subject to the sole discretion of DRMS. Neither
Contractor nor Purchaser shall publicly denigrate the surplus property
disposition program of the U.S. Department of Defense or the conduct thereof by
DRMS.

 

Section 9. Tense and Gender.

 

Unless the context clearly indicates otherwise, the
singular shall include the plural and vice versa. Whenever the masculine,
feminine or neuter gender is used inappropriately in this contract, this
contract shall be read as if the appropriate gender had been used.

 

Section 10. Entire Agreement; Modification.

 

This contract, and the materials incorporated herein
by reference, constitute the entire agreement between the parties regarding the
matters contained in this contract. If there is any inconsistency between the
terms of this contract and those of any Appendix, Schedule or
Exhibit hereto, the terms of this contract shall govern. There are no
promises or other agreements, oral or written, express or implied, between the
parties other than as set forth in this contract. No change or modification of,
or waiver or compromise under, this contract shall be valid unless it is in
writing and signed by a duly authorized representative of the party against
which it is to be enforced. Contractor understands and agrees to submit a
written request for contract modification to the SCO prior to effecting any
change from that stated in its technical proposal (including any subcontractors
identified therein), and/or Sale of Government Property-Item Bid Page, whether
occurring before or after the release of the Property. Contractor further
agrees not to effect such changes without first receiving the written approval
of the SCO.

 

Section 11. Computation of Time.

 

In computing any period of time prescribed or allowed
by this contract, the Day of the act, event, or default from which the
designated period of time begins to run shall not be included. The last Day of
the period so computed shall be included unless it is not a Business Day, in
which event the period runs until the end of the next Business Day.

 

Section 12. Electronic Communication.

 

DRMS and Purchaser shall cooperate to facilitate
delivery of Pickup Notices, Invoices and Purchaser’s Reports to the extent
reasonably practical by electronic transmission, such as by electronic mail or
file transfer, rather than by delivery of a physical removable magnetic or
optical storage medium.

 

 

111

 

ARTICLE TWENTY-THREE.
DEFINITIONS AND CROSS-REFERENCES TO DEFINITIONS

 

AAA
Rules: As defined
in Article 20.

 

Additional
NSN Data: As
defined in Article 4.

 

Additional
Property: As
defined in Article 2.

 

ADR: As defined in Article 20,

 

Affiliate Transaction: Either (i) any
sale by or on behalf of Purchaser of goods, assets, property or services to, or
purchase by or on behalf of Purchaser of goods, assets, property or services
from, an Affiliated Party, including, without limitation, the purchase or sale
of, or of any interest in, any of the subject Property, or (ii) any transaction on behalf of
Purchaser conditioned upon or involving any action or transaction entered into
by any Affiliated Party, including, without limitation, a transaction that
directly or indirectly benefits an Affiliated Party.

 

Affiliated Party: (i) Contractor
or any other Person that directly, or indirectly through one or more
intermediaries, controls, is controlled by or is under common control with,
Contractor or Purchaser; or (ii) any
Person that is a director, officer, management official, employee, trustee or
general partner of, or an owner of an equity interest of one percent (1%) or
more or a beneficiary of a trust owning an equity interest of one percent (1%)
or more in, Contractor or any other Person specified in clause (i) above; or (iii) any individual Person related by
blood, marriage or guardianship within two (2) degrees of affinity to any
individual Person specified in clauses (i) or (ii) above. For purposes
of this definition, a Person shall be presumed to have control when such Person
possesses the power, directly or indirectly, or has the power to direct, or
cause the direction of, the management or policies of a Person, whether through
the ownership of voting securities, by contract, or otherwise. In addition, and
without limiting the foregoing, an employee or subcontractor of Purchaser or
Contractor shall be deemed to be an Affiliated Party if he, she or it derives
fifty percent (50%) or more of its gross compensation or revenues in any twelve
(12) months within the Performance Period or the Wind-Up from Purchaser or from
an Affiliated Party.

 

Annual
Pricing Correction:
As defined in Article 6.

 

Annual
Report: As
defined in Article 8.

 

Apparent
Successful Offeror:
As defined in Article 1.

 

Appointed
Arbitrator: As
defined in Article 20.

 

Audit
Adjustment: As
defined in Article 18.

 

Awarded
Costs: As defined
in Article 20.

 

Base
Closure: As
defined in Article 3.

 

Base
Compensation: As
defined in Article 7.

 

Benchmark
Performance Ratio Proceeds: As defined in Article 2.

 

Bid
Deposit: As
defined in Article 1.

 

 

112

 

Bid
Forms: As set
forth in the Attachment to the “Bidding Instructions and Bid Forms” that accompany
this IFB.

 

Bid
Price: As defined
in Article 1.

 

Breaching
Party: As defined
in Article 19.

 

Business Day: Any Day that is not a Saturday, a Sunday
or a holiday observed by the federal government. Federal holidays presently are
New Year’s Day, Martin Luther King, Jr. Day, President’s Day, Memorial
Day, Independence Day, Labor Day, Columbus Day, Veteran’s Day, Thanksgiving Day
and Christmas Day.

 

Closing Report: As defined in Article 8.

 

Compliance
Review Firm: As
defined in Article 17.

 

Compliance
Review: As
defined in Article 17.

 

Consolidated
Pickup Notice: As
defined in Article 4.

 

Container: A receptacle that can hold material or
cargo, including without limitation a rolloff, trailer, hopper, compacting or
baling rolloff, railcar or barge.

 

Contractor:
The bidder that
is selected for the award of the contract.

 

Contractor
Distribution Payment: As defined in Article 16.

 

Contractor
Indirect Cost:
Each cost that is not a Direct Cost and is to be paid solely by Contractor.

 

Contractor
Systems and Software: As defined in Article 12.

 

Control Group: All locations generating Scrap in the
states of Tennessee, North Carolina and South Carolina. These locations are
excluded from this transaction, and DRMS will conduct traditional sales of
Scrap generated in these states for as long as DRMS elects to do so in the
exercise of its sole discretion.

 

COR: As defined in Article 3.

 

Cure
Period: As
defined in Article 19.

 

CV: Sale contract awarded by DRMS on June 13, 2001
between DRMS as seller, and Surplus Acquisition Venture as “Contractor” and
Government Liquidation as “Purchaser” and buyer.

 

Day: A calendar day.

 

DCS Property: Items that must be demilitarized pursuant
to applicable DoD regulations before title to the residue can pass to Purchaser
or a re-sale buyer.

 

Decision:
As defined in
Article 20.

 

Delivery:
As defined in
Article 3.

 

Delivery
Documentation: As
defined in Article 3.

 

Delivery
Point: As defined
in Article 3.

 

Delivery Weight: The weight of a particular amount of
material, which weight is applied for the purpose of determining pricing on an
Invoice.

 

Demilitarization Code (DEMIL Code): A single character alphabetical code
assigned to each item of Property by federal procurement authorities that
signifies the applicability of particular demilitarization, mutilation or trade
security (export) control requirements.

 

 

113

 

Demilitarization as Condition of Sale
Property: Items
that must be demilitarized pursuant to applicable DoD regulations before title
to the residue can pass to Purchaser or a re-sale buyer.

 

Department
of Defense Activity Account Code: As defined in Article 4.

 

Designated
Representative: As
defined in Article 20.

 

Direct
Cost: As defined
in Article 9.

 

Discrepancy:
As defined in
Article 6.

 

Disposal
Turn in Document Number: As defined in Article 4.

 

Dispute:
As defined in
Article 20.

 

Distribution:
A Distribution
Payment as adjusted pursuant to the provisions of Article 16.

 

Distribution
Amount: As
defined in Article 16.

 

Distribution
Payment: As
defined in Article 16.

 

DLA: Defense Logistics Agency.

 

DoD: U.S. Department of Defense

 

DRMO: Defense Reutilization and Marketing
Office.

 

DRMO
Name: As defined
in Article 4.

 

DRMS
Benchmark Performance Ratio Proceeds: As defined in Article 2.

 

DRMS
Scrap Operation: Any
location where DRMS Scrap is received, stored, processed, treated, collected or
located.

 

DRMO RIC
and RIC Suffix: As
defined in Article 4.

 

DTID: As defined in Article 4.

 

ECLR: The Estimated Contingent Liabilities
Reserve, as defined in Article 15.

 

EFT: As defined in Article 5.

 

End Use
Certificate (EUC): DLA
Form 1822 (a copy of which form is attached as Attachment VI.7.5.B).

 

Estimated
Contingent Liabilities Reserve: As defined in Article 15.

 

EUC: End Use Certificate; a DLA Form 1822
(a copy of which form is attached as Attachment VI.7.5.B).

 

Federal Supply Classification (FSC): The federal government’s system of
identifying and categorizing items of tangible personal property.

 

Fidelity Bond: As defined in Article 11.

 

Fiscal
Year: For a
particular calendar year, the twelve (12) calendar month period concluding on
30 September of such year.

 

FSC: Federal Supply Classification; FSCs that pertain to
the Property are set forth at Table IV-1 in Part IV, “Item Description.”

 

Further
Review: As
defined in Article 17.

 

GAAP: As defined in Article 8.

 

GFE: As defined in Article 3.

 

Gross Proceeds: With respect to a particular period of
time, all revenues obtained by Purchaser from any source whatsoever excepting (i) Purchase Advances and (ii) Working Capital

 

114

 

Advances,
but including without limitation all revenues from the sale or rental of
Property, buyers’ premiums and insurance proceeds.

 

High
Value SCL Code: SCL
Codes identified in Schedule IV.3.3.B(1).

 

Host
Installation: The
federal installation that hosts a particular DRMS activity.

 

Independent
Auditor: Independent
national accounting firm engaged by Purchaser to audit Purchaser’s Records.

 

Indexed
Market Value: As
defined in Article 6.

 

Indexed
Price: As defined
in Article 2.

 

Ineligible
Disbursement: As
defined in Article 18.

 

Ineligible
Disposition: As
defined in Article 18.

 

Initial
Delivery Point: As
set forth in Table VI.3.2.C

 

Inventory
Item Name: As
defined in Article 4.

 

Inventory
Status Report: As
defined in Article 8.

 

Invoice:
As defined in
Article 5.

 

Item
Unit of Issue: As
defined in Article 4.

 

Item
Unit Price: As
defined in Article 4.

 

Key: As defined in Article 7.

 

Key
Person: Each
individual who is identified as such in Contractor’s technical proposal.

 

Line
Item: As defined
in Article 4.

 

Local
Stock Number: As
defined in Article 4.

 

Material
Breach: As
defined in Article 19.

 

Monthly
Distribution Statement: As defined in Article 16; see Attachment VI.16.1.

 

Monthly
Report: As
defined in Article 8.

 

Mutilation: The act of making an item unfit for its
intended purpose by cutting, tearing, scratching, crushing, breaking, punching,
shearing, burning or neutralizing the item.

 

National
Item Identification Number: As defined in Article 4.

 

National
Stock Number [or] Local Stock Number: As defined in Article 4.

 

Net
Proceeds: With
respect to a particular period of time, the amount of Gross Proceeds less the
amount of Direct Costs.

 

Neutral
Arbitrator: As
defined in Article 20.

 

Non-Breaching
Party: As defined
in Article 19.

 

Notice
of Audit Adjustment: As defined in Article 18.

 

Notice
of Intent to Award: As
defined in Article 1.

 

On-Site
Processing: As
defined in Article 3.

 

Operating
Account: As
defined in Article 13.

 

Operating
Cash Balance: As
defined in Article 16.

 

Operating
Net Worth: As
defined in Article 16.

 

Other
Systems and Software: As defined in Article 3.

 

Outstanding
Pickup Notice List: As
defined in Article 3.

 

Overnight
Carrier: As
defined in Article 22.

 

Panel: As defined in Article 20.

 

 

115

 

Payment
Deposit: As
defined in Article 5.

 

Payroll
Account: As
defined in Article 13.

 

P-Card
Account: As
defined in Article 13.

 

Performance
Period: As
defined in Article 2.

 

Performance
Ratio Property:
As defined in Article 2; see Schedule VI.2.2(B).

 

Permitted
Affiliate Transaction: As defined in Article 9; see Schedule VI.9.1A.

 

Person: Either (i) an
individual, or (ii) a
business entity of any form of organization whatsoever.

 

Phase-In
Period: As
defined in Article 3.

 

Phase-In
Schedule: As
defined in Article 3.

 

Pickup
Notice: As
defined in Article 3.

 

Post-Receipt
Downgrade: As
defined in Part II, Section B.

 

Post-Receipt
Upgrade: As
defined in Part II, Section B.

 

Pre-Payment: As defined in Article 5.

 

Pricing
Correction: As
defined in Article 6.

 

Pricing
Discrepancy Benchmark: As defined in Article 6.

 

Product
Pool: As defined
in Part II, Section B.

 

Property: All material or items declared excess to
the needs of the Department of Defense and surplus to the needs of the Federal
Government, designated as “Scrap,” “Demilitarization as a Condition of Sale
Property,” “RRRP Material” or “Additional Property,” and received by DRMS on
its accountable record, with a DRMS Hazardous Materials Code other than “W” or “M”
and, other than with respect to “Demilitarization as a Condition of Sale
Property,” with a Demilitarization Code of “A,” “B,” “E” or “Q,” at the
locations within the Continental United States (except North Carolina, South
Carolina and Tennessee) or in Alaska, and, if applicable, identified by the SCL
Codes that are designated in Table IV-1. At all times the Property includes
pallets, boxes, packing material and rigging for such material and items,
provided, however, that if the SCO so requests, pallets shall be returned to a
particular DRMO.

 

Property
Storage Location:
As defined in Article 4.

 

PSNS: Puget Sound Naval Shipyard.

 

Purchase
Transfer: As
defined in Article 14.

 

Purchaser: As defined in Article I.

 

Purchaser Liabilities: The total of Purchaser’s liabilities
that are determined pursuant to GAAP exclusive of un-repaid Working Capital
Advances and Purchase Advances.

 

Purchaser
Systems and Software: As defined in Article 12.

 

Purchaser
Scrap Operation:
As defined in Article 3.

 

Purchaser’s
Dedicated Storage:
As defined in Article 3.

 

Purchaser’s
Reports: As
defined in Article 8.

 

QRP: As defined in Article 6.

 

Qualified
Recycling Program (“QRP”): As defined in Article 6.

 

Quantity
Available: As
defined in Article 4.

 

Quarterly
Purchase Price: As
defined in Article 5.

 

 

116

 

Quarterly
Report: As
defined in Article 8.

 

Records: As defined in Article 8.

 

Refuse: Material that has zero or negative value.

 

Remaining
Assets: As
defined in Article 21.

 

Required
Retention Fund Balance: As defined in Article 15.

 

Reserve
Account: As
defined in Article 13.

 

Rcsource
Recovery and Recycling Program (“RRRP”): As defined in Article 6.

 

Response:
As defined in
Article 20.

 

Restricted Access Facility: Due to Host Installation restrictions or
for other reasons, a particular DRMO or DRMS Operation may occasionally and
temporarily be unable to provide storage as provided in Section 3 of
Article 3 or access as provided in Subsection (1) of
Section 4(A) of Article 3. Any such facility that is not
reasonably able to provide such storage or access other than occasionally and
temporarily shall be deemed a “Restricted Access Facility.”

 

Retention
Fund: As defined
in Article 15.

 

Retention
Payment: As
defined in Article 15.

 

Retention
Rate: As defined
in Article 15.

 

Retention
Trigger Month: As
defined in Article 15.

 

RIPL: Former DRMO locations that are not full service DRMO
Scrap Yards but that have minimal part time staffs and limited DRMS operations.

 

RRRP
Material: As
defined in Article 6.

 

Sale by
Reference: As
defined in Part V, “Terms and Conditions of Sale;” see Attachment V.

 

Sales Contracting Officer: The individual person accepting the bid
in whole or in part on behalf of the Government, and any other officer or
civilian employee who is a properly designated Sales Contracting Officer,
including, except as otherwise provided in this contract, the authorized
representative of a Sales Contracting Officer acting within the limits of the
representative’s authority.

 

Sales
Deposit Account: As
defined in Article 13.

 

SBR: Sale by Reference, as defined in
Part V, “Terms and Conditions of Sale;” see Attachment V.

 

SCL: Scrap Classification List.

 

SCL
Code: Standard
Waste and Scrap Classification Code.

 

SCL
Group: As defined
in Part II, Section B.

 

SCO: Sales contracting officer.

 

Scrap: With respect to a particular item of
Property, a designation assigned by or with the approval of DRMS personnel
meaning that the item has no value other than for its material content.

 

Scrap
Yard: A place
where scrap is collected.

 

Seller
Indirect Cost: As
defined in Article 9.

 

Seller
Indirect Cost Reserve: As defined in Article 13.

 

Shipping
Container: As
defined in Article 7.

 

 

117

 

Site
Location Code: As
defined in Article 4.

 

Special Situation Locations: Locations that are designated as Delivery
Points by DRMS in the exercise of its sole discretion and that are neither a
DRMO, a DRMS Scrap Operation, nor a Purchaser Scrap Operation.

 

Storage
Location Code: As
defined in Article 4.

 

SV
Performance Ratio: As
defined in Article 2.

 

Termination:
As defined in
Article 19.

 

Third
Party Software: As
defined in Article 12.

 

Traditional Sales: Sales methods generally employed by DRMS
prior to this transaction, including either sealed-bid or negotiated sales that
typically provide that Scrap will either be sold on a term sale with “purchaser
loading” or sold on a one-time sale with “Government loading.”

 

Transfer
Account: As
defined in Article 13.

 

Upgrade
Upon Receipt: As
defined in Article 6.

 

Useable: With respect to a particular item of
Property, a designation assigned by or with the approval of DRMS personnel
meaning that the item has value in excess of that of the item’s material
content.

 

User
Documentation: As
defined in Article 12.

 

Wind-Up
Commencement Date: As
defined in Article 21.

 

Working
Capital Advance: As
defined in Article 13.

 

Working
Capital Advance Balance: As defined in Article 13.

 

 

118QuickLinks
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Exhibit 10.8  

LIQUIDITY SERVICES, INC.  

(Formerly known as Liquidation.com, Inc)  

2005 STOCK OPTION AND INCENTIVE PLAN  

TABLE OF CONTENTS  

	 
	 	 
	 	 
	 	Page

	SECTION 1.	 	PURPOSE	 	3
	SECTION 2.	 	DEFINITIONS	 	3
	SECTION 3.	 	ADMINISTRATION OF THE PLAN	 	5
	 	 	3.1	 	Board	 	5
	 	 	3.2	 	Committee	 	5
	 	 	3.3	 	Grants	 	6
	 	 	3.4	 	No Liability	 	6
	SECTION 4.	 	STOCK SUBJECT TO THE PLAN	 	6
	SECTION 5.	 	EFFECTIVE DATE AND TERM OF THE PLAN	 	6
	 	 	5.1	 	Effective Date	 	6
	 	 	5.2	 	Term	 	7
	SECTION 6.	 	OPTION GRANTS	 	7
	 	 	6.1	 	Employees; Service Providers; or Other Persons	 	7
	 	 	6.2	 	Successive Grants	 	7
	SECTION 7.	 	LIMITATIONS ON GRANTS	 	7
	 	 	7.1	 	Limitations on Incentive Stock Options	 	7
	SECTION 8.	 	AWARD AGREEMENT	 	7
	SECTION 9.	 	OPTION PRICE	 	7
	SECTION 10.	 	VESTING, TERM AND EXERCISE OF OPTIONS	 	8
	 	 	10.1	 	Vesting and Option Period	 	8
	 	 	10.2	 	Term	 	8
	 	 	10.3	 	Acceleration	 	8
	 	 	10.4	 	Termination of Employment or Other Relationship	 	8
	 	 	10.5	 	Rights in the Event of Death	 	8
	 	 	10.6	 	Rights in the Event of Disability	 	9
	 	 	10.7	 	Rights in the Event of Retirement	 	9
	 	 	10.8	 	Limitations on Exercise of Option	 	9
	 	 	10.9	 	Method of Exercise	 	9
	 	 	10.10	 	Delivery of Stock Certificates	 	10
	SECTION 11.	 	TRANSFERABILITY OF OPTIONS	 	10
	 	 	11.1	 	Transferability of Options	 	10
	 	 	11.2	 	Family Transfers	 	10
	SECTION 12.	 	RESTRICTED STOCK AND RESTRICTED STOCK UNITS	 	11
	 	 	12.1	 	Grant of Restricted Stock or Restricted Stock Units	 	11
	 	 	12.2	 	Restrictions	 	11
	 	 	12.3	 	Restricted Stock Certificates	 	11
	 	 	12.4	 	Rights of Holders of Restricted Stock	 	11
	 	 	12.5	 	Rights of Holders of Restricted Stock Units	 	11
	 	 	12.6	 	Termination of Employment or Other Relationship	 	12
	 	 	12.7	 	Rights in the Event of Death	 	12
	 	 	12.8	 	Rights in the Event of Disability	 	12
	 	 	12.9	 	Delivery of Stock and Payment Therefor	 	12
	SECTION 13.	 	NONTRANSFERABILITY OF SHARES; REPURCHASE RIGHTS	 	12
	 	 	13.1	 	Nontransferability of Shares	 	12
	 	 	13.2	 	Repurchase Rights	 	13
	 	 	13.3	 	Installment Payments	 	13
	 	 	13.4	 	Publicly Traded Stock	 	13
	 	 	13.5	 	Legend	 	14
	SECTION 14.	 	CERTAIN PROVISIONS APPLICABLE TO AWARDS	 	14
	 	 	14.1	 	Stand-Alone, Additional, Tandem, and Substitute Grants	 	14
	 	 	 	 	 	 	 

 

	 	 	14.2	 	Term of Grant	 	14
	 	 	14.3	 	Form and Timing of Payment Under Grants; Deferrals	 	14
	SECTION 15.	 	PARACHUTE LIMITATIONS	 	14
	SECTION 16.	 	REQUIREMENTS OF LAW	 	15
	 	 	16.1	 	General	 	15
	 	 	16.2	 	Rule 16b-3	 	16
	SECTION 17.	 	AMENDMENT AND TERMINATION OF THE PLAN	 	16
	SECTION 18.	 	EFFECT OF CHANGES IN CAPITALIZATION	 	16
	 	 	18.1	 	Changes in Stock	 	16
	 	 	18.2	 	Reorganization in Which the Company Is the Surviving Entity and in Which No Change of Control Occurs	 	17
	 	 	18.3	 	Reorganization, Sale of Assets or Sale of Stock Which Involves a Change of Control	 	17
	 	 	 	 	18.3.1    Grants Not Continued	 	17
	 	 	 	 	18.3.2    Grants Continued	 	17
	 	 	18.4	 	Adjustments	 	17
	 	 	18.5	 	No Limitations on Company	 	18
	SECTION 19.	 	DISCLAIMER OF RIGHTS	 	18
	SECTION 20.	 	NONEXCLUSIVITY OF THE PLAN	 	18
	SECTION 21.	 	WITHHOLDING TAXES	 	18
	SECTION 22.	 	CAPTIONS	 	19
	SECTION 23.	 	OTHER PROVISIONS	 	19
	SECTION 24.	 	NUMBER AND GENDER	 	19
	SECTION 25.	 	SEVERABILITY	 	19
	SECTION 26.	 	GOVERNING LAW	 	19
	SECTION 27.	 	BLUE SKY PROVISIONS REQUIRED TO BE SET FORTH IN THE PLAN	 	19
	 	 	27.1	 	California Provisions	 	19
	 	 	27.2	 	Florida, Virginia and Missouri Provisions	 	20
	SECTION 28.	 	SECTION 409A OF THE CODE	 	21

2

   LIQUIDITY SERVICES, INC.  

 2005 STOCK OPTION AND INCENTIVE PLAN  

 AS AMENDED AND RESTATED FEBRUARY 25, 2005  

        Liquidity Services, Inc., a Delaware corporation formerly known as Liquidation.com, Inc. (the
"Company"), sets forth herein the terms of its 2005 Stock Option and Incentive Plan (the "Plan") as
follows: 

SECTION 1. PURPOSE  

        The Plan is intended to enhance the Company's and its affiliates' (as defined herein) ability to attract and retain highly qualified officers, directors, key
employees, and other persons, and to motivate such officers, directors, key employees, and other persons to serve the Company and its affiliates and to expend maximum effort to improve the business
results and earnings of the Company, by providing to such officers, key employees and other persons an opportunity to acquire or increase a direct proprietary interest in the operations and future
success of the Company. To this end, the Plan provides for the grant of stock options, restricted stock and restricted stock units in accordance with the terms hereof. Stock options granted under the
Plan may be non-qualified stock options or incentive stock options, as provided herein. Prior to the amendment and restatement of the Plan effective February    , 2005 (the
"Amendment and Restatement Date"), the Plan was known as the "Liquidation.com 2000 Stock Option and Incentive Plan." Grants made prior to the Amendment and Restatement Date shall be subject to the
terms of the Plan prior to the Amendment and Restatement Date. 

SECTION 2. DEFINITIONS  

        For purposes of interpreting the Plan and related documents (including Award Agreements), the following definitions shall apply: 

        "affiliate" of, or person "affiliated" with, a person means any company or other trade or
business that controls, is controlled by or is under common control with such person within the meaning of Rule 405 of Regulation C under the Securities Act, including, without
limitation, any Subsidiary. 

        "Award Agreement" means the stock option agreement, restricted stock agreement, restricted stock unit agreement or other written agreement
between the Company and a Grantee that evidences and sets out the terms and conditions of a Grant. 

        "Benefit Arrangement" shall have the meaning set forth in Section 15 hereof. 

        "Board" means the Board of Directors of the Company. 

        "Change of Control" means (i) the dissolution or liquidation of the Company or a merger, consolidation, or reorganization of the
Company with one or more other entities in which the Company is not the surviving entity, (ii) a sale of substantially all of the assets of the Company to another entity, or (iii) any
transaction (including without limitation a merger or reorganization in which the Company is the surviving entity) which results in any person or entity (other than persons who are shareholders or
affiliates of the Company at the time the Plan is approved by the Company's shareholders) owning 50% or more of the combined voting power of all classes of stock of the Company. 

        "Code" means the Internal Revenue Code of 1986, as now in effect or as hereafter amended. 

        "Committee" means a committee of, and designated from time to time by resolution of, the Board. 

        "Company" means Liquidity Services, Inc. (formerly known as Liquidation.com, Inc.). 

        "Effective Date" means January 21, 2000, the date the Plan was approved by the Board. 

3

 

        "Exchange Act" means the Securities Exchange Act of 1934, as now in effect or as hereafter amended. 

        "Fair Market Value" means the value of a share of Stock, determined as follows: if on the Grant Date or other determination date the Stock
is listed on an established national or regional stock exchange, is admitted to quotation on The Nasdaq Stock Market, Inc., or is publicly traded on an established securities market, the Fair
Market Value of a share of Stock shall be the closing price of the Stock on such exchange or in such market (the highest such closing price if there is more than one such exchange or market) on the
Grant Date or such other determination date (or if there is no such reported closing price, the Fair Market Value shall be the mean between the highest bid and lowest asked prices or between the high
and low sale prices on such trading day) or, if no sale of Stock is reported for such trading day, on the next preceding day on which any sale shall have been reported. If the Stock is not listed on
such an exchange, quoted on such system or traded on such a market, Fair Market Value shall be the value of the Stock as determined by the Board in good faith. 

        "Family Member" means a person who is a spouse, child, stepchild, grandchild, parent, stepparent, grandparent, niece, nephew,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or
sister-in-law, including adoptive relationships, of the Grantee, any person sharing the Grantee's household (other than a tenant or employee), a trust in which these persons
have more than fifty percent of the beneficial interest, a foundation in which these persons (or the Grantee) control the management of assets, and any other entity in which these persons (or the
Grantee) own more than fifty percent of the voting interests. 

        "Grant" means an award of an Option, Restricted Stock or Restricted Stock Units under the Plan. 

        "Grant Date" means, as determined by the Board or authorized Committee, (1) the date as of which the Board or such Committee
approves a Grant, (ii) the date on which the recipient of a Grant first becomes eligible to receive a Grant under Section 6 hereof, or
(iii) such other date as may be specified by the Board or such Committee. 

        "Grantee" means a person who receives or holds an Option, Restricted Stock or Restricted Stock Units under the Plan. 

        "Incentive Stock Option" means an "incentive stock option" within the meaning of Section 422 of the Code, or the corresponding
provision of any subsequently enacted tax statute, as amended from time to time. 

        "Option" means an option to purchase one or more shares of Stock pursuant to the Plan. 

        "Option Period" means the period during which Options may be exercised as set forth in  Section 10 hereof. 

        "Option Price" means the purchase price for each share of Stock subject to an Option. 

        "Other Agreement" shall have the meaning set forth in Section 15 hereof. 

        "Plan" means this Liquidity Services, Inc. 2005 Stock Option and Incentive Plan. 

        "Reporting Person" means a person who is required to file reports under Section 16(a) of the Exchange Act. 

        "Restricted Period" means the period during which Restricted Stock or Restricted Stock Units are subject to restrictions or conditions
pursuant to Section 12.2 hereof. 

        "Restricted Stock" means shares of Stock, awarded to a Grantee pursuant to  Section 12 hereof, that are subject to restrictions and to a risk of forfeiture.

4

 

        "Restricted Stock Unit" means a unit awarded to a Grantee pursuant to Section 12
hereof, which represents a conditional right to receive a share of Stock in the future, and which is subject to restrictions and to a risk of forfeiture. 

        "Retire" and "Retirement" mean the termination of employment with the Company or an
affiliate on or after the age of 65 or on or after the age of 55 with ten years of service with the Company. 

        "Securities Act" means the Securities Act of 1933, as now in effect or as hereafter amended. 

        "Service Provider" means a director, consultant or adviser to the Company or an affiliate, a manager of the Company's or an affiliate's
properties or affairs, or other similar service provider or affiliate of the Company, and employees of any of the foregoing, as such persons may be designated from time to time by the Board pursuant
to Section 6 hereof. 

        "Stock" means the common stock, $.001 par value per share, of the Company. 

        "Subsidiary" means any "subsidiary corporation" of the Company within the meaning of Section 424(f) of the Code. 

        "Termination Date" means the date upon which an Option shall terminate or expire, as set forth in  Section 10.2 hereof. 

SECTION 3. ADMINISTRATION OF THE PLAN  

 3.1 Board.  

        The Board shall have such powers and authorities related to the administration of the Plan as are consistent with the Company's certificate of incorporation and
by-laws and applicable law. The Board shall have full power and authority to take all actions and to make all determinations required or provided for under the Plan, any Grant or any Award
Agreement, and shall have full power and authority to take all such other actions and make all such other determinations not inconsistent with the specific terms and provisions of the Plan that the
Board deems to be necessary or appropriate to the administration of the Plan, any Grant or any Award Agreement. All such actions and determinations shall be by the affirmative vote of a majority of
the members of the Board present at a meeting or by unanimous consent of the Board executed in writing in accordance with the Company's certificate of incorporation and by-laws and
applicable law. The
interpretation and construction by the Board of any provision of the Plan, any Grant or any Award Agreement shall be final and conclusive. 

 3.2 Committee.  

        The Board from time to time may delegate to a Committee such powers and authorities related to the administration and implementation of the Plan, as set forth in  Section 3.1 above and in other applicable provisions, as the Board shall determine, consistent with the certificate of incorporation and
by-laws of the Company and applicable law. In the event that the Plan, any Grant or any Award Agreement entered into hereunder provides for any action to be taken by or determination to be
made by the Board, such action may be taken by or such determination may be made by the Committee if the power and authority to do so has been delegated to the Committee by the Board as provided for
in this Section. Unless otherwise expressly determined by the Board, any such action or determination by the Committee shall be final, binding and conclusive. 

 3.3 Grants.  

        Subject to the other terms and conditions of the Plan, the Board shall have full and final authority (i) to designate Grantees, (ii) to determine
the type or types of Grant to be made to a Grantee, (iii) to determine the number of shares of Stock to be subject to a Grant, (iv) to establish the terms and conditions of each Grant
(including, but not limited to, the exercise price of any Option, the nature 

5

 

and
duration of any restriction or condition (or provision for lapse thereof) relating to the vesting, exercise, transfer, or forfeiture of a Grant or the shares of Stock subject thereto, and any
terms or conditions that may be necessary to qualify Options as Incentive Stock Options), (v) to prescribe the form of each Award Agreement evidencing a Grant, and (vi) to amend, modify,
or supplement the terms of any outstanding Grant, provided, that such change will not materially impair the rights of the Grantee under an outstanding Grant. Such authority specifically includes the
authority, in order to effectuate the purposes of the Plan but without amending the Plan, to modify Grants to eligible individuals who are foreign nationals or are individuals who are employed outside
the United States to recognize differences in local law, tax policy, or custom. As a condition to any Grant, the Board shall have the right, at its discretion, to require Grantees to return to the
Company Grants previously awarded under the Plan. Subject to the terms and conditions of the Plan, any such subsequent Grant shall be upon such terms and conditions as are specified by the Board at
the time the new Grant is made. The Company may retain the right in an Award Agreement to cause a forfeiture of the gain realized by a Grantee on account of actions taken by the Grantee in violation
or breach of or in conflict with any non-competition agreement, any agreement prohibiting solicitation of employees or clients of the Company or any affiliate thereof or any
confidentiality obligation with respect to the Company or any affiliate thereof or otherwise in competition with the Company, to the extent specified in such Award Agreement applicable to the Grantee.
Furthermore, the Company may annul a Grant if the Grantee is an employee of the Company or an affiliate thereof and is terminated "for cause" as defined in the applicable Award Agreement. The Board
may permit or require the deferral of any award payment, subject to such rules and procedures as it may establish, which may include provisions for the payment or crediting of interest or dividend
equivalents, including converting such credits into deferred Stock equivalents. 

 3.4 No Liability.  

        No member of the Board or of the Committee shall be liable for any action or determination made in good faith with respect to the Plan or any Grant or Award
Agreement. 

SECTION 4. STOCK SUBJECT TO THE PLAN  

        Subject to adjustment as provided in Section 18 hereof, the number of shares of Stock available for
issuance under the Plan shall be 7,611,195 shares. Stock issued or to be issued under the Plan shall be authorized but unissued shares. If any shares covered by a Grant are not purchased or are
forfeited, or if a Grant otherwise terminates without delivery of any Stock subject thereto, then the number of shares of Stock counted against the aggregate number of shares available under the Plan
with respect to such Grant shall, to the extent of any such forfeiture or termination, again be available for making Grants under the Plan. 

SECTION 5. EFFECTIVE DATE AND TERM OF THE PLAN  

 5.1 Effective Date.  

        The Plan shall be effective as of the Effective Date, subject to approval of the Plan within one year of the Effective Date, by a majority of the votes cast on
the proposal at a meeting of shareholders, provided that a quorum is present or by the written consent of the holders of a majority of the Company's shares of Stock entitled to vote. Upon approval of
the Plan by the shareholders of the Company as set forth above, all Grants made under the Plan on or after the Effective Date shall be fully effective as if the shareholders of the Company had
approved the Plan on the Effective Date. If the shareholders fail to approve the Plan within one year after the Effective Date, any Grants made hereunder shall be null and void and of no effect. 

6

  

 5.2 Term.  

        The Plan has no termination date; however, no Incentive Stock Option may be granted under the Plan on or after the tenth anniversary of the Amendment and
Restatement Date. 

SECTION 6. OPTION GRANTS  

 6.1 Employees; Service Providers; or Other Persons.  

        Grants (including Grants of Incentive Stock Options, subject to Section 7.1) may be made under the Plan to:
(i) any employee, officer or director of, or other Service Provider providing, or who has provided, services to, the Company or any affiliate, including any such employee who is an officer or
director of the Company or of any affiliate, as the Board shall determine and designate from time to time; or (ii) any other individual whose participation in the Plan is determined to be in
the best interests of the Company by the Board. 

 6.2 Successive Grants.  

        An eligible person may receive more than one Grant, subject to such restrictions as are provided herein. 

SECTION 7. LIMITATIONS ON GRANTS  

 7.1 Limitations on Incentive Stock Options.  

        An Option shall constitute an Incentive Stock Option only (i) if the Grantee of such Option is an employee of the Company or any Subsidiary of the Company;
(ii) to the extent specifically provided in the related Award Agreement; and (iii) to the extent that the aggregate Fair Market Value (determined at the time the Option is granted) of
the shares of Stock with respect to which all Incentive Stock Options held by such Grantee become exercisable for the first time during any calendar year (under the Plan and all other plans of the
Grantee's employer and its affiliates) does not exceed $100,000. This limitation shall be applied by taking Options into account in the order in which they were granted. 

SECTION 8. AWARD AGREEMENT  

        Each Grant pursuant to the Plan shall be evidenced by an Award Agreement, in such form or forms as the Board shall from time to time determine. Award Agreements
granted from time to time or at the same time need not contain similar provisions but shall be consistent with the terms of the Plan. Each Award Agreement evidencing a Grant of Options shall specify
whether such Options are intended to be non-qualified stock options or Incentive Stock Options, and in the absence of such specification such options shall be deemed
non-qualified stock options. 

SECTION 9. OPTION PRICE  

        The Option Price of each Option shall be fixed by the Board and stated in the Award Agreement evidencing such Option and shall be at least 100% of the Fair Market
Value on the Grant Date of a share of Stock; provided, however, that in the event that a Grantee would otherwise be ineligible to receive an
Incentive Stock Option by reason of the provisions of Sections 422(b)(6) and 424(d) of the Code (relating to ownership of more than ten percent of the Company's outstanding shares of Stock), the
Option Price of an Option granted to such Grantee that is intended to be an Incentive Stock Option shall be not less than the greater of the par value or 110 percent of the Fair Market Value of
a share of Stock on the Grant Date. In no case shall the Option Price of any Option be less than the par value of a share of Stock. 

7

 

SECTION 10. VESTING, TERM AND EXERCISE OF OPTIONS  

 10.1 Vesting and Option Period.  

        Subject to Sections 10.2 and 18.3 hereof, each Option granted
under the Plan shall become exercisable at such times and under such conditions as shall be determined by the Board and stated in the Award Agreement. For purposes of this  Section 10.1, fractional
numbers of shares of Stock subject to an Option shall be rounded down to the next nearest whole number. The period
during which any Option shall be exercisable shall constitute the "Option Period" with respect to such Option. 

 10.2 Term.  

        Each Option granted under the Plan shall terminate, and all rights to purchase shares of Stock thereunder shall cease, upon the expiration of ten years from the
date such Option is granted, or under such circumstances and on such date prior thereto as is set forth in the Plan or as may be fixed by the Board and stated in the Award Agreement relating to such
Option; provided, however, that in the
event that the Grantee would otherwise be ineligible to receive an Incentive Stock Option by reason of the provisions of Sections 422(b)(6) and 424(d) of the Code (relating to ownership of more than
ten percent of the outstanding shares of Stock), an Option granted to such Grantee that is intended to be an Incentive Stock Option shall not be exercisable after the expiration of five years from its
Grant Date. 

 10.3 Acceleration.  

        Any limitation on the exercise of an Option contained in any Award Agreement may be rescinded, modified or waived by the Board, in its sole discretion, at any
time and from time to time after the Grant Date of such Option, so as to accelerate the time at which the Option may be exercised. Notwithstanding any other provision of the Plan, no Option shall be
exercisable in whole or in part prior to the date the Plan is approved by the shareholders of the Company as provided in Section 5.1 hereof. 

 10.4 Termination of Employment or Other Relationship.  

        Unless otherwise provided by the Board, upon the termination of a Grantee's employment or other relationship with the Company or any affiliate other than by
reason of death or "permanent and total disability" (within the meaning of Section 22(e)(3) of the Code), any Option or portion thereof held by
such Grantee that has not vested in accordance with the provisions of Section 10.1 hereof shall terminate immediately, and any Option or portion
thereof that has vested in accordance with the provisions of Section 10.1 hereof but has not been exercised shall terminate at the close of
business on the 30th day following the Grantee's termination of employment or other relationship (or, if such 30th day is a Saturday, Sunday or holiday, at the close of business on the next preceding
day that is not a Saturday, Sunday or holiday). Upon termination of an Option or portion thereof, the Grantee shall have no further right to purchase shares of Stock pursuant to such Option or portion
thereof. Whether a termination of employment or other relationship shall have occurred for purposes of the Plan shall be determined by the Board, which determination shall be final and conclusive. For
purposes of the Plan, a termination of employment, service or other relationship shall not be deemed to occur if the Grantee is immediately thereafter a director of the Company or an affiliate. 

 10.5 Rights in the Event of Death.  

        Unless otherwise provided by the Board, if a Grantee dies while employed by or providing services to the Company or an affiliate, all Options granted to such
Grantee shall fully vest on the date of death, and the executors or administrators or legatees or distributees of such Grantee's estate shall have the right, at any time within one year after the date
of such Grantee's death and prior to 

8

 

termination
of the Option pursuant to Section 10.2 above, to exercise any Option held by such Grantee at the date of such Grantee's death. 

 10.6 Rights in the Event of Disability.  

        Unless otherwise provided by the Board, if a Grantee's employment or other relationship with the Company or an affiliate is terminated by reason of the
"permanent and total disability" (within the meaning of Section 22(e)(3) of the Code) of such Grantee, all Options granted to such Grantee shall
fully vest on the date of permanent and total disability, and the Grantee shall have the right, at any time within one year after the date of such Grantee's permanent and total disability and prior to
termination of the Option pursuant to Section 10.2 above, to exercise any Option held by such Grantee. Whether a termination of employment or
service is to be considered by reason of "permanent and total disability" for purposes of the Plan shall be determined by the Board, which determination
shall be final and conclusive. 

 10.7 Rights in the Event of Retirement  

        Unless otherwise provided by the Board, if a Grantee Retires while employed by or providing services to the Company or an affiliate, all Options granted to such
Grantee shall fully vest on the date of Retirement, and Grantee shall have the right, at any time within one year after the date of such Grantee's Retirement and prior to termination of the Option
pursuant to Section 10.2 above, to exercise any Option held by such Grantee at the date of such Grantee's Retirement. 

 10.8 Limitations on Exercise of Option.  

        Notwithstanding any other provision of the Plan, in no event may any Option be exercised, in whole or in part, prior to the date the Plan is approved by the
shareholders of the Company as provided herein, or after ten years following the date upon which the Option is granted, or after the occurrence of an event referred to in  Section 18 hereof which
results in termination of the Option. 

 10.9 Method of Exercise.  

        An Option that is exercisable may be exercised by the Grantee's delivery to the Company of written notice of exercise on any business day, at the Company's
principal office, addressed to the attention of the Board. Such notice shall specify the number of shares of Stock with respect to which the Option is being exercised and shall be accompanied by
payment in full of the Option Price of the shares for which the Option is being exercised. The minimum number of shares of Stock with respect to which an Option may be exercised, in whole or in part,
at any time shall be the lesser of (i) 100 shares or such lesser number set forth in the applicable Award Agreement and (ii) the maximum number of shares available for purchase under the
Option at the time of exercise. Payment of the Option Price for the shares purchased pursuant to the exercise of an Option shall be made (i) in cash or in cash equivalents acceptable to the
Company; (ii) to the extent permitted by law and at the Board's discretion, through the tender to the Company of shares of Stock, which shares, if acquired from the Company, shall have been
held for at least six months at the time of tender (if so required by the Board) and which shall be valued, for purposes of determining the extent to which the Option Price has been paid thereby, at
their Fair Market Value on the date of exercise; or (iii) to the extent permitted by law and at the Board's discretion, by a combination of the methods described in (i) and (ii). In
addition and unless the Board provides otherwise in the Award Agreement, payment in full of the Option Price need not accompany the written notice of exercise provided that the notice of exercise
directs that the certificate or certificates for the shares of Stock for which the Option is exercised be delivered to a licensed broker acceptable to the Company as the agent for the individual
exercising the Option and, at the time such certificate or certificates are delivered, the broker tenders to the Company cash (or cash equivalents acceptable to the Company) equal to the Option Price
for the 

9

 

shares
of Stock purchased pursuant to the exercise of the Option plus the amount (if any) of federal and/or other taxes which the Company may in its judgment, be required to withhold with respect to
the exercise of the Option. An attempt to exercise any Option granted hereunder other than as set forth above shall be invalid and of no force and effect. Unless otherwise stated in the applicable
Award Agreement, an individual holding or exercising an Option shall have none of the rights of a shareholder (for example, the right to receive cash or dividend payments or distributions attributable
to the subject shares of Stock or to direct the voting of the subject shares of Stock) until the shares of Stock covered thereby are fully paid and issued to such individual. Except as provided in  Section 18 hereof, no adjustment shall be made for dividends, distributions or other rights for which the record date is prior to the date of
such issuance. 

 10.10 Delivery of Stock Certificates.  

        Promptly after the exercise of an Option by a Grantee and the payment in full of the Option Price, such Grantee shall be entitled to the issuance of a stock
certificate or certificates evidencing such Grantee's ownership of the shares of Stock subject to the Option. Notwithstanding any provision of this
Plan to the contrary, the Company may satisfy any requirement to deliver share certificates under this Plan through the book-entry method of share recordation. 

SECTION 11. TRANSFERABILITY OF OPTIONS  

 11.1 Transferability of Options  

        Except as provided in Section 11.2, during the lifetime of a Grantee, only the Grantee (or, in the event of
legal incapacity or incompetency, the Grantee's guardian or legal representative) may exercise an Option. Except as provided in Section 11.2, no
Option shall be assignable or transferable by the Grantee to whom it is granted, other than by will or the laws of descent and distribution. 

 11.2 Family Transfers  

        If authorized in the applicable Award Agreement, a Grantee may transfer, not for value, all or part of an Option which is not an Incentive Stock Option to any
Family Member. For the purpose of this Section 11.2, a "not for value" transfer is a transfer
which is (i) a gift, (ii) a transfer under a domestic relations order in settlement of marital property rights; or (iii) a transfer to an entity in which more than fifty percent
of the voting interests are owned by Family Members (or the Grantee) in exchange for an interest in that entity. Following a transfer under this  Section 11.2, any such Option shall continue to be
subject to the same terms and conditions as were applicable immediately prior to transfer.
Subsequent transfers of transferred Options are prohibited except to Family Members of the original Grantee in accordance with this Section 11.2
or by will or the laws of descent and distribution. The events of termination of employment or other relationship of Section 10.4 hereof shall
continue to be applied with respect to the original Grantee, following which the Option shall be exercisable by the transferee only to the extent, and for the periods specified in  Sections 10.4,
10.5, or 10.6. 

10

   SECTION 12. RESTRICTED STOCK AND RESTRICTED STOCK UNITS  

 12.1 Grant of Restricted Stock or Restricted Stock Units.  

        The Board may from time to time grant Restricted Stock or Restricted Stock Units to persons eligible to receive Grants under  Section 6 hereof, subject to such restrictions, conditions and other terms as the Board may determine.
 

 12.2 Restrictions.  

        At the time a Grant of Restricted Stock or Restricted Stock Units is made, the Board shall establish a period of time (the "Restricted
Period") applicable to such Restricted Stock or Restricted Stock Units. Each Grant of Restricted Stock or Restricted Stock Units may be subject to a different Restricted
Period. The Board may, in its sole discretion, at the time a Grant of Restricted Stock or Restricted Stock Units is made, prescribe restrictions in addition to or other than the expiration of the
Restricted Period, including the satisfaction of corporate or individual performance objectives, which may be applicable to all or any portion of the Restricted Stock or Restricted Stock Units. The
Board also may, in its sole discretion, shorten or terminate the Restricted Period or waive any other restrictions applicable to all or a portion of the Restricted Stock or Restricted Stock Units.
Neither Restricted Stock nor Restricted Stock Units may be sold, transferred, assigned, pledged or otherwise encumbered or disposed of during the Restricted Period or prior to the satisfaction of any
other restrictions prescribed by the Board with respect to such Restricted Stock or Restricted Stock Units. 

 12.3 Restricted Stock Certificates.  

        The Company shall issue, in the name of each Grantee to whom Restricted Stock has been granted, stock certificates representing the total number of shares of
Restricted Stock granted to the Grantee, as soon as reasonably practicable after the Grant Date. The Board may provide in an Award Agreement that either (i) the Secretary of the Company shall
hold such certificates for the Grantees benefit until such time as the Restricted Stock is forfeited to the Company, or the restrictions lapse, or
(ii) such certificates shall be delivered to the Grantee, provided, however, that such certificates shall bear a legend or legends that complies with the applicable securities laws and
regulations and makes appropriate reference to the restrictions imposed under the Plan and the Award Agreement. 

 12.4 Rights of Holders of Restricted Stock.  

        Unless the Board otherwise provides in an Award Agreement, holders of Restricted Stock shall have the right to vote such Stock and the right to receive any
dividends declared or paid with respect to such Stock. The Board may provide that any dividends paid on Restricted Stock must be reinvested in shares of Stock, which may or may not be subject to the
same vesting conditions and restrictions applicable to such Restricted Stock. All distributions, if any, received by a Grantee with respect to Restricted Stock as a result of any stock split, stock
dividend, combination of shares, or other similar transaction shall be subject to the restrictions applicable to the original Grant. 

 12.5 Rights of Holders of Restricted Stock Units.  

        Unless the Board otherwise provides in an Award Agreement, holders of Restricted Stock Units shall have no rights as stockholders of the Company. The Board may
provide in an Award Agreement evidencing a Grant of Restricted Stock Units that the holder of such Restricted Stock Units shall be entitled to receive, upon the Company's payment of a cash dividend on
its outstanding Stock, a cash payment for each Restricted Stock Unit held equal to the per-share dividend paid on the Stock. Such Award Agreement may also provide that such cash payment
will be deemed reinvested in additional Restricted Stock Units at a price per unit equal to the Fair Market Value of a share of Stock on the date that such dividend is paid. 

11

 

 12.6 Termination of Employment or Other Relationship.  

        Unless otherwise provided by the Board, upon the termination of a Grantee's employment or other relationship with the Company or an affiliate other than by reason
of death or "permanent and total disability" (within the meaning of Section 22(e)(3) of the Code), any shares of Restricted Stock or Restricted
Stock Units held by such Grantee that have not vested, or with respect to which all applicable restrictions and conditions have not lapsed, shall immediately be deemed forfeited. Upon forfeiture of
Restricted Stock or Restricted Stock Units, the Grantee shall have no further rights with respect to such Grant, including but not limited to any right to vote Restricted Stock or any right to receive
dividends with respect to shares of Restricted Stock or Restricted Stock Units. Whether a termination of employment or other relationship shall have occurred for purposes of the Plan shall be
determined by the Board, which determination shall be final and conclusive. For purposes of the Plan, a termination of employment, service or other relationship shall not be deemed to occur if the
Grantee is immediately thereafter a director of the Company or an affiliate. 

 12.7 Rights in the Event of Death.  

        Unless otherwise provided by the Board, if a Grantee dies while employed by the Company or an affiliate, all Restricted Stock or Restricted Stock Units granted to
such Grantee shall fully vest on the date of death, and the shares of Stock represented thereby shall be deliverable in accordance with the terms of the Plan to the executors, administrators, legatees
or distributees of the Grantee's estate. 

 12.8 Rights in the Event of Disability.  

        Unless otherwise provided by the Board, if a Grantee's employment or other relationship with the Company or an affiliate is terminated by reason of the
"permanent and total disability" (within the meaning of Section 22(e)(3) of the Code) of such Grantee, such Grantee's Restricted Stock or
Restricted Stock Units shall continue to vest in accordance with the applicable Award Agreement for a period of one year after such termination of employment or service, subject to the earlier
forfeiture of such Restricted Stock or Restricted Stock Units in accordance with the terms of the applicable Award Agreement. Whether a termination of employment or service is to be considered by
reason of "permanent and total disability" for purposes of the Plan shall be determined by the Board, which determination shall be final and conclusive. 

 12.9 Delivery of Stock and Payment Therefor.  

        Upon the expiration or termination of the Restricted Period and the satisfaction of any other conditions prescribed by the Board, the restrictions applicable to
shares of Restricted Stock or Restricted Stock Units shall lapse, and, unless otherwise provided in the Award Agreement, upon payment by the Grantee to the Company, in cash or by check, of the greater
of (i) the aggregate par value of the shares of Stock represented by such Restricted Stock or Restricted Stock Units or (ii) the purchase price, if any, specified in the Award Agreement
relating to such Restricted Stock or Restricted Stock Units, a stock certificate for such shares shall be delivered, free of all such restrictions, to the Grantee or the Grantee's beneficiary or
estate, as the case may be. 

SECTION 13. NONTRANSFERABILITY OF SHARES; REPURCHASE RIGHTS  

 13.1 Nontransferability of Shares  

        Subject to Section 13.4 below, a Grantee (or such other individual who is entitled to exercise an Option or
otherwise acquire shares pursuant to a Grant) shall not sell, pledge, assign, gift, transfer, or otherwise dispose of any shares of Stock acquired pursuant to a Grant to any person or entity without
first offering such shares to the Company for purchase on the same terms and conditions as those offered the proposed transferee. The Company may assign its right of first refusal under this  Section 13

12

 

in
whole or in part, to (1) any holder of stock or other securities of the Company (a "Stockholder"), (2) any affiliate or (3) any
other person or entity that the Board of Directors of the Company determines has a sufficient relationship with or interest in the Company. The Company shall give reasonable written notice to the
Grantee of any such assignment of its rights. The restrictions of this Section 13.1 apply to any person to whom Stock that was originally
acquired pursuant to a Grant is sold, pledged, assigned, bequeathed, gifted, transferred or otherwise disposed of, without regard to the number of such subsequent transferees or the manner in which
they acquire the Stock, but the restrictions of this Section 13.1 do not apply to a transfer of Stock that occurs as a result of the death of the
Grantee or of any subsequent transferee (but shall apply to the executor, the administrator or personal representative, the estate, and the legatees, beneficiaries and assigns thereof). 

 13.2 Repurchase Rights.  

        Subject to Section 13.4 below, upon the termination of a Grantee's employment or other relationship with
the Company or an affiliate, the Company shall have the right, for a period of up to twelve months following such termination, to repurchase any or all of the shares of Stock acquired by the
individual pursuant to this Plan under a Grant (including shares of Stock that were previously transferred pursuant to Sections 11 or  13.1), at a price
equal to the Fair Market Value of such shares of Stock on the date of termination, unless a different repurchase price is specified in
the applicable Award Agreement. Upon the exercise of an Option following termination of a Grantee's employment or other relationship with the Company or an affiliate, the Company shall have the right,
for a period of up to twelve months following such exercise, to repurchase any or all such shares of Stock acquired by the Grantee pursuant to such exercise of such Option at a price that is equal to
the fair market value of such shares (including shares that were previously transferred pursuant to Sections 11 or  13.1 above) on the date of exercise (or
at such other price or the Fair Market Value on such other date as shall have been specified by the Board at the
time of grant and set out in the appropriate Award Agreement with respect to the grant). In the event that the Company determines that it cannot or will not exercise its rights to purchase Stock under
this Section 13.2 and the applicable Award Agreement, in whole or in part, the Company may assign its rights, in whole or in part, to
(1) any Stockholder (2) any affiliate or (3) any other person or entity that the Board of Directors of the Company determines has a sufficient relationship with or interest in the
Company. The Company shall give reasonable written notice to the individual of any assignment of its rights. 

 13.3 Installment Payments  

        In the case of any purchase of Stock or an Option under this Section 13, the Company or its permitted
assignee may pay the Grantee, transferee of the Option or other registered owner of the Stock the purchase price in three or fewer annual installments. Interest shall be credited on the installments
at the applicable federal rate (as determined for purposes of Section 1274 of the Code) in effect on the date on which the purchase is made. The Company or its permitted assignee shall pay at
least one-third of the total purchase price each year, plus interest on the unpaid balance, with the first payment being made on or before the 60th day after the purchase. 

 13.4 Publicly Traded Stock  

        If the Stock is listed on an established national or regional stock exchange or is admitted to quotation on the National Association of Securities Dealers
Automated Quotation System, or is publicly traded in
an established securities market, the foregoing transfer restrictions of Sections 13.1 and 13.2 shall
terminate as of the first date that the Stock is so listed, quoted or publicly traded. 

13

  

 13.5 Legend  

        In order to enforce the restrictions imposed upon shares of Stock under this Plan or as provided in an Award Agreement, the Board may cause a legend or legends to
be placed on any certificate representing shares issued pursuant to this Plan that complies with the applicable securities laws and regulations and makes appropriate reference to the restrictions
imposed under it. 

SECTION 14. CERTAIN PROVISIONS APPLICABLE TO AWARDS  

 14.1 Stand-Alone, Additional, Tandem, and Substitute Grants  

        Grants under the Plan may, in the discretion of the Board, be granted either alone or in addition to, in tandem with, or in substitution or exchange for, any
other Grant or any award granted under another plan of the Company, any affiliate, or any business entity to be acquired by the Company or an affiliate, or any other right of a Grantee to receive
payment from the Company or any affiliate. Such additional, tandem, and substitute or exchange Grants may be awarded at any time. If a Grant is awarded in substitution or exchange for another Grant,
the Board shall require the surrender of such other Grant in consideration for the new Grant. In addition, Grants may be made in lieu of cash compensation, including in lieu of cash amounts payable
under other plans of the Company or any affiliate, in which the value of Stock subject to the Grant is equivalent in value to the cash compensation (for example, Restricted Stock), or in which the
exercise price, grant price or purchase price of the Grant in the nature of a right that may be exercised is equal to the Fair Market Value of the underlying Stock minus the value of the cash
compensation surrendered (for example, Options granted with an exercise price "discounted" by the amount of the cash compensation surrendered). 

 14.2 Term of Grant  

        The term of each Grant shall be for such period as may be determined by the Board; provided that in no event shall the term of any Option exceed a period of ten
years (or such shorter term as may be required in respect of an Incentive Stock Option under Section 422 of the Code). 

 14.3 Form and Timing of Payment Under Grants; Deferrals  

        Subject to the terms of the Plan and any applicable Award Agreement, payments to be made by the Company or an affiliate upon the exercise of an Option or other
Grant may be made in such forms as the Board shall determine, including, without limitation, cash, Stock, other Grants or other property, and may be made in a single payment or transfer, in
installments, or on a deferred basis. The settlement of any Grant may be accelerated, and cash paid in lieu of Stock in connection with such settlement, in the discretion of the Board or upon
occurrence of one or more specified events. Installment or deferred payments may be required by the Board or permitted at the election of the Grantee on terms and conditions established by the Board.
Payments may include, without limitation, provisions for the payment or crediting of a reasonable interest rate on installment or deferred payments or the grant or crediting of dividend equivalents or
other amounts in respect of installment or deferred payments denominated in Stock. 

SECTION 15. PARACHUTE LIMITATIONS  

        Notwithstanding any other provision of this Plan or of any other agreement, contract, or understanding heretofore or hereafter entered into by a Grantee with the
Company or any affiliate, except an agreement, contract, or understanding hereafter entered into that expressly modifies or excludes application of this paragraph (an "Other
Agreement"), and notwithstanding any formal or informal plan or other arrangement for the direct or indirect provision of compensation to the Grantee (including groups or
classes of participants or beneficiaries of which the Grantee is a member), whether or not such compensation is deferred, is in cash, or is in the form of a benefit to or for the Grantee (a 

14

 

"Benefit Arrangement"), if the Grantee is a "disqualified individual," as defined in
Section 280G(c) of the Code, any Option, Restricted Stock or Restricted Stock Unit held by that Grantee and any right to receive any payment or other benefit under this Plan shall not become
exercisable or vested (i) to the extent that such right to exercise, vesting, payment, or benefit, taking into account all other rights, payments, or benefits to or for the Grantee under this
Plan, all Other Agreements, and all Benefit Arrangements, would cause any payment or benefit to the Grantee under this Plan to be considered a "parachute
payment" within the meaning of Section 280G(b)(2) of the Code as then in effect (a "Parachute Payment")  and (ii) if, as a result of receiving a Parachute Payment, the aggregate after-tax amounts received by the Grantee from the Company
under this Plan, all Other Agreements, and all Benefit Arrangements would be less than the maximum after-tax amount that could be received by the Grantee without causing any such payment
or benefit to be considered a Parachute Payment. In the event that the receipt of any such right to exercise, vesting, payment, or benefit under this Plan, in conjunction with all other rights,
payments, or benefits to or for the Grantee under any Other Agreement or any Benefit Arrangement would cause the Grantee to be considered to have received a Parachute Payment under this Plan that
would have the effect of decreasing the after-tax amount received by the Grantee as described in clause (ii) of the preceding sentence, then the Grantee shall have the right, in the
Grantee's sole discretion, to designate those rights, payments, or benefits under this Plan, any Other Agreements, and any Benefit Arrangements that should be reduced or eliminated so as to avoid
having the payment or benefit to the Grantee under this Plan be deemed to be a Parachute Payment. 

SECTION 16. REQUIREMENTS OF LAW  

 16.1 General.  

        The Company shall not be required to sell or issue any shares of Stock under any Grant if the sale or issuance of such shares would constitute a violation by the
Grantee, any other individual exercising a right emanating from such Grant, or the Company of any provision of any law or regulation of any governmental authority, including without limitation any
federal or state securities laws or regulations. If at any time the Company shall determine, in its discretion, that the listing, registration or qualification of any shares subject to a Grant upon
any securities exchange or under any governmental regulatory body is necessary or desirable as a condition of, or in connection with, the issuance or purchase of shares hereunder, no shares of Stock
may be issued or sold to the Grantee or any other individual exercising an Option pursuant to such Grant unless such listing, registration, qualification, consent or approval shall have been effected
or obtained free of any conditions not acceptable to the Company, and any delay caused thereby shall in no way affect the date of termination of the Grant. Specifically, in connection with the
Securities Act, upon the exercise of any right emanating from such Grant or the delivery of any shares of Restricted Stock or Stock underlying Restricted Stock Units, unless a registration statement
under such Act is in effect with respect to the shares of Stock covered by such Grant, the Company shall not be required to sell or issue such shares unless the Board has received evidence
satisfactory to it that the Grantee or any other individual exercising an Option may acquire such shares pursuant to an exemption from registration under the Securities Act. Any determination in this
connection by the Board shall be final, binding, and conclusive. The Company may, but shall in no event be obligated to, register any securities covered hereby pursuant to the Securities Act. The
Company shall not be obligated to take any affirmative action in order to cause the exercise of an Option or the issuance of shares of Stock pursuant to the Plan to comply with any law or regulation
of any governmental authority. As to any jurisdiction that expressly imposes the requirement that an Option shall not be exercisable until the shares of Stock covered by such Option are registered or
are exempt from registration, the exercise of such Option (under circumstances in which the laws of such jurisdiction apply) shall be deemed conditioned upon the effectiveness of such registration or
the availability of such an exemption. 

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 16.2 Rule 16b-3.  

        During any time when the Company has a class of equity security registered under Section 12 of the Exchange Act, it is the intent of the Company that
Grants pursuant to the Plan and the exercise of Options granted hereunder will qualify for the exemption provided by Rule 16b-3 under the Exchange Act. To the extent that any
provision of the Plan or action by the Board does not comply with the requirements of Rule 16b-3, it shall be deemed inoperative to the extent permitted by law and deemed advisable
by the Board, and shall not affect the validity of the Plan. In the event that Rule 16b-3 is revised or replaced, the Board may exercise its discretion to
modify this Plan in any respect necessary to satisfy the requirements of, or to take advantage of any features of, the revised exemption or its replacement. 

SECTION 17. AMENDMENT AND TERMINATION OF THE PLAN  

        The Board may, at any time and from time to time, amend, suspend, or terminate the Plan as to any shares of Stock as to which Grants have not been made. Except as
permitted under this Section 17 or Section 18 hereof, no amendment, suspension, or
termination of the Plan shall, without the consent of the Grantee, alter or impair rights or obligations under any Grant theretofore awarded under the Plan. 

SECTION 18. EFFECT OF CHANGES IN CAPITALIZATION  

 18.1 Changes in Stock.  

        If the number of outstanding shares of Stock is increased or decreased or the shares of Stock are changed into or exchanged for a different number or kind of
shares or other securities of the Company on account of any recapitalization, reclassification, stock split, reverse split, combination of shares, exchange of shares, stock dividend or other
distribution payable in capital stock, or other increase or decrease in such shares effected without receipt of consideration by the Company occurring after the Effective Date, the number and kinds of
shares for which Grants of Options, Restricted Stock and Restricted Stock Units may be made under the Plan shall be adjusted proportionately and accordingly by the Company. In addition, the number and
kind of shares for which Grants are outstanding shall be adjusted proportionately and accordingly so that the proportionate interest of the Grantee immediately following such event shall, to the
extent practicable, be the same as immediately before such event. Any such adjustment in outstanding Options shall not change the aggregate Option Price payable with respect to shares that are subject
to the unexercised portion of an Option outstanding but shall include a corresponding proportionate adjustment in the Option Price per share. The conversion of any convertible securities of the
Company shall not be treated as an increase in shares effected without receipt of consideration. The Board may also make the adjustments described in this  Section 18.1 in the event of a cash
dividend other than a normal cash dividend. In determining adjustments to be made under this  Section 18.1, the Board may take into account such factors as it deems appropriate, including
(i) the restrictions of applicable law and
(ii) the potential tax consequences of an adjustment. Any such adjustments to outstanding Grants will be effected in a manner that precludes the enlargement of rights and benefits under such
Grants. 

16

  

 18.2 Reorganization in Which the Company Is the Surviving Entity and in Which No Change of Control Occurs.  

        Subject to Section 18.3 hereof, if the Company shall be the surviving entity in any reorganization, merger,
or consolidation of the Company with one or more other entities and in which no Change of Control occurs, any Option and Restricted Stock Unit theretofore granted pursuant to the Plan shall pertain to
and apply to the securities to which a holder of the number of shares of Stock subject to such Option or Restricted Stock Unit would have been entitled immediately following such reorganization,
merger, or consolidation, with a corresponding proportionate adjustment of the Option Price per share so that the aggregate Option Price thereafter shall be the same as the aggregate Option Price of
the shares remaining subject to the Option immediately prior to such reorganization, merger, or consolidation. Subject to any contrary language in an Award Agreement evidencing a Grant of Restricted
Stock, any restrictions applicable to such Restricted Stock shall apply as well to any replacement shares received by the Grantee as a result of the reorganization, merger or consolidation. 

 18.3 Reorganization, Sale of Assets or Sale of Stock Which Involves a Change of Control.  

        18.3.1 Grants Not Continued  

        Subject to Section 18.3.2, (i) upon the occurrence of a Change of Control, all outstanding shares of Restricted Stock and
all Restricted Stock Units shall be deemed to have vested, and all restrictions and conditions applicable to such shares of Restricted Stock shall be deemed to have lapsed and the shares subject to
such Restricted Stock Units shall be delivered, immediately prior to the occurrence of such Change of Control, and (ii) fifteen days prior to the scheduled consummation of a Change of Control,
all Options outstanding hereunder shall become immediately exercisable and shall remain exercisable for a period of fifteen days. Any exercise of an Option during such fifteen-day period
shall be conditioned upon the consummation of the event and shall be effective only immediately before the consummation of the event. Upon consummation of any Change of Control, the Plan and all
outstanding but unexercised Options shall terminate. The Board shall send written notice of an event
that will result in such a termination to all individuals who hold Options not later than the time at which the Company gives notice thereof to its shareholders. 

        18.3.2 Grants Continued  

        Section 18.3.1 shall not apply to any Change of Control to the extent that provision is made in writing in connection with such
Change of Control for the assumption of the Options, Restricted Stock and Restricted Stock Units theretofore granted, or for the substitution for such Options, Restricted Stock and Restricted Stock
Units of new options, restricted stock and restricted stock units covering the stock of a successor entity, or a parent or subsidiary thereof, with appropriate adjustments as to the number and kinds
of shares and exercise prices, in which event vesting and share delivery shall not be accelerated and the Options, Restricted Stock and Restricted Stock Units theretofore granted shall continue in the
manner and under the terms so provided. Notwithstanding the foregoing, Options and Restricted Stock granted under the Plan prior to May 23, 2000 shall become fully vested upon the occurrence of
a Change of Control. 

 18.4 Adjustments.  

        Adjustments under this Section 18 related to shares of Stock or securities of the Company shall be made by
the Board, whose determination in that respect shall be final, binding and conclusive. No fractional shares or other securities shall be issued pursuant to any such adjustment, and any fractions
resulting from any such adjustment shall be eliminated in each case by rounding downward to the nearest whole share. 

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 18.5 No Limitations on Company.  

        The making of Grants pursuant to the Plan shall not affect or limit in any way the right or power of the Company to make adjustments, reclassifications,
reorganizations, or changes of its capital or business structure or to merge, consolidate, dissolve, or liquidate, or to sell or transfer all or any part of its business or assets. 

SECTION 19. DISCLAIMER OF RIGHTS  

        No provision in the Plan or in any Grant or Award Agreement shall be construed to confer upon any individual the right to remain in the employ or service of the
Company or any affiliate, or to interfere in any way with any contractual or other right or authority of the Company either to increase or decrease the compensation or other payments to any individual
at any time, or to terminate any employment or other relationship between any individual and the Company. In addition, notwithstanding anything contained in the Plan to the contrary, unless otherwise
stated in the applicable Award Agreement, no Grant awarded under the Plan shall be affected by any change of duties or position of the Grantee, so long as such Grantee continues to be a director,
officer, consultant or employee of the Company or any affiliate. The obligation of the Company to pay any benefits pursuant to this Plan shall be interpreted as a contractual obligation to pay only
those amounts described herein, in the manner and under the conditions prescribed herein. The Plan shall in no way be interpreted to require the Company to transfer any amounts to a third party
trustee or otherwise hold any amounts in trust or escrow for payment to any participant or beneficiary under the terms of the Plan. No Grantee shall have any of the rights of a shareholder with
respect to the shares of Stock subject to an Option except to the extent the certificates for such shares of Stock shall have been issued upon the exercise of the Option. 

SECTION 20. NONEXCLUSIVITY OF THE PLAN  

        Neither the adoption of the Plan nor the submission of the Plan to the shareholders of the Company for approval shall be construed as creating any limitations
upon the right and authority of the Board to adopt such other incentive compensation arrangements (which arrangements may be applicable either generally to a class or classes of individuals or
specifically to a particular individual or particular individuals) as the Board in its discretion determines desirable, including, without limitation, the granting of stock options otherwise than
under the Plan. 

SECTION 21. WITHHOLDING TAXES  

        The Company or any affiliate, as the case may be, shall have the right to deduct from payments of any kind otherwise due to a Grantee any Federal, state, or local
taxes of any kind required by law to be withheld with respect to the vesting of or other lapse of restrictions applicable to Restricted Stock or Restricted Stock Units or upon the issuance of any
shares of Stock upon the exercise of an Option. At the time of such vesting, lapse, or exercise, the Grantee shall pay to the Company or affiliate, as the case may be, any amount that the Company or
affiliate may reasonably determine to be necessary to satisfy such withholding obligation. Subject to the prior approval of the Company or the affiliate, which may be withheld by the Company or the
affiliate, as the case may be, in its sole discretion, the Grantee may elect to satisfy such obligations, in whole or in part, (i) by causing the Company or the affiliate to withhold shares of
Stock otherwise issuable to the Grantee or (ii) by delivering to the Company or the affiliate shares of Stock already owned by the Grantee. The shares of Stock so delivered or withheld shall
have an aggregate Fair Market Value equal to such withholding obligations. The Fair Market Value of the shares of Stock used to satisfy such withholding obligation shall be determined by the Company
or the affiliate as of the date that the amount of tax to be withheld is to be determined. A Grantee who has made an election pursuant to this  Section 21 may satisfy his or her withholding

18

 

obligation
only with shares of Stock that are not subject to any repurchase, forfeiture, unfulfilled vesting, or other similar requirements. 

SECTION 22. CAPTIONS  

        The use of captions in this Plan or any Award Agreement is for the convenience of reference only and shall not affect the meaning of any provision of the Plan or
such Award Agreement. 

SECTION 23. OTHER PROVISIONS  

        Each Grant awarded under the Plan may contain such other terms and conditions not inconsistent with the Plan as may be determined by the Board, in its sole
discretion. 

SECTION 24. NUMBER AND GENDER  

        With respect to words used in this Plan, the singular form shall include the plural form, the masculine gender shall include the feminine gender, etc., as the
context requires. 

SECTION 25. SEVERABILITY  

        If any provision of the Plan or any Award Agreement shall be determined to be illegal or unenforceable by any court of law in any jurisdiction, the remaining
provisions hereof and thereof shall be severable and enforceable in accordance with their terms, and all provisions shall remain enforceable in any other jurisdiction. 

SECTION 26. GOVERNING LAW  

        The validity and construction of this Plan and the instruments evidencing the Grants awarded hereunder shall be governed by the laws of the State of Delaware
(excluding the choice of law rules thereof). 

SECTION 27. BLUE SKY PROVISIONS REQUIRED TO BE SET FORTH IN THE PLAN  

 27.1 California Provisions  

        Notwithstanding the foregoing sections, any Grant made under the Plan to a Grantee who is a resident of the State of California on the Grant Date shall be subject
to the following additional terms and conditions: 

	A.
	For
the purpose of Grants which are not Incentive Stock Options, Fair Market Value shall be determined in a manner not inconsistent with Section 260.140.50 of the California
Code of Regulations or any successor statute.

	B.
	Grants
may not be made under the Plan to Grantees ten years after the earlier of: (i) the date the Plan was adopted by the Board or (ii) the date the Plan was approved by
the shareholders of the Company.

	C.
	An
Option granted under the Plan to a Grantee who is a person who owns stock possessing more than ten percent of the combined voting power of all classes of stock of the Company or its
parent or its Subsidiary corporations shall have an Option Price of at least 110% of the Fair Market Value of a share of Stock on the Grant Date.

	D.
	Any
Option granted under the Plan to a Grantee who is not an officer, director, or consultant of the Company or its affiliates shall become exercisable at a rate of at least twenty
percent (20%) of the shares of Stock subject to such Grant per year for a period of five years from the Grant Date; provided, that, such
Option shall be subject to such reasonable forfeiture 

19

 

conditions
as the Board may choose to impose and which are not inconsistent with Section 260.140.41 of the California Code of Regulations or any successor statute. 

	E.
	The
Company shall deliver to the Grantee financial statements on an annual basis regarding the Company. The financial statements so provided shall comply with Section 260.140.46
of the California Code of Regulations or any successor statute, but need not comply with Section 260.613 of the California Code of Regulations or any successor statute.

	F.
	Any
transfer of an Option granted under the Plan authorized by the Board in an Award Agreement must comply with Section 260.140.41(d) of the California Code of Regulations or
any successor statute.

	G.
	A
grant which authorizes a Grantee to purchase Stock under the Plan (other than a non-qualified stock option) shall not be transferable other than by will or the laws of
descent and distribution.

	H.
	Unless
a Grantee's employment is terminated for cause as defined by applicable law, the Grantee shall have the right to exercise an Option, prior to the termination of the Option in
accordance with Section 10 and only to the extent that the Grantee was entitled to exercise such Option on the date employment terminates, as
follows: (i) at least six (6) months from the date of termination if the termination was caused by the Grantee's death or "permanent and total
disability" (within the meaning of Section 22(e)(3) of the Code), and (ii) at least thirty (30) days from the date of termination if termination was caused
by other than death or "permanent and total disability" (within the meaning of Section 22(e)(3) of the Code) of the Grantee.

	I.
	The
purchase price for a grant of Restricted Stock or Restricted Stock Units shall be at least 85% of the Fair Market Value of the Stock on the Grant Date and at least 100% of the Fair
Market Value of Stock on the Grant Date in the case of a person who owns stock possessing more than ten percent of the combined voting power of all classes of stock of the Company or its parent or its
Subsidiary corporations.

	J.
	At
no time shall the total number of shares of Stock issuable upon exercise of all outstanding Options and the total number of shares provided for under all stock bonus or similar
plans of the Company exceed the applicable percentage as calculated in accordance with the conditions and exclusions of Section 260.140.45 of the California Code of Regulations or any successor
statute.

	K.
	Grants
may be made only to persons who are employees, directors, or consultants of the Company or its affiliates. 

        If
the Stock is listed on an established national or regional stock exchange or is admitted to quotation on the National Association of Securities Dealers Automated Quotation System, or
is publicly traded in an established securities market, the restrictions of this Section 27.1 shall terminate as of the first date that the Stock
is so listed, quoted or publicly traded. 

 27.2 Florida, Virginia and Missouri Provisions  

        Notwithstanding Section 6: 

        (a)   a
resident of Florida or Virginia who is not an employee or director of the Company or an employee of any wholly-owned subsidiary of the Company shall not be eligible to
receive a Grant under the Plan; and 

        (b)   a
resident of Missouri who is not an employee of the Company or an employee of any wholly-owned subsidiary of the Company shall not be eligible to receive a Grant under
the Plan. 

20

 

SECTION 28. SECTION 409A OF THE CODE  

        To the extent that the Board determines that a Grantee would be subject to the additional 20% tax imposed on certain deferred compensation arrangements pursuant
to Section 409A of Code as a result of any provision of any Grant, such provision shall be deemed amended to the minimum extent necessary to avoid application of such additional tax. The Board
shall determine the nature and scope of such amendment. 

*
* * 

        The
Plan was originally adopted and approved by the Board of Directors of the Company as of the 3rd day of January, 2000 and the amended and restated Plan was duly adopted
and approved by the Board of Directors as of the 25th day of February, 2005. 

	 	 	/s/  WILLIAM P. ANGRICK, III      
 William P. Angrick, III

Secretary

        The
Plan was originally approved by the stockholders of the Company on the 3rd day of January, 2000 and the amended and restate Plan was duly approved by the stockholders
of the Company on the 25th day of February, 2005. 

	

 	
 	

/s/  WILLIAM P. ANGRICK, III      
 William P. Angrick, III

Secretary

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