Project Completion Agreement (2001)Full Document 

Start of Preview
                                     RED OAK
                          PROJECT COMPLETION AGREEMENT

         This PROJECT COMPLETION AGREEMENT (this "AGREEMENT"), is entered into
and is dated as of November 16, 2001 (the "EFFECTIVE DATE"), by and between
RAYTHEON COMPANY, a corporation organized under the laws of Delaware
("RAYTHEON"), and WASHINGTON GROUP INTERNATIONAL, INC., a corporation organized
under the laws of Ohio ("CONTRACTOR"), and each of the foregoing are hereinafter
referred to as a "PARTY" and collectively as the "PARTIES".

         WHEREAS, AES Red Oak, LLC, a limited liability company organized under
the laws of Delaware ("AES" or "OWNER") and Contractor entered into that certain
Engineering, Procurement and Construction Contract, dated as of October 15, 1999
(as amended, the "CONSTRUCTION CONTRACT") relating to the performance of certain
engineering, procurement and construction services with respect to the 800 MW
natural gas fire, combined cycle generating plant, at Sayreville, New Jersey
(the "PROJECT");

         WHEREAS, pursuant to that certain Guaranty No. 2381 made and effective
as of October 15, 1999, made by Raytheon in favor of AES (the "GUARANTY")
Raytheon guaranteed the payment and performance of Contractor's obligations
under the Construction Contract;

         WHEREAS, on May 14, 2001, Contractor and its ultimate corporate parent,
Washington Group International, Inc., a corporation organized under the laws of
Delaware ("WGI DELAWARE") filed voluntary bankruptcy petitions (the "BANKRUPTCY
FILING") in the United States Bankruptcy Court (the "BANKRUPTCY COURT") for the
District of Nevada;

         WHEREAS, the Parties hereto acknowledge that Owner made a demand on
Raytheon to perform its obligations under the Guaranty to complete the Project;

         WHEREAS, Raytheon, in performance of the Guaranty, entered into that
certain Interim Agreement dated as of June 20, 2001, by and among, Raytheon,
Contractor and Owner (as amended, the "INTERIM AGREEMENT"), pursuant to which
the parties thereto agreed on an interim basis, among other things, (i) that
Contractor would continue to perform the Services for the limited period covered
by such Interim Agreement, (ii) that to a limited extent, Owner, and thereafter
Raytheon, would reimburse the completion costs incurred by Contractor in
accordance with the terms of such Interim Agreement, and (iii) that all future
payments by Owner under the Construction Contract would be directly to Raytheon;
and

         WHEREAS, pursuant to the Interim Agreement, as amended by Amendment No.
7 dated as of September 7, 2001, Raytheon, Contractor and Owner agreed to
"proceed expeditiously and in good faith to prepare and to enter into a
definitive form of Project Completion Agreement having substantially the terms
set forth in the Term Sheet attached as Exhibit 1 [t]hereto, and such other
terms as are consistent therewith and that are acceptable to the parties," in
order for Raytheon to complete the Services on the Project and discharge its
obligations to the Owner;

         NOW THEREFORE, for good and valuable consideration, the sufficiency and
receipt of which is hereby acknowledged, and in consideration of the mutual
promises and covenants set forth herein, the Parties hereto hereby agree as
follows:

<PAGE>

                                                                  EXECUTION COPY


SECTION 1.   DEFINITIONS.
             ------------

        1.1. "Accrued Costs" has the same meaning set forth in Section 5.2.5
hereof.

        1.2. "AES" or "Owner" means AES Red Oak, LLC, a limited liability
company organized under the laws of Delaware.

        1.3. "Affiliate" means any entity, person, partnership, joint venture,
corporation, limited liability company or other form of enterprise, domestic or
foreign, including, but not limited to, parents and subsidiaries, which directly
controls, is controlled by, or is under common control with the subject Party.

        1.4. "Allowable Costs" has the same meaning set forth in Section 5.2.5
hereof.

        1.5. "Assigned Vendor Contracts" means those Project subcontracts, and
to the extent necessary, purchase orders, assigned to Raytheon or its designee
by Contractor, pursuant to Section 365 of the Bankruptcy Code, a list of which
is provided on SCHEDULE 3.1.2 attached hereto.

        1.6. "Bankruptcy Code" means the Bankruptcy Reform Act of 1978, as
amended, codified at 11 U.S.C.ss.ss.101-1330.

        1.7. "Bankruptcy Court" means the United States Bankruptcy Court for the
District of Nevada before which the Bankruptcy Filing was made.

        1.8. "Bankruptcy Filing" means those certain voluntary bankruptcy
petitions filed on May 14, 2001 by Contractor and WGI Delaware.

        1.9. "Bi-Weekly Project Estimate" has the meaning set forth in Section
5.2 hereof.

        1.10. "Bi-Weekly Project Statement" has the meaning set forth in Section
5.6 hereof.

        1.11. "Budget" has the meaning set forth in Section 4.3.1 hereof.

        1.12. "Claims" has the meaning set forth in Section 6.2 hereof.

        1.13. "Construction Contract" means that certain Engineering,
Procurement and Construction Contract, dated as of October 15, 1999 as amended
and in effect from time to time relating to the performance of certain
engineering, procurement and construction services with respect to the Project.

        1.14. "Contractor" means Washington Group International, Inc, a
corporation organized under the laws of Ohio, and the successor by merger to
Raytheon Engineers and Constructors, Inc.

        1.15. "Contractor Obligations" has the meaning set forth in Section 4.1
hereof.

        1.16. "Cure Costs" has the meaning set forth in Section 3.5 hereof.

        1.17. "Estimated Weekly Costs" has the meaning set forth in Section
5.2.6 hereof.


                                      -2-

<PAGE>
                                                                  EXECUTION COPY


        1.18. "Guaranty" means that certain Guaranty No. 2381 made and effective
as of October 15, 1999 made by Raytheon in favor of AES pursuant to the
Construction Contract.

        1.19. "Indemnitees" has the meaning set forth in Section 7.1 hereof.

        1.20. "Interim Agreement" means that certain Interim Agreement dated as
of June 20, 2001, as amended and extended from time to time, by and among,
Raytheon, Contractor and Owner pursuant to which the parties thereto agreed on
an interim basis, among other things, (i) that Contractor would continue to
perform the Services for the limited period covered by such Interim Agreement,
(ii) that to a limited extent, Owner, and thereafter Raytheon, would reimburse
the completion costs incurred by Contractor in accordance with the terms of such
Interim Agreement, and (iii) that all future payments by Owner under the
Construction Contract would be paid directly to Raytheon.

        1.21. "Key Persons" has the meaning set forth in Section 4.5.3 hereof.

        1.22. "Key Vendors and Subcontractors" means those vendors and
subcontractors listed on SCHEDULE 3.6 hereof.

        1.23. "Labor Costs" has the meaning set forth in Section 5.2.2 hereof.

        1.24. "New Vendor Contracts" has the meaning set forth in Section 3.7
hereof.

        1.25. "Non-Executory Contracts" has the meaning set forth in Section
3.1.2.1 hereof.

        1.26. "Out-of-Pocket Costs" has the meaning set forth in Section 5.2.3
hereof.

        1.27. "Owner Assumed Contracts" means those Project subcontracts, and to
the extent necessary, purchase orders, assigned to Owner by Contractor, pursuant
to Section 365 of the Bankruptcy Code, a list of which is provided on SCHEDULE
3.1.1 attached hereto.

        1.28. "Owner Payments" has the meaning set forth in Section 2.5 hereof.

        1.29. "Performance Period" has the meaning set forth in Section 4.5.1
hereof.

        1.30. "Pre-Petition Invoices" has the meaning set forth in Section 5.9
hereof.

        1.31. "Project" means the 800 MW combined cycle power plant being
constructed at Sayreville, New Jersey, and shall have the same meaning as in the
Construction Contract.

        1.32. "Project Agreements" means the Construction Contract, the Interim
Agreement, and all other contracts, subcontracts, purchase orders, labor
agreements, and other agreements for the provision of construction services in
connection with the Project, and all other contracts, subcontracts, purchase
orders, labor agreements, and other agreements for the provision of engineering,
construction and procurement services in connection with the Project, together
with all related purchase orders, job orders, change orders, extra work orders,
amendments, modifications, subcontracts and similar agreements and any ancillary
contracts entered into in connection with such contracts, subcontracts and
agreements, such as any services agreements.

        1.33. "Project Completion Agreement" means this Project Completion
Agreement.


                                      -3-

<PAGE>
                                                                  EXECUTION COPY


        1.34. "Project Liaisons" has the meaning set forth in Section 2.4
hereof.

        1.35. "Project Schedule" has the meaning set forth in Section 4.3.2
hereof.

        1.36. "Raytheon" means Raytheon Company, a corporation organized under
the laws of Delaware.

        1.37. "Raytheon Guaranty" has the meaning set forth in Section 2.2
hereof.

        1.38. "Raytheon's Representative" has the meaning set forth in Section
2.3 hereof.

        1.39. "Red Oak Payment Account" has the meaning set forth in Section 5.1
hereof.

        1.40. "Services" shall have the same meaning as "Services" as defined in
the Construction Contract.

        1.41. "Specified Obligations" has the meaning set forth in Section 6.4
hereof.

        1.42. "Staffing Plan" has the meaning set forth in Section 4.3.3 hereof.

        1.43. "Stock Purchase Agreement" means that certain Stock Purchase
Agreement dated as of April 14, 2000 by and between Raytheon, Raytheon Engineers
& Constructors International, Inc. and WGI Delaware

        1.44. "Taxes" has the meaning set forth in Section 5.2.4 hereof.

        1.45. "Term" means the period beginning upon the Effective Date and
ending upon the date that Raytheon discharges all of its obligations to Owner
with respect to all obligations of the Contractor under the Construction
Contract, as more particularly set forth in Section 2.1.6 hereof.

        1.46. "Termination For Cause" has the meaning set forth in Section 9.1
hereof.

        1.47. "Termination For Convenience" has the meaning set forth in Section
9.4 hereof.

        1.48. "WGI Delaware" means Washington Group International, Inc., a
Delaware corporation, and the direct parent of Contractor.

        1.49. "WGI Guaranty" has the meaning set forth in Section 10.1 hereof.

        1.50. Any capitalized terms not otherwise defined herein shall have the
meaning or meanings assigned to them in the Construction Contract.


SECTION 2.   COMPLETION ARRANGEMENTS.
             ------------------------

        2.1. Contracting Structure. As set forth more particularly herein, and
subject to the terms and conditions hereof,

             2.1.1. Contractor hereby agrees to, and shall, perform the
        Services.

             2.1.2. Raytheon shall fund all of the Contractor's costs and
        expenses related to Contractor's performance of the Services on a cost
        reimbursable basis.


                                      -4-

<PAGE>
                                                                  EXECUTION COPY


             2.1.3. Contractor's obligations under this Agreement shall be
        guaranteed by WGI Delaware, as more fully set forth in Section 10.1
        hereof.

             2.1.4. The Parties hereby acknowledge that all payments made and
        obligations undertaken by Raytheon hereunder are made in performance of
        Raytheon's obligations under the Guaranty.

             2.1.5. This Agreement shall replace and supplant the Interim
        Agreement from and after November 17, 2001, and thereafter shall govern
        the relationships of the Parties with respect to the Project.

             2.1.6. Term. The Term of this Agreement shall begin upon the
        Effective Date and end upon the date on which Raytheon discharges all of
        its obligations to Owner with respect to all obligations of the
        Contractor under the Construction Contract, determined without reference
        to the effects of the rejection of the Construction Contract by the
        Contractor (as set forth in Section 3.4 hereof).

        2.2. Raytheon's Designees. Raytheon may, at its option, prior to or
following the execution of this Agreement, delegate to one or more existing or
newly formed domestic or foreign corporations, limited liability companies,
partnerships or other entities, each and every one of its obligations hereunder,
other than as set forth in this Section 2.2 or Section 10.2 hereof. If Raytheon
delegates any of its obligations under this Agreement pursuant to this
Section 2.2, then Raytheon shall thereafter cause such delegatee to accept,
assume and perform all such obligations. Nothing contained in this Section 2.2,
nor any delegation hereunder, shall in any way limit, waive, modify or alter the
primary obligations or liabilities of Raytheon under this Agreement. In the
event that Raytheon delegates any of its obligations hereunder in accordance
with this Section 2.2, and as a condition precedent to the effectiveness of such
delegation, Raytheon, concurrently with such delegation, shall deliver to
Contractor a Raytheon Guaranty in the form set forth on SCHEDULE 2.2 attached
hereto (a "Raytheon Guaranty").

        2.3. Project Liaisons; Raytheon's Representative. Each of Raytheon and
the Contractor have appointed the liaisons, indicated in SCHEDULE 2.3, to meet
and discuss the Project on an ongoing basis (the "Project Liaisons"). For
purposes of administering this Agreement and providing oversight and supervision
to the Contractor, Raytheon's Project Liaison shall be appointed as Raytheon's
Representative ("Raytheon's Representative"), and Contractor may conclusively
rely upon the direction of Raytheon's Representative as the direction of
Raytheon. Raytheon will make Raytheon's Representative reasonably available to
the Contractor for purposes of administering this Agreement. In the absence of
Raytheon's Representative, the Contractor may rely upon the direction of any of
Raytheon's officers or employees set forth as an "Alternate" on SCHEDULE 2.3.

        2.4. Raytheon Access. Raytheon will be entitled to place a reasonable
number of employees, consultants or representatives on-site at the Project and,
during regular business hours, at the Contractor's Princeton offices to observe
and supervise the performance by the Contractor of its obligations under this

End of Preview