Owner/Guarantor Supplemental Agreement (23K)
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OWNER/GUARANTOR
SUPPLEMENTAL AGREEMENT
This OWNER/GUARANTOR SUPPLEMENTAL AGREEMENT (this "Agreement") is
entered into and is dated as of November 21, 2001 (the "Effective Date"), by and
among, AES RED OAK, L.L.C., a Delaware limited liability company ("Owner"), and
RAYTHEON COMPANY, a Delaware corporation ("Raytheon"). Each of Owner and
Raytheon are hereinafter referred to as a "Party" and collectively as the
"Parties".
WHEREAS, Owner and Washington Group International, Inc., an Ohio
corporation ("Contractor"), as successor in interest to Raytheon Engineers &
Constructors, Inc., entered into an Agreement for Engineering, Procurement and
Construction Services, dated as of October 15, 1999, as amended by that certain
Amendment No. 1 dated as of February 23, 2000 (as so amended, the "EPC
Agreement") for the design, construction, start-up, testing and initial
operation of Owner's electric generating facility located near Sayreville, New
Jersey (the "Project");
WHEREAS, Raytheon, pursuant to that certain Guaranty No. 2381, dated as
of October 15, 1999 (the "Guaranty"), guaranteed to Owner all of Contractor's
obligations under the EPC Agreement;
WHEREAS, Contractor, and its corporate parent, Washington Group
International Inc., a Delaware corporation ("Parent") filed voluntary petitions
(the "Bankruptcy Filing") in the United States Bankruptcy Court for Nevada (the
"Bankruptcy Court") on May 14, 2001;
WHEREAS, Contractor informed Owner that Contractor had insufficient
funds to pay Subcontractors in accordance with the terms of their subcontracts
as required by Section 3.3 of the EPC Agreement, or to pay Contractor's own
employees who are performing services with respect to the Project, and requested
that Owner fund such payments as advances to be deducted from Scheduled Payments
that would otherwise be made by Owner to Contractor under the EPC Agreement;
WHEREAS, in order that Contractor would continue to perform work under
the EPC Agreement, Owner, Contractor, Parent and Raytheon entered into that that
certain Interim Agreement For Advance Payments, dated as of June 20, 2001 (as
amended, the "Interim Agreement"), whereby Owner and Raytheon agreed on a
limited basis to fund Contractor's costs;
WHEREAS, Owner and Raytheon agreed to share the costs of funding the
Interim Agreement in that certain Funding Cap Agreement, dated as of June 20,
2001 (as amended, the "Funding Cap Agreement");
WHEREAS, Contractor and Raytheon, in order to better define the terms
upon which Contractor will complete the Project, have entered into a Project
Completion Agreement, dated as of even date herewith (the "Project Completion
Agreement"), pursuant to which, among other things, Contractor agreed to
complete performance of the Project on a cost reimbursable basis, Raytheon
agreed to fund certain costs in connection with such performance, and Parent
agreed to guaranty the obligations of Contractor to Raytheon;
WHEREAS, as a condition to entering into the Project Completion
Agreement, Contractor received from the Bankruptcy Court an order permitting
Contractor, among other things, (i) to enter into the Project Completion
Agreement, (ii) to reject the EPC Agreement, (iii) to assume and to assign to
Owner the outstanding subcontracts and purchase orders and other vendor
contracts relating to the Project set forth on Schedule 3.1.1 of the Project
Completion Agreement (the "Owner Assumed Contracts"); and (iv) to assume and
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assign to Raytheon the outstanding subcontracts and purchase orders and other
vendor contracts related to the Project set forth on Schedule 3.1.2 of the
Project Completion Agreement (the "Assigned Vendor Contracts") and Schedule
3.1.2.1 of the Project Completion Agreement (the "Non-Executory Contracts" and
together with the Assigned Vendor Contracts, the "Raytheon Assumed Contracts");
and
WHEREAS, the parties hereto wish to clarify their respective rights and
obligations with respect to the Project under the EPC Agreement, the Guaranty,
and the Project Completion Agreement;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties hereto each hereby
agrees as follows:
SECTION 1. CONTRACTING STRUCTURE.
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1.1 Consent of Owner. Owner hereby consents to the execution and
delivery by Raytheon and Contractor, and Owner acknowledges receipt of a copy
of, the Project Completion Agreement. Owner acknowledges and agrees that with
respect to the Project, all payments made, obligations undertaken or agreements
entered into by Raytheon in connection with the Project, are made, undertaken or
entered into, by Raytheon solely in Raytheon's capacity as Guarantor, as such
term is defined in the Guaranty.
1.2 Affirmation of Prior Agreements.
1.2.1 The Parties hereby agree that notwithstanding the Bankruptcy
Filing of Contractor and Parent, or Contractor's rejection of the EPC
Agreement pursuant to a Bankruptcy Court order, the EPC Agreement
remains in full force and effect, and shall have continuing
applicability, insofar as it defines (i) the obligations of Contractor
guaranteed by Raytheon (the "Guaranteed Obligations"), (ii) Owner's
rights against and obligations to Raytheon under the Guaranty, and (iii)
Raytheon's rights against and obligations to Owner under the Guaranty.
1.2.2 Raytheon hereby acknowledges, ratifies and confirms that the
Guaranty is and shall remain in full force and effect as the binding
obligation of Raytheon.
1.3 Contractor Instructions. Owner hereby acknowledges and agrees that
it has received instructions from Contractor, the form of which is attached
hereto as Schedule 1.3, instructing Owner to make all unpaid payments,
originally payable under the EPC Agreement to Contractor, including any
milestone payments and retention amounts, when due and owing under the EPC
Agreement, to Raytheon, by wire transfer, at the account specified in such
instruction.
1.4 Original Owner Payments. Subject to Raytheon's performance of the
Guaranteed Obligations, and in accordance with the other terms and conditions
set forth in the EPC Agreement, Owner shall pay the Contract Price (as defined
in the EPC Agreement), less the aggregate amount heretofore paid by Owner to
Contractor under the EPC Agreement and the Interim Agreement, and all Retainage
otherwise payable under the EPC Agreement to Contractor, to Raytheon, in each
case when due and payable in accordance with the terms of the EPC Agreement,
irrespective of Contractor's Bankruptcy Filing or Contractor's rejection of the
EPC Agreement pursuant to a Bankruptcy Court order. Without limiting the
generality of the foregoing, Owner shall make payments to Raytheon in accordance
with the Payment and Milestone Schedule (as defined in the EPC Agreement) and
such other payment procedures as are set forth in the EPC Agreement, including
Section 4.2.2 thereof, and heretofore applicable to Contractor, including,
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