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EXHIBIT 10.137
[*] Indicates that the confidential portion has been omitted from this filed exhibit and filed separately with the Securities and Exchange Commission
ENGINEERING, PROCUREMENT AND CONSTRUCTION AGREEMENT FOR
THE LUNA ENERGY FACILITY
BY AND AMONG
PHELPS DODGE ENERGY SERVICES, LLC
PNMR DEVELOPMENT AND MANAGEMENT CORPORATION,
TUCSON ELECTRIC POWER COMPANY,
AND
FLUOR ENTERPRISES, INC.
DATED AS OF FEBRUARY 24, 2005
ENGINEERING,
PROCUREMENT AND CONSTRUCTION AGREEMENT
TABLE OF CONTENTS
1.1...... "Affiliate"................................................................................................................. 1
1.2...... "Applicable Codes and Standards"..................................................................... 1
1.3...... "Applicable Law"..................................................................................................... 1
1.4...... "Business Day"........................................................................................................ 1
1.5...... "Change Order"....................................................................................................... 2
1.6...... "Contamination"....................................................................................................... 2
1.7...... "Contract Completion Date".................................................................................. 2
1.8...... "Contract Documents"............................................................................................. 2
1.9...... "Contract Sum"........................................................................................................ 2
1.10.... "Contractor's Project Director" or "Project Director"......................................... 2
1.11.... "D/FD Engineering Services".................................................................................. 2
1.12.... "Disclosing Party"..................................................................................................... 2
1.13.... "Engineering Services".............................................................................................. 2
1.14.... "Environmental Laws".............................................................................................. 2
1.15.... "Existing Work"....................................................................................................... 2
1.16.... "Facility".................................................................................................................. 3
1.17.... "Facility CPM Schedule"....................................................................................... 3
1.18.... "Fee"....................................................................................................................... 3
1.19.... "Final Completion"............................................................................................... 3
1.20.... "Fully Dispatchable Facility"............................................................................... 3
1.21.... "Good Engineering and Construction Practices" or "GECP"........................... 3
1.22.... "Hazardous Materials".............................................................................................. 3
1.23.... "Key Personnel"....................................................................................................... 3
1.24.... "Major Subcontracts"............................................................................................... 3
1.25.... "Major Subcontractors"........................................................................................... 3
1.26.... "Mechanical Completion"......................................................................................... 3
1.27.... "Notice to Proceed"................................................................................................. 3
1.28.... "Owner Event of Default"......................................................................................... 3
1.29.... "Owner-Furnished Property".................................................................................... 4
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TABLE
OF CONTENTS
(continued)
1.30.... "Owner", "Owner Party" or "Owner Parties"..................................................... 4
1.31.... "Owner's Project Manager"................................................................................... 4
1.32.... "Overrun"................................................................................................................ 4
1.33.... "Performance Security".......................................................................................... 4
1.34.... "Performance Tests"............................................................................................... 4
1.35.... "Plant Site"............................................................................................................... 4
1.36.... "Punch List"............................................................................................................. 4
1.37.... "Rate Schedule"....................................................................................................... 4
1.38.... "Receiving Party"..................................................................................................... 4
1.39.... "Reimbursable Cost" or "Reimbursable Costs".................................................. 4
1.40.... "Services"................................................................................................................ 4
1.41.... "Site"....................................................................................................................... 4
1.42.... "Subcontractors"................................................................................................... 4
1.43.... "Substantial Completion"....................................................................................... 4
1.44.... "Target Cash Flow Budget"................................................................................... 5
1.45.... "Target Performance Criteria"................................................................................ 5
1.46.... "Target Price".......................................................................................................... 5
1.47.... "True-Up Date"....................................................................................................... 5
1.48.... "Uncontrollable Forces"......................................................................................... 5
1.49.... "Underrun"............................................................................................................... 5
1.50.... "Warranty Period".................................................................................................. 5
1.51.... "Work".................................................................................................................... 5
1.52.... "Work Progress Schedule".................................................................................... 5
ARTICLE 2.......... THE WORK AND OBLIGATIONS OF THE PARTIES................... 5
2.1...... The Work................................................................................................................ 5
2.2...... Specific Obligations for the Work............................................................................. 6
2.3...... Spare Parts.............................................................................................................. 7
2.4...... Contractor's Tools and Equipment............................................................................ 7
2.5...... Employment of Personnel......................................................................................... 7
2.6...... Clean-up and Non-Interference................................................................................ 8
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TABLE
OF CONTENTS
(continued)
2.7...... Safety and Security................................................................................................... 8
2.8...... Emergencies............................................................................................................. 8
2.9...... Approvals, Certificates, Permits and Licenses................................................... 8
2.10.... Contractor Taxes..................................................................................................... 9
2.11.... Hazardous Materials................................................................................................. 9
2.12.... Progress Meeting and Reports............................................................................... 9
2.13.... Care, Custody and Control/Risk of Loss.............................................................. 10
2.14.... [Intentionally Omitted]............................................................................................ 10
2.15.... Interpretation.......................................................................................................... 10
2.16.... Training and Operational Supervision................................................................ 11
2.17.... Interconnections..................................................................................................... 11
2.18.... Responsibility for Subcontractors....................................................................... 11
2.19.... Assurances Regarding Payments....................................................................... 12
2.20.... Office Space.......................................................................................................... 12
2.21.... Key Personnel........................................................................................................ 12
2.22.... Co-operation and Coordination............................................................................ 12
2.23.... Start-Up, Commissioning and Testing Gas and Raw Water............................ 13
2.24.... Owner Obligations................................................................................................. 13
2.25.... Existing Work........................................................................................................ 15
2.26.... Commercial Activities............................................................................................. 15
ARTICLE 3.......... CONSTRUCTION SCHEDULE.......................................................... 15
3.1...... Commencement of the Work and Contract Completion Date......................... 15
3.2...... Work Progress Schedule and Facility CPM Schedule.................................... 15
3.3...... Delays and Time Extensions............................................................................... 16
ARTICLE 4.......... COMPENSATION............................................................................. 16
4.1...... Compensation........................................................................................................ 16
4.2...... Reimbursable Costs................................................................................................ 16
4.3...... Fee........................................................................................................................ 20
4.4...... Target Price, Underrun and Overrun.................................................................. 20
4.5...... Non-Reimbursable Items........................................................................................ 21
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TABLE
OF CONTENTS
(continued)
4.6...... Monthly Billing....................................................................................................... 22
4.7...... Contents of Progress Invoices............................................................................. 22
4.8...... Final Payment; Liens............................................................................................... 23
4.9...... Records; Audit....................................................................................................... 23
4.10.... No Duplication....................................................................................................... 24
4.11.... Effect of Payment................................................................................................... 24
4.12.... Security of Performance......................................................................................... 24
4.13.... Wire Transfer Information. ..................................................................................... 24
ARTICLE 5 CHANGES IN THE WORK 24
5.1...... Change Order........................................................................................................ 24
5.2...... Individuals Authorized to Make Changes........................................................ 24
5.3...... Change Orders....................................................................................................... 24
5.4...... If No Agreement.................................................................................................... 26
ARTICLE 6.......... INSPECTION AND WARRANTY................................................. 26
6.1...... Warranty................................................................................................................ 26
6.2...... Engineering and Design Warranty.................................................................... 27
6.3...... Inspection and Testing....................................................................................... 28
6.4...... Correction of Defects........................................................................................... 29
6.5...... Limitations.............................................................................................................. 29
6.6...... Title....................................................................................................................... 29
ARTICLE 7.......... REPRESENTATIVES AND NOTICES.......................................... 30
7.1...... Owner's Project Manager.................................................................................... 30
7.2...... Contractor's Project Director.............................................................................. 31
7.3...... Notices.................................................................................................................. 31
7.4...... Changes................................................................................................................. 31
7.5...... Ordinary Course.................................................................................................... 32
ARTICLE 8.......... PRIOR WORK AND WORK SITE.................................................. 32
8.1...... Prior Work and Site Investigation...................................................................... 32
8.2...... Lines and Grades................................................................................................... 32
8.3...... Specifications and Drawings................................................................................... 32
8.4...... Use of Premises..................................................................................................... 33
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TABLE
OF CONTENTS
(continued)
8.5...... Cleaning Up........................................................................................................... 33
8.6...... Underground Facilities........................................................................................ 33
8.7...... Other Contracts..................................................................................................... 33
ARTICLE 9.......... [INTENTIONALLY OMITTED].................................................... 34
ARTICLE 10........ COMPLETION OF THE WORK..................................................... 34
10.1.... Mechanical Completion....................................................................................... 34
10.2.... Performance Testing............................................................................................ 35
10.3.... Substantial Completion........................................................................................ 35
10.4.... Punch List.............................................................................................................. 36
10.5.... Final Completion.................................................................................................... 37
ARTICLE 11........ DEFAULT AND TERMINATION.................................................. 37
11.1.... Contractor Default.................................................................................................. 37
11.2.... Right to Terminate for Cause............................................................................... 38
11.3.... Termination by Owner for Cause......................................................................... 38
11.4.... Termination by Owner for Convenience............................................................ 39
11.5.... Stopping Work...................................................................................................... 39
11.6.... Suspension of the Work...................................................................................... 40
11.7.... Owner Default........................................................................................................ 40
11.8.... Delivery of Documents......................................................................................... 40
ARTICLE 12........ DISPUTE RESOLUTION................................................................... 41
12.1.... Dispute Resolution.................................................................................................. 41
12.2.... Waiver of Jury Trial................................................................................................ 42
ARTICLE 13........ INDEMNITY AND LIMITATIONS OF LIABILITY....................... 42
13.1.... General Liability; Indemnification......................................................................... 42
13.2.... Liability for Owner Property................................................................................... 42
13.3.... Trespass................................................................................................................ 42
13.4.... Intellectual Property Rights Infringement Indemnity....................................... 42
13.5.... Owner's Use of Drawings and Specifications.................................................... 43
13.6.... Consequential Damages........................................................................................ 43
13.7.... Limitation of Liability............................................................................................. 44
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TABLE
OF CONTENTS
(continued)
ARTICLE 14........ DRUG, ALCOHOL, SAFETY AND HAZARDOUS MATERIALS...... 44
14.1.... Drug and Alcohol Policy......................................................................................... 44
14.2.... Safety Materials..................................................................................................... 44
14.3.... Safety Precautions.................................................................................................. 45
14.4.... Hazardous Materials............................................................................................... 45
ARTICLE 15........ INSURANCE......................................................................................... 47
15.1.... Contractor's Insurance........................................................................................... 47
15.2.... Coverage............................................................................................................... 48
15.3.... Subcontractors....................................................................................................... 49
15.4.... Owner's Insurance................................................................................................. 49
ARTICLE 16........ OWNERSHIP OF PLANS AND CONFIDENTIALITY.................. 50
16.1.... Title to plans and specifications.......................................................................... 50
16.2.... Confidentiality........................................................................................................ 51
ARTICLE 17........ UNCONTROLLABLE FORCES........................................................ 51
17.1.... Uncontrollable Forces............................................................................................ 51
ARTICLE 18........ OTHER PROVISIONS.......................................................................... 51
18.1.... EEO Clauses and Executive Orders........................................................................ 51
18.2.... Assignment............................................................................................................. 52
18.3.... Independent Contractor.......................................................................................... 52
18.4.... No Waiver............................................................................................................. 52
18.5.... Gratuities................................................................................................................ 52
18.6.... Severability............................................................................................................ 53
18.7.... Governing Law....................................................................................................... 53
18.8.... Fair Labor Standards Act....................................................................................... 53
18.9.... New Mexico Preference......................................................................................... 53
18.10.. Counterparts.......................................................................................................... 53
18.11.. Entire Agreement.................................................................................................... 53
18.12.. Agreement Authors................................................................................................ 54
18.13.. Survival of Obligations............................................................................................ 54
18.14.. No Third Party Beneficiaries................................................................................... 54
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TABLE
OF CONTENTS
(continued)
18.15.. Liability of Owner Parties....................................................................................... 55
-vii-
LIST OF EXHIBITS
A. Scope of Work
B. Work Progress Schedule
C. Rate Schedule
D. Form of Change Order
E. (1) Form of Partial Lien Waivers and Release,
(2) Form of Final Lien Waiver and Release
F. (1) Form of Substantial Completion Certificate
(2) Form of Final Completion Certificate
G. Target Performance Criteria
H. List of Major Subcontracts and Subcontractors
I. Permits
J. Owner's Drug and Alcohol Policy
K. Procedure for Assessment of Existing Work
L. Owner-Furnished Property
M. Plant Site and Site Descriptions
N. Target Cash Flow Budget
O. Form of Performance Security
P. Form of Monthly Progress Report
Q. Key Personnel
R. Target Price Summary
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ENGINEERING, PROCUREMENT AND CONSTRUCTION AGREEMENT
THIS ENGINEERING, PROCUREMENT AND CONSTRUCTION AGREEMENT (this "Agreement") effective the 24th day of February 2005 ("Effective Date"), is by and among FLUOR ENTERPRISES, INC. a California corporation (hereinafter referred to as the "Contractor") and PHELPS DODGE ENERGY SERVICES, LLC, a Delaware limited liability company, PNMR DEVELOPMENT AND MANAGEMENT CORPORATION, a New Mexico corporation, and TUCSON ELECTRIC POWER COMPANY, an Arizona corporation (hereinafter collectively referred to as "Owner"). Contractor and Owner may be referred to collectively as the "Parties" or individually as a "Party".
RECITALS
WHEREAS, Contractor has represented to Owner that it is specifically qualified to perform engineering, procurement, construction, testing, start-up and commissioning services of the nature contemplated by this Agreement; and
WHEREAS, Owner desires to engage Contractor to perform engineering, procurement, construction, testing, start-up, and commissioning services related to the partially-constructed Luna Energy Facility, a nominal 570 MW gas-fired combined cycle power plant to be completed in Deming, New Mexico, and Contractor desires to perform such services for Owner;
NOW THEREFORE, in consideration of the mutual terms, covenants and conditions set forth in this Agreement, Contractor and Owner agree as follows:
In addition to other defined terms contained in this Agreement, the following terms shall have the meaning specified below in this Article.
1.1 "Affiliate". of a Party means any other entity directly or indirectly controlling or controlled by or under direct or indirect common control with such Party. For the purposes of this definition, control means the power to direct the management or policies directly or indirectly whether through the ownership of voting securities or otherwise.
1.2 "Applicable Codes and Standards". shall mean the codes, standards or requirements set forth in Exhibit A applicable to the Work.
1.3 "Applicable Law". shall mean any law, including but not limited to Environmental Laws, statute, code, order, decree, injunction, license, permit, consent, approval, agreement or regulation of any federal, state, tribal or local government, department, court, office, agency, board or commission having jurisdiction over a Party or any portion of the Work
1.4 "Business Day". means a day other than Saturday, Sunday, or a day on which banks are authorized to close in New Mexico, Texas or Arizona.
1.5 "Change Order". means a written instrument, in substantially the form attached hereto as Exhibit D, signed by Owner and Contractor in accordance with Article 5.
1.6 "Contamination". means any Hazardous Material present at the Site or which has been brought to the Site by a party other than Contractor or its Subcontractors.
1.7 "Contract Completion Date". means May 1, 2006, as may be adjusted pursuant to the Agreement.
1.8 "Contract Documents". means this Agreement plus all attachments, exhibits, specifications, schedules, and drawings and any Change Orders or amendments thereto.
1.9 "Contract Sum". is the sum through the applicable True-Up Date of the actual amounts for (a) Reimbursable Costs paid by Owner that are chargeable against the Target Price plus (b) other amounts incurred or paid by Owner in accordance with this Agreement that are chargeable against the Target Price.
1.10 "Contractor's Project Director" or "Project Director". shall be the person identified in Article 7.2.
1.11 "D/FD Engineering Services". shall have the meaning set forth in Article 6.2.
1.12 "Disclosing Party". shall mean the Party disclosing information in Article 16.2.
1.13 "Engineering Services". shall have the meaning set forth in Article 6.2.
1.14 "Environmental Laws". mean all federal, state and local laws, rules, regulations and ordinances governing, regulating or relating to public health, pollution, or the protection of the environment, including, but not limited to, the laws and regulations promulgated pursuant to: the Resource Conservation and Recovery Act of 1976, 42 U.S.C. § 6901 et seq., as amended, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, 42 U.S.C. § 9601 et seq., as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. § 9601 et seq., as amended, the Federal Water Pollution Control Act, 33 U.S.C. § 1251, et seq., as amended, the Clean Air Act, 42 U.S.C. § 7401 et seq., as amended, the Toxic Substances Control Act, 15 U.S.C. § 2601 et seq., as amended, the Hazardous Materials Transportation Act, 49 U.S.C. § 5101 et seq., as amended, the Safe Drinking Water Act, 42 U.S.C. § 300f et seq., as amended, the National Environmental Policy Act, 42 U.S.C. § 4321 et seq., as amended, and the Emergency Planning and Community Right-to-Know Act, 42 U.S.C. § 11001 et seq., as amended, the New Mexico Water Quality Act, §74-6-1 et seq., as amended, the New Mexico Air Quality Act, § 74-2-1 et seq., as amended, the New Mexico Hazardous Waste Act, §74-4-1, et seq., as amended, the New Mexico Solid Waste Act, §74-9-1, et seq., as amended, the New Mexico Ground Water Protection Act, § 74-6B-1, et seq., as amended, and the New Mexico Hazardous Chemicals Information Act, §74-4D-1, et seq., as amended, together with all applicable similar and related federal, state and local laws, rules, regulations and ordinances, as may be amended from time to time.
1.15 "Existing Work". shall mean those portions of the Facility constructed and existing as of the Effective Date together with Owner-Furnished Property.
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1.16 "Facility". means the combined cycle power plant known as Luna Energy Facility, in Deming, New Mexico, including without limitation all equipment, materials, fuel and water supply systems, discharge equipment and all other ancillary equipment located at the Site.
1.17 "Facility CPM Schedule". shall have the meaning set forth in Article 3.2.2.
1.18 "Fee". shall have the meaning set forth in Article 4.3.
1.19 "Final Completion". shall have the meaning set forth in Article 10.5.1.
1.20 "Fully Dispatchable Facility". shall mean a reliable power generation facility capable of starting and operating in accordance with manufacturers' recommendations, Applicable Law and generally accepted operating practices without excessive trips or significant periods of downtime and as further described in Exhibit A.
1.21 "Good Engineering and Construction Practices" or "GECP". shall mean that degree of skill and judgment and the utilization of practices, methods, and techniques and standards that (a) are generally expected of skilled and experienced engineering and construction firms in the electric power industry in the United States of America and commonly used by such firms to design, engineer, construct, commission, and test power and related facilities similar to the Facility and (b) conform in all material respects to the recommendations and guidelines of the suppliers and manufacturers of the equipment comprising the Facility, taking into account such equipment's size, service and type, so that such equipment may be operated in compliance with any applicable warranty, in compliance with Applicable Laws, and in a manner that consistent with preserving the reliability and availability of the Facility under the operating conditions reasonably expected at the Site.
1.22 "Hazardous Materials". mean any hazardous, toxic, or polluting substance, material or waste as defined or regulated under any Applicable Law and other substances, materials or wastes that, even if not so defined or regulated, reasonably could be anticipated to pose a hazard to human health and safety or to the environment.
1.23 "Key Personnel". shall mean those Contractor positions identified in Article 2.21.
1.24 "Major Subcontracts". means all of the contracts between Contractor and Major Subcontractors.
1.25 "Major Subcontractors". means those Subcontracts set forth in Exhibit H and any other Subcontractor with a scope of work, whether through one contract or several contracts, having consideration due to such Subcontractor equal to or greater than $1,000,000.
1.26 "Mechanical Completion". shall have the meaning set forth in Article 10.1.
1.27 "Notice to Proceed". means that notice issued by Owner in accordance with Article 3.1.
1.28 "Owner Event of Default". shall have the meaning set forth in Article 11.7.
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