EXHIBIT 10.137 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.

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ARTICLE 1

DEFINITIONS

1

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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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

Page

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

Page

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

Page

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