Construction Agency Agreement

EXHIBIT 10.17


EXECUTION COPY


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CONSTRUCTION AGENCY AGREEMENT


between


AES RED OAK URBAN RENEWAL CORPORATION


and


AES RED OAK, L.L.C.


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Dated as of March 1, 2000


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830 MW (Net) Gas-Fired Combined Cycle Electric Generating Facility
Borough of Sayreville, Middlesex County, New Jersey


TABLE OF CONTENTS


PAGE
---- ARTICLE I APPOINTMENT; SERVICES GENERALLY.........................................................................2


SECTION 1.1 APPOINTMENT..................................................................................2
SECTION 1.2 SERVICES.....................................................................................2
SECTION 1.3 PERSONNEL....................................................................................2
SECTION 1.4 BILLING AND COLLECTION OF REVENUES...........................................................3
SECTION 1.5 ACCOUNTING AND DOCUMENTATION.................................................................3
SECTION 1.6 LICENSES AND PERMITS.........................................................................3
SECTION 1.7 AUTHORITY OF THE CONSTRUCTION AGENT..........................................................3


ARTICLE II SPECIAL COVENANTS OF THE PARTIES.......................................................................4


SECTION 2.1 COVENANTS OF AES URC.........................................................................4
SECTION 2.2 COVENANTS OF THE CONSTRUCTION AGENT..........................................................4


ARTICLE III TERM AND TERMINATION..................................................................................4


SECTION 3.1 TERM.........................................................................................4
SECTION 3.2 RIGHTS UPON TERMINATION......................................................................5


ARTICLE IV MISCELLANEOUS..........................................................................................5


SECTION 4.1 AMENDMENTS...................................................................................5
SECTION 4.2 NOTICES......................................................................................5
SECTION 4.3 GOVERNING LAW................................................................................5
SECTION 4.4 COUNTERPARTS.................................................................................5
SECTION 4.5 INDEMNIFICATION..............................................................................5
SECTION 4.6 FURTHER ASSURANCES...........................................................................6
SECTION 4.7 ENTIRE AGREEMENT.............................................................................6
SECTION 4.8 ASSIGNABILITY................................................................................6
SECTION 4.9 BINDING EFFECT...............................................................................6
SECTION 4.10 HEADINGS.....................................................................................6


i


CONSTRUCTION AGENCY AGREEMENT


This CONSTRUCTION AGENCY AGREEMENT (this "Agreement"), dated as of March 1, 2000, by and between AES RED OAK URBAN RENEWAL CORPORATION, a New Jersey corporation ("AES URC"), and AES RED OAK, L.L.C., a Delaware limited liability company (the "Company").


RECITALS:


A. As set forth in the Financial Agreement dated as of December 3, 1999 between AES URC and the Borough of Sayreville, New Jersey (the "Financial Agreement"), AES URC will lease the Site from the Company pursuant to a Ground Lease dated as of the date hereof and intends to have the "Project" (as described and defined in the Financial Agreement) constructed on the Site (the "Project Improvements").


B. The Project Improvements make up a portion of the Facility, which will be developed and owned by the Company, and AES URC desires to have the Company undertake or cause the engineering, procurement, construction, testing and completion of the Project Improvements.


C. Pursuant to the EPC Contract, the Company has arranged for the Contractor to provide engineering, design, procurement and construction services with respect to the Facility, including the Project Improvements, as more particularly described in such EPC Contract.


D. The Company desires to lease the Site and all improvements to be built thereon (including the Project Improvements) from AES URC upon commercial operation of the Facility pursuant to the Sublease dated as of the date hereof and between the Company and AES URC.


E. To provide for financing and construction of the Project Improvements, AES URC has entered into the URC Loan Agreement under which $40 million will be loaned by the Company to AES URC (the "Project Loan").


F. AES URC and the Company desire to enter into this Agreement to provide for the terms and conditions under which the Company shall serve as construction agent for AES URC.


G. For purposes of this Agreement, capitalized terms used but not otherwise defined herein shall have the respective meanings given such terms in that certain Trust Indenture dated as of the date hereof (the "Trust Indenture ") among the Company, The Bank of New York, as Trustee, and The Bank of New York, as Depository Bank. The rules of usage set forth in the Trust Indenture shall apply to this Agreement.


AGREEMENTS:


NOW, THEREFORE, in consideration of the foregoing and the mutual promises and covenants herein made, ...