Document:

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                                                                    Exhibit 4.13
                             SUBORDINATION AGREEMENT

        This Subordination Agreement (as the same may from time to time be
amended, modified or restated, the "Agreement") is dated as of November 19, 2001
and is entered into by and between O. BRUTON SMITH (the "Junior Creditor") and
U.S. Bank Trust National Association (the "Trustee"), a bank organized under the
laws of the United States, as Trustee under an Indenture dated as of November
19, 2001 (the "Indenture") among Sonic Automotive, Inc. (the "Issuer"), the
Guarantors named therein (the "Guarantors"), and the Trustee, and acting
hereunder for the benefit of the holders (the "Holders") of the Issuer's
$75,000,000 in principal amount of Senior Subordinated Notes Due 2008, Series C
(the "Issuer's Senior Notes") issued pursuant to the Indenture (in such
capacity, "Senior Creditor").

                              W I T N E S S E T H:

        WHEREAS, the Junior Creditor has a financial interest in the Issuer
relating to the Issuer's obligation to repay the Junior Creditor a debt in the
principal amount of $5,500,000 evidenced by the Issuer's Subordinated Promissory
Note dated December 15, 1997 (collectively with any instrument that may be
substituted for such note, the "Subordinated Note");

        WHEREAS, the Issuer and the Trustee have entered into the Indenture for
the benefit of the Holders and providing for the issuance by the Issuer's Senior
Notes;

        WHEREAS, the Junior Creditor acknowledges that the issuance of the
Issuer's Senior Notes and the Issuer's receipt of the proceeds from the sale
thereof is of direct pecuniary value to the Junior Creditor;

        NOW, THEREFORE, for good and valuable consideration, receipt of which
is hereby acknowledged by the Junior Creditor, and in order to induce the
Holders to purchase the Issuer's Senior Notes for the benefit of the Issuer and
to provide the ranking of the Issuer's Senior Notes among the Issuer's debt as
disclosed in the Issuer's Offering Memorandum dated November 8, 2001 relating to
the sale of the Issuer's Senior Notes, the Junior Creditor hereby agrees with
Trustee, for the benefit of the Holders, as hereinafter set forth.

        1.  Certain Defined Terms.  In addition to the terms defined above and
            ---------------------
elsewhere in this Agreement, the following terms used in this Agreement shall
have the following meanings, applicable both to the singular and the plural
forms of the terms defined:

        As used in this Agreement:

        "Issuer" shall mean Sonic Automotive, Inc., a Delaware corporation or
any successor assign or assign of Sonic Automotive, Inc., including, without
limitation, a receiver, trustee or debtor-in-possession.

        "Senior Debt" shall mean (a) the indebtedness evidenced by the Issuer's
Senior Notes and all other obligations, liabilities, and indebtedness issued or
arising pursuant to the Indenture, in each case whether now existing or
hereafter arising (and whether such indebtedness arises or accrues before or
after the commencement of any bankruptcy, insolvency or receivership
proceedings) directly between Issuer and the Senior Creditor, or acquired
outright, conditionally or as collateral security from another by the Senior
Creditor, including, without limitation, interest and fees accruing pre-petition
or post-petition at the rate or rates prescribed in Issuer's Senior Notes and
costs, expenses, and attorneys' and paralegals'

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fees, whenever incurred (and whether or not such claims, interest, costs,
expenses or fees are allowed or allowable in any such proceeding); and (b)
amounts disbursed or advanced (including, without limitation in connection with
the provision of any financing or other financial accommodations pursuant to
Section 364 of the Bankruptcy Code) by the Senior Creditor which the Senior
Creditor, in its good faith discretion and to the extent the same may be
permitted under the Indenture, deems necessary or desirable to preserve or
protect any collateral now or hereafter securing all or any portion of the
Senior Debt or to enhance the likelihood or maximize the amount of repayment of
the Senior Debt, including, but not limited to, all protective advances, costs,
expenses, and attorneys' and paralegals' fees, whensoever made, advanced or
incurred by the Senior Creditor in connection with the Senior Debt or the
collateral therefor ("Preservation Debt").

        "Subordinated Debt" shall mean (a) all principal of, and premium, if
any, and interest on, the Subordinated Note, and (b) all other indebtedness,
fees, expenses, obligations and liabilities of the Issuer (or any other person,
firm, partnership or corporation for the benefit of Issuer) to the Junior
Creditor, whether now existing or hereafter incurred or created, under or with
respect to the Subordinated Note, in each case, whether such amounts are due or
not due, direct or indirect, absolute or contingent.

        2. Standby; Subordination. The payment and performance of the
           ----------------------
Subordinated Debt is hereby subordinated to the Senior Debt and, except as set
forth in Section 3 below, the Junior Creditor will not accelerate, ask, demand,
sue for, take or receive from Issuer, by setoff or in any other manner, the
whole or any part of the Subordinated Debt, including, without limitation, the
taking of any negotiable instruments evidencing such amounts, nor any security
for any of the Subordinated Debt, unless and until all of the Senior Debt shall
have been fully and indefeasibly paid and satisfied in cash. The Junior Creditor
also hereby agrees that, regardless of whether the Senior Debt is secured or
unsecured, then the Senior Creditor shall be subrogated for the Junior Creditor
with respect to the Junior Creditor's claims against the Issuer and the Junior
Creditor's rights, liens and security interests, if any, in any of the Issuer's
assets or any other assets securing the Senior Debt and the proceeds thereof
until all of the Senior Debt has been fully and indefeasibly paid and satisfied
in cash.

        3. Permitted Payments. Notwithstanding the provisions of Section 2 of
           ------------------
this Agreement, until the occurrence of a "Default" or an "Event of Default" (as
these terms are defined in the Indenture), and provided that (i) there shall not
then exist any breach of this Agreement by the Junior Creditor which has not
been waived, in writing, by the Senior Creditor, and (ii) the payment described
below, if made, would not give rise to the occurrence of an Event of Default,
Issuer may pay to the Junior Creditor, and the Junior Creditor may accept from
Issuer, regularly scheduled payments of interest, when due, on an unaccelerated
basis, pursuant to the Subordinated Note provided the maximum interest rate at
which such payments shall be permitted shall not exceed the "Prime Rate"
announced from time to time by Bank of America N.A. in Charlotte, North
Carolina, or any successor, plus 0.5% per annum ("Permitted Payments"), it being
understood and agreed by the Junior Creditor that the Subordinated Note may not
be modified or amended without the prior written consent of the Senior Creditor.

        4. Enforcement Rights. Prior to the indefeasible payment in full in
           ------------------
cash of the Senior Debt and the termination of all financing arrangements
between Issuer and the Senior Creditor, the Junior Creditor shall not have any
right to enforce any claim with respect to the Subordinated Debt, including,
without limitation, any Permitted Payment, or otherwise to take any action
against the Issuer or the Issuer's property without the Senior Creditor's prior
written consent.

        5. Liens; Permitted Transfers. The Junior Creditor hereby represents as
           --------------------------
of the date hereof that the Junior Creditor has not been granted or obtained any
liens or security interests in any assets of the Debtor Parties or any other
assets securing the Senior Debt. The Junior Creditor agrees that, without the
prior written consent of the Senior Creditor, the Junior Creditor shall not take
any liens on or security

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interests in any assets of the Issuer or any other assets securing the Senior
Debt. The Junior Creditor acknowledges and agrees that, to the extent the terms
and provisions of this Agreement are inconsistent with the Subordinated Note,
the Subordinated Note shall be deemed to be subject to this Agreement. The
Junior Creditor agrees that, without the prior written consent of the Senior
Creditor, the Junior Creditor shall not take any liens on or security interests
in any assets of the Issuer or any other assets securing the Senior Debt. In the
event that the Issuer proposes to sell, assign, transfer, lease, convey or
otherwise dispose of any of its property (a "Transfer") and such Transfer is
either permitted pursuant to the Indenture or pursuant to a separate consent
executed by the Senior Creditor, then such Transfer shall be deemed to be
permitted and consented to by the Junior Creditor and shall not constitute a
violation or breach of any terms contained in the Subordinated Note. The Junior
Creditor acknowledges and agrees that, to the extent the terms and provisions of
this Agreement are inconsistent with the Subordinated Note, the Subordinated
Note shall be deemed to be subject to this Agreement.

        6. Subordinated Debt Owed Only to the Junior Creditor. The Junior
           --------------------------------------------------
Creditor warrants and represents that (a) the Junior Creditor has not previously
assigned any interest in the Subordinated Debt or any security interest in
connection therewith, if any; (b) no other party owns an interest in the
Subordinated Debt or security therefor other than the Junior Creditor (whether
as joint holders of the Subordinated Debt, participants or otherwise); and that
the entire Subordinated Debt is owing only to the Junior Creditor. The Junior
Creditor covenants that the entire Subordinated Debt shall continue to be owing
only to the Junior Creditor and all security therefor, if any, shall continue to
be held solely for the benefit of the Junior Creditor.

        7. Senior Creditor Priority. In the event of any distribution, division,
           ------------------------
or application, partial or complete, voluntary or involuntary, by operation of
law or otherwise, of all or any part of the assets of Issuer or the proceeds
thereof to the creditors of Issuer or readjustment of the obligations and
Subordinated Debt of Issuer, whether by reason of liquidation, bankruptcy,
arrangement, receivership, assignment for the benefit of creditors or any other
action or proceeding involving the readjustment of all or any part of the Senior
Debt or the Subordinated Debt, or the application of the assets of Issuer to the
payment or liquidation thereof, or upon the dissolution or other winding up of
Issuer's business, or upon the sale of all or substantially all of Issuer's
assets (an "Insolvency or Liquidation Proceeding"), then, and in any such event,
(i) the Senior Creditor shall be entitled to receive indefeasible payment in
full in cash of any and all of the Senior Debt prior to the payment of all or
any part of the Subordinated Debt, and (ii) any payment or distribution of any
kind or character, whether in cash, securities or other property, which shall be
payable or deliverable upon or with respect to any or all of the Subordinated
Debt shall be paid or delivered directly to the Senior Creditor for application
on any of the Senior Debt, due or not due, until the Senior Debt shall have
first been fully and indefeasibly paid and satisfied in cash.

        8. Grant of Authority to the Senior Creditor. In the event of the
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occurrence of any Insolvency or Liquidation Proceeding, and in order to enable
the Senior Creditor to enforce its rights hereunder in any of the aforesaid
actions or proceedings, the Senior Creditor is hereby irrevocably authorized and
empowered, in the Senior Creditor's discretion, to file, make and present for
and on behalf of the Junior Creditor such proofs of claims against the Issuer on
account of the Subordinated Debt or other motions or pleadings as the Senior
Creditor may deem expedient or proper and to vote such proofs of claims in any
such proceeding and to receive and collect any and all dividends or other
payments or disbursements made thereon in whatever form the same may be paid or
issued and to apply the same on account of any portion of the Senior Debt. In
voting such proofs of claim in any proceeding, the Senior Creditor may act in a
manner consistent with its sole interest and shall have no duty to take any
action to optimize or maximize the Junior Creditor's recovery with respect to
its claim. The Junior Creditor irrevocably authorizes and empowers the Senior
Creditor to demand, sue for, collect and receive each of the aforesaid payments
and distributions described in Section 7 above and give acquittance therefor and
to file claims and take such other actions, in the Senior Creditor's own name or
in the name of the Junior

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Creditor or otherwise, as the Senior Creditor may deem necessary or advisable.
To the extent that payments or distributions are made in property other than
cash, the Junior Creditor authorizes the Senior Creditor to sell such property
to such buyers and on such terms as the Senior Creditor, in its sole discretion,
shall determine. The Junior Creditor will execute and deliver to the Senior
Creditor such powers of attorney, assignments and other instruments or
documents, including notes and stock certificates (together with such
assignments or endorsements as the Senior Creditor shall deem necessary), as may
be requested by the Senior Creditor in order to enable the Senior Creditor and
to enforce any and all claims of the Senior Creditor upon or with respect to any
or all of the Subordinated Debt and to collect and receive any and all payments
and distributions which may be payable or deliverable at any time upon or with
respect to the Subordinated Debt, all for the Senior Creditor's own benefit.
Following the indefeasible payment in full in cash of the Senior Debt, the
Senior Creditor shall remit to the Junior Creditor, all dividends or other
payments or distributions paid to and held by the Senior Creditor in excess of
the Senior Debt. Each of the powers and authorizations granted to the Senior
Creditor in this Section 8, being coupled with an interest, is irrevocable.

        9.  Payments Received by the Junior Creditor. Except for Permitted
            ----------------------------------------
Payments received by the Junior Creditor prior to the occurrence of an a
"Default" or "Event of Default" as provided in Section 3 above, should any
payment or distribution or security or instrument or proceeds thereof be
received by the Junior Creditor upon or with respect to the Subordinated Debt or
any other obligations of the Issuer to the Junior Creditor prior to the
indefeasible payment in full in cash of all of the Senior Debt and termination
of all financing arrangements between the Issuer and the Senior Creditor, the
Junior Creditor shall receive and hold the same in a segregated account in
trust, as trustee, for the benefit of the Senior Creditor, and shall forthwith
deliver the same to the Senior Creditor, in precisely the form received (except
for the endorsement or assignment of the Junior Creditor where necessary), for
application on any of Senior Debt, due or not due, and, until so delivered, the
same shall be held in trust by the Junior Creditor as the property of the Senior
Creditor. In the event of the failure of the Junior Creditor to make any such
endorsement or assignment to the Senior Creditor, the Senior Creditor, or any of
its officers or employees, is hereby irrevocably authorized to make the same
(which authorization, being coupled with an interest, is irrevocable).

        10. Instrument Legend. Any instrument evidencing any of the
            -----------------
Subordinated Debt (including, without limitation, the Subordinated Note), or any
portion thereof, will, on the date hereof, be inscribed with a legend
conspicuously indicating that payment thereof is subordinated to the claims of
the Senior Creditor pursuant to the terms of this Agreement, and a copy thereof
will be delivered to the Senior Creditor on the date hereof. Any instrument
evidencing any of the Subordinated Debt, or any portion thereof, which is
hereafter executed by Issuer, will, on the date thereof, be inscribed with the
aforesaid legend and a copy thereof will be delivered to the Senior Creditor on
the date of its execution or within five (5) business days thereafter.

        11. Reimbursements for Expenses and Borrowings from Issuer; Restriction
            -------------------------------------------------------------------
on Assignment of Claims. Except as permitted in Section 3 hereof, the Junior
-----------------------
Creditor agrees that until the Senior Debt has been indefeasibly paid in full in
cash and satisfied and all financing arrangements between the Debtor Parties and
the Senior Creditor have been terminated, the Junior Creditor will not, directly
or indirectly, accept or receive the benefit of any remuneration or
reimbursement for expenses on account of the Subordinated Debt from or on behalf
of any Debtor Party and will not assign or transfer to others any claim the
Junior Creditor has or may have against Issuer, unless such assignment or
transfer is made expressly subject to this Agreement.

        12. Continuing Nature of Subordination.  This Agreement shall be
            ----------------------------------
effective and may not be terminated or otherwise revoked by the Junior Creditor
until the Senior Debt shall have been indefeasibly paid in full in cash and
satisfied and all financing arrangements among Debtor Parties and the Senior

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Creditor have been terminated. The Junior Creditor hereby waives to the fullest
extent permitted by applicable law any right it may have to terminate or revoke
this Agreement or any of the provisions of this Agreement. In the event the
Junior Creditor shall have any right under applicable law otherwise to terminate
or revoke this Agreement which right cannot be waived, such termination or
revocation shall not be effective until written notice of such termination or
revocation, signed by the Junior Creditor, is actually received by the Senior
Creditor's officer responsible for such matters In the absence of the
circumstances described in the immediately preceding sentence, this is a
continuing agreement of subordination and the Senior Creditor may continue, at
any time and without notice to the Junior Creditor, to extend credit or other
financial accommodations and loan monies to or for the benefit of a Debtor Party
on the faith hereof. Any termination or revocation described hereinabove shall
not affect this Agreement in relation to (a) any of the Senior Debt which arose
or was committed to prior to receipt thereof, or (b) any of the Senior Debt
created after receipt thereof if such Senior Debt is Preservation Debt.

        13. Additional Agreements between the Senior Creditor and Issuer. The
            ------------------------------------------------------------
Senior Creditor at any time and from time to time, either before or after any
such aforesaid notice of termination or revocation, may enter into such
agreement or agreements with a Issuer as the Senior Creditor may deem proper,
extending the time of payment of or renewing or otherwise altering the terms,
including, without limitation increasing the principal amount thereof, of all or
any portion of the Senior Debt or affecting the security underlying any or all
of the Senior Debt, and may exchange, sell, release, surrender or otherwise deal
with any such security, without in any way thereby impairing or affecting this
Agreement.

        14. Junior Creditor's Waivers. All of the Senior Debt shall be deemed
            -------------------------
to have been made or incurred in reliance upon this Agreement. The Junior
Creditor expressly waives all notice of the acceptance by the Senior Creditor of
the subordination and other provisions of this Agreement and all other notices
not specifically required pursuant to the terms of this Agreement whatsoever,
and the Junior Creditor expressly waives reliance by the Senior Creditor upon
the subordination and other agreements as herein provided. In the event that the
Junior Creditor has or at any time acquires any lien upon or security interest
in the assets securing the Senior Debt, or any part thereof, to the fullest
extent permitted by applicable law, the Junior Creditor hereby waives any right
that the Junior Creditor may have whether such right arises under Sections 9-504
or 9-505 of the Uniform Commercial Code or other applicable law, to receive
notice of the Senior Creditor's intended disposition of such assets (or a
portion thereof) or of the Senior Creditor's proposed retention of such assets
in satisfaction of the Senior Debt (or a portion thereof). The Junior Creditor
further agrees that in the event Issuer consents or fails to object to a
proposed retention of such assets (or a portion thereof) by the Senior Creditor
in satisfaction of the Senior Debt (or a portion thereof), the Junior Creditor
hereby consents to such proposed retention regardless of whether the Junior
Creditor is provided with notice of such proposed retention. The Junior Creditor
agrees that the Junior Creditor will not interfere with or in any manner oppose
a disposition of any assets securing the Senior Debt by the Senior Creditor. The
Junior Creditor agrees that the Senior Creditor has not made any warranties or
representations with respect to the due execution, legality, validity,
completeness or enforceability of the Issuer's Senior Notes, or the
collectibility of the Senior Debt, that the Senior Creditor shall be entitled to
manage and supervise its financial accommodations to Issuer in accordance with
applicable law and its usual practices, modified from time to time as deemed
appropriate under the circumstances, without regard to the existence of any
rights that the Junior Creditor may now or hereafter have in or to any of the
assets of Issuer, and that Senior Creditor shall have no liability to the Junior
Creditor for, and waive any claim which the Junior Creditor may now or hereafter
have against, the Senior Creditor arising out of any and all actions which the
Senior Creditor, in good faith, takes or omits to take (including, without
limitation, actions with respect to the creation, perfection or continuation of
liens or security interests in any collateral now or hereafter securing any of
the Senior Debt, actions with respect to the occurrence of an Event of Default,
actions with respect to the foreclosure upon, sale, release, or depreciation of,
or failure to realize upon, any of the Collateral and actions with respect to
the collection of any claim for all or any part of the Senior Debt from any
account debtor, guarantor or any

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other party) with respect to the Senior Debt or any agreement related thereto or
to the collection of the Senior Debt or the valuation, use, protection or
release of the collateral now or hereafter securing any of the Senior Debt for
the Senior Debt.

        15. Invalidated Payments. To the extent that the Senior Creditor
            --------------------
receives payments on, or proceeds of collateral for, the Senior Debt which are
subsequently invalidated, declared to be fraudulent or preferential, set aside,
avoided and/or required to be repaid to a trustee, receiver or any other party
under any bankruptcy law, state or federal law, common law, equitable cause or
pursuant to the Indenture, then, to the extent of such payment or proceeds
received, the Senior Debt, or part thereof, intended to be satisfied shall be
revived and continue in full force and effect as if such payments or proceeds
had not been received by the Senior Creditor.

        16. Bankruptcy Issues. The Junior Creditor agrees that the Senior
            -----------------
Creditor may consent to the use of cash collateral or provide financing to a
Issuer (under Section 363 or Section 364 of the Bankruptcy Code or otherwise) on
such terms and conditions and in such amounts as the Senior Creditor, in its
sole discretion, may decide and that, in connection with such cash collateral
usage or such financing, the Issuer (or a trustee appointed for the estate of
the Issuer) may grant to the Senior Creditor liens and security interests upon
all assets of the Issuer, which liens and security interests (i) shall secure
payment of all Senior Debt (whether such Senior Debt arose prior to the filing
of the petition for relief or arise thereafter); and (ii) shall be superior in
priority to the liens and security interests, if any, held by the Junior
Creditor on the assets of the Debtor Parties. All allocations of payments
between the Senior Creditor and the Junior Creditor shall, subject to any court
order, continue to be made after the filing or other commencement of any
Insolvency or Liquidation Proceeding on the same basis that the payments were to
be allocated prior to the date of such filing or commencement. The Junior
Creditor agrees that he will not object to or oppose a sale or other disposition
of any assets securing the Senior Debt (or any portion thereof) free and clear
of security interests, liens or other claims of the Junior Creditor, if any,
under Section 363 of the Bankruptcy Code or any other provision of the
Bankruptcy Code if the Senior Creditor has consented to such sale or disposition
of such assets. In the event that the Junior Creditor has or at any time
acquires any security for the Subordinated Debt, the Junior Creditor agrees not
to assert any right it may have to "adequate protection" of its interest in such
security in any Insolvency or Liquidation Proceeding and agrees that he will not
seek to have the automatic stay lifted with respect to such security, without
the prior written consent of the Senior Creditor. The Junior Creditor waives any
claim he may now or hereafter have arising out of the Senior Creditor's
election, in any proceeding instituted under Chapter 11 of the Bankruptcy Code,
of the application of Section 1111(b)(2) of the Bankruptcy Code, and/or any
borrowing or grant of a security interest under Section 364 of the Bankruptcy
Code by a Issuer, as debtor in possession. The Junior Creditor agrees not to
initiate or prosecute or encourage any other person to initiate or prosecute any
claim, action or other proceeding (i) challenging the enforceability of the
Senior Creditor's claim, (ii) challenging the enforceability of any liens or
security interests in assets securing the Senior Debt or (iii) asserting any
claims which the Issuer may hold with respect to the Senior Creditor. The Junior
Creditor agrees that he will not seek participation or participate on any
creditors' committee without the Senior Creditor's prior written consent. In the
event that the Senior Creditor consents to such participation, at the request of
the Senior Creditor, the Junior Creditor will resign from his position on such
committee. To the extent that the Senior Creditor receives payments on, or
proceeds of collateral for, the Senior Debt which are subsequently invalidated,
declared to be fraudulent or preferential, set aside and/or required to be
repaid to a trustee, receiver or any other party under any bankruptcy law, state
or federal law, common law, or equitable cause, then, to the extent of such
payment or proceeds received, the Senior Debt, or part thereof, intended to be
satisfied shall be revived and continue in full force and effect as if such
payments or proceeds had not been received by the Senior Creditor.

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         17.  Senior Creditor's Waivers. No right of the Senior Creditor to
              -------------------------
enforce the subordination or other terms as provided in this Agreement shall at
any time in any way be prejudiced or impaired by any act or failure to act on
the part of Issuer or by any act or failure to act by the Senior Creditor, or by
any noncompliance by Issuer with the terms, provisions and covenants of this
Agreement, or the Subordinated Note, regardless of any knowledge thereof which
the Senior Creditor may have or be otherwise charged with. No waiver shall be
deemed to be made by the Senior Creditor of any of the Senior Creditor's rights
hereunder, unless the same shall be in writing signed on behalf of the Senior
Creditor, and each waiver, if any, shall be a waiver only with respect to the
specific instance involved and shall in no way impair the rights of the Senior
Creditor or the obligations of the Junior Creditor to the Senior Creditor in any
other respect at any other time. The failure of the Senior Creditor to enforce
at any time any provision of this Agreement shall not be construed to be a
waiver of such provisions, nor in any way to affect the validity of this
Agreement or any part hereof or the right of the Senior Creditor thereafter to
enforce each and every such provision. No waiver by the Senior Creditor of any
breach of this Agreement shall be held to constitute a waiver of any other or
subsequent breach.

         18.  Information Concerning Financial Condition of Issuer. The Junior
              ----------------------------------------------------
Creditor hereby assumes responsibility for keeping informed of the financial
condition of Issuer, any and all endorsers and any and all guarantors of the
Senior Debt and of all other circumstances bearing upon the risk of nonpayment
of the Senior Debt and/or Subordinated Debt that diligent inquiry would reveal,
and the Junior Creditor hereby agrees that the Senior Creditor shall not have
any duty to advise the Junior Creditor of information known to the Senior
Creditor regarding such condition or any such circumstances. In the event the
Senior Creditor, in its sole discretion, undertakes, at any time or from time to
time, to provide any such information to the Junior Creditor, the Senior
Creditor shall be under no obligation (i) to provide any such information to the
Junior Creditor on any subsequent occasion, or (ii) to undertake any
investigation not a part of Senior Creditor's regular business routine and shall
be under no obligation to disclose any information which, pursuant to accepted
or reasonable commercial finance practices, the Senior Creditor wishes to
maintain confidential. The Junior Creditor hereby agrees that all payments
received by the Senior Creditor may be applied, reversed, and reapplied, in
whole or in part, to any portion of the Senior Debt, as the Senior Creditor, in
its sole discretion, deem appropriate and assent to any extension or
postponement of the time of payment of the Senior Debt or to any other
indulgence with respect thereto, to any substitution, exchange or release of
collateral which may at any time secure the Senior Debt and to the addition or
release of any other party or person primarily or secondarily liable therefor.

         Without in any way limiting the generality of the foregoing paragraph,
the Senior Creditor, may, at any time and from time to time, without the consent
of, or notice to, the Junior Creditor without incurring any liabilities to the
Junior Creditor and without impairing or releasing the subordination and other
benefits provided in this Agreement (even if any right of subrogation or other
right or remedy of the Junior Creditor is affected, impaired or extinguished
thereby) do any one or more of the following:

         (i)  change the manner, place or terms of payment or change or extent
the time of payment of, or renew, exchange, amend, increase or alter, the terms
of any of the Senior Debt or any lien in any of any collateral now or hereafter
securing all or any portion of the Senior Debt or guaranty thereof or any
liability of a Issuer or any guarantor, or any liability incurred directly or
indirectly in respect thereof (including, without limitation, any extension of
the Senior Debt, without any restriction as to the tenor or terms of any such
extension), or otherwise amend, renew, exchange, extend, modify, supplement in
any manner the Senior Debt or any related documents.

         (ii) sell, exchange, release, surrender, realize upon, enforce or
otherwise deal with in any manner and in any order any part of the Collateral or
other property securing the Senior Debt or any liability of a Issuer or any
guarantor to such holder, or any liability incurred directly or indirectly in
respect thereof;

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         (iii) settle or compromise any Senior Debt or any other liability of a
Issuer or any guarantor or any security therefor or any liability incurred
directly or indirectly in respect thereof and apply any sums by whomsoever paid
and however realized to any liability (including, without limitation, the Senior
Debt) in any manner or order; and

         (iv)  exercise or delay in or refrain from exercising any right or
remedy against a Issuer or any security or any guarantor or any other Person,
elect any remedy and otherwise deal freely with a Issuer and the collateral and
any security and any guarantor or any liability of a Issuer or any guarantor to
such holder or any liability incurred directly or indirectly in respect thereof.

         The Senior Creditor shall have no duty to the Junior Creditor with
respect to the preservation or maintenance of any collateral now or hereafter
securing all or any portion of the Senior Debt or the manner in which Senior
Creditor enforces its rights in such collateral or to preserve or maintain the
rights of any Person in such collateral, and the Junior Creditor hereby waive
any and all claims which the Junior Creditor may now or hereafter have against
the Senior Creditor which relate to such preservation, maintenance or
enforcement. The Junior Creditor agrees not to assert and hereby waives, to the
fullest extent permitted by law: any right to demand, request, plead or
otherwise assert or otherwise claim the benefit of, any marshalling,
appraisement, valuation or other similar right that may otherwise be available
under applicable law or any other similar rights a junior creditor may have
under applicable law.

         19.   CONSENT TO JURISDICTION; SERVICE OF PROCESS.

         (A) THE JUNIOR CREDITOR CONSENTS TO THE JURISDICTION OF ANY STATE OR
FEDERAL COURT LOCATED WITHIN NEW YORK AND WAIVES PERSONAL SERVICE OF ANY AND ALL
PROCESS UPON IT, AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY
REGISTERED MAIL DIRECTED TO THE JUNIOR CREDITOR AT THE ADDRESS STATED BELOW AND
SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED THREE (3) DAYS AFTER THE SAME
SHALL HAVE BEEN POSTED AS AFORESAID. THE JUNIOR CREDITOR WAIVES ANY OBJECTION
BASED UPON FORUM NON CONVENIENS, AND ANY OBJECTION TO VENUE OF ANY ACTION
INSTITUTED HEREUNDER. NOTHING IN THIS SECTION 17 SHALL AFFECT THE RIGHT OF THE
SENIOR CREDITOR TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR
AFFECT THE RIGHT OF THE SENIOR CREDITOR TO BRING ANY ACTION OR PROCEEDING
AGAINST THE JUNIOR CREDITOR OR ITS PROPERTY IN THE COURTS OF ANY OTHER
JURISDICTION.

         (B) ADVICE OF COUNSEL. EACH OF THE PARTIES REPRESENTS TO EACH OTHER
             -----------------
PARTY HERETO THAT IT HAS DISCUSSED THIS AGREEMENT AND, SPECIFICALLY, THE
PROVISIONS OF SECTIONS 17, 18, 19 AND 21, WITH COUNSEL OF ITS CHOICE AND IS
FULLY AWARE OF THE LEGAL CONSEQUENCES AND EFFECTS OF AND HAS KNOWINGLY AGREED TO
THE PROVISIONS HEREOF.

         20.   ARM'S LENGTH AGREEMENT.  EACH OF THE PARTIES TO THIS AGREEMENT
               ----------------------
AGREES AND ACKNOWLEDGES THAT THIS AGREEMENT HAS BEEN NEGOTIATED IN GOOD FAITH,
AT ARM'S LENGTH, AND NOT BY ANY MEANS FORBIDDEN BY LAW.

         21.   INJUNCTIVE RELIEF.  THE JUNIOR CREDITOR ACKNOWLEDGES AND AGREES
               -----------------
THAT ITS COVENANTS AND OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER DOCUMENTS,
INSTRUMENTS AND AGREEMENTS EXECUTED IN CONNECTION HEREWITH ARE INTEGRAL TO THE
SENIOR CREDITOR'S REALIZATION OF ITS RIGHTS AGAINST, AND THE VALUE OF ITS
INTEREST IN, THE ASSETS OF A DEBTOR PARTY AND

                                       8

<PAGE>

ITS AFFILIATES, THAT A BREACH OF ANY OF THE COVENANTS AND OBLIGATIONS OF THE
JUNIOR CREDITOR HEREUNDER OR UNDER THE OTHER DOCUMENTS, INSTRUMENTS AND
AGREEMENTS EXECUTED IN CONNECTION HEREWITH SHALL ENTITLE THE SENIOR CREDITOR TO
INJUNCTIVE RELIEF AND SPECIFIC PERFORMANCE WITHOUT THE NECESSITY OF PROVING
IRREPARABLE INJURY TO THE SENIOR CREDITOR OR THAT THE SENIOR CREDITOR DO NOT
HAVE AN ADEQUATE REMEDY AT LAW IN RESPECT OF SUCH BREACH (EACH OF WHICH ELEMENTS
THE JUNIOR CREDITOR ADMITS EXIST) AND, AS A CONSEQUENCE, THE JUNIOR CREDITOR
AGREES THAT EACH AND EVERY COVENANT AND OBLIGATION APPLICABLE TO IT AND
CONTAINED IN THIS AGREEMENT OR THE OTHER DOCUMENTS INSTRUMENTS AND AGREEMENTS
EXECUTED IN CONNECTION HEREWITH SHALL BE SPECIFICALLY ENFORCEABLE AGAINST IT.
THE JUNIOR CREDITOR HEREBY WAIVES AND AGREES NOT TO ASSERT ANY DEFENSES AGAINST
AN ACTION FOR SPECIFIC PERFORMANCE OF ITS RESPECTIVE COVENANTS AND OBLIGATIONS
HEREUNDER AND/OR UNDER THE OTHER DOCUMENTS, INSTRUMENTS AND AGREEMENTS EXECUTED
IN CONNECTION HEREWITH.

         22.  Notices. Except as otherwise provided for herein, whenever it is
              -------
provided herein that any notice, demand, request, consent, approval, declaration
or other communication shall or may be given to or served upon either of the
parties by the other, or whenever either of the parties desires to give or serve
upon the other communication with respect to this Agreement, such notice,
demand, request, consent, approval, declaration or other communication shall be
in writing (including, but not limited to, facsimile communication), and shall
either be delivered in person, telecopied, telegraphed, sent by reputable
overnight courier or mailed by first class mail, or registered or certified
mail, return receipt requested, postage prepaid or provided for, addressed as
follows:

         (i)  If to the Senior Creditor at:

         c/o U.S. Bank Trust National Association
         Corporate Trust Services
         U.S. Bank Trust Center
         Mail Code SPFT0210
         180 East Fifth Street
         St. Paul, Minnesota 55101

         (ii) If to the Junior Creditor at:

         O. Bruton Smith
         5401 East Independence Boulevard
         P.O. Box 18747
         Charlotte, North Carolina  78218

or to such other address as any party designates to the other parties in the
manner herein prescribed.

         23.  GOVERNING LAW. ANY DISPUTE BETWEEN ANY OF THE JUNIOR CREDITOR AND
              -------------
THE SENIOR CREDITOR ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO
THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH, THIS AGREEMENT OR
ANY OF THE OTHER DOCUMENTS, INSTRUMENTS OR AGREEMENTS EXECUTED IN CONNECTION
HEREWITH AND WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL BE
RESOLVED IN ACCORDANCE WITH THE LAWS (WITHOUT REGARD TO THE CONFLICTS OF LAWS
PROVISIONS) OF THE STATE OF NEW YORK.

                                       9

<PAGE>

         24.  Counterparts; Facsimile Effectiveness. This Agreement may be
              -------------------------------------
executed in one or more counterparts, each of which shall be considered an
original counterpart, and shall become a binding agreement when the Senior
Creditor and the Junior Creditor and Issuer have each executed one counterpart.
Each of the parties hereto agrees that a signature transmitted to the Senior
Creditor or its counsel by facsimile transmission shall be effective to bind the
party so transmitting its signature.

         25.  Complete Agreement; Merger. This Agreement, including the
              --------------------------
schedules and exhibits hereto, contain the entire understanding of the parties
hereto with regard to the subject matter contained herein. This Agreement
supersedes all prior or contemporaneous negotiations, promises, covenants,
agreements and representations of every nature whatsoever with respect to the
matters referred to in this Agreement, all of which have become merged and
finally integrated into this Agreement. Each of the parties understands that in
the event of any subsequent litigation, controversy or dispute concerning any of
the terms, conditions or provisions of this Agreement, no party shall be
entitled to offer or introduce into evidence any oral promises or oral
agreements between the parties relating to the subject matter of this Agreement
not included or referred to herein and not reflected by a writing included or
referred to herein.

         26.  No Third Party Beneficiaries.  This Agreement is solely for the
              ----------------------------
benefit of the Senior Creditor and its respective successors and assigns and the
Junior Creditor and its successors and is not intended to confer upon the Issuer
or any other third party any rights or benefits.

         27.  Severability. Wherever possible, each provision of this Agreement
              ------------
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.

         28.  Section Titles.  The section titles contained in this Agreement
              --------------
are and shall be without substantive meaning or content of any kind whatsoever
and are not a part of the agreement between the parties hereto.

         29.  No Strict Construction. The parties (directly and through their
              ----------------------
counsel) hereto have participated jointly in the negotiation and drafting of
this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties hereto and no presumption or burden of proof shall arise favoring
or disfavoring any party by virtue of the authorship of any provisions of this
Agreement.

                      [Signatures begin on following page]

                                       10

<PAGE>

     IN WITNESS WHEREOF, this Subordination Agreement has been signed as of this
19th day of November, 2001.

                                                    /s/ O. Bruton Smith
                                              ----------------------------------
                                                    O. BRUTON SMITH

Acknowledged and accepted as of
this 19th day of November 2001, by:

U.S. BANK TRUST NATIONAL ASSOCIATION
AS TRUSTEE UNDER THAT CERTAIN INDENTURE
DATED AS OF NOVEMBER 19, 2001 FOR THE BENEFIT OF
THE HOLDERS OF SONIC AUTOMOTIVE, INC.
SENIOR SUBORDINATED NOTE DUE 2008

By:    /s/ Lori Anne Rosenberg
    -------------------------------------------------
Name:  Lori Anne Rosenberg
      -----------------------------------------------
Title: Assistant Vice President
       ----------------------------------------------

Without in any way establishing any rights with respect to the terms thereof on
behalf of any of the undersigned, the undersigned acknowledges receipt of a copy
of the foregoing Subordination Agreement this 19th day of November, 2001, and
agrees to take no action or refrain from taking action inconsistent with the
terms thereof.

SONIC AUTOMOTIVE, INC.

By:     /s/ Theodore M. Wright
    -------------------------------------------------
Name:  Theodore M. Wright
      -----------------------------------------------
Title: Vice President and CFO
       ----------------------------------------------EXHIBIT 10.1

                                                                  EXECUTION COPY

                                     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
Agreement, and Raytheon and its representatives, including any third party
consultant retained by Raytheon, will be permitted to have access to and examine
and take copies of any documents, books, records, materials and other
information, whether in tangible or electronic form, relating to the Project,
including any and all engineering, procurement and construction documents,
purchase orders, invoices, specifications, progress reports, plans and designs.
With regards to access to Contractor's Princeton, New Jersey, offices,

                                      -5-

<PAGE>
                                                                  EXECUTION COPY

(i) access shall be given during normal business hours, and (ii) Raytheon's
personnel shall be subject to Contractor's prior approval, such approval not to
be unreasonably withheld or delayed. In addition to those personnel subject to
the foregoing approval process, Contractor expressly will pre-approve and permit
the persons listed on SCHEDULE 2.4 to have access to the Princeton facilities.
The Contractor shall provide Raytheon with copies of all internal and external
Project reports and correspondence as generated or received. The Project
Liaisons will conduct monthly Project reviews and weekly progress meetings. The
Contractor shall not designate a replacement Project Liaison without the consent
of Raytheon, which consent shall not be unreasonably withheld or delayed.

        2.5. Owner Payments. All payments made by AES as the Project Owner after
May 14, 2001, originally payable under the Construction Contract to Contractor,
relating to Services performed on, prior to, or after May 14, 2001 on the
Project (collectively, "Owner Payments"), shall instead be made by wire transfer
to the bank account(s) set forth on SCHEDULE 2.5(a), except as provided for in,
or paid pursuant to, the Interim Agreement. Concurrently with the execution and
delivery of this Agreement, Contractor shall instruct AES, substantially in the
form attached as SCHEDULE 2.5(b), to make all Owner Payments to such designated
account. Any Owner Payments inadvertently received by the Contractor, including
any Owner Payments received prior to the date of this Agreement, but after May
14, 2001, shall be immediately forwarded to Raytheon's designated bank account,
and pending such remittance, shall be held in trust for Raytheon.

        2.6. Agreements with Owner. The Contractor shall not be authorized to
enter into any arrangement with Owner which purports to modify or waive any of
the Contractor Obligations.

SECTION 3.   PROJECT SUBCONTRACTS; REJECTION OF CONSTRUCTION CONTRACT.
             ---------------------------------------------------------

        3.1. Assignment of Contracts

             3.1.1. Owner Assumed Contracts. Pursuant to Section 365 of the
        Bankruptcy Code, the Contractor shall, in the Bankruptcy Court, assume
        and assign to Owner all of the Project subcontracts and purchase orders
        set forth on SCHEDULE 3.1.1 attached hereto (collectively "Owner Assumed
        Contracts "), if any.

             3.1.2. Assigned Vendor Contracts. Pursuant to Section 365 of the
        Bankruptcy Code, the Contractor shall, in the Bankruptcy Court, assume
        and assign to Raytheon (or its designees, subject to the provisions of
        Section 2.2 hereof), all of the Project subcontracts and purchase orders
        set forth on SCHEDULE 3.1.2 attached hereto (collectively "Assigned
        Vendor Contracts").

                    3.1.2.1. Non Executory Contracts. Pursuant to Section
             363(b)(1) of the Bankruptcy Code, the Contractor shall, in the
             Bankruptcy Court, assign to the Raytheon (or its designee(s)) all
             of its right, title and interest in and to the Project subcontracts
             and purchase orders set forth on Schedule 3.1.2.1 attached hereto
             (the "Non-Executory Contracts") and all rights thereunder. The
             Non-Executory Contracts shall be deemed to be, and shall be
             administered by Contractor as, Assigned Vendor Contracts for
             purposes of this Agreement. To the extent that any Non-Executory
             Contract is determined to be executory pursuant to Section 365(a)
             of the Bankruptcy Code, such Non-Executory Contract shall be deemed
             to

                                      -6-

<PAGE>
                                                                  EXECUTION COPY

             be an Assigned Vendor Contract or Owner Assumed Contract for
             purposes of this Agreement and the Contractor, pursuant to Section
             365 of the Bankruptcy Code, and Section 3.1.1 or Section 3.1.2
             hereof, shall assume and assign all of the right, title and
             interest in and to such Non-Executory Contract to Raytheon (or its
             designee(s)) or the Owner, as applicable. To the extent that any
             Owner Assumed Contract or Assigned Vendor Contract is determined to
             be non-executory pursuant to Section 365(a) of the Bankruptcy Code,
             such contract shall be deemed to be a Non-Executory Contract for
             purposes of this Agreement and the Contractor, pursuant to Section
             363(b)(1) of the Bankruptcy Code, and Section 3.1.2.1 hereof, shall
             assign all of the right, title and interest in and to such
             Non-Executory Contract to Raytheon (or its designee(s)).

             3.1.3. Any Owner Assumed Contract subsequently assigned by Owner to
        Raytheon (or its designees), subject to applicable third party consents,
        shall be treated as an Assigned Vendor Contract for purposes of this
        Agreement.

             3.1.4. Any Assigned Vendor Contract subsequently assigned by
        Raytheon (or its designees) to Owner, subject to applicable third party
        consents, shall be treated as an Owner Assumed Contract for purposes of
        this Agreement.

        3.2. Owner's Agents. Contractor acknowledges and agrees that, Raytheon
shall be designated as Owner's payment and purchasing agent for purposes of
administering the Owner Assumed Contracts.

        3.3. Rejected Subcontracts and Purchase Orders. The Parties hereby
acknowledge and agree that the Project subcontracts and purchase orders set
forth on SCHEDULE 3.3 attached hereto (i) have not been assumed by Contractor,
(ii) have not been assumed and assigned by Contractor, pursuant to the terms of
Section 3.1 hereof, (iii) have been or will be rejected by Contractor in the
bankruptcy proceeding in the Bankruptcy Court except to the extent such
subcontracts and purchase orders are determined to not be executory, and (iv)
notwithstanding anything to the contrary contained herein, Contractor shall have
no obligation under this Agreement to administer, pay or perform such
subcontracts and purchase orders. Contractor represents and warrants that, to
Contractor's knowledge, when taken together, the subcontracts and purchase
orders set forth on SCHEDULES 3.1.1, 3.1.2, 3.1.2.1 and 3.3, constitute all of
the material subcontracts and purchase orders held by Contractor on the Project
as of the date hereof.

        3.4. Rejection of the Construction Contract; Court Approval. It shall be
a condition precedent to the effectiveness of this Agreement that the Contractor
shall obtain an order of the Bankruptcy Court authorizing Contractor (i) to
reject the Construction Contract, (ii) to assume and assign all Assigned Vendor
Contracts and Owner Assumed Contracts, as described herein, (iii) to reject
project subcontracts and purchase orders set forth on SCHEDULE 3.3 attached
hereto, and (iv) to assign the Non-Executory Contracts to Raytheon. Any order of
the Bankruptcy Court otherwise meeting the requirements in clauses (i) through
(iii) above will be deemed to have satisfied these requirements notwithstanding
that the Bankruptcy Court determines that certain of the Project subcontracts
and purchase orders are not "executory."

        3.5. Cure Costs. Upon the assumption and assignment of the Owner Assumed
Contracts and the Assigned Vendor Contracts, and upon the execution and delivery
of this Agreement, the costs of curing the defaults in such Owner Assumed
Contracts and Assigned Vendor Contracts, if any (such costs, the "Cure Costs")
shall, if and when such costs become due

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and payable, constitute AllowableCosts, provided however, that in no instance
shall any Cure Cost include or duplicate any amount payable on any Pre-Petition
Invoice or otherwise payable hereunder; and, notwithstanding the foregoing, or
anything to the contrary contained herein, no Cure Cost shall be payable other
than those set forth on SCHEDULE 3.5 attached hereto. The Parties acknowledge
that Cure Costs do not include unknown claims, potential claims, unsubmitted
claims or any outstanding earned retention that is not yet payable.

        3.6. Replacement Subcontractors and Vendors. Except as ordered by the
Bankruptcy Court, Contractor shall not change (otherwise than in connection with
the termination of a vendor or subcontractor for default, as reasonably
determined by the Contractor and subject to approval of Raytheon's
Representative) any of the vendors or subcontractors listed on SCHEDULE 3.6 as
"Key Vendors and Subcontractors" without the prior consent of Raytheon's
Representative.

        3.7. New Vendor Contracts. At the request of Raytheon's Representative,
the Contractor shall, in the name of, and on behalf of, Raytheon, enter into new
subcontracts and purchase orders relating to the Project ("New Vendor
Contracts").

        3.8. Change Orders and Modifications; Notice. Contractor shall notify
and obtain prior approval from Raytheon's Representative for any modification or
change order to any Assigned Vendor Contract, Owner Assumed Contract or New
Vendor Contract in excess of $20,000, other than in the ordinary course of
business. Contractor shall notify (by electronic means or otherwise) Raytheon
within five (5) business days of any other modification or change (including
change orders) to any subcontract or purchase order. Contractor will obtain
prior approval from Raytheon's Representative (which shall not be unreasonably
withheld or delayed) for, and will notify Raytheon in the Bi-Weekly Project
Estimate (defined below) of, any single payment (or any series of payments to
the same party to be paid within fourteen (14) days of each other) in excess of
$50,000 to any vendor or subcontractor.

        3.9. Contract Administration. At the direction of Raytheon, Contractor
shall administer all of the Assigned Vendor Contracts, Owner Assumed Contracts
and New Vendor Contracts on behalf of Raytheon. Pursuant to, and subject to any
restrictions contained herein, Contractor shall be authorized to enter into
modifications to any of the Assigned Vendor Contracts, Owner Assumed Contracts
or New Vendor Contracts. At the direction of Raytheon, Contractor shall issue
and deliver all invoices, bills, applications for payment, certificates and/or
reports to Owner (in conformity with the requirements of the Construction
Contract), that are required to be issued or delivered as preconditions to Owner
making milestone Owner Payments under the Construction Contract (in accordance
with the terms set forth herein).

        3.10. Limits on Authority. Except as otherwise expressly provided
herein, and other than as set forth in any approved Bi-Weekly Project Estimate,
Contractor shall not incur, or enter into any agreement with any third party to
incur, any liability materially in excess of the Budget (as then revised)
without the prior written consent of Raytheon's Representative.

SECTION 4.   CONTRACTOR'S PERFORMANCE OBLIGATIONS.
             -------------------------------------

        4.1. Contractor Obligations. As set forth in greater detail below, the
Contractor and Raytheon intend that the Contractor perform, on a cost-reimbursed
basis (except with respect to Contractor's indemnity obligations as set forth
herein), all of Contractor's obligations hereunder (except as expressly set
forth herein), which shall include the Services (the "Contractor Obligations").
Under the oversight and supervision of Raytheon, and on its behalf, the

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Contractor shall perform all of the Contractor Obligations in accordance with
the "Budget" (as defined below) and "Project Schedule" (as defined below),
provided that the obligations of Contractor in this Section 4.1 are not intended
to mean that delays or cost overruns, not resulting from Contractor's gross
negligence or willful misconduct, are the responsibility of the Contractor.
Contractor's responsibility and liability for delays and cost overruns resulting
from Contractor's gross negligence or willful misconduct are set forth in
Section 6.4 hereof. Contractor shall attend and participate in all regularly
scheduled meetings with the Owner, Raytheon, vendors, specialty contractors, and
others, to the extent deemed necessary or advisable by Raytheon's
Representative.

        4.2. Baseline Report. The Contractor, at or prior to the execution of
this Agreement, and not later than the tenth day of each month during the Term
hereof with respect to the prior month, shall provide to Raytheon an analysis of
the progress and status of the Project, including, without limitation:

             4.2.1. a list of any and all Assigned Vendor Contracts and Owner
        Assumed Contracts, including, for each of the foregoing, a complete
        payment history, and shall provide copies or shall permit Raytheon to
        have access to, and to make copies of, the Assigned Vendor Contracts and
        Owner Assumed Contracts,

             4.2.2. any pending or outstanding change orders (including known
        events of force majeure) to the Construction Contract, purchase orders
        or other material agreements,

             4.2.3. any claims of any third party (including subcontractors and
        vendors) against the Contractor, the Owner, Raytheon (or its designees),
        or with regards to the Project, of which Contractor is aware,

             4.2.4. any design, engineering, construction, supply, material,
        labor, environmental, or operational issues known to the Contractor,
        which are reasonably likely to, either currently or with the passage of
        time, result in additional costs to or delay of the completion of the
        Project beyond the costs and time set forth in the Budget or the Project
        Schedule,

             4.2.5. the existence of any outstanding claim known to the
        Contractor against any third party under any subcontract, purchase
        order, guaranty or warranty arising in connection with the Project,

             4.2.6. the status and schedule of all payments:

                    4.2.6.1. owing to any subcontractor, vendor or third party
             that remain unpaid,

                    4.2.6.2. which were paid on or after May 14, 2001, or

                    4.2.6.3. which were paid prior to May 14, 2001 in respect to
             Services, services or supplies to be performed or delivered after
             May 14, 2001, and

             4.2.7. the status and schedule of all equipment delivered or to be
        delivered by vendors and contractors for any Services including any
        spare parts ordered by Owner.

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        4.3. Budget; Schedule; Staffing Plan.

             4.3.1. Attached hereto as SCHEDULE 4.3.1 is Contractor's reasonable
        estimate of the anticipated master budget broken down by month and by
        cost element detailing all expenses (including, without limitation, all
        cash retainage owed to any subcontractor or contractor, whether for work
        performed or invoices submitted before or after May 14, 2001) from the
        period beginning on June 20, 2001 and ending upon Project Completion (as
        updated from time to time consistent with the provisions hereof, the
        "Budget"). The Parties acknowledge that the Budget does not reflect any
        Warranty costs.

             4.3.2. Attached hereto as SCHEDULE 4.3.2 is Contractor's reasonable
        estimate of the Project schedule for the construction, testing and
        commissioning of the Project, reasonably satisfactory to Raytheon (as
        updated from time to time consistent with the provisions hereof, the
        "Project Schedule").

             4.3.3. Attached hereto as SCHEDULE 4.3.3 is a staffing plan (as
        updated from time to time consistent with the provisions hereof, the
        "Staffing Plan") for the "Performance Period" (as defined below).

             4.3.4. The Contractor shall update the Project Schedule not less
        than every two weeks, and the Budget and the Staffing Plan not less than
        monthly. The Contractor will meet with Raytheon to discuss such updated
        Schedule, Budget and Staffing Plan during the monthly Project reviews
        and the weekly progress meetings, or as otherwise requested by Raytheon.

             4.3.5. The Contractor shall promptly, and in any event within
        forty-eight (48) hours of becoming aware of any event, issue or
        condition that would reasonably be expected to (i) cause a material
        delay in the Project Schedule, (ii) cause any category of costs in the
        Project Budget to be materially exceeded, or (iii) materially adversely
        affect the execution of the Services, report the existence of such
        event, issue or condition to Raytheon's Representative, and promptly
        update the Project Schedule, the Budget or the Staffing Plan, as
        applicable.

             4.3.6. For avoidance of doubt, the Budget shall not restrict the
        Allowable Costs (as defined below) reimbursable by Raytheon to the
        Contractor, other than as set forth herein.

        4.4. Punchlist; Warranty Works. From the Mechanical Completion Date and
thereafter, the Contractor will provide a detailed schedule for Punch List
Items, and the Contractor will update this schedule every two weeks and will
meet with Raytheon as requested to discuss the updated schedule. From the
Provisional Acceptance date and during the Warranty Period, the Contractor will
provide a detailed schedule of warranty works, and the Contractor will update
this schedule every two weeks and will meet with Raytheon as requested to
discuss the updated schedule.

        4.5. Staffing.

             4.5.1. During the period beginning on the execution hereof and
        ending upon the termination of this Agreement (the "Performance
        Period"), Contractor, in fulfilling the Contractor Obligations, shall
        staff the Project in accordance with the Staffing Plan. Any

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        deviation from the Staffing Plan that materially increases the costs of
        Contractor's performance or results in a material delay in completing
        the Project shall require the prior written consent of Raytheon's
        Representative.

             4.5.2. During the Performance Period the Contractor shall use
        commercially reasonable efforts to maintain staffing levels in
        accordance with the Staffing Plan. Contractor shall use reasonable
        efforts to require any subcontractor to maintain such subcontractor's
        staffing levels in accordance with such subcontractor's responsibilities
        in connection with the Project. At Raytheon's Representative's request,
        Contractor shall remove from the Project any individual reasonably
        requested by Raytheon's Representative and Contractor shall use
        commercially reasonable efforts to promptly replace such individual with
        an appropriately qualified person, provided that any costs or delays
        resulting from such removal shall be born by Raytheon.

             4.5.3. During the Performance Period, and consistent with the
        Staffing Plan, the Contractor shall continue to assign the individuals
        identified in SCHEDULE 4.5.3 as "Key Persons" to the performance of the
        Project, and Contractor shall not terminate the employment of such Key
        Persons, with respect to the Project, other than (i) for cause, as
        reasonably determined by the Contractor, (ii) in accordance with the
        Staffing Plan, or (iii) with the approval of Raytheon, such approval not
        to be unreasonably withheld or delayed. In addition, during the
        Performance Period the Contractor shall not terminate (otherwise than
        for cause, as reasonably determined by the Contractor) the employment of
        any other individuals (other than craft labor and local field hires)
        other than pursuant to the Staffing Plan, provided, however, that,
        Contractor may remove any employee from the Project, with the prior
        approval of Raytheon, which shall not be unreasonably withheld or
        delayed. If any individuals referred to in the preceding sentence
        voluntarily terminate their employment, die or become disabled prior to
        the time that they are no longer required for the Project as provided in
        the preceding sentence, the Contractor shall use commercially reasonable
        efforts to promptly replace such individuals with appropriately
        qualified individuals. Any replacements for the Key Persons referred to
        above during the Performance Period will be subject to the Project
        Liaisons' prior approval, not to be unreasonably withheld or delayed.

        4.6. Resources. The Contractor shall provide all reasonably necessary
resources for the performance of the Contractor Obligations (e.g. tools,
equipment, scaffolding, etc.) as required, the cost of which shall be reimbursed
by Raytheon in accordance with the terms of this Agreement.

SECTION 5.   REIMBURSEMENT AND FUNDING
             -------------------------

        5.1. Payment Account. Contractor shall establish a separate interest
bearing account with a financial institution reasonably acceptable to both the
Contractor and Raytheon (such account, the "Red Oak Payment Account") to receive
deposits made by Raytheon pursuant to this Agreement, such account to be under
the control of Contractor. The Red Oak Payment Account will be in the name of
the Contractor, in its capacity as Contractor pursuant to this Agreement.
Contractor shall account for and disclose to Raytheon all payments made from the
Red Oak Payment Account. Any and all interest paid upon the Red Oak Payment
Account shall be deemed to be deposits made by Raytheon, and for purposes of
calculating amounts to be deposited under this Agreement, such amounts shall
reduce the obligations of Raytheon.

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        5.2. Bi-Weekly Project Estimates. During the Performance Period, and on
the schedule described below, the Contractor shall deliver to Raytheon a
bi-weekly estimate of the costs to be incurred and personnel to be utilized by
Contractor in performance of the Contractor Obligations in accordance with this
Agreement (the "Bi-Weekly Project Estimate"), showing, for such two week period,
Contractor's estimates of:

             5.2.1. the personnel planned to be working on the Project,

             5.2.2. the labor costs incurred by Contractor on the Project
        pursuant hereto, and calculated in accordance with the rates and charges
        set forth on SCHEDULE 5.2 (the "Labor Costs"),

             5.2.3. the out-of-pocket costs, including payments to
        subcontractors and vendors, incurred by Contractor on the Project
        pursuant hereto, and calculated in accordance with the rates and charges
        set forth on SCHEDULE 5.2 (the "Out-of-Pocket Costs"),

             5.2.4. any taxes ("Taxes") estimated to be levied, collected,
        assessed or imposed by any government or government agency in connection
        with Contractor's performance of the Contractor Obligations, including,
        without limitation, any VAT, levies, imposts, duties, charges, fees,
        deductions or withholdings of whatever nature (but not including the
        income taxes of Contractor or its employees, except that Raytheon shall
        reimburse Contractor for the cost of tax equalization of its employees)
        payable by the Contractor in connection with the performance of its
        obligations hereunder, and

             5.2.5. any Labor Costs, Out-of-Pocket Costs or Taxes payable to the
        Contractor pursuant hereto which were not reflected in a prior Bi-Weekly
        Project Estimate and which were not otherwise paid by Raytheon (the
        "Accrued Costs", and collectively with the Labor Costs, Out-of-Pocket
        Costs, and Taxes that are required to be paid to Contractor hereunder,
        referred to hereinafter as the "Allowable Costs"). Subject to Section
        5.8 hereof, any amounts which were expended by Contractor under the
        Interim Agreement which were, pursuant to the terms of the Interim
        Agreement, required to be reimbursed by Raytheon, and which, as of the
        date of this Agreement, have not been reimbursed by Raytheon (or
        invoiced thereto by Contractor), may be treated as an Allowable Cost
        under this Agreement.

             5.2.6. The total amount of Allowable Costs for any week in a
        Bi-Weekly Project Estimate is referred to herein as the "Estimated
        Weekly Costs" for such week.

             5.2.7. Contractor may not include in any Bi-Weekly Project Estimate
        any amounts intended to reimburse Contractor for funds spent by
        Contractor (pursuant to the approval of Contractor's
        Debtor-In-Possession Lenders or otherwise) on the Project that were
        spent prior to, or not in connection with this Agreement (or under the
        Interim Agreement), and, notwithstanding anything to the contrary
        contained herein, no such amount shall constitute an Allowable Cost.

        5.3. Estimate Schedule. The first Bi-Weekly Project Estimate shall be
delivered by November 14, 2001, covering the weeks beginning November 17, 2001
and November 24, 2001. Thereafter, a Bi-Weekly Project Estimate will be

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delivered beginning on November 21, 2001 (covering the weeks beginning December
1, 2001 and December 8, 2001) and every fourteen (14) days thereafter during the
Performance Period.

        5.4. Estimate Meetings. The Contractor shall meet with the Project
Liaisons within five (5) days following the delivery of any Bi-Weekly Project
Estimate to discuss the contents of such Bi-Weekly Project Estimate and to
confirm that the Estimated Weekly Costs for the two week period in fact
represent Allowable Costs to be paid in the period. In the event that Raytheon
does not approve the Bi-Weekly Project Estimate, then nothing contained herein
shall obligate Raytheon to fund, or to commit to fund, any costs whatsoever
(other than any costs already approved to be reimbursed by Raytheon), and
nothing contained herein shall obligate Contractor to perform any Contractor
Obligations with respect to such Bi-Weekly Project Estimate. In the event that
Raytheon approves the Bi-Weekly Project Estimate only in part, then Raytheon
shall not be obligated to fund any amounts beyond those so approved, and
Contractor shall not be obligated to perform Contractor Obligations beyond the
amount of such funding, with respect to such Bi-Weekly Project Estimate. In the
event that Raytheon does not approve a Bi-Weekly Project Estimate, in whole or
in part, then Raytheon and the Contractor shall set forth in writing the
Allowable Costs which are approved, if any, for such period, and such revised
and approved Bi-Weekly Project Estimate shall be deemed to be an invoice payable
in accordance with the terms hereof. A failure to agree upon any Bi-Weekly
Project Estimate shall not affect the obligations of the parties with respect to
any prior Bi-Weekly Project Estimates. Contractor may take commercially
reasonable efforts to mitigate any costs, including the reduction of otherwise
applicable staffing levels, resulting from the inability of the parties to agree
upon a Bi-Weekly Project Estimate (and the lack of additional funding resulting
therefrom), provided however, that Contractor shall provide such reasonable
prior notice as is practicable under the circumstances of such mitigation
efforts to Raytheon.

        5.5. Funding. Provided that Contractor has met with Raytheon with
regards to a Bi-Weekly Estimate and that the Parties have agreed upon the
Estimated Weekly Costs for each of the two weeks in the applicable two week
period, then Raytheon shall deposit into the Red Oak Payment Account the total
amount of Estimated Weekly Costs set forth in the Bi-Weekly Project Estimate no
later than three (3) days prior to the first Monday of the applicable week.
Notwithstanding the foregoing, in the case of the Bi-Weekly Project Estimate for
the week beginning November 17, 2001, funding shall be deposited no later than
November 19, 2001, and for the week beginning November 24, 2001, funding shall
be deposited no later than November 21, 2001. The payment or receipt by Raytheon
of any such amounts or the estimate as provided above shall not prejudice its
rights to subsequently contest the amounts set forth in the applicable Bi-Weekly
Project Estimate. Contractor shall pay from the Red Oak Payment Account all
Allowable Costs payable pursuant to this Agreement, including any Out-of-Pocket
Costs, Labor Costs or Accrued Costs payable to Contractor or its affiliates, as
and when earned or payable, provided however that such payments shall comply
with other applicable terms of this Agreement. Contractor shall not withdraw any
funds from the Red Oak Payment Account for any other purpose whatsoever, unless
directed to, in writing, by Raytheon.

        5.6. Bi-Weekly Project Statement. Not later than fourteen (14) days
following the Friday of the second week in any two week period covered by a
Bi-Weekly Project Estimate (i.e., not more than thirty-seven (37) days from the
scheduled delivery of the applicable Bi-Weekly Project Estimate), the Contractor
will deliver to Raytheon a statement (the "Bi-Weekly Project Statement") showing
(i) the personnel who actually worked on the Project during the two applicable
weeks, the actual hours worked by each such person, and the task code
identifying the type of work performed thereby, (ii) the Labor Costs incurred
during those two weeks, (iii) the Out-of-Pockets Costs and Taxes paid by the

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Contractor during those two weeks, and (iv) any Accrued Costs paid by the
Contractor not already reimbursed by Raytheon. This Bi-Weekly Project Statement
will also include supporting documentation in reasonable detail for all Labor
Costs (including an updated description of each task code), Out-of-Pocket Costs,
Taxes, Accrued Costs, weekly certified payroll reports and status reports on
progress in the field, minutes of all meetings, issues of concern, vendor and
subcontractor updates (including manloading, progress, scheduled deliveries,
problems, etc.) and progress photos.

        5.7. Reconciliation. Adjusting payments or credits as appropriate to
reflect any differences in the amounts set forth in the Bi-Weekly Project
Estimate as compared to the Bi-Weekly Project Statement will be made to the Red
Oak Payment Account by the Contractor or Raytheon, as appropriate, within five
(5) business days of such reconciliation. Any amounts paid by Contractor as
shown on the Bi-Weekly Project Statement which were not included in the
Bi-Weekly Project Estimate for such period but that were reasonable and
appropriate to be paid pursuant hereto, shall be deemed Accrued Costs and
included in the following Bi-Weekly Project Estimate. The Contractor and
Raytheon will meet if requested by any party to discuss any differences between
the Bi-Weekly Project Statement and the Bi-Weekly Project Estimate.

        5.8. No Duplication. No amount payable by Raytheon under this Project
Completion Agreement, for Allowable Costs, for indemnity, or otherwise, shall be
payable, or paid, to Contractor more than once. Contractor shall not include any
item in any Bi-Weekly Project Estimate for which Contractor has already been
paid by Raytheon under any other agreement or arrangement with respect to the
Project.

        5.9. Pre-Petition Invoices. The Contractor represents and warrants that,
to Contractor's knowledge, all of the unpaid invoices issued or issuable to
Contractor by Project vendors and subcontractors prior to, or arising in
connection with work performed prior to, May 14, 2001 (the "Pre-Petition
Invoices") are listed on SCHEDULE 5.9 attached hereto. The Parties agree that
certain other invoices that may be received by Contractor shall be deemed to be
"Pre-Petition Invoices," provided that such invoices (i) do not appear of
SCHEDULE 5.9, (ii) were issued, or relate to work performed, prior to May 14,
2001, (iii) are unknown to Contractor as of the date hereof, and (iv) do not
exceed $20,000 individually, or $100,000 in the aggregate. Payments of the
Pre-Petition Invoices shall be made by Contractor, and the costs thereof may be
included as Out-of-Pocket Costs in any applicable Bi-Weekly Project Estimate,
provided, however, that Contractor shall clearly indicate to Raytheon in any
such Bi-Weekly Project Estimate, any amounts relating to any Pre-Petition
Invoices. Raytheon shall not be responsible for funding any other pre-petition
invoices or costs (other than Cure Costs), other than as expressly set forth
herein.

        5.10. Audit Rights. Raytheon shall have reasonable access during normal
business hours to Contractor's books and records as necessary to verify the
number of man-hours actually charged in a given work week, all Out-of-Pocket
costs, including subcontractor and vendor payments, any Taxes, and the
application of the appropriate rates and multipliers to the man-hours charged.
Raytheon shall not have audit rights with respect to the agreed upon multiplier
rates set forth on SCHEDULE 5.2 for Labor Costs and certain Out-of-Pocket Costs.

        5.11. Tax Cooperation. Contractor shall cooperate with Raytheon, prior
to or following the expiration or earlier termination of this Agreement, to
obtain tax refunds from any applicable taxing authorities for the benefit of
Raytheon. Raytheon shall compensate Contractor (at rates substantially similar
to the rates for work performed hereunder) for any work performed

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under this Section 5.11 following the termination or expiration of this
Agreement. The Parties shall endeavor to minimize Taxes payable in connection
with the Project, to the extent permitted by law.

        5.12. Set off. Raytheon agrees to fund its obligations to make payments
to the Red Oak Payment Account notwithstanding any right of set-off or
recoupment (other than credits arising from the reconciliation of the Bi-Weekly
Project Estimate as against the Bi-Weekly Project Statement) that Raytheon may
have or allege against any sums due under this Agreement.

SECTION 6.   CONTRACTOR'S ADDITIONAL OBLIGATIONS.
             ------------------------------------

        In performing its obligations under this Agreement:

        6.1. Contractor's Indemnity. The Contractor shall be responsible for,
and shall indemnify, defend and hold Raytheon and its designees harmless
against, any claims arising from the gross negligence or willful misconduct of
the Contractor or WGI Delaware in the performance or nonperformance of the
Contractor's or WGI Delaware's obligations under this Agreement; provided,
however, that in any case in which the Contractor uses commercially reasonable
efforts to perform and comply with its obligations hereunder and takes all
reasonable steps to abide by the directions of Raytheon and the terms of this
Agreement, Contractor shall be deemed not to have breached such obligations.

        6.2. Claims. The Contractor shall use commercially reasonable efforts to
diligently pursue, settle, investigate, negotiate (or, as necessary, defend)
change orders and claims for equitable adjustment and other claims relating to
the Project, including any claims for warranty or for non-complying work or
delivery, against the Owner, customers, suppliers, subcontractors, vendors and
non-contract parties (collectively, "Claims") other than those Claims that the
Contractor reasonably believes are not commercially reasonable (and in the case
of defending Claims, that the Contractor reasonably believes are not
commercially reasonable to defend); provided that the Contractor shall not be
required to litigate, arbitrate or assume the defense of any Claim. Contractor's
pursuit or defense, if any, of such Claims shall be at the direction and under
the control of Raytheon. Contractor shall use commercially reasonable efforts to
assist Raytheon in pursuing, litigating, arbitrating or defending against any
Claims, and Raytheon shall take the lead role in such process. Any cash received
by the Contractor from any such Claims shall be remitted to Raytheon within five
(5) business days after receipt and until then shall be held in trust. In the
event that Contractor reasonably believes such Claims are not commercially
reasonable, or that the defense of such Claims is not commercially reasonable,
and Raytheon wishes to pursue or defend such Claim, Contractor agrees to
cooperatively provide all documentation, information, access, and access to (but
not use of) personnel requested by Raytheon. In addition to the foregoing, the
Contractor shall, upon the request of Raytheon, assign and transfer to Raytheon,
or its designee, all of the Contractor's right, title and interest in and to any
Claim, if any. The estimated costs of Contractor associated with activity under
this Section 6.2 may be included as Out-of-Pocket Costs in any applicable
Bi-Weekly Project Estimate.

        6.3. No Modifications. Except as ordered by the Bankruptcy Court, the
Contractor shall not, and is not authorized to, waive, terminate, modify or
amend any term of the Project Agreements without the express written consent of
Raytheon.

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        6.4. Specified Obligations. In performing its obligations hereunder, the
Contractor shall act (a) in good faith, (b) in accordance with Prudent Utility
Practices (meaning, the practices, methods, techniques, standards and acts
engaged in or approved by a significant portion of the electric utility industry
in the United States or any of the practices, methods, techniques, standards and
acts which, in the exercise of reasonable judgment in light of the facts known
(or which a qualified and prudent contractor should have known) at the time a
decision is made, would have been expected to accomplish a desired result at
reasonable cost consistent with good business practices, reliability, safety and
expedition, in each case for use in connection with the design, engineering,
construction, testing, operation and maintenance of power stations of the same
or similar size and type as the Project, that at the particular time of
performance of the Services (i) in the exercise of that degree of skill,
diligence, prudence and foresight which would reasonably be expected from a
skilled and experienced contract employing generally accepted professional
standards with respect to the performance of the Services hereunder, would have
been expected to accomplish the desired result in a manner consistent with
Applicable Laws, Applicable Permits, Accepted Electrical Practices, reliability,
safety, environmental protection, economy and expediency, and (ii) conform in
all material respects to the design, engineering, construction, testing,
operation, maintenance and other recommendations and guidelines of the equipment
suppliers and manufacturers applicable to the equipment in question; provided
however that Prudent Utility Practices are not limited to the optimum practices,
methods, techniques, standards and acts to the exclusion of others, but rather
refer to those practices, methods, techniques, standards and acts that are
generally accepted or approved by a significant portion of the electric utility
industry in the relevant region, during the relevant time period, as described
in the preceding clause), and (c) in accordance with the degree of care and
skill ordinarily exercised by engineering and construction firms performing
similar services, and will use commercially reasonable efforts to perform the
Services remaining to be performed under the Project Agreements within the time
periods required under the Project Agreements and the Schedule and within the
cost estimates for the Project Agreements and the Budget as in effect on the
date of this Agreement. Contractor's obligations set forth in the preceding
sentence are referred to as the "Specified Obligations." Contractor shall be
liable for any and all costs and delays resulting from Contractor's gross
negligence or willful misconduct, including the costs of re-performing any
Services that are non-complying as a result of Contractor's gross negligence or
willful misconduct, and Contractor shall, unless directed by Raytheon,
expeditiously re-perform such non-complying Services.

        6.5. Insurance. During the Term, the Contractor shall maintain the
insurance required under the terms of the Project Agreements consistent with the
limits of coverage in place as of the date hereof, and, with respect to
project-specific insurance relating to the Project, shall name Raytheon as an
additional insured and/or loss payee as its interest may appear. The actual cost
of maintaining this insurance on the Project will constitute an Out-of-Pocket
Cost. Contractor shall turn over, assign or otherwise transfer to Raytheon any
proceeds of or rights in any insurance taken out by any party (including
Contractor) with regards to the Project where Contractor is a direct or
third-party beneficiary of such insurance. The Parties have agreed that
Contractor shall also provide the insurance listed on SCHEDULE 6.5.

        6.6. Good Standing. The Contractor shall maintain its existence and good
standing and the existence and good standing of any Affiliate performing work
under the Project Agreements, until performance is completed.

        6.7. Permits and Licenses. The Contractor shall maintain the existence
and effectiveness of all permits necessary for Contractor's performance
hereunder. Contractor shall

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assist Raytheon in obtaining any of the permits required by Raytheon (as
determined in its reasonable judgment) to fulfill Raytheon's obligations to the
Owner on the Project, and, upon request, will transfer to Raytheon any Project
related license, permit or qualification held thereby.

        6.8. Performance Security.

             6.8.1. The Contractor shall deliver, assign or otherwise transfer
        to Raytheon any retainage, collateral, bond or other security relating
        to the Project, other than any cash retainage held by the Contractor and
        attributable to work performed on or before May 14, 2001, held by
        Contractor or acquired thereby, or issued for the benefit of, or in the
        name of Contractor, subject to the consent rights, if any, of the party
        having posted or issued such retainage, collateral, bond or other
        security, (i) in the case of any cash, within two (2) business days from
        the date of this Agreement, and (ii) in the case of any other
        performance security, as soon as practicable following the date of this
        Agreement. Additionally, Contractor shall do all things necessary, other
        than incurring unreimbursed costs in connection with obtaining third
        party consents, to accomplish such delivery, assignment and/or transfer.
        In the event that any performance security cannot be assigned,
        Contractor shall use its best efforts to cause the third party issuer of
        such security to re-issue such security in favor of Raytheon or its
        nominees. The estimated costs of Contractor associated with activity
        under this section may be included as Out-of-Pocket Costs in any
        applicable Bi-Weekly Project Estimate.

             6.8.2. Contractor hereby warrants and represents that, as of the
        date hereof, all of the performance security held by Contractor, or
        issued for the benefit thereof or in Contractor's name, is listed on
        SCHEDULE 6.8.2, other than any cash retainage attributable to work
        performed on or before May 14, 2001, and Contractor shall update such
        SCHEDULE 6.8.2 from time to time to reflect any changes thereto (other
        than the assignment or transfer to Raytheon or its nominees).

             6.8.3. Contractor hereby warrants and represents that all cash
        retainage withheld from payments to subcontractors and vendors (a) was
        not identified and deposited into any segregated account(s), (b) was
        co-mingled with Contractor's or WGI Delaware's general operating funds,
        and (c) is subject to the claims of Contractor's and/or WGI Delaware's
        secured creditors in Contractor's and/or WGI Delaware's bankruptcy
        proceeding before the Bankruptcy Court. Contractor acknowledges that
        notwithstanding anything contained herein, Raytheon shall not be deemed
        to have waived any rights in or claims to such cash retainage.

        6.9. No Liability for Consequential Damages. In no event, whether based
on breach of contract, warranty, tort, negligence, error or omission, indemnity,
strict liability, or otherwise, shall Contractor or Raytheon (or their
respective affiliates, officers, directors, agents or employees) be liable to
the other for any loss of profits or revenues, or for any other special,
indirect, incidental, exemplary, punitive or consequential loss or damages of
any nature, whether similar or dissimilar to those enumerated above.
Notwithstanding the foregoing, Contractor shall be liable for consequential
damages under this Agreement arising from or in connection with Contractor's
willful misconduct. The Parties hereby acknowledge and agree that damages
arising from third party claims for personal injury related to the Project site
shall not be considered special, indirect, incidental, exemplary, punitive or
consequential damages. Notwithstanding anything to the contrary contained
herein, no provision of this Agreement, including, without limitation, this
Section 6.9, shall in any way limit or be construed as a waiver of Raytheon's

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rights, if any, to seek any proceeds of any applicable insurance, or the rights
to seek indemnification under any other agreement, including, without
limitation, Raytheon's rights under the Stock Purchase Agreement.

        6.10. Publication. The Contractor shall not, except as required by
applicable law, disclose or otherwise publish or publicly comment upon the
existence of, or Contractor's involvement in, this Project Completion Agreement,
nor any term thereof, without the prior written approval of Raytheon, not to be
unreasonably withheld or delayed, and, if required, Owner. Notwithstanding the
foregoing, but subject to the Owner's rights, Contractor may publicly correct
any factual inaccuracies contained in any public statement or comment made by
Raytheon, provided, that Contractor shall have delivered the text of such
correction to Raytheon no less than one (1) business day prior to making such
public correction.

SECTION 7.   RAYTHEON'S INDEMNITY.
             ---------------------

        7.1. Indemnity. Raytheon agrees to indemnify, defend and hold Contractor
and its Affiliates and any and all directors, officers, employees and/or agents
of the foregoing (the "Indemnitees"), harmless from and against any and all
claims, liabilities, expenses, damages, losses, costs, judgments, demands, suits
(including reasonable attorney's fees) of any kind or nature whatsoever, arising
(a) from or related to Contractor's assumption and assignment of the Owner
Assumed Contracts and Assigned Vendor Contracts, and regardless of whether based
upon negligence, contract, warranty, indemnity, strict liability, error,
omission or otherwise, or (b) in connection with Contractor's performance of
this Agreement.

        7.2. Exceptions. Notwithstanding Section 7.1 hereof, or any provision to
the contrary contained herein, Raytheon shall not indemnify, hold harmless, or
defend the Indemnitees with regards to any claims, expenses, damages, losses,
costs, judgments, demands, suits (including reasonable attorney's fees) of any
kind or nature whatsoever:

             7.2.1. to the proportionate extent that such arise from any
        Indemnitee's breach of this Agreement, other than any breach of the
        Specified Obligations that does not arise from any Indemnitee's gross
        negligence or willful misconduct;

             7.2.2. to the proportionate extent that such arise from any
        Indemnitee's gross negligence or willful misconduct;

             7.2.3. to the proportionate extent that such are covered by the
        collected proceeds of any insurance policy covering the Project;

             7.2.4. to the proportionate extent that such are WGI Delaware's
        responsibility under Section 10.1 hereof and the WGI Guaranty;

             7.2.5. to the proportionate extent that such are Cure Costs not
        appearing on SCHEDULE 3.5 hereof; or

             7.2.6. to the proportionate extent that such are in connection with
        any Pre-Petition Invoice not meeting the requirements of Section 5.9
        hereof.

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SECTION 8.   REPRESENTATIONS AND WARRANTIES.
             -------------------------------

        8.1. Representations of Contractor. Contractor hereby represents and
warrants that:

             8.1.1. Organization; Authority.

                    8.1.1.1. Contractor is a corporation duly organized, validly
             existing and in good standing under the laws of the State of Ohio
             with all due corporate power and authority to enter into this
             Agreement, and any agreements called for herein to which it is a
             party, and to perform each and every obligation hereunder and
             thereunder.

                    8.1.1.2. WGI Delaware is a corporation duly organized,
             validly existing and in good standing under the laws of the State
             of Delaware with all due corporate power and authority to enter
             into this Agreement, and any agreements called for herein to which
             it is a party, including, without limitation, the WGI Guaranty, and
             to perform each and every obligation hereunder and thereunder.

                    8.1.1.3. All of the equity interests in Contractor are owned
             by WGI Delaware.

             8.1.2. Binding Effect. The execution and delivery of this Agreement
        and each other agreement called for hereby, and the consummation of the
        transactions contemplated hereby and thereby, have been duly and validly
        authorized by all necessary corporate action on behalf of Contractor and
        WGI Delaware, and this Agreement, and in the case of WGI Delaware, the
        WGI Guarantee, has been duly executed and delivered by each of them,
        and, assuming the due authorization, execution and delivery thereof,
        constitutes, or when executed and delivered will constitute, the legal,
        valid and binding obligation of Contractor and WGI Delaware, enforceable
        against each of them in accordance with their terms, except as such
        enforceability may be subject to the laws of general application
        relating to bankruptcy, insolvency, creditors rights, and the relief of
        debtors, other than with respect to, or in connection with, the current
        Bankruptcy Filing and the related bankruptcy proceedings before the
        Bankruptcy Court.

             8.1.3. Non-Contravention. Neither the execution and delivery of
        this Agreements or the agreements called for thereby, including, without
        limitation, the WGI Guaranty, nor the consummation of the transactions
        contemplated hereby or thereby, will constitute a breach or violation
        of, be in conflict with, or constitute or create a default under, give
        rise to a right of termination, modification, acceleration (whether
        after the giving of notice or lapse of time or both) or cancellation of
        any material right or obligation under, or result in the creation or
        imposition of any lien or encumbrance upon the Project, or the goods and
        materials used thereon, pursuant to:

                    8.1.3.1. any contract, agreement or commitment to which any
             of Contractor or WGI Delaware is a party or by which they are
             bound, or to which any of its properties, licenses, or permits is
             subject;

                    8.1.3.2. the articles or certificate of incorporation or
             by-laws or other constitutive documents of Contractor or WGI
             Delaware; or

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                    8.1.3.3. any statute, regulation, rule, judgment, order,
             decree or injunction of any government, governmental agency or
             court or other tribunal to which Contractor or WGI Delaware or any
             of its properties is subject, including the Bankruptcy Court.

        8.2. Representations of Raytheon.

             8.2.1. Organization; Authority.

                    8.2.1.1. Raytheon hereby represents and warrants that it is
             a corporation duly organized, validly existing and in good standing
             under the laws of the State of Delaware with all due corporate
             power and authority to enter into this Agreement, and any
             agreements called for herein to which it is a party, including any
             Raytheon Guaranty, and to perform each and every obligation
             hereunder and thereunder.

             8.2.2. Binding Effect. The execution and delivery of this Agreement
        and each other agreement called for hereby, and the consummation of the
        transactions contemplated hereby and thereby, have been duly and validly
        authorized by all necessary corporate action on behalf of Raytheon, and
        this Agreement has been duly executed and delivered thereby, and,
        assuming the due authorization, execution and delivery thereof,
        constitutes, or when executed and delivered will constitute, the legal,
        valid and binding obligation of Raytheon enforceable against it in
        accordance with their terms, except as such enforceability may be
        subject to the laws of general application relating to bankruptcy,
        insolvency, creditors rights, and the relief of debtors.

             8.2.3. Non-Contravention. Neither the execution and delivery of
        this Agreement or the agreements called for hereby, including, without
        limitation, Raytheon's Guaranty, nor the consummation of the
        transactions contemplated hereby or thereby, will constitute a breach or
        violation of, be in conflict with, or constitute or create a default
        under, give rise to a right of termination, modification, acceleration
        (whether after the giving of notice or lapse of time or both) or
        cancellation of any material right or obligation under, or result in the
        creation or imposition of any lien or encumbrance upon the Project, or
        the goods and materials used thereon, pursuant to:

                    8.2.3.1. any contract, agreement or to which either Raytheon
             is a party or by which it is bound, or to which any of its
             properties, licenses, or permits is subject;

                    8.2.3.2. the articles or certificate of incorporation or
             by-laws or other constitutive documents of Raytheon; or

                    8.2.3.3. any statute, regulation, rule, judgment, order,
             decree or injunction of any government, governmental agency or
             court or other tribunal to which Raytheon or any of its properties
             is subject, including the Bankruptcy Court.

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SECTION 9.   TERMINATION.
             ------------

        9.1. Termination by Raytheon. Raytheon may terminate the Contractor's
engagement for default (a "Termination For Cause") upon the occurrence of any of
the following:

             9.1.1. the Contractor assigns this Agreement or any of its rights
        and obligations thereunder, without the prior written consent of
        Raytheon;

             9.1.2. the failure of the Contractor to resume and thereafter
        diligently continue performance of the Services within forty-five (45)
        days after the cessation of the occurrence of a Force Majeure;

             9.1.3. the Contractor shall have suspended the progress of the
        Services for ten (10) days in violation of the terms hereof;

             9.1.4. any representation made by the Contractor to Raytheon in
        Sections 6.8.2, 6.8.3 or 8.1 of this Agreement shall have been false or
        misleading in any material respect when made; or

             9.1.5. upon the Contractor's breach of this Agreement, which, in
        each case remains uncured for ten (10) days after notice of such
        condition or breach, or in the case of a breach which cannot be cured
        within ten (10) days of such notice, for which Contractor has not
        commenced to cure within ten (10) days of such notice and diligently
        pursued thereafter without interruption. For purposes of the foregoing,
        Contractor's Bankruptcy Filing shall not constitute a default hereunder.

        9.2. Services Stoppage. Subject to Sections 5.4 and 9.5 hereof,
Raytheon, without notice, may, upon Contractor's work stoppage, immediately
terminate Contractor's engagement hereunder, and such termination shall
constitute a Termination For Cause.

        9.3. Consequential Damages from Breach. The Contractor shall not be
liable for any consequential damages arising in connection with a breach under
Section 9.1 and 9.2 hereof, except as set forth in Section 6.9 hereof.

        9.4. Termination for Convenience. Raytheon may terminate the
Contractor's engagement for convenience at any time (a "Termination For
Convenience"), upon five (5) days written notice. In the event of a Termination
for Convenience, (i) Contractor will be paid for Allowable Costs incurred
pursuant to this Agreement through the date of termination, and (ii) Contractor
will be paid for its actual, reasonable and customary demobilization costs
(determined on a basis consistent with SCHEDULE 5.2), such demobilization to
begin promptly upon the receipt of such notice.

        9.5. Termination by Contractor. Contractor may suspend performance for
non-payment of amounts due after five (5) days notice. In addition, Contractor
may terminate this Agreement after thirty (30) days cumulative suspension for
non-payment. This termination shall be treated as a Termination For Convenience.
Other than as set forth in this Section, Contractor may not terminate this
Agreement or its obligations hereunder.

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        9.6. Survival. Sections 1, 2.2, 2.5, 5.1, 5.2, 5.8, 5.10, 5.11, 5.12,
6.1, 6.9, 7.1, 7.2, 9.3, 9.6, 9.7, 9.8, 10.1, 10.2, 13.1, 13.2, and Sections
14.1 through 14.18 inclusive, shall survive the termination or expiration of
this Agreement.

        9.7. Liquidation of Red Oak Payment Account. Upon the earlier of
termination of this Agreement or the date of Final Completion, any and all
amounts remaining in the Red Oak Payment Account, if any, shall be disbursed to
Raytheon, inclusive of all interest thereon or any credits owing thereto,
without any setoff or deduction of any kind other than Allowable Costs to be
reimbursed pursuant to this Agreement, including, in the event of a Termination
For Convenience, the Contractor's demobilization costs that are reimbursable
pursuant to this Agreement. The Contractor shall also remit to the Red Oak
Payment Account any and all amounts withdrawn from the account under this
Agreement that remain unspent as of the termination date. The liquidation of the
Red Oak Payment Account shall in no way affect Contractor's rights to pursue or
collect other amounts due to Contractor under this Agreement.

        9.8. Non-Solicitation by Raytheon. For the period beginning upon the
date of this Agreement and, (i) in the case of a Termination For Cause, ending
upon the date of such Termination For Cause, (ii) in the case of a Termination
For Convenience, where such Termination For Convenience follows Contractor's
receipt of a notice of and failure to timely cure any condition or event within
the Contractor's Obligations which in the reasonable judgment of Raytheon is
likely to cause a material delay in the Project Schedule or cause any category
of costs in the Project Budget to be materially exceeded or materially adversely
affect the execution of the Services, ending upon the date five (5) days from
such notice, and (iii) in the case of any other Termination For Convenience,
ending upon the date thirty (30) days from the notice of such Termination For
Convenience, Raytheon shall not solicit or hire the employees listed on
SCHEDULE 9.8, and Raytheon shall use commercially reasonable efforts to cause
any proposed replacement Contractor under the Construction Contract to similarly
not solicit or hire the employees listed on SCHEDULE 9.8. The provisions of this
Section 9.8 are not intended to imply that Raytheon may terminate Contractor
other than in accordance with Sections 9.1, 9.2 and 9.4 hereof.

        9.9. Special Bankruptcy Liquidation Provision. In the event that any (x)
action or position taken by Raytheon or its Affiliates in the Contractor's
Chapter 11 cases contesting the confirmation of WGI Delaware's plan of
reorganization or (y) other adversary proceedings or contested matters initiated
by Raytheon in the Chapter 11 cases, other than any adversary proceedings
brought in response to the gross negligence or willful misconduct of the
Contractor or any of its Affiliates or in response to the breach of this
Agreement by Contractor, causes the Contractor to be unable to perform its
obligations under this Agreement and causes the Contractor to be unable to
perform a substantial portion of its other contracts in its Power division
(other than other projects Raytheon is funding), then

             9.9.1. Contractor agrees that it (or its successor), using
        commercially reasonable best efforts, shall continue to perform as much
        of this Agreement as it is able to perform given the impact of the
        events causing the inability to perform, including using its
        commercially reasonable best efforts to take actions required to
        maintain the existing permitting structure,

             9.9.2. Contractor shall use its commercially reasonable best
        efforts to provide reasonable transitional assistance, including
        providing copies of all documentation (in

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        any form) as required so as to permit Raytheon to self-perform or engage
        another contractor to perform the Contractor's obligations under this
        Agreement, and

             9.9.3. Raytheon agrees that, except for the Contractor's
        obligations under the two preceding clauses, Raytheon shall not seek or
        assert claims having the status of administrative claims in any
        proceeding against the Contractor for failure to perform its obligations
        under this Agreement.

             9.9.4. Contractor agrees to include in any order approving this
        Agreement, subject to the provisions of this Section 9.9, that this
        Agreement shall be an unconditional obligation of the reorganized
        Contractor and that upon confirmation and the effective date of any plan
        of reorganization, this Agreement will be in full force and effect and
        legally binding on and against Contractor as a full obligation against
        the reorganized Contractor pursuant to the terms of this Agreement and
        applicable law. Moreover, subject to the provisions set forth in this
        section, nothing in this Project Completion Agreement shall limit or
        waive any right of Raytheon to file a proof of claim, vote to accept or
        reject WGI Delaware's proposed plan of reorganization, or to participate
        in any distribution made on account of confirmation of a plan of
        reorganization by WGI Delaware or any Affiliate or subsidiary thereof.

             9.9.5. The Contractor and Raytheon further agree that the
        Bankruptcy Court in the Contractor's chapter 11 cases shall retain
        jurisdiction for the purpose of resolving any disputes regarding this
        Section 9.9.

SECTION 10.  GUARANTEES.
             -----------

        10.1. WGI Guaranty. WGI Delaware shall unconditionally and irrevocably
guaranty to Raytheon and its designees hereunder, the due and prompt performance
and payment when due of each and every obligation, responsibility, undertaking,
representation, warranty, covenant and agreement of Contractor under this
Agreement, in the form of SCHEDULE 10.1 attached hereto (the "WGI Guaranty").

        10.2. Raytheon's Guaranty. If applicable, Raytheon shall unconditionally
and irrevocably guaranty to Contractor, the due and prompt performance and
payment when due of each and every obligation, responsibility, undertaking,
representation, warranty, covenant and agreement of any of its designees under
this Agreement, in the form of SCHEDULE 2.2 attached hereto.

SECTION 11.  CONDITIONS TO OBLIGATIONS OF RAYTHEON.
             --------------------------------------

        The obligations of Raytheon to enter into this Agreement, or to perform
its obligations hereunder, shall be expressly subject to and conditioned upon
the satisfaction of the following conditions:

        11.1. Bankruptcy Court Approvals.

             11.1.1. Not later than November 15, 2001, Contractor shall have
        received an order of the Bankruptcy Court authorizing Contractor (i) to
        reject the Construction Contract, (ii) to assume and assign all Assigned
        Vendor Contracts and Owner Assumed Contracts, as described herein, and
        (iii) to reject project subcontracts and purchase orders

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        other than Assigned Vendor Contracts and Owner Assumed Contracts, (iv)
        to assign the Non-Executory Contracts to Raytheon and (v) to enter into,
        deliver and perform this Agreement, and any agreement contemplated
        hereby, and all of the obligations contained herein or therein.

             11.1.2. WGI Delaware shall have received an order of the Bankruptcy
        Court, no later than November 15, 2001, authorizing it to enter into,
        deliver and perform this Agreement, and any agreement contemplated
        hereby, including the WGI Guaranty, and all of the obligations contained
        herein or therein.

        11.2. Delivery of the WGI Guaranty. Contractor shall have delivered an
original fully executed WGI Guaranty made by WGI Delaware in favor of Raytheon.

SECTION 12.  CONDITIONS TO OBLIGATIONS OF CONTRACTOR.
             ----------------------------------------

        The obligations of Contractor to enter into this Agreement, or to
perform its obligations hereunder, shall be expressly subject to and conditioned
upon satisfaction of the following condition:

             12.1.1. Delivery of Raytheon's Guaranty. If applicable, Raytheon
        shall have executed and delivered a Raytheon Guaranty in favor of the
        Contractor.

SECTION 13.  DISPUTE RESOLUTION.
             -------------------

        13.1. All disputes or claims arising under or in any way relating to
this Agreement shall be settled by the Project Liaisons. In the event the
Project Liaisons cannot settle such disputes or claims, such disputes or claims
shall be settled by the senior management of the Parties. In the event the
senior management cannot settle such disputes or claims, such disputes or claims
shall be settled pursuant to the arbitration procedures set forth in Section
13.2 hereof.

        13.2. Arbitration.

             13.2.1. Subject to Section to provisions of this Section 13, any
        party hereto may commence arbitration in conformity with and under the
        rules of the American Arbitration Association ("AAA"), and,
        notwithstanding anything to the contrary contained herein, such
        arbitration shall be governed by and construed in accordance with the
        laws of the State of New York, USA.

             13.2.2. The arbitral tribunal shall consist of three arbitrators.
        Each party hereto shall appoint one arbitrator with, in the case of a
        dispute of a technical nature, knowledge and experience in such
        technical matters. The two arbitrators so appointed shall appoint the
        third arbitrator who shall serve as the chairman of the arbitral
        tribunal. If a party fails to appoint its arbitrator within a period of
        ten (10) days after receiving notice of the arbitration, or if the two
        arbitrators appointed cannot agree on the third arbitrator within a
        period of ten (10) days after appointment of the second arbitrator, then
        such third arbitrator shall be appointed pursuant to the procedures of
        the AAA Rules.

             13.2.3. In the event an arbitrator is appointed pursuant to the
        last sentence of the foregoing subsection 13.2.2, such arbitrator shall
        be a person with experience in

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        commercial agreements and, in particular, the implementation and
        interpretation of contracts relating to the design, engineering,
        construction, operation and maintenance of international electrical
        power generating facilities which have been financed on a limited
        recourse basis (and if the dispute concerns a technical issue, a person
        who has knowledge and experience in technical matters). No arbitrator
        shall be a present or former employee or agent of, or consultant or
        counsel to, either party hereto or any affiliate thereof.

             13.2.4. The arbitration shall be conducted in New York, New York,
        U.S.A., and shall apply English as the language of the arbitration
        proceedings. All documents or evidence presented at such arbitration in
        a language other than in English shall be accompanied by a certified
        English translation thereof. The arbitrators shall apply, and shall be
        bound by, the applicable rules of law and the terms of this Agreement.
        Unless both parties hereto agree otherwise in writing, the arbitrators
        shall be permitted to order the parties to an arbitration to engage in
        discovery (including the taking of depositions). The arbitrators shall
        decide the dispute by majority of the arbitral tribunal and shall state
        in writing the reasons for its decision. Any monetary award of the
        arbitral tribunal shall be denominated in U.S. dollars and shall be paid
        by the earlier of (i) the time period specified by the arbitral tribunal
        and (ii) thirty (30) days after the arbitral tribunal notifies the
        parties of receiving such award. The parties agree to direct the
        arbitral tribunal to complete the arbitration proceeding, and issue a
        decision, within sixty (60) days after the submission of the request for
        arbitration.

             13.2.5. The parties hereby waive any rights to appeal or to review
        such award by any court or tribunal, and such award shall be final and
        binding. The parties hereto further undertake to carry out without delay
        the provisions of any arbitral award or order, and each agrees that any
        such award or order shall be conclusive and may be enforced in any
        jurisdiction (and the parties shall submit to any such jurisdiction) by
        suit on the arbitral award or by any other manner provided by law. A
        party may disclose the contents of an award of the arbitral tribunal on
        to affiliates, governmental authorities or other persons as required by
        applicable law.

             13.2.6. The costs of such arbitration shall be determined by and
        allocated between the parties by the arbitral tribunal in its award.

             13.2.7. Unless the parties hereto otherwise agree, no dispute,
        controversy or claim hereunder shall be consolidated with any other
        arbitrable proceeding involving any third party.

SECTION 14.  MISCELLANEOUS.
             --------------

        14.1. Notices. All notices, demands and other communications hereunder
regarding any breach, consent, waiver, termination, indemnification, or any
proposed amendment to, or modification of, this Agreement, shall be in writing
or by facsimile, and shall be deemed to have been duly given, (i) on the day
such notice is delivered personally, (ii) on the business day such notice is
sent by facsimile, provided such notice is sent during the normal business hours
of the recipient (and if sent after such hours, on the following business day),
with a confirmation copy sent by overnight courier or certified mail, (iii) one
business day after being sent by overnight courier, or (iv) four business days
after being mailed by certified mail, return receipt requested, postage prepaid,
as follows:

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         If to Raytheon, to:

                  Raytheon Company
                  141 Spring Street
                  Lexington, MA  02173
                  Attention:  General Counsel
                  Telephone:        (781) 860-2681
                  Facsimile:        (781) 860-2924

         with a copy sent contemporaneously to Raytheon's counsel at:

                  Bingham Dana LLP
                  150 Federal Street
                  Boston, MA  02110
                  Attention:  John R. Utzschneider, Esq.
                  Telephone:        (617) 951-8852
                  Facsimile:        (617) 951-8736

         If to Contractor, to:

                  Washington Group International
                  Attn: Louis E. Pardi
                  Executive Vice President
                  510 Carnegie Center Blvd
                  Post Office Box 5287
                  Princeton,  NJ  08543-5287
                  Telephone:        (609) 720-3337
                  Facsimile:        (609) 720-3101

        14.2. Governing Law; Exclusive Venue; Jurisdiction. This Agreement shall
be governed by and construed in accordance with the laws of the State of New
York, United States of America, without regard to the conflict of law rules
thereof other than Section 5-1401 of the General Obligations Law of the State of
New York. Any action or other proceeding brought under or in connection with
this Agreement and the transactions contemplated hereby shall be brought and
heard only in an appropriate state or federal court located in the State of New
York, U.S.A. Each of Contractor and Raytheon acknowledge and agree that such
courts shall have exclusive jurisdiction to interpret and enforce the provisions
of this Agreement, and each of them hereby waives any and all objections that
they might have as to personal jurisdiction or venue in any of the above courts.
Nothing contained in this Section 14.2 is intended to limit the applicability of
Section 13 hereof. In the event of any conflict between the second and third
sentences of this Section 14.2 and the terms and provisions of Section 13, the
terms of Section 13 shall control.

        14.3. Attorneys Fees. If any action or proceeding at law or equity,
including declaratory relief, in any administrative or judicial proceeding, in
any jurisdiction, is brought to interpret or enforce (i) the provisions of this
Agreement, (ii) any arbitral award rendered pursuant to Section 13 hereof, or
(iii) any judgment rendered by a court of competent jurisdiction pursuant to
Section 14.2 hereof arising out of or in connection with this Agreement, the
successful or prevailing party shall be entitled to recover reasonable
attorneys' fees and other costs incurred in

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                                                                  EXECUTION COPY

such action or proceeding (including any separate action brought to enforce this
Section 14.3), in additional to any other relief to which such party may be
entitled.

        14.4. Reservation of Rights. Except as expressly set forth herein, no
amendment, modification or waiver of any of the Parties' rights or obligations
under the Construction Contract, the Guaranty, the Stock Purchase Agreement, or
otherwise, shall be, or shall be deemed to be, granted or implied by reason of
the execution, delivery or performance of this Agreement.

        14.5. Use of Information. The parties hereto agree that no information
obtained as a result of the arrangements contemplated by this Agreement may be
used by any other party in any subsequent litigation or arbitration except to
the extent that (i) the applicable parties hereto, who are also parties to that
litigation or arbitration, subsequently agree that such information may be used,
or (ii) a court or arbitral body of competent jurisdiction determines that such
information was otherwise discoverable.

        14.6. Captions. Captions contained in this Agreement are inserted only a
matter of convenience and shall not affect the construction or interpretation of
any of the provisions hereof.

        14.7. Incorporation by Reference. The exhibits and schedules attached to
this Agreement are hereby incorporated herein as if set forth in full herein.

        14.8. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which, when
taken together, shall constitute one and the same instrument.

        14.9. Waiver of Jury Trial. Each of Contractor and Raytheon hereby
voluntarily waives its rights to a jury trial of any claim or cause of action
based upon or arising out of this Agreement and the transactions contemplated
herein. This section has been fully discussed by each of the foregoing
(including consultation with its legal counsel) and these provisions shall not
be subject to any exceptions. This waiver shall apply to any subsequent
amendments, supplements or modifications to this Agreement.

        14.10. Special Indirect and Consequential Damages. Except as otherwise
set forth herein, the Parties hereto hereby waive any right to claim special,
indirect and consequential damages.

        14.11. Successors and Assigns. This Agreement shall be binding upon, and
inure to the benefit of each of the parties hereto and to their
successors-in-interest and assigns, provided, however, that notwithstanding the
foregoing, Contractor may not assign its rights or obligations under this
Agreement without the prior written consent of Raytheon, and any such purported
assignment shall be void ab initio. Raytheon only may assign or delegate its
obligations under this Agreement subject to the terms of Section 2.2 hereof, and
any other assignment shall be void ab initio

        14.12. Further Assurances. Each Party to this Agreement shall make,
execute, acknowledge and deliver such other instruments and documents and take
all such other action as may be reasonably required to effectuate the purposes
of this Agreement and to consummate the transactions contemplated hereby.

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<PAGE>
                                                                  EXECUTION COPY

        14.13. Amendments, Modifications and Waivers. No change, amendment or
modification of this Agreement shall be valid or binding upon the Parties unless
such change, amendment or modification shall be in writing and duly executed by
each and every Party hereto. No waiver of any term, provision, condition or
breach of this Agreement, whether by conduct or otherwise, in any one or more
instances, shall be deemed to be or construed as a further or continuing waiver
of any such term, provision, condition or breach of this Agreement. No failure
or delay by a Party to exercise any right it may have hereunder, or by reason of
the breach or default of any other party, shall operate as a waiver of default
or modification of this Agreement or prevent the exercise of any right while
such party continues to be in default, except as expressly set forth herein.

        14.14. No Third Party Beneficiaries. Nothing in this Agreement, express
or implied, shall, is intended to, or shall be construed to, confer upon or to
give any person, firm or corporation, except the Parties hereto, any rights or
remedies under or by reason of this Agreement.

        14.15. Entire Agreement. Other than as expressly set forth herein, this
Agreement and the schedules, annexes, exhibits or attachments referred to
herein, contain the entire understanding of the parties, supersedes all prior
agreements and understandings relating to the subject matter hereof, including,
without limitation, the Interim Agreement to the extent provided in Section
2.1.5 hereof, and shall not be amended except in accordance with the terms
hereof. The Interim Agreement shall remain in effect with respect to the period
prior to the date set forth in Section 2.1.5 hereof.

        14.16. Severability. The validity, legality or enforceability of the
remainder of this Agreement shall not be affected even if one or more of the
provisions of this Agreement shall be held to be invalid, illegal or
unenforceable in any respect.

        14.17. Construction. The language used in this Agreement shall be deemed
to be the language chosen by the parties to express their mutual intent, and no
rule of strict construction shall be applied against any party.

        14.18. Exclusivity of Remedies. The remedies contained in this
Agreement, the WGI Guaranty, and any Raytheon Guaranty, are the sole and
exclusive remedies as between and among the Parties in connection with the
services to be performed pursuant to this Agreement; provided, however, that
nothing in this Agreement shall limit (i) the right of Raytheon to assert claims
(other than claims having the status of administrative claims in connection with
the Bankruptcy Filing) or remedies against Contractor or its affiliates for
costs incurred by Raytheon to complete the Project or arising from the rejection
by Contractor and its affiliates, of the Construction Contract or related
agreements or (ii) the right of Contractor or its affiliates or Raytheon or its
affiliates to pursue claims or remedies arising under or relating to the Stock
Purchase Agreement or any agreement entered into pursuant thereto. Nothing in
clauses (i) or (ii) of the preceding sentence shall constitute an admission by
any party that any of such rights, claims or remedies actually exist,
particularly in light of the rejection of the Stock Purchase Agreement in the
Bankruptcy Court.

                           [Signature Page to Follow]

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                                                                  EXECUTION COPY

         IN WITNESS WHEREOF, the Parties hereto have caused this Project
Completion Agreement (Red Oak) to be executed in its names by their duly
authorized representatives as of the date first written above.

RAYTHEON COMPANY ("RAYTHEON"),
a corporation organized under the laws of Delaware

By:      /s/ David Dickman
         -------------------------------------------
         Name: David Dickman
         Title: Director, Contracts

WASHINGTON GROUP INTERNATIONAL, INC. ("CONTRACTOR"),
a corporation organized under the laws of Ohio

By:      /s/ Kevin T. Colby
         -------------------------------------------
         Name: Kevin T. Colby
         Title: VP Contracts

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