##### 



FOIA Confidential Treatment
Requested by Allegheny Energy, Inc.
 ALLIANCE AGREEMENT
 for
 ENGINEERING, CONSTRUCTION AND PROJECT MANAGEMENT
 for the
 TRANS-ALLEGHENY INTERSTATE LINE PROJECT
 between
 TRANS-ALLEGHENY INTERSTATE LINE COMPANY
 and
 KENNY CONSTRUCTION COMPANY
 Dated: February 28, 2007




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##### 



FOIA Confidential Treatment
Requested by Allegheny Energy, Inc.
 Table of Contents
 PageARTICLE 1 DEFINITIONS; INTERPRETATION
    
    
    11.1 Definitions
    
    
    11.2 Interpretation
    
    
    12ARTICLE 2 SCOPE OF WORK; PROJECT WORKSHOP
    
    
    132.1 Project Releases
    
    
    132.2 Scope of Work
    
    
    132.3 Project Workshop
    
    
    132.4 Target Cost
    
    
    152.5 Special Termination Right
    
    
    15ARTICLE 3 ENGINEERING SERVICES
    
    
    153.1 Preliminary Engineering
    
    
    153.2 Design of Facilities
    
    
    153.3 Site Conditions
    
    
    163.4 Incidental Engineering
    
    
    163.5 Access to Design Information
    
    
    16ARTICLE 4 CONSTRUCTION SERVICES
    
    
    174.1 Scope of Construction Services
    
    
    174.2 Site Conditions
    
    
    174.3 Environmental Protection
    
    
    174.4 Archeological Materials
    
    
    184.5 Commissioning
    
    
    194.6 Construction Management
    
    
    194.7 Scheduling
    
    
    194.8 Health and Safety
    
    
    194.9 Cleanup
    
    
    204.10 Emergencies
    
    
    204.11 Cooperation
    
    
    204.12 Work Site Security
    
    
    204.13 Interconnections
    
    
    214.14 Contractor Liens
    
    
    214.15 Utilities and Consumables
    
    
    214.16 Laydown and Storage Areas
    
    
    21ARTICLE 5 PROCUREMENT MANAGEMENT SERVICES
    
    
    225.1 Procurement Plan
    
    
    225.2 Scope of Procurement Management Services
    
    
    235.3 Relationship With Direct Suppliers
    
    
    235.4 Enforcement of Warranties
    
    
    23ARTICLE 6 REAL PROPERTY MANAGEMENT SERVICES
    
    
    246.1 Real Property Management Services
    
    
    246.2 Real Property Plan
    
    
    246.3 Ownership of Project Real Property
    
    
    25
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FOIA Confidential Treatment
Requested by Allegheny Energy, Inc.
 Page6.4 Limitation
    
    
    25ARTICLE 7 CONTRACTORS GENERAL OBLIGATIONS
    
    
    257.1 Standards of Performance
    
    
    257.2 Contractor Liable for Work
    
    
    257.3 Project Manager
    
    
    257.4 Contractor Personnel
    
    
    257.5 Labor Disputes
    
    
    267.6 Imports and Exports
    
    
    267.7 Permits and Approvals
    
    
    267.8 Reserved
    
    
    267.9 Records
    
    
    267.10 Financial Statements
    
    
    277.11 Quality Assurance Program
    
    
    277.12 Performance Testing
    
    
    277.13 Office Space
    
    
    277.14 Progress Reports
    
    
    277.15 Meetings
    
    
    287.16 Site Procedures
    
    
    287.17 Insurance
    
    
    287.18 Alcohol and Drug Policy
    
    
    307.19 Business Standards
    
    
    307.20 Compliance With Law
    
    
    307.21 Authority
    
    
    31ARTICLE 8 OWNERS RIGHTS AND OBLIGATIONS
    
    
    318.1 Owner Permits
    
    
    318.2 Owner Representative
    
    
    318.3 Temporary Possession
    
    
    318.4 Approvals
    
    
    318.5 Inspections
    
    
    318.6 Other Property
    
    
    328.7 Disclosure
    
    
    328.8 Reserved
    
    
    328.9 Condemnation Proceedings
    
    
    328.10 Preliminary Routing Information
    
    
    32ARTICLE 9 SUBCONTRACTORS
    
    
    329.1 Right to Subcontract
    
    
    329.2 Approval Rights
    
    
    339.3 Justification of Non-Competitive Contracts
    
    
    339.4 Subcontractor Warranties
    
    
    339.5 Manufacturer Information
    
    
    339.6 No Contractual Relationship
    
    
    339.7 Assignment of Subcontracts
    
    
    33ARTICLE 10 PAYMENT TERMS
    
    
    3410.1 Management Fee
    
    
    34
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 ii




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FOIA Confidential Treatment
Requested by Allegheny Energy, Inc.
 Page10.2 Non-Craft Labor Costs
    
    
    3410.3 Craft Labor Costs
    
    
    3510.4 Out-of-Pocket Costs
    
    
    3510.5 Reimbursable Costs
    
    
    3510.6 Interest
    
    
    3610.7 Retention
    
    
    3610.8 Payments
    
    
    3710.9 Accuracy of Records
    
    
    3810.10 Breakdown of Agreement Price
    
    
    3810.11 Audit Rights
    
    
    3810.12 Waiver under Payment Act
    
    
    38ARTICLE 11 PROJECT BUDGET; PROJECT SCHEDULE
    
    
    3911.1 Project Budget
    
    
    3911.2 Project Schedule
    
    
    3911.3 Adjustments Based on Suspension of Work
    
    
    4011.4 Adjustments Based on Force Majeure
    
    
    40ARTICLE 12 STEERING COMMITTEE
    
    
    4012.1 Formation
    
    
    4012.2 Availability
    
    
    4012.3 Informed Status
    
    
    41ARTICLE 13 COMPLETION
    
    
    4113.1 Substantial Completion
    
    
    4113.2 Punch List
    
    
    4113.3 Final Completion
    
    
    4113.4 [***]
    
    
    42ARTICLE 14 SECURITY FOR PERFORMANCE
    
    
    4214.1 Performance Bond
    
    
    42ARTICLE 15 CONTRACTOR WARRANTIES
    
    
    4315.1 Scope of Warranties
    
    
    4315.2 Duration of Warranties
    
    
    4315.3 Warranty Obligations
    
    
    4315.4 Exclusions
    
    
    44ARTICLE 16 CHANGE ORDERS
    
    
    4416.1 Change in Scope
    
    
    4416.2 Equitable Adjustments to Schedule
    
    
    4416.3 Preparation of Change Orders
    
    
    45ARTICLE 17 FORCE MAJEURE
    
    
    4517.1 Excused Performance
    
    
    4517.2 Notification
    
    
    45ARTICLE 18 INDEMNIFICATION
    
    
    4518.1 General Indemnity
    
    
    4518.2 Environmental Indemnities
    
    
    46
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 iii




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FOIA Confidential Treatment
Requested by Allegheny Energy, Inc.
 Page18.3 Intellectual Property Indemnity
    
    
    4618.4 Indemnity Against Prohibited Liens
    
    
    4718.5 Defense of Indemnified Claims
    
    
    47ARTICLE 19 TAXES AND DUTIES
    
    
    4819.1 Cooperation
    
    
    4819.2 Payment Obligations
    
    
    4819.3 Assignment of Rights
    
    
    48ARTICLE 20 SUSPENSION; TERMINATION
    
    
    4820.1 Suspension of Work
    
    
    4820.2 Termination for Convenience
    
    
    49ARTICLE 21 DEFAULT; REMEDIES
    
    
    4921.1 Default by Contractor
    
    
    4921.2 Remedies for Contractor Default
    
    
    5021.3 Default by Owner
    
    
    5121.4 Remedies for Owner Default
    
    
    5121.5 Right to Suspend Performance
    
    
    5121.6 Effect of Termination
    
    
    52ARTICLE 22 TITLE AND RISK OF LOSS
    
    
    5322.1 Owner Procured Materials
    
    
    5322.2 Contractor Procured Materials
    
    
    5322.3 Care, Custody and Control
    
    
    5322.4 Risk of Loss
    
    
    53ARTICLE 23 REPRESENTATIONS AND WARRANTIES
    
    
    5323.1 Contractors Representations and Warranties
    
    
    5323.2 Owners Representations and Warranties
    
    
    54ARTICLE 24 LIMITATION OF LIABILITY
    
    
    5524.1 Aggregate Limit of Liability
    
    
    5524.2 Exclusion of Consequential Damages
    
    
    56ARTICLE 25 DISPUTE RESOLUTION
    
    
    5625.1 Informal Dispute Resolution
    
    
    5625.2 Steering Committee
    
    
    5625.3 Written Decisions
    
    
    5625.4 Litigation
    
    
    5625.5 Continued Performance
    
    
    56ARTICLE 26 INTELLECTUAL PROPERTY
    
    
    5626.1 Proprietary Information
    
    
    5626.2 Infringement Claims
    
    
    5726.3 Use of Trademarks
    
    
    57ARTICLE 27 CONFIDENTIAL INFORMATION
    
    
    5727.1 Protection of Confidential Information
    
    
    5727.2 Permitted Disclosures
    
    
    5727.3 Contractors Use of Confidential Information
    
    
    58
 *** Confidential Treatment Requested
 iv




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##### 



FOIA Confidential Treatment
Requested by Allegheny Energy, Inc.
 Page27.4 Survival
    
    
    5827.5 Contractors Proprietary Information
    
    
    5827.6 Contractor Information
    
    
    58ARTICLE 28 MISCELLANEOUS PROVISIONS
    
    
    5828.1 Governing Law
    
    
    5828.2 Notices
    
    
    5828.3 Entire Agreement
    
    
    5928.4 Severability
    
    
    6028.5 Independent Contractor
    
    
    6028.6 Assignment
    
    
    6028.7 Amendments
    
    
    6028.8 Precedence
    
    
    6028.9 Remedies Cumulative
    
    
    6028.10 Sole Benefit
    
    
    6028.11 Waiver
    
    
    6028.12 Counterparts
    
    
    6028.13 Survival
    
    
    6128.14 Small Business Investment Act
    
    
    6128.15 Announcements
    
    
    61
 LIST OF EXHIBITS AND SCHEDULES
 Exhibits
 A            Alliance PhilosophyB            Description of Facilities
 Schedules
 1.1
    
    Phases4.13
    
    Interconnection Points7.4
    
    Key Personnel7.17
    
    Contractor Required Insurance9.2
    
    Approved Subcontractors10.2
    
    Non-Craft Labor Multiplier10.4
    
    Out-of-Pocket Costs
 *** Confidential Treatment Requested
 v




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##### 



FOIA Confidential Treatment
Requested by Allegheny Energy, Inc.
 Alliance Agreement
for
Engineering, Construction and Project Management
 ALLIANCE AGREEMENT FOR ENGINEERING, CONSTRUCTION AND PROJECT MANAGEMENT TRANS-ALLEGHENY INTERSTATE LINE COMPANY Owner KENNY CONSTRUCTION COMPANY Contractor
 RECITALS
 WHEREAS
 WHEREAS
 WHEREAS
 WHEREAS Exhibit A
 WHEREAS [***]
 NOW THEREFORE
 ARTICLE 1
DEFINITIONS; INTERPRETATION
 Definitions
 Acceptable LC Provider
 Affiliate
 *** Confidential Treatment Requested




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##### 



FOIA Confidential Treatment
Requested by Allegheny Energy, Inc.
  Agreement
 Applicable Laws
 Approved Subcontractors Schedule 9.2
 Authorized Design
 Business Day
 Change-in-Law
 Change Order
 Claim
 Commissioning
 [***]
 [*** Date ] [***]
 [***] [***]
 Confidential Information
 Construction Services
 Contractor
 *** Confidential Treatment Requested
 2




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##### 



FOIA Confidential Treatment
Requested by Allegheny Energy, Inc.
 Contractor Default
 Contractor Indemnitees
 Contractor Lien
 Contractor Permits
 Contractor Personnel
 Contractor Procured Materials
 Contractor Required Insurance
 Craft Labor Costs
 Dedicated Personnel
 Delayed Facilities
 Direct Supplier
 Dollar $
 Emergency
 Engineering Services
 Environmental Laws et
seq et seq et seq et seq et
seq et seq et seq et seq
 *** Confidential Treatment Requested
 3




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##### 



FOIA Confidential Treatment
Requested by Allegheny Energy, Inc.
 et seq
 Facilities Exhibit B Exhibit B
 FERC
 Field Office
 Final Completion
 Force Majeure
 (i)
    
    acts of God or the public enemy;(ii)
    
    expropriation or confiscation of facilities;(iii)
    
    war, terrorism, rebellion, sabotage or riot;(iv)
    
    floods;
 *** Confidential Treatment Requested
 4




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##### 



FOIA Confidential Treatment
Requested by Allegheny Energy, Inc.
 (v)
    
    fires, explosions, hurricanes, tornados, microbursts or other
natural catastrophes;(vi)
    
    actions or inaction of Governmental Authorities that render(s)
illegal performance required in connection with the Work;(vii)
    
    strikes and other concerted acts of workers;(viii)
    
    a Change-in-Law;(ix)
    
    delays in the delivery of Owner Procured Materials;(x)
    
    underground conditions at, on or under the Project Real
Property that Contractor could not reasonably anticipate, including the
existence of Hazardous Substances or archaeological materials;(xi)
    
    extraordinary delays by Governmental Authorities in issuing
Permits;(xii)
    
    unreasonable delays by Owner in applying for Owner Permits for
reasons other than Contractors failure to satisfy its obligations under this
Agreement;(xiii)
    
    delays by Governmental Authorities in granting right of entry onto Project
Real Property beyond the time periods specified in the Project Schedule;(xiv)
    
    injunctions issued by Governmental Authorities; and(xv)
    
    operating conditions on the Transmission Grid that restrict
outages, testing or access properly scheduled in accordance with the
requirements of the Transmission Grid operator;
  (A)
    
    lack of finances;(B)
    
    strikes or labor disturbances limited to a single employer
performing any of the Work, unless, as a result of any such strike or labor
disturbance, there is no other Person capable and reasonably available to
Contractor to perform such Work;(C)
    
    shortages or price fluctuations with respect to Contractor
Procured Material;(D)
    
    late delivery of Contractor Procured Material, except to the
extent caused by an event that would otherwise constitute a Force Majeure;(E)
    
    economic hardship;
 *** Confidential Treatment Requested
 5




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##### 



FOIA Confidential Treatment
Requested by Allegheny Energy, Inc.
 (F)
    
    shortages of manpower, except to the extent caused by an event
that would otherwise constitute a Force Majeure;(G)
    
    delay or failure to perform of a Subcontractor, except to the
extent caused by an event that would otherwise constitute a Force Majeure;(H)
    
    machinery or equipment breakdown, except to the extent caused
by an event that would otherwise constitute a Force Majeure;(I)
    
    unavailability at the Work Site of necessary water and other
utilities, except to the extent caused by an event that would otherwise
constitute a Force Majeure; or(J)
    
    flaws in any design, drawing or technical specifications
requiring Contractor to re-design or re-engineer any portion of the Facilities.
 GAAP
 Good Utility Practices
 Governmental Authority
 Hazardous Substance
 Indemnitee
 Initial Project Schedule
 *** Confidential Treatment Requested
 6




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##### 



FOIA Confidential Treatment
Requested by Allegheny Energy, Inc.
 Interest Rate [***] The Wall Street Journal [***]
 Labor Costs
 Lender
 List of Materials
 Major Subcontractor
 Management Fee [***] [***] [***]
 Management Fee Milestone
 Management Fee Payment Schedule
 Material Milestone
 Moodys
 Non-Craft Labor Costs
 Non-Craft Labor Multiplier
 Non-Craft Labor Rates
 *** Confidential Treatment Requested
 7




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FOIA Confidential Treatment
Requested by Allegheny Energy, Inc.
 Notice of Final Completion
 Notice of Substantial Completion
 Out-of-Pocket Costs Schedule 10.4
 Owner
 Owner Additional Insureds
 Owner Default
 Owner Indemnitees
 Owner Nominee
 Owner Permits
 Owner Procured Materials
 Owner Reimbursed Insurance
 Owner Representative
 Party Parties
 Payment Act
 Permit
 *** Confidential Treatment Requested
 8




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##### 



FOIA Confidential Treatment
Requested by Allegheny Energy, Inc.
  Person
 Phase Schedule 1.1
 PJM
 PJM Extended Deadline
 PJM Extended Deadline [ *** ] [***]
 Procurement Management Services
 Procurement Plan
 Progress Report
 Prohibited Lien
  Project 
 Project Budget
 Project Design Book
 Project Manager
 Project Materials
 *** Confidential Treatment Requested
 9




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FOIA Confidential Treatment
Requested by Allegheny Energy, Inc.
 Project Real Property
  Project Release 
 Project Schedule
 Project Workshop
 Proprietary Information
 Punch List
 Punch List Security Amount [***]
 Real Property Acquisition Costs
 Real Property Management Services
 Real Property Plan
 Reimbursable Costs
 Replacement Contractor
 Retention
 Retention Amount
 Retention Letter of Credit
 S&P
 Safety Standards
 *** Confidential Treatment Requested
 10




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##### 



FOIA Confidential Treatment
Requested by Allegheny Energy, Inc.
 Savings [***]
 [***] [***] [***] [***]
 [***] [***]
 [***] [***]
 Services
 Steering Committee
 Subcontract
  Subcontractor 
 Substantial Completion
 Substantial Completion Date
 Target Cost [***]
 Target Cost Delivery Date
 Transmission Grid
 *** Confidential Treatment Requested
 11




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##### 



FOIA Confidential Treatment
Requested by Allegheny Energy, Inc.
 Unrestricted Information
 Warranty Period
 Work
 Work Site
 Interpretation
 (a)
    
    all references in this Agreement to Articles, Sections,
Exhibits and Schedules refer to Articles, Sections, Exhibits and Schedules of
this Agreement unless expressly provided otherwise;(b)
    
    the headings appearing in this Agreement are for convenience
only, do not constitute any part of this Agreement and shall be disregarded in
construing the language contained herein;(c)
    
    the terms this Agreement, herein, hereby, hereunder,
hereof and terms of similar import refer to this Agreement as a whole and not
to any particular subdivision unless expressly so limited and the term this
Section refers only to the Section hereof in which such words occur;(d)
    
    the word including (in its various forms) means including
without limitation;(e)
    
    pronouns in masculine, feminine, or neuter genders shall be
construed to state and include any other gender;(f)
    
    unless the context otherwise requires, all defined terms
contained herein shall include the singular and plural;(g)
    
    each Exhibit and Schedule hereto is incorporated into this
Agreement by reference as if such Exhibit or Schedule were set forth in its
entirety herein;
 *** Confidential Treatment Requested
 12




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FOIA Confidential Treatment
Requested by Allegheny Energy, Inc.
 provided, however, that if any conflicts exist between Exhibit A and
the remainder of this Agreement, such conflict shall be resolved in favor of
the remainder of this Agreement; and(h)
    
    no term of this Agreement shall be construed in favor of, or
against, a Party as a consequence of one Party having had a greater role in the
preparation or drafting of this Agreement, but shall be construed as if the
language were mutually drafted by both Parties with full assistance of counsel.
 ARTICLE 2
SCOPE OF WORK; PROJECT WORKSHOP
 Project Releases Project Release
 Scope of Work
 (a)
    
    structural and design engineering for the Facilities, as
described further in Article 3 (the Engineering Services);(b)
    
    construction of the Facilities, as described further in Article
4 (the Construction Services);(c)
    
    management of the procurement of Project Materials, as
described further in Article 5 (the Procurement Management Services); and(d)
    
    management of the acquisition of the Project Real Property, as
described further in Article 6 (the Real Property Management Services).
 Project Workshop
 Project Workshop
  *** Confidential Treatment Requested
 13




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##### 



FOIA Confidential Treatment
Requested by Allegheny Energy, Inc.
  (a)
    
    a proposed drug testing plan;(b)
    
    proposed Safety Standards;(c)
    
    a proposed environmental orientation
program;(d)
    
    a preliminary Procurement Plan and
preliminary List of Materials;(e)
    
    preliminary man-hour and labor cost
estimates for Engineering Services, Construction Services,
Procurement Management Services and Real Property Management
Services;(f)
    
    proposed Field Office locations;(g)
    
    a preliminary Real Property Plan; and(h)
    
    the identity of proposed survey and
geotechnical Subcontractors.
 2.3.4
    
    At the Project Workshop, the Parties shall agree on:
 (a)
    
    the Initial Project Schedule;(b)
    
    the Management Fee Payment Schedule;(c)
    
    a Project execution plan;(d)
    
    forms for monthly invoices, weekly and
monthly reports, and cost control reporting;(e)
    
    protocols, meeting schedules and
procedures for the Steering Committee;(f)
    
    detailed rules for Real Property
Management Services, including rules of engagement with landowners,
procedures for payment of landowners, access rules, record-keeping
requirements, training of agents on how to respond to questions
concerning the Project, manpower projections and preliminary plans
for initiating Real Property Management Services;(g)
    
    engineering standards that require
development prior to starting detailed engineering; and(h)
    
    the identity of the Project Manager and
Owner Representative.
 *** Confidential Treatment Requested
 14




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##### 



FOIA Confidential Treatment
Requested by Allegheny Energy, Inc.
 
    Target Cost
 Special Termination Right [***]
 ARTICLE 3
ENGINEERING SERVICES
 Preliminary Engineering
 Design of Facilities
  *** Confidential Treatment Requested
 15




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##### 



FOIA Confidential Treatment
Requested by Allegheny Energy, Inc.
  Authorized Design
   Site Conditions
 Incidental Engineering
 Access to Design Information
 *** Confidential Treatment Requested
 16




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##### 



FOIA Confidential Treatment
Requested by Allegheny Energy, Inc.
  ARTICLE 4
CONSTRUCTION SERVICES
 Scope of Construction Services
 Site Conditions
   Environmental Protection
    *** Confidential Treatment Requested
 17




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##### 



FOIA Confidential Treatment
Requested by Allegheny Energy, Inc.
  [***]
   Archeological Materials
 *** Confidential Treatment Requested
 18




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##### 



FOIA Confidential Treatment
Requested by Allegheny Energy, Inc.
 Commissioning
 Construction Management
 Scheduling
 Health and Safety
 Safety Standards
   *** Confidential Treatment Requested
 19




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##### 



FOIA Confidential Treatment
Requested by Allegheny Energy, Inc.
  Cleanup
 Emergencies Emergency
 Cooperation
    Work Site Security
 *** Confidential Treatment Requested
 20




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##### 



FOIA Confidential Treatment
Requested by Allegheny Energy, Inc.
  Interconnections Schedule 4.13
 Contractor Liens
    Utilities and Consumables
 Laydown and Storage Areas
 *** Confidential Treatment Requested
 21




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##### 



FOIA Confidential Treatment
Requested by Allegheny Energy, Inc.
 ARTICLE 5
PROCUREMENT MANAGEMENT SERVICES
 Procurement Plan
 List of Materials
 Owner Procured Materials Contractor Procured Materials
    *** Confidential Treatment Requested
 22




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##### 



FOIA Confidential Treatment
Requested by Allegheny Energy, Inc.
 Procurement Plan
 Scope of Procurement Management Services
 (a)
    
    management of the Procurement Plan, including the timing of
bidding and delivery so as to minimize cost while complying with the Project
Schedule;(b)
    
    preparation of bid packages for all Project Materials based on
the Authorized Design and on terms and conditions approved by Owner (including
preparation of purchase orders and technical documentation, assistance in the
selection of qualified Direct Suppliers and preparation of Direct Supplier
scopes of work);(c)
    
    assisting Owner in timely obtaining and evaluating bids for
Owner Procured Materials;(d)
    
    coordinating, monitoring and expediting the manufacture and
delivery of materials, equipment and supplies, including Project Materials and,
where applicable, conducting factory inspections and testing of such materials,
equipment and supplies, including Project Materials;(e)
    
    where necessary, arranging for transportation and insurance of
Project Materials to the appropriate locations;(f)
    
    coordinating and expediting the delivery of all Project
Materials to the appropriate locations so as to meet the Project Schedule;(g)
    
    inspecting and verifying all Project Materials at the point of
delivery to verify they are undamaged, suitable for use and meet the
requirements of the relevant purchase order(s), in a manner consistent with
Owners rights and obligations under contracts with Direct Suppliers; and(h)
    
    reviewing and validating invoices for Project Materials prior
to their payment.
 Relationship With Direct Suppliers
 Enforcement of Warranties
 *** Confidential Treatment Requested
 23




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##### 



FOIA Confidential Treatment
Requested by Allegheny Energy, Inc.
  ARTICLE 6
REAL PROPERTY MANAGEMENT SERVICES
 Real Property Management Services
 (a)
    
    identification of landowners and required crossing permits, and
managing communications with such landowners so as to obtain required
permissions;(b)
    
    with the concurrence of Owner on a case by case basis, agreeing
on the terms for acquisition of each parcel of Project Real Property, including
all monetary payments associated therewith;(c)
    
    documenting by files and maps, in accordance with formats
designated by Owner, all Project Real Property; and(d)
    
    providing surveys as needed to obtain the Project Real
Property.
 Real Property Plan
 Real Property Plan
  *** Confidential Treatment Requested
 24




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##### 



FOIA Confidential Treatment
Requested by Allegheny Energy, Inc.
  Ownership of Project Real Property
 Limitation
 ARTICLE 7
CONTRACTORS GENERAL OBLIGATIONS
 Standards of Performance
 Contractor Liable for Work
 Project Manager Project Manager
 Contractor Personnel
  Schedule 7.4
 *** Confidential Treatment Requested
 25




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##### 



FOIA Confidential Treatment
Requested by Allegheny Energy, Inc.
   Labor Disputes
 Imports and Exports
 Permits and Approvals
 Owner Permits
  Reserved
 Records
 *** Confidential Treatment Requested
 26




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##### 



FOIA Confidential Treatment
Requested by Allegheny Energy, Inc.
  Financial Statements
  [***]
  Quality Assurance Program
 Performance Testing
 Office Space
 Progress Reports Progress Report
 (a)
    
    the status of Contractors acquisition of Contractor Permits;
 *** Confidential Treatment Requested
 27




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##### 



FOIA Confidential Treatment
Requested by Allegheny Energy, Inc.
 (b)
    
    the status of the Work, including a reconciliation of the Work
to the Project Schedule and a reasonably detailed explanation of any variances;(c)
    
    identification of Subcontractors and the scope of their Work;(d)
    
    identification of any Claims regarding the performance of the
Work of which Contractor has knowledge (including facts and circumstances of
which Contractor has knowledge that are reasonably likely to give rise to a
Claim);(e)
    
    a report on safety, injury and illness incidents;(f)
    
    identification of any Contractor Liens of which Contractor has
knowledge;(g)
    
    the status of testing and inspections (including the results
thereof);(h)
    
    a line-item reconciliation of actual Reimbursable Costs for the
relevant period compared to those set forth in the Project Budget, including a
reasonably detailed explanation of any variances; and(i)
    
    any other matters related to the Project that Owner reasonably
requests.
 Meetings
 Site Procedures
 Insurance
 Schedule 7.17 Contractor Required Insurance
  *** Confidential Treatment Requested
 28




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##### 



FOIA Confidential Treatment
Requested by Allegheny Energy, Inc.
 Schedule 7.17 Schedule 7.17 Owner Reimbursed Insurance Schedule 10.2
 Schedule 7.17 Schedule 7.17
 Schedule 7.17 Schedule 7.17
 [***] [***]
 [***]
 *** Confidential Treatment Requested
 29




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##### 



FOIA Confidential Treatment
Requested by Allegheny Energy, Inc.
 Alcohol and Drug Policy
    Business Standards
 Compliance With Law
 *** Confidential Treatment Requested
 30




---



##### 



FOIA Confidential Treatment
Requested by Allegheny Energy, Inc.
  Authority
 ARTICLE 8
OWNERS RIGHTS AND OBLIGATIONS
 Owner Permits
 Owner Representative Owner
Representative
 Temporary Possession
 Approvals
 Inspections
 *** Confidential Treatment Requested
 31




---



##### 



FOIA Confidential Treatment
Requested by Allegheny Energy, Inc.
 Other Property
 Disclosure
 Reserved
 Condemnation Proceedings
 Preliminary Routing Information [***]
 ARTICLE 9
SUBCONTRACTORS
 Right to Subcontract
   *** Confidential Treatment Requested
 32




---



##### 



FOIA Confidential Treatment
Requested by Allegheny Energy, Inc.
  Approval Rights [***] Schedule 9.2
 Justification of Non-Competitive Contracts
 Subcontractor Warranties
 Manufacturer Information
 No Contractual Relationship
 Assignment of Subcontracts
 *** Confidential Treatment Requested
 33




---



##### 



FOIA Confidential Treatment
Requested by Allegheny Energy, Inc.
 ARTICLE 10
PAYMENT TERMS
 Management Fee
  [***]
 [***]
 Non-Craft Labor Costs
  [***] [***]
 Schedule 10.2
 *** Confidential Treatment Requested
 34




---



##### 



FOIA Confidential Treatment
Requested by Allegheny Energy, Inc.
  Schedule 10.2
 Craft Labor Costs
 Out-of-Pocket Costs Schedule 10.4
 Reimbursable Costs
 [***]
 *** Confidential Treatment Requested
 35




---



##### 



FOIA Confidential Treatment
Requested by Allegheny Energy, Inc.
  [***] [***]
  (a)
    
    are incurred as a result of Contractors failure to perform in
accordance with this Agreement (including any failure to pay taxes, fees and
assessments in accordance with Section 19.2);(b)
    
    are incurred as a result of Contractors failure to comply with
any Applicable Laws, including any reporting, filing or other procedural
requirements thereunder, and any assessment, fees or penalties, and interest
owed thereon;(c)
    
    represent Contractors payment of any indemnity obligations
owed pursuant to this Agreement;(d)
    
    represent Contractors performance of its warranty obligations
hereunder;(e)
    
    are incurred as a result of Contractors failure to obtain
immunity or exemption from taxes, fees, assessments and duties from which
Contractor or any Subcontractor is entitled to exemption under Applicable Laws;
or(f)
    
    are incurred as a result of Contractors failure to obtain a
refund or credit, including interest, applicable thereto.
 Interest
 Retention
 [***] Retention
 *** Confidential Treatment Requested
 36




---



##### 



FOIA Confidential Treatment
Requested by Allegheny Energy, Inc.
 Retention Amount
     Payments
    *** Confidential Treatment Requested
 37




---



##### 



FOIA Confidential Treatment
Requested by Allegheny Energy, Inc.
  Accuracy of Records
 Breakdown of Agreement Price
 Audit Rights
   Waiver under Payment Act
 *** Confidential Treatment Requested
 38




---



##### 



FOIA Confidential Treatment
Requested by Allegheny Energy, Inc.
  ARTICLE 11
PROJECT BUDGET; PROJECT SCHEDULE
 Project Budget
 Project
Budget
    Project Schedule
  *** Confidential Treatment Requested
 39




---



##### 



FOIA Confidential Treatment
Requested by Allegheny Energy, Inc.
 Project Schedule
    Adjustments Based on Suspension of Work [***]
 Adjustments Based on Force Majeure [***]
 ARTICLE 12
STEERING COMMITTEE
 Formation Steering Committee
 Availability
 *** Confidential Treatment Requested
 40




---



##### 



FOIA Confidential Treatment
Requested by Allegheny Energy, Inc.
 Informed Status
 ARTICLE 13
COMPLETION
 Substantial Completion
 Punch List
 Punch List
  Final Completion
 *** Confidential Treatment Requested
 41




---



##### 



FOIA Confidential Treatment
Requested by Allegheny Energy, Inc.
  [ *** ]
 [***] [***] [***] [***] [***] [***] [***] [***] [***]
 Delayed Facilities [***] [***] [***] [***] [***] [***]
 [***] [***] PJM Extended Deadline [***] [***] [***] [***] [***]
 ARTICLE 14
SECURITY FOR PERFORMANCE
 Performance Bond [***] [***]
 *** Confidential Treatment Requested
 42




---



##### 



FOIA Confidential Treatment
Requested by Allegheny Energy, Inc.
 ARTICLE 15
CONTRACTOR WARRANTIES
 Scope of Warranties
 (a)
    
    the Facilities shall conform to the Authorized Design;(b)
    
    the Authorized Design shall be free from defects and shall be
in accordance with Good Utility Practices;(c)
    
    the Facilities and the Work shall comply with Applicable Laws
in effect on the Substantial Completion Date;(d)
    
    the Work shall be performed in a competent, diligent,
workmanlike manner in accordance with Good Utility Practices and Applicable
Laws;(e)
    
    all Work shall be free from defects in workmanship and
materials;(f)
    
    when energized, the Facilities shall be capable of safe and
reliable operation;(g)
    
    all Contractor Procured Materials shall be new, unused and of
good quality; and(h)
    
    title to all materials and equipment comprising the Facilities
and the Work (other than Owner Procured Materials) shall pass to Owner free and
clear of all liens and encumbrances in accordance with Section 22.2.
 Duration of Warranties Warranty Period
 Warranty Obligations
  *** Confidential Treatment Requested
 43




---



##### 



FOIA Confidential Treatment
Requested by Allegheny Energy, Inc.
   Exclusions NO IMPLIED STATUTORY WARRANTY OF MERCHANTABILITY OR OF FITNESS FOR A PARTICULAR PURPOSE
SHALL APPLY.
 ARTICLE 16
CHANGE ORDERS
 Change in Scope
 Equitable Adjustments to Schedule [***] [***]
 *** Confidential Treatment Requested
 44




---



##### 



FOIA Confidential Treatment
Requested by Allegheny Energy, Inc.
 Preparation of Change Orders
 ARTICLE 17
FORCE MAJEURE
 Excused Performance
 Notification
 ARTICLE 18
INDEMNIFICATION
 General Indemnity
 Owner Indemnitees
 *** Confidential Treatment Requested
 45




---



##### 



FOIA Confidential Treatment
Requested by Allegheny Energy, Inc.
  Contractor Indemnitees
 Environmental Indemnities
   Intellectual Property Indemnity
 *** Confidential Treatment Requested
 46




---



##### 



FOIA Confidential Treatment
Requested by Allegheny Energy, Inc.
  Indemnity Against Prohibited Liens
 Defense of Indemnified Claims
    *** Confidential Treatment Requested
 47




---



##### 



FOIA Confidential Treatment
Requested by Allegheny Energy, Inc.
  ARTICLE 19
TAXES AND DUTIES
 Cooperation
 Payment Obligations
 Assignment of Rights
 ARTICLE 20
SUSPENSION; TERMINATION
 Suspension of Work
  *** Confidential Treatment Requested
 48




---



##### 



FOIA Confidential Treatment
Requested by Allegheny Energy, Inc.
     Termination for Convenience
    ARTICLE 21
DEFAULT; REMEDIES
 Default by Contractor Contractor Default
 *** Confidential Treatment Requested
 49




---



##### 



FOIA Confidential Treatment
Requested by Allegheny Energy, Inc.
 (a)
    
    a proceeding is instituted against Contractor seeking to
adjudicate Contractor as bankrupt or insolvent and such proceeding is not
dismissed within sixty (60) days of filing, Contractor makes a general
assignment for the benefit of its creditors, a receiver is appointed on account
of the insolvency of Contractor, Contractor files a petition seeking to take
advantage of any other Applicable Laws relating to bankruptcy, insolvency,
reorganization, winding up or composition or readjustment of debts, or
Contractor is unable to pay its debts when due or as they mature;(b)
    
    any representation or warranty of Contractor made pursuant to
this Agreement shall have been incorrect as of the date made and shall remain
incorrect for a period of thirty (30) days after notice thereof;(c)
    
    Contractor abandons the Work and such abandonment is not cured
within seven (7) Business Days after notice thereof;(d)
    
    Contractor fails to make prompt payment of any amount due to
any Subcontractor or otherwise repudiates or is in breach with respect to any
of its obligations to any Subcontractor which failure, repudiation or breach
(i) could have a material adverse effect on the ability of Contractor to
perform its obligations under this Agreement and (ii) continues for a period of
fifteen (15) days after notice thereof from Owner;(e)
    
    Contractor fails to correct any defective Work in accordance
with Article 15;(f)
    
    Contractor fails to perform any other material obligation under
this Agreement and such failure continues for thirty (30) days after notice
thereof by Owner or, if such failure cannot be cured in such thirty (30) day
period with the exercise of all commercially reasonable efforts, such longer
period as shall be reasonably necessary to cure such failure, not to exceed
ninety (90) days, so long as Contractor diligently continues without
interruption all commercially reasonable efforts to cure such failure;(g)
    
    Contractor attempts to make an assignment of this Agreement in
violation of the terms hereof; and(h)
    
    Contractor fails to achieve any Material Milestone for a period
of one hundred eighty (180) days after the date designated in the Project
Schedule for the achievement of such Material Milestone.
 Remedies for Contractor Default
 *** Confidential Treatment Requested
 50




---



##### 



FOIA Confidential Treatment
Requested by Allegheny Energy, Inc.
  Default by Owner Owner Default
 (a)
    
    any representation or warranty of Owner made pursuant to this
Agreement shall have been incorrect as of the date made and shall remain
incorrect for a period of thirty (30) days after notice thereof;(b)
    
    Owner fails to pay any undisputed amount owed to Contractor
pursuant to this Agreement for a period of forty-five (45) days after the date
such payment is due;(c)
    
    Owner fails to perform any material non-payment obligation
under this Agreement and such failure continues for thirty (30) days after
notice thereof by Contractor or, if such failure cannot be cured in such thirty
(30) day period with the exercise of all commercially reasonable efforts, such
longer period as shall be reasonably necessary to cure such failure so long as
Owner diligently continues without interruption all commercially reasonable
efforts to cure such failure; and(d)
    
    a proceeding is instituted against Owner seeking to adjudicate
Owner as bankrupt or insolvent and such proceeding is not dismissed within
sixty (60) days of filing, Owner makes a general assignment for the benefit of
its creditors, a receiver is appointed on account of the insolvency of Owner,
Owner files a petition seeking to take advantage of any other Applicable Laws
relating to bankruptcy, insolvency, reorganization, winding up or composition
or readjustment of debts, or Owner is unable to pay its debts when due or as
they mature.
 Remedies for Owner Default
 Right to Suspend Performance
 *** Confidential Treatment Requested
 51




---



##### 



FOIA Confidential Treatment
Requested by Allegheny Energy, Inc.
 Effect of Termination
  (a)
    
    execute no further Subcontracts and place no further orders
with any Subcontractor(s);(b)
    
    exercise all commercially reasonable efforts to procure
cancellations of all Subcontracts on terms satisfactory to Owner, except to the
extent Owner requests that any Subcontract(s) be assigned to Owner, an Owner
Nominee or the Replacement Contractor, in which case Contractor shall assign
such Subcontract(s) to Owner, such Owner Nominee or such Replacement Contractor
as may be directed by Owner;(c)
    
    execute only that portion of the Work as may be necessary to
preserve and protect Work already in progress and to protect equipment and
materials at the Work Site or in transit thereto;(d)
    
    deliver or cause to be delivered all uninstalled equipment and
materials at the Work Site or such other locations as shall be directed by
Owner;(e)
    
    if requested by Owner, provide Owner, an Owner Nominee and/or
any Replacement Contractor with the right to continue to use any and all
intellectual property reasonably necessary for the completion of the Work which
Contractor has the right to use (subject only to the same restrictions and
costs as may apply to Contractor);(f)
    
    assist Owner in preparing an inventory of all equipment and
materials in use or in storage;(g)
    
    remove from the Work Site all rubbish and other materials as
Owner may request; and(h)
    
    deliver to Owner all design and other information related to
the Project as may be requested by Owner.
   *** Confidential Treatment Requested
 52




---



##### 



FOIA Confidential Treatment
Requested by Allegheny Energy, Inc.
  ARTICLE 22
TITLE AND RISK OF LOSS
 Owner Procured Materials
 Contractor Procured Materials
 Care, Custody and Control
 Risk of Loss
 ARTICLE 23
REPRESENTATIONS AND WARRANTIES
 Contractors Representations and Warranties
 (a)
    
    no Permit or other action by, and no notice to, or filing with,
any Governmental Authority which has not been obtained, taken or made is
required to be obtained, taken or made by or on behalf of Contractor in
connection with the execution, delivery and performance of this Agreement;
 *** Confidential Treatment Requested
 53




---



##### 



FOIA Confidential Treatment
Requested by Allegheny Energy, Inc.
 (b)
    
    it is a corporation, duly organized, validly existing and in
good standing under the laws of the state of its organization;(c)
    
    it has taken all necessary action to authorize the execution,
delivery and performance of this Agreement, which action has not been
superseded or modified;(d)
    
    this Agreement constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms, except to the
extent such enforceability may be affected by: (i) insolvency, reorganization,
moratorium and similar laws affecting the enforcement of creditors rights and
remedies generally; and (ii) general principles of equity (regardless of
whether enforceability is considered in a proceeding in equity or at law);(e)
    
    the execution, delivery and performance of this Agreement do
not violate: (i) its charter, bylaws or any resolution of its board of
directors or other committee charged with the governance of its affairs; (ii)
any contract, agreement, arrangement, understanding or commitment to which it
is a party or by which it or any of its assets or properties is bound; or (iii)
any law, rule, regulation, order, writ, judgment, injunction, decree or
determination affecting it or any of its properties;(f)
    
    it: (i) is regularly paying its debts as they become due; (ii)
has not filed any petition for relief under the bankruptcy laws of the United
States; (iii) has not made and is not making a general assignment for the
benefit of creditors; and (iv) has not initiated nor been the subject of any
proceeding seeking to have a receiver or trustee appointed to liquidate or
manage its affairs;(g)
    
    no litigation is pending or, to its knowledge, threatened which
seeks to restrain it from performing its obligations hereunder or the adverse
outcome of which would materially affect its business or its ability to perform
its obligations hereunder; and(h)
    
    it has not received non-public information regarding the
Project, including information designed to influence the award of this
Agreement or to corrupt the bidding process with respect to the award hereof
other than information provided directly by Owner.
 Owners Representations and Warranties
 (a)
    
    it is a corporation duly organized, validly existing and in
good standing under the laws of the Commonwealth of Virginia and the State of
Maryland;
 *** Confidential Treatment Requested
 54




---



##### 



FOIA Confidential Treatment
Requested by Allegheny Energy, Inc.
 (b)
    
    it has taken all necessary action to authorize the execution,
delivery and performance of this Agreement, which action has not been
superseded or modified;(c)
    
    this Agreement constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms, except to the
extent such enforceability may be affected by: (i) insolvency, reorganization,
moratorium and similar laws affecting the enforcement of creditors rights and
remedies generally; and (ii) general principles of equity (regardless of
whether enforceability is considered in a proceeding in equity or at law);(d)
    
    the execution, delivery and performance of this Agreement do
not violate: (i) its charter, bylaws or any resolution of its board of
directors or other committee charged with the governance of its affairs; (ii)
any contract, agreement, arrangement, understanding or commitment to which it
is a party or by which it or any of its assets or properties is bound; or (iii)
any law, rule, regulation, order, writ, judgment, injunction, decree or
determination affecting it or any of its properties;(e)
    
    it: (i) is regularly paying its debts as they become due; (ii)
has not filed any petition for relief under the bankruptcy laws of the United
States; (iii) has not made and is not making a general assignment for the
benefit of creditors; and (iv) has not initiated nor been the subject of any
proceeding seeking to have a receiver or trustee appointed to liquidate or
manage its affairs; and(f)
    
    no litigation is pending or, to its knowledge, threatened which
seeks to restrain it from performing its obligations hereunder or the adverse
outcome of which would materially affect its business or its ability to perform
its obligations hereunder.
 ARTICLE 24
LIMITATION OF LIABILITY
 Aggregate Limit of Liability
 [***]
  *** Confidential Treatment Requested
 55




---



##### 



FOIA Confidential Treatment
Requested by Allegheny Energy, Inc.
  Exclusion of Consequential Damages NOTWITHSTANDING ANY PROVISIONS IN THIS
AGREEMENT TO THE CONTRARY, NEITHER PARTY, SHALL BE LIABLE TO THE OTHER PARTY FOR ANY SPECIAL,
INDIRECT, INCIDENTAL, PUNITIVE, CONSEQUENTIAL OR EXEMPLARY DAMAGES OF ANY KIND OR NATURE
WHATSOEVER, OR DAMAGES ARISING FROM OR IN CONNECTION WITH SUCH OTHER PARTYS LOSS OF ACTUAL OR
ANTICIPATED PROFITS OR REVENUES, IN EACH CASE ARISING OUT OF, IN CONNECTION WITH OR RESULTING FROM
THIS AGREEMENT, REGARDLESS OF WHETHER ANY CLAIM FOR SUCH LOSSES OR DAMAGES IS BASED ON CONTRACT,
WARRANTY, TORT (INCLUDING NEGLIGENCE), STRICT LIABILITY OR OTHERWISE.
 ARTICLE 25
DISPUTE RESOLUTION
 Informal Dispute Resolution
 Steering Committee
 Written Decisions
 Litigation
 Continued Performance
 ARTICLE 26
INTELLECTUAL PROPERTY
 Proprietary Information Proprietary Information
 *** Confidential Treatment Requested
 56




---



##### 



FOIA Confidential Treatment
Requested by Allegheny Energy, Inc.
  Infringement Claims
 Use of Trademarks
 ARTICLE 27
CONFIDENTIAL INFORMATION
 Protection of Confidential Information
 Confidential Information
  Permitted Disclosures
   *** Confidential Treatment Requested
 57




---



##### 



FOIA Confidential Treatment
Requested by Allegheny Energy, Inc.
   Contractors Use of Confidential Information
 Survival
 Contractors Proprietary Information
 Contractor Information
 ARTICLE 28
MISCELLANEOUS PROVISIONS
 Governing Law
 Notices
 *** Confidential Treatment Requested
 58




---



##### 



FOIA Confidential Treatment
Requested by Allegheny Energy, Inc.
  
  
  
  
  Entire Agreement
 *** Confidential Treatment Requested
 59




---



##### 



FOIA Confidential Treatment
Requested by Allegheny Energy, Inc.
 Severability
 Independent Contractor
 Assignment ab initio
 Amendments
 Precedence
 Remedies Cumulative
 Sole Benefit
 Waiver
 Counterparts
 *** Confidential Treatment Requested
 60




---



##### 



FOIA Confidential Treatment
Requested by Allegheny Energy, Inc.
 Survival
 Small Business Investment Act
 Announcements
 [signature page follows]
 *** Confidential Treatment Requested
 61




---



##### 



FOIA Confidential Treatment
Requested by Allegheny Energy, Inc.
  TRANS-ALLEGHENY INTERSTATE LINE COMPANYBy:
    
    /s/ David E. Flitman

David E. FlitmanPresidentKENNY CONSTRUCTION COMPANYBy:
    
    /s/ John E. Kenny, Jr.

John E. Kenny, Jr.President
 *** Confidential Treatment Requested