##### 



Exhibit 10.1
 EPC Agreement No. 1001
 between
 Allegheny Energy Supply Company, LLC
 and
 The Babcock & Wilcox Company
 covering
 Flue Gas Desulfurization Project
 at
 Hatfields Ferry Units 1, 2 and 3




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##### 



TABLE OF CONTENTS  Principal Document
 ARTICLE
    
    TITLE
    
    PAGEARTICLE 1 -
    
    AGREEMENT SCOPE
    
    
    1ARTICLE 2 -
    
    TERM AND SURVIVORSHIP
    
    
    1ARTICLE 3 -
    
    DEFINITIONS
    
    
    1ARTICLE 4 -
    
    CONTRATORS GENERAL OBLIGATIONS
    
    
    3ARTICLE 5 -
    
    COST AND SCHEDULE PERFORMANCE
    
    
    4ARTICLE 6 -
    
    WARRANTIES
    
    
    4ARTICLE 7 -
    
    PROCUREMENT AND SUBCONTRACTING
    
    
    6ARTICLE 8 -
    
    ALLEGHENY
    
    
    6ARTICLE 9 -
    
    CHANGE ORDER
    
    
    8ARTICLE 10 -
    
    INDEPENDENT CONTRACTOR
    
    
    9ARTICLE 11 -
    
    PAYMENT AND INVOICING
    
    
    9ARTICLE 12 -
    
    CLAIMS AND LIENS
    
    
    11ARTICLE 13
    
    TAXES AND DUTIES
    
    
    12ARTICLE 14 -
    
    INSPECTION OF WORK
    
    
    14ARTICLE 15 -
    
    DEFICIENT WORK
    
    
    14ARTICLE 16 -
    
    SUSPENSION
    
    
    15ARTICLE 17 -
    
    TERMINATION
    
    
    15ARTICLE 18 -
    
    MECHANICAL COMPLETION AND FINAL ACCEPTANCE
    
    
    16ARTICLE 19 -
    
    TITLE
    
    
    16ARTICLE 20 -
    
    DISTRIBUTION OF RISK, RELEASE AND INDEMNITY
    
    
    16ARTICLE 21 -
    
    INSURANCE
    
    
    17ARTICLE 22 -
    
    TOOLS AND EQUIPMENT
    
    
    19ARTICLE 23 -
    
    RESPONSIBILITY FOR CONSEQUENTIAL DAMAGES, LIMITATION OF LIABILITY
    
    
    19ARTICLE 24 -
    
    GOVERNING LAW AND DISPUTE RESOLUTION
    
    
    20ARTICLE 25 -
    
    OWNERSHIP OF INVENTIONS AND DOCUMENTS
    
    
    20ARTICLE 26 -
    
    CONFIDENTIAL INFORMATION
    
    
    22ARTICLE 27 -
    
    USE OF TRADEMARK AND PUBLICITY
    
    
    22ARTICLE 28 -
    
    AUDIT
    
    
    23ARTICLE 29 -
    
    BUSINESS STANDARDS
    
    
    23ARTICLE 30 -
    
    NO INFORMATION BROKERING
    
    
    24ARTICLE 31 -
    
    MANAGEMENT OF WASTE AND HAZARDOUS MATERIALS
    
    
    25ARTICLE 32 -
    
    ASSIGNMENT OF AGREEMENT
    
    
    25ARTICLE 33 -
    
    DESIGNATED REPRESENTATIVE AND NOTICES
    
    
    26ARTICLE 34 -
    
    ALCOHOL AND DRUGS
    
    
    26ARTICLE 35 -
    
    HEALTH AND SAFETY
    
    
    26ARTICLE 36 -
    
    RIGHT OF REMOVAL
    
    
    26ARTICLE 37 -
    
    FORCE MAJEURE
    
    
    27ARTICLE 38 -
    
    AMENDMENTS
    
    
    27ARTICLE 39 -
    
    PRECEDENCE
    
    
    27ARTICLE 40 -
    
    MISCELLANEOUS
    
    
    28ARTICLE 41 -
    
    SURVIVING OBLIGATIONS
    
    
    28ARTICLE 42 -
    
    ENTIRE AGREEMENT
    
    
    28
 EXHIBITA
    
    REIMBURSABLE COSTSB
    
    FIXED RATESC
    
    FEED
    
    CONTRACTORS PERSONNEL POLICIESE
    
    FORM LETTER OF CREDIT




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EXHIBITF
    
    (not used)G
    
    OWNERS CONTROLLED INSURANCE PROGRAM (OCIP)G-1
    
    EXCEPTIONS TO EXHIBIT GH
    
    DISPUTE RESOLUTION PROCEDUREI
    
    PERFORMANCE GUARANTEESJ
    
    MINIMUM DATA FIELD REQUIREMENTS FOR AUDIT PURPOSES




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##### 



ARTICLE 1  AGREEMENT SCOPE
  ARTICLE 2  TERM AND SURVIVORSHIP
 2.1
    
    Term.The Term of this Agreement begins and is effective from the date first written
above and shall terminate upon final acceptance pursuant to Article 18, unless terminated
earlier as permitted by this Agreement.
 2.2
    
    Survivorship.The provisions of this Agreement as stipulated in Article 41 shall survive
any expiration or termination of this Agreement.
 ARTICLE 3  DEFINITIONS
  3.1
    
    Agreementmeans Principal Document, Job Specification, and the Exhibits listed in the Table
of Contents.
 a)
    
    Principal Documentmeans this document, executed by Allegheny and Contractor
and comprising Articles 1 through 42.b)
    
    Job Specificationmeans the documents issued by Allegheny to Contractor, which
contain the detailed description of the Work including technical and other requirements
pertaining thereto. The Parties agree that the following documents are for information
only in the Job Specification and are not part of this Agreement: Flue Gas
Desulfurization (FGD) Phase I Study Report, dated December 2005, prepared by Black &
Veatch; Hatfields Ferry Coal Trace Analysis; Hatfields Ferry Units 1, 2 and 3 FGD
Process Design Operating Conditions and Parameters (Fuel); Result of Limestone Analysis
and Its Reactivity, dated March 2006, prepared by Mitsubishi Heavy Industries,
Ltd.;Technical Specification for Wet Flue Gas Desulfurization System prepared




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##### 



by Sargent & Lundy; Hatfield Power Station Bid for Continuous Emissions Monitoring
Systems; Water Analysis for Hatfield FGD Project; Fort Martin Lagoon Relocation
Specification; Geotechnical Report Revision 0, dated December 16, 2005, prepared by Black
& Veatch; Hatfields Ferry & Ft Martin  Site Fire Protection Flow Diagrams; Balance
Draft Conversion Boiler Reinforcement Design Conditions; Route 21 Rebuild and Bridge
Replacement Drawings; and Permitting Lists (including Phase 1 Permitting Schedule, Phase
1 Summary Permitting Schedule, Environmental Permit Action List (4-10-2006)). The
parties may mutually agree that other portions of the Job Specification may not apply or
may be adjusted.
 3.2
    
    Agreement Pricemeans the total of Costs and Fee relating to compensation as specified in
Exhibits A, B &C to be paid by Allegheny to Contractor.
 (a)
    
    Costsmeans the sum of Reimbursable Costs and costs resulting from application
of Fixed Rates.(b)
    
    Reimbursable Costsmeans costs set forth in Exhibit A for which Contractor is
compensated at actual costs incurred and paid.(c)
    
    Fixed Ratesmeans unit prices listed in Exhibit B.(d)
    
    Feemeans the part of Agreement Price as provided in Exhibit C by which
Contractor is compensated for: (i) its profit related to the Work; and (ii) expenses not
recovered by Contractor in Costs.
 3.3
    
    Agreement Price Budgetmeans the budget for the Work prepared by Contractor and approved by
Allegheny, which may be modified or adjusted by Change Orders. The Agreement Price Budget
shall be agreed to by the parties within four (4) months of the effective date of this
Agreement.
 3.4
    
    Change Ordermeans the document issued by Allegheny, which sets forth adjustments to the
Agreement Price Budget and/or the Scheduled Mechanical Completion Dates.
 3.5
    
    Competencemeans the expertise, experience, capability and specialized knowledge to perform
the Work in a good and workmanlike manner and within all accepted standards for the utility
industry.
 3.6
    
    Consequential Damagesmeans any loss or anticipated loss of profit, loss or anticipated
loss of revenue, business interruption, loss of use of any equipment, loss of any Agreement or
other business opportunity and any other indirect damage of a similar nature as further
defined in Article 23.
 3.7
    
    Contractormeans: (1) the legal entity identified in the Principal Document and, where the
context so permits; (2) any company in which that legal entity now or hereafter (a) owns
directly or indirectly or (b) controls, directly or indirectly, more than fifty percent (50%)
of the stock having the right to vote or appoint its directors; and (3) Contractors
representatives that are responsible for supplying services or performing the Work in
accordance with the terms of this Agreement.
 3.8
    
    Facility meansthe property at Hatfields Ferry in Monongahela Township, Greene County,
Pennsylvania.




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3.9
    
    Final Acceptance Noticemeans the document issued by Allegheny upon agreeing that
Contractor has substantially met the criteria set forth in this Agreement pursuant to
Sub-Article 18.2 for final acceptance of the Facility or any part thereof.3.10
    
    Hazardous Substancemeans any substance defined as hazardous by Law.3.11
    
    Hazardous Wastemeans any waste defined as hazardous by Law.
 3.12
    
    Industry Standardsmeans those practices, methods, acts, techniques and standards as may be
followed or employed by Contractor and other power plant owners and contractors at the time of
performance of the Work and which: (i) are generally accepted in the United States for use in
the electric power generation industry in connection with power stations of the same or
similar size and type and related construction work; (ii) are commonly utilized by Contractor
and other power plant owners and contractors in related retrofit design, engineering,
construction, testing, project management and operation and; (iii) are expected for Work
performed consistent with reliability and safety objectives.
 3.13
    
    Lawmeans all applicable laws of the jurisdiction in its broadest sense including without
limitation the following: constitutional law, civil law, common law, international law,
equity, treaties, statutes, decrees, edicts, codes, orders, rules, ordinances and regulations
of any federal, state, local, municipal, or any other duly constituted governmental authority
or agency.
 3.14
    
    Mechanical Completionmeans, in general, the Work is substantially completed so that the
systems are ready to receive flue gas and as further detailed in the Job Specification.
 3.15
    
    Mechanical Completion Noticemeans the document issued by Allegheny upon agreeing that
Contractor has substantially met the criteria set forth in the Job Specification for
Mechanical Completion of the Facility or any part thereof.
 3.16
    
    Safety and Health Manualmeans the documents issued by Allegheny to Contractor detailing
the minimum safety and health policies and procedures to be adopted by Contractor,
Subcontractors and Vendors at the Work Site.
 3.17
    
     Scheduled Mechanical Completion Datemeans the date or dates set forth in the Job
Specification for Mechanical Completion of the Work, which may be modified or adjusted by
Change Orders. The Scheduled Mechanical Completion Date shall be finalized within four (4)
months of the effective date of this Agreement.
 3.18
    
    Subcontractormeans any subcontractor, supplier, agent or materialman providing services or
work to Contractor for the purpose of performing the Work under this Agreement.
 3.19
    
    Vendor means any supplier, agent or materialman providing equipment, materials, and/or
specialty services to Contractor pursuant to the Work under this Agreement.
 3.20
    
    Workmeans the engineering, procurement and construction of the flue gas desulfurization
system, by Contractor, under this Agreement, including providing as necessary therefor
supervision, construction work, consultations, any specified materials, labor, construction
tools, equipment, and supplies at the Work Site.
 3.21
    
    Work Sitemeans the site indicated in the Job Specification at the Hatfields Ferry
facility in Monongahela Township, Greene County, Pennsylvania, and at the




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field fabrication and lay down area at the Ft. Martin facility in Maidsville, West Virginia.




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ARTICLE 4  CONTRACTORS GENERAL OBLIGATIONS
 4.1
    
    Contractor shall engineer, procure and construct flue gas desulfurization systems and
shall perform the Work in accordance with the terms and conditions of this Agreement.
 4.2
    
    No documentation, including Contractors proposal and bid clarification correspondence, shall
constitute a part of this Agreement unless included in Exhibit E  Supplemental Documentation.4.3
    
    Contractor represents that it knows:
 (a)
    
    the nature, requirements and scope of the Work,(b)
    
    the location and peculiarities of the Work Site,(c)
    
    the type and magnitude of detailed engineering, procurement, construction, and
construction management services and labor required,(d)
    
    the character of equipment, materials and facilities required, and(e)
    
    the general and local conditions and other matters which could affect the Work.
   4.4
    
    After entering into this Agreement, Contractor shall commence the Work promptly upon being
notified by Allegheny, and shall perform the Work in a professional manner to the satisfaction
of Allegheny: (i) with diligence until its obligations pursuant to this Agreement have been
completed; and (ii) meet, at a minimum, the Industry Standards pertaining to such work
including standards of the appropriate construction code and revisions thereto applicable to
the jurisdiction where the Facility is to be constructed, as well as such other requirements
as set forth in this Agreement.
 4.5
    
    Contractor shall provide sufficient supervisory and other personnel to perform the Work and
shall continuously furnish such personnel and control the progress of the Work until
Contractors performance under this Agreement has been completed. Contractors project
manager and other key personnel as approved by Allegheny and identified in the Job
Specification, shall not be reassigned or removed from the




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Work by Contractor without the approval of Allegheny. Contractor shall not use third party
agency personnel for any position without Alleghenys prior approval.
 4.6
    
    Contractor shall perform the Work under the National Maintenance Agreement, providing for a
wage modifier at ninety percent (90%) and one hundred percent (100%) of the fringe benefits
found in the local collective bargaining agreement. Contractor shall take all necessary steps
to minimize and/or eliminate labor disputes with respect to this Agreement.
 4.7
    
    Contractor represents that all engineering work requiring certification by applicable Law
shall be certified by professional engineers properly licensed and qualified to perform such
engineering services in all appropriate jurisdictions and will remain solely responsible for
the contents of such drawings.
 4.8
    
    Contractor shall develop with governmental authorities customs procedures for: (i) importing
to the Work Site equipment, materials, supplies and construction tools required for the Work;
and (ii) exporting Contractor-owned or rented construction tools and construction equipment.
Contractor shall be responsible for obtaining and maintaining all licenses, visas, clearances,
certifications and governmental or administrative authorizations, necessary for the
performance of its obligations hereunder, including entry visas, residence and work permits
and any applicable licenses for its employees, agents and representatives. Allegheny shall
have no liability whatsoever in respect thereof.
 4.9
    
    To the extent required to perform the Work under this Agreement, Contractor shall procure all
necessary permits (where required to be in Contractors name), licenses, including licenses or
registrations issued by any professional boards pursuant to Law, observe and abide by all
applicable Law relating to the Work and support Alleghenys efforts to secure approval of
plans and specifications. Without releasing Contractor from its obligation hereunder, if any
drawings or specifications are known by Contractor to be at variance with any applicable Law,
Contractor shall give notice to Allegheny thereof before performing such Work. Applications
for such permits, licenses or approvals shall be submitted to Allegheny for approval prior to
being filed with any relevant authority involved. Contractor shall give a copy of each permit
to Allegheny promptly after receipt thereof by Contractor.
 4.10
    
    Contractor shall have custody and control of: equipment, materials and supplies for
performing the Work furnished by it or delivered to it by Allegheny; parts of the Facility
under construction or completed; temporary structures; and construction facilities, except
for: (i) partially completed parts of the Facility for which Allegheny has taken temporary
possession by Change Order, (ii) parts (units, systems or areas of equipment) of the Facility
as to which Allegheny has accepted custody and control pursuant to Mechanical Completion
Notices, and (iii) parts of the Facility included in any part of the Work which has been
terminated pursuant to Article 17. Contractor shall protect and care for items and parts of
the Facility in its custody and control until Mechanical Completion, after which time
Allegheny shall bear the risk of loss or damage to the Work.
 4.11
    
    Contractors proposed working hours schedule shall be submitted to Allegheny for its approval
prior to Contractor beginning any Work at the Work Site. Once approved, such working hours
schedule shall not be revised without further approval by Allegheny. Contractor shall not
permit its employees or




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Subcontractors employees to work more than the approved working hours schedule, unless
approved in advance by Allegheny.
 4.12
    
    Contractor shall schedule, report, forecast and control progress of the Work, and shall
undertake best efforts to achieve Mechanical Completion on or before the Scheduled Mechanical
Completion Dates as set forth in the Job Specification, and Final Acceptance. The Scheduled
Mechanical Completion Dates are non-guaranteed target dates.
 4.13
    
    Contractor shall furnish to Allegheny for its review and comment, copies required by the Job
Specification of working drawings, specifications, engineering calculations, purchase orders,
subcontracts and other documents prepared by Contractor, Subcontractors or Vendors in the
course of performing the Work, and shall give Allegheny access at reasonable times, at
Contractors and Subcontractors facilities, to Contractors detail drawings, design and
engineering methods, calculations, and data used in performing the Work. Notwithstanding the
foregoing, this provision shall not require Contractor to disclose its identified proprietary
methods, software, calculations and data, provided, however, Contractor shall cooperate with
Allegheny in its understanding of the methodology or derivation of any calculation or design
developed by Contractor for the Work short of Contractor disclosing its proprietary methods.
 4.14
    
    Contractor shall maintain all Work records and financial records requested by Allegheny in
accordance with the requirements of this Agreement and of the federal and state agencies in
the state where the work is being performed, and upon request, shall provide Allegheny with
sufficient information relating to prices of materials and services to similarly enable
Allegheny to meet its asset management accounting, compliance and reporting requirements.
 4.15
    
    Contractor shall comply with all applicable Federal, State and local Laws, rules and
regulations including but not limited to: Fair Labor Standards Act, Occupational Safety and
Health Act, Equal Opportunity, Vietnam Era Veterans Readjustment Assistance Act of 1974,
Rehabilitation Act of 1973, Minority Business Enterprise and Americans With Disabilities Act
of 1990. Contractor further shall make certifications and periodic reports stipulated by
such Laws, rules and regulations, the Laws and Executive Orders implemented by those
regulations, and as otherwise requested by Allegheny. Contractor also shall provide
information for Allegheny to report upon its obligations under the Small Business and Small
Disadvantaged Business Concerns of the Federal Acquisition Regulations System (FAR).
 4.16
    
    Contractors project manager named in the Job Specification shall have the authority to act
for Contractor with respect to all matters pertaining to the Work and Contractors
performance. Communications concerning these matters received by Contractors project manager
from Allegheny shall be deemed to have been received by Contractor.
 4.17
    
    Contractor shall respond promptly to Alleghenys request for assurances concerning the
financial condition of Contractor and any Subcontractor or Vendor and their respective ability
to perform all of their respective obligations under this Agreement. Upon the request of
Allegheny, Contractor shall submit financial
statements for its most recent fiscal quarter, as well as the most recent three years




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and will
submit such other documents as are permitted by Law and, in Alleghenys discretion, necessary
to substantiate Contractors financial ability to complete the Work in accordance with the
terms hereof. In the event that Contractor fails to provide such financial information, then
a deficiency will be deemed to have occurred under Sub-Article 15.1. Contractor shall use
best efforts to include in all subcontracts and purchase orders a similar provision requiring
all Subcontractors and Vendors to provide such financial information upon request of either
Allegheny or Contractor.
 4.18
    
    Without diminishing the importance of other portions of the Job Specification, Contractor
shall ensure satisfactory pursuance of the requirements in the following portions of that
document:
 (a)
    
    furnishing and maintaining, in an up-to-date condition, the project control
documents and giving notice to Allegheny, if any condition exists that might prevent
Contractor from obtaining results that are in full compliance with this Agreement;(b)
    
    operating a quality assurance system that complies with Alleghenys requirements
and allows Allegheny full access to audit the system, and further undertakes to make
such modifications to the system as may be required for the applicable quality assurance
standards to be met; and(c)
    
    during the course of manufacture and fabrication of equipment and materials, the
making of inspections and tests required by the Job Specification, including Alleghenys
right to attend such inspections and tests and Contractors giving Allegheny proper
notice therefor.
 4.19
    
    Contractor shall provide as specified in the Job Specification, office space, furnishings,
clerical and secretarial assistance, communication services and other facilities and services
required for Alleghenys use at Contractors home and branch offices, subject to Allegheny and
its consultants executing mutually agreeable confidentiality agreements relating to
information of Contractor clients other than Allegheny and liability waivers.
 ARTICLE 5  COST AND SCHEDULE PERFORMANCE
 5.1
    
    Contractor shall estimate, budget, report, forecast and control Costs, and shall schedule,
report, forecast and control progress of the Work.
 5.2
    
    Contractor shall use its best efforts to: (i) keep the forecasted Agreement Price for all
phases of the Work within the Agreement Price Budget; (ii) complete elements of the Work by
the time specified in the agreed upon detailed work schedule, and (iii) achieve completion of
the Facility, and other deliverables to be provided as part of the Work, on or before the
Scheduled Mechanical Completion Dates.
 5.3
    
    Contractor shall use its best efforts to achieve completion of each part of the Facility and
other deliverables in the time sequence specified in the Job Specification. If the time
sequence is revised by Allegheny, a Change Order shall
be issued if appropriate pursuant to the criteria of Sub-Article 9.2. If such revision is
required because of Contractors deficient performance, no adjustment to Fee




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shall be allowed
and no adjustment to the Scheduled Mechanical Completion Dates shall be allowed.
 5.4
    
    After issuance of the Final Acceptance Notice, Contractor shall prepare and provide to
Allegheny a final cost report.
 ARTICLE 6  WARRANTIES
 6.1
    
    Representations and Warranties
  (a)
    
    has the Competence to perform the Work;(b)
    
    has or shall obtain and maintain the necessary personnel and supervision
possessing appropriate skills to perform the Work in an efficient and timely manner, and
as otherwise subject to Contractors general obligations under Sub-Article 4.4;(c)
    
    shall obtain, maintain and use all tools and equipment in accordance with
manufacturers specifications and recommendations and good engineering and operational
practices;(d)
    
    has or shall obtain, at its expense, before performing any work connected with
the Work, all the necessary registrations, certificates, permits, licenses and
authorizations to conduct business and perform the Work, and as otherwise subject to
Contractors general obligations under Sub-Article 4.9;(e)
    
    shall perform all Work in accordance with Law, and as otherwise subject to
Contractors general obligations under Sub-Article 4.15;(f)
    
    shall perform all Work promptly, with due diligence and Competence, and as
otherwise subject to Contractors general obligations under Sub-Article 4.4;(g)
    
    shall conduct itself with the highest degree of ethical and professional
standards and as otherwise subject to Contractors obligations under Article 29; and(h)
    
    fully comprehends the requirements and contingencies for performing the Work and
that it has examined the Work Site for any additional or special requirements and
contingencies, and as otherwise subject to Contractors general obligations under
Sub-Article 4.3.
 6.2
    
    Contractors Duty for Compliance while Performing Work under this Agreement




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6.3
    
    Warranty




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##### 



6.4
    
    Warranties of Others
  6.5
    
    Conditions, Limitations and Disclaimers
    CONTRACTOR AND ALLEGHENY AGREE THAT, IN CONSIDERATION OF THE ABOVE EXPRESS WARRANTY AND
THE PERFORMANCE GUARANTEE(S), ALL OTHER WARRANTIES AND GUARANTEES, OTHER THAN TITLE, EITHER
EXPRESSED OR IMPLIED, WHETHER ARISING UNDER LAW OR EQUITY OR CUSTOM OF THE TRADE, INCLUDING
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, ARE EXCLUDED FROM THIS
AGREEMENT.
 ARTICLE 7  PROCUREMENT AND SUBCONTRACTING
 7.1
    
    Contractor shall obtain Alleghenys agreement with (i) procurement procedure, (ii)
subcontract procedure, (iii) purchase order and subcontract documents and (iv) Subcontractor
and Vendor selection.7.2
    
    No home, branch office or construction management services shall be performed by
Subcontractor(s) or Vendor(s) without Alleghenys prior approval.7.3
    
    Contractor shall make its best efforts to include in all purchase orders and subcontracts
terms, conditions, provisions, obligations, warranties, and guaranties no less stringent than
those imposed on Contractor under this Agreement.




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##### 



7.4
    
    In purchase orders and subcontracts involving the supply of equipment, supplies, structures
and/or materials, whether permanent or temporary, Contractor shall:
 7.4.1
    
    specify that the equipment, supplies, structures and/or materials are being
procured on behalf of Allegheny, and that Allegheny is the legal and equitable owner
thereof at the time of payment, and7.4.2
    
    require that Allegheny be a recipient of manufacturers notices related to
the equipment and/or materials to be supplied including, but not limited to, any and
all health and safety advisories and notices.
  7.5
    
    At regular intervals and as requested by Allegheny, Contractor shall review with Allegheny
each Subcontractors progress and performance. Subcontract administration matters of a
non-routine nature including, but not limited to, claims or potential claims (exclusive of
warranty claims) shall be reviewed with Allegheny prior to any action or response by
Contractor.
 7.6
    
    Contractor shall be responsible to Allegheny for work performed by Subcontractors to the same
extent it is for work performed by Contractors employees.
 7.7
    
    Reviews or approvals of purchase orders, subcontracts, Subcontractors or Vendors by Allegheny
shall not create any Contractual relation between Allegheny and any Subcontractor or Vendor.
 7.8
    
    Regarding Public Law 95-507, the Small Business Investment Act, 15 U.S.C. 637(d), Allegheny
recognizes that much of Contractors Work under this Agreement requires the duplication of
Contractors work on a prior project. Contractor will report on a quarterly basis the goals
identified in Contractors subcontracting plan and will pursue these goals on a commercially
reasonable basis. Contractor agrees to perform so that small business concerns and those
concerns owned and controlled by socially and economically disadvantaged individuals, as
defined in the Act, have the opportunity to compete for purchase orders and subcontracts
consistent with the efficient performance under this Agreement.
 ARTICLE 8  ALLEGHENY
 8.1
    
    Specific Obligations




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##### 



8.1.1
    
    Allegheny shall provide Contractor with the Job Specification, revisions
thereto, and upon request, copies of specifications, drawings, instructions and other
documents referred to in the Job Specification and not readily available to
Contractor.
 (a)
    
    Job Specification will be identified by its Table of Contents
date.(b)
    
    At any time, Allegheny may issue revision(s) to the Job
Specification and shall issue Change Order(s) thereto.
 8.1.2
    
    Allegheny shall obtain from governmental authorities the licenses and
permits that it must possess to locate, construct, maintain and operate the Facility.8.1.3
    
    Allegheny shall fulfill its obligations under Sub-Articles 8.1.1 through
8.1.2 above, and shall provide those items specified in the Job Specification as being
provided by Allegheny in time to avoid delaying Contractor in the performance of the
Work.8.1.4
    
    Allegheny shall coordinate activities conducted by Allegheny or by other
Contractors employed by Allegheny on or contiguous to the Work Site with the
activities of Contractor.8.1.5
    
    Allegheny shall use its best efforts to provide certificates, upon
reasonable and timely request, as it is empowered to issue in support of Contractor.
 8.2
    
    Alleghenys Project Manager
  8.3
    
    Access to and Use of Premises
 8.3.1
    
    Allegheny may use any portion of its property for its own purpose and may
employ workers or other contractors of its own choosing for constructing other
facilities or maintaining or changing any of the existing facilities.8.3.2
    
    Allegheny may refuse any person admission to the Facility and Contractor
shall cooperate with Allegheny with respect thereto.8.3.3
    
    Allegheny may take temporary possession of and use partially completed parts
of the Facility by notifying Contractor thereof.
 (a)
    
    Such possession by Allegheny shall not be deemed an
acknowledgement of completion of said parts of the Facility and shall
not limit Contractors responsibility for custody and control of said parts of
the Facility pursuant to Sub-Article 4.8, after possession is




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##### 



returned to
Contractor. For that portion of the Work under Alleghenys temporary
possession, Allegheny shall be responsible for risk of loss or damage to the
Work and for safety and health pursuant to Article 35.(b)
    
    A Change Order shall be issued with respect to such temporary
possession.
 8.3.4
    
    Contractor is responsible for ensuring that its employees, Subcontractors,
Vendors and all others permitted by Contractor to enter the Facility and other sites
made available by Allegheny for construction-related activities shall comply with
Alleghenys regulations and requirements. Contractor also shall require said persons
to go to and from the Work Site and within such sites via a route prescribed by
Allegheny and not to deviate therefrom.
 8.4
    
    Approvals, Authorizations, Agreements and Reviews
  8.5
    
    Bonus Offers
  ARTICLE 9  CHANGE ORDER
 9.1
    
    Changes
  9.2
    
    Change Orders
 (a)
    
    Unless this Agreement provides otherwise, Allegheny shall issue a Change Order
when it revises the Job Specification or elements of the Work already completed or being
performed in accordance with the Job Specification, requires additional Work of
Contractor or directs omission of part of the Work
previously authorized, provided that any of the following Change Order criteria is
satisfied: (i) Contractors costs for performing the Work are affected




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thereby; or (ii)
the time required for performing the Work is affected thereby; or (iii) the scope of the
Work or execution approach is affected thereby. If any of the foregoing criteria is
satisfied, Allegheny shall authorize Contractor to prepare and Contractor shall prepare
an estimate of the effects on costs and/or completion of the Work. Contractor shall
proceed with the additional Work and after Contractor and Allegheny agree on the
effects, Allegheny shall issue a Change Order which may adjust the schedule or Agreement
Price Budget.(b)
    
    A Change Order shall not be issued, when: (i) revisions in the Work already
performed by Contractor are required to achieve compliance with the Job Specification;
or (ii) to correct errors, omissions or work not in accordance with the requirements of
Sub-Articles 4.3 and 4.5; or (iii) Contractor has not complied with a requirement of
this Agreement.
 ARTICLE 10  INDEPENDENT CONTRACTOR
  ARTICLE 11   PAYMENT AND INVOICING
 11.1
    
    Payment
  11.1.1
    
    On or about the twentieth day of each month, Contractor shall render to Allegheny an
invoice for the actual, payable portion of the Agreement Price incurred for the Work
performed by Contractor during those days of the current month for which actual Costs
are available and an estimate of the payable portion of the Costs forecasted to be
earned for Work performed by Contractor during the balance of the month. The invoice
shall specify, document and be adjusted for the difference between the estimate paid to
Contractor during the prior month and the actual Costs incurred by
Contractor in the prior month. Undisputed payments shall be made by




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Allegheny, and
received by Contractor, on the first of the month following the date of the invoice.11.1.2
    
    Invoices under Sub-Article 11.1.1 shall include supporting documentation detailing:
 (a)
    
    the payable portion of actual and forecasted Costs
(including applicable SG&A).(b)
    
    the payable portion of Fee earned based upon the
percentage of project completion actually earned at the end of the previous
month.(c)
    
    a reconciliation of amounts forecasted in the prior month
versus amounts actually incurred for that month, together with an update of
forecasted amounts for the current month and the following six (6) months.
 11.1.3
    
    On or before the tenth and twentieth day of each month, Contractor shall render to
Allegheny an invoice for the actual Costs paid by Contractor to its Subcontractors and
Vendors for the Work. In support of each invoice, Contractor shall provide full
supporting documentation required by the Job Specification, together with copies of
Subcontractor and Vendor invoices and Contractor reports detailing the actual payments
made thereunder. Undisputed payments shall be made by Allegheny, and received by
Contractor, within five (5) business days following the receipt of each invoice from
Contractor.
    11.1.4
    
    Payable amounts of Costs and Fee earned and eligible for invoicing in accordance with
Sub-Articles 11.1.1 and 11.1.3 above, shall be:
 (a)
    
    ninety-five percent (95%) of Costs,(b)
    
    one hundred percent (100%) of Reimbursable Costs for those
Subcontractors already subject to a retention of five percent or more under
agreement with Contractor, unless otherwise agreed by Allegheny and
Contractor, and(c)
    
    ninety-five percent (95%) of Fee earned.




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11.1.5
    
    Costs and Fee shall be certified by Contractor as being allowable under this Agreement
before payment by Allegheny shall be made hereunder.11.1.6
    
    After receipt of a correct and valid invoice with full supporting documentation from
Contractor, Allegheny shall promptly advise Contractor of any disputed amount, together
with the reason for the dispute. Allegheny shall have the right to withhold the
disputed amount from payment of future invoices. Any disputed amount will be paid or
credited upon resolution.11.1.7
    
    Invoicing for Costs shall be kept current and Allegheny shall reserve the right to not
pay five percent (5%) of undisputed Costs (up to a total, cumulative amount of $100,000)
incurred in excess of sixty days from the date such Costs should have been invoiced by
Contractor to Allegheny.11.1.8
    
    Each invoice shall be specified net of taxes, with applicable taxes (e.g., sales tax)
identified separately.11.1.9
    
    Contractor shall have no legal or equitable right, title or interest in or to any
amounts which may otherwise be due under this Agreement, and any such amounts shall not
have been earned by Contractor, unless and until Allegheny receives satisfactory
Contractor reports evidencing that Subcontractors and Vendors who have supplied any
materials, labor or equipment or performed any of the Work with respect to such amounts
have been fully paid therefore. Receipt of such Contractors reports evidencing
payments shall be a condition precedent to Contractors right to receive any further
payment, and a condition precedent to Alleghenys release of any amount retained by
Allegheny pursuant to this Article.11.1.10
    
    Nothing in this Agreement shall create any obligation on the part of Allegheny to pay
to or see to the payment of any sums to any Subcontractor or Vendor or to any other
person or entity furnishing labor, equipment or materials to Contractor.11.1.11
    
    The retention of five percent (5%) held by Allegheny shall be released to Contractor
upon: the earlier of successful completion of the performance tests demonstrating
satisfaction of the Performance Guarantees under Exhibit I or failure of Allegheny to
test the entire flue gas desulfurization system within ninety (90) days after Contractor
provides notice that the system is ready for testing; and the posting by Contractor of
an irrevocable, on demand, stand-by letter of credit, in form and substance as the
letter of credit attached hereto as Exhibit E, with a financial institution approved by
Allegheny (Letter of Credit), equal to fifty percent (50%) of the amount of retention
to be released. The Letter of Credit shall terminate upon expiration of the warranty
period set forth in Sub-Article 6.3. The Letter of Credit is to cover the warranty
claims not honored by Contractor and, after providing Contractor with seven days notice
to cure such warranty claim, and if Contractor has not diligently pursued such cure, may
be partially or wholly drawn upon with notification by Allegheny to the financial institution.




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The costs incurred by Contractor for such Letter of Credit will be a Reimbursable Cost.11.1.12
    
    Upon Mechanical Completion, Contractor shall have the option of posting a Letter of
Credit, at Contractors expense, up to the amount of the retention held by Allegheny, at
which time Allegheny shall release such retention to Contractor. Such Letter of Credit
shall terminate: upon the earlier of successful completion of the performance tests
demonstrating satisfaction of the Performance Guarantees under Exhibit I or failure of
Allegheny to test the entire flue gas desulfurization system within ninety (90) days
after Contractor provides notice that the system is ready for testing; and posting of
the Letter of Credit referenced in Sub-Article 11.1.11 above.
 11.2
    
    Waiver under Payment Act
  ARTICLE 12  CLAIMS AND LIENS
 12.1
    
    Contractor agrees to waive all rights to mechanics, materialmens or similar liens with
respect to every aspect of this Agreement. Immediately upon execution of this Agreement,
Contractor will execute and provide to Allegheny, and Allegheny will be responsible for
properly filing and indexing a Mechanics Lien Waiver and/or Stipulation against Liens in the
appropriate county office. Such Waiver and/or Stipulation shall be provided to Allegheny for
filing at least ten (10) days prior to Contractor or any Subcontractor or Vendor performing
any physical Work at the Work Site. Contractor shall include enforceable language waiving all
rights to any mechanics lien, materialmens lien or similar lien in all Subcontract and
Vendor agreements related to Work under this Agreement, and will require that all
Subcontractors, Vendors, or other persons supplying labor, material, services or any other
potentially lienable product for the Work will include such language in all Agreements with
any lower tier Subcontractor or Vendor of such products.
 12.2
    
    Contractor agrees that it will indemnify, defend and hold Allegheny harmless from any fines,
penalties, assessments, attorneys fees, expenses or costs of any kind incurred by Allegheny or
assessed against Allegheny in connection with any violation or alleged violation by Contractor
or any Subcontractor or Vendor of any Occupational Safety and Health statutes, regulations or
requirements.
 12.3
    
    In the event any Subcontractor, Vendor or third party asserts any claim that would, if
successful, cause an increase in the Agreement Price, become a cost, or cause
an extension of the Scheduled Mechanical Completion Date, Contractor shall immediately notify
Allegheny of the receipt of such claim, and shall immediately provide to Allegheny all claim
documentation received from such claimant.




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Allegheny shall have the right to monitor the
progress and handling of such claim in every respect, and may, at Alleghenys sole option,
undertake the handling and defense of any such claim with counsel of its own choosing.
Contractor agrees to fully cooperate with Allegheny in the negotiation, handling and/or
defense of any such claim, including but not limited to the provision of documentary and
witness support, and shall not settle or make payment on any such claim without the written
consent of Allegheny.12.4
    
    Contractor agrees that it will continue performance under this Agreement and Allegheny agrees
to continue to pay undisputed amounts during the pendency of any dispute or claim.
 ARTICLE 13  TAXES AND DUTIES
 13.1
    
    Contractor shall pay when due:
 13.1.1
    
    Taxes and fees imposed by reason of the performance of the Work by Contractor
including, but not limited to, sales, excise, storage, consumption and use taxes;
licenses, permit and registration fees; and income, profit, franchise, and personal
property taxes, but excluding fees for licenses and permits obtained by Allegheny
pursuant to Sub-Article 8.1.2.13.1.2
    
    Employment taxes and contributions imposed by applicable Law, or trade union
agreements or regulations, with respect to or measured by compensation (wages,
salaries or other) paid to employees of Contractor including, but not limited to taxes
and contributions for unemployment compensation insurance, old age benefits, welfare
funds, pensions and annuities, and disability insurance, and13.1.3
    
    Import/export license fees and import/export taxes and duties on services, equipment
and materials, and construction tools, equipment and supplies imported or exported by
Contractor.
 13.2
    
    Contractor shall defend, indemnify and hold Allegheny harmless from liability resulting from
Contractors or Subcontractors or Vendors failure to (i) make timely payment of or to pay
any of the items in Sub-Article 13.1 above, or (ii) comply with the reporting, filing or other
procedural requirements with respect to their payment. Interest, penalties or other
liabilities arising from such failures shall not be allowed as Costs and shall be for
Contractors account.
 13.3
    
    In accordance with Sub-Article 13.7.1, equipment for this Agreement will be purchased as
permanent equipment under Pennsylvania tax law and Contractor will pay sales tax and/or accrue
and pay use tax. In addition, in accordance with Sub-Article 13.7.2, Contractor shall pay
applicable sales or use tax on: (i) equipment, materials and supplies (including but not
limited to consumable supplies and small tools) that will not become a permanent part of the
Work; (ii) third party rentals
including construction equipment; and (iii) permanent equipment and materials purchased by
Contractor.




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13.4
    
    If Allegheny believes that Contractor is entitled to immunity or exemption from taxes or
duties associated with the purchase of goods or services under this contract, Allegheny shall
provide Contractor or Subcontractor with appropriate citation to said immunity or exemption
and assist Contractor or Subcontractor with obtaining such benefit from the appropriate
governmental authority. If as a result of such actions Contractor or Subcontractor have any
additional taxes, penalties or interest imposed upon them, then Allegheny shall reimburse
Contractor or Subcontractor for such costs.
 13.5
    
    Contractor shall promptly notify Allegheny of matters pertaining to nonpayment or payment
under protest of, claim for immunity or exemption from, or claim for refund of or credit
against any taxes or duties.
 13.6
    
    Contractor shall provide Allegheny with a completed Federal form W-9. If Contractor fails to
provide such a form then Allegheny shall withhold income and other taxes from payments due to
Contractor under this Agreement to the extent that such withholding is required by Law.
Payment by Allegheny to the appropriate governmental office of the amount of money so withheld
will be deemed to have been made on behalf of Contractor hereunder for the amount of such
payment as if the payment had been made to Contractor and will relieve Allegheny of any
further obligation to Contractor with respect to the amount so withheld. The receipt for any
such withholding tax will be given to the Contractor.13.7
    
    Sales and Use Tax Responsibilities
 13.7.1
    
    Except as expressly provided in Sub-Article 13.7.2 below, all permanent equipment
and materials purchased by Contractor for incorporation as a permanent part of the
Work shall be purchased by Contractor. Contractor shall pay sales and/or accrue and
pay use tax as appropriate.13.7.2
    
    Contractor shall pay applicable sales or use tax on: (i) equipment, materials and
supplies (including but not limited to consumable supplies and small tools) that will
not become a permanent part of the Work; (ii) third party rentals including
construction equipment; and (iii) permanent equipment and materials purchased by
Contractor.13.7.3
    
    Contractor shall, in its accounting of the Agreement Price Budget, distinguish
between (i) permanent equipment and materials purchased for incorporation as a
permanent part of the Work and (ii) those equipment, materials and supplies which
Contractor shall have paid sales and use tax in accordance with Sub-Article 13.7.2
above.13.7.4
    
    The Contractor agrees to assign and transfer to Allegheny all its rights to sales
and use tax which may be refunded as a result of a claim for refund for materials
purchased in connection with this Agreement. The
Contractor further agrees that it will not file a claim for refund for any sales or
use tax which is the subject of this assignment.




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ARTICLE
14  INSPECTION OF WORK
 14.1
    
    Allegheny or its representative shall at all times have access to the Work whether it is in
preparation or in progress and Contractor shall provide proper facilities for such access and
for inspection. If the Job Specification, Alleghenys advance instructions, any Law or any
public authority require any Work to be specifically inspected, tested or approved, Contractor
shall give Allegheny timely notice of: (i) readiness for inspection; and (ii) the date fixed
for any inspection to be performed by a public authority.
 14.2
    
    Inspections by Allegheny shall be promptly made. If Allegheny timely requests an inspection
of, or witness to, any part of the Work, but Contractor proceeds to close or cover it before
such inspection or witnessing has been performed, Allegheny may require said Work to be opened
or uncovered for inspection or witnessing and reclosed or recovered. Costs associated
therewith shall not be allowed as Reimbursable Costs.
 ARTICLE
15  DEFICIENT WORK
 15.1
    
    Any or all of the following, at Alleghenys option, shall be deemed deficient during
performance of Work hereunder: (i) any Work performed or equipment and/or materials furnished
by Contractor or Subcontractors that does not conform with requirements as set forth in this
Agreement, or (ii) Contractor has failed to remedy any defects in the Work, or (iii)
Contractor has failed to supply a sufficient number of properly skilled workmen or
construction equipment and/or materials, provided they are available, or (iv) Contractor, or
any Subcontractor or Vendor, fails upon request to demonstrate financial ability to complete
the Work in accordance with the terms of this Agreement, or (v) Contractor has failed to
execute the Work with promptness and diligence, or (vi) Contractor has failed to comply with
any of the material provisions of this Agreement. Upon receipt of written notice from
Allegheny that any such deficiency to the satisfaction of Allegheny exists, Contractor shall
immediately undertake and proceed with due diligence to remedy such deficiency to the
satisfaction of Allegheny.
 15.2
    
    For Contractors remediation pursuant to the foregoing Sub-Article, Allegheny shall pay
Contractor in accordance with Exhibit A and Exhibit B, costs incurred by Contractor in
correcting deficiencies in the Work, except for amounts recoverable from Subcontractors,
Vendors or others.
 15.3
    
    If Contractor does not immediately, upon receipt of such notice, undertake and proceed with
due diligence to remedy such deficiencies, Allegheny may declare Contractor in material breach
of this Agreement, and by written notice setting forth the effective date of removal, may
remove Contractor from all or any part of the Work and use or dispose of all materials,
supplies, tools and equipment in connection therewith. Allegheny may then complete all or any
part of the Work from which Contractor has been removed.
 15.4
    
    In the event that Allegheny does remove Contractor and take possession as aforesaid, then
notwithstanding Article 11, Contractor shall only be entitled to payment for the part of the
Work performed by it and acceptable to Allegheny under the terms and conditions of this
Agreement up to the effective date of such removal, reduced by: (i) costs recoverable under
Subcontractors or Vendors guarantees; (ii)




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any costs recoverable by Contractor under
insurance policies; and (iii) Alleghenys retainage out of moneys owing to Contractor of an
amount sufficient to indemnify Allegheny against extra costs incurred by Allegheny to remedy
deficiencies. The rights and remedies of Allegheny provided by this Article are in addition
to any other rights and remedies provided by this Agreement.
 15.5
    
    Failure of Contractor to meet the Mechanical Completion Dates or other schedule or completion
dates does not constitute a material breach of this Agreement, if Contractors Work is not
otherwise deficient under this Article.
 ARTICLE 16  SUSPENSION
 16.1
    
    Suspension of Work
  16.2
    
    Compensation
  (a)
    
    Contractors employees whose retention on the Work during the suspension has been
authorized in advance by Allegheny; and(b)
    
    Other items directly related to the suspension of the Work,(c)
    
    Other items directly related to the suspended part of the Work if authorized in
advance by Allegheny,
 16.3
    
    Resumption
  16.4
    
    Liability
  ARTICLE 17  TERMINATION
 17.1
    
    Termination for Convenience




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17.2
    
    Termination for Material Breach
   17.3
    
    Termination by Contractor
  17.4
    
    Termination for Force Majeure
  17.5
    
    Compensation
  (a)
    
    for the Work; and




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(b)
    
    for direct costs that Contractor incurs in terminating the Work under this
Agreement, including unpaid legally enforceable obligations to Subcontractors and
Vendors and others as well as transportation costs for return of employees, construction
tools and equipment, provided those costs incurred after termination are authorized in
advance by Allegheny and properly supported by time sheets, invoices and the like.
  17.6
    
    No Compensation
  17.7
    
    Liability
  ARTICLE 18  MECHANICAL COMPLETION AND FINAL ACCEPTANCE
 18.1
    
    Mechanical Completion
  18.2
    
    Final Acceptance
  ARTICLE 19  TITLE




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ARTICLE 20  Distribution of Risk, Release and Indemnity
 20.1
    
    Contractors Responsibilities
 20.1.1
    
    Contractor agrees, to the extent not prohibited by Law, to defend, indemnify and
hold Allegheny and its agents, officers and employees harmless from (i) all third
party claims, obligations and liabilities (and all costs and expenses including
attorneys fees incurred in connection therewith) to the extent arising out of or
related to any negligence, gross negligence, recklessness or willful misconduct of
Contractor and (ii) all claims for death, disease, bodily injury and/or property
damage including, without limitation, claims from Contractors employees,
Subcontractors employees and/or Vendors employees (other than property damage to the
Work itself) that may arise in connection with the Work or that occur during
Contractors performance of the Work, including all costs and expenses including
attorneys fees incurred in connection therewith.20.1.2
    
    Contractor shall also cause any Subcontractor working at the Site, and use best
efforts to cause other Subcontractors, to the extent not prohibited by Law, to
indemnify, defend and hold Allegheny and Contractor and their respective principals,
officers, partners, agents and employees harmless from all third party claims for
death, disease, bodily injury and/or property damage (other than property damage to
the Work itself) that may arise in connection with Subcontractors performance of the
Work including, but not limited to, claims from any Subcontractor employees.20.1.3
    
    Contractors and all Subcontractors obligations to indemnify and hold Allegheny
harmless shall not be limited by a limitation on the amount or type of damages,
compensation or benefits payable by or for the Contractor or Subcontractor under
workers compensation acts, disability
benefit acts or other employee benefit acts. Where personal injury, death, disease
or loss of or damage to property arises from a cause or causes attributable jointly
to the negligence of one or more of Allegheny, Contractor and/or any Subcontractor,
each indemnitors duty of




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indemnification shall be in proportion to its allocable
share of such negligence.20.1.4
    
    (a) Allegheny and Contractor hereby waive all rights of subrogation against each
other, and against all Contractors and Subcontractors enrolled in the OCIP, in
connection with any and all events, occurrences, claims, losses and/or payments
arising from or in connection with the performance of the Work.(b) Contractor shall cause each of its Subcontractors, in their respective
subcontracts, to waive all rights of subrogation against Allegheny, and against all
Contractors and Subcontractors enrolled in the OCIP, in connection with any and all
events, occurrences, claims, losses and/or payments arising from or in connection
with the performance of the Work.(c) All insurance provided by Contractors and/or Subcontractors shall be endorsed
to waive the insurers rights of subrogation against Allegheny. All insurance
provided by Contractors and/or Subcontractors enrolled in the OCIP shall be
endorsed to waive the insurers rights of subrogation against all other Contractors
and Subcontractors enrolled in the OCIP.
 20.2
    
    Alleghenys Responsibilities
 20.2.1
    
    Allegheny shall be responsible for and hold Contractor harmless for loss of or damage
howsoever caused to Alleghenys property intended to be incorporated into or used in the
Work and located at the Work Site, even if the loss or damage results from Contractors
negligence, except that Contractor shall be responsible for the first $5,000 of any such
loss.20.2.2
    
    Allegheny will indemnify Contractor for loss of or damage howsoever caused to
Contractors property intended to be incorporated into the Work and located at the Work
Site, even if the loss or damage results from Contractors negligence, except that
Contractor shall be responsible for the first $5,000 of any such loss.20.2.3
    
    Notwithstanding the provisions of Sub-Articles 20.2.1 and 20.2.2, Contractor shall
also be responsible, and not compensated by Allegheny, for:
 (a)
    
    any loss of money or securities in the care, custody or control
of Contractor, which are used or intended for use in paying for or performing
the Work;(b)
    
    unexplained or mysterious disappearance of any property in
Contractors care, custody or control, or shortage of any property disclosed on
taking inventory; or(c)
    
    theft of property on the part of Contractor, Subcontractors or
their employees.
 ARTICLE 21  INSURANCE




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21.1
    
    Contractor shall participate in Alleghenys Controlled Insurance Program (OCIP) pursuant to
Exhibit G, and require Subcontractors to meet the insurance coverage requirements set forth in
Exhibit G.
 21.2
    
    Upon Alleghenys request, Contractor agrees to participate in a project-wide bonding program
(recognizing that Contractor does not currently have surety bonding capacity), subguard,
primeguard or other insurance programs, and Allegheny may request that Contractor require
Subcontractors to provide bonding.
 ARTICLE 22  TOOLS AND EQUIPMENT
  22.1
    
    to inspect the tools and equipment and make its own determination, before commencing the
Work, that they are adequate for the safe and efficient performance of the Work by Contractor.
 22.2
    
    that the tools and equipment will be loaned or furnished by Allegheny and accepted by
Contractor without warranty or representation by Allegheny as to their condition or fitness
for Contractor purpose.
 22.3
    
    to return the tools and equipment to Allegheny at the conclusion of use in good condition as
when received, ordinary wear and tear excepted.
 ARTICLE 23  RESPONSIBILITY FOR CONSEQUENTIAL DAMAGES, LIMITATION OF LIABILITY
 23.1
    
    NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, NEITHER CONTRACTOR, NOR
SUBCONTRACTORS, SHALL BE LIABLE, WHETHER BASED ON CONTRACT OR TORT (INCLUDING NEGLIGENCE AND
STRICT LIABILITY), UNDER ANY WARRANTY OR OTHERWISE, RELATING TO THIS AGREEMENT, FOR ANY
CONSEQUENTIAL, INDIRECT, SPECIAL, OR INCIDENTAL LOSS OR DAMAGE, INCLUDING, BUT NOT LIMITED TO,
ANY DAMAGE TO, OR ANY LOSS OF USE OF PROPERTY, LOSS BY REASON OF PLANT SHUTDOWN OR SERVICE
INTERRUPTION, COSTS OF CAPITAL OR EXPENSES THEREOF, LOSS OF PROFITS OR REVENUES OR THE LOSS OF
USE THEREOF, NON-OPERATION OR INCREASED EXPENSE OF OPERATION, FINES OR PENALTIES ASSESSED OR
LEVIED BY ANY GOVERNMENTAL AGENCY BASED ON THE OPERATION, NON-OPERATION, OR USE OF THE
EQUIPMENT, OR COST OF PURCHASED OR REPLACEMENT POWER (INCLUDING ADDITIONAL EXPENSES INCURRED
IN USING EXISTING POWER FACILITIES).The parties agree that the above disclaimer shall not apply to the liquidated damages set
forth in Exhibit I in the event of Contractors failure to achieve the performance
guarantees therein.NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, ALLEGHENY SHALL NOT BE LIABLE TO
CONTRACTOR, WHETHER BASED




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ON CONTRACT OR TORT (INCLUDING NEGLIGENCE AND STRICT LIABILITY),
UNDER ANY WARRANTY OR OTHERWISE, RELATING TO THIS AGREEMENT, FOR ANY CONSEQUENTIAL,
INDIRECT, SPECIAL OR INCIDENTAL LOSS OR DAMAGE, INCLUDING, BUT NOT LIMITED TO, COSTS OF
CAPITAL OR EXPENSES THEREOF, LOSS OF OTHER BUSINESS OPPORTUNITIES INCLUDING ANTICIPATED
REVENUES FROM OTHER PROJECTS FOREGONE TO UNDERTAKE THIS AGREEMENT, CONTRACTORS INCREASED
FINANCE COSTS, OR ANY LOSS OR DAMAGE THAT IS SPECULATIVE IN NATURE.
 23.2
    
    The total liability of the Contractor under this Agreement, whether arising out of contract,
tort (including negligence, but excluding fraud or willful misconduct), strict liability, or
any other cause of or form of action, shall not exceed Fifty Million Dollars, which liability
shall be excess of any valid and collectible insurance provided by Allegheny under Exhibit G.This Sub-Article 23.2 shall apply notwithstanding any other provision of this Agreement.
 ARTICLE 24  Governing Law and Dispute Resolution
 24.1
    
    Governing Law
  24.2
    
    Dispute Resolution
  ARTICLE 25  INTELLECTUAL PROPERTY AND INFRINGEMENT
 25.1
    
    Contractor will prepare drawings, specifications and documents in connection with the Work
furnished by Contractor under this Agreement. All such drawings and documents, regardless of
the form in which they may have been created or thereafter exist, and all intellectual
property rights pertaining thereto including but not limited to copyright, shall remain the
sole and exclusive property of the Contractor. Contractor agrees to provide drawings,
specifications and documents to Allegheny to permit Allegheny to construct, operate, maintain,
and use the Work furnished by Contractor under this Agreement. Contractor grants to Allegheny
a paid up, royalty free, nonexclusive license to reproduce those
drawings, specifications or documents provided by Contractor to Allegheny for the Work
furnished by Contractor under this Agreement for the limited purposes




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of constructing,
operating, maintaining, and using the Work furnished by Contractor under this Agreement,
provided that Allegheny complies with all obligations, including payment of all undisputed
sums due under this Agreement and, subject to the obligations of confidentiality set forth
in this Agreement, Contractor also grants to Allegheny a paid up, royalty free,
nonexclusive license to create and use photographs, drawings, sketches, artistic
representations and other similar representations of the Work, with the understanding that
ownership of such derivative works shall remain with Contractor, for the same limited
purposes set forth above. Contractor further grants Allegheny a paid-up, royalty free,
nonexclusive license for all patents necessary to construct, operate, maintain and use the
Work furnished by Contractor under this Agreement for the remaining terms of all such
patents. Contractor and Allegheny agree that the references in this Sub-Article 25.1 to
drawings, specifications and documents provided to Allegheny shall apply equally to
drawings, specifications and documents that have been completed and provided to Allegheny
and to drawings, specifications and documents that are works-in-progress prior to their
delivery to Allegheny under this Agreement.
 25.2
    
    Contractor shall use its best efforts to cause provisions substantially similar to
Sub-Article 25.1 to be included with all of Contractors agreements with its Subcontractors
and Vendors and cause such Subcontractors and Vendors to grant the licenses to Allegheny as
described in Sub-Article 25.1.
 25.3
    
    For those drawings, specifications or documents provided by Contractor to Allegheny in
accordance with Sub-Article 25.1 for the Work furnished by Contractor under this Agreement,
Contractor agrees to provide electronic copies of same to Allegheny, in a medium (e.g., disk,
magnetic tape, network direct transfer, etc.) approved by Allegheny, including those which
were produced or created by Subcontractors or Vendors.
 25.4
    
    The Contractor shall defend at its own expense and hold Allegheny harmless from any suit or
action brought against Allegheny based on a claim that anything furnished as part of the Work
hereunder, or any part thereof, or the designed use of same, constitutes infringement of any
patent of the United States, and the Contractor shall also pay all costs and damages awarded
therein against Allegheny. In case anything furnished as part of the Work hereunder, or any
part thereof, is in such suit held to constitute infringement and its use is enjoined, the
Contractor shall, at its option and own expense either: procure for Allegheny the right to
continue to use such thing furnished as part of the Work hereunder, or part thereof; or
replace it with something that is a non-infringing substantial equivalent; or modify it so it
becomes non-infringing. It shall be the responsibility of Allegheny to provide prompt written
notice of the assertion of any claim of infringement and to make available all other needed
information, assistance, and authority it possesses for the defense of any suit or proceeding
in which such claim is asserted. Any such replacement or modification shall be accomplished
in the same manner as repair or replacement of defects under the Warranty article of this
Agreement. However, Contractors obligations to defend, procure or replace anything furnished
as part of the Work hereunder shall not apply to
anything furnished as part of the Work hereunder, or any part thereof, manufactured to
Alleghenys detailed design specifications or to any




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modifications to anything furnished as
part of the Work hereunder or part thereof made by Allegheny, and as to such thing
furnished as part of the Work hereunder or part Contractor assumes no obligation to defend
or any liability whatsoever for infringement. The foregoing sets forth the sole liability
of the Contractor and the exclusive remedy of Allegheny with respect to patent
infringement.
 25.5
    
    Ownership of Inventions
  25.6
    
    Infringement Notice and Indemnification




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ARTICLE
26  CONFIDENTIAL INFORMATION
 26.1
    
    Duty of Confidentiality
  (a)
    
    information, which is or becomes, without fault of the receiving party, part of the public
domain;
 (b)
    
    information, which the receiving party can show, was received by the receiving party from an
independent third party that is under no obligation to the disclosing party regarding the
information;
 (c)
    
    information, which the receiving party can show was already in the receiving partys
possession at the time the information, was made available to the receiving party, directly or
indirectly, from the disclosing party.Additionally, if so required by Law or valid legal or regulatory process, the receiving
party may disclose Confidential Information, but only following notice by the receiving
party to the disclosing party of the requirement to disclose and reasonable cooperation
with any attempt by the disclosing party to maintain the confidentiality of such
Confidential Information. Provided, however, upon notice to the disclosing party, the
receiving party may disclose confidential information required by the Securities and
Exchange Commission or New York Stock Exchange.
 26.2
    
    Use of Confidential Information
  26.3
    
    Contractors Information




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ARTICLE 27  USE OF TRADEMARK AND PUBLICITY
  ARTICLE 28  AUDIT
 28.1
    
    Contractor shall maintain and preserve, and shall cause Subcontractors (to the extent such
Subcontractors are employed on a reimbursable cost and/or fixed rate basis) to maintain and
preserve, in accordance with generally accepted accounting practices, full, complete and
accurate documentation and data (including but not limited to written and electronic records,
books of account, correspondence, plans, permits, licenses, drawings, craft payroll records,
memoranda, invoices , receipts, and documentation of related systems and controls) pertaining
to the Reimbursable Costs under this Agreement, as well as any gift or entertainment expenses
incurred by Contractor or Subcontractors pertaining to the Work under this Agreement.
 28.2
    
    A listing of the minimum data field requirements for audit purposes to be maintained by
Contractor and Subcontractors with respect to the Work is attached hereto as Exhibit J.
 28.3
    
    At reasonable times, Contractor shall permit and shall cause Subcontractors (to the extent
such Subcontractors are employed on a reimbursable cost and/or fixed rate basis) to permit
Allegheny or an independent third party auditor, selected by mutual agreement of Allegheny and
Contractor, and the OCIP insurers (to the extent required to verify relevant insurance
information) to have access to its and their offices and work locations to examine such
documentation and data and to interview Contractors and Subcontractors personnel in
connection therewith, as necessary to verify and monitor the accuracy and propriety of the
Reimbursable Costs under the terms of this Agreement.
 28.4
    
    The Fixed Rates and Sales General and Administrative Expenses shall have been audited, by an
independent third party auditor selected by mutual agreement of Allegheny and Contractor, and,
upon agreement, the percentages for the Sales
General and Administrative Expenses shall be fixed for the term of this Agreement. At
reasonable times, Contractor shall permit an independent third party auditor,




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selected by
mutual agreement of Allegheny and Contractor, to have access to its offices to examine such
documentation and data and to interview Contractors personnel in connection therewith, as
necessary to verify and monitor the accuracy and propriety of the Fixed Rates, if they are
adjusted, under the terms of this Agreement. Where Work is compensated using Fixed Rates and
Sales General and Administrative Expenses, the independent auditors shall have sufficient
access to those rates and expenses to satisfy themselves that the Work provided thereunder has
not also been separately billed on some other basis (e.g., a reimbursable basis). Contractors
Fixed Rates and Sales General and Administrative Expenses shall be subject to additional
disclosure and independent audit only in the event Contractor seeks an adjustment thereto.28.5
    
    Any and all costs associated with audits under Article 28 shall be paid by Allegheny.
 28.6
    
    The provisions of this Article shall be applicable during the term of this Agreement and for
a period of three (3) years thereafter. If errors or deficiencies are identified by an audit
or otherwise, the responsible party shall take prompt corrective action and advise the other
party thereof.
 ARTICLE 29  BUSINESS STANDARDS
 29.1 Business Standards
  29.2
    
    Accuracy of Records
  29.3
    
    Compliance With Law




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29.4
    
    Notice of Non-Compliance
  ARTICLE 30  NO INFORMATION BROKERING
 30.1
    
    Warranty and Representation
  30.2
    
    Notification
  ARTICLE
31  MANAGEMENT OF WASTE, HAZARDOUS SUBSTANCE AND HAZARDOUS WASTE
 31.1
    
    Contractor and Subcontractors shall have the responsibility and liability for the proper
management of wastes resulting from their Work pursuant to the Job Specification. In
particular, but without limitation, Contractor and Subcontractors shall implement procedures
to minimize the generation of waste, other than Hazardous Waste. These procedures shall
include, at a minimum, process substitution, materials recovery, and continued product use.
 31.2
    
    Contractor and Subcontractors shall, in performing the Work, have the responsibility for
proper handling according to Law of all Hazardous Substances and Hazardous Waste brought onto
or generated at the Work Site by Contractor




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and Subcontractors, and Allegheny shall be
responsible for the proper permitting, removal and disposal of all such Hazardous Waste
according to Law. Allegheny shall direct Contractor and Subcontractors as to where Hazardous
Waste shall be stored prior to removal and disposal. Contractor and Subcontractors shall
implement procedures to minimize the generation of Hazardous Waste resulting from their Work.
These procedures shall include, at a minimum, process substitution, materials recovery, and
continued product use. When possible, Contractor shall select less toxic alternatives to
minimize the generation of Hazardous Waste. Contractor shall maintain a log of all Hazardous
Substances and Hazardous Waste brought onto or generated at the Work Site by Contractor and
Subcontractors, including their quantity and locations, and provide copies of such log
regularly to Allegheny. Allegheny shall remove from the Work Site all Hazardous Waste brought
onto or generated at the Work Site by Contractor and Subcontractors. In the event asbestos or
asbestos containing materials are located at the Work Site, Contractor shall provide notice of
such location and Allegheny shall remove and dispose of such materials.
 31.3
    
    Contractor shall defend, indemnify and hold harmless Allegheny, and Alleghenys parents,
subsidiaries, affiliates and the officers, directors, employees, successors and assigns of
each of them, from and against all claims resulting from or related to: (i) any Hazardous
Substances and Hazardous Waste that has been brought onto the Work Site by Contractor or any
Subcontractors or any person acting on behalf of, or under the direction or supervision of
Contractor or Subcontractors; (ii) Contractors failure to timely notify Allegheny of the
release of any Hazardous Substances or Hazardous Waste brought onto the Work Site by
Contractor or any Subcontractor on or from, the Work Site, (iii) Contractors failure to
remove or properly dispose of any such Hazardous Substance; or (iv) Contractors or a
Subcontractors failure to comply with Law with respect to any such Hazardous Substance or
Hazardous Waste or other waste brought onto the Work Site by Contractor or any Subcontractor.
Contractors obligations hereunder shall not be limited by the provisions of any Workers
Compensation act or similar statute or otherwise.
 ARTICLE 32  ASSIGNMENT OF AGREEMENT




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ARTICLE
33  EXECUTIVE SPONSOR AND NOTICES
 33.1
    
    Executive Sponsor
 33.1.1
    
    Alleghenys Executive Sponsor, Michael V. Herriott, or other such person as may be
subsequently designated in writing by Allegheny, shall be the primary contact with
Contractors corporate management and shall have authority to act for Allegheny with
respect to all matters pertaining to this Agreement.33.1.2
    
    Contractors Executive Sponsor, Walter Nischt, an officer or an executive of
Contractor or some other officer or executive as may be subsequently designated in
writing by Contractor, shall have authority to act for Contractor with respect to all
matters pertaining to this Agreement.33.1.3
    
    The Executive Sponsor of each party shall be available to the other partys
representatives at any reasonable time, regarding among other things, communications
to the other partys corporate management of its performance of the Work. It is
agreed that the Executive Sponsor shall maintain a detailed knowledge of the progress
of the Work and of significant or anticipated problems and shall ensure that each
party fulfils its obligations under this Agreement. In particular, the Executive
Sponsor shall attend regular project review meetings and shall receive copies of
Contractors regular progress reports and other significant correspondence. If
Contractors Project Manager and Alleghenys Project Manager cannot reach agreement
on any material matter related to the Work, the matter will be decided by
Contractors Executive Sponsor and Alleghenys Executive Sponsor.
 33.2
    
    Notices
 33.2.1
    
    Notices required by this Agreement shall be in writing and shall be sent by hand,
certified mail or overnight courier to Contractor or Allegheny at the respective partys
office address set forth below, to the attention of the respective Designated
Representative:
 Allegheny Energy Supply:
    
    Contractor:ATTN:
    
    Michael V. Herriott
    
    ATTN:Walter NischtAllegheny Energy, Inc.
    
    The Babcock & Wilcox Company800 Cabin Hill Drive
    
    20 South Van Buren AvenueGreensburg, PA 15601
    
    Barberton, OH 44203With a copy to:Allegheny Energy Supply:
    
    Contractor:ATTN:
    
    General Counsel
    
    ATTN: Assistant General CounselAllegheny Energy, Inc.
    
    The Babcock & Wilcox Company




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800 Cabin Hill Drive
    
    20 South Van Buren AvenueGreensburg, PA 15601
    
    Barberton, OH 44203
 33.2.2
    
    The effective date of notice shall be the date the notice is received by the addressee
or it reaches the office of the addressee, whichever is earlier.
 ARTICLE 34  ALCOHOL AND DRUGS
 34.1
    
    Contractor warrants that none of its personnel or those of Subcontractors shall perform any
Work at the Work Site while under the influence of alcohol and/or drugs. Contractors and
Subcontractors personnel performing the Work at the Work Site shall be informed about its
alcohol and drug policy.
 34.2
    
    Contractors and Subcontractors personnel shall neither abuse medications nor use, possess,
distribute or sell alcohol and/or drugs when performing the Work at the Work Site or on
premises owned or controlled by Allegheny. Upon reasonable suspicion of such conduct, and
after notice and discussion with Contractor, such personnel shall be removed from performing
Work.
 34.3
    
    Contractor shall maintain a drug and alcohol policy that meets or exceeds the Safety and
Health Manual.
 ARTICLE 35  SAFETY AND HEALTH
  ARTICLE 36  RIGHT OF REMOVAL
  ARTICLE 37  FORCE MAJEURE
 37.1
    
    No delay or failure of performance by either party shall constitute a material breach
hereunder or give rise to any claim for damages if, and to the extent, such delay or failure
is caused by force majeure. In the event of any delay arising by reason of force majeure, the
schedule shall be adjusted by a Change Order. Force majeure means an unforeseen occurrence
beyond the control and without the fault or negligence of the party affected and which said
party is unable to prevent or provide against by the exercise of reasonable diligence
including, but not limited
to: acts of God or the public enemy; expropriation or confiscation of facilities; war,
rebellion, sabotage or riot, floods, unusually severe weather that could not reasonably have
been anticipated; fires, explosions, or other catastrophes; strikes




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or any other concerted
acts of workers; inability to obtain fuel or labor; riots or acts of terrorism; other similar
occurrences, but lack of finances shall in no event be deemed to be a cause beyond a partys
control.
 37.2
    
    The following are specifically excluded as force majeure occurrences unless: (i) they were
caused by force majeure of the type set forth in the preceding clause; and (ii) an alternate
source of work or materials, acceptable to Contractor and Allegheny, is unavailable:
 (a)
    
    late performance caused by a failure to employ sufficient supervisors or labor,
inefficiencies, or similar occurrences.(b)
    
    late delivery of equipment or materials caused by congestion at a manufacturers
plant or elsewhere, an oversold condition of the market, inefficiencies, or similar
occurrences.
 37.3
    
    The party invoking the force majeure will: (i) immediately notify the other party; (ii) make
every effort to remedy the cause of non-performance; and (iii) perform the entirety of its
obligations as soon as this cause has gone, the other party being released from its
contractual obligations related to such cause until such time as the cause has gone.
 37.4
    
    When the effect of said occurrence can be estimated, Allegheny may issue a Change Order.
 ARTICLE 38  AMENDMENTS
  ARTICLE 39  PRECEDENCE
  ARTICLE 40  MISCELLANEOUS
 40.1
    
    Severability
  40.2
    
    Waiver
  40.3
    
    Remedies Cumulative




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40.4
    
    Sole Benefit
  40.5
    
    Counter Parts
  ARTICLE 41  SURVIVING OBLIGATIONS
  ARTICLE 42  ENTIRE AGREEMENT
  ,
 The Babcock and Wilcox Company
    
    
    
    Allegheny Energy Supply Company, L.L.C.By:
    
    /s/ Walter Nischt
    
    By:
    
    /s/ Michael V. HerriottName:
    
    Walter Nischt
    
    Name:
    
    Michael V. Herriott(Typed or Printed)
    
    
    
    (Typed or Printed)Title:
    
    V. P. Env. Products & Services
    
    Title:
    
    V. P. Construction & EngineeringDate:
    
    July 12, 2006
    
    Date:
    
    July 12, 2006