Document:

Purchase Agreement

 Exhibit 10.2 
  
 EXECUTION VERSION 
  
 PURCHASE AGREEMENT 
  
 between 
  
 Allegheny Energy Supply Company, LLC 
  
 as “Seller” 
  
 and 
  
 Grant Peaking
Power, LLC 
  
 as “ArcLight Buyer” 

 
 and 
  
 ArcLight Energy Partners Fund II, L.P. 
  
 September 27, 2004 

  
 TABLE OF CONTENTS

  

							
	 	  	 	  	 	  	Page

	 1.
	  	Definitions	  	1
			
	 2.
	  	Purchase and Sale of the Interests	  	10
	 	  	2.1	  	 Basic Transaction
	  	10
	 	  	2.2	  	 Purchase Price
	  	11
	 	  	2.3	  	 Purchase Price Adjustment
	  	11
	 	  	2.4	  	 The Closing
	  	12
	 	  	2.5	  	 Deliveries at the Closing
	  	12
	 	  	2.6	  	 Allocation of Purchase Price
	  	13
			
	 3.
	  	Representations and Warranties Concerning the Seller	  	13
	 	  	3.1	  	 Organization of the Seller
	  	13
	 	  	3.2	  	 Authorization of Transaction
	  	14
	 	  	3.3	  	 Noncontravention
	  	14
	 	  	3.4	  	 Consents
	  	14
	 	  	3.5	  	 Ownership and Transfer of the Interests
	  	15
	 	  	3.6	  	 Brokers’ Fees
	  	15
			
	 4.
	  	Representations and Warranties Concerning the Company	  	15
	 	  	4.1	  	 Organization, Qualification and Power
	  	15
	 	  	4.2	  	 Capitalization
	  	15
	 	  	4.3	  	 Noncontravention
	  	16
	 	  	4.4	  	 Consents
	  	16
	 	  	4.5	  	 Title to Assets
	  	16
	 	  	4.6	  	 Books and Records
	  	17
	 	  	4.7	  	 Tax Matters
	  	17
	 	  	4.8	  	 Real Property
	  	18
	 	  	4.9	  	 Legal Compliance
	  	19
	 	  	4.10	  	 Environmental Matters
	  	19
	 	  	4.11	  	 Powers of Attorney
	  	21
	 	  	4.12	  	 Litigation
	  	21
	 	  	4.13	  	 Employment Matters
	  	21
	 	  	4.14	  	 Employee Benefits
	  	22
	 	  	4.15	  	 Intellectual Property
	  	24
	 	  	4.16	  	 Contracts
	  	25
	 	  	4.17	  	 Permits
	  	25
	 	  	4.18	  	 Brokers’ Fees
	  	25
	 	  	4.19	  	 Transactions with Affiliates
	  	26
	 	  	4.20	  	 Regulatory
	  	26
	 	  	4.21	  	 Financial Statements
	  	26
	 	  	4.22	  	 Undisclosed Liabilities
	  	27
	 	  	4.23	  	 No Guarantees
	  	27
	 	  	4.24	  	 Insurance
	  	27

  

 i 

							
	 	  	4.25	  	 Due Diligence Materials
	  	27
	 	  	4.26	  	 No Other Business
	  	28
	 	  	4.27	  	 Bank Accounts
	  	28
	 	  	4.28	  	 Disclaimer of Other Representations and Warranties
	  	28
			
	 5.
	  	Representations and Warranties Concerning the Buyers	  	29
	 	  	5.1	  	 Organization of the Buyers
	  	29
	 	  	5.2	  	 Authorization of Transaction
	  	29
	 	  	5.3	  	 Noncontravention
	  	29
	 	  	5.4	  	 Consents
	  	30
	 	  	5.5	  	 Brokers’ Fees
	  	30
	 	  	5.6	  	 Investment
	  	30
	 	  	5.7	  	 Financing
	  	30
	 	  	5.8	  	 Litigation
	  	30
	 	  	5.9	  	 No Knowledge of Certain Conditions
	  	30
	 	  	5.10	  	 Due Diligence Investigation and Other Acknowledgements
	  	31
			
	 6.
	  	Pre-Closing Covenants	  	31
	 	  	6.1	  	 General
	  	31
	 	  	6.2	  	 Notices and Consents
	  	31
	 	  	6.3	  	 Operation of Business
	  	33
	 	  	6.4	  	 Full Access
	  	35
	 	  	6.5	  	 Notice of Developments
	  	35
	 	  	6.6	  	 Exclusivity
	  	36
	 	  	6.7	  	 Guaranties of the Seller
	  	36
	 	  	6.8	  	 Intercompany Obligations and Agreements
	  	37
	 	  	6.9	  	 Risk of Loss
	  	37
	 	  	6.10	  	 Employee Benefits
	  	37
			
	 7.
	  	Post-Closing Covenants	  	38
	 	  	7.1	  	 General
	  	38
	 	  	7.2	  	 Transition
	  	38
	 	  	7.3	  	 Access to Information
	  	38
	 	  	7.4	  	 Transfer Taxes
	  	39
	 	  	7.5	  	 Securities Law Covenant
	  	39
	 	  	7.6	  	 Employment Matters
	  	39
	 	  	7.8	  	 Non-Use of Allegheny Marks
	  	41
			
	 8.
	  	Conditions to Obligation to Close	  	42
	 	  	8.1	  	 Conditions to Obligation of the Buyers
	  	42
	 	  	8.2	  	 Conditions to Obligation of the Seller
	  	44
			
	 9.
	  	Remedies for Breaches of this Agreement	  	45
	 	  	9.1	  	 Survival of Representations, Warranties and Covenants
	  	45
	 	  	9.2	  	 Indemnification Provisions for Benefit of the Buyers
	  	46
	 	  	9.3	  	 Indemnification Provisions for Benefit of the Seller
	  	46
	 	  	9.4	  	 Matters Involving Third Parties
	  	46

  

 ii 

							
	 	  	9.5	  	 Limitation on Certain of Seller’s Indemnification Obligations
	  	47
	 	  	9.6	  	 Environmental Indemnification
	  	48
	 	  	9.7	  	 Employment Indemnification
	  	49
	 	  	9.8	  	 Other Indemnification Provisions
	  	50
	 	  	9.9	  	 Exclusive Remedy
	  	50
			
	 10.
	  	Tax Matters	  	50
	 	  	10.1	  	 Tax Periods Ending on or Before the Closing Date
	  	50
	 	  	10.2	  	 Straddle Periods
	  	51
	 	  	10.3	  	 Tax Indemnification
	  	51
	 	  	10.4	  	 Refunds and Tax Benefits; Amended Tax Returns
	  	52
	 	  	10.5	  	 Cooperation on Tax Matters
	  	52
			
	 11.
	  	Termination	  	53
	 	  	11.1	  	 Termination of Agreement
	  	53
	 	  	11.2	  	 Effect of Termination
	  	55
			
	 12.
	  	Miscellaneous	  	55
	 	  	12.1	  	 Press Releases and Public Announcements
	  	55
	 	  	12.2	  	 No Third-Party Beneficiaries
	  	55
	 	  	12.3	  	 Entire Agreement
	  	55
	 	  	12.4	  	 Succession and Assignment
	  	56
	 	  	12.5	  	 Counterparts and Facsimile Signatures
	  	56
	 	  	12.6	  	 Headings
	  	56
	 	  	12.7	  	 Notices
	  	56
	 	  	12.8	  	 Governing Law
	  	57
	 	  	12.9	  	 Amendments and Waivers
	  	58
	 	  	12.10	  	 Severability
	  	58
	 	  	12.11	  	 Expenses
	  	58
	 	  	12.12	  	 Construction
	  	58
	 	  	12.13	  	 Incorporation of Exhibits and Schedules
	  	58
	 	  	12.14	  	 Specific Performance
	  	59
	 	  	12.15	  	 Waiver of Consequential Damages
	  	59

  
 EXHIBITS AND SCHEDULES

  

					
	 Exhibit 2.3
	 	 —
	  	 Sample Calculation of Net Working Capital

	 Exhibit 2.5
	 	 —
	  	 Form of Transition Services Agreement

	 Exhibit 8.1(f)
	 	 —
	  	 Form of Exelon Consent

	 Seller’s Disclosure Schedule

	 Buyers’ Disclosure Schedule

  

 iii 

 PURCHASE AGREEMENT 
  
 This PURCHASE AGREEMENT (this “Agreement”) between ALLEGHENY ENERGY SUPPLY COMPANY, LLC, a Delaware limited
liability company (the “Seller”), GRANT PEAKING POWER, LLC, a Delaware limited liability company (the “ArcLight Buyer,” with each of the ArcLight Buyer and any other Person that becomes a Buyer as provided in
Section 12.4 below being called a “Buyer” and, collectively, the “Buyers” even if no other Person becomes a Buyer) takes effect on September 27, 2004. Each of the Buyers and the Seller is referred to individually as
a “Party” and collectively as the “Parties.” ArcLight Energy Partners Fund II, L.P., a Delaware limited partnership, is also executing this Agreement for the limited purpose of the guaranty provided above its
signature on the signature page of this Agreement. 
  
 RECITALS 
  

	A.	The Seller owns all of the issued and outstanding membership interests in Allegheny Energy Supply Lincoln Generating Facility, LLC, a Delaware limited liability company (the
“Company”). 

  

	B.	This Agreement contemplates a transaction in which the Buyers will purchase from the Seller, and the Seller will sell to the Buyers, all of the issued and outstanding membership
interests in the Company, all on the terms and subject to the conditions of this Agreement. 

  
 AGREEMENT 
  
 In consideration of the above recitals and the promises set forth in this Agreement, the Parties agree as follows: 
  

	1.	Definitions. 

  
 “Adverse Consequences” means all actions, suits, proceedings, hearings, investigations, charges, complaints, claims, demands, Orders,
damages, dues, penalties, fines, costs, reasonable amounts paid in settlement, Liabilities, Taxes, Encumbrances, losses, expenses and fees, including all litigation costs and reasonable attorneys’ fees and expenses. 
  
 “Affiliate” has the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Securities Exchange Act of 1934, as amended. 
  
 “Agreement” has the meaning set forth in the preface above. 
  
 “Allegheny Employee Benefit Plans” has the meaning set forth in Section 4.14 of this Agreement. 
  
 “Allegheny Marks” means the names and marks “Allegheny
Energy” and “Allegheny” together with all derivations and variations thereof, and the Allegheny Energy, Inc. corporate logo, together with all derivations or variations thereof. 
  

 “ArcLight Buyer” has the meaning set forth in the preface above. 
  
 “Business Day” means a day other than Saturday, Sunday or
any day on which banks located in New York City are authorized or obligated to close. 
  
 “Buyer” and “Buyers” have the meanings set forth in the preface above. 
  
 “Buyer Employee Benefit Plans” has the meaning set forth in Section 7.6 of this Agreement. 
  
 “Buyers’ Disclosure Schedule” has the meaning set
forth in Section 5 of this Agreement. 
  
 “Buyers’
Indemnitee” has the meaning set forth in Section 9.2 of this Agreement. 
  
 “Buyers’ Required Consents” means those consents and notices set forth in Section 1(a) of the Buyer’s Disclosure Schedule. 
  
 “Buyers’ Required Regulatory Approvals” means those
consents, approvals, filings and notices set forth in Section 1(b) of the Buyer’s Disclosure Schedule. 
  
 “Capital Expenditure” means any capital expenditure or commitment for any additions to or replacements of property, plant or equipment
for the Facility. 
  
 “CERCLA” means the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. § 9601 et seq., as amended as of the date of this Agreement. 
  
 “Closing” has the meaning set forth in Section 2.4 of this Agreement. 
  
 “Closing Date” has the meaning set forth in Section 2.4 of this Agreement. 
  
 “Closing Purchase Price” has the meaning set forth in
Section 2.2 of this Agreement. 
  
 “Code” means
the Internal Revenue Code of 1986, as amended. 
  
 “Commercially Reasonable Efforts” means efforts that are reasonable for a prudent business enterprise in circumstances similar to those of the performing Party but that do not require the performing Party to expend funds
other than expenditures that are customary and reasonable in transactions of the kind and nature contemplated by this Agreement in order for the performing Party to satisfy its obligations under this Agreement. 
  
 “Common Terms Agreement” means the Common Terms Agreement
dated as of March 8, 2004 among Seller, the Loan Parties referred to therein, the Lenders referred to therein, Citicorp North America, Inc., as Administrative Agent, and Citibank, N.A., as Collateral Agent and Intercreditor Agent. 
  
 “Company” has the meaning set forth in the preface above.

  

 2 

 “Company Financial Statements” has the meaning set forth in Section 4.21 of this
Agreement. 
  
 “Company Intellectual Property”
means all Intellectual Property that is needed for the Company to conduct its business in the same manner as such business is currently conducted and was conducted in the periods covered by the Company Financial Statements. 
  
 “Confidentiality Agreement” means that certain
confidentiality agreement between Seller and ArcLight Capital Holdings, LLC, dated May 28, 2004. 
  
 “Due Diligence Materials” means (a) all due diligence materials provided for review or distributed in written or digital form by the
Seller or its Representatives to the Buyer or its Representatives, (b) all written, oral or electronic answers to questions provided by the Seller or its Representatives to the Buyer or its Representatives, and (c) all materials contained in data
rooms or privately-accessible internet sites established for purposes of providing due diligence materials to the Buyer or its Representatives. 
  
 “Employee Benefit Plan” means any: (a) “employee benefit plan” as such term is defined in ERISA § 3(3); (b) nonqualified
deferred compensation or retirement plan or arrangement; (c) qualified defined contribution retirement plan or arrangement that is an Employee Pension Benefit Plan; (d) qualified defined benefit retirement plan or arrangement that is an Employee
Pension Benefit Plan; (e) employment, bonus, incentive compensation, stock purchase, stock option, severance or termination pay plan, agreement or arrangement; (f) Employee Welfare Benefit Plan; or (g) other similar plan, program, agreement or
arrangement. 
  
 “Employee Pension Benefit Plan”
has the meaning set forth in ERISA § 3(2). 
  
 “Employee Welfare Benefit Plan” has the meaning set forth in ERISA § 3(1). 
  
 “Employees” means those individuals employed by the Company. 
  
 “Encumbrances” means any mortgages, pledges, claims, liens, security interests, options, warrants, purchase
rights, conditional and installment sales agreements, easements, activity and use restrictions and limitations, exceptions, rights-of-way, deed restrictions, defects or imperfections of title, encroachments, encumbrances and charges of any kind.

  
 “Energy Services Conversion Agreement” means
that certain Energy Services Conversion Agreement dated June 13, 2002, between Seller and Exelon. 
  
 “Environmental Claims” has the meaning set forth in Section 9.6 of this Agreement. 
  
 “Environmental Condition” means the presence or Release to
the environment of Hazardous Substances, including any migration of Hazardous Substances through air, soil or groundwater. 
  

 3 

 “Environmental Laws” means all Laws and the common law: (a) concerning pollution or
protection of the environment or natural resources, including without limitation CERCLA, the Resource Conservation and Recovery Act of 1976, 42 U.S.C. § 6901 et seq., the Clean Air Act, 42 U.S.C. § 7401 et seq., the Federal Water Pollution
Control Act, 33 U.S.C. § 1251 et seq., and the Oil Pollution Act of 1990, 33 U.S.C. § 2701 et seq., each as amended as of the date of this Agreement; and (b) concerning Hazardous Substances. 
  
 “Environmental Permit” means any permit, authorization,
approval, decision, zoning Order, franchise, registration, license, filing, certificate, variance or similar permission or right granted by or obtained from any Governmental Authority that are issued under Environmental Laws. 
  
 “ERISA” means the Employee Retirement Income Security Act
of 1974, as amended. 
  
 “ERISA Affiliate” has
the meaning set forth in Section 4.14 of this Agreement. 
  
 “Estimated Net Working Capital” has the meaning set forth in Section 2.3 of this Agreement. 
  
 “Exelon” means Exelon Generation Company, LLC, a Delaware limited liability company. 
  
 “Exelon Consent” means the Consent and Agreement dated as
of a date on or before the Closing Date among Exelon, the Seller and the Company and substantially in the form of Exhibit 8.1(f). 
  
 “Existing Debt Documents” means, collectively, (a) the Credit Agreement dated as of March 8, 2004 among Allegheny Energy, Inc., the
Lenders and the Lender Parties referred to therein, and Citicorp North America, Inc., as Administrative Agent, (b) the Credit Agreement dated as of February 21, 2003 and amended and restated March 8, 2003, among Seller, the Lenders referred to
therein, and Citicorp North America, Inc., as Administrative Agent, (c) the Term C Credit Agreement dated as of March 8, 2004, among Seller, the Lenders referred to therein, and Citicorp North America, Inc., as Administrative Agent, (d) the Common
Terms Agreement, (e) the Amendment Agreement dated as of March 8, 2004, among Seller, the other Grantors referred to therein, Citibank, N.A. as Collateral Agent, Intercreditor Agent and Depository Bank, and Citicorp North America, Inc., as
Administrative Agent, (f) the Security and Intercreditor Agreement, (g) the Refinancing Indenture referred to in the Security and Intercreditor Agreement, and (h) other documents, instruments and agreements executed and delivered in connection with
or otherwise relating to the foregoing agreements, including any mortgages, deeds of trust, security agreements, financing statements, pledge agreements and other documents creating or evidencing Encumbrances securing the indebtedness or other
obligations under the foregoing. 
  
 “Facility”
means the approximately 656 MW electric generating facility located in Manhattan, Illinois. 
  

 4 

 “FERC” means the Federal Energy Regulatory Commission. 
  
 “GAAP” means United States generally accepted accounting
principles as in effect from time to time. 
  
 “Good
Utility Practice” means any of the practices, methods and acts engaged in and approved by a significant portion of the independent electric power generation industry during the relevant time period that, in the exercise of reasonable
judgment in light of the applicable manufacturer’s recommendations and the facts known at the time the decision was made, could have been expected to accomplish the desired result at a reasonable cost consistent with good business practices,
reliability, safety and expedition. Good Utility Practice is intended to consist of practices, methods or acts generally accepted in the region where the Facility is located, and is not intended to be limited to optimum practices, methods or acts to
the exclusion of all others. 
  
 “Governmental
Authority” means any federal, state, local or foreign governmental, administrative or regulatory authority (including the FERC, the Federal Communications Commission, the Mid-American Interconnected Network, Inc. and PJM Interconnection,
L.L.C.), court, agency or body, or any division or subdivision, or any arbitrator, arbitration board, tribunal or mediator. 
  
 “Hazardous Substances” means any chemicals, materials or substances, whether solids, liquids, semi-liquids or gas, defined as or listed
as “hazardous substances,” “hazardous wastes,” “hazardous materials,” “hazardous constituents,” “restricted hazardous materials,” “extremely hazardous substances,” “toxic
substances,” “contaminants,” “pollutants,” “irritants,” “toxic pollutants” or words of similar meaning and regulatory effect under any Environmental Law, including without limitation, petroleum and its
by-products. 
  
 “HSR Act” means the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. 
  
 “Income Tax” means any federal, state, local or foreign income Tax or other Tax based (in whole or in part) upon or related to income or receipts, including any interest, penalty or addition, whether disputed or not.

  
 “Income Tax Return” means any return,
declaration, report, claim for refund, or information return or statement relating to Income Taxes, including any schedule, supplement, attachment or amendments thereto. 
  
 “Indemnified Party” has the meaning set forth in Section 9.4 of this Agreement. 
  
 “Indemnifying Party” has the meaning set forth in Section
9.4 of this Agreement. 
  
 “Initial Purchase
Price” has the meaning set forth in Section 2.2 of this Agreement. 
  
 “Intellectual Property” means all patents and industrial designs (including any continuations, divisionals, continuations-in-part, renewals, reissues, and applications for 

  

 5 

 
any of the foregoing); copyrights (including any registrations and applications for any of the foregoing); trademarks, trade names, mask works, service
marks, service names, logos and Internet domain names (together with all goodwill, registrations and applications related to the foregoing); technology, know-how, processes, trade secrets, inventions, proprietary rights, proprietary data, formulae,
research and development data, databases, computer software programs and any other intellectual property as provided by applicable Law, and any registrations or applications for the same and all goodwill associated therewith. 
  
 “Interests” means all of the issued and outstanding
membership interests in the Company. 
  
 “Knowledge” means, with respect to an individual, that, with respect to a particular fact or other matter, such individual is actually aware of such fact or other matter. With respect to Seller, “Knowledge” means
the Knowledge of any of the Persons listed in Section 1(c) of the Seller’s Disclosure Schedule. With respect to Buyers, “Knowledge” means the Knowledge of any of the Persons listed in Section 1(c) of the Buyers Disclosure Schedule

  
 “Law” means any federal, state, local or
foreign constitution, law, code, plan, statute, rule, regulation or ordinance of any Governmental Authority, each as amended and in effect as of the date of this Agreement. 
  
 “Liability” means any liability or obligation of whatever kind or nature, whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due. 
  
 “Material Adverse Effect” means any change or effect that is materially adverse to the business, operation, properties, financial
conditions, assets, Liabilities (including contingent Liabilities), or prospects of the Company, taken as a whole. “Material Adverse Effect,” however, does not include any effect that is attributable to any of the following: 
  

	 	(a)	Any change (or changes taken together) or effect generally affecting the international, national or regional electric generating, transmission or distribution industry as a whole;

  

	 	(b)	Any change (or changes taken together) or effect resulting from changes in the international, national or regional wholesale or retail markets for electric power;

  

	 	(c)	Any change (or changes taken together) or effect resulting from changes in the international, national or regional fuel markets for the type of fuel used at the Facility;

  

 6 

	 	(d)	Any change (or changes taken together) in or effect on the North American, national or regional electric transmission or distribution systems; 

  

	 	(e)	Any change (or changes taken together) or effect resulting from changes in the general national or regional economic or financial conditions; 

  

	 	(f)	Any change that is cured (including by the payment of money) before the earlier of the Closing or the termination of the Agreement pursuant to Section 11 of this Agreement, which
cure or payment does not have a Material Adverse Effect; or 

  

	 	(h)	Any change in Law or any Order generally applicable to providers of generation, transmission or distribution of electricity or to owners and operators of industrial facilities in
Illinois. 

  
 Any determination as to whether any
condition or other matter has a Material Adverse Effect will be made only after taking into account all effective insurance coverages and effective indemnifications (other than under this Agreement) with respect to such condition or matter.

  
 “Material Agreement” means any written or
oral contract, note, bond, mortgage, indenture, instrument, arrangement and other agreement to which the Company is a party, the performance of which involves or would involve consideration in excess of $25,000 per year or $100,000 over the life of
such agreement or the non-performance of which would have a Material Adverse Effect. 
  
 “Net Working Capital” means the remainder (whether positive or negative) as of the Closing Date of (a) the sum of (i) the Company’s cash plus (ii) accounts receivable of the Company (or of the
Seller to the extent the account receivable has been assigned to the Company) under the Energy Services Conversion Agreement, if any, plus (iii) the Company’s inventory of materials and supplies (provided that the amount in this clause (a)(iii)
may not to exceed $686,002.83), minus (b) all Liabilities of the Company. All such items shall be determined in accordance with GAAP on an ongoing basis but adjusted to include revenues from the Energy Services Conversion Agreement to the extent
those revenues have been assigned or otherwise accrue to the Company and assuming that the transactions to occur at the Closing have not and will not occur; provided, however, that assets, liabilities, gains, losses, revenues and expenses in interim
periods or as of dates other than year-end (which are determined through the application of so-called interim accounting conventions or procedures) shall be determined through full application of the procedures used in preparing the balance sheet
included within the Company Financial Statements. A sample calculation of Net Working Capital is attached to this Agreement as Exhibit 2.3. 
  
 “New Operator” means the Person that the Company engages to operate the Facility after the Closing. 
  

 7 

 “Off-Site Location” means any real property other than the Site, but excluding any real
property to which Hazardous Substances disposed of, on or Released at the Site or the Facility have migrated. 
  
 “Order” means any writ, judgment, decree, injunction, or order of any Governmental Authority (in each such case whether preliminary or
final). 
  
 “Ordinary Course of Business” means
the ordinary course of business consistent with (a) past custom and practice (including with respect to quantity and frequency) in a manner not inconsistent with customs and practices reflected in the statements of income and cash flows included in
the Company Financial Statements, (b) the requirements of any agreement or any Permit, and (c) Good Utility Practice. 
  
 “Other Real Property Rights” means the easements, rights-of-way and other interests in real property identified in Section 1(d) of the
Seller’s Disclosure Schedule under the heading “Other Real Property Rights.” 
  
 “Owned Real Property” means the real property identified in Section 1(d) of the Seller’s Disclosure Schedule under the heading “Owned Real Property,” together with (a) all buildings,
structures and improvements located thereon, including the Facility, (b) all easements, rights-of-way and other appurtenances to the foregoing, and (c) all fixtures, machinery, apparatus or equipment affixed to the foregoing, to the extent that such
items constitute fixtures, but excluding any equipment that is being leased to the Company. 
  
 “Parent” means Allegheny Energy Inc., a Maryland corporation. 
  
 “Party” has the meaning set forth in the preface above. 
  
 “Percentage” means (a) in the case of the ArcLight Buyer, 100% subject to adjustment as provided in Section
12.4 and (b) in the case of any other Buyer, the Percentage provided in Section 12.4. 
  
 “Permit” means any permit, authorization, approval, decision, zoning Order, franchise, registration, license, filing, certificate, variance or similar permission or right granted by or obtained from
any Governmental Authority except as are issued under Environmental Laws. 
  
 “Permitted Encumbrances” means: (a) the Encumbrances set forth in Section 1(e) of the Seller’s Disclosure Schedule; (b) mechanic’s, materialmen’s and similar liens and rights arising or
incurred in the Ordinary Course of Business for amounts not yet due and payable or that are being contested in good faith through appropriate proceedings; (c) liens for Taxes or other governmental charges or assessments not yet due and payable or
that are being contested in good faith through appropriate proceedings; (d) purchase money liens and liens securing rental payments under capital lease arrangements; (e) all exceptions specifically set forth in the Title Policy; (f) all exceptions,
restrictions, easements, charges, rights-of-way and monetary and non-monetary encumbrances set forth in any Permit; (g) zoning, entitlement, conservation restriction and other land use and environmental regulations of any Governmental Authority and
(h) to the extent the 

  

 8 

 
same do not, individually or in the aggregate, have a Material Adverse Effect, defects of title, easements, encroachments, rights-of-way, restrictions,
reservations and other charges or encumbrances. 
  
 “Person” means an individual, a partnership, a corporation, a limited liability company, an association, an entity, a joint stock company, a trust, a joint venture, an unincorporated organization, any other business entity
or any Governmental Authority. 
  
 “Post-Closing Benefit
Plan” has the meaning set forth in Section 7.6(a) of this Agreement. 
  
 “Property Tax” means any ad valorem or similar Tax imposed upon real or personal property, whether tangible or intangible, by any Governmental Authority. 
  
 “PUHCA” means the Public Utility Holding Company Act of
1935, 15 U.S.C. § 79a, et seq., as amended. 
  
 “Purchase Price” has the meaning set forth in Section 2.2 of this Agreement. 
  
 “Release” means any release, spill, leak, discharge, disposal of, pumping, pouring, emitting, emptying, injecting, leaching, dumping or
allowing to escape into or through the environment. 
  
 “Representatives” of a Person means, collectively, such Person’s Affiliates and his, her or its and their respective directors, officers, partners, members, employees, representatives, agents, advisors (including
accountants, legal counsel, environmental consultants, engineering consultants and financial advisors), parent entities and other controlling Persons. 
  
 “Response Actions” means the activities defined in 42 U.S.C. § 9601(25) of CERCLA. 
  
 “Security and Intercreditor Agreement” means the Amended
and Restated Security and Intercreditor Agreement among the Seller, the other Grantors referred to therein, Citibank, N.A. as Collateral Agent, Intercreditor Agent and Depository Bank, Citicorp North America, Inc., as Administrative Agent, and Law
Debenture Trust Company of New York, as Indenture Trustee, dated February 21, 2003, as amended and restated in its entirety on March 8, 2004. 
  
 “Seller” has the meaning set forth in the preface above. 
  
 “Seller’s Disclosure Schedule” has the meaning set forth in Section 3 of this Agreement. 

 
 “Seller’s Indemnitee” has the meaning set forth in
Section 9.3 of this Agreement. 
  
 “Seller’s
Required Consents” means those consents and notices set forth in Section 1(a) of the Seller’s Disclosure Schedule. 
  

 9 

 “Seller’s Required Regulatory Approvals” means those consents, approvals, filings
and notices set forth in Section 1(b) of the Seller’s Disclosure Schedule. 
  
 “Site” means, collectively, the Owned Real Property and the Other Real Property Rights. 
  
 “Straddle Period” means a taxable year or period beginning on or before, and ending after, the Closing Date. 
  
 “Tax” means any federal, state, local or foreign income,
gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental, customs, duties, utility, production, capital stock, franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated, or other taxes, fees, levies, tariffs, imposts, assessments, obligations or charges of the same or
of a similar nature to any of the foregoing, including any interest, penalty or addition, whether disputed or not. 
  
 “Tax Return” means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any
schedule, supplement, attachment or amendment thereto. 
  
 “Third Party Claim” has the meaning set forth in Section 9.4 of this Agreement. 
  
 “Title Policy” means the owner’s policy of title insurance, policy number 1410 001370022 WB, dated April 17, 2001, issued by Chicago
Title Insurance Company in favor of the Company. 
  
 “Transaction Documents” means all documents and agreements to be entered into by one or more of the Parties in connection with the transactions contemplated by this Agreement. 
  
 “Transferred Employee” has the meaning set forth in Section
7.6(b) of this Agreement. 
  
 “Updated Title
Policy” means the Title Policy, as supplemented by, (a) a date-down endorsement to the Title Policy amending the date of the Title Policy to the Closing Date or such other date as shall be acceptable to the Buyers and (b) a non-imputation
endorsement. The Updated Title Policy shall provide for coverage in the amount of $90,000,000 and insure the fee title of the Company in the Site, free and clear of all Encumbrances, other than Permitted Encumbrances. 
  

	2.	Purchase and Sale of the Interests. 

  

	 	2.1	Basic Transaction. On the terms and subject to the conditions of this Agreement, at the Closing, the Buyers agree to purchase and accept delivery from the Seller, and the
Seller agrees to sell, assign, transfer and deliver to the Buyers, all of the Interests, in exchange for the Purchase Price. 

  

 10 

	 	2.2	Purchase Price. At the Closing, each of the Buyers shall pay to the Seller by wire transfer or delivery of other immediately available funds to an account in the United
States designated by the Seller by notice to the Buyers at least two Business Days prior to the Closing, that Buyer’s Percentage of an amount equal to (a) the result of (i) One Hundred Seventy Three Million Dollars ($173,000,000), (ii) minus
$33,333 for each day (if any) that occurs from and after the Closing Date to and including October 31, 2004, (iii) plus $33,333 for each day that occurs from and including November 1, 2004 to and including December 31, 2004 (or if earlier, the
Closing Date), (iv) minus $95,000 for each day that occurs from and including January 1, 2005 to and including January 7, 2005 (or if earlier, the Closing Date), (v) minus $65,000 for each day that occurs from and including January 8, 2005 to and
including January 31, 2005 (or if earlier, the Closing Date), (vi) minus $71,000 for each day that occurs from and including February 1, 2005 to and including February 28, 2005 (or if earlier, the Closing Date), (vii) minus $21,000 for each day that
occurs from and including March 1, 2005 to and including the Closing Date (the “Initial Purchase Price”), (b) increased or decreased by the adjustment set forth in Section 2.3(a) below (the Initial Purchase Price, as so adjusted,
the “Closing Purchase Price”). The Closing Purchase Price shall be subject to a further adjustment pursuant to Section 2.3(c) of this Agreement (the Closing Purchase Price, as so adjusted, the “Purchase Price”).

  

	 	2.3	Purchase Price Adjustment. 

  

	 	(a)	Not later than three Business Days before the Closing Date, the Seller shall provide the Buyers by notice with the Seller’s good-faith estimate of the Net Working Capital,
based upon the accounting books and records of the Company (the “Estimated Net Working Capital”), and all underlying documentation supporting the Estimated Net Working Capital. If the Estimated Net Working Capital is greater than
$0, then the Initial Purchase Price shall be increased by the amount of such excess. If the Estimated Net Working Capital is less than $0, then the Initial Purchase Price shall be decreased by the amount of such deficit. 

  

	 	(b)	Within 60 days after the Closing Date, the Buyers will prepare and deliver to the Seller a written calculation of the Net Working Capital. Buyers will provide copies and otherwise
make available to Seller and its representatives the work papers and back-up materials used in calculating the Net Working Capital. 

  

	 	(c)	 If the Seller has any good faith objections to the Buyers’ calculation of the Net Working Capital, then it must deliver a detailed written statement describing
its objections to the Buyers within 20 Business Days after the Buyers deliver their calculation of the Net Working Capital to the Seller. If the Seller does not object to the Buyers’ calculation of Net Working Capital (and any adjustments
resulting therefrom) within such 20 Business Day period, then the Seller shall be deemed to have accepted the Buyers’ calculation thereof and any amounts due shall be paid pursuant to clause 

  

 11 

	 	 
(d) below. If the Seller does object in a timely manner, the Parties will make a diligent, good faith effort to resolve all such objections. Any payment due
pursuant to clause (d) below shall be paid upon resolution of such objections whether between the Parties or by the national accounting firm as set forth below. If the Parties do not resolve all objections to Buyers’ calculation of the Net
Working Capital within 10 Business Days after the Buyers receive the Seller’s statement of objections, then the Parties will select a mutually acceptable, nationally-recognized accounting firm (which may not be the regular outside accounting
firms of any Party) to resolve any remaining objections. If the Buyers and the Seller do not agree upon the choice of an accounting firm, they will select a nationally-recognized accounting firm by lot (after excluding their respective regular
outside accounting firms). The Buyers will collectively pay 50%, and the Seller will pay 50%, of the costs and expenses of any accounting firm so used. The Buyers and the Seller will jointly instruct the accounting firm to compute the disputed items
as soon as practicable, and the determination made by such accounting firm will be set forth in writing and will be conclusive and binding upon the Parties. The amount of the Net Working Capital as agreed to by the Buyers and the Seller or as
determined by the accounting firm constitutes the Net Working Capital for purposes of clause (d) below. 

  

	 	(d)	In the event that the Net Working Capital exceeds the Estimated Net Working Capital, then each Buyer shall pay to Seller in cash that Buyer’s Percentage of the amount of such
excess. In the event that the Estimated Net Working Capital exceeds the Net Working Capital, then the Seller shall pay to each Buyer in cash that Buyer’s Percentage of the amount of such excess. All amounts payable under this Section 2.3(d)
shall be paid within three Business Days of the determination of the Closing Date Net Working Capital by wire transfer of immediately available funds to a bank account designated in writing by the recipient not less than one Business Day before such
payment. 

  

	 	2.4	The Closing. The closing of the transactions contemplated by this Agreement (the “Closing”) will take place at the offices of Skadden, Arps, Slate, Meagher
& Flom LLP, Four Times Square, New York, New York, at 10:00 a.m. local time, on the fifth Business Day after the respective Parties have satisfied or waived all conditions to the obligations of the Parties to consummate the transactions
contemplated by this Agreement (other than actions the Parties will take at the Closing itself) or any other time, date and location as the Parties may agree. The date on which such proceedings actually occur is referred to as the “Closing
Date.” 

  

	 	2.5	 Deliveries at the Closing. At the Closing: (a) the Seller will execute, acknowledge (if appropriate) and deliver to the Buyers any certificates, instruments
and documents, including those referred to in Section 8.1, as the Buyers and their respective counsel may reasonably request; (b) each Buyer will 

  

 12 

	 	 
execute, acknowledge (if appropriate) and deliver to the Seller any certificates, instruments and documents, including those referred to in Section 8.2, as
the Seller and its counsel may reasonably request; (c) the Seller will deliver to each Buyer certificates, if any, representing its respective share of the Interests (such certificates, if any, collectively representing all of the Interests),
endorsed in blank or accompanied by duly executed assignment documents, or other documents of conveyance; (d) each Buyer will deliver to the Seller its respective share of the Closing Purchase Price as provided in Section 2.2; (e) the Seller shall
deliver to the Buyers originals (if available) or true, correct and complete copies of all books and records of the Company, including employee records, that are in the possession of the Seller or any Affiliate of the Seller; (f) the Buyers will
cause to be delivered to Exelon the letter of credit and the Seller will cause to be delivered to Exelon the notice, required under paragraph 1 of the Exelon Consent; and (g) the Seller shall, and shall cause the Company to, enter into a Transition
Services Agreement in the form attached as Exhibit 2.5 to this Agreement. 

  

	 	2.6	Allocation of Purchase Price. Each Buyer and the Seller will negotiate in good faith upon an allocation of the Purchase Price, together with any liabilities that are deemed
to be assumed for United States federal Income Tax purposes, among the Company’s assets for United States federal Income Tax purposes consistent with Section 1060 of the Code and the applicable Treasury Regulations within 60 days after the
Closing Date. In the event that the Parties do not agree on a mutually satisfactory allocation within such 60-day period, the Parties will appoint a mutually acceptable, nationally-recognized accounting firm that will determine the appropriate
allocation. The Buyers will collectively pay 50% and the Seller will pay 50%, of the costs and expenses of any accounting firm so used. The Buyers and the Seller will jointly instruct the accounting firm to determine the allocation as soon as
practicable, and the determination made by such accounting firm will be set forth in writing and will be conclusive and binding upon the Parties. Each Buyer and the Seller will report the transactions contemplated by this Agreement for United States
federal Income Tax and all other Tax purposes in a manner consistent with the allocation determined pursuant to this Section 2.6. Each Buyer and the Seller will notify and provide the other Parties with reasonable assistance in the event of an
examination, audit or other proceeding regarding the agreed-upon allocation of the Purchase Price. 

  

	3.	Representations and Warranties Concerning the Seller. The Seller represents and warrants to each Buyer that the statements contained in this Section 3 are correct and
complete as of the date of this Agreement, except as set forth in the disclosure schedule of the Seller (the “Seller’s Disclosure Schedule”) attached to this Agreement. 

  

	 	3.1	Organization of the Seller. The Seller is duly organized, validly existing and in good standing under the laws of the State of Delaware. 

  

 13 

	 	3.2	Authorization of Transaction. 

  

	 	(a)	The Seller has full power and authority (including full entity power and authority) to execute and deliver this Agreement and the Transaction Documents to which it is a party, and
to perform its obligations under this Agreement and the Transaction Documents to which it is a party. 

  

	 	(b)	The Seller has duly authorized the execution, delivery and performance of this Agreement and the Transaction Documents to which it is a party. 

  

	 	(c)	This Agreement and the Transaction Documents to which it is a party constitute the valid and legally binding obligations of the Seller, enforceable in accordance with their
respective terms and conditions, subject, however, to the effects of bankruptcy, insolvency, reorganization, moratorium or similar Laws affecting creditor’s rights generally and to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law). 

  

	 	3.3	Noncontravention. Subject to obtaining or making, as applicable, all of the Seller’s Required Consents and the Seller’s Required Regulatory Approvals, neither the
execution and the delivery of this Agreement or the Transaction Documents to which it is a party, nor the consummation of the contemplated transactions, will: 

  

	 	(a)	Violate any Law or Order applicable to the Seller, except where the violation would not, individually or in the aggregate, materially adversely affect the Seller’s ability to
consummate the transactions contemplated by this Agreement or have a Material Adverse Effect; 

  

	 	(b)	Violate any provision of the Seller’s limited liability company agreement or other organizational documents; or 

  

	 	(c)	Conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify or cancel, or require
any notice under any agreement, contract, lease, license, instrument or other arrangement to which the Seller is a party or by which it is bound, or to which any of its assets is subject, except where the violation, conflict, breach, default,
acceleration, termination, modification, cancellation or failure to give notice would not, individually or in the aggregate, materially adversely affect the Seller’s ability to consummate the transactions contemplated by this Agreement or have
a Material Adverse Effect; and without limiting the generality of the foregoing, the transactions contemplated with this Agreement comply with the provisions of Section 5.02(e)(v) of the Common Terms Agreement and the Seller has obtained the board
approval and the appraisal required under Section 5.02(e)(v)(B) of the Common Terms Agreement. 

  

	 	3.4	 Consents. The Seller need not give any notice to, make any filing with, or obtain any authorization, consent or approval of, any Person (including any

  

 14 

	 	 
Governmental Authority) in order for it to consummate the transactions contemplated by this Agreement and the Transaction Documents to which it is a party,
except for the Seller’s Required Consents and the Seller’s Required Regulatory Approvals, and except for notices, filings, authorizations, consents or approvals that, if not made or obtained, would not materially adversely affect the
Seller’s ability to consummate the transactions contemplated by this Agreement or have a Material Adverse Effect. 

  

	 	3.5	Ownership and Transfer of the Interests. Except as set forth in Section 3.5 of the Seller’s Disclosure Schedule, Seller is the record and beneficial owner of the
Interests, free and clear of any and all Encumbrances, and has made no agreements or arrangements with respect to the sale, transfer or assignment of any of the Interests other than this Agreement. 

  

	 	3.6	Brokers’ Fees. There is no Liability to pay any fees or commissions to any broker, finder or agent with respect to the transactions contemplated by this Agreement for
which any Buyer or the Company could become liable or obligated, other than amounts (if any) arising by, through or under a Buyer. 

  

	4.	Representations and Warranties Concerning the Company. The Seller represents and warrants to each Buyer that the statements contained in this Section 4 are correct and
complete as of the date of this Agreement, except as set forth in the Seller’s Disclosure Schedule. 

  

	 	4.1	Organization, Qualification and Power. The Company is a limited liability company duly organized, validly existing and in good standing under the laws of the State of
Delaware. The Company is duly authorized to conduct business and is in good standing under the laws of the State of Illinois. The Company has full power and authority to carry on the businesses in which it is engaged and to own and use the
properties owned and used by it. The Seller has made available to the Buyers correct and complete copies of the governing documents of the Company (as amended to date). 

  

	 	4.2	Capitalization. The Interests represent all of the issued and outstanding membership interests in the Company. All of the Interests have been duly authorized and are validly
issued, fully paid and nonassessable. Except as set forth in Section 4.2 of the Seller’s Disclosure Schedule, The Seller owns all of the Interests, free and clear of any restrictions on transfer (other than restrictions under the Securities Act
of 1933, as amended, and state securities Laws), Taxes, Encumbrances (other than Permitted Encumbrances), options, warrants, purchase rights, contracts, commitments, equities, claims and demands. There are no outstanding or authorized options,
warrants, purchase rights, subscription rights, conversion rights, exchange rights or other contracts or commitments that could require the Company to issue, sell or otherwise cause to become outstanding any of its membership interests. The Company
owns no equity interest in any other Person. 

  

 15 

	 	4.3	Noncontravention. Except as set forth in Section 4.3 of the Seller’s Disclosure Schedule, and subject to obtaining or making, as applicable, all of the Seller’s
Required Consents and the Seller’s Required Regulatory Approvals, neither the execution and the delivery of this Agreement by the Seller, nor the consummation of the contemplated transactions, will: 

  

	 	(a)	Violate any Law or Order applicable to the Company, except where the violation would not, individually or in the aggregate, materially adversely affect the Seller’s ability to
consummate the transactions contemplated by this Agreement or have a Material Adverse Effect; 

  

	 	(b)	Violate any provision of the articles, charter, limited liability company agreement, partnership agreement, bylaws or other organizational documents of the Company; or

  

	 	(c)	Conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify or cancel, or require
any notice under any agreement to which the Company is a party or by which it is bound, except where the violation, conflict, breach, default, acceleration, termination, modification, cancellation or failure to give notice would not, individually or
in the aggregate, materially adversely affect the Seller’s ability to consummate the transactions contemplated by this Agreement or have a Material Adverse Effect. 

  

	 	4.4	Consents. The Company need not give any notice to, make any filing with, or obtain any authorization, consent or approval of, any Person (including any Governmental
Authority) in order for the Seller to consummate the transactions contemplated by this Agreement and the Transaction Documents to which the Seller is a party, except for the Seller’s Required Consents and the Seller’s Required Regulatory
Approvals, and except for notices, filings, authorizations, consents or approvals that, if not made or obtained, would not, individually or in the aggregate, materially adversely affect the Seller’s ability to consummate the transactions
contemplated by this Agreement or have a Material Adverse Effect. 

  

	 	4.5	Title to Assets. Without limiting the provisions of Section 4.8, and except as set forth in Section 4.5 of the Seller’s Disclosure Schedule, the Company has good and
valid title to, or a valid leasehold interest in, the Facility and the other properties and assets (tangible and intangible) reflected in the balance sheet for June 30, 2004 included in the Company Financial Statements, and holds such properties and
assets free and clear of all Encumbrances (other than Permitted Encumbrances). The rights, properties and other assets presently owned, leased or licensed by the Company include all such rights, properties and other assets as are necessary to permit
the Company to conduct its business in the same manner as such business as currently conducted and was conducted in the periods covered by the Company Financial Statements except where the absence of such rights, properties or assets would not have
a Material Adverse Effect. 

  

 16 

	 	4.6	Books and Records. The minute books and other similar records of the Company have been made available to Buyers prior to the execution of this Agreement and contain a true
and complete record, in all material respects, of all action taken at all meetings and by all written consents in lieu of meetings of the stockholders, members, boards of directors and similar governing bodies of the Company. The membership interest
transfer ledgers or other similar records of the Company as made available to Buyers prior to the execution of this Agreement accurately reflect all transfers of the membership interests of the Company made prior to the date of this Agreement. The
maintenance records for the Facility set forth in Section 4.6 of the Seller’s Disclosure Schedule are true and complete as to the matters set forth thereon in all material respects. 

  

	 	4.7	Tax Matters. Except as described in Section 4.7 of the Seller’s Disclosure Schedule: 

  

	 	(a)	All Tax Returns of the Company or with respect to the assets or activities of the Company have been timely filed with the appropriate tax authorities in the jurisdictions in which
such Tax Returns are required to be filed, except where the failure timely to file would not have a Material Adverse Effect. All Taxes shown on such Tax Returns as owing have been timely paid. All such Tax Returns are correct and complete in all
material respects. 

  

	 	(b)	All material Tax deficiencies asserted or assessed against the Company or with respect to the assets or activities of the Company have been resolved and paid in full.

  

	 	(c)	Neither the Seller nor the Company has waived any statute of limitations in respect of Taxes of the Company or with respect to the assets or activities of the Company or agreed to
any extension of time with respect to a Tax assessment or deficiency against the Company or with respect to the assets or activities of the Company which waiver or extension remains in effect. 

  

	 	(d)	The Company (and any predecessors thereto) has qualified as, and been treated as, disregarded as an entity separate from its owner for United States federal and Illinois state
Income Tax purposes at all times since the date of its formation on February 26, 1998. 

  

	 	(e)	 Since December 31, 2003, neither the Seller nor the Company has (i) changed any financial or Tax accounting methods, policies or practices of the Company or with
respect to the assets or activities of the Company, except as required by a change in GAAP or SEC rules, regulations or guidelines or applicable law, (ii) made, revoked, or amended any Tax election of the Company or with respect to the assets or
activities of the Company, (iii) filed any amended Tax Return or claim for refund of the Company or with respect to the assets or activities of the Company, (iv) 

  

 17 

	 	 
entered into any closing agreement affecting any Tax liability or refund of the Company or with respect to the assets or activities of the Company, or (v)
settled or compromised any Tax liability or refund of the Company or with respect to the assets or activities of the Company. 

  

	 	(f)	There are no audits, claims, assessments, levies, administrative or judicial proceedings pending, or to Seller’s Knowledge, threatened, proposed or contemplated against the
Company, or with respect to the assets or activities of the Company, by any Tax authority. 

  

	 	(g)	There are no liens for Taxes on any assets of the Company except for Taxes not yet due and payable. 

  

	 	(h)	The Company is not a party to, bound by or have any obligation under, any Tax allocation, Tax sharing, Tax indemnity or similar agreement, arrangement or understanding.

  

	 	(i)	The Company has withheld and paid all Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor,
member or other third party. 

  

	 	(j)	None of the assets of the Company are (i) required, pursuant to section 168(g) of the Code, to be depreciated under the “alternative depreciation system” within the
meaning of section 168(g)(2) of the Code, or (ii) subject to the provisions of section 168(f) of the Code. 

  

	 	4.8	Real Property. 

  

	 	(a)	Except as set forth in Section 4.8(a) of Seller’s Disclosure Schedule, the Company has good and indefeasible fee simple title to the Owned Real Property, free and clear of all
Encumbrances, other than Permitted Encumbrances. The Owned Real Property is the only real property owned by the Company. The Seller has made available to the Buyers a correct and complete copy of the Title Policy. The exceptions listed in the Title
Policy do not and will not have a Material Adverse Effect on the Facility and related off-Site improvements and their use, operation and maintenance in accordance with past practices. 

  

	 	(b)	The Other Real Property Rights constitute all leases, easements, rights-of-way and other rights of the Company to use real property owned by Persons other than the Company. The
Other Real Property Rights are in full force and effect, and except as set forth in Section 4.8(b) of the Seller’s Disclosure Schedule, the Seller holds the Other Real Property Rights free and clear of all Encumbrances, other than Permitted
Encumbrances. 

  

 18 

	 	(c)	Except as set forth in Section 4.8(c) of the Seller’s Disclosure Schedule, (i) the Site is the only real property in which the Company has any ownership, leasehold or other
interest, (ii) to Seller’s Knowledge there is no proposed special assessment that would affect the Site, (iii) to Seller’s Knowledge there are no claims, causes of action, lawsuits or proceedings pending or threatened regarding the
ownership, use or possession of the Site, including condemnation or similar proceedings, or regarding the Company’s right to use utilities used or otherwise reasonably necessary to operate the Facility, (iv) the Facility is located entirely on
Owned Real Property (other than off-Site improvements required to connect the Facility with the electric transmission grid and with natural gas pipelines, which are properly located on Other Real Property Rights) and the Company’s rights in the
Site are sufficient to permit the continued presence, use, operation and maintenance of the Facility and such related off-Site improvements, and (v) no portion of the Site is leased, subleased or licensed by the Company to any other Person.

  

	 	4.9	Legal Compliance. Except where failure to do so would not, individually or in the aggregate, have a Material Adverse Effect, each of the Company and its Affiliates has since
May 4, 2001, and to the Knowledge of the Seller before that time, complied in a timely manner with all Laws and Orders of all United States federal, state, local, foreign governments and agencies thereof that affect the business, properties or
assets of the Company. No notice, charge, claim, action or assertion has been received by the Company or has been filed, commenced or, to the Knowledge of the Seller, threatened in writing against the Company alleging any violation of any of the
foregoing, except for violations that would not, individually or in the aggregate, have a Material Adverse Effect. 

  

	 	4.10	Environmental Matters. Except as set forth on Section 4.10 of the Seller’s Disclosure Schedule: 

  

	 	(a)	The Company has been and is in material compliance with Environmental Laws and Environmental Permits. 

  

	 	(b)	There are no pending or, to the Seller’s Knowledge, threatened claims, demands, actions, notices of noncompliance, administrative proceedings, lawsuits or investigations or
outstanding Orders against the Company under any Environmental Laws, claiming any personal injury, property damage or other harm allegedly resulting from the Release of or exposure to Hazardous Substances, or arising from any activities not in
compliance with any Environmental Laws. 

  

	 	(c)	 The Company has not received any written notice or request for information indicating that it is a potentially responsible party under CERCLA or any similar state
law with respect to the Site, any real property adjacent to the Site or any Off-Site Location, or any written 

  

 19 

	 	 
notice of any Governmental Authority’s allegation or investigation of any criminal or civil violations by the Company of any Environmental Laws.

  

	 	(d)	The Company holds all Environmental Permits needed to operate the Facility as it is being operated as of the date of this Agreement. All such Environmental Permits are in effect and
no appeal nor any other action is pending to revoke any such permit. To the extent required by applicable Environmental Laws, the Company has filed (or will have filed by the Closing Date) all applications necessary to renew or obtain any necessary
Environmental Permits in a timely fashion so as to allow the Company to continue to operate its business and the Facility in compliance with applicable Environmental Laws, and the Company does not have reason to know that such new or renewed
Environmental Permits will include any terms or conditions that will be more stringent than the terms and conditions of existing Environmental Permits, except for such applications, terms and conditions that would not, individually or in the
aggregate, have a Material Adverse Effect. 

  

	 	(e)	The Seller has heretofore delivered to the Buyers true and complete copies of all material environmental studies, audits and assessment reports in its possession or prepared on its
behalf and made in the last seven years relating to the Site or the construction or operations of the Facility. 

  

	 	(f)	The Company has not and to the Seller’s Knowledge, no other Person has, Released any Hazardous Substances on, beneath or adjacent to the Site, or any real property formerly
owned or operated by the Company, except for Releases of Hazardous Substances that are not reasonably likely to result in a claim against the Company under Environmental Laws. 

  

	 	(g)	To the Seller’s Knowledge, the Facility does not contain toxic or hazardous mold that would require remediation in order to protect the health of individuals working at the
Facility. 

  

	 	(h)	All of the emissions allowances for present or future years allocated to the Company with respect to the Facility remain in the Company’s relevant federal or state compliance
accounts, other than allowances that have previously been used by the Company for purposes of demonstrating the Facility’s compliance with applicable Environmental Laws, and the Company has not entered into any agreement with any Person
(including Affiliates of the Company) to sell, transfer or other otherwise convey emissions allowances that have been issued to it, that will or may be issued to it in the future, or that have been acquired by the Company prior to August 20, 2004,
other than sales of emissions allowances that have been completed prior to August 20, 2004. 

  

	 	(i)	 With the exception of those set forth in Sections 4.21 and 4.22, the only representations and warranties given by Seller in respect to environmental 

  

 20 

	 	 
matters are those contained in this Section 4.10, and none of the other representations and warranties given by Seller in this Agreement other than those set
forth in Sections 4.21 and 4.22 will be deemed to constitute, directly or indirectly, a representation or warranty in respect of any matter relating to Environmental Laws or Environmental Permits. 

  

	 	4.11	Powers of Attorney. There are no outstanding powers of attorney executed on behalf of the Company. 

  

	 	4.12	Litigation. There is no claim, action, proceeding or investigation pending or, to the Seller’s Knowledge, threatened in writing against the Company before any
Governmental Authority, or any Order, other than such matters that would not, individually or in the aggregate, have a Material Adverse Effect or that would delay or prevent the consummation of the transactions contemplated by this Agreement.

  

	 	4.13	Employment Matters. 

  

	 	(a)	Other than services by employees of the Seller or its Affiliates provided under the agreements and arrangements set forth on Section 4.19 of the Seller’s Disclosure Schedule,
the only individuals who are employed to provide services in respect of the Company are employed by the Company. 

  

	 	(b)	Neither the Company nor any other Person is a party to any employment agreement with any Employee in respect of employment with the Company. 

  

	 	(c)	There is not presently pending or existing any strike, slowdown, picketing, work stoppage or employee grievances in process, or any proceeding against or affecting the Company
relating to the alleged violation of any Law pertaining to labor relations or employment matters, and, to the Seller’s Knowledge, none of the foregoing is threatened. 

  

	 	(d)	The Company is not and since May 4, 2001, and to the Knowledge of the Seller before that time, has not been a party to or bound by any collective bargaining or similar agreement
with any labor organization or work rules or practices agreed to with any labor organization or employee association applicable to the Employees. Since May 4, 2001, and to the Knowledge of the Seller before that time, no labor union has been
certified by the National Labor Relations Board as bargaining agent for any of the Employees, no notice has been received from any labor union stating that it has been designated as the bargaining agent for any of the Employees, and no petition has
been filed by any labor union requesting an election to determine whether or not it is the exclusive bargaining agent for any of the Employees. 

  

 21 

	 	(e)	The Company has complied with all provisions of Law pertaining to the employment of employees, including such Laws relating to labor relations, equal employment and fair employment
practices, except for any noncompliance that would not, individually or in the aggregate, have a Material Adverse Effect. 

  

	 	(f)	Section 4.13(f) of the Seller’s Disclosure Schedule sets forth a true and complete list of (i) the names and current salaries of all directors and elected and appointed
officers of the Company, and the family relationships, if any, among such individuals, (ii) the wage rates for non-salaried and non-executive salaried employees of the Company by classification, and (iii) all group insurance programs in effect for
employees of the Company. The Company is not in default with respect to any of its obligations referred to in the preceding sentence. 

  

	 	(g)	No Employee has notified the Company in writing that he plans to terminate employment with the Company during the 12 months following the date of this Agreement.

  

	 	4.14	Employee Benefits. 

  

	 	(a)	Section 4.14(a) of the Seller’s Disclosure Schedule lists each Employee Benefit Plan that the Company sponsors or maintains, or to which the Company (or any trade or business,
whether or not incorporated, that together with the Company would be deemed a “single employer” within the meaning of Section 4001(b) of ERISA or Section 414 of the Code (an “ERISA Affiliate”)) contributes or has any
obligation to contribute, that covers any Employee or any individual formerly employed by the Company (collectively, the “Allegheny Employee Benefit Plans”). With respect to each of the Allegheny Employee Benefit Plans, the Seller
has delivered or made available to the Buyers complete copies of each of the following documents: (i) the governing plan document and any funding instrument established thereunder; (ii) the most recent annual report and actuarial report, if required
under ERISA or the Code, and, if separate, the most recent financial statement; (iii) the most recent Summary Plan Description, together with each Summary of Material Modifications, to the extent such summaries are required under ERISA; and (iv) the
most recent determination letter received from the Internal Revenue Service with respect to each of the Allegheny Employee Benefit Plans that is intended to be qualified under Section 401(a) of the Code. 

  

	 	(b)	 Each of the Allegheny Employee Benefit Plans has been operated and administered in accordance with its terms and the applicable requirements of ERISA, the Code and
other Laws, except where the noncompliance would not, individually or in the aggregate, have a Material Adverse Effect. Except as set forth in Section 4.14(b) of the Seller’s Disclosure Schedule, there are no pending or, to the Seller’s
Knowledge, threatened 

  

 22 

	 	 
claims by or on behalf of any of the Allegheny Employee Benefit Plans, by any Employee or any beneficiary of any such Allegheny Employee Benefit Plan or
otherwise involving any such Allegheny Employee Benefit Plan (other than routine claims for benefits). 

  

	 	(c)	All contributions (including all employer contributions and employee salary reduction contributions) that are due from the Company or any Employee or former employee of the Company
have been paid to each Allegheny Employee Benefit Plan, and all contributions for any period ending on or before the Closing Date that are not yet due from the Company or any Employee or former employee of the Company have been paid to each
Allegheny Employee Benefit Plan or accrued in accordance with the past custom and practice of the Company and the Allegheny Employee Benefit Plans. All premiums or other payments due from the Company for all periods ending on or before the Closing
Date have been paid with respect to each Allegheny Employee Benefit Plan that is an Employee Welfare Benefit Plan. 

  

	 	(d)	No liability under Title IV of ERISA has been incurred by the Company or any ERISA Affiliate that has not been satisfied in full, and, to the Seller’s Knowledge, no condition
exists that presents a material risk to the Company of incurring a liability under such Title. No Allegheny Employee Benefit Plan subject to the minimum funding requirements of Section 412 of the Code or Section 302 of ERISA or any trust established
thereunder has incurred any “accumulated finding deficiency” (as defined in Section 302 of ERISA or Section 412 of the Code), whether or not waived, as of the last day of the most recently ended fiscal year of such Allegheny Employee
Benefit Plan, and all contributions as of the date hereof and as of the Closing Date required to be made with respect thereto (whether pursuant to the terms of such Allegheny Employee Benefit Plan or by Law) have been made. 

 

	 	(e)	No Allegheny Employee Benefit Plan is a multiemployer plan within the meaning of Section 3(37) or 4001(a)(3) of ERISA, and neither the Company nor any ERISA Affiliate has
contributed to or been obligated to contribute to any such multiemployer plan covering one or more Employees or former employees of the Company during the preceding six years. No Allegheny Employee Benefit Plan is a plan described in Section 4063(a)
of ERISA. 

  

	 	(f)	Each Allegheny Employee Benefit Plan intended to be “qualified” within the meaning of Section 401(a) of the Code has received a favorable determination letter from the
Internal Revenue Service as to its qualification under said Section 401(a), and, to the Seller’s Knowledge, no event has occurred that is likely to result in the disqualification of such Allegheny Employee Benefit Plan.

  

 23 

	 	(g)	Except as set forth in Section 4.14(g) of the Seller’s Disclosure Schedule, the consummation of the transactions contemplated by this Agreement will not, whether alone or
together with any other event, (i) entitle any Employee or any other individual formerly employed by the Company to severance pay, unemployment compensation or any other payment, or (ii) accelerate the time of payment or vesting, or increase the
amount of compensation due any such Employee or other individual. 

  

	 	(h)	Except as set forth in Section 4.14(h) of the Seller’s Disclosure Schedule, no Allegheny Employee Benefit Plan provides benefits, including without limitation death or medical
benefits (whether or not insured), with respect to current or former Employees beyond their retirement or other termination of service, other than (i) coverage mandated solely by applicable Law, (ii) death benefits or retirement or other termination
of employment benefits under any “employee pension benefit plan,” as defined in Section 3(2) of ERISA, or (iii) disability benefits. 

  

	 	(i)	To the Seller’s Knowledge, neither the Seller nor any other Person has engaged in a transaction with respect to any Allegheny Employee Benefit Plan that, assuming the taxable
period of such transaction expired as of the date of this Agreement, could subject the Company or any Employee to a Tax or penalty imposed by either Section 4975 of the Code or Section 502(i) of ERISA in respect of any Allegheny Employee Benefit
Plan. 

  

	 	(j)	There has been no amendment to, announcement by the Company, the Parent or any of their Affiliates relating to, or change in employee participation or coverage under, any Allegheny
Employee Benefit Plan which would increase materially the aggregate benefits provided to any Employee under such Allegheny Employee Benefit Plan above the level of the aggregate benefits provided thereunder for the most recent fiscal year.

  

	 	4.15	Intellectual Property. Except as disclosed in Section 4.15 of the Seller’s Disclosure Schedule: 

  

	 	(a)	The Company owns or has the valid right to use pursuant to license, sublicense, agreement or permission, in each case free and clear of all Encumbrances other than Permitted
Encumbrances, all Company Intellectual Property. 

  

	 	(b)	 The conduct of the businesses of the Seller (as it relates to the Facility and the Company) and of the Company as currently conducted, to the Seller’s
Knowledge, does not infringe upon or misappropriate any Intellectual Property of any third party, and neither the Seller nor the Company has received written notice by any Person of any pending or threatened claims, suits, actions, mediations,
arbitrations, orders or other adversarial proceedings (i) alleging infringement (or other violation) by the Seller (except where such violation would not have a Material Adverse Effect) or 

  

 24 

	 	 
the Company of Intellectual Property or other rights of any Person, or (ii) challenging the Seller’s or the Company’s ownership or use of, or the
validity, enforcement, registrability or maintenance of, any Company Intellectual Property. 

  

	 	(c)	To the Seller’s Knowledge, no Person is infringing upon or otherwise violating any Company Intellectual Property. 

  

	 	(d)	To the Seller’s Knowledge, the use by the Company of any Company Intellectual Property is, except as would be immaterial, in accordance with any and all applicable grants,
licenses, agreements, instruments or other arrangements pursuant to which the Company acquired the right to use such Company Intellectual Property. 

  

	 	(e)	The Company has not entered into and is not bound by any consents, Orders, indemnifications, forbearances to sue, settlement agreements, licenses or other arrangements that (i)
restrict the Company’s right to use any Company Intellectual Property, (ii) restrict the business of the Company in order to accommodate a third Person’s Intellectual Property rights, or (iii) permit any third party to use any Company
Intellectual Property. 

  

	 	4.16	Contracts. Section 4.16 of the Seller’s Disclosure Schedule lists all Material Agreements. Neither the Company nor, to the Seller’s knowledge, the other party to
any of the Material Agreements is in breach or default under, and to the Seller’s Knowledge no event has occurred that, with notice or lapse of time, would constitute a breach or default or permit termination, modification or acceleration of,
any Material Agreements, except for such breaches, defaults or events as to which requisite waivers have been, or prior to the Closing will have been, obtained or that would not, individually or in the aggregate, have a Material Adverse Effect. The
Seller has made available to the Buyers a correct and complete copy of each Material Agreement listed in Section 4.16 of the Seller’s Disclosure Schedule. 

  

	 	4.17	Permits. The Company holds and is in material compliance with all Permits that are required to own or operate the Facility as operated on the date of this Agreement, except
for such failures to hold or comply that would not, individually or in the aggregate, have a Material Adverse Effect. Each Permit is in full force and effect, the Company is in compliance in all material respects with all of its obligations with
respect thereto, and no event has occurred and is continuing which allows, or with or without the giving of notice or the passage of time or both would allow, the revocation or termination of any permit. 

  

	 	4.18	Brokers’ Fees. The Company has no Liability to pay any fees or commissions to any broker, finder or agent with respect to the transactions contemplated by this
Agreement, other than those (if any) by, through or under Buyers. 

  

 25 

	 	4.19	Transactions with Affiliates. Section 4.19 of the Seller’s Disclosure Schedule lists all contracts and agreements between the Company, on one hand, and any of the Seller
or its Affiliates, on the other. 

  

	 	4.20	Regulatory. 

  

	 	(a)	The Company is not subject to regulation as an “electric utility”, “electric corporation”, “electrical company”, “public utility”,
“holding company”, “public utility holding company” or “public service corporation” or the equivalent under any Law or PUHCA or any rule, regulation, order or interpretation of any Governmental Entity with respect to
PUHCA. 

  

	 	(b)	None of Seller, the Company nor any of their Affiliates is an “investment company” or a company “controlled” by an “investment company” within the
meaning of the Investment Company Act of 1940, as amended, or an “investment advisor” within the meaning of the Investment Company Act of 1940, as amended. 

  

	 	(c)	The Project is an “eligible facility” under Section 32(a) of PUHCA and the FERC regulations implemented thereunder and all administrative and judicial precedent relating
to them. The Parent is a “registered holding company” and is subject to regulation under PUHCA; however, the Company was determined by FERC’s staff, acting on delegated authority, to be an exempt wholesale generator within the
meaning of Section 32 of PUHCA by Order dated March 2, 2000 in Docket No. EG00-80-000. The Company and the Facility have met, and will continue to meet until the consummation of the Transaction at the Closing, all applicable requirements for the
maintenance of such status. 

  

	 	(d)	On January 25, 2001 in Docket No. ER01-623-000, the Company obtained an Order from the FERC staff, acting on delegated authority, accepting for filing the Project
Company’s Market-Based Rate tariff and granting waivers and blanket approvals under the Federal Power Act. The Market-Based Rate Order is a final, non-appealable order. 

  

	 	4.21	Financial Statements. 

  

	 	(a)	The Seller has made available to the Buyers the financial statements in Section 4.21 of the Seller’s Disclosure Schedule (collectively, the “Company Financial
Statements”). The Company Financial Statements have been prepared in accordance with GAAP (without footnotes) applied on a consistent basis, and present fairly in all material respects the financial condition and results of operations of
the Company as of the dates of the particular Company Financial Statements. 

  

	 	(b)	 Since June 30, 2004, the Company has conducted its business only in the Ordinary Course of Business, and the Company has not suffered any Material Adverse Effect
or, other than as set forth in Section 4.21(b) of the 

  

 26 

	 	 
Seller’s Disclosure Schedule, engaged in any action of the type described in Section 6.3. 

  

	 	(c)	To the Seller’s Knowledge, the financial and accounting records regarding operations of the Facility set forth in Section 4.21(c) of the Seller’s Disclosure Schedule are
true and complete as to the matters set forth thereon in all material respects. 

  

	 	4.22	Undisclosed Liabilities. The Company has no Liabilities that are required to be reflected in a balance sheet prepared in accordance with GAAP which would, individually or in
the aggregate, have a Material Adverse Effect, except for (a) Liabilities reflected or reserved against in the Company Financial Statements; or (b) Liabilities that have arisen in the Ordinary Course of Business after June 30, 2004; (c) Liabilities
described in Section 4.22 of the Seller’s Disclosure Schedule; or (d) Liabilities arising under Material Agreements. 

  

	 	4.23	No Guarantees. The Company has no indebtedness for borrowed money, other than trade payables incurred in the Ordinary Course of Business and payables to Seller or its
Affiliates that will be extinguished as of the Closing. 

  

	 	4.24	Insurance. Section 4.24 of the Seller’s Disclosure Schedule sets forth (a) a true list and description of applicable insurance policies, other insurance arrangements and
other contracts or arrangements for the transfer or sharing of insurance risks by the Company, together with a statement regarding the impairment or likely impairment of each such insurance policy or other arrangement through the date hereof, (b)
coverages and deductible for fire and casualty, general liability and workers compensation under those policies, (c) a description of such risks that the Company, or its directors, managers or officers, have designated as being self-insured and (d)
a true and complete list of all outstanding claims for medical expenses in excess of $10,000 made by or with respect to any single Employee (but not including the identity of such Employee). All such policies are in full force and effect, subject to
the terms of each policy, all premiums due with respect thereto covering all periods up to and including the date as of which this representation is being made have been paid (other than retroactive premiums which may be payable with respect to
comprehensive general liability and worker’s compensation insurance policies), and no notice of cancellation or termination has been received with respect to any such policy which was not replaced on substantially similar terms prior to the
date of such cancellation. During the 12 months preceding the date of this Agreement, neither the Company nor any of its Affiliates has been refused any insurance, or had any coverage limited, on account of conditions or events involving the Company
or the Facility. 

  

	 	4.25	Due Diligence Materials. 

  

	 	(a)	All of the Due Diligence Materials that are photostatic, facsimile or electronic copies conform in all material respects with the original documents. 

  

 27 

	 	(b)	The financial records attached to Section 4.25(b) of the Seller’s Disclosure Schedule present fairly in all material respects the matters set forth thereon.

  

	 	4.26	No Other Business. The Company has never engaged in any business other than the development, construction, ownership, operation and financing of the Facility.

  

	 	4.27	Bank Accounts. As of the Closing Date, the Company will have no safe deposit boxes, checking accounts or other accounts of any nature. 

  

	 	4.28	Disclaimer of Other Representations and Warranties.  

  

	 	(a)	EXCEPT FOR THOSE REPRESENTATIONS AND WARRANTIES EXPRESSLY
SET FORTH IN SECTION 4 OF THIS AGREEMENT, THE SELLER MAKES NO
REPRESENTATIONS OR WARRANTIES OF ANY KIND OR NATURE, EXPRESS OR IMPLIED,
AS TO THE INTERESTS OR THE PROPERTIES OR ASSETS OF THE COMPANY
OR THE FACILITY, THE OPERATIONS OF THE FACILITY, OR THE PROSPECTS
(FINANCIAL AND OTHERWISE), RISKS AND OTHER INCIDENTS OF THE FACILITY, INCLUDING
WITHOUT LIMITATION WITH RESPECT TO THE ACTUAL OR RATED GENERATING CAPABILITY
OF THE FACILITY OR THE ABILITY OF THE BUYERS TO GENERATE OR
SELL ELECTRICAL ENERGY. 

  

	 	(b)	WITHOUT LIMITING THE FOREGOING, AND EXCEPT FOR THOSE
REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN SECTION 4 OF THIS AGREEMENT,
THE SELLER MAKES NO REPRESENTATIONS OR WARRANTIES OF MERCHANTABILITY, USAGE OR
SUITABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE WITH RESPECT TO THE
PROPERTIES OR ASSETS OF THE COMPANY OR THE FACILITY, OR ANY PART
THEREOF, OR AS TO THE WORKMANSHIP THEREOF, OR THE ABSENCE OF ANY
DEFECTS THEREIN, WHETHER LATENT OR PATENT, OR COMPLIANCE OF SUCH PROPERTIES
OR ASSETS WITH ANY LAWS, INCLUDING WITHOUT LIMITATION ENVIRONMENTAL LAWS, OR
AS TO THE CONDITION OF THE PROPERTIES OR ASSETS OF THE COMPANY
OR THE FACILITY, OR ANY PART THEREOF, OR AS TO THE ABSENCE
OF HAZARDOUS SUBSTANCES OR LIABILITY OR POTENTIAL LIABILITY UNDER ENVIRONMENTAL LAWS
WITH RESPECT TO THE COMPANY OR THE FACILITY. ANY SUCH OTHER
REPRESENTATIONS AND WARRANTIES ARE HEREBY EXPRESSLY DISCLAIMED. 

  

	 	(c)	EXCEPT FOR THOSE REPRESENTATIONS AND WARRANTIES EXPRESSLY
SET FORTH IN SECTION 4 OF THIS AGREEMENT, THE PROPERTIES AND ASSETS
OF THE COMPANY, THE FACILITY AND THE INTERESTS ARE SOLD “AS IS, WHERE IS”
ON THE CLOSING DATE, AND IN THEIR CONDITION ON THE CLOSING DATE
“WITH ALL FAULTS.” 

  

 28 

	5.	Representations and Warranties Concerning the Buyers. Each Buyer represents and warrants to the Seller that the statements contained in this Section 5 are correct and
complete as of the date of this Agreement and will be correct and complete as of the Closing Date, except as set forth in the disclosure schedule of the Buyers (the “Buyers’ Disclosure Schedule”) attached to this Agreement.

  

	 	5.1	Organization of the Buyers. That Buyer is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware.

  

	 	5.2	Authorization of Transaction. 

  

	 	(a)	That Buyer has full power and authority to execute and deliver this Agreement and the Transaction Documents to which it is a party, and to perform its obligations under this
Agreement and the Transaction Documents to which it is a party. 

  

	 	(b)	That Buyer has duly authorized the execution, delivery and performance of this Agreement and the Transaction Documents to which it is a party. 

  

	 	(c)	This Agreement and the Transaction Documents to which it is a party constitute the valid and legally binding obligations of that Buyer, enforceable in accordance with their
respective terms and conditions, subject, however, to the effects of bankruptcy, insolvency, reorganization, moratorium or similar Laws affecting creditor’s rights generally and to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law). 

  

	 	5.3	Noncontravention. Subject to obtaining or making, as applicable, all of the Buyers’ Required Consents and the Buyers’ Required Regulatory Approvals, neither the
execution and the delivery of this Agreement or the Transaction Documents to which that Buyer is a party, nor the consummation of the contemplated transactions, will: 

  

	 	(a)	Violate any Law or Order applicable to that Buyer, except where the violation would not, individually or in the aggregate, have any change or effect that is reasonably likely to be
materially adverse to that Buyer’s ability to consummate the transactions contemplated by this Agreement; 

  

	 	(b)	Violate any provision of that Buyer’s articles, charter, limited liability company agreement, bylaws or other organizational documents or governance provisions; or

  

	 	(c)	Conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify or cancel, or require
any notice under any material agreement, contract, lease, license, instrument or other arrangement to which that Buyer is a party or by which it is bound or to which any of its assets is 

  

 29 

	 	 
subject, except where the violation, conflict, breach, default, acceleration, termination, modification, cancellation or failure to give notice would not,
individually or in the aggregate, have any change or effect that is reasonably likely to be materially adverse to that Buyer’s ability to consummate the transactions contemplated by this Agreement. 

  

	 	5.4	Consents. To that Buyer’s Knowledge, that Buyer need not give any notice to, make any filing with, or obtain any authorization, consent or approval of, any Person
(including any Governmental Authority) in order to consummate the transactions contemplated by this Agreement and the Transaction Documents to which it is a party, except for the Buyers’ Required Consents and the Buyers’ Required
Regulatory Approvals, and except for notices, filings, authorizations, consents or approvals that, if not made or obtained, would not materially adversely affect that Buyer’s ability to consummate the transactions contemplated by this
Agreement. 

  

	 	5.5	Brokers’ Fees. That Buyer has no Liability to pay any fees or commissions to any broker, finder or agent with respect to the transactions contemplated by this Agreement
for which the Seller could become liable or obligated. 

  

	 	5.6	Investment. That Buyer is an accredited investor within the meaning of Rule 501 of Regulation D promulgated under the Securities Act of 1933, as amended. That Buyer will
acquire the Interests for its own account for the purpose of investment and not with a view towards the resale, transfer or distribution of the Interests in violation of the Securities Act of 1933, as amended, or other applicable federal or state
securities or blue sky Laws. 

  

	 	5.7	Financing. That Buyer has sufficient cash, available lines of credit or other sources of funds to enable it to make payment of its Buyer’s Percentage of the Purchase
Price and of all other amounts payable pursuant to this Agreement and to perform all of its other obligations under this Agreement and the Transaction Documents within the time contemplated by this Agreement. 

  

	 	5.8	Litigation. There is no claim, action, proceeding or investigation pending or, to that Buyers’ Knowledge, threatened against or relating to that Buyer or its Affiliates
before any Governmental Authority, or any judgment, decree or Order of any Governmental Authority, that would delay or prevent the consummation of the transactions contemplated by this Agreement. 

  

	 	5.9	No Knowledge of Certain Conditions. To that Buyer’s Knowledge, and assuming the accuracy of the Seller’s representations and warranties in this Agreement, the
Parties’ compliance with their obligations under this Agreement, and the making or obtaining, as applicable, of all Buyers’ Required Consents and Seller’s Required Consents, no condition or circumstance exists as of the date of this
Agreement that will excuse that Buyer from its timely performance of its obligations under this Agreement. 

  

 30 

	 	5.10	Due Diligence Investigation and Other Acknowledgements. 

  

	 	(a)	That Buyer acknowledges and agrees that it has fully conducted and is relying exclusively upon the Seller’s representations and warranties in this Agreement and its own
inspections and investigation in order to satisfy itself as to the condition and suitability of the business, inventories, assets, real and personal properties, Liabilities, results of operations, condition (financial or otherwise) and prospects of
the Company and the Facility. In addition, that Buyer acknowledges that it has reviewed, or has had the opportunity to review, all of the Due Diligence Materials to its full and complete satisfaction. 

  

	 	(b)	That Buyer acknowledges and agrees that, except as provided in this Agreement, the Seller makes no representations or warranties (express, implied, at common law, statutory or
otherwise) with respect to the accuracy or completeness of the Due Diligence Materials now, previously or hereafter made available to that Buyer in connection with this Agreement (including any description of the Company or the Facility, revenue,
price and expense assumptions, electricity demand forecasts or environmental information), or of any other information furnished to that Buyer by the Seller or its Representatives. 

  

	6.	Pre-Closing Covenants. The Parties agree as follows with respect to the period between the execution of this Agreement and the Closing. 

  

	 	6.1	General. Each of the Parties will use Commercially Reasonable Efforts to take all action and to do all things necessary, proper or advisable in order to consummate and make
effective the transactions contemplated by this Agreement (including satisfaction, but not waiver, of the Closing conditions set forth in Section 8 of this Agreement). No Party will, without the prior written consent of the other Party, take any
action, or refrain to take any action, where such action or failure to take action might reasonably be expected to prevent or materially impede, interfere with or delay the transactions contemplated by this Agreement. 

  

	 	6.2	Notices and Consents. 

  

	 	(a)	 Each Buyer and the Seller will (and the Seller will cause the Company to) give any notices to, make any filings with, and use Commercially Reasonable Efforts to
obtain any consents of any third party necessary in connection with the transactions contemplated by this Agreement, including the Buyers’ Required Consents and the Seller’s Required Consents, as applicable, and the Exelon Consent. Each
Buyer will use Commercially Reasonable Efforts to obtain such consents and agreements with Persons to which the Buyers or the Company pledge, assign, or grants a security interest in its right, title, and interest in and to the Exelon Agreements (as
defined in the Exelon Consent) in customary form that such Persons reasonably may request in connection with any financing 

  

 31 

	 	 
that will close at or promptly after the Closing and that do not adversely affect Exelon’s rights under the Exelon Agreements. If each of the Exelon
Consent and the consents and agreements described in the immediately preceding sentence has not been executed and delivered by all parties to it within 60 days after the filing of the application for the approval listed as item 1 on Section 1(b) of
the Seller’s Disclosure Schedule, the Seller may terminate this Agreement pursuant to Section 11.1(i) of this Agreement by providing written notice of termination to each Buyer; provided, however, that the Seller shall not be entitled to so
terminate this Agreement in the event the Seller has breached its obligations under Section 6.6 hereof, and any notice of termination delivered pursuant to this Section 6.2(a) shall include a certificate executed and delivered by the Seller to the
effect that the Seller has not breached its obligations under Section 6.6 hereof. 

  

	 	(b)	Unless such a filing is not required, as promptly as practicable after the date of this Agreement, each of the Parties will file any Notification and Report Forms and related
material that it may be required to file with the Federal Trade Commission and the Antitrust Division of the United States Department of Justice under the HSR Act, will use Commercially Reasonable Efforts to obtain an early termination of the
applicable waiting period and will make (and the Seller will cause the Company to make) any further filings that may be necessary, proper or advisable relating to the HSR Act. Each of the Parties will cooperate and coordinate with the other Party in
connection with such filings and actions. Each Party will bear its own costs of the preparation of any such filings, and Seller and Buyers each will pay one-half of the entire amount of the filing fee with respect to all filings made pursuant to the
HSR Act and Buyers will bear all costs associated with any experts or consultants reasonably necessary in connection with such filings. 

  

	 	(c)	As promptly as practicable after the date of this Agreement, each Buyer and the Seller will (and the Seller will cause the Company to) give any notices to, make any filings with,
and use Commercially Reasonable Efforts to obtain the Buyers’ Required Regulatory Approvals and the Seller’s Required Regulatory Approvals, as applicable, and any other authorizations, consents and approvals of any Governmental Authority
necessary in connection with the transactions contemplated by this Agreement. Each of the Parties will cooperate and coordinate with the other Party in connection with such filings and actions. The Parties will respond promptly to any requests for
additional information made by such Governmental Authority and will use Commercially Reasonable Efforts to cause all such consents and approvals to be obtained or waived at the earliest possible date after the date of filing. Each Party will bear
its own costs of the preparation of any such filing or notice, except that each Buyer will bear its respective percentage of all costs associated with any experts or consultants reasonably necessary for the preparation of any such

  

 32 

	 	 
filing or notice or reasonably necessary to obtain such consents and approvals as promptly as practicable. 

  

	 	(d)	In furtherance of Section 6.2(c) above, as promptly as practicable after the date of this Agreement, the Seller will (and the Seller will cause the Company to) make all filings
required to be made by it under the Federal Power Act, as amended. The Buyers will cooperate with the Seller in preparing such applications. Without limiting the generality of the foregoing, the Parties shall use Commercially Reasonable Efforts to
cause the application for the approval listed as item 1 on Section 1(b) of the Seller’s Disclosure Schedule to be filed by October 11, 2004. The Seller will be solely responsible for the cost of preparing and filing such applications, as well
as all petition(s) for rehearing and all reapplications. If any filing is rejected by the FERC, the Seller will petition the FERC for rehearing or permission to re-submit an application with the FERC. 

  

	 	(e)	The Seller, at its sole expense, will (i) use all Commercially Reasonable Efforts to cause the transactions contemplated by this Agreement to be permitted, as of the Closing, under
the Existing Debt Documents, including Section 5.02(e)(v) of the Common Terms Agreement and Section 9.08(a) of the Security and Intercreditor Agreement, and (ii) will timely seek and cause the Company timely to seek, and will use all Commercially
Reasonable Efforts to obtain, the releases described in Section 8.1(r). 

  

	 	6.3	Operation of Business. The Seller will not, without the consent of the Buyers (which will not be unreasonably withheld or delayed), cause or permit the Company to engage in
any practice, take any action or enter into any transaction outside the Ordinary Course of Business, except as expressly contemplated by this Agreement. Without limiting the foregoing, the Seller will not, without the consent of the Buyers (which
will not be unreasonably withheld or delayed), except as expressly contemplated by this Agreement, cause or permit the Company to do any of the following: 

  

	 	(a)	Sell, lease (as lessor), transfer or otherwise dispose of, any of the material assets of the Company, or any spare parts or other inventory, other than as used, consumed or replaced
in the Ordinary Course of Business; 

  

	 	(b)	Encumber, pledge, mortgage or suffer to be imposed on any of the material assets of the Company, or any spare parts or other inventory, any Encumbrances other than Permitted
Encumbrances; 

  

	 	(c)	Amend, terminate, allow to lapse or expire, fail to timely apply for renewal of, or otherwise modify in any respect any Material Agreement or any Permit or Environmental Permit or
as may be required in connection with transferring the rights or obligations under such Material Agreement, Permit or Environmental Permit to the Buyers pursuant to this Agreement; 

  

 33 

	 	(d)	Enter into commitments to make any Capital Expenditures; 

  

	 	(e)	Amend or otherwise change its charter, bylaws, member control agreement or equivalent organizational documents; 

  

	 	(f)	Issue, sell, pledge, dispose of, grant, encumber or authorize the issuance, sale, pledge, disposition, grant or encumbrance of, any membership interests, in the Company, or any
options, warrants, convertible securities or other rights of any kind to acquire any membership interests, or any other ownership interest (including without limitation any phantom interest) in the Company; 

  

	 	(g)	Acquire (including without limitation by merger, consolidation or acquisition of stock or assets) any interest in any other Person or any division thereof; incur any indebtedness
for borrowed money (other than from the Seller or its Affiliates and trade payable in the Ordinary Course of Business) or issue any debt securities or assume, guarantee or endorse, or otherwise as an accommodation become responsible for, the
obligations of any Person, or make any loans or advances; or enter into any transaction relating to the purchase of assets other than in the Ordinary Course of Business; 

  

	 	(h)	Enter into any new employment, consulting or severance agreement with any director, officer, employee or consultant of the Company, or establish, adopt, enter into or amend any
collective bargaining, bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the
benefit of any director, officer, employee or consultant, except pursuant to existing contractual arrangements or existing compensation plans; 

  

	 	(i)	Enter into any material amendment to or material modification of or terminate any Material Agreement; 

  

	 	(j)	Fail to maintain the Facility in accordance with Good Utility Practice, or modify the Facility in any material respect; or 

  

	 	(k)	(i) change any financial or Tax accounting methods, policies or practices of the Company or with respect to the assets or activities of the Company, except as required by a change
in GAAP or SEC rules, regulations or guidelines or applicable law, (ii) make, revoke, or amend any Tax election of the Company or with respect to the assets or activities of the Company, (iii) file any amended Tax Return of the Company or with
respect to the assets or activities of the Company, (iv) enter into any closing agreement affecting any Tax liability or refund of the Company or with respect to the assets or activities of the Company, (v) settle or compromise any Tax liability or
refund of the Company or with respect to the assets or activities 

  

 34 

	 	 
of the Company, or (vi) extend or waive the application of any statute of limitations regarding the assessment or collection of any Tax of the Company or
with respect to the assets or activities of the Company; or 

  

	 	(l)	Enter into any agreement, contract, commitment or arrangement to do any of the foregoing. 

  

	 	6.4	Full Access. 

  

	 	(a)	The Seller will (and the Seller will cause the Company to) permit the Buyers and their Representatives to have reasonable access during normal business hours with reasonable notice,
and in a manner so as not to interfere with the normal business operations of the Company, to all premises, properties, personnel, books, records (including Tax records), contracts and documents of or pertaining to the Company and the Facility,
which access will include the right to conduct environmental due diligence, except that the Buyers will not be entitled to conduct invasive testing, or sample or test surface waters, soil, sediments, groundwater, emissions or discharges with respect
to the Facility or the Site. Any information obtained by any Buyer or its Representatives under this Section 6.4 is subject to the Confidentiality Agreement. 

  

	 	(b)	Neither Buyer will, prior to the Closing Date, contact any customer, vendor, supplier or employee of, or any other Person having business dealings with, the Company with respect to
any aspect of the Facility or the transactions contemplated by this Agreement, without the consent of the Seller (not to be unreasonably withheld or delayed). 

  

	 	6.5	Notice of Developments. 

  

	 	(a)	Prior to the Closing, each Party will advise the others in writing with respect to any matter arising after the date of this Agreement of which that Party obtains Knowledge and
that, if existing or occurring on or prior to the date of this Agreement, would have been required to be set forth in the Buyers’ Disclosure Schedule or the Seller’s Disclosure Schedule, as applicable, or would constitute a breach of any
of its representations or warranties. 

  

	 	(b)	The Seller will, from time to time prior to the Closing, promptly supplement or amend the Seller’s Disclosure Schedule with respect to any matter that existed as of the date of
this Agreement and should have been set forth or described in the Seller’s Disclosure Schedule. No disclosure by the Seller pursuant to this Section 6.5(b), however, will be deemed to amend or supplement the Seller’s Disclosure Schedule or
to have qualified the representations and warranties contained in this Agreement, unless the Buyers expressly consent to such supplement in writing. 

  

 35 

	 	(c)	The Seller will, from time to time prior to the Closing, promptly supplement or amend the Seller’s Disclosure Schedule with respect to any matter arising after the date of this
Agreement, which, if existing as of the date of this Agreement, would have been required to be set forth or described in the Seller’s Disclosure Schedule in order to make any representation or warranty set forth in this Agreement true and
correct as of such date. If the matters disclosed on such supplemented or amended Seller’s Disclosure Schedule have or could reasonably be expected to have a Material Adverse Effect, then Buyer may, in accordance with Section 11.1(b), terminate
this Agreement, within 10 calendar days after receipt of the supplemented or amended Seller’s Disclosure Schedule, by written notice thereof to Seller; provided, however, that if Buyer does not exercise such right to terminate this Agreement
within such 10 calendar day period, then (i) Buyer will be deemed to have forever waived any right to terminate this Agreement based upon such supplement or amendment, (ii) Buyer will be deemed to have accepted such supplement or amendment, and
(iii) such supplement or amendment will be deemed to supplement or amend Seller’s Disclosure Schedules. If Buyer does elect to terminate this Agreement pursuant to Section 11.1(b) then Seller will have a 30 day period to cure the event causing
the amended or supplemented Seller’s Disclosure Schedule. 

  

	 	(d)	Each Buyer will, from time to time prior to the Closing, promptly supplement or amend the Buyers’ Disclosure Schedule with respect to any matter (i) that existed as of the date
of this Agreement and should have been set forth or described in the Buyers’ Disclosure Schedule, or (ii) arising after the date of this Agreement, which, if existing as of the date of this Agreement, would have been required to be set forth or
described in the Buyers’ Disclosure Schedule in order to make any representation or warranty set forth in this Agreement true and correct as of such date. No disclosure by any Buyer pursuant to this Section 6.5(d), however, will be deemed to
amend or supplement the Buyers’ Disclosure Schedule or to have qualified the representations and warranties contained in this Agreement, unless the Seller expressly consents to such supplement in writing. 

  

	 	6.6	Exclusivity. The Seller will not, and the Seller will not cause or permit the Company to, solicit, initiate or encourage the submission of, or participate in negotiations or
provide information in connection with, any proposal or offer from any Person relating to the acquisition of all or substantially all of the membership interests, partnership interests or capital stock or other voting securities, or any substantial
portion of the assets, of the Company (including any acquisition structured as a merger, consolidation or share exchange). 

  

	 	6.7	 Guaranties of the Seller. The Buyer will use Commercially Reasonable Efforts to arrange that the Seller and its Affiliates (other than the Company) be
released, as of the Closing, from their obligations to provide guaranties, letters of credit, 

  

 36 

	 	 
bonds, credit support or other security in connection with the Company or the Facility set forth in Section 6.7 of the Seller’s Disclosure Schedule.

  

	 	6.8	Intercompany Obligations and Agreements. Prior to the Closing the Seller will cause the following to occur: 

  

	 	(a)	the payment, satisfaction and discharge of all receivables and payables outstanding between the Company, on the one hand, and any of the Seller or its Affiliates (other than the
Company), on the other hand; 

  

	 	(b)	the termination of all of the intercompany contracts and agreements identified in Section 4.19 of the Seller’s Disclosure Schedule; 

  

	 	(c)	subject to receipt of Seller’s Required Consents where applicable, the transfer to the Company of all real property and other assets of the Seller and its Affiliates that the
Seller’s Disclosure Schedule states are currently owned by the Seller or any of its Affiliates but will be transferred to the Company at or prior to the Closing; and 

  

	 	(d)	the full release, termination and discharge of the Encumbrances and other obligations of the Company that the Seller’s Disclosure Schedule states will be released, terminated
or discharged at or prior to the Closing. 

  

	 	6.9	Risk of Loss. 

  

	 	(a)	Between the date of this Agreement and the Closing Date, all risk of loss or damage to the assets and properties of the Company will be borne by the Seller, except that loss or
damage caused by the acts or omissions of a Buyer or its Representatives will be the responsibility of that Buyer. 

  

	 	(b)	If, after the date of this Agreement and prior to the Closing, all or any portion of the assets and properties of the Company (i) is condemned or taken by eminent domain or is the
subject of a pending or threatened condemnation or taking that has not been consummated, or (ii) is materially damaged or destroyed by fire or other casualty, then the Seller will notify the Buyers promptly in writing of such fact. If that
condemnation, taking, damage, or destruction results in the failure of any condition in Section 8.1 to be met, then Buyers may terminate this Agreement pursuant to Section 11.1(h). If Buyers do not so terminate this Agreement, the Seller shall
procure that all proceeds of insurance, condemnation awards and similar amounts are paid to the Company and, if paid before the Closing, remain with the Company up to and including the time of the Closing. 

  

	 	6.10	 Employee Matters. The Seller will, or as appropriate will cause the Company to, perform such acts, execute such documents and provide such notices as are
necessary (a) to terminate the Employees’ active participation and, as applicable, the Company’s participation as a participating employer, in the Allegheny 

  

 37 

	 	 
Employee Benefit Plans as of the Closing Date and (b) to cause the Company to have no liability with respect to the Allegheny Employee Benefit Plans after
the Closing (whether for contributions, the payment of benefits or otherwise). The Parties also shall take the actions required by Section 7.6 to occur before the Closing. 

  

	7.	Post-Closing Covenants. The Parties agree as follows with respect to the period following the Closing. 

  

	 	7.1	General. If after the Closing any further action is necessary to carry out the purposes of this Agreement, the Transaction Documents and the contemplated transactions, each
of the Parties will take such further action (including the execution and delivery of such further instruments and documents) as any other Party reasonably may request, and the requesting Party will pay all reasonable out-of-pocket costs and
expenses of the requested Party (unless the requesting Party is entitled to indemnification for the requested action under Section 9 of this Agreement). No Party, however, will be required to take any action that, in the opinion of counsel, could
constitute a violation of any Law. 

  

	 	7.2	Transition. The Seller and its Affiliates will not take any action that is designed or intended to have the effect of discouraging any lessor, licensor, customer, supplier or
other business associate of the Company from maintaining the same business relationships with the Company after the Closing as it maintained with the Company prior to the Closing. 

  

	 	7.3	Access to Information. 

  

	 	(a)	After the Closing, the Buyers will afford to the Seller and its Representatives access during normal business hours with reasonable notice to the books, records and personnel of the
Company and the Facility, and to such other information, and will furnish such cooperation relating to the Company, as the Seller reasonably requests for financial, environmental and regulatory reporting and accounting matters, the calculation of
Net Working Capital, the preparation and filing of any Tax Returns, the defense of Tax and indemnity claims, and any other purposes related to this Agreement, the Transaction Documents or the contemplated transactions. In addition, the Seller will
afford each Buyer and its Representatives similar access to any books, records or files retained by the Seller relating to the business of the Company. 

  

	 	(b)	 Each Buyer and Seller will hold, and will use all commercially reasonable efforts to cause its respective Affiliates and its respective officers, employees,
directors, counsel, accountants, financial advisors and other representatives to hold, in strict confidence from any other Person all information and documents obtained pursuant to Section 7.3(a), provided that nothing in this sentence shall limit
the disclosure by any party of any information (a) to the extent required by statute, rule, regulation or judicial 

  

 38 

	 	 
process (provided that if permitted by law, each party agrees to give the other parties prior notice of such disclosure in sufficient time to permit any of
such other parties to obtain a protective Order should it so determine), (b) in connection with any litigation to which such party is a party (provided that such party has taken all reasonable actions to limit the scope and degree of disclosure in
any such litigation), (c) in an action or proceeding brought by a party in pursuit of its rights or in the exercise of its remedies under this Agreement, (d) to the extent that such documents or information can be shown to have come within the
public domain through no action or omission of the disclosing party or its Affiliates and (e) to its Affiliates (but the party shall be liable for any breach by its Affiliates). 

  

	 	7.4	Transfer Taxes. The Buyers on the one hand and the Seller on the other each will pay 50% of all sales, use, transfer, real property transfer, recording, stock transfer and
other similar Taxes and fees, if any, arising out of or in connection with the sale of the Interests pursuant to this Agreement, and will indemnify, defend and hold harmless the other and its Representatives with respect to its share of any such
Taxes. The Buyers and the Seller shall cooperate in the preparation, execution and filing of all necessary documentation and Tax Returns with respect to such Taxes. 

  

	 	7.5	Securities Law Covenant. No Buyer will transfer or otherwise dispose of any of the Interests, or any interest in the Interests, in such manner as to cause the Seller or its
Affiliates to be in violation of the registration requirements of the Securities Act, or applicable federal or state securities or blue sky Laws. 

  

	 	7.6	Employment Matters. 

  

	 	(a)	 Not later than 14 days before the Closing Date, the Buyers shall cause the New Operator to offer employment to each Employee, effective immediately following the
Closing provided that the Closing occurs, at an initial rate of base pay not less than that in effect with respect to the Employee immediately before the Closing and initially at the same location and in a capacity substantially equivalent to the
capacity of the Employee immediately before the Closing. The Seller shall, and shall cause the Company and their Affiliates to cooperate with the reasonable requests of Buyers and the New Operator for access to the Employees before Closing for
purposes of making such employment offers. Any Employee who accepts such offer of employment shall be referred to herein as a “Transferred Employee.” The Buyers shall cause the Company to terminate, effectively immediately following
the Closing, the employment of all Employees and to pay to each Employee who is not a Transferred Employee the cash severance that the Employee would have received from the Seller or its Affiliates had such termination of employment occurred
immediately before the Closing. The Buyers also shall, or shall cause the Company to, notify the Seller, on or before the 

  

 39 

	 	 
third Business Day following the Closing Date, of the names of the Employees (if any) who are not Transferred Employees. Except as otherwise required by
applicable Law, the New Operator shall not be required to continue the employment of any Transferred Employee after the Closing or, except as otherwise provided in this Section 7.6, to continue such employment on any particular terms and conditions.

  

	 	(b)	The Buyers shall procure that the New Operator agrees to (i) provide each Transferred Employee with employee benefits under plans maintained by New Operator (“Post-Closing
Benefit Plans”) that are no less favorable in the aggregate than the benefits provided by the New Operator from time to time to its other similarly situated employees, (ii) upon receiving proof of prior creditable coverage, waive all health
care plan pre-existing condition requirements, actively at work exclusions, and waiting periods applicable to the Transferred Employees under the Post-Closing Benefit Plans (except to the extent that the requirements, exclusions, or periods applied
with respect to the Transferred Employees immediately before the Closing), (iii) credit under the Post-Closing Benefit Plans all health care expenses incurred by the Transferred Employees under the Allegheny Employee Benefit Plans during the year in
which the Closing Date occurs and prior to the Closing Date for the purposes of satisfying annual and lifetime deductibles and out of pocket limits, (iv) credit each Transferred Employee with service before the Closing Date for all purposes under
the Post-Closing Benefit Plans (other than for purposes of benefit accrual under any defined benefit pension plan) to the extent that such service was credited under the Allegheny Employee Benefit Plans immediately before the Closing, (v) fulfill
all obligations for accrued vacation and sick leave earned or accrued by the Transferred Employees as of the Closing Date, including all unused earned, banked and accrued vacation and sick leave that Transferred Employees have earned as of the
Closing Date, and (vi) cause the trustee of any Post-Closing Benefit Plan that is a defined contribution plan in which a Transferred Employee participates, as directed by the Employee, to accept as a contribution any distribution to the Transferred
Employee from the Allegheny Energy Employee Stock Ownership and Savings Plan that constitutes an “eligible rollover distribution” within the meaning of section 401(a)(31)(D) of the Code and complies with the provisions of both the
Allegheny Energy Employee Stock Ownership and Savings Plan and the applicable receiving Post-Closing Benefit Plan; provided, however, that such Post-Closing Benefit Plan shall not be required to accept any distribution from the Allegheny Energy
Employee Stock Ownership and Savings Plan in the form of securities of Seller or its Affiliates. 

  

	 	(c)	 The Seller shall, or shall cause an appropriate Affiliate of the Seller to, be responsible for complying with the requirements of Part 6 of Subtitle B of Title I of
ERISA, section 4980B of the Code, and any similar applicable state law, including the notice requirements thereof, with respect to any 

  

 40 

	 	 
Employee (or any person who is a qualified beneficiary in respect of an Employee) who has a “qualifying event” (within the meaning of the foregoing
statutes) that occurs on or before the Closing Date. 

  

	 	(d)	The Buyers acknowledge that the Company does not own any pension assets and that no pension assets of the Seller, if any, will be transferred to the Company or the Buyers.

  

	 	(e)	Nothing contained in this Section 7.6, whether express or implied, is intended to confer upon any Employee or former employee of the Company any right or remedy, including without
limitation any right as a third-party beneficiary. 

  

	 	7.7	Non-Use of Allegheny Marks. 

  

	 	(a)	The Allegheny Marks appear on some of the properties and assets of the Company, including on signage at the Facility, and on supplies, materials, stationery, brochures, advertising
materials, manuals and similar consumable items of the Company. The Buyers acknowledge and agree that they do not have and, upon consummation of the transactions contemplated by this Agreement, will not have, any right, title, interest, license or
other right to use the Allegheny Marks. 

  

	 	(b)	The Buyers will (i) within 60 days after the Closing Date, remove the Allegheny Marks from, or cover or conceal the Allegheny Marks on, the properties and assets of the Company,
including signage at the Facility, and provide written verification thereof to the Seller promptly after completing such removal, (ii) within 14 days after the Closing Date, return or destroy (with proof of destruction) all other assets of the
Company that contain any Allegheny Marks that are not removable, and (iii) within 30 days after the Closing Date, file amendments to the certificate, charter, bylaws or other governing documents, or submit notifications or amendments with respect to
any Permits, of the Company that use any Allegheny Marks. 

  

	 	(c)	Each Buyer agrees never to challenge Parent’s or its Affiliates’ ownership of the Allegheny Marks or any application for registration thereof or any registration thereof
or any rights of the Seller or its Affiliates therein as a result, directly or indirectly, of its ownership of the Company. 

  

	 	(d)	No Buyer will conduct any business or offer any goods or services under any Allegheny Marks, except as expressly permitted during the transaction period pursuant to Section 7.7(b)
above or as permitted pursuant to Parent’s written consent. 

  

	 	(e)	 No Buyer will send, or cause to be sent, any correspondence or other materials to any Person on any stationery that contains any Allegheny Marks or otherwise
operate the Company in any manner that would or 

  

 41 

	 	 
might reasonably be expected to confuse any Person into believing that such Buyer has any right, title, interest or license to use any Allegheny Marks.

  

	8.	Conditions to Obligation to Close. 

  

	 	8.1	Conditions to Obligation of the Buyers. The obligation of each Buyer to consummate the transactions to be performed by it in connection with the Closing is subject to
satisfaction of the following conditions: 

  

	 	(a)	The representations and warranties of the Seller set forth in Sections 3 and 4 of this Agreement will be true and correct in all material respects (except that those representations
and warranties qualified by reference to Material Adverse Effect shall be true and correct in all respects) at and as of the Closing Date; 

  

	 	(b)	The Seller will have performed and complied with all of its covenants contained in this Agreement in all material respects through the Closing; 

  

	 	(c)	There will not be any injunction, judgment, Order or decree of any Governmental Authority in effect preventing the consummation of any of the transactions contemplated by this
Agreement; 

  

	 	(d)	The Seller will have executed and delivered to the Buyers a certificate to the effect that each of the conditions specified in Section 8.1(a) to (c) above is satisfied in all
respects; 

  

	 	(e)	All applicable waiting periods (and any extensions) under the HSR Act will have expired or otherwise been terminated; 

  

	 	(f)	The Buyers will have procured all of the Buyers’ Required Consents, in form and substance reasonably satisfactory to that Buyer, the Exelon Consent shall have been executed and
delivered by all parties to it, and Exelon shall have delivered such consents and agreements with Persons to which the Buyers or the Company pledge, assign, or grants a security interest in its right, title, and interest in and to the Exelon
Agreements (as defined in the Exelon Consent) in customary form that such Persons reasonably may request in connection with any financing that will close at or promptly after the Closing and that do not adversely affect Exelon’s rights under
the Exelon Agreements; 

  

	 	(g)	The Buyers will have procured all of the Buyers’ Required Regulatory Approvals, in form and substance reasonably satisfactory to that Buyer; 

  

	 	(h)	There will not have occurred any Material Adverse Effect between the date of this Agreement and the Closing; 

  

 42 

	 	(i)	The Seller will have delivered a certificate of incumbency, dated as of the Closing Date, as to the officers and other personnel of the Seller executing this Agreement and any
certificate, instrument or document to be delivered by the Seller at the Closing; 

  

	 	(j)	The Seller will have delivered a certified copy of resolutions authorizing the execution and delivery of this Agreement and the consummation of the transactions contemplated by this
Agreement; 

  

	 	(k)	The Seller will have executed and delivered to each of the Buyers a non-foreign affidavit as described in Section 1445(b)(2) of the Code and the regulations thereunder, in form and
substance reasonably satisfactory to the Buyers; 

  

	 	(l)	The Seller will have delivered to the Buyers written resignations of all of the incumbent officers, directors or individuals holding similar positions of the Company;

  

	 	(m)	The Seller shall have provided to the Buyers, at its sole cost and expense; the Updated Title Policy and (ii) an update and recertification of the survey of the Owned Real Property
dated February 27, 2003 by Bock & Clark Corp. to a date not more than 30 days prior to the Closing Date with such certification addressed to the Company, Chicago Title Insurance Company and any lenders or other parties as the Buyers may
designate by notice to the Seller no later than five days prior to the Closing; 

  

	 	(n)	The Seller will have delivered to the Buyers the documents and agreements contemplated by this Agreement to be delivered by the Seller at the Closing; 

  

	 	(o)	The Seller shall have delivered an opinion of Gray, Plant, Mooty, Mooty & Bennett, P.A., and Winston & Strawn LLP to the effect of Sections 3.1, 3.2, 3.3, 3.4, 4.1, 4.2,
4.3, 4.4 and 4.20, subject to customary assumptions, officer’s certificates and exceptions; 

  

	 	(p)	Exelon shall have a credit rating of at least BBB from Standard & Poor’s Rating Service, a division of The McGraw-Hill Companies, Inc., and at least Baa2 from Moody’s
Investors Service, Inc.; 

  

	 	(q)	The Seller shall have delivered evidence of compliance with Section 6.8 reasonably satisfactory in form and substance to that Buyer; 

  

	 	(r)	 The Seller shall have delivered evidence, reasonably satisfactory in form and substance to that Buyer, of the full and irrevocable release of the Company from any
and all obligations under the Existing Debt Documents and of the Interests, the Site, the Facility, the Energy Services Conversion Agreement and all other assets of the Company from all Encumbrances arising under or relating to the Existing Debt
Documents, including the 

  

 43 

	 	 
releases described in Section 9.08(a) of the Security and Intercreditor Agreement; and 

  

	 	(s)	All actions to be taken by the Seller in connection with consummation of the contemplated transactions and all certificates, instruments and other documents required to effect these
transactions will be reasonably satisfactory in form and substance to that Buyer. 

  

	 	Each	Buyer may waive any condition specified in this Section 8.1 by providing a written waiver at or prior to the Closing. 

  

	 	8.2	Conditions to Obligation of the Seller. The obligation of the Seller to consummate the transactions to be performed by it in connection with the Closing is subject to
satisfaction of the following conditions: 

  

	 	(a)	The representations and warranties of the Buyers set forth in Section 5 of this Agreement will be true and correct in all respects at and as of the Closing Date;

  

	 	(b)	Each Buyer will have performed and complied with all of its covenants contained in this Agreement in all material respects through the Closing; 

  

	 	(c)	There will not be any injunction, judgment, Order or decree of any Governmental Authority in effect preventing the consummation of any of the transactions contemplated by this
Agreement; 

  

	 	(d)	Each Buyer will have delivered to the Seller a certificate to the effect that each of the conditions specified in Section 8.2(a) through (c) above is satisfied in all respects to
the extent applicable to that Buyer; 

  

	 	(e)	All applicable waiting periods (and any extensions) under the HSR Act will have expired or otherwise been terminated; 

  

	 	(f)	Exelon shall have executed and delivered to the Seller and the Company the Exelon Consent, and the Seller will have made or obtained, as applicable, all of the other Seller’s
Required Consents, in form and substance reasonably satisfactory to the Seller; 

  

	 	(g)	The Seller will have procured all of the Seller’s Required Regulatory Approvals, in form and substance reasonably satisfactory to the Seller; 

  

	 	(h)	There will not have occurred any change or effect since the date of this Agreement that is reasonably likely to be materially adverse to the business, operation, properties,
financial condition, assets or Liabilities (including contingent Liabilities) of the Buyers; 

  

 44 

	 	(i)	The Seller will have been unconditionally released from its obligation to provide the guaranties or other obligations pursuant to Section 6.7 of this Agreement;

  

	 	(j)	Each Buyer will have delivered a certificate of incumbency, dated as of the Closing Date, as to the officers and other personnel of such Buyer executing this Agreement and any
certificate, instrument or document to be delivered by such Buyer at the Closing; 

  

	 	(k)	Each Buyer will have delivered a certified copy of corporate resolutions authorizing the execution and delivery of this Agreement and the consummation of the transactions
contemplated by this Agreement; 

  

	 	(l)	Each Buyer will have delivered to the Seller the documents and agreements contemplated by this Agreement to be delivered by that Buyer at the Closing; and 

 

	 	(n)	All actions to be taken by the Buyers in connection with consummation of the contemplated transactions and all certificates, instruments and other documents required to effect the
contemplated transactions will be reasonably satisfactory in form and substance to the Seller. 

  
 The Seller may waive any condition specified in this Section 8.2 by providing a written waiver at or prior to the Closing. 
  

	9.	Remedies for Breaches of this Agreement. 

  

	 	9.1	Survival of Representations, Warranties and Covenants. 

  

	 	(a)	The representations and warranties of the Seller contained in (a) Sections 3.1 through 3.6, 4.1, 4.3 through 4.6, 4.10 and 4.18 of this Agreement will survive the Closing and will
continue in full force and effect for a period of five years after the Closing, (b) Sections 4.8, 4.9, 4.11 through 4.17 and 4.19 through 4.27 of this Agreement will survive the Closing and will continue in full force and effect until the date
occurring 18 months after the Closing Date, (c) Section 4.7 will survive the Closing and will continue in full force and effect until 120 days following the expiration of the applicable statute of limitations (giving effect to any extensions
thereof), and (d) Section 4.2, which will survive the Closing and will continue in full force and effect indefinitely. The representations and warranties of each Buyer contained in (a) Sections 5.1 through 5.5 of this Agreement will survive the
Closing and will continue in full force and effect for a period of five years after the Closing and (b) Sections 5.6 through 5.9 of this Agreement will survive the Closing and will continue in full force and effect until the date occurring 18 months
after the Closing Date. 

  

 45 

	 	(b)	The covenants of the Parties contained in this Agreement will survive the Closing in accordance with their respective terms. 

  

	 	9.2	Indemnification Provisions for Benefit of the Buyers. In the event the Seller breaches (or in the event any third party alleges facts that, if true, would mean the Seller has
breached) any of its representations, warranties or covenants contained in this Agreement (other than Section 4.7, which is addressed in Section 10.3), or any statement in the certificate delivered under Section 8.1(d) is inaccurate, provided that a
Buyer makes a written claim for indemnification against the Seller with respect to such breach (or alleged breach) within the applicable survival period, and subject to the limitations set forth in Section 9.5 of this Agreement, then the Seller is
obligated to indemnify and hold harmless each Buyer and its respective Representatives (each, a “Buyers’ Indemnitee”) from and against the entirety of any Adverse Consequences any Buyers’ Indemnitee may suffer through and
after the date of the claim for indemnification resulting from, arising out of, relating to, in the nature of, or caused by such breach (or alleged breach). 

  

	 	9.3	Indemnification Provisions for Benefit of the Seller. In the event a Buyer breaches (or in the event any third party alleges facts that, if true, would mean such Buyer has
breached) any of its representations, warranties or covenants contained in this Agreement, or any statement in the certificate delivered by that Buyer under Section 8.2(d) is inaccurate, provided that a Seller makes a written claim for
indemnification against that Buyer with respect to such breach (or alleged breach) within such applicable survival period, then that Buyer is obligated to indemnify and hold harmless each Seller and its respective Representatives (each, a
“Seller’s Indemnitee”) from and against the entirety of any Adverse Consequences any Seller’s Indemnitee may suffer through and after the date of the claim for indemnification resulting from, arising out of, relating to,
in the nature of, or caused by such breach (or alleged breach). Nothing in this Agreement shall require a Buyer to indemnify Seller in respect of any breach by the other Buyer. 

  

	 	9.4	Matters Involving Third Parties. 

  

	 	(a)	If any third party notifies any Party (the “Indemnified Party”) with respect to any matter (a “Third Party Claim”) that may give rise to a claim
for indemnification against any other Party (the “Indemnifying Party”) under this Section 9, then the Indemnified Party will promptly notify each Indemnifying Party in writing. Delay on the part of the Indemnified Party in notifying
any Indemnifying Party will not relieve the Indemnifying Party from its obligation unless (and then solely to the extent) the Indemnifying Party is actually prejudiced. 

  

	 	(b)	 Any Indemnifying Party will have the right to defend the Indemnified Party against the Third Party Claim with counsel of its choice reasonably satisfactory to the
Indemnified Party so long as (i) the Indemnifying Party notifies the Indemnified Party in writing within 15 days after the 

  

 46 

	 	 
Indemnified Party has given notice of the Third Party Claim that the Indemnifying Party will indemnify the Indemnified Party from and against the entirety of
any Adverse Consequences the Indemnified Party may suffer resulting from, arising out of, relating to, in the nature of or caused by the Third Party Claim, (ii) the Indemnifying Party provides the Indemnified Party with evidence reasonably
acceptable to the Indemnified Party that the Indemnifying Party will have the financial resources to defend against the Third Party Claim and fulfill its indemnification obligations, (iii) the Third Party Claim involves only money damages and does
not seek an injunction or other equitable relief, (iv) settlement of, or an adverse judgment with respect to, the Third Party Claim is not, in the good faith judgment of the Indemnified Party, likely to establish a precedential custom or practice
materially adverse to the continuing business interests of the Indemnified Party, and (v) the Indemnifying Party conducts the defense of the Third Party Claim actively and diligently. 

  

	 	(c)	So long as the Indemnifying Party is conducting the defense of the Third Party Claim in accordance with Section 9.4(b) of this Agreement, (i) the Indemnified Party may retain
separate co-counsel at its sole cost and expense and participate in the defense of the Third Party Claim, (ii) the Indemnified Party will not consent to the entry of any judgment or enter into any settlement with respect to the Third Party Claim
without the prior written consent of the Indemnifying Party (which consent may not be withheld, conditioned or delayed unreasonably), and (iii) the Indemnifying Party will not consent to the entry of any judgment or enter into any settlement with
respect to the Third Party Claim without the prior written consent of the Indemnified Party (which consent may not be withheld, conditioned or delayed unreasonably). 

  

	 	(d)	If any of the conditions in Section 9.4(b) of this Agreement is not or is no longer satisfied, (i) the Indemnified Party may defend against, and consent to the entry of any judgment
or enter into any settlement with respect to, the Third Party Claim in any manner it reasonably may deem appropriate (and the Indemnified Party need not consult with, or obtain any consent from, any Indemnifying Party), (ii) the Indemnifying Parties
will reimburse the Indemnified Party promptly and periodically for the costs of defending against the Third Party Claim (including reasonable attorneys’ fees and expenses), and (iii) the Indemnifying Parties will remain responsible for any
Adverse Consequences the Indemnified Party may suffer resulting from, arising out of, relating to, in the nature of, or caused by the Third Party Claim to the fullest extent provided in this Section 9. 

  

	 	9.5	Limitations on Seller’s Indemnification Obligations. 

  

	 	(a)	 Subject to Section 9.5(c), the Seller will have no obligation to indemnify any Buyers’ Indemnitee from and against any Adverse Consequences resulting from,
arising out of, relating to, in the nature of or caused by the 

  

 47 

	 	 
breach or alleged breach by the Seller of its representations or warranties contained in this Agreement or any inaccuracy in its certificate delivered under
Section 8.1(d) until the Buyers’ Indemnitees have suffered Adverse Consequences by reason of all such breaches (or alleged breaches) in excess of a $1,000,000 aggregate deductible, at which point the Seller will be obligated only to indemnify
the Buyers’ Indemnitees from and against such further Adverse Consequences. 

  

	 	(b)	Subject to Section 9.5(c), the Seller will not be obligated to pay more than $86,000,000 in the aggregate on account of its obligation to indemnify the Buyers’ Indemnitees from
and against all Adverse Consequences resulting from, arising out of, relating to, in the nature of or caused by the breach or alleged breach by the Seller of its representations, warranties or covenants contained in this Agreement or any inaccuracy
in its certificate delivered under Section 8.1(d), including with respect to the matters set forth in Section 9.6(a) of this Agreement. 

  

	 	(c)	The provisions of Sections 9.5(a) and (b) shall not apply to any breaches of representations and warranties in Sections 3.1 through 3.5, 4.1 through 4.5, 4.7, 4.18, and 5.1 through
5.8; provided, however, the Seller will not be obligated to pay more than the Purchase Price in the aggregate on account of its obligation to indemnify the Buyers’ Indemnitees from and against all Adverse Consequences resulting from, arising
out of, relating to, in the nature of or caused by the breach or alleged breach by the Seller of such representations or warranties or any inaccuracy in its certificate delivered under Section 8.1(d). 

  

	 	9.6	Environmental Indemnification. 

  

	 	(a)	The Seller is obligated to indemnify and hold harmless the Buyers’ Indemnitees from and against the entirety of any Adverse Consequences any Buyers’ Indemnitee may suffer
resulting from, arising out of, relating to, in the nature of, or caused by Third Party Claims for: 

  

	 	(i)	Any Liability under or related to Environmental Laws arising as a result of or in connection with loss of life, injury to persons or property, or damage to natural resources
(whether such loss, injury or damage arose or was made manifest before or after the Closing Date) caused (or allegedly caused) by the disposal of Hazardous Substances at an Off-Site Location in connection with the ownership or operation of the
Facility prior to the Closing Date; 

  

	 	(ii)	 Any Liability under or related to Environmental Laws arising as a result of or in connection with a Response Action (whether such Response Action commenced before
or after the Closing Date) for Hazardous Substances that are disposed at any Off-Site Location in 

  

 48 

	 	 
connection with the ownership or operation of the Facility prior to the Closing Date; or 

  

	 	(iii)	Third Party Claims by a Governmental Authority or other Person relating to the storage, transportation, treatment, disposal, discharge, recycling or Release of any Hazardous
Substances at any Off-Site Location, including, without limitation, former properties owned or operated by the Company, prior to the Closing Date, or the arrangement by the Company for any storage, transportation, treatment, disposal, discharge,
recycling or Release of any such Hazardous Substances at any Off-Site Location, including, without limitation, former properties owned or operated by the Company, prior to the Closing Date. 

  

	 	(b)	Each Buyer, for itself and on behalf of its Representatives, hereby irrevocably releases and forever discharges the Seller’s Indemnitees from any and all Adverse Consequences
of any kind or character, whether known or unknown, contingent or accrued, arising under or relating to Environmental Laws, including Environmental Laws enacted or amended after the Closing Date, or relating to any claim in respect of any
Environmental Condition or Hazardous Substance, with respect to any of the Company, the Facility (other than as provided in Sections 9.2 and 9.6(a) of this Agreement) (collectively, “Environmental Claims”). 

 

	 	9.7	Employment Indemnification. The Buyers shall cause the Company to indemnify and hold harmless the Seller’s Indemnitees from and against the entirety of any Adverse
Consequences any Seller’s Indemnitee may suffer through and after the date of the claim for indemnification resulting from, arising out of, relating to, in the nature of, or caused by (a) any Liability related to all unemployment fund
contributions concerning the Employees with respect to periods after the Closing Date; or (b) any Liability relating to the Employees arising out of or attributable to acts or omissions of the Company or any Buyer occurring after the Closing Date,
including without limitation all claims asserted under the Fair Labor Standards Act, the Family and Medical Leave Act, Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, the Age Discrimination in Employment Act, the
Worker Adjustment and Retraining Notification Act, the National Labor Relations Act, ERISA, the Occupational Health and Safety Act, or any other federal, state or local discrimination, civil rights, health and safety, wage and hour or worker’s
compensation laws, or the common law doctrines of breach of contract, breach of covenant of good faith and fair dealing, promissory estoppel, violation of public policy, fraud or misrepresentation, defamation, intentional or negligent infliction of
emotional distress, negligence, wrongful termination of employment, or any other employment-related doctrines under the common law of any state. 

  

 49 

	 	9.8	Other Indemnification Provisions. 

  

	 	(a)	The Parties will make appropriate adjustments for Tax benefits, Tax burdens, insurance coverage and third-party indemnification rights in determining Adverse Consequences for
purposes of this Section 9. All indemnification payments under this Agreement will, to the maximum extent permitted by Law, be treated by the Parties as adjustments to the Purchase Price. 

  

	 	(b)	The Seller’s Indemnitees and the Buyers’ Indemnitees, as appropriate, will use Commercially Reasonable Efforts to mitigate all Adverse Consequences relating to claims for
indemnification pursuant to this Section 9, including availing itself of any defenses, limitations, rights of contribution, claims against third parties and other rights at law or equity. For purposes of this Section 9.7(b), Commercially Reasonable
Efforts will include the reasonable expenditure of money to mitigate or otherwise reduce or eliminate any loss or expenses for which indemnification would otherwise be due (which reasonable expenditures will be included as Adverse Consequences
suffered by the Party incurring such expenditures). 

  

	 	9.9	Exclusive Remedy. EXCEPT AS PROVIDED IN SECTION 12.14 OF THIS
AGREEMENT, OR IN THE CASE OF FRAUD, THE RIGHT OF THE PARTIES
AND THEIR RESPECTIVE REPRESENTATIVES TO ASSERT INDEMNIFICATION CLAIMS AND RECEIVE
INDEMNITY PAYMENTS UNDER THIS AGREEMENT IS THE SOLE AND EXCLUSIVE RIGHT
AND REMEDY EXERCISABLE BY THE PARTIES AND THEIR RESPECTIVE REPRESENTATIVES WITH
RESPECT TO ANY ADVERSE CONSEQUENCES ARISING OUT OF ANY BREACH BY ANY
PARTY OF ANY REPRESENTATION, WARRANTY, COVENANT OR AGREEMENT OF SUCH PARTY
SET FORTH IN THIS AGREEMENT OR OTHERWISE RELATING TO THIS AGREEMENT
AND THE CONTEMPLATED TRANSACTIONS. NO PARTY OR THEIR RESPECTIVE REPRESENTATIVES WILL
HAVE ANY OTHER REMEDY (STATUTORY, EQUITABLE, COMMON LAW OR OTHERWISE) AGAINST
ANY OTHER PARTY WITH RESPECT TO SUCH MATTERS, AND ALL SUCH OTHER
REMEDIES ARE HEREBY WAIVED. WITHOUT LIMITING THE FOREGOING, EACH OF THE
PARTIES ACKNOWLEDGES AND AGREES THAT NEITHER IT NOR ITS REPRESENTATIVES WILL
HAVE ANY REMEDY AFTER THE CLOSING FOR ANY BREACH OF THE
REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS AGREEMENT, EXCEPT AS EXPRESSLY
PROVIDED IN SECTION 9 OF THIS AGREEMENT OR IN THE CASE OF FRAUD.

  

	10.	Tax Matters. The following provisions will govern the allocation of responsibility as among the Buyers and the Seller for certain Tax matters following the Closing
Date: 

  

	 	10.1	 Tax Periods Ending on or Before the Closing Date. The Seller will prepare or cause to be prepared and file or cause to be filed when due all Tax Returns of
the Company or with respect to the assets or activities of the Company for all periods ending on or prior to the Closing Date that are filed after the Closing Date and will remit all Taxes shown due on such Tax Returns to the extent such Tax
liability is not included as a Liability in the determination of Net Working Capital under Section 

  

 50 

	 	 
2.3. All such Tax Returns shall be prepared in a manner consistent with past practice. 

  

	 	10.2	Straddle Periods . The Buyers will prepare or cause to be prepared and file or cause to be filed when due any Tax Returns of the Company or with respect to the assets or
activities of the Company for Straddle Periods and will remit all Taxes shown due on such Tax Returns. The Buyers will permit the Seller to review and comment on each such Tax Return described in the preceding sentence prior to filing and will make
such revisions to such Tax Returns unless the Buyers reasonably determine that a proposed revision is not appropriate. The Seller will pay to the Buyers no later than two days prior to the date on which the Buyers pay the Taxes shown due on the Tax
Returns an amount equal to the portion of such Taxes for which the Seller is liable pursuant to this Section 10 to the extent such Tax Liability is not included as a Liability in the determination of Net Working Capital under Section 2.3. To the
extent permitted or required by law or administrative practice, the taxable year of the Company which includes the Closing Date shall be treated as closing on (and including) the Closing Date. Where it is necessary for purposes of this Section 10 to
apportion between the Seller and the Buyers the Taxes of the Company or with respect to the assets or activities of the Company for a Straddle Period (which is not treated under the immediately preceding sentence as closing on the Closing Date),
such liability shall be apportioned between the period deemed to end at the close of the Closing Date, and the period deemed to begin at the beginning of the day following the Closing Date on the basis of an interim closing of the books, except that
in the case of any Taxes that are imposed on a periodic basis, the portion of such Tax that shall be allocated to the portion of such Straddle Period ending on the Closing Date will be deemed to be the amount of such Tax for the entire Straddle
Period multiplied by a fraction the numerator of which is the number of days in the Straddle Period ending on the Closing Date and the denominator of which is the number of days in the entire Straddle Period. For purposes of this Section 10, if any
transaction occurs on the Closing Date but after the Closing has occurred, and that transaction is outside the Ordinary Course of Business or otherwise is with respect to assets and activities of the Company, that transaction shall be treated as
having occurred on the day following the Closing Date. 

  

	 	10.3	 Tax Indemnification. Except for Taxes included as a Liability in the determination of Net Working Capital under Section 2.3, and not paid over to the Seller
in accordance with Section 10.4, the Seller shall indemnify the Buyers from and against and in respect of any and all losses incurred by the Buyers, which may be imposed on, sustained, incurred, or suffered by or assessed against the Buyers,
directly or indirectly, to the extent relating to or arising out of (i) any liability for Taxes of the Company or with respect to the assets or activities of the Company for any taxable year or period that ends on or before the Closing Date and,
with respect to any Straddle Period, the portion of such Straddle Period deemed to end on and include the Closing Date, (ii) any breach of or inaccuracy in the representations and warranties set forth in Section 4.7, or (iii) any liability for Taxes
of any Person (other than the Company) imposed on the Company as transferee, successor or otherwise (including any liability arising under Treasury 

  

 51 

	 	 
Regulation Section 1.1502-6 or any comparable provisions of foreign, state or local law), which Taxes relate to an event or transaction occurring before the
Closing, except that this Section 10.3 shall not apply to Taxes to the extent such Taxes would not have been incurred but for the Buyer or its Affiliates (including the Company) making Tax elections, Tax accounting, or Tax reporting determinations
for the Company (or with respect to the assets or activities of the Company on the Closing Date) for a Tax period ending after the Closing Date that are inconsistent with the Tax elections, Tax accounting, or Tax reporting of the Company for Tax
periods ending on or prior to the Closing Date, unless such elections or determinations for Tax periods ending after the Closing Date are required by applicable Tax law or such elections or determinations for Tax periods ending on or prior to the
Closing Date violate applicable Tax law. Except as set forth in this Section 10.3, the procedures governing indemnification claims under this section 10.3 shall be the same as set forth in Section 9.4 and 9.8 (except that clauses (iii) and (iv) of
Section 9.4(b) shall not apply). With respect to any audit or other proceeding for Taxes for Straddle Period under Section 10.2, Buyer shall not consent to any entry of judgment or enter into any settlement of such claim that would increase the Tax
liability for the portion of the Straddle Period ending on and including the Closing Date without the prior written consent of Seller (which consent may not be withheld, conditioned or delayed unreasonably). 

  

	 	10.4	Refunds and Tax Benefits; Amended Tax Returns. Any Tax refunds that are received by the Buyers or the Company, and any amounts credited against Tax to which the Buyers or the
Company become entitled, that relate to Tax periods ending on or before the Closing Date, or to the portion of the Straddle Period ending on or before the Closing Date, will be for the account of the Seller, and the Buyers will pay over to the
Seller any such refund or the amount of any such credit within 15 days after receipt or entitlement thereto. In addition, to the extent that any amount accrued as a Liability for Taxes in the determination of the Net Working Capital under Section
2.3 turns out to be greater than the actual Tax liability as of the Closing Date, the Buyers will pay over to the Seller such excess within 15 days after the actual amount of the Tax liability has been determined. No amended Tax Return or claim for
Tax refund may be filed for any Tax Returns for tax periods ending on or prior to the Closing Date without the advance written consent of the Seller. No amended Tax Return or claim for Tax refund may be filed for any Tax Returns for any Straddle
Periods under Section 10.2 without the advance written consent of the Seller (which consent may not be withheld, conditioned or delayed unreasonably). 

  

	 	10.5	Cooperation on Tax Matters. 

  

	 	(a)	 The Parties will cooperate fully, as and to the extent reasonably requested by the other Party, in connection with the filing of Tax Returns pursuant to this
Section 10 and any audit, litigation or other proceeding with respect to Taxes. Such cooperation will include the retention and (upon the other Party’s request) the provision of records and information that are reasonably relevant to any such
audit, litigation or other proceeding and making 

  

 52 

	 	 
employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder. The Company and the
Seller agree (i) to retain all books and records with respect to Tax matters pertinent to the Company relating to any taxable period beginning before the Closing Date until the expiration of the statute of limitations (and, to the extent notified by
the Buyers or the Seller, any extensions thereof) of the respective taxable periods, and to abide by all record retention agreements entered into with any taxing authority, and (ii) to give the other Party reasonable notice prior to transferring,
destroying or discarding any such books and records and, if the other party so requests, the Company or the Seller, as the case may be, will allow the other Party to take possession of such books and records. 

  

	 	(b)	The Parties further agree, upon request, to use Commercially Reasonable Efforts to obtain any certificate or other document from any Governmental Authority or any other Person as
may be necessary to mitigate, reduce or eliminate any Tax that could be imposed (including without limitation with respect to the transactions contemplated by this Agreement). 

  

	 	10.6	Survival of Obligations. For the avoidance of doubt, notwithstanding any other provision of this Agreement, the obligations of the Parties set forth in this Section 10 shall
not be subject to any restrictions or limitations other than those expressly set forth in this Section 10 and shall survive the Closing. 

  

	 	10.7	Tax Treatment. For purposes of all Income Tax Returns, the Buyers and the Seller will each report the acquisition of all of the Interests pursuant to this Agreement as a
taxable purchase and sale, respectively, of all of the assets of the Company in exchange for the Purchase Price and the assumption of any liabilities of the Company that are deemed to be assumed for United States federal Income Tax purposes. The
Buyers and the Seller shall (i) be bound by such treatment for purposes of determining any Income Taxes, (ii) prepare and file their Income Tax Returns on a basis consistent with each such treatment, and (iii) take no position inconsistent with such
treatment on any applicable Income Tax Return or in any proceeding before any tax authority. In the event that such treatment is disputed by any tax authority, the Party receiving notice of the dispute shall promptly notify the other Parties of such
dispute. 

  

	11.	Termination. 

  

	 	11.1	Termination of Agreement. The Parties may terminate this Agreement as provided below: 

  

	 	(a)	The Buyers and the Seller may terminate this Agreement by mutual written consent at any time prior to the Closing; 

  

	 	(b)	 The Buyers may terminate this Agreement by giving notice to the Seller at any time prior to the Closing in the event (i) the Seller has breached any representation,
warranty or covenant contained in this Agreement and such 

  

 53 

	 	 
breach causes a Material Adverse Effect, (ii) a Buyer has notified the Seller of the breach (specifying in reasonable detail such breach), and (iii) the
breach has continued without cure or written waiver by the Buyers for a period of 30 days after the notice of breach; 

  

	 	(c)	The Buyers may terminate this Agreement by giving notice to the Seller at any time prior to the Closing if the Closing does not occur on or before March 27, 2005, by reason of the
failure of any condition precedent under Section 8.1 of this Agreement (unless the failure results primarily from a Buyer breaching any representation, warranty or covenant contained in this Agreement); 

  

	 	(d)	The Buyers may terminate this Agreement by giving notice to the Seller at any time prior to the Closing if any of the Buyers’ Required Regulatory Approvals, the receipt of
which is a condition to the obligation of the Buyers to consummate the Closing as set forth in Section 8.1 of this Agreement, will have been denied (and a petition for rehearing or re-filing of an application initially denied without prejudice will
also have been denied), and such denial was not caused by or the result of a breach of this Agreement by a Buyer; 

  

	 	(e)	The Seller may terminate this Agreement by giving notice to each Buyer at any time prior to the Closing in the event (i) a Buyer has breached any material representation, warranty
or covenant contained in this Agreement in any material respect, (ii) the Seller has notified each Buyer of the breach (specifying in reasonable detail such breach), and (iii) the breach has continued without cure or written waiver by the Seller for
a period of 30 days after the notice of breach; 

  

	 	(f)	The Seller may terminate this Agreement by giving notice to each Buyer at any time prior to the Closing if the Closing does not occur on or before March 27, 2005, by reason of the
failure of any condition precedent under Section 8.2 of this Agreement (unless the failure results primarily from the Seller itself breaching any representation, warranty or covenant contained in this Agreement); 

  

	 	(g)	The Seller may terminate this Agreement by giving notice to each Buyer at any time prior to the Closing if any of the Seller’s Required Regulatory Approvals, the receipt of
which is a condition to the obligation of the Seller to consummate the Closing as set forth in Section 8.2 of this Agreement, will have been denied (and a petition for rehearing or re-filing of an application initially denied without prejudice will
also have been denied), and such denial was not caused by or the result of a breach of this Agreement by the Seller; 

  

	 	(h)	The Buyers may terminate this Agreement in the circumstances described in Section 6.9(b); 

  

 54 

	 	(i)	The Seller may terminate this Agreement in the circumstances described in Section 6.2(a); and 

  

	 	(j)	Any Party may terminate this Agreement in the event that any Law or Order becomes effective and continues in effect for 90 days restraining, enjoining or otherwise prohibiting or
making illegal the consummation of any of the contemplated transactions. 

  

	 	11.2	Effect of Termination. If any Party terminates this Agreement pursuant to Section 11.1 of this Agreement, all rights and obligations of the Parties under this Agreement will
terminate without any Liability of any Party to any other Party (except for any Liability of any Party then in breach). No termination of this Agreement, however, will affect the obligations of the Parties pursuant to the Confidentiality Agreement,
except to the extent specified in such Confidentiality Agreement. 

  

	12.	Miscellaneous. 

  

	 	12.1	Press Releases and Public Announcements. No Party will issue any press release or make any public announcement relating to the subject matter of this Agreement prior to the
Closing without the prior written approval of the other Parties. Any Party, however, may make any public disclosure it believes in good faith is required by Law or any listing or trading agreement concerning its publicly-traded securities (in which
case the disclosing Party will use Commercially Reasonable Efforts to advise the other Parties prior to making the disclosure). 

  

	 	12.2	No Third-Party Beneficiaries. This Agreement will not confer any rights or remedies upon any Person other than the Parties, their respective successors and permitted assigns,
the Seller’s Indemnitees (solely in their capacity as such) and the Buyers’ Indemnitees (solely in their capacity as such). 

  

	 	12.3	Entire Agreement. This Agreement (including the Schedules and Exhibits), together with the Confidentiality Agreement and the Transaction Documents, embodies the entire
agreement and understanding of the Parties with respect to the transactions contemplated by this Agreement and the Transaction Documents, and supersedes all prior agreements and understandings between or among the Parties with respect to such
transactions. There are no representations, warranties, covenants or agreements between or among the Parties with respect to the subject matter set forth in this Agreement and the Transaction Documents, other than those expressly set forth in this
Agreement and the Transaction Documents. Without limiting the foregoing, each Buyer acknowledges and agrees that there are no representations, warranties, covenants or agreements between or among the Parties with respect to any material made
available to such Buyer pursuant to the terms of the Confidentiality Agreement (including the Due Diligence Materials). 

  

 55 

	 	12.4	Succession and Assignment. This Agreement will be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns. No Party may
assign either this Agreement or any of its rights, interests or obligations under this Agreement without the prior written approval of the other Parties. No permitted assignment, however, will release the assigning party from primary liability under
this Agreement. Notwithstanding the foregoing, before the Closing the ArcLight Buyer may assign its rights under this Agreement with respect to up to 10% of the Interests to one or more Persons it may designate. To effect such an assignment, the
assignee must execute and deliver to the Seller an instrument agreeing to be bound by this Agreement as a Buyer with respect to that percentage Interest, whereupon (a) that assignee shall become a Buyer with a Percentage equal to the percentage
specified in the assignment and have all rights of the Buyers with respect to its Percentage of the Interests and (b) ArcLight Buyer shall be released from its obligations under this Agreement in respect of the new Buyer’s Percentage of the
Interests and its Percentage shall be reduced by an amount equal to the new Buyer’s Percentage; provided, however, that no such assignment shall relieve ArcLight Energy Partners Fund II, L.P. of its obligations under the guaranty provided above
its signature on the signature page of this Agreement. 

  

	 	12.5	Counterparts and Facsimile Signatures. This Agreement may be executed in one or more counterparts, each of which will be deemed an original but all of which together will
constitute one and the same instrument, and by facsimile. 

  

	 	12.6	Headings. The section headings contained in this Agreement are inserted for convenience only and do not affect in any way the meaning or interpretation of this Agreement.

  

	 	12.7	Notices. All notices, requests, demands, claims and other communications under this Agreement will be in writing. Any notice, request, demand, claim or other communication
under this Agreement will be deemed duly given two Business Days after it is sent by registered or certified mail, return receipt requested, postage prepaid and addressed to the intended recipient as set forth below: 

  
 If to the Seller: 
  
 Allegheny Energy, Inc. 
 800 Cabin Hill Drive 
 Greensburg,
Pennsylvania 15601-1689 
 Attn: President 
 Fax: (724) 830-5151 
  
 with a
copy, which does not constitute notice, to: 
  
 Allegheny Energy
Supply Company, LLC 
 4350 Northern Pike - 4 North 
 Monroeville, PA 15146-2841 
 Attn: Deputy General Counsel 
 Fax: (412) 856-2789 
  

 56 

 If to the ArcLight Buyer: 
  
 Grant Peaking Power, LLC 
 c/o ArcLight Capital Partners LLC 
 200 Clarendon Street, 55th Floor 
 Boston, MA 02117 
 Attn: General Counsel 
 Fax: (617) 867-4698

  
 with a copy, which does not constitute notice, to:

  
 Skadden, Arps, Slate, Meagher & Flom LLP 
 1600 Smith Street, Suite 4400 
 Houston, TX
77002 
 Attn: John C. Ale 
 Fax: (713) 655-5200 
  
 Any Party may send any notice,
request, demand, claim or other communication to the intended recipient at the address set forth above using any other means (including personal delivery, expedited courier, messenger service, telecopy, telex, ordinary mail or electronic mail), but
no such notice, request, demand, claim or other communication will be deemed to have been duly given unless and until it actually is received by the intended recipient. Any Party may change the address to which notices, requests, demands, claims and
other communications hereunder are to be delivered by giving the other Parties notice in the manner set forth in this Agreement. 
  

	 	12.8	Governing Law; Jurisdiction. 

  

	 	(a)	This Agreement has been negotiated under and will be governed by and construed in accordance with the domestic laws of the State of New York without giving effect to any choice or
conflict of law provision or rule (whether of the State of New York or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of New York. 

  

	 	(b)	 Any action, suit or proceeding arising out of or relating to this Agreement or any of the transactions contemplated hereby may be brought, if at all, only in the
United States District Court for the Southern District of New York and the courts of the State of New York located in New York County. Each party hereby irrevocably submits to the jurisdiction of each such court with respect to any such action, suit
or proceeding; provided, however, that such consent to jurisdiction is solely for the purpose referred to in this section and shall not be deemed to be a general submission to the 

  

 57 

	 	 
jurisdiction of said courts or in the State of New York other than for such purpose. Each party hereby irrevocably waives, to the fullest extent permitted by
law, any objection that it may now or hereafter have to the laying of the venue of any such action, suit or proceeding brought in such a court and any claim that any such action, suit or proceeding brought in such a court has been brought in an
inconvenient forum. 

  

	 	(c)	EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO TRIAL
BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY. 

  

	 	12.9	Amendments and Waivers. No amendment of any provision of this Agreement will be valid unless the same is in writing and signed by each Buyer and the Seller. No waiver by any
Party of any provision of this Agreement or any default, misrepresentation or breach of warranty or covenant under this Agreement, whether intentional or not, will be deemed to extend to any prior or subsequent default, misrepresentation or breach
of warranty or covenant under this Agreement or affect in any way any rights arising by virtue of any prior or subsequent such default, misrepresentation or breach of warranty or covenant. 

  

	 	12.10 	Severability. Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction will not affect the validity or enforceability of
the remaining terms and provisions of this Agreement or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction. 

  

	 	12.11 	Expenses. Except as otherwise provided in this Agreement, each Party will bear its own costs and expenses (including legal fees and expenses) incurred in connection with this
Agreement and the contemplated transactions. 

  

	 	12.12 	Construction. The Parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation
arises, this Agreement must be construed as if drafted jointly by the Parties, and no presumption or burden of proof will arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement. Except where
otherwise indicated, all references to Laws (including Environmental Laws, the Code and Treasury Regulations) means such Laws as in existence and as interpreted on the date of this Agreement or any amendment hereto. The word “or” is not
exclusive, and the words “including,” “includes” and “include” are not limiting. 

  

	 	12.13 	 Incorporation of Exhibits and Schedules. The Exhibits and the Schedules identified in this Agreement are incorporated in this Agreement by reference and are
made a part of this Agreement. In the event of any conflict between the provisions of this Agreement (exclusive of the exhibits and Schedules to this 

  

 58 

	 	 
Agreement) and any Exhibit or Schedule, the provisions of this Agreement will govern. 

  

	 	12.14 	Specific Performance. Each of the Parties acknowledges and agrees that the other Party would be damaged irreparably in the event any of the provisions of this Agreement is
not performed in accordance with its specific terms or otherwise is breached. Accordingly, each of the Parties agrees that the other Party is entitled to an injunction or injunctions to prevent breaches of the provisions of this Agreement and to
enforce specifically this Agreement, in addition to any other remedy to which it may be entitled, at law or in equity. 

  

	 	12.15 	Waiver of Consequential Damages. IN NO EVENT WILL ANY PARTY OR
THEIR RESPECTIVE REPRESENTATIVES BE LIABLE TO ANY OTHER PARTY OR THEIR
RESPECTIVE REPRESENTATIVES UNDER THIS AGREEMENT AT ANY TIME FOR PUNITIVE,
CONSEQUENTIAL, SPECIAL, OR INDIRECT LOSS OR DAMAGE, INCLUDING LOSS OF PROFIT,
LOSS OF REVENUE OR ANY OTHER SPECIAL OR INCIDENTAL DAMAGES, WHETHER
IN CONTRACT, TORT (INCLUDING NEGLIGENCE), STRICT LIABILITY OR OTHERWISE; PROVIDED,
HOWEVER, THAT FOR PURPOSES OF THIS SENTENCE ANY DAMAGES AWARDED OR
CLAIMED ON ACCOUNT OF A THIRD PARTY CLAIM SHALL BE DEEMED TO
BE ACTUAL DAMAGES EVEN IF CONSTITUTING ANY OF THE FOREGOING. EACH
PARTY HEREBY EXPRESSLY RELEASES THE OTHER PARTIES AND THEIR RESPECTIVE
REPRESENTATIVES FROM ALL SUCH DAMAGES. 

  

 59 

 The Parties have executed this Agreement as of the date first above written. 
  

									
	ARCLIGHT BUYER:
	
	GRANT PEAKING POWER, LLC
		
	 By:
	 	 ArcLight Energy Partners Fund II, L.P., its sole member

			
	 	 	 By:
	 	 ArcLight PEF GP II, LLC, its general partner

				
	 	 	 	 	 By:
	 	 ArcLight Capital Holdings, LLC, its Manager

					
	 	 	 	 	 	 	 By:
	 	 
	 	 	 	 	 	 	 	 	Daniel R. Revers, its Managing Partner
	
	SELLER:
	
	ALLEGHENY ENERGY SUPPLY COMPANY, LLC
		
	 By:
	 	 
	 	 	John P. Campbell, President

  
 The undersigned hereby (i)
agrees to cause the Buyers to perform all of their obligations arising prior to the Closing under this Agreement to the extent of the Buyers’ obligations under this Agreement, and (ii) shall cause the payment when due of the Buyers’
obligation to pay the Purchase Price, if, as and when provided in this Agreement. In no event shall the undersigned have any greater liability than the Buyers pursuant to this Agreement. 
  

							
	ARCLIGHT ENERGY PARTNERS FUND II, L.P.
		
	By:	 	 ArcLight PEF GP II, LLC, its general partner

			
	 	 	By:	 	 ArcLight Capital Holdings, LLC, its Manager

				
	 	 	 	 	By:	 	 
	 	 	 	 	 	 	Daniel R. Revers, its Managing Partner

  

 60Stock Purchase Agreement

  
 Exhibit 10.3

 Execution Version 
  
 STOCK PURCHASE 
 AND 

ICPA ASSIGNMENT AGREEMENT 
  
 Between 
 ALLEGHENY ENERGY, INC.,

 ALLEGHENY ENERGY SUPPLY COMPANY, LLC 
  
 And 
 BUCKEYE POWER GENERATING, LLC

  
 Dated as of May 17, 2004 
  

  
 STOCK PURCHASE

 AND 
 ICPA
ASSIGNMENT AGREEMENT 
  
 THIS AGREEMENT, dated as of May 17,
2004, is between ALLEGHENY ENERGY, INC., a Maryland corporation (successor by merger to West Penn Electric Company) (“AEI”), ALLEGHENY ENERGY SUPPLY COMPANY, LLC, a Delaware limited liability company (“AES”, each of AES and AEI,
individually, and, together, jointly and severally, “Allegheny”) and BUCKEYE POWER GENERATING, LLC, an Ohio limited liability company (“Purchaser”). 
  
 Allegheny owns 9,000 issued and outstanding shares (the “OVEC Shares”) of Ohio Valley Electric Corporation, an
Ohio corporation (“OVEC”), representing 9.0% of the total number of issued and outstanding shares of OVEC. This Agreement provides for the purchase by Purchaser from Allegheny of all of Allegheny’s OVEC Shares, and the transfer and
assignment by Allegheny to Purchaser, and the assumption by Purchaser, of all of Allegheny’s rights and obligations under the ICPA (as defined below). 
  
 FOR GOOD AND VALUABLE CONSIDERATION, Purchaser and Allegheny agree as follows: 
  
 1. Sale and Purchase of OVEC Shares. At the Effective Time (as defined in Section 10), Allegheny will transfer to
Purchaser, and Purchaser will acquire, all of Allegheny’s OVEC Shares, free and clear of any lien, pledge, charge, equity, encumbrance, or claim. Allegheny and Purchaser agree that no provision of this Agreement shall be construed to include or
cover any shares in OVEC or rights or obligations in the ICPA (as defined below) owned or held by Allegheny other than the OVEC Shares and corresponding rights and obligations under the ICPA; it being understood that the 3,500 shares of OVEC and
corresponding 3.5% interest in the ICPA referenced therein of Monongahela Power Company are not included by any term of this Agreement. 
  
 2. ICPA. 
  
 (a) Assignment of ICPA. At the Effective Time, Allegheny and the Purchaser will enter into an assignment and assumption agreement in mutually
satisfactory form (the “ICPA Assignment Agreement”), providing for the immediate transfer and assignment by Allegheny to Purchaser, and the assumption by Purchaser, of (i) all of AES’s rights and obligations, from and after the New
ICPA Effective Date (as defined below), under that certain Inter-Company Power Agreement, dated July 10, 1953, by and among OVEC, AES (as successor by assignment to The Potomac Edison Company and West Penn Power Company), FirstEnergy Generation
Corporation (as successor by assignment to The Toledo Edison Company, Ohio Edison Company, and Pennsylvania Power Company), Appalachian Power Company (formerly Appalachian Electric Power Company), The Cincinnati Gas & Electric Company, Columbus
Southern Power Company (formerly Columbus and Southern 

  

 2 

 
Ohio Electric Company), The Dayton Power and Light Company, Indiana Michigan Power Company (formerly Indiana & Michigan Electric Company), Kentucky
Utilities Company, Louisville Gas and Electric Company, Monongahela Power Company, Ohio Power Company (formerly The Ohio Power Company), and Southern Indiana Gas and Electric Company, as heretofore and hereafter modified (the “Original
ICPA”), (ii) all of Allegheny’s rights and obligations under that certain Amended and Restated Inter-Company Power Agreement, dated as of March 13, 2006, by and among the parties to the Original ICPA (the “New ICPA”), and (iii)
any other rights Allegheny may have to electric power and energy from the OVEC Entities (as defined below) after the New ICPA Effective Date associated with its ownership of the OVEC Shares (such rights, together with the Original ICPA and the New
ICPA, the “ICPA”). As used in this Agreement, “New ICPA Effective Date” means the first to occur of (v) March 13, 2006; (w) the date of any material breach or material default by AES under the ICPA; (x) the date, following
expiration of all applicable notice and cure periods, if any, of any default by Allegheny in the payment when due (whether upon maturity or upon acceleration or otherwise) of any indebtedness for borrowed money or interest or other amounts due in
respect thereof (or any obligation having the effect of a borrowing of money) under any indenture, credit agreement or other similar agreement or arrangement of Allegheny filed or required to be filed by Item 601(b)(10) of Regulation S-K (or any
successor regulation) as an exhibit to AEI’s or AES’s Form 10-K for the year ended December 31, 2003 or any succeeding fiscal year (or, if AEI or AES is not then subject to the requirement to file a Form 10-K, that was filed as an exhibit
to the last Form 10-K that AEI or AES was required to file or that would be required to be filed if AEI or AES were then subject to such requirement); (y) the date of the expiration of all applicable notice and cure periods for any default by
Allegheny under any indenture, credit agreement or other similar agreement or arrangement of Allegheny, filed or required to be filed by Item 601(b)(10) of Regulation S-K (or any successor regulation) as an exhibit to AEI’s or AES’s Form
10-K for the year ended December 31, 2003 or any succeeding fiscal year (or, if AEI or AES is not then subject to the requirement to file a Form 10-K, that was filed as an exhibit to the last Form 10-K that AEI or AES was required to file or that
would be required to be filed if AEI or AES were then subject to such requirement), that evidences or relates to any indebtedness for borrowed money (or any obligation having the effect of a borrowing of money) and that entitles a creditor of
Allegheny to declare such indebtedness or obligation due and payable prior to the specified maturity thereof; or (z) the date upon which AEI or AES shall commence or become the subject of any voluntary or involuntary bankruptcy, insolvency,
reorganization, liquidation or similar proceeding or case. 
  
 (b)
New ICPA Effective Date Payments. If the New ICPA Effective Date occurs on a date earlier than March 13, 2006, and the assignment of Allegheny’s rights and obligations under the ICPA described in Section 2(a)(i) above becomes effective,
upon the occurrence of any one or more of the events listed as items (x), (y) or (z) under the definition of New ICPA Effective Date above, Purchaser will pay to Allegheny an amount equal to $26,667 per day for each day from and after the New ICPA
Effective Date until March 12, 2006. If the New ICPA Effective Date occurs on a date earlier than March 13, 2006, and the assignment of Allegheny’s rights and obligations under the ICPA described in 

  

 3 

 
Section 2(a)(i) above becomes effective, upon the occurrence of the event listed as item (w) under the definition of New ICPA Effective Date above, Purchaser
will pay to Allegheny an amount equal to $8,333 per day for each day from and after the New ICPA Effective Date until March 12, 2006. 
  
 3. Payment of Purchase Price. In consideration for the OVEC Shares and the transfer and assignment of the ICPA, Purchaser will pay to Allegheny a
purchase price of Ninety-Nine Million Dollars ($99,000,000), payable as follows: 
  
 (a) Payment at the Effective Time. At the Effective Time, Purchaser will pay Allegheny Ninety Three Million Dollars ($93,000,000) in cash, subject to adjustment as provided in Section 3(c) below. 
  
 (b) Purchase Price Holdback. Purchaser shall hold back from the
purchase price Six Million Dollars ($6,000,000) (the “Holdback Amount”), with such Holdback Amount to accrue interest at a rate per annum equal to 3% plus the rate indicated by Telerate at Page 3750 (rounded upward to the nearest
thousandth) as having been quoted by the British Bankers Association at 11:00 A.M. London time on the date of this Agreement for the offering of U.S. dollar deposits in the London interbank market for the period of one year. The Holdback Amount plus
all interest accrued will be paid to Allegheny, or retained by Purchaser, when, as and to the extent provided in Section 12(g) of this Agreement. 
  
 (c) Purchase Price Adjustment. The purchase price payable at the Effective Time as provided in Section 3(a) above shall be (i) reduced by the
amount of any dividends, distributions, credits or other payments that Allegheny may receive or become entitled to receive prior to the Effective Time, directly or indirectly, in its capacity as a shareholder of OVEC or a party to the ICPA, or
otherwise, arising out of or attributable to (w) amounts received or to be received by OVEC from the United States of America, acting by and through the Secretary of Energy, the statutory head of the Department of Energy (“DOE”) pursuant
to that certain Settlement Agreement, dated as of February 11, 2004, between OVEC and DOE (“DOE Benefits Settlement Payments”), (x) the sale by any of the OVEC Entities of any electric generating facilities or other assets, (y) the sale by
any of the OVEC Entities of electric power and energy from any electric generating facilities owned by any of the OVEC Entities other than pursuant to the ICPA, or (z) any other circumstance or event except the provision by OVEC to its shareholders
of a reasonable return on equity at times and in amounts consistent with OVEC’s past practices; it being understood that Allegheny shall retain all other dividends, distributions, credits or other payments; (ii) increased by the amount of any
capital contributions or payments made by Allegheny to OVEC, and required to be made by Allegheny and the other OVEC shareholders or parties to the ICPA, after the date of this Agreement and prior to the Effective Time because of the acceleration of
the debt obligation incurred by OVEC to purchase the selective catalytic reduction equipment (other than an acceleration attributable to any default or breach on the part of Allegheny). 
  

 4 

 (d) Allocation of Purchase Price. The purchase price shall be allocated among Allegheny such that
93.0% of the purchase price will be allocated to AES, and 7.0% of the purchase price will be allocated to AEI. 
  
 4. General Representations and Warranties by Allegheny. Allegheny represents and warrants to Purchaser as follows: 
  
 (a) Ownership of the OVEC Shares. AEI owns beneficially and of record
the OVEC Shares, and it has the right to transfer to Purchaser beneficial and record ownership of the OVEC Shares, free and clear of any lien, pledge, charge, equity, encumbrance, or claim. The OVEC Shares are validly issued, fully paid, and
non-assessable. The OVEC Shares owned by AEI constitute 9.0% of the total number of issued and outstanding shares of OVEC. 
  
 (b) ICPA. AES is a party to the ICPA. Neither AES, nor, to the Best Knowledge of Allegheny, any other party to the ICPA, is in default thereunder.
The ICPA is valid, enforceable in accordance with its terms, and in full force and effect. Allegheny has provided to Purchaser a copy of the ICPA as currently in effect. The ICPA has not been amended or modified since it was modified by that certain
Modification No. 15 thereto dated as of April 30, 2004 and amended and restated by the New ICPA. 
  
 (c) Organization; Corporate Power. Each of AEI and AES is an entity duly organized under the laws of the state of its organization or incorporation
and has all requisite power and authority to own or lease its properties and assets and to conduct its business as it is presently being conducted. 
  
 (d) Authority. This Agreement has been duly authorized by all necessary action on the part of Allegheny. 
  
 (e) No Conflict. Except as set forth in Schedule 4(e) –
Allegheny Conflicts, neither the execution and delivery of this Agreement, nor the completion of the transactions contemplated by this Agreement, will (i) violate, conflict with, or constitute a default (or an event that, with notice or lapse
of time or both, would constitute a default) under any agreement or commitment (including any agreement or commitment made in connection with a proposed sale or other disposition of Allegheny to any person or organization, whether through a sale of
assets or stock, a merger, or other business combination) to which any of Allegheny or its affiliates is a party or by which any of them may be bound, (ii) violate any law, rule, or regulation, or any judgment, decree, or order, of any court or
other governmental body, applicable to Allegheny or any of its affiliates, (iii) result in any charge, equity, security interest, lien, pledge, mortgage, restriction, option, or claim (“Encumbrance”) upon the OVEC Shares or its rights
under the ICPA, or (iv) violate or be in conflict with any provision of the organizational or governance documents of Allegheny. 
  
 (f) No Litigation or Claims; No Governmental Investigation. Schedule 4(f) – Allegheny Litigation describes all pending and, to
the Best Knowledge of Allegheny, 

  

 5 

 
threatened actions, suits, claims (including products liabilities and warranties claims) or proceedings against Allegheny or relating to any of its
affiliates, any of its assets, the OVEC Shares or the ICPA that calls into question or could be reasonably expected to affect the right or ability of Allegheny to consummate the transactions contemplated by this Agreement. Allegheny has not received
written notice that it is the subject of any investigation or inquiry by any governmental authority relating to the OVEC Shares or the ICPA. No third party has asserted any claim against Allegheny or any of its affiliates that, individually or in
the aggregate, will have, or would reasonably be expected to affect the right or ability of Allegheny to consummate the transactions contemplated by this Agreement or result in or form the basis of any such action, suit, claim, proceeding or
investigation. 
  
 (g) No Material Adverse Change. Since
the date of the last financial statements of Allegheny included in the most recent report on Form 10-K filed with the United States Securities and Exchange Commission (the “SEC”), there has not been any material adverse change in the
financial condition, results of operations, business, or prospects of Allegheny which could be reasonably expected to affect the right or ability of Allegheny to consummate the transactions contemplated by this Agreement. 
  
 (h) Consents and Approvals. Schedule 4(h) – Allegheny
Consents contains a list of all consents and approvals that are required to be obtained in connection with the performance of Allegheny’s obligations hereunder, and no other consents and approvals are required in connection with the
performance of Allegheny’s obligations hereunder. 
  
 5. Representations and Warranties by Allegheny Concerning OVEC. Allegheny represents and warrants to Purchaser as follows: 
  
 (a) Information Concerning OVEC. Except as disclosed on Schedule 5(a) – Information Concerning OVEC, there is no information provided
to Allegheny by any OVEC Entity or otherwise known to Allegheny which Allegheny reasonably believes, to the Best Knowledge of Allegheny, could result in a material adverse change in the financial condition, results of operations, business, or
prospects of any OVEC Entity. 
  
 (b) Organization; Corporate
Power; No Subsidiaries; Directors and Officers. Each of OVEC and Indiana-Kentucky Electric Corporation, an Indiana corporation (“IKEC”; with OVEC, individually, an “OVEC Entity”, and, collectively, the “OVEC
Entities”) is an entity duly organized under the laws of the state in which it was organized, and each OVEC Entity has all requisite power and authority to own or lease its properties and assets and to conduct its business as it is presently
being conducted. No OVEC Entity owns any capital stock of, or other equity interest in, any corporation, limited liability company, partnership, or other entity, except that OVEC owns all of the issued and outstanding shares of capital stock of
IKEC. 
  
 (c) No Conflict. To the Best Knowledge of
Allegheny, except as set forth in Schedule 5(c) – Conflicts, neither the execution and delivery of this Agreement, nor the 

  

 6 

 
completion of the transactions contemplated by this Agreement, will (i) violate, conflict with, or constitute a default (or an event that, with notice or
lapse of time or both, would constitute a default) under any agreement or commitment to which any of the OVEC Entities is a party or by which any of them may be bound, (ii) violate any law, rule, or regulation, or any judgment, decree, or order, of
any court or other governmental body, applicable to any of the OVEC Entities, or (iii) violate or be in conflict with any provision of the organizational or governance documents of any OVEC Entity. 
  
 (d) Capitalization. Except as set forth in Schedule
5(d)—Capitalization, there are (A) no outstanding options, offers, warrants, conversion rights, contracts, agreements or other rights to subscribe for or to purchase from any OVEC Entity, or agreements obligating any OVEC Entity to issue,
transfer or sell (whether formal or informal, written or oral, firm or contingent), shares of capital stock or other securities of any OVEC Entity (whether debt, equity or a combination of debt and equity) or obligating any OVEC Entity to grant,
extend or enter into any such agreement and (B) no agreements or other understandings (whether formal or informal, written or oral, firm or contingent) which require or may require any OVEC Entity to repurchase any of its capital stock. There are no
preemptive or similar rights with respect to any OVEC Entity’s capital stock. To the Best Knowledge of Allegheny, except as set forth in Schedule 5(d), no OVEC shareholder is a party to any voting agreements, voting trusts, proxies or
any other agreements, instruments or understandings with respect to the voting of any shares of the capital stock of any OVEC Entity, or any agreement with respect to the transferability, purchase or redemption of any shares of the capital stock of
any OVEC Entity. 
  
 (e) Financial Statements of the OVEC
Entities; No Undisclosed Liabilities. Attached to this Agreement as Schedule 5(e) – Financial Statements are the following financial statements of the OVEC Entities (collectively, the “Financial Statements”): (i)
audited balance sheets of each OVEC Entity as of December 31, 2003, 2002 and 2001 and (ii) audited income statements of each OVEC Entity for the years ended December 31, 2003, 2002 and 2001. The audited balance sheets of each OVEC Entity as of
December 31, 2003 are hereafter referred to as the “December 31, 2003 Balance Sheets”. These Financial Statements were prepared by OVEC’s independent certified public accountant in accordance with GAAP applied on a consistent basis.
To the Best Knowledge of Allegheny, no OVEC Entity has any liabilities or loss contingencies, whether or not required to be disclosed in the Financial Statements (including footnote disclosure), except for liabilities shown in the December 31, 2003
Balance Sheets and current liabilities, not unusual in nature or amount, incurred by any OVEC Entity in the ordinary course of business since December 31, 2003. 
  

(f) No Litigation or Claims; No Governmental Investigation. Schedule 5(f) – Litigation describes all pending actions, suits,
claims (including products liabilities and warranties claims) or proceedings against any OVEC Entity or relating to any OVEC Entity, any of its assets, or the OVEC Shares. To the Best Knowledge of Allegheny, no OVEC Entity is the subject of any
investigation or inquiry by any governmental authority. To the Best Knowledge of Allegheny, no third party has asserted any claim against any 

  

 7 

 
OVEC Entity that, individually or in the aggregate, will have, or would reasonably be expected to have, a material adverse effect on any OVEC Entity.

  
 (g) Environmental Matters. To the Best Knowledge of
Allegheny and except as disclosed on Schedule 5(g) – Environmental Matters: 
  
 (i) the OVEC Entities have not received any notice, request for information, citation, complaint, summons or order relating to any
material violation or alleged violation of, or any liability under any Environmental Laws in connection any OVEC Entity, relating to any OVEC Entity, any of its assets or the OVEC shares during the past three years or, if not resolved, any previous
years; and 
  
 (ii) there are no writs,
injunctions, decrees, orders or judgments outstanding, or any actions, suits, proceedings or investigations pending or threatened, relating to compliance with or liability under any Environmental Laws in connection with any OVEC Entity, relating to
any OVEC Entity, any of its assets or the OVEC shares. 
  
 (h)
Compliance with Laws. To the Best Knowledge of Allegheny, each OVEC Entity complies with all applicable laws, including but not limited to any laws, regulations, permits, authorizations and requirements relating to environment, health and
safety, and laws relating to employment practices, product safety, and safety in the work place. 
  
 (i) Right to Power and Energy from OVEC. No person or entity, other than the parties to the ICPA, has any presently existing rights to any electric
power and energy from OVEC, except for up to 50 megawatts of arranged power and energy under Contract No. DE-AC05-03OR22988 between OVEC and DOE. 
  
 (j) OVEC Operating Budgets. Allegheny has provided to Purchaser a copy of the approved (or proposed if not yet approved) operating budgets for OVEC
for years 2004, 2005 and 2006. 
  
 (k) ICPA. At the
Effective Time, the ICPA will be valid, enforceable in accordance with its terms and in full force and effect, and neither AES, nor, to the Best Knowledge of Allegheny, any other party to the ICPA, shall be in default thereunder. 
  
 6. Representations and Warranties by Purchaser. Purchaser represents
and warrants to Allegheny, as follows: 
  
 (a) Organization;
Standing; Corporate Power. Purchaser is a limited liability company duly organized, validly existing, and in good standing under the laws of the State of Ohio and has the necessary power to execute and deliver this Agreement and to perform its
obligations under this Agreement. 
  
 (b) Authority. This
Agreement been duly authorized by all necessary action on the part of Purchaser. 
  

 8 

 (c) No Conflict. Neither the execution and delivery of this Agreement, nor the completion of the
transactions contemplated by this Agreement, will (i) violate, conflict with, or constitute a default (or an event that, with notice or lapse of time or both, would constitute a default) under any agreement or commitment (including any commitment
made in connection with a proposed sale or other disposition of Purchaser, whether through a sale of assets or stock, a merger, or other business combination) to which Purchaser is a party or by which it may be bound, (ii) violate any law, rule, or
regulation, or any judgment, decree, or order, of any court or other governmental body, applicable to Purchaser, (iii) result in any Encumbrance upon any of the assets of Purchaser, or (iv) violate or be in conflict with any provision of the
articles of organization, operating agreement or other governance agreement of Purchaser. 
  
 (d) No Finder’s Fee or Brokerage Commission. Purchaser has no obligation to pay a finder’s fee or brokerage commission in connection with the transactions contemplated by this Agreement. 

 
 (e) Ownership. All of the issued and outstanding ownership
interests in Purchaser are owned beneficially and of record by Buckeye Power, Inc., an Ohio nonprofit corporation (“Buckeye Power”). 
  
 (f) Consents and Approvals. Schedule 6(f)- Purchaser Consents contains a list of all consents and approvals that are required to be obtained
in connection with the performance of Purchaser’s obligations hereunder, and no other consents and approvals are required in connection with the performance of Purchaser’s obligations hereunder. 
  
 (g) Power Purchase Agreement. Buckeye Power and Purchaser have entered
into a Power Purchase Agreement, dated as of even date herewith (the “Buckeye PPA”). The Buckeye PPA is valid, enforceable in accordance with its terms, and in full force and effect. Purchaser has provided Allegheny with a copy of the
Buckeye PPA as currently in effect. 
  
 7. Covenants.

  
 (a) By Allegheny. From the date of this Agreement to
the Effective Time, except as expressly provided in this Agreement or as otherwise agreed in writing by Purchaser, Allegheny will: 
  
 (i) Operate Businesses in Ordinary Course; Maintain Business Relationships; Etc. Not vote the OVEC Shares or exercise any of its
other rights as a shareholder in any way inconsistent with causing each OVEC Entity (A) to operate its business in the ordinary course, as previously and ordinarily conducted, (B) to use all reasonable efforts to maintain its relationships with
employees and others with whom it has business relations, (C) not to declare, pay, or agree to declare or pay any dividends except in 

  

 9 

 
the ordinary course and not unusual in type or amount, (D) not to redeem or agree to redeem any OVEC shares or other equity interests in any OVEC Entity, (E)
not to issue or agree to issue any OVEC shares, any other equity interests in any OVEC Entity, or any options, warrants, or other rights to purchase OVEC shares or other equity interest in any OVEC Entity, (F) to pay trade creditors in accordance
with each OVEC Entity’s normal credit terms and to collect from account debtors in accordance with each OVEC Entity’s normal collection practices, (G) not to borrow any funds in amounts exceeding normal working capital requirements, (H)
not to change the compensation or benefits (including any severance or change in control benefits) of its directors, officers, or employees, other than normal merit increases to employees who are not directors or officers that are consistent in
nature and amount with past practices, (I) not to enter into any material contract, lease, or license (Purchaser will promptly respond to a request to consent to any such contract, lease, or license and will not unreasonably withhold its consent).

  
 (ii) Assist in Purchaser’s
Investigation. Cause each OVEC Entity to continue to furnish Purchaser with information about each OVEC Entity and its business, assets, and liabilities and to permit Purchaser’s representatives to review its books and records; to talk with
its employees (to the extent necessary to update Purchaser’s due diligence); and to visit its facilities. Purchaser will conduct its investigation in a manner that does not unreasonably disrupt the business of any OVEC Entity and will preserve
the confidentiality of all information that it receives from each OVEC Entity or Allegheny. 
  
 (iii) ICPA. Use its commercially reasonable efforts to obtain the consent of any third parties, including the other parties to the
ICPA, to the assignment and transfer of the ICPA to Purchaser, keep Purchaser informed of any material developments affecting or arising out of the ICPA, provide Purchaser with the opportunity to review and comment on drafts of any amendments or
modifications to the ICPA, and not enter into any amendments or modifications to the ICPA unless the terms and conditions thereof do not affect in any manner the rights or obligations of the parties under the New ICPA. 
  
 (iv) OVEC. Keep Purchaser informed of any material
developments affecting OVEC, including, without limitation, the status of any financings or refinancings of OVEC’s debt. 
  
 (v) Financing and Investment Grade Credit Rating. Cooperate with Purchaser in Purchaser’s efforts to obtain financing and an
Investment Grade Credit Rating (as defined below) for the transactions contemplated hereunder, including, without limitation, by agreeing to such modifications to 

  

 10 

 
the Buckeye PPA as Purchaser’s lenders or credit rating agencies may reasonably request and that do not materially and adversely affect the assurance
afforded to Allegheny by the Buckeye PPA for the payment and performance of Purchaser’s obligations under this Agreement. 
  
 (b) Covenants of Allegheny respecting the ICPA. From the date that is 20 days after the expiration of the Modified Election Period (as such term is
defined in that certain Unanimous Consent and Waiver Agreement dated as of April 30, 2004 by and among the parties to the ICPA (the “Unanimous Consent and Waiver Agreement”)) and until the New ICPA Effective Date: 
  
 (i) Amendments to ICPA. Allegheny will keep Purchaser
informed of any material developments affecting or arising out of the ICPA, provide Purchaser with the opportunity to review and comment on drafts of any amendments or modifications to the ICPA, and not enter into any amendments or modifications to
the ICPA unless the terms and conditions thereof do not affect in any manner the rights or obligations of the parties under the New ICPA. 
  
 (ii) Performance under ICPA. Allegheny will retain and perform all of its rights and obligations under the ICPA and not transfer
any of its rights or obligations under the ICPA without the prior written consent of Purchaser. 
  
 (iii) Waiver; Bankruptcy. Allegheny irrevocably waives, and agrees that, in the event of any voluntary or involuntary bankruptcy,
insolvency, reorganization or liquidation proceeding or case with respect to Allegheny (a “Bankruptcy”), it will not assert in such Bankruptcy or in any action or proceeding in connection with such Bankruptcy, any defense, claim or
counterclaim (i) that the ICPA Assignment Agreement or the ICPA is not a legal, valid and binding obligation of Allegheny or is not enforceable against Allegheny in accordance with its terms; or (ii) that may be asserted as a bar to the remedy of
specific performance of the ICPA Assignment Agreement by the Purchaser or the ICPA by the parties thereto, regardless, in the case of either (i) and (ii), of the theory upon which such defense, claim or counterclaim may be based, including, but not
limited to, any theory based on the adequacy of a remedy at law. Without limiting the foregoing in any way, Allegheny irrevocably waives any protection it may be entitled to under Sections 365(C)(1) and 365(C)(2) of the Bankruptcy Reform Act of
1978, as amended (the “Bankruptcy Code”), or any successor provision of law of similar import, with respect to the ICPA Assignment Agreement or the ICPA in the event of a Bankruptcy. Specifically, in the event that the trustee or the
debtor-in-possession in a Bankruptcy takes any action (including, but not limited to, the institution of any action, suit or other proceeding in a Bankruptcy for the purpose of enforcing the obligations of Allegheny under the ICPA Assignment
Agreement or the ICPA), Allegheny shall not assert any defense, claim or counterclaim denying liability under 

  

 11 

 
the ICPA Assignment Agreement or the ICPA on the basis that the ICPA Assignment Agreement or the ICPA or any provision of the ICPA Assignment Agreement or
the ICPA is an executory contract that cannot be assumed, assigned or enforced or on any other theory directly or indirectly based on Section 365(C)(1) or 365(C)(2) of the Bankruptcy Code or any successor provision of law of similar import
(including, but not limited to, any theory that the ICPA Assignment Agreement or the ICPA or any provision of the ICPA Assignment Agreement or the ICPA is a contract to make a loan, or to extend other debt financing or financial accommodations, to
or for the benefit of Allegheny or any other person). If a Bankruptcy shall occur, Allegheny agrees, after the occurrence of the Bankruptcy, to reconfirm in writing its pre-petition waiver of any protection it may be entitled to under Sections
365(C)(1) and 365(C)(2) of the Bankruptcy Code; provided, however, that in any event Allegheny shall not ask the Bankruptcy Court for permission or otherwise seek to (x) reject the ICPA Assignment Agreement or the ICPA without first offering in
writing to assign and delegate to Purchaser, without the payment of any consideration to or by Purchaser, all of Allegheny’s rights, titles, interests, duties, obligations and liabilities thereunder which offer Purchaser shall have 10 days from
the date of its receipt thereof to accept or reject; or (y) assume and assign to any other person or entity the ICPA Assignment Agreement or the ICPA without first offering in writing to assume and assign to Purchaser the ICPA Assignment Agreement
and the ICPA on the same terms and conditions as in the proposed assignment to any such person or entity which offer Purchaser shall have 10 days from the date of its receipt thereof to accept or reject. 
  
 (c) Covenant by Allegheny Respecting DOE Benefits Settlement Payments and
Other Distributions. Allegheny shall pay to Purchaser an amount equal to (i) any distributions, credits or other payments that Allegheny may receive or become entitled to receive under the ICPA from and after the Effective Time and prior to the
New ICPA Effective Date arising out of or attributable to (w) the DOE Benefits Settlement Payments, (x) the sale by any of the OVEC Entities of any electric generating facilities or other assets, or (y) the sale by any of the OVEC Entities of
electric power and energy from any electric generating facilities owned by any of the OVEC Entities other than pursuant to the ICPA, and (ii) any decrease in capital contributions or payments required to be made by Allegheny to OVEC after the
Effective Time and prior to the New ICPA Effective Date (the “Adjustment Period”) because of (x) any decrease in expenditures made by OVEC for capital improvements below the level of expenditures set forth in the approved (or proposed if
not yet approved) monthly operating budgets for OVEC (heretofore provided to Purchaser by Allegheny) for the Adjustment Period (such monthly 

  

 12 

 
operating budgets to be pro-rated for any partial months during the Adjustment Period based on the number of days in such month) by more than 20% in the
aggregate or (y) any decrease in expenditures made by OVEC for operation and maintenance expenses below the level of expenditures set forth in the approved (or proposed if not yet approved) monthly operating budgets for OVEC (heretofore provided to
Purchaser by Allegheny) for the Adjustment Period (such monthly operating budgets to be pro-rated for any partial months during the Adjustment Period based on the number of days in such month) by more than 10% in the aggregate (but without
duplicating any reduction of the purchase price pursuant to Section 3(c) above). Any payment to Purchaser under this subsection (c) shall be made within five (5) days of any such distribution, credit, capital contribution or other payment by wire
transfer of immediately available federal funds to an account designated by Purchaser. 
  
 (d) By Both Parties. 
  
 (i) From the date that is 20 days after the expiration of the Modified Election Period (as such term is defined in the Unanimous Consent and Waiver Agreement) to the Effective Time, unless otherwise agreed in writing
by the parties, Purchaser and Allegheny will use all reasonable efforts to satisfy the conditions to closing at or before the date that is 385 days following the expiration of the Modified Election Period (as such term is defined in the Unanimous
Consent and Waiver Agreement). Purchaser and Allegheny will notify each other of any event that occurs, or condition that comes to their attention, that may delay the Effective Time or that constitutes a breach of their respective representations
and warranties in this Agreement and will use all reasonable efforts to mitigate any such delay or to cure any such breach. 
  
 (ii) Without limiting the foregoing, Purchaser will, and Allegheny will, if required, cause each OVEC Entity to, (A) make the filings
required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), within 34 days after the expiration of the Modified Election Period (as such term is defined in the Unanimous Consent and Waiver
Agreement), (B) comply at the earliest practicable date with any request by the Federal Trade Commission or the Department of Justice for additional information or documents under the HSR Act, and (C) cooperate with the other party in connection
with making any filing under the HSR Act and in connection with the resolution of any investigation or other inquiry by the Federal Trade Commission, the Department of Justice, or any other governmental authority. 
  
 (iii) Without limiting the foregoing, Allegheny and the
Purchaser will each, as promptly as practical after the date that is 20 days after the expiration of the Modified Election Period (as such term is defined in the Unanimous Consent and Waiver Agreement), make all filings and take all such other
actions as are required, and that may be reasonably taken, to obtain, in the case of Allegheny, the consents and approvals of third parties listed on Schedule 4(h), and, in the case of Purchaser, the consents and approvals of third parties
listed on Schedule 6(f). Allegheny and Purchaser 

  

 13 

 
will cooperate with each other and support each other’s efforts to obtain all required consents and approvals of third parties. 
  
 (e) By Purchaser. 
  
 (i) Purchaser shall pay to Allegheny the amount of any
capital contributions or payments made by Allegheny to OVEC, and required to be made by Allegheny and the other OVEC shareholders or parties to the ICPA, after the Effective Time and prior to the New ICPA Effective Date (the “Adjustment
Period”) because of (x) the acceleration of the debt obligation incurred by OVEC to purchase the selective catalytic reduction equipment (other than an acceleration attributable to any default or breach on the part of Allegheny), (y)
expenditures by OVEC for capital improvements exceeding the approved (or proposed if not yet approved) monthly operating budgets for OVEC (heretofore provided to Purchaser by Allegheny) for the Adjustment Period (such monthly operating budgets to be
pro-rated for any partial months during the Adjustment Period based on the number of days in such month) by more than 20% in the aggregate, or (z) expenditures by OVEC for operation and maintenance expenses exceeding the approved (or proposed if not
yet approved) monthly operating budgets for OVEC (heretofore provided to Purchaser by Allegheny) for the Adjustment Period (such monthly operating budgets to be pro-rated for any partial months during the Adjustment Period based on the number of
days in such month) by more than 10% in the aggregate (but without duplicating any increase of the purchase price pursuant to Section 3(c) above). 
  
 (ii) Purchaser will cooperate with Allegheny and OVEC in obtaining all regulatory approvals necessary for the effectiveness of the ICPA.

  
 (iii) Purchaser shall not terminate the
Buckeye PPA prior to the Effective Time. 
  
 (iv)
Purchaser shall use commercially reasonable efforts to obtain and maintain through the Effective Time a credit rating for its long-term unsecured non-credit enhanced indebtedness of either (x) at least BBB- from Standard & Poor’s or (y) at
least Baa3 from Moody’s Investors Service, Inc. (an “Investment Grade Credit Rating”). If Purchaser is unable to obtain an Investment Grade Credit Rating within 90 days after the date of this Agreement, either party may terminate this
Agreement by providing written notice thereof to the other party. 
  
 (f) No Shop. Except for making the Offer in accordance with Section 15 hereof, (i) Allegheny will not, and will cause its affiliates and its and their respective directors, officers, employees, agents, and advisors not to, solicit
offers from, negotiate with, execute agreements with, or provide non-public information to, any party other than Purchaser with respect to the possible sale or other disposition of the OVEC Shares or the transfer and assignment of Allegheny’s
rights and obligations under the ICPA, and (ii) 

  

 14 

 
Allegheny will, and will cause its affiliates and its and their respective directors, officers, employees, agents, and advisors to, cease any current
discussions with any party other than Purchaser concerning any such sale or other disposition or transfer and assignment. Notwithstanding anything to the contrary in this Section 7(f), for a period of forty five (45) days following the date of this
Agreement, Allegheny, its affiliates, and its and their respective directors, officers, employees, agents, and advisors may negotiate with, carry on discussions with, execute agreements with, or provide non-public information to, any Sponsoring
Company under the ICPA with respect to the possible sale or other disposition of the OVEC Shares or the transfer and assignment of Allegheny’s rights and obligations under the ICPA. 
  
 (g) Seat on OVEC Board of Directors. Commencing no later than the date that is 20 days after the expiration of the
Modified Election Period (as such term is defined in the Unanimous Consent and Waiver Agreement), Allegheny shall use its commercially reasonable best efforts to secure and retain for Purchaser two seats on the Board of Directors of OVEC to be held
by Purchaser’s representatives as soon as practicable after the Effective Time, and Allegheny shall cause two of its representatives on the Board of Directors of OVEC to resign if and when a representative of Purchaser is elected to the Board
of Directors of OVEC. Until a representative of Purchaser is elected to the Board of Directors of OVEC, two of Allegheny’s representatives on the Board of Directors of OVEC shall vote from and after the Effective Time in the manner directed by
Purchaser and shall inform Purchaser of all matters discussed at each and every meeting of the Board of Directors of OVEC. 
  
 8. Purchaser’s Conditions to Closing. Purchaser’s obligation to complete the purchase of the OVEC Shares and the assumption of AES’s
rights and obligations under the ICPA pursuant to the terms of this Agreement is conditioned upon the satisfaction or waiver by Purchaser of the following conditions: 
  
 (a) Performance of Obligations. Allegheny has performed in all material respects the obligations under this Agreement
that are to be performed by it at or before the Effective Time. 
  
 (b) Representations and Warranties Are True; Certification. The representations and warranties made by Allegheny in this Agreement continue to be true in all material respects as of the Effective Time as though they were made at the
Effective Time. Allegheny shall have delivered to Purchaser a certificate duly executed by an appropriate officer of Allegheny dated as of the Effective Time to the effect that (i) Allegheny has performed in all material respects the obligations
under this Agreement that are to be performed by it at or before the Effective Time; (ii) the representations and warranties made by Allegheny in this Agreement continue to be true in all material respects as of the Effective Time as though they
were made at the Effective Time; (iii) the ICPA has been executed and delivered by AES and the other parties to the ICPA; (iv) the ICPA is valid, enforceable in accordance with its terms and in full force and effect, and AES is not, and to the Best
Knowledge of Allegheny no other party to the ICPA is, in default thereunder; and 

  

 15 

 
(v) Allegheny has provided to the Purchaser a copy of the ICPA as executed and delivered by the parties thereto and copies of all amendments or modifications
to the ICPA. 
  
 (c) No Material Adverse Change. There is
no material adverse change in the financial condition, results of operations, business, or prospects of any OVEC Entity since December 31, 2003. Since the date of the last financial statements of Allegheny included in the most recent report on Form
10-K filed with the SEC, there has not been any material adverse change in the financial condition, results of operations, business, or prospects of Allegheny which could be reasonably expected to affect the right or ability of Allegheny to
consummate the transactions contemplated by this Agreement and perform its obligations in connection therewith. 
  
 (d) HSR Act. If applicable, the waiting period or periods under the HSR Act have expired or been terminated early, and neither the Federal Trade
Commission, the Justice Department, or any other governmental authority has advised Purchaser that it will seek to enjoin the sale of the OVEC Shares or the transfer and assignment of the ICPA to Purchaser under this Agreement, require any
significant divestiture by Purchaser or any OVEC Entity, or impose restrictions on the operation of any business by Purchaser or any OVEC Entity. 
  
 (e) Consents and Approvals. The consents and approvals of the SEC, FERC, lenders of OVEC or Allegheny, and the other third parties identified on
Schedules 4(h) and 6(f) required in connection with the transactions contemplated hereunder, including the sale of the OVEC Shares to Purchaser and the transfer and assignment of the ICPA to Purchaser (the “Required
Consents”), have been obtained and remain in full force and effect and not subject to any pending appeal, intervention or similar proceeding or any unsatisfied condition that may result in modification or revocation thereof. All consents to the
assignment and transfer of the ICPA to Purchaser shall have been obtained on terms and conditions which the Purchaser deems satisfactory in its sole and absolute discretion. 
  
 (f) ICPA. The ICPA shall have been executed and delivered by AES and the other parties to the ICPA. The ICPA shall be
valid, enforceable in accordance with its terms, and in full force and effect, and no party thereto, including AES, shall be in default thereunder. There shall have been no amendments or modifications to the ICPA since the ICPA was modified by that
certain Modification No. 15 thereto dated as of April 30, 2004 and amended and restated by the New ICPA, except for any such amendments or modifications that do not affect in any manner the rights or obligations of the parties under the New ICPA.
AES shall have entered into the ICPA Assignment Agreement, effective as of the Effective Time. 
  
 (g) Financing. Purchaser shall have obtained a commitment for financing of the payment of the purchase price hereunder on terms and conditions and from a lender or lenders satisfactory to Purchaser in its sole
and absolute discretion, except that Purchaser shall not have the right to terminate this Agreement and to decline to close the transactions 

  

 16 

 
contemplated hereby by reason of the failure of this condition unless Purchaser exercises such right no later than 90 days after the date of this Agreement.

  
 9. Allegheny’s Conditions to Closing.
Allegheny’s obligation to complete the sale of the OVEC Shares and the assignment of AES’s rights and obligations under the ICPA pursuant to the terms of this Agreement is conditioned upon the satisfaction or waiver by Allegheny of the
following conditions: 
  
 (a) Performance of Obligations.
Purchaser has performed in all material respects the obligations under this Agreement that are to be performed by it at or before the Effective Time. 
  
 (b) Representations and Warranties Are True; Certification. The representations and warranties made by Purchaser in this Agreement continue to be
true in all material respects as of the Effective Time as though they were made at the Effective Time. Purchaser shall have delivered to Allegheny a certificate to the effect of clause (a) above and this clause (b) duly executed by an appropriate
officer of Purchaser. 
  
 (c) HSR Act. If applicable, the
waiting period or periods under the HSR Act have expired or been terminated early, and neither the Federal Trade Commission, the Justice Department, or any other governmental authority has advised any OVEC Entity that it will seek to enjoin the sale
of the OVEC Shares to Purchaser under this Agreement, require any significant divestiture by Purchaser or any OVEC Entity, or impose restrictions on the operation of any business by Purchaser, AES or any OVEC Entity. 
  
 (d) Consents and Approvals. The Required Consents have been obtained
and remain in full force and effect and not subject to any pending appeal, intervention or similar proceeding or any unsatisfied condition that may result in modification or revocation thereof. 
  
 (e) ICPA Assignment Agreement. Purchaser shall have entered into the
ICPA Assignment Agreement, effective as of the Effective Time. 
  
 10. Closing; Effective Time. 
  
 (a) The closing
of the sale and purchase of the OVEC Shares and the transfer and assignment of the ICPA pursuant to this Agreement will occur within five business days after all of the conditions to closing have been satisfied or waived and will be effective as of
the close of business on that date or such other date and time as the parties may agree (the “Effective Time”). As of the Effective Time, upon satisfaction or waiver of the conditions to closing, Purchaser will pay the portion of the
purchase price referred to in Section 3 to be paid at the Effective Time, by wire transfer of immediately available federal funds to an account designated by Allegheny, upon receipt of certificates for the OVEC Shares, duly endorsed by AEI for
transfer to Purchaser or accompanied by duly executed stock powers, and the ICPA Assignment Agreement and the certificate referred to in Section 8(b) above signed by an appropriate officer of Allegheny. 
  

 17 

 (b) The parties will execute and deliver all other documents, and take all further actions, necessary to
complete the sale and purchase of shares and to carry out the other transactions contemplated by this Agreement. 
  
 (c) The parties acknowledge that time is of the essence and, therefore, agree to use all reasonable efforts to complete the sale and purchase of shares
and the other transactions contemplated by this Agreement on or before the date that is 385 days following the expiration of the Modified Election Period (as such term is defined in the Unanimous Consent and Waiver Agreement), except that the
foregoing shall not impose any obligation on a party to waive or modify any of that party’s conditions to closing. Any party may terminate this Agreement if the Effective Time does not occur before the date that is 385 days following the
expiration of the Modified Election Period (as such term is defined in the Unanimous Consent and Waiver Agreement), unless the delay in the Effective Time results from the failure, by the party seeking to terminate this Agreement, to perform its
obligations under this Agreement. Termination of this Agreement by any party will not relieve the other party of any liability that it may have for a breach of the representations, warranties, or covenants made by it in this Agreement. If Purchaser
does not satisfy its condition to closing set forth in Section 8(g) hereof, and notify Allegheny of Purchaser’s satisfaction of such condition to closing, on or before 90 days after the date of this Agreement, Allegheny shall have the right to
terminate this Agreement by providing written notice thereof to Purchaser. Allegheny must exercise this right to terminate within 10 days after the end of such 90 day period. 
  
 11. Survival of Representations, Warranties, and Covenants. The representations, warranties, and covenants made by
Purchaser and Allegheny in this Agreement will survive for the periods set forth below: 
  
 (a) With respect to the representations and warranties in Sections 4(a), (c), and (d), without limitation as to time; with respect to all other representations and warranties in Section 4, for a period of 24 months
following the Effective Time. 
  
 (b) With respect to the
representations and warranties in Sections 5(b), (d), (i) and (k), without limitation as to time; with respect to all other representations and warranties in Section 5, for a period of 24 months following the Effective Time, except that the
representations and warranties in the last sentence of Section 5(d) and the last sentence of Section 5(e) shall not survive past the Effective Time. 
  
 (c) With respect to the representations and warranties in Sections 6(a), (b) and (e), without limitation as to time; with respect to all other
representations and warranties in Section 6, for a period of 24 months following the Effective Time. 
  
 Any claim brought within the periods described above will continue to survive until it is resolved. A claim for a breach of the covenants made by Purchaser or Allegheny in this Agreement may, subject to any applicable
statute of limitations, be brought at any time. 
  

 18 

 12. Indemnification. 
  
 (a) Indemnification by Allegheny. Subject to the limitations in Sections 11, 12(c) and 12(d), Allegheny will
indemnify Purchaser against any expense, loss, liability, or claim (including attorneys’ fees and reimbursable expenses) (“Losses”) incurred by Purchaser by reason of (i) the incorrectness of any of the representations or warranties
made by Allegheny in this Agreement, or (ii) the breach by Allegheny of any of the covenants made by it in this Agreement. 
  
 (b) Indemnification by Purchaser. Subject to the limitations in Sections 11, 12(c) and 12(d), Purchaser will indemnify Allegheny against any Losses
incurred by Allegheny by reason of (i) the incorrectness of any of the representations or warranties made by Purchaser in this Agreement, (ii) the breach by Purchaser of any of the covenants made by Purchaser in this Agreement or (iii) a final
judicial determination or settlement agreement or consent decree after the Effective Time to which Allegheny is party that requires Allegheny, solely by reason of its having been a shareholder of OVEC, to pay fines or penalties relating to, or to
pay all or any part of any amount the OVEC Entities are required to pay for fines or penalties or the installation of emission control equipment relating to, any alleged violation of the federal Clean Air Act New Source Review (“NSR”) or
Prevention of Significant Deterioration (“PSD”) requirements, 42 USC 7470 et. seq. and 42 USC 7501 et seq., because of Major Modifications (as defined in the 40 CFR Part 52) by any OVEC Entity to any OVEC facility prior to
the Effective Time that allegedly triggered such NSR or PSD requirements. 
  
 (c) Threshold. 
  
 (i) Purchaser will not be entitled to indemnification under Section 12(a)(i) for the incorrectness of any of the representations or warranties made by Allegheny in this Agreement, and Allegheny will not be entitled to indemnification under
Section 12(b)(i) for the incorrectness of any of the representations or warranties made by Purchaser in this Agreement, unless the aggregate amount of the Losses for which it would otherwise be entitled to indemnification exceeds Eight Hundred Fifty
Thousand Dollars ($850,000). Once the aggregate amount of the Losses exceeds Eight Hundred Fifty Thousand Dollars ($850,000), Purchaser or Allegheny, as the case may be, will be entitled to indemnification for the full amount of the Losses.

  
 (ii) Allegheny will not be entitled to
indemnification under Section 12(b)(iii) with respect to NSR requirements relating to the OVEC Entities unless and until it has incurred in excess of One Hundred Thousand Dollars ($100,000) of Losses in the aggregate with respect thereto. In such
event, Purchaser shall be liable to Seller for Losses in excess of such amount. 
  

 19 

 The foregoing thresholds do not apply to indemnification for breach of any of the covenants made by Purchaser or
Allegheny in this Agreement. 
  
 (d) Cap. The obligation of
Allegheny to indemnify Purchaser for breach of any of Allegheny’s covenants or obligations in this Agreement will not exceed in the aggregate the purchase price paid to Allegheny hereunder. The obligation of Allegheny to indemnify Purchaser for
breach of any of Allegheny’s representations and warranties in this Agreement will not exceed Thirty Five Million Dollars ($35,000,000) in the aggregate. The obligation of Purchaser to indemnify Allegheny for breach of any of Purchaser’s
covenants or obligations in this Agreement will not exceed in the aggregate the purchase price paid to Allegheny hereunder, except that the obligation of Purchaser to indemnify Allegheny under Section 12(b)(iii) of this Agreement shall not exceed
Ten Million Dollars ($10,000,000) in the aggregate. The obligation of Purchaser to indemnify Allegheny for breach of any of Purchaser’s representations and warranties in this Agreement will not exceed Thirty Five Million Dollars ($35,000,000)
in the aggregate. 
  
 (e) Right to Set-Off. Purchaser will
be entitled to set-off, against the amounts that it is required to pay to Allegheny under Section 3, the amount of any indemnification to which it is entitled under this Section 12. Purchaser will give written notice to Allegheny of any such
set-off. 
  
 (f) Notice of Third-Party Claims. If a third
party asserts a claim for which any of the parties is entitled to indemnification under this Section 12, the party against whom the claim is asserted will give prompt notice of the claim to the party required to pay the indemnification (the
“Indemnifying Party”). The failure to give any such notice will not, however, relieve the Indemnifying Party of its obligation to indemnify the other party. The Indemnifying Party will have the right to assume control of the defense
against the claim, at its expense, and to compromise and settle the claim; except that, Allegheny may not, without the prior written consent of Purchaser, compromise or settle any claim in a manner that would impair the value of any assets or rights
of Purchaser or any OVEC Entity or that would interfere with the continued operation of their respective businesses. Both parties will cooperate reasonably in any such defense. If the Indemnifying Party does not assume control of the defense, the
party against whom the claim is asserted will have the right, at the expense of the Indemnifying Party, to undertake the defense and to compromise or settle the claim as it deems appropriate. 
  
 (g) Procedures with respect to the Holdback Amount. If at any time
from and after the Effective Time through the New ICPA Effective Date, Allegheny breaches any of its covenants in Section 7(b) of this Agreement, Purchaser shall have the right to retain from the Holdback Amount an amount equal to Purchaser’s
proportionate share of any Losses incurred by the OVEC Entities, and any additional direct Losses incurred by Purchaser, arising out of or related to the breach (the “Holdback Claim”). Purchaser shall give notice to Allegheny of any
Holdback Claim by delivering a written notice (the “Holdback Claim Notice”) to Allegheny as soon as reasonably practicable after Purchaser has knowledge of the facts underlying the Holdback Claim. The Holdback Claim Notice shall set forth
a 

  

 20 

 
description of the Holdback Claim and the amount due to Purchaser as a result of the Holdback Claim (which may be an estimate if the exact amount has not
been determined). No Holdback Claim Notice will be timely made if made greater than 45 days after the New ICPA Effective Date (the “Holdback Expiration Date”). Allegheny may dispute the validity or amount of a Holdback Claim by delivering
to Purchaser, within twenty (20) days after delivery to Allegheny of the Holdback Claim Notice, a written notice setting forth its basis for disputing the Holdback Claim, the portion of the Holdback Claim that it disputes, and (if applicable) the
portion of the Holdback Claim that it does not dispute. The sum of all amounts relating to Holdback Claims that Allegheny does not dispute shall be referred to herein as the “Undisputed Holdback Amount”, the sum of all amounts relating to
Holdback Claims that Allegheny does dispute shall be referred to herein as the “Disputed Holdback Amount” and the amount, if any by which the Holdback Amount exceeds the sum of the Undisputed Holdback Amount and the Disputed Holdback
Amount shall be referred to as the “Unclaimed Holdback Amount”. On the New ICPA Effective Date, the Holdback Amount shall be disbursed to Allegheny, or retained by Purchaser, as follows: (i) the Undisputed Holdback Amount shall be retained
by Purchaser; (ii) the Unclaimed Holdback Amount less One Million Dollars ($1,000,000) shall be disbursed to Allegheny; and (iii) the Disputed Holdback Amount shall be retained by Purchaser pending mutual agreement of Allegheny and Purchaser as to
its disposition or, in the absence of such agreement, a final, non-appealable order of a court of competent jurisdiction respecting the disposition thereof, at which time Purchaser will retain or disburse the Disputed Holdback Amount in accordance
with such agreement or order, as the case may be. On the 46th day following the New ICPA Effective Date the One
Million Dollars ($1,000,000) remaining as Holdback Amount shall be disbursed in the same manner as immediately above. The provisions of this Section 12(g) are intended to facilitate Purchaser’s right to be indemnified for any breaches of
Section 7(b) and are not a limitation on Purchaser’s right to be indemnified under Section 12(a)(ii) with respect to any such breach. 
  
 13. Break-Up Fees. 
  
 (a) If the Effective Time does not occur and this Agreement is terminated by Purchaser by reason of the failure of any of the closing conditions specified
in Sections 8(a) or (b) and Allegheny directly or indirectly sells the OVEC Shares or its rights and obligations under the ICPA to any person or entity other than the Purchaser within three years of the date of this Agreement, Allegheny will pay
Purchaser Two Million Dollars ($2,000,000). 
  
 (b) If the
Effective Time does not occur and this Agreement is terminated by Allegheny by reason of failure of any of the closing conditions specified in Sections 9(a) or (b) and Purchaser purchases any shares or rights, directly or indirectly, in OVEC from
any third party within three years of the date of this Agreement, Purchaser will pay Allegheny Two Million Dollars ($2,000,000). 
  

 21 

 (c) If the Effective Time does not occur and this Agreement is terminated by reason of failure of the
closing condition specified in Sections 8(g) or under Section 7(e)(iv), Purchaser will pay to Allegheny Two Million Dollars ($2,000,000). 
  
 (d) The break-up fees contained in this Section 13 shall be in addition to all other rights and remedies either party may have against the other party for
any breaches of this Agreement. The obligations contained in this Section 13 shall survive any termination of this Agreement except termination pursuant to Section 15. 
  
 14. Miscellaneous. 
  
 (a) Expenses. Each of the parties will pay its own expenses incurred in connection with the negotiation, execution, and performance of this
Agreement and the completion of the transactions contemplated by this Agreement, including fees and reimbursable expenses of counsel, accountants, and other advisors. 
  
 (b) “Best Knowledge of Allegheny”. For purposes of this Agreement, the phrase “Best Knowledge of
Allegheny” means the actual knowledge of David Benson, James Garlick, or Thomas Kalup. Allegheny represents and warrants that such persons are presently Allegheny’s representatives on the Board of Directors of OVEC. 
  
 (c) Entire Agreement. This Agreement and its Exhibits and Schedules
contain the entire understanding among Purchaser and Allegheny on their subject matter, and there are no representations, warranties, or covenants by or among them other than those set forth in this Agreement and its Exhibits and Schedules.

  
 (d) Waiver. Any of the terms or conditions of this
Agreement may be waived in writing at any time by the party that is entitled to the benefit of that term or condition. 
  
 (e) Governing Law; Dispute Resolution. The validity, interpretation, and enforceability of this Agreement will be governed by the laws of the State
of Ohio. In the event of a dispute regarding this Agreement or the transactions contemplated by it, the parties will use all reasonable efforts to resolve the dispute on an amicable basis. If the dispute is not resolved on that basis within 60 days,
the parties may take whatever legal action they deem appropriate, or may enter into mediation or arbitration if mutually agreeable. 
  
 (f) Notices. Any notice or other communication required or permitted under this Agreement will be adequately given when it is personally delivered;
when it is sent by fax, with confirmation of receipt; or one day after it is sent by overnight courier paid by the sender, and addressed 
  
 To Purchaser at: 
  
 Buckeye Power Generating, LLC 
  
 6677 Busch Boulevard 
 Columbus, Ohio 43229

 Attention: President 
  

 22 

 with a copy to: 
  

Thompson Hine LLP 
 10 West Broad Street

 Columbus, Ohio 43215 
 Attention: Robert P. Mone 
  
 To Allegheny: 

 
 Allegheny Energy, Inc. 
 800 Cabin Hill Drive 
 Greensburg, PA
15601-1689 
 Attention: President 
 Fax: (724) 830-5151 
  
 Allegheny Energy Supply Company,
LLC 
 4350 Northern Pike – 4 North 
 Monroeville, PA 15146-2841 
 Attention: President 
 Fax: (412) 856-2789 
  
 with a
copy to: 
  
 Gray, Plant, Mooty, Mooty & Bennett, P.A.

 500 IDS Center 
 80 South
Eighth Street 
 Minneapolis, MN 55402-3796 
 Attention: Joseph Kinning, Esq. 
 Fax (612) 632-4444 
  
 Any party may change the address or fax number to which notices or other communications are
to be given by furnishing the other party with written notice of the change. 
  
 (g) Confidentiality. Purchaser agrees that, unless and until the Effective Time has taken place, Purchaser and its officers, directors, and other representatives will hold in strict confidence, and will not use
to the detriment of any OVEC Entity or Allegheny, all data and information about the business of the OVEC Entities or Allegheny disclosed to them by the OVEC Entities or Allegheny in connection with this transaction or this Agreement (except for any
data or information that is publicly available or is disclosed to them by a source other than any OVEC Entity or Allegheny). If the transaction contemplated by this Agreement is not completed, Purchaser will, upon reasonable request 

  

 23 

 
by Allegheny, return to Allegheny or destroy any written documents in Purchaser’s possession that include such data or information, including
worksheets, reports, lists, memoranda, and other documents prepared by or made available to Purchaser. 
  
 (h) Notices to Third Parties and Publicity. All notices to third parties and publicity concerning the transaction contemplated by this Agreement
will be jointly planned and coordinated by Purchaser and Allegheny. No party may act in this regard without the prior consent of the others; however, this consent will not be unreasonably withheld. 
  
 (i) Assignment. Neither of the parties may assign this Agreement
without the prior written consent of the other party; except that Purchaser may assign this Agreement to any direct or indirect wholly owned subsidiary of Purchaser, provided any such assignment does not relieve Purchaser of its obligations
hereunder. 
  
 (j) Preamble; Headings. The preamble to this
Agreement, and the headings used in this Agreement, are for convenience of reference only and are not intended to affect the interpretation of this Agreement. 
  

(k) Counterparts and Facsimile Signatures. This Agreement may be executed in one or more counterparts, each of which will be deemed an
original but all of which together will constitute one and the same instrument, and by facsimile. 
  
 15. Right of First Offer. In accordance with Section 12.193 of the Original ICPA, Section 9.183 of the New ICPA, and the Unanimous Consent and
Waiver Agreement, Allegheny shall make an offer (“Offer”) to the other Sponsoring Companies (as such term is defined in the ICPA) by providing an Offer Notice (as such term is defined in the ICPA) to the other Sponsoring Companies within
three days after the date of this Agreement. Allegheny shall provide Purchaser an opportunity to review and comment on Allegheny’s proposed draft of its Offer Notice prior to its distribution to the other Sponsoring Companies. Notwithstanding
any review and comment by Purchaser on Allegheny’s proposed draft of its Offer Notice, Allegheny agrees that the purchase price set forth in the Offer Notice shall not exceed $107 million, and that the Offer Notice shall contain such other
terms as will permit Allegheny to transfer and assign its rights and obligations under the ICPA to Purchaser in accordance with the terms of this Agreement in the event the Offer is not accepted by any other Sponsoring Companies. If the Offer is
accepted by, and approved by the Board of Directors of, one or more of the other Sponsoring Companies in accordance with Section 12.193 of the Original ICPA, Section 9.183 of the New ICPA, and the Unanimous Consent and Waiver Agreement or if, within
45 days of the date of this Agreement, Allegheny enters into a definitive agreement with a Sponsoring Company for the sale and purchase of the OVEC Shares, and the transfer and assignment of Allegheny’s rights and obligations under the ICPA,
this Agreement will immediately and automatically terminate, and Allegheny and Purchaser shall have no liabilities or obligations hereunder; provided, however, that Allegheny shall pay Purchaser (i) Five Hundred Thousand Dollars ($500,000) in cash
within 10 days of termination of this Agreement, and (ii) One Million Five Hundred Thousand Dollars ($1,500,000) in cash upon 

  

 24 

 
the closing of the sale and purchase of the OVEC Shares, and the transfer and assignment of Allegheny’s rights and obligations under the ICPA. If the
Offer is not accepted by, and approved by the Board of Directors of, one or more of the other Sponsoring Companies in accordance with Section 12.193 of the Original ICPA, Section 9.183 of the New ICPA, and the Unanimous Consent and Waiver Agreement,
or if, within 45 days of the date of this Agreement, Allegheny does not enter into a definitive agreement with a Sponsoring Company for the sale and purchase of the OVEC Shares, and the transfer and assignment of Allegheny’s rights and
obligations under the ICPA, this Agreement shall continue in full force and effect in accordance to its terms. Allegheny’s obligations under this Section 15 shall survive any termination of this Agreement. 
  
 16. Escrow. Upon the signing of this Agreement, Purchaser will deposit
Two Million Dollars ($2,000,000) with Wells Fargo National Association (the “Escrow Agent”), as escrow agent, pursuant to such form of escrow agreement as Purchaser, Allegheny and Escrow Agent mutually agree (the “Escrow
Agreement”), which will be paid to Allegheny upon the termination of this Agreement under the condition of Section 13(c) above. Immediately upon the satisfaction of the condition of Section 8(g), Purchaser shall place an additional Three
Million Dollars ($3,000,000) with the Escrow Agent such that Purchaser will have a total of Five Million Dollars ($5,000,000) in escrow pursuant to this Section 16. Allegheny will have the right to recover from this $5,000,000 escrow any amount
which Allegheny is entitled to indemnification for under Section 12(b). Any interest accrued on the escrow amounts described in this Section 16 will be disbursed to Purchaser periodically as provided in the Escrow Agreement. Any payment of any
escrow amounts to Allegheny pursuant to this Section 16 are in addition to any other remedies to which Allegheny may be entitled under this Agreement. The Escrow Agreement shall terminate at the earlier of the termination of this Agreement or the
Effective Time, and, except as otherwise provided in this Section 16, any amounts in escrow, including accrued interest, at the time of the termination of the Escrow Agreement shall be disbursed to Purchaser provided, however, that if Allegheny has
any unsatisfied claims under the Escrow Agreement the Escrow Agreement will not terminate until final resolution of such unsatisfied claims. 
  
 [Signature Page Follows] 
  

 25 

 IN WITNESS WHEREOF, Purchaser and Allegheny have executed this Agreement as of the date first written
above. 
  

			
	ALLEGHENY ENERGY, INC.
		
	By:	 	 
	 Its:
	 	 
	
	ALLEGHENY ENERGY SUPPLY COMPANY, LLC
		
	By:	 	 
	 Its:
	 	 
	
	BUCKEYE POWER GENERATING, LLC
		
	By:	 	 
	 Its:
	 	 

  

 26 

  
 DISCLOSURE
SCHEDULE 
  
 ALLEGHENY
ENERGY, INC. AND 
 ALLEGHENY ENERGY SUPPLY
COMPANY, LLC (“ALLEGHENY”) 
  
 DATED AS OF MAY 17, 2004 
  
 This schedule and the disclosures set forth herein (the “Schedule”) are delivered in connection with that certain Stock Purchase and ICPA
Assignment Agreement dated as of May 17, 2004, between Allegheny Energy, Inc., Allegheny Energy Supply Company, LLC, and Buckeye Power Generating, LLC (the “Agreement”). Capitalized terms used in this Schedule but not defined herein shall
have the meanings ascribed to such terms in the Agreement. 
  
 The
Schedule numbers set forth below correspond to the section numbers in the Agreement. Any disclosure made in any part of this Schedule which should, based upon the substance of such disclosure, be applicable to another part of this Schedule shall be
deemed to be made with respect to such other Schedule, regardless of whether or not a specific reference is made thereto. The headings or any subheadings of any Schedule have been inserted for convenience of reference only and shall not be deemed to
be part of this Schedule. 
  
 To the extent that this Schedule
contains exceptions to the representations and warranties set forth in Sections 4 and 5 of the Agreement, the inclusion of an item on this Schedule shall not be deemed an admission by Allegheny that such item is material or that it will have a
material adverse effect. 
  

 1 

  
 DISCLOSURE
SCHEDULE 
  
 Schedule 4(e) 
  
 Allegheny Conflicts 
  
 None 
  

 2 

  
 DISCLOSURE
SCHEDULE 
  
 Schedule 4(f) 
  
 Allegheny Litigation 
  
 None 
  

 3 

  
 DISCLOSURE
SCHEDULE 
  
 Schedule 4(h) 
  
 Allegheny Consents 
  
 OVEC Specific Approvals  
  
 Each of the OVEC Sponsoring Companies must fail to exercise each of their right of first
offer under the ICPA before Allegheny may assign its rights and obligations under the ICPA. 
  
 Consent to the assignment of all of Allegheny’s rights and obligations under the ICPA and the transfer of the OVEC Shares to Purchaser by XL Capital Assurance, as the insurance wrap provider and guarantor to
bondholders, under a $305 million bond financing that is wrapped by a credit-insurance policy, primarily documented by an Indenture and an Insurance and Reimbursement Agreement, both dated as of December 21, 2001. 
  
 Consent to the assignment of all of Allegheny’s rights and obligations under the ICPA
and the transfer of the OVEC Shares to Purchaser by certain required lenders under a $60 million term loan facility, primarily documented by a Term Credit Agreement, dated as of March 25, 2003, among OVEC, a syndicate of banks and LaSalle Bank N.A.,
as administrative agent. 
  
 Consent to the assignment of all of Allegheny’s
rights and obligations under the ICPA and the transfer of the OVEC Shares to Purchaser by KeyBank, N.A. and certain required lenders under a 364-day revolving loan facility, primarily documented by a 364-day Credit Agreement, dated as of August 10,
2001, among OVEC, a syndicate of lenders and KeyBank N.A., as administrative agent. 
  
 Approvals of Transaction in Connection with Stock Purchase and ICPA 
  
 Assignment Agreement 
  
 Approval
of the transactions contemplated under this Agreement by the Federal Energy Regulatory Commission pursuant to a 203 filing. 
  
 All applicable waiting periods (and any extensions of such waiting periods) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, have expired or
otherwise been terminated. 
  

 4 

 Approval of the transactions contemplated under this Agreement by the Securities and Exchange Commission. 
  
 ICPA Approvals 
  
 Approval of the ICPA by the Federal Energy Regulatory Commission pursuant to a 205 filing. 
  
 Approval of the ICPA by the Virginia State Corporation Commission. 
  
 Filing with the Public Service Commission of West Virginia. 
  
 Filing with the Indiana Regulatory Commission. 
  
 Consent or approval of, or filings or negotiations with, the Kentucky Public Service
Commission may be required. 
  
 Filing with, or consent or approval of, the
Securities and Exchange Commission under the Public Utility Holding Company Act of 1935, if required. 
  

 5 

  
 DISCLOSURE
SCHEDULE 
  
 Schedule 5(a) 
  
 Information Concerning OVEC 
  
 OVEC’s purchase and installation of flu-gas desulpherization equipment, i.e. scrubbers,
on the generation units at the Clifty Creek and Kyger Creek Stations 
  
 National,
regional and local market conditions generally affecting OVEC 
  
 All information
contained in the 2002 Annual Report of OVEC 
  

 6 

  
 DISCLOSURE
SCHEDULE 
  
 Schedule 5(c) 
  
 OVEC Conflicts 
  
 See Schedule 4(h) to this Agreement for OVEC Specific Approvals and ICPA Approvals

  

 7 

  
 DISCLOSURE
SCHEDULE 
  
 Schedule 5(d) 
  
 OVEC Capitalization 
  
 None 
  

 8 

  
 DISCLOSURE
SCHEDULE 
  
 Schedule 5(e) 
  
 OVEC Financial Statements 
  
 See Financial Statements as of December 31, 2002 and 2001 attached in the 2002 Annual Report
for OVEC at http://www.ovec.com/AnnualReport02.pdf 
  
 See Financial Statements as
of December 31, 2003 at http://www.ovec.com/ConFinancials.html 
  

 9 

  
 DISCLOSURE
SCHEDULE 
  
 Schedule 5(f) 
  
 OVEC Litigation 
  
 A. OVEC Corporate Litigation 
  
 1. AEI Coal 
  
 OVEC is a party to a certain coal supply agreement between OVEC, as buyer,
and Horizon Natural Resources Sale Company (n/k/a AEI Coal Sales Company, Inc.) (“AEI Coal”), as seller, dated April 25, 2000 (as amended, the “Coal Supply Agreement”). Coal Ventures Holding Company, Inc., Horizon
NR, LLC (n/k/a AEI Resources, Inc) and Zeigler Coal Holding Company, all debtors and debtors-in-possession, are jointly and severally guarantors (collectively, the “Guarantors”) of the Coal Supply Agreement under the guarantee
attached to the Coal Supply Agreement (the “Guarantee”). AEI Coal repeatedly failed and refused to provide the quantity of coal required under the Coal Supply Agreement despite demands by OVEC that it comply with its contractual
obligations under the Agreement. To date, AEI Coal has failed to deliver hundreds of thousands of tons of coal required under the Coal Supply Agreement. 
  
 On or about September 26, 2001, AEI Coal, Horizon Natural Resources Holding Company, LLC (n/k/a AEI Holding Company, Inc.) (“AEI
Holding”), Bluegrass Coal Development Co. (“Bluegrass”) and Evergreen Mining Co. (“Evergreen”) commenced an action against OVEC and other defendants in the Commonwealth of Kentucky Boyd Circuit II Division
(the “Kentucky State Court”), Case No. 01-CI-00935 (the “Kentucky Litigation”), alleging, among other claims, fraud, breach of contract and duress and seeking, inter alia, to rescind the Coal Supply
Agreement. On November 6, 2001, OVEC filed its 

  

 10 

 
answer to the Kentucky complaint and asserted counterclaims against AEI (the “OVEC Counterclaims”). 
  
 On February 26, 2002, AEI Coal, AEI Holding, Bluegrass and Evergreen filed an
amended complaint in the Kentucky Litigation (the “First Amended Complaint”). OVEC’s claims arising out of and relating to the Coal Litigation and the Coal Supply Agreement (the “Litigation Claims”) are in the
multi-million dollar range. On February 28, 2002, AEI Coal, AEI Holding, Bluegrass and Evergreen and various affiliated companies (collectively, the “AEI Debtors”) commenced voluntary petitions for reorganization under Chapter 11 of
Title 11, United States Code (the “Bankruptcy Code”) in the Bankruptcy Court. 
  
 In response to OVEC’s objection to the AEI Debtors’ Chapter 11 Plan dated February 28, 2002 (the “AEI Plan”), the order confirming the AEI Plan dated April 17, 2002 (the “AEI
Confirmation Order”) provided that the OVEC Counterclaims were unimpaired, passed through the AEI Debtors’ Chapter 11 cases and were unaffected by the confirmation of the AEI Plan. 
  
 On March 11, 2002, counsel for AEI Coal, AEI Holding, Bluegrass and Evergreen
confirmed by letter to counsel for OVEC that OVEC need not answer the amended complaint, which was directed only to another defendant in the Kentucky Litigation. On or about April 26, 2002, AEI Coal, AEI Holding, Bluegrass and Evergreen filed a
second amended complaint (the “Second Amended Complaint”) in the Kentucky Litigation. 
  
 On May 20, 2002, OVEC filed its answer to the second amended complaint (the “OVEC Answer II”) in the Kentucky Litigation and reasserted
the OVEC 

  

 11 

 
Counterclaims against AEI Coal (together with the second amended complaint, the “Coal Litigation”). On November 13, 2002, the reorganized
AEI Debtors, Horizon Natural Resources Sales Company, Horizon Natural Resources Holding Company, LLC, Coal Ventures Holding Company, Inc., AEI Resources, Inc. and Zeigler Coal Holding Company, Blue Grass and Evergreen and various other affiliated
companies (collectively, the “Horizon Debtors”) commenced voluntary petitions for reorganization under Chapter 11 of the Bankruptcy Code. 
  
 Pursuant to the automatic stay imposed by Section 362 of the Bankruptcy Code, the Coal Litigation against the Horizon Debtors has been stayed. No motion
to lift the automatic stay has been filed by OVEC. 
  
 OVEC filed a proof of claim asserting (a) various claims for amounts payable and breach of obligations under the Coal Supply Agreement, the Guarantee and other related agreements as set forth in the Coal Litigation; (b) contingent and/or
unliquidated claims relating to breaches and failures to perform obligations, including indemnity obligations, under the Coal Supply Agreement, the Guarantee and other related agreements, including but not limited to (i) contingent, unliquidated
claims for future liabilities under the Coal Supply Agreement, the Guarantee and other related agreements, (ii) contingent, unliquidated claims for indemnification relating to any losses or liabilities from the Coal Litigation and (iii) contingent,
unliquidated claims for indemnification relating to any losses or liabilities for breach of representation and warranties under Article XIII of the Coal Supply Agreement; (c) a guarantee claim for OVEC’s contingent and/or unliquidated claims
relating to breaches and failures to perform obligations, including indemnity obligations, under the Coal Supply Agreement against Coal Ventures Holding 

  

 12 

 
Company, Inc., Horizon Natural Resources Holding Company, LLC and Zeigler Coal Holding Company; and (d) various claims against each of the Horizon Debtors
set forth in the OVEC Counterclaims. 
  
 2. American Commercial
Barge Line 
  
 On July 29, 1980, American Commercial Barge
Line LLC (“ACBL”) and Indiana-Kentucky Electric Corporation (“IKEC”) entered into a coal barge agreement (as amended, the “Contract”) pursuant to which ACBL transported coal owned by IKEC from the
Loading Points (as defined in the Contract) of third-party coal suppliers to IKEC’s coal unloading docks. Pursuant to the terms of the Contract, IKEC had an option to extend the Contract up to and including August 31, 2009. 
  
 By Motion to Reject Executory Contract (Coal Barging Agreement, as Amended,
With Indiana-Kentucky Electric Corporation), dated March 17, 2003 (the “Motion”), ACBL and certain of its subsidiaries (collectively, the “Debtors”) sought to reject the Contract. On April 8, 2003, the United States
Bankruptcy Court for the Southern District of Indiana (New Albany Division)(the “Bankruptcy Court”) entered an Agreed Order (the “Agreed Order”) Granting Debtors’ Motion To Reject Executory Contract (Coal
Barging Agreement, As Amended, With Indiana-Kentucky Electric Corporation) effective as of April 3, 2003 (the “Effective Date”). 
  
 As a result of the rejection of the Contract, IKEC filed a proof of claim for damages for, inter alia, (i) breach of ACBL’s performance
and other obligations under the Contract for the period commencing after the Effective Date through August 31, 2009; (ii) the actual costs IKEC incurred to obtain emergency barge services; and (iii) contingent and/or unliquidated claims relating to
breaches and failures to perform obligations, including indemnity obligations, under the Contract. 
  

 13 

 B. OVEC Environmental Litigation - IKEC 
  
 1. Clifty Creek Station 
  
 On December 26, 2002, Save The Valley (STV), Hoosier Environmental Council (HEC), and Citizens Action Coalition of Indiana (CAC) filed an appeal of the
renewed operating permit for the fly ash landfill at IKEC’s Clifty Creek Station with the Indiana Office of Environmental Adjudication (OEA). The appeal alleged that the Indiana Department of Environmental Management (IDEM) did not properly
public notice the renewal permit and that the permit should not have been issued considering surface water, groundwater and fugitive dust problems at the site. 
  

IKEC intervened in the appeal in support of IDEM. IDEM allowed IKEC to take the lead in defending the permit action, and IKEC chose to challenge the
environmental groups’ legal standing under Indiana law on the grounds that the groups were “not persons adversely affected by the permit action.” On June 23, 2003, the OEA ruled against IKEC on the standing issue, and on July 3, 2003
IKEC and IDEM appealed OEA’s decision to the Marion County Superior Court. On October 27, 2003, the Marion Superior Court reversed the OEA decision and ruled that the groups did not have standing to appeal the permit. The environmental groups
have now asked the Indiana State Court of Appeals to review the Marion Superior Court’s decision and the court has agreed to do so. The State Court of Appeals has not yet established a schedule to review the decision. 
  

 14 

 2. North Madison & Liberty Ridge Monitoring Stations 
  
 On March 7, 2001, IKEC submitted a waiver request to IDEM requesting approval
to discontinue operation of the North Madison SO2 ambient air monitoring station and the Liberty Ridge meteorological monitoring station, both associated with the Clifty Creek Station. The basis of the request was that the stations were no longer
needed to assure compliance with the ambient air quality standards for SO2 since no exceedances had been measured over a 30 plus year period and the plant had recently significantly reduced SO2 emissions in response to the Acid Rain Rules. On May
15, 2001, IDEM denied the request, and on May 31, 2001, IKEC appealed IDEM’s denial to the OEA. On May 8, 2003, the OEA upheld IDEM’S denial. On June 4, 2003, IKEC appealed OEA’s decision to the Marion County Superior Court. Oral
arguments were held before the Marion Superior Court on March 11, 2004, and the court’s decision is pending. 
  

	C.	Employee/Other Litigation 

  

	1.	Ronald K. Barnes – Harbor Boat Operator at the Clifty Creek Plant. On 4/16/99, Mr. Barnes alleges that he injured his back while pulling an employee from the Ohio River
who was struck by a barge haul cable which had broken and knocked the employee into the river. Mr. Barnes filed a Jones Act suit in the United States District Court, Eastern District of Kentucky in April 2002. The Company is insured under the Jones
Act by MOAC (A CNA Maritime Division) who has hired attorneys to defend the claim. Depositions have been taken and the case is scheduled to go to trial 12/21/04. A settlement demand has not been made. 

  

	2.	Keith A. Tanner – Transmission Mechanic A in the System Division. On July 5, 2001, Mr. Tanner was burned when he contacted a 12,000 volt conductor resulting in the loss
of his left arm at the shoulder and his right arm below the elbow. He filed an intentional tort claim against the Company in Franklin, Ohio, County Common Pleas Court on April 26, 2002. Motions for Summary Judgment were filed on March 5, 2004. The
case is scheduled to go to trial on November 8, 2004. Company is represented by Jim Blake from the law firm of Day, Ketterer, Raley, Wright & Rybolt. A settlement demand has not been made. 

  

	3.	 Cheryl L. Maddox – Maintenance Mechanic B at the Clifty Creek Plant. Ms. Maddox was discharged on 2/19/03 for altering the return to work date on a

  

 15 

	 	 
doctor’s statement and insubordination and abusive, threatening, and profane language when confronted about the statement. Ms. Maddox filed an EEOC
charge against the Company alleging discrimination due to sex and retaliation for which we received a no probable cause finding. She then filed suit in August 2003 in United States District Court, Southern District of Indiana alleging
discrimination. We are currently responding to Interrogatories and a Request for Production of Documents. Company is represented by Mr. Douglas Bates from the law firm of Stites & Harbison. A settlement demand has not been made.

  

	4.	Chester Willis – A contractor employee performing work at the Kyger Creek Plant. On 9/24/01, Mr. Willis was working in a coal bunker when coal spilled from the conveyor
belt into the bunker and onto Mr. Willis allegedly causing him to suffer a back injury. He filed suit in Gallia, Ohio, County Common Pleas Court on 9/11/03. The Company is insured by Chubb who has hired Mr. Jim Blake to represent the Company.
Depositions are now being taken. A settlement demand has not been made. 

  

	D.	Asbestos Litigation 

  

	1.	On 12/11/02, Charlotte Johnson, surviving spouse of Joseph Johnson, brought suit against Air Products & Chemicals, Et Al (which included Ohio Valley Electric Corporation) in
Maryland alleging Mr. Johnson died of mesothelioma resulting from exposure to asbestos – containing products while working as a contractor employee at the Kyger Creek Plant. The Company filed a Motion To Dismiss Claims Against It And
“Kyger Creek Power” on 7/3/03, on the grounds that the Court does not have jurisdiction over the Company and the claims against the Company are time – barred. The law firm of Kramon & Graham, P.A. located in Baltimore, Maryland is
defending the Company. 

  

	2.	On April 28, 2003, the Company was served with a summons and complaint in the case of a group of plaintiffs vs 20th Century Glove Corporation of Texas, Et Al (including Ohio Valley Electric Corporation) which was filed in the Circuit Court of Kanawha County, West Virginia.
(See note below). 

  

	3.	On June 19, 2003, the Company was served with a summons in the case of a group of plaintiffs vs 20th Century Glove Corporation of Texas, Et Al (including Ohio Valley Electric Corporation) which was filed in the Circuit Court of Kanawha County, West Virginia.
(See note below). 

  

	4.	On January 27, 2004, the Company was served with a summons and complaint in the case of Sue Ellen Guinn vs 20th Century Glove Corporation, Et Al (including Ohio Valley Electric Corporation) which was filed in the Circuit Court of Kanawha County, West Virginia. (See note
below). 

  

 16 

	5.	On February 5, 2004, the Company was served with a summons and complaint in the case of Jon T. Chatham vs A. W. Chesterton Company, Et Al (including Indiana-Kentucky Electric
Corporation) which was filed in the Marion County Superior Court, Indiana. (See note below). 

  

			
	NOTE:	  	The cases described in items D - 2., 3., 4., and 5. above have been referred to Mr. Richard C. Polley of Dickie, McCamey & Chilcote who has been retained by the Company to handle these
asbestos claims in litigation. Mr. Polley also represents subsidiaries of American Electric Power Company, Inc. (AEP). These cases may be settled using the AEP Settlement Guidelines.

  

 17 

  
 DISCLOSURE
SCHEDULE 
  
 Schedule 5(g) 
  
 OVEC Environmental Matters 
  
 See Schedule 5(f), OVEC Litigation, to this Agreement 
  

 18 

 SCHEDULE 6(F) – PURCHASER CONSENTS 
  
 Set forth below is a list of all consents and approvals that are required to
be obtained in connection with the performance of Purchaser’s obligations under this Agreement. 
  

	1.	Approval of the transactions contemplated under this Agreement by the Federal Trade Commission, the Department of Justice, and all other relevant government agencies under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, without the requirement of any significant divestiture by the Purchaser or any OVEC Entity, or the imposition of restrictions on the operation of any business by Purchaser or any OVEC
Entity. 

  

	2.	All required approvals of the ICPA, including, without limitation, to the extent necessary, by applicable state public utility commissions, and acceptance for filing and approval of
the ICPA as a rate schedule by the Federal Energy Regulatory Commission (“FERC”). 

  

	3.	All required approvals of the assignment of all of Allegheny’s rights and obligations under the ICPA to Purchaser, including, without limitation, to the extent necessary, by
the FERC, Allegheny’s and OVEC’s lenders, the other parties to the ICPA, and the Securities and Exchange Commission. 

  

	4.	All required approvals of the transfer of the OVEC Shares to Purchaser, including, without limitation, to the extent necessary, by the Securities and Exchange Commission.

  

	5.	All required approvals of the Buckeye PPA, including, without limitation, to the extent necessary, acceptance for filing and approval of the Buckeye PPA as a rate schedule by the
FERC. 

  

 1

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