Document:

EX-10.1

 

Exhibit 10.1

RETENTION BONUS AND NON-COMPETITION AGREEMENT

          THIS RETENTION BONUS AND NON-COMPETITION AGREEMENT (the “Agreement”) is made by and
between Hamilton Beach/Proctor-Silex, Inc. (the “Employer”) and Michael J. Morecroft (“Employee”)
as of May 1, 2007 (the “Effective Date”).

          WHEREAS, Employee is the President & Chief Executive Officer of the Employer;

          WHEREAS, on the Spin-Off Date (as defined below), the Employer and its Affiliates (as defined
below) (collectively, the “Company”) will become an independent, publicly-traded company; and

          WHEREAS, the Employee is a key employee whose services are vital to the success of the Company
following the Spin-Off Date; and

          WHEREAS, the Employee has received specialized training and has expertise and knowledge
regarding the Company’s business and will continue to have access to proprietary and confidential
information of the Company after the Spin-Off Date; and

          WHEREAS, the Company would be at a competitive disadvantage if the Employee were to terminate
employment during the two-year period following the Spin-Off Date and/or become employed by a
Competitor (as defined below).

          NOW, THEREFORE, for good and valuable consideration, Employee and the Company hereby agree as
follows:

	 	1.	 	Definitions. In addition to the other defined terms which appear in this Agreement,
the following terms shall have the meaning ascribed to them below:

	 	a.	 	Affiliate. The term “Affiliate” shall mean any entity that
directly or indirectly controls, is controlled by, or is under common control with,
the Employer.

	 	b.	 	Cause. The term “Cause” shall constitute any of the following:
(i) dishonesty, fraud or material misrepresentation by Employee in the performance
of Employee’s employment duties; (ii) Employee having been convicted of, or having
entered a plea of nolo contendere to, a crime that constitutes a felony; or (iii)
Employee’s willful and continued failure to substantially perform Employee’s
employment duties. For purpose of this Subsection, no act or failure to act by the
Employee shall be considered “willful”, unless done or omitted to be done by the
Employee in bad faith and without reasonable belief that the Employee’s action or
omission was in the best interests of the Company. Any act, or failure to act,
based upon authority given pursuant to a resolution duly adopted by the Board of
Directors of the Employer (the “Board”) shall be conclusively presumed to be done,
or omitted to be done, by the Employee in good faith and in the best interests of
the Company. Cause shall not exist unless and until the Employer has delivered to
the Employee a copy of a

 

 

resolution duly adopted by three-quarters (3/4) of the entire Board (excluding the
Employee if the Employee is a Board member) at a meeting of the Board called and held
for such purpose (after reasonable notice to the Employee and an opportunity for the
Employee to be heard before the Board), finding that in the good faith opinion of the
Board an event set forth in clauses (i), (ii) or (iii) has occurred and specifying
the particulars thereof in detail.

	 	c.	 	Code. The term “Code” shall mean the Internal Revenue Code of
1986, as amended, and all regulations, guidance, and other interpretive authority
issued thereunder.

	 	d.	 	Disability or Disabled. The Employee shall be deemed to have a
“Disability” or be “Disabled” if he is determined to be totally disabled by the
Social Security Administration or if he (i) is unable to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death or can be expected to last for
a continuous period of not less than 12 months, or (ii) is, by reason of any
medically determinable physical or mental impairment which can be expected to
result in death or can be expected to last for a continuous period of not less than
12 months, receiving income replacement benefits for a period of not less than 3
months under an employer-sponsored accident or health plan.

	 	e.	 	Spin-Off Agreement. The term “Spin-Off Agreement” shall mean
the Amended and Restated Spin-Off Agreement dated April 25, 2007 by and among NACCO
Industries, Inc., Housewares Holding Company, Hamilton Beach, Inc. and Hamilton
Beach/Proctor-Silex, Inc.

	 	f.	 	Spin-Off and Spin-Off Date. The terms “Spin-Off” and “Spin-Off
Date” shall have the same meanings as assigned to those terms under the Spin-Off
Agreement.

	 	g.	 	Change in Control. The term “Change in Control” shall mean the
occurrence of (i), (ii), (iii) or (iv) below (excluding the Spin-Off):

	 	i.	 	The acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of voting securities of Hamilton Beach, Inc. (“Hamilton
Beach”) after the Spin-Off Date where such acquisition causes such Person to
own 50% or more of the combined voting power of the then outstanding voting
securities of Hamilton Beach entitled to vote generally in the election of
directors (the “Outstanding Voting Securities”); provided, however, that for
purposes of this Subsection (i), the following acquisitions shall not be
deemed to result in a Change in Control:

	 	(A)	 	any acquisition of voting securities directly from
Hamilton Beach that is approved by the Incumbent Board (as defined in
Subsection (ii), below),

	 	(B)	 	any acquisition of voting securities by Hamilton Beach
or a subsidiary of Hamilton Beach,

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	 	(C)	 	any acquisition of voting securities by (1) any employee
benefit plan (or related trust) sponsored or maintained by Hamilton Beach or
an Affiliate, (2) any corporation controlled by Hamilton Beach or (3) any
member of the Rankin or Taplin families or any corporation, partnership,
trust or other entity owned or controlled by such families (an “Interested
Party”),

	 	(D)	 	any acquisition of voting securities by any Person
pursuant to a transaction described in clauses (A), (B) and (C) of
Subsection (iii) below; and
	 
	 	 	 	provided, further, that if any Person’s beneficial ownership of the Outstanding
Voting Securities reaches or exceeds 50% as a result of a transaction
described in clause (A) or (B) above, and such Person subsequently acquires
beneficial ownership of additional voting securities of Hamilton Beach, such
subsequent acquisition shall be treated as an acquisition that causes such
Person to own 50% or more of the Outstanding Voting Securities; and
provided, further, that if at least a majority of the members of the
Incumbent Board determines in good faith that a Person has acquired
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 50% or more of the Outstanding Voting Securities
inadvertently, and such Person divests as promptly as practicable a
sufficient number of shares so that such Person beneficially owns (within
the meanings of Rule 13d-3 promulgated under the Exchange Act) less than 50%
of the Outstanding Voting Securities, then no Change in Control shall have
occurred as a result of such Person’s acquisition; or

	 	ii.	 	individuals who, as of the Spin-Off Date, constitute the
Hamilton Beach Board of Directors (the “Incumbent Board” (as modified by
this clause (ii)) cease for any reason to constitute at least a majority of
such Board of Directors; provided, however, that any individual becoming a
director subsequent to the date hereof whose election, or nomination for
election by Hamilton Beach’s shareholders, was approved by a vote of at
least a majority of the directors then comprising the Incumbent Board
(either by a specific vote or by approval of the proxy statement of Hamilton
Beach in which such person is named as a nominee for director, without
objection to such nomination) shall be considered as though such individual
were a member of the Incumbent Board, but excluding, for this purpose, any
such individual whose initial assumption of office occurs as a result of an
actual or threatened election contest with respect to the election or
removal of directors or other actual or threatened solicitation of proxies
or consents by or on behalf of a Person other than the Board of Directors;
or

	 	iii.	 	the consummation of a reorganization, merger or
consolidation or sale or other disposition of all or substantially all of
the assets of Hamilton Beach or the acquisition of assets of another
corporation, or other transaction (“Business Combination”) excluding,
however, such a Business Combination pursuant to which all three of the
following apply:

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	 	(A)	 	the individuals and entities who were the ultimate
beneficial owners of voting securities of Hamilton Beach immediately prior
to such Business Combination beneficially own, directly or indirectly, more
than 50% of, respectively, the then outstanding shares of common stock and
the combined voting power of the then outstanding voting securities entitled
to vote generally in the election of directors, as the case may be, of the
entity resulting from such Business Combination (including, without
limitation, an entity that as a result of such transaction owns Hamilton
Beach or all or substantially all of Hamilton Beach’s assets either directly
or through one or more subsidiaries),

	 	(B)	 	no Person (excluding any Interested Party, Hamilton Beach
or such entity resulting from such Business Combination) beneficially owns,
directly or indirectly 30% or more of the combined voting power of the then
outstanding securities entitled to vote generally in the election of
directors of the entity resulting from such Business Combination, and

	 	(C)	 	at least a majority of the members of the board of
directors of the corporation resulting from such Business Combination were
members of the Incumbent Board at the time of the execution of the initial
agreement, or of the action of the Board, providing for such Business
Combination; or

	 	iv.	 	approval by the Hamilton Beach shareholders of a complete
liquidation or dissolution of Hamilton Beach except pursuant to a Business
Combination described in clauses (A), (B) and (C) of Subsection (iii),
above.

	 	2.	 	No Employment Contract. Nothing contained in this Agreement shall be construed to be
an employment contract between Employee and the Company. By entering into this Agreement,
Employee agrees and acknowledges that Employee’s employment relationship remains at-will
and that either party to this Agreement may terminate the employment relationship for any
reason at any time; provided, however, that any termination of the Employee’s employment
shall be subject to all of the provisions of this Agreement.

	 	3.	 	Retention Bonus Payment/Termination of Offer

	 	a.	 	Retention Bonus Payment(s). The Employer shall pay to Employee
a retention bonus in the amounts and under the circumstances described below:

	 	i.	 	In the event the Employee is an active employee of the
Employer on the second anniversary of the Spin-Off Date (the “Second
Anniversary Date”), the Employer will pay to the Employee a lump sum cash
payment equal to one-half of the sum of (A) his base salary (excluding
perquisite allowance), plus (B) his target annual incentive compensation
award plus (C) the cash equivalent of his target award under the Hamilton
Beach/Proctor-Silex, Inc. Long-Term Incentive Compensation Plan (the “HB/PS
Long-Term Plan”), all as in effect for the portion of the 2007 calendar year
following the Spin-Off Date, determined on an annualized basis.

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	 	ii.	 	In the event the Employee terminates employment with the
Employer at any time at or after the Second Anniversary Date for any reason
other than involuntary termination for Cause (including, without limitation,
termination on account of resignation, retirement, death or Disability), the
Employer shall also pay to the Employee (or his estate in the event of his
death):

	 	1.	 	A lump sum cash payment equal to one-half
of the sum of (A) his base salary (excluding perquisite allowance),
plus (B) the cash equivalent of his target annual incentive
compensation award plus (C) his target award under the HB/PS
Long-Term Plan, all as in effect for the portion of the 2007
calendar year following the Spin-Off Date, determined on an
annualized basis.

	 	2.	 	A lump sum cash payment equal to the
projected cost of COBRA continuation coverage under the Company’s
medical and dental plan for a period of twelve months, determined on
the basis of the level of coverage that the Employee has in place on
the date of the Employee’s termination of employment.

	 	iii.	 	In the event the Employee’s employment is terminated on or
after the Spin-Off Date but before the Second Anniversary Date (A) on account
of death or Disability, (B) involuntarily by the Company following a Change
in Control for reasons other than Cause or (C) on account of the Employee’s
voluntary retirement following a Change in Control, the Employer shall pay to
the Employee (or his estate in the event of his death) the following amounts
in lieu of the payments described in Sections 3(a)(i) and 3(a)(ii):

	 	1.	 	A lump sum cash payment equal to the sum
of (1) the Employee’s base salary (excluding perquisite allowance),
plus (2) the Employee’s target annual incentive compensation award,
plus (3) the cash equivalent of the Employee’s target award under
the HB/PS Long-Term Plan, all as in effect for the portion of the
2007 calendar year following the Spin-Off Date, determined on an
annualized basis.

	 	2.	 	A lump sum cash payment equal to the
projected cost of COBRA continuation coverage under the Company’s
medical and dental plan for a period of twelve months, determined on
the basis of the level of coverage that the Employee has in place on
the date of the Employee’s termination of employment.

	 	iv.	 	Notwithstanding any provision of the Company’s annual
incentive compensation plan, the current HB/PS Long-Term Plan or any
successor long-term incentive compensation plan to the contrary, in the event
the Employee terminates employment with the Employer following the Spin-Off
Date and prior to December 31st of any year or the last day of the
performance period to which incentive awards under such plans relate (each an
“Award Period End Date”) for any reason other than involuntary termination
for Cause (including, without limitation, termination on account of
resignation, retirement, death or Disability), the Employee shall be entitled
to receive a pro-rata incentive award

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	 	 	 	under the annual incentive compensation plan and the long-term incentive
compensation plan for the year of termination. The amount of the awards shall
be equal to the awards the Employee would have been entitled to receive under
the terms of the plans in effect for the year of termination assuming he
continued in employment until the Award Period End Date, pro-rated to reflect
the period of time during which the Employee was employed by the Company during
the year of termination. The awards so granted shall be paid out in accordance
with the terms of the plans (as in effect from time to time).

	 	v.	 	The payments described in Sections 3(a)(ii) and 3(a)(iii)
(other than payments made on account of the death of the Employee) shall be
conditioned upon receipt by the Company, within 46 days of the date of the
Employee’s termination of employment, of the Company’s standard general
release, executed by the Employee, substantially in the form attached hereto
as Exhibit A. The payments described in Sections 3(a)(i) and 3(a)(iv) shall
not be conditioned on the execution of a release.

	 	b.	 	Timing of Retention Bonus Payments; Other Rules. The lump sum
cash payment described in Section 3(a)(i) shall be paid within five (5) business
days following the Second Anniversary Date. The lump sum cash payments described
in Sections 3(a)(ii) and 3(a)(iii) shall be paid within three (3) business days
after the earlier of (1) the last day of the revocation period provided in the
Employee’s executed general release described above or (2) the date of the
Employee’s death. If the Employee’s termination of employment occurs for reasons
other than death and before November 1st of a calendar year, the lump
sum cash payments payable under Sections 3(a)(ii) or 3(a)(iii) shall be paid within
three (3) business days after the last day of the revocation period provided in the
Employee’s executed general release described above. If the Employee’s
termination of employment occurs for reasons other than death and on or after
November 1st of a calendar year, the lump sum cash payments payable
under Sections 3(a)(ii) or 3(a)(iii) shall be paid on the later of (1) the first
business day of the subsequent calendar year (provided that the Company has
received the Employee’s executed general release by that date) or (2) three (3)
business days after the last day of the revocation period provided in the
Employee’s executed general release described above.

	 	i.	 	Each of the payments described in this Section shall be
classified as a “separate payment” under Code Section 409A and the Treasury
Regulations thereunder. As used in this Agreement, the phrase “termination
of employment” shall be interpreted in accordance with the applicable
standards established pursuant Treasury Regulations under Code Section 409A.

	 	ii.	 	If and to the extent required by Section 409A, and if the
Employee is classified as a “specified employee” under Code Section 409A at
the time the Employee becomes entitled to a payment on account of the
Employee’s termination of employment, no payments shall be made to the
Employee prior to the earlier of (i) the expiration of the six-month period
measured from the date of the Employee’s termination of employment or (ii)
the date of the Employee’s death. Upon the expiration of the six -month
deferral period referred to in the preceding sentence or the Employee’s
death, all payments deferred pursuant to

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	 	 	 	the preceding sentence shall be paid to the Employee (or the Employee’s estate
in the event of the Employee’s death) in a lump sum (without interest) within
five (5) business days following the earlier of the end of such six-month period
or the Employee’s death.

	 	iii.	 	The payments described in this Section shall be in addition
to any other payments to which the Employee is entitled from the Employer;
provided that, in the event the Employee receives payments under Sections
3(a)(ii) or 3(a)(iii), such payments shall be in lieu of, and not in addition
to, any payments or other benefits the Employee would otherwise be eligible
to receive under the Company’s Employee’s Severance Pay Plan or any other
severance plan, practice or program of the Company (as in effect from time to
time).

	 	c.	 	Termination/Lapse of Offer. Notwithstanding any provision of
this Agreement to the contrary, this Agreement shall be null and void and of no
further force or effect and the Employee shall not be entitled to receive any
payments hereunder if either (i) the Spin-Off does not occur by September 1, 2007
or (ii) the Employee fails to deliver a signed copy of this Agreement to the
Employer to the attention of Kathleen L. Diller, Vice President, General Counsel
and Human Resources, and Secretary, at the address specified in Section 13 hereof
prior to May 10, 2007.

	 	4.	 	Non-Competition, Non-Disclosure, Proprietary Rights, Non-Solicitation, Non-Interference
and Cooperation

	 	a.	 	Nature of Position. Employee’s position with the Company is
President & Chief Executive Officer of the Employer and in such position Employee
has management responsibility for all aspects of the Employer’s business,
including strategic and financial planning, engineering, product development,
product quality, marketing, sales, logistics, distribution, operations, procurement
and employee matters on a worldwide basis.

	 	b.	 	Non-Competition.

	 	i.	 	Applicability. In return for (A) the consideration
described in Section 3 of this Agreement, (B) any awards granted to Employee
under the Hamilton Beach, Inc. Executive Long-Term Incentive Compensation
Plan (the “Hamilton Beach LTIP”) for the remainder of 2007 and (C) Employee’s
continued access to confidential information, Employee agrees to comply with
the non-competition provisions described in this Section 4(b).

	 	ii.	 	Restrictions. For a period of 18 months after the
Employee’s termination of employment for any reason (the “Restricted
Period”), Employee shall not, without the prior written consent of the
Hamilton Beach Board of Directors, directly or indirectly, whether as an
employee, independent contractor, consultant or in any other capacity: (A)
perform any executive, management, supervisory, administrative, consulting,
professional, sales or advisory job duties for a Competitor; (B) perform
other duties for a Competitor that are the same or similar to job duties and
responsibilities as those performed by Employee at the Company within
eighteen (18) months prior to termination of

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	 	 	 	his employment with the Company or exercise the same or similar responsibilities
or have the same or similar authority with a Competitor, (C) report to or
supervise persons performing, exercising or having the same or similar
responsibilities or authority with a Competitor or (D) serve as a partner,
director or investor of a Competitor.

	 	iii.	 	Additional Restrictions. Employee acknowledges
that as of the Effective Date, he is a member of the Employer’s Executive
Committee. As a senior management employee and member of the Executive
Committee, Employee has had and will have special knowledge and
responsibilities in every aspect of the Employer’s business, including
strategic and financial planning, engineering, product development, product
quality, marketing, sales, logistics, distribution, operations, procurement
and employee matters. Accordingly, Employee agrees that, in addition to the
foregoing obligations, Employee shall not, whether as an employee,
independent contractor, consultant or in any other capacity, perform any job
duties for a Competitor within the Restricted Period.

	 	iv.	 	Applicable Competitors and Territory. For purposes
of this Agreement, a “Competitor” means any person or entity engaged in the
small appliance manufacturing, marketing and distribution businesses (or any
parent, direct or indirect subsidiary, division, affiliate, or related
company or entity thereof), regardless of the form of business organization
of any of the forgoing, any successors to any of the forgoing (whether by
merger, consolidation, transfer, reorganization, sale of assets or otherwise)
and any joint ventures of any of the forgoing. It is understood and agreed
that the geographic scope of this restriction is worldwide (the “Territory”).
Employee acknowledges and agrees that the Competitors are in direct
competition with the Company in the small appliance manufacturing, marketing
and distribution business within the Territory, this restriction is
reasonable and necessary to protect the interests of the Company, and
accurately reflects the scope of the Employee’s job responsibilities and
knowledge of the Company’s business.

	 	v.	 	Limitations. Notwithstanding the foregoing: (A)
the provisions of Section 4(b) shall not be interpreted or applied to
restrict Employee from performing exclusively unskilled labor or clerical
duties in which Employee proves that he could not use or disclose his skills,
knowledge and expertise of the Company on behalf of the Competitor; (B)
Employee may make and retain investments during the Restricted Period, for
investment purposes only, in less than ten percent (10%) of the outstanding
capital stock of any Competitor if the stock of such Competitor is either
listed on a national stock exchange or on the NASDAQ National Market System,
and (C) the provisions of this Section 4(b) shall automatically terminate, be
null and void and of no further force (i) on any date specified in writing by
the Hamilton Beach Board of Directors in the event of a business combination
between or among one or more Competitors and the Company or (ii) in such
other circumstances as deemed appropriate and as agreed in writing by the
parties.

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	 	c.	 	Non-Disclosure of Confidential Information.

	 	i.	 	During employment and anytime after termination of
Employee’s employment with the Company for any reason, Employee shall not
disclose to others or use, whether directly or indirectly, any Confidential
Information except as may be required to perform Employee’s duties for the
Company or as required by applicable law. For purposes of this Agreement,
“Confidential Information” shall mean any trade secrets or confidential
know-how, information, or data relating to the business of the Company which
may become known to Employee during Employee’s employment, whether before or
after the Effective Date. Such information, data or trade secrets includes,
but is not limited to, any confidential or proprietary information concerning
the Company’s products, plans, customers, services, source code, object code,
software, purchasing, pricing, accounting, marketing, merchandising and
selling or any other information concerning the business of the Company or
its manner of operation not known to others in the industry and/or the
public. Employee agrees to deliver or return to the Company, at the
Company’s request at any time or upon termination of Employee’s employment or
as soon thereafter as possible, anything that includes Confidential
Information, including but not limited to documents, computer files, tapes
and disks, records, lists, data, drawings, prints, and notes. Employee shall
not cause articles to be published that contain Confidential Information
unless Employee has obtained the prior, written approval of the Company.

	 	ii.	 	Employee recognizes that it often may be difficult to draw
an exact line of distinction as to what does or does not require confidential
treatment, although, as a general rule, it may be said that any unpublished
information is secret and confidential. In those cases where any doubt
arises, Employee will obtain written permission from the Company before using
or divulging the information in question.

	 	iii.	 	Employee further agrees that if he accepts a position with a Competitor
(as defined in Section 4(b)) on or before the end of the Restricted Period
and such position includes duties or responsibilities that are the same as or
similar to those Employee had at the Company within eighteen (18) months
before Employee’s termination of employment from the Company, Employee will
inevitably use or disclose Confidential Information in the performance of
Employee’s duties and responsibilities for the Competitor. Accordingly,
Employee agrees that any acceptance of such a position on or before the end
of the Restricted Period shall violate Employee’s duties of confidentiality
under this provision at common law.

	 	iv.	 	The provisions of this Section 4(c) do not supersede any
confidentiality restrictions to which Employee may be subject by policy or as
a matter of law.

	 	d.	 	Proprietary Rights. All Intellectual Property shall be work
made for hire by Employee for the Company, and if any Intellectual Property does
not qualify as work for hire, Employee assigns such Intellectual Property to the
Company. Employee shall promptly disclose to the Company all Intellectual Property
that Employee creates during Employee’s employment with the Company. During
employment and anytime after termination of Employee’s employment with the Company
for any

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	 	 	 	reason, at the Company’s request and expense, Employee shall help the Company obtain,
maintain, defend and assert its rights in the Intellectual Property. Employee
authorizes the Company to apply in its own name in any foreign country for a
copyright, patent, inventor’s certificate, design registration or similar
intellectual property right based on the Intellectual Property (including
improvements and derivative works), and Employee conveys to the Company all rights of
priority in patent applications based on the Intellectual Property. Employee
appoints the Company to be Employee’s attorney-in-fact to execute those documents and
do those lawful acts related to the Intellectual Property that are consistent with
the terms of this Agreement. For purposes of this Agreement, the term “Intellectual
Property” means the Confidential Information, copyrightable works and inventions that
were made, conceived or developed by Employee (either alone or with the help of
others) during Employees’ employment with the Company that relate to the Company’s
business or business plans.

	 	e.	 	Non-Solicitation. Employee agrees that, during the Restricted
Period, Employee will not, either directly or indirectly, solicit, induce, recruit
or encourage any of the Company’s employees to leave their employment or take away
such employees, or attempt to solicit, induce, recruit, encourage or take away
employees of the Company, either for Employee or for any other person or entity
(whether or not a Competitor).

	 	f.	 	Non-Interference. Employee agrees that, during the Restricted
Period, Employee will not, either directly or indirectly, interfere with the
Company’s current or prospective contracts and relationships, including, but not
limited to, the Company’s customer, client, contractor and vendor contracts and
relationships.

	 	g.	 	Cooperation. Employee agrees to cooperate with the Company for
a period of three (3) years following his termination of employment for any reason,
by being reasonably available to testify on behalf of the Company in any action,
suit or proceeding, whether civil, criminal, administrative or investigative and to
assist the Company in any such action, suit or proceeding, by providing information
and meeting and consulting at mutually agreeable times and places with the Company,
its representatives or counsel, as reasonably requested; provided that such
obligation to cooperate does not unreasonably interfere with the Employee’s
business or personal affairs. The Company agrees to reimburse the Employee for all
documented expenses reasonably incurred by the Employee in connection with the
provision of testimony or assistance or other cooperation contemplated by this
Subsection and to pay an hourly fee at a mutually agreed rate for the services
rendered by the Employee under this Subsection. Such reimbursements and hourly
fees shall be paid in accordance with Company’s normal payment timing arrangement
for non-employee service providers, and shall be paid no later than the last date
for which such reimbursements and payments are permitted to be paid pursuant to
applicable Treasury Regulations under Code Section 409A so that such reimbursements
and payments do not constitute a deferral of compensation.

	 	h.	 	Remedies. Employee acknowledges that monetary damages will not
be an adequate remedy for the Company in the event of a breach of this Section 4
and that it would be impossible for the Company to measure damages in the event of
such a breach.

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	 	 	 	Therefore, Employee agrees that, in addition to any other rights the Company may
have, in the event of an actual or threatened violation of Employee’s
non-competition, non-disclosure, proprietary rights and non-solicitation obligations,
the Company is entitled to seek both preliminary and permanent injunctive relief
preventing Employee from any breach (or further breach) of this Section 4. In
addition, if the Employee breaches this Section 4, Employee will pay the Company the
attorneys’ fees and other expenses incurred by the Company in establishing such a
breach and in otherwise enforcing the terms of this Section 4.

	 	i.	 	Notification Requirements. During the Restricted Period, the
Employee shall be required to (i) notify the Company in writing of any oral or
written offer of employment, a consulting position or any other job duties from or
on behalf of a Competitor during the Restricted Period and (ii) notify the Company
in writing at least one (1) week prior to the acceptance of such an offer. In
addition, the Employee agrees to notify any Competitor with which Employee is
offered a position of the Employee’s obligations under this Agreement before
accepting such offer. Employee also agrees that the Company may notify any
potential or subsequent employer about his rights and obligations under this
Agreement.

	 	5.	 	Additional Compensation; No Set Off. Employee acknowledges that he would not otherwise
be entitled to the consideration described in Section 3 hereof or any awards under the
Hamilton Beach LTIP for the remainder of 2007 and that the Company is providing such
consideration in return for Employee’s agreement to be bound by the terms of this
Agreement, including, without limitation, the non-competition, non-solicitation,
non-interference and cooperation provisions described in Section 4 hereof. Except as
otherwise required by applicable law, the amounts payable under this Agreement shall not be
taken into account for purposes of determining the benefits that are payable under the
Company’s retirement plans or welfare plans. No amount payable to Employee pursuant to
this Agreement shall be reduced by any amount Employee may otherwise owe to the Company.

	 	6.	 	Assignment. No interest of Employee under this Agreement, or any right to receive any
payment hereunder, shall be subject in any manner to sale, transfer, assignment, pledge,
attachment, garnishment, or other alienation or encumbrance of any kind, nor may such
interest or payment right be taken, voluntarily or involuntarily, for the satisfaction of
the obligations or debts of, or other claims against, Employee, including claims for
alimony, support, separate maintenance and claims in bankruptcy proceedings. The Company
may assign its rights and obligations under this Agreement to any successor of the
Company’s business which expressly assumes the Company’s obligations hereunder in writing.

	 	7.	 	Governing Law/Consent to Personal Jurisdiction. This Agreement shall be deemed to be
made in, and in all respects shall be interpreted, construed and governed by and in
accordance with, the laws of the Commonwealth of Virginia, without regard to any principles
governing conflicts of laws. Except as otherwise provided in this Section 7, all disputes
in relation to the Agreement and the parties’ respective obligations and performance
thereof shall be subject to the exclusive jurisdiction of the state and federal courts with
jurisdiction in Henrico County, Virginia. The Company and Employee agree and stipulate
that venue is proper in such courts and that service of process shall be valid by mailing
pursuant to Section 13, and otherwise waive service of process. The Company and Employee
further agree that, notwithstanding the provisions of this Section 7 regarding court

11

 

	 	 	 	proceedings, at the option of either party and on written notice pursuant to Section 13 of
that party’s election of such option, either party to this Agreement may direct that any
dispute arising hereunder be settled by binding arbitration conducted in accordance with the
commercial arbitration rules of the American Arbitration Association. To be effective, any
such notice electing arbitration must be given before a grounds of defense, answer, or
similar responsive pleading on the merits has been filed in court. All arbitration hearings
shall be conducted in Henrico County, Virginia, unless otherwise mutually agreed by the
Company and Employee.

	 	8.	 	Waiver of Right to Jury Trial. The Company and Employee hereby agree to waive all
rights to a jury trial in connection with any dispute arising out of or relating to the
terms of this Agreement.

	 	9.	 	Severability. If any clause, phrase or provision of this Agreement or the application
thereof to any person or circumstance shall be invalid or unenforceable under any
applicable law, this shall not affect or render invalid or unenforceable the remainder of
this Agreement. Furthermore, in the event that a court of law or equity determines that
the duration of any restrictions under this Agreement is not enforceable, this Agreement
shall be deemed to be amended to the extent necessary, but only to the extent necessary, to
permit the enforcement of the terms of this Agreement, as so amended.

	 	10.	 	Waiver. The waiver by the Company of a breach by Employee of any provision of this
Agreement shall not be construed as a waiver of any subsequent breach.

	 	11.	 	Successors. The Agreement shall be binding upon and inure to the benefit of Employee,
Employee’s estate, heirs and representatives, and to the Company and the successors and
permitted assigns of the Company.

	 	12.	 	Liability for Payment/Benefits Unfunded. The Employer shall be solely liable for the
payment of any amounts due hereunder. All rights of Employee under this Agreement shall at
all times be entirely unfunded, and no provision shall at any time be made with respect to
segregating any assets of the Employer for payment of any amounts due hereunder.

	 	13.	 	Notice. Any notice to be given hereunder shall be in writing and shall be deemed given
when mailed by certified mail, return receipt requested, addressed as follows:

To Employee at:

5909 New Harvard Place

Glen Allen, VA 23059

To the Company at:

Hamilton Beach/Proctor-Silex, Inc.

4421 Waterfront Drive

Glen Allen, VA 23060

Attention: Vice President, General Counsel and Secretary.

12

 

	 	14.	 	Multiple Counterparts. This Agreement may be executed in two or more counterparts,
each of which will be deemed an original, but all of which together shall constitute one
and the same instrument.

	 	15.	 	Taxes. All payments made under this Agreement shall be subject to the Employer’s
withholding of all required foreign, federal, state and local income and employment/payroll
taxes, and all payments shall be net of such tax withholding. The parties intend that any
payment under this Agreement shall be paid in compliance with Code Section 409A and the
Treasury Regulations thereunder such that there shall be no adverse tax consequences,
interest, or penalties as a result of the payments, and the parties shall interpret the
Agreement in accordance with Code Section 409A and the Treasury Regulations thereunder.
The parties agree to modify this Agreement or the timing (but not the amount) of any
payment to the extent necessary to comply with Section 409A of the Code and avoid
application of any taxes, penalties or interest thereunder. However, in the event that the
payments under the Agreement are subject to any penalties or excise taxes (including,
without limitation, those specified in Code Sections 409A or 4999), the Employee shall be
solely liable for the payment of any such penalties and taxes.

	 	16.	 	Entire Agreement; Modification. This Agreement constitutes the entire agreement of the
parties with respect to the subject matter hereof and supersedes all prior agreements,
contracts, representations, proposals, discussions, and communications, whether oral or in
writing. In furtherance of, but without limiting the foregoing, this Agreement
specifically supersedes any prior agreement on confidentiality and intellectual property
between the Company and the Employee. This Agreement may be modified only by a writing
that is signed by both parties. This Agreement shall be enforceable in accordance with its
terms when signed by the party sought to be bound.

	 	17.	 	No Mitigation. The Employee shall not have any duty to mitigate the amounts payable by
the Company under this Agreement by seeking new employment following termination. All
amounts payable pursuant to this Agreement shall be paid without reduction regardless of
any amounts of salary, compensation or other amounts which may be paid or payable to the
Employee as the result of the Employee’s employment by another employer.

	 	18.	 	Other Rights. Except as provided in Section 3(b)(iii), this Agreement shall not prevent
or limit the Employee’s continuing or future participation in any benefit, bonus, incentive
or other plans provided by the Company and for which the Employee may qualify, nor shall
this Agreement limit or otherwise affect such rights as the Employee may have under any
other agreements with the Company. Amounts which are vested benefits or which the Employee
is otherwise entitled to receive under the terms of any plan or program of the Company and
any other payment or benefit required by law shall be payable in accordance with such plan,
program or applicable law except as expressly modified by this Agreement.

13

 

     IN WITNESS WHEREOF, the parties hereto have signed this Agreement on the date(s) set forth below.

Employee expressly acknowledges that Employee would not otherwise be entitled to receive the
consideration described in Section 3 of this Agreement or any awards under the Hamilton
Beach LTIP for the remainder of 2007 unless Employee entered into this Agreement and agreed
to be bound by its terms. Employee further acknowledges that Employee has carefully read
and understood this Agreement, including the non-competition provisions and restrictions.
Employee is executing this Agreement knowingly and voluntarily, with a full understanding of
its significance and intending to be bound by its terms.

	 	 	 	 	 	 	 
	EMPLOYEE	 	 	 	 
	 
	 	 	 	 	 	 
	/s/ Michael J. Morecroft	 	 	 	Date: May 5, 2007
	 	 	 	 	 
	Michael J. Morecroft	 	 	 	 
	 
	 	 	 	 	 	 
	HAMILTON BEACH/PROCTOR-SILEX, INC.	 	 	 	 
	 
	 	 	 	 	 	 
	By:

	 	/s/ Kathleen L. Diller
	 	 	 	Date: May 7, 2007
	 

	 	 	 	 	 	 
	 

	 	Kathleen L. Diller	 	 	 	 
	 

	 	Vice President, General Counsel and Human	 	 	 	 
	 

	 	Resources, and Secretary	 	 	 	 

14

 

EXHIBIT A

Form of Standard General Release

Personal and Confidential — Delivered By Hand on [date]

[Employee]

Dear _________:

The purpose of this Agreement, General Release and Promise Not To Sue (the “Agreement”), is to
specify the compensation and benefits that will be paid to you as a result of your termination and
in accordance with the terms of the Retention Bonus and Non-Competition Agreement effective as of
May 1, 2007 by and among You and Hamilton Beach/Proctor-Silex, Inc. (the “Retention Agreement”).
The attached “Term Sheet” is part of this Agreement and contains the definitions of words used in
this Agreement with initial capital letters that are not otherwise defined herein.

AGREEMENT, GENERAL RELEASE AND PROMISE NOT TO SUE

The Company strongly urges You to review this Agreement and to have this Agreement reviewed by an
attorney. In no circumstances will the Company accept an executed Agreement prior to the
Termination Date specified in Paragraph 1 of Part I of this Agreement. If You fail to execute this
Agreement within forty-five (45) days from the date You receive it, You will not be entitled to
receive any retention bonus payments under the Retention Agreement. In order for this Agreement to
be effective, You must sign, date and deliver or mail it to the Company within forty-five (45) days
from the date You receive it.

I. Termination Date

Your employment by the Company will terminate effective _______________(the “Termination Date”).

II. Payments

The Company will provide You with the retention bonus payments described in the Retention
Agreement in exchange for your execution of this Agreement. Such retention bonus payments shall be
paid in the amounts and at the times specified in the Retention Agreement and shall be subject to
deduction for taxes as specified therein. If the Company does not pay any cash amount due under the
Retention Agreement within thirty (30) business days after such amount first became due and owing,
interest shall accrue on such overdue amount from the date it became due and owing until the date
of payment at a rate of interest charged from time to time by the Company’s principal revolving
credit lender or, in the absence of such a lender, at an annual rate equal to the “Prime Rate”
published by The Wall Street Journal applicable from time to time during the period of such
nonpayment; but in no event more than the highest legally permissible interest rate permitted for
this Agreement by applicable law.

A-1

 

III. Release and General Provisions

In consideration of the Payments provided to You by the Company, You agree to the following:

1) Non-Compete and Other Restrictive Covenants.

You agree that You will continue to be bound by the restrictive covenants contained in Paragraph
4 of the Retention Agreement, in accordance with the terms thereof, which are hereby
incorporated by reference.

2) Release of All Claims

You hereby release and forever discharge the Company, together with its parent companies (past,
present or future), divisions, affiliates, subsidiaries, predecessors, successors and assigns,
and their Boards of Directors, benefit plans and plan administrators, shareholders, officers,
agents and employees, all personally and in their representative and respective capacities, from
any and all Claims, demands, charges, or causes of action of whatever type or nature, whether
known or unknown to You, which You now have or may have against them either individually,
jointly or severally, or which could be raised before any municipal, county, state or federal
body and under any rules, regulations, statutes, or under the Common law which Arise out of, or
in any way relate to, either directly or indirectly, your employment with the Company and work
for its subsidiaries, or the termination of said employment and work activity. You acknowledge
your awareness of your rights under the Employee Retirement Income Security Act, as amended; any
federal, state or local statute, ordinance, or order of law, including but not limited to laws
which protect You against discrimination in employment; Title VII of the Civil Rights Act of
1964, as amended, and the Civil Rights Act of 1991, as amended, which prohibit discrimination in
employment based on race, color, national origin, religion or gender; the Civil Rights Act of
1866 (42 U.S.C. § 1981), which prohibits discrimination on the basis of race and color; the
Rehabilitation Act, as amended, and the Americans With Disabilities Act of 1990, as amended,
which prohibit discrimination on the basis of disability; the Equal Pay Act, as amended, which
prohibits paying men and women unequal pay for equal work; the Family and Medical Leave Act,
which provides employment leave rights for covered family and medical situations and prohibits
discrimination or retaliation for exercising such rights; the Age Discrimination in Employment
Act, which prohibits discrimination against individuals age 40 and older on account of age; the
Worker Adjustment and Retraining Notification Act, as amended, which provides for certain
benefits for laid off workers; the National Labor Relations Act, as amended, which prohibits
discrimination on the basis of collective bargaining status; the Vietnam Era Veteran’s
Readjustment Assistance Act of 1974, as amended, which prohibits discrimination on the basis of
military service; and that this release waives any claim arising under any such laws.
Notwithstanding the above, this release does not include, however, a release by You of your
rights, if any, to payments of ERISA benefits under any ERISA plan for which You are otherwise
eligible or to which You are entitled, nor does it release or waive any claims or rights You are
prohibited by applicable law or regulation from releasing or waiving.

3) Release of Claims under the Age Discrimination in Employment Act

You specifically agree that the release and waiver set forth in Paragraph 1 of Part III of this
Agreement (Release of All Claims) includes any and all rights or claims against the Company
under the Age Discrimination in Employment Act, as amended (ADEA), 29 U.S.C. § 621, et
seq., that arose on or before the execution of this Agreement. In consideration of this
waiver of rights and claims under the ADEA, You acknowledge that You have accepted the
Additional Consideration set forth in Part III of this Agreement. This Additional Consideration
is over and above those amounts to which You are otherwise entitled under the Company’s
policies. You acknowledge that prior to signing this Agreement, You were given a copy of this
Agreement as a written directive from the Company advising You to consult an attorney before
signing it and advising You that You have forty-five (45) days in which to consider signing this
Agreement. You further acknowledge that You were informed by the Company that You will not be
entitled

A-2

 

to receive any retention bonus payments under the Retention Agreement if You fail to execute
this Agreement within the forty-five (45) day period described in the preceding sentence.

4) Consideration

You acknowledge that the payments described in Part II of this Agreement are solely in exchange
for the promises in this Agreement and are in excess of any amount of pay or benefits to which
You are entitled under any law, regulation or Company policy, plan, procedure or practice.

5) Voluntary Execution

By executing this Agreement, You expressly acknowledge that the payments to be received by You
from the Company under the Retention Agreement in exchange for entering into this Agreement are
expressly conditioned upon the release and waiver of any and all Claims, demands, charges, or
causes of actions as described herein. You further acknowledge that this Agreement has been
carefully read and understood by You, and that You execute this Agreement knowingly and
voluntarily, with a full understanding of its significance and intending to be bound by its
terms. You have had the opportunity to talk with an attorney before signing this Agreement.
The Company has informed You, in writing, that You should talk with an attorney before signing
this Agreement.

6) Acknowledgement

You received a copy of this Agreement representing the final offer of the Company. No deadline
of less than forty-five (45) days has been imposed upon You to sign this Agreement. If You are
signing this Agreement less than forty-five (45) days from the date You received it, You
understand that You do not have to do so. You understand that, if You fail to execute this
Agreement within forty-five (45) days from the date You received it, this Agreement will be
withdrawn by the Company and You will not be entitled to receive the retention bonus payments
described in the Retention Agreement. At the beginning of the forty-five (45) day period, the
Company informed You, in writing, as to: any class, unit, or group of individuals covered by the
Program; any eligibility factors for the Program; any time limits applicable to the Program; the
job titles and ages of all individuals eligible or selected for the Program; and all individuals
in the same job classification or organizational unit who are not eligible or selected for the
Program. (A copy of this information is attached to this Agreement as “Schedule A”.) You
acknowledge that the Company provided this information to You in a format that You could
understand.

7) No Admission of Liability

You further acknowledge that any payments or benefits provided under this Agreement do not
constitute an admission by the parties hereto of liability or of violation of any applicable law
or regulation. The parties hereto expressly deny any liability or alleged violation of law.

8) Promise Never to File Lawsuit

You agree never to file a lawsuit or cause of action asserting any Claims that are released in
this Agreement. You further agree that in the event You breach any of the terms of this
Agreement,

A-3

 

You will forfeit the payments set forth in Part II of this Agreement plus You will pay any
expenses or damages incurred as a result of said breach, including all costs incurred by the
Company, including reasonable attorneys’ fees, in defending against any Claims released.
Nothing herein, however, is intended to, or does, waive or release any right which applicable
law or regulation prohibits You from waiving or releasing.

9) Agreement Not to Testify Voluntarily Against the Company

To the maximum extent permitted by law, You agree that You will not voluntarily offer testimony
(by affidavit or otherwise) in any legal proceeding involving the Company or any other entity
released herein, except as requested by the Company or where compelled by subpoena or other
legal process.

10) Actions After Termination Date

You will not perform any services for the Company except as explicitly and specifically
authorized by the Company, and will not enter the Company’s premises or communicate with adverse
parties in actual or potential litigation, suppliers, service providers, customers, or employees
of the Company regarding the Company’s business or your employment status without the express
written authorization of the Company. You agree that if You are contacted by any government
agency with reference to the Company’s business, or by any person contemplating or maintaining
any claim or legal action against the Company, or by any agent or attorney of such person, You
will promptly notify the Company of the substance of your communications with such person. You
agree that You will not make any disparaging or negative comments to any other Person regarding
the Company.

You will cooperate fully and sign any and all additional documents that may be necessary to
effectuate your separation from the Company and your receipt of benefits under this Agreement.

11) Return of Company Property

You shall return all Company property, including but not limited to: tools, credit cards, keys,
electronic proximity tags, ID/building access cards, office equipment, files, supplies,
computers, software, electronic equipment, cell phones and all data files no later than the end
of the Termination Date. Any monies, property, or personal expenses owed to the Company by You
will be repaid to the Company no later than the end of the day on _________. You agree that the
Company has the right to reduce the amount of any monies or other compensation it may owe You by
the amount of any monies, property, or personal expenses You owe to the Company. Any remaining
balance owed by You must be repaid to the Company no later than the end of the day on _________.

12) Illegal Acts

By signing this Agreement, You certify that You have not committed any illegal acts against the
Company, including, but not limited to, fraud, theft or damage to Company property, whether
tangible or intangible. In the event that the Company discovers that You have falsely certified
that You have not committed any illegal acts against the Company, the Company reserves the right
to revoke the retention bonus payments provided for in the Retention Agreement.

A-4

 

13) Assignability; Binding Nature

No rights or obligations of the Company under this Agreement may be assigned or transferred by
the Company without Your written consent except to a successor to the Company’s business which
expressly assumes the Company’s obligations in writing. This Agreement shall be binding upon
and shall inure to the benefit of and be enforceable by Your heirs and legal representatives and
the Company and its permitted successors and assigns.

14) Claims for On-The-Job Injury or Condition

You certify that You have not suffered any on-the-job injury or condition for which You have not
already filed a Claim.

15) Termination Date/Reinstatement

You agree that your employment with the Company terminated on the Termination Date, and that You
waive any Claim You may have to reemployment and agree not to seek reemployment at any time in
the future with the Company, its parent, divisions, affiliates, or related companies.

16) Violation of Agreement

If You violate the terms of this Agreement, including, but not limited to, by filing a Claim
against the Company, and this Agreement is upheld against You, the Company may have Claims
against You.

17) Acceptance and Revocation Period

You accept the terms of this Agreement by dating and signing this Agreement below and then by
delivering or mailing one (1) executed duplicate copy of the Agreement to the Company at the
following address:_________, on or before forty-five (45) days from the date You receive
this Agreement (but no earlier than your Termination Date). In addition, even after signing the
Agreement, You have the right to Revoke or cancel it within seven (7) days after signing it.
Upon execution by You, this Agreement becomes binding upon the Company, except that the Company
shall not be obligated to provide You with any payments described in Part II until the seven (7)
day revocation period has expired. This cancellation or revocation can be accomplished by
delivery of a written notification to the Company in accordance with the notification provisions
of the Retention Agreement if You wish to Revoke the Agreement. In the event that this
Agreement is canceled or Revoked by You, the Company has no obligation to provide any of the
payments described in Part II. If You fail to execute this Agreement within forty-five (45) days
from the date You receive it, the Company will withdraw this Agreement. In order for this
Agreement to be effective, You must sign, date and deliver or mail it to the Company within
forty-five (45) days from the date You receive it. If You mail this Agreement to the Company it
must be postmarked no later than forty-five (45) days from the date You receive it.
Notwithstanding the above, if the 45th day from the date of your receipt of this
Agreement falls on a weekend, holiday or other date or time on which the United States Postal
Service is not open for business, then the postmark shall be deemed timely if dated on the next
business day on which the Postal Service is open for business following the 45th day.

A-5

 

18) Full Understanding

By signing this Agreement, You acknowledge that You have carefully read this Agreement; that You
have had a reasonable time to consider the language and effect of this Agreement; that the
Company has informed You, in writing, to talk with an attorney before signing this Agreement;
that You know, understand and agree to be bound by the terms of this Agreement; and that You are
signing this document voluntarily because You are satisfied with its terms and conditions.

19) Legal Fees and Expenses

Should any party institute any action or proceeding to enforce this Agreement or any provision
hereof, or for damages by reason of any alleged breach of this Agreement or of any provision
hereof, or for a declaration of rights hereunder, the prevailing party in such action or
proceeding shall be entitled to receive from the other party all costs and expenses, including
reasonable attorneys’ fees incurred by the prevailing party in connection with such action or
proceeding.

20) Incorporation By Reference/Entire Agreement

All of the provisions of the Retention Agreement including, without limitation, (i) the
non-competition and other restrictive covenants, (ii) the governing law and consent to personal
jurisdiction, (iii) the waiver of a right to jury trial and (iv) the severability, modification
and no mitigation provisions thereof, are all hereby incorporated by reference and shall apply
in full force and effect under this Agreement. This Agreement and the Retention Agreement
contain the entire understanding and agreement between You and the Company concerning the
subject matter hereof. This Agreement supersedes all prior agreements, understandings,
discussions, negotiations and undertakings, whether written or oral, between You and the Company
with respect thereto, other than the Retention Agreement.

[Closing and Signature]

ACCEPTANCE

I, _________, have carefully read and understand the Agreement, including Schedule A and the “Term
Sheet” (which is a part of this Agreement and contains the definitions of words used in this
Agreement with initial capital letters); I have had a reasonable opportunity to consult with
counsel of my choosing about the Agreement, including the general release and promise not to sue; I
understand that the Agreement is legally binding; I AGREE TO and ACCEPT the payments described in
Part II and the rights and obligations stated therein; and I voluntarily enter into the Agreement
with the Company by my signature below, on or after, but not before [insert termination date].

 

	 	 	 
	 

	 	 
	[insert]

	 	(date executed)

A-6

 

TERM SHEET

This Term Sheet defines words that are used with initial capital letters in the preceding
Agreement, General Release and Promise Not to Sue.

	 	1.	 	Agreement: document setting out the terms of an arrangement; legally binding contract.
	 
	 	2.	 	Anyone: any and every person and entity.
	 
	 	3.	 	Arise: originate, occur, ensue, emanate.
	 
	 	4.	 	Claims: includes, without limitation, any and all claims, charges, promises, causes of
actions, suits, damages, debts, complaints, demands, grievances, costs, expenses,
liabilities or losses whatsoever, whether known or unknown, suspected or unsuspected.
	 
	 	5.	 	Company: includes, without limitation, the Company itself, its present and former
employees, officers, directors, stockholders, agents, affiliates, subsidiaries, parent
corporations, successors and assigns, benefit plans, joint ventures, owners, divisions,
attorneys and Anyone acting on their joint or several behalf.
	 
	 	6.	 	Given Up: waived, released, forfeited, forever discharged, forever put to rest.
	 
	 	7.	 	Program: The program under which the payments are being offered as described on
Schedule A.
	 
	 	8.	 	Revoke: to make void, cancel, repeal, annul.
	 
	 	9.	 	You: includes, without limitation, yourself, your spouse, children, next of kin,
attorneys, agents, beneficiaries, heirs, administrators, executors and assigns, and anyone
acting on your or their joint or several behalf.

A-7EX-10.1

 

Exhibit 10.1

FOIA Confidential Treatment

Requested by Allegheny Energy, Inc.

ALLIANCE AGREEMENT

for

ENGINEERING, CONSTRUCTION AND PROJECT MANAGEMENT

for the

TRANS-ALLEGHENY INTERSTATE LINE PROJECT

between

TRANS-ALLEGHENY INTERSTATE LINE COMPANY

and

KENNY CONSTRUCTION COMPANY

Dated: February 28, 2007

 

 

FOIA Confidential Treatment

Requested by Allegheny Energy, Inc.

Table of Contents

	 	 	 	 	 
	 	 	Page
	ARTICLE 1 DEFINITIONS; INTERPRETATION
	 	 	1	 
	1.1 Definitions
	 	 	1	 
	1.2 Interpretation
	 	 	12	 
	 
	 	 	 	 
	ARTICLE 2 SCOPE OF WORK; PROJECT WORKSHOP
	 	 	13	 
	2.1 Project Releases
	 	 	13	 
	2.2 Scope of Work
	 	 	13	 
	2.3 Project Workshop
	 	 	13	 
	2.4 Target Cost
	 	 	15	 
	2.5 Special Termination Right
	 	 	15	 
	 
	 	 	 	 
	ARTICLE 3 ENGINEERING SERVICES
	 	 	15	 
	3.1 Preliminary Engineering
	 	 	15	 
	3.2 Design of Facilities
	 	 	15	 
	3.3 Site Conditions
	 	 	16	 
	3.4 Incidental Engineering
	 	 	16	 
	3.5 Access to Design Information
	 	 	16	 
	 
	 	 	 	 
	ARTICLE 4 CONSTRUCTION SERVICES
	 	 	17	 
	4.1 Scope of Construction Services
	 	 	17	 
	4.2 Site Conditions
	 	 	17	 
	4.3 Environmental Protection
	 	 	17	 
	4.4 Archeological Materials
	 	 	18	 
	4.5 Commissioning
	 	 	19	 
	4.6 Construction Management
	 	 	19	 
	4.7 Scheduling
	 	 	19	 
	4.8 Health and Safety
	 	 	19	 
	4.9 Cleanup
	 	 	20	 
	4.10 Emergencies
	 	 	20	 
	4.11 Cooperation
	 	 	20	 
	4.12 Work Site Security
	 	 	20	 
	4.13 Interconnections
	 	 	21	 
	4.14 Contractor Liens
	 	 	21	 
	4.15 Utilities and Consumables
	 	 	21	 
	4.16 Laydown and Storage Areas
	 	 	21	 
	 
	 	 	 	 
	ARTICLE 5 PROCUREMENT MANAGEMENT SERVICES
	 	 	22	 
	5.1 Procurement Plan
	 	 	22	 
	5.2 Scope of Procurement Management Services
	 	 	23	 
	5.3 Relationship With Direct Suppliers
	 	 	23	 
	5.4 Enforcement of Warranties
	 	 	23	 
	 
	 	 	 	 
	ARTICLE 6 REAL PROPERTY MANAGEMENT SERVICES
	 	 	24	 
	6.1 Real Property Management Services
	 	 	24	 
	6.2 Real Property Plan
	 	 	24	 
	6.3 Ownership of Project Real Property
	 	 	25	 

i

 

FOIA Confidential Treatment

Requested by Allegheny Energy, Inc.

	 	 	 	 	 
	 	 	Page
	6.4 Limitation
	 	 	25	 
	 
	 	 	 	 
	ARTICLE 7 CONTRACTOR’S GENERAL OBLIGATIONS
	 	 	25	 
	7.1 Standards of Performance
	 	 	25	 
	7.2 Contractor Liable for Work
	 	 	25	 
	7.3 Project Manager
	 	 	25	 
	7.4 Contractor Personnel
	 	 	25	 
	7.5 Labor Disputes
	 	 	26	 
	7.6 Imports and Exports
	 	 	26	 
	7.7 Permits and Approvals
	 	 	26	 
	7.8 Reserved
	 	 	26	 
	7.9 Records
	 	 	26	 
	7.10 Financial Statements
	 	 	27	 
	7.11 Quality Assurance Program
	 	 	27	 
	7.12 Performance Testing
	 	 	27	 
	7.13 Office Space
	 	 	27	 
	7.14 Progress Reports
	 	 	27	 
	7.15 Meetings
	 	 	28	 
	7.16 Site Procedures
	 	 	28	 
	7.17 Insurance
	 	 	28	 
	7.18 Alcohol and Drug Policy
	 	 	30	 
	7.19 Business Standards
	 	 	30	 
	7.20 Compliance With Law
	 	 	30	 
	7.21 Authority
	 	 	31	 
	 
	 	 	 	 
	ARTICLE 8 OWNER’S RIGHTS AND OBLIGATIONS
	 	 	31	 
	8.1 Owner Permits
	 	 	31	 
	8.2 Owner Representative
	 	 	31	 
	8.3 Temporary Possession
	 	 	31	 
	8.4 Approvals
	 	 	31	 
	8.5 Inspections
	 	 	31	 
	8.6 Other Property
	 	 	32	 
	8.7 Disclosure
	 	 	32	 
	8.8 Reserved
	 	 	32	 
	8.9 Condemnation Proceedings
	 	 	32	 
	8.10 Preliminary Routing Information
	 	 	32	 
	 
	 	 	 	 
	ARTICLE 9 SUBCONTRACTORS
	 	 	32	 
	9.1 Right to Subcontract
	 	 	32	 
	9.2 Approval Rights
	 	 	33	 
	9.3 Justification of Non-Competitive Contracts
	 	 	33	 
	9.4 Subcontractor Warranties
	 	 	33	 
	9.5 Manufacturer Information
	 	 	33	 
	9.6 No Contractual Relationship
	 	 	33	 
	9.7 Assignment of Subcontracts
	 	 	33	 
	 
	 	 	 	 
	ARTICLE 10 PAYMENT TERMS
	 	 	34	 
	10.1 Management Fee
	 	 	34	 

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	10.2 Non-Craft Labor Costs
	 	 	34	 
	10.3 Craft Labor Costs
	 	 	35	 
	10.4 Out-of-Pocket Costs
	 	 	35	 
	10.5 Reimbursable Costs
	 	 	35	 
	10.6 Interest
	 	 	36	 
	10.7 Retention
	 	 	36	 
	10.8 Payments
	 	 	37	 
	10.9 Accuracy of Records
	 	 	38	 
	10.10 Breakdown of Agreement Price
	 	 	38	 
	10.11 Audit Rights
	 	 	38	 
	10.12 Waiver under Payment Act
	 	 	38	 
	 
	 	 	 	 
	ARTICLE 11 PROJECT BUDGET; PROJECT SCHEDULE
	 	 	39	 
	11.1 Project Budget
	 	 	39	 
	11.2 Project Schedule
	 	 	39	 
	11.3 Adjustments Based on Suspension of Work
	 	 	40	 
	11.4 Adjustments Based on Force Majeure
	 	 	40	 
	 
	 	 	 	 
	ARTICLE 12 STEERING COMMITTEE
	 	 	40	 
	12.1 Formation
	 	 	40	 
	12.2 Availability
	 	 	40	 
	12.3 Informed Status
	 	 	41	 
	 
	 	 	 	 
	ARTICLE 13 COMPLETION
	 	 	41	 
	13.1 Substantial Completion
	 	 	41	 
	13.2 Punch List
	 	 	41	 
	13.3 Final Completion
	 	 	41	 
	13.4 [***]
	 	 	42	 
	 
	 	 	 	 
	ARTICLE 14 SECURITY FOR PERFORMANCE
	 	 	42	 
	14.1 Performance Bond
	 	 	42	 
	 
	 	 	 	 
	ARTICLE 15 CONTRACTOR WARRANTIES
	 	 	43	 
	15.1 Scope of Warranties
	 	 	43	 
	15.2 Duration of Warranties
	 	 	43	 
	15.3 Warranty Obligations
	 	 	43	 
	15.4 Exclusions
	 	 	44	 
	 
	 	 	 	 
	ARTICLE 16 CHANGE ORDERS
	 	 	44	 
	16.1 Change in Scope
	 	 	44	 
	16.2 Equitable Adjustments to Schedule
	 	 	44	 
	16.3 Preparation of Change Orders
	 	 	45	 
	 
	 	 	 	 
	ARTICLE 17 FORCE MAJEURE
	 	 	45	 
	17.1 Excused Performance
	 	 	45	 
	17.2 Notification
	 	 	45	 
	 
	 	 	 	 
	ARTICLE 18 INDEMNIFICATION
	 	 	45	 
	18.1 General Indemnity
	 	 	45	 
	18.2 Environmental Indemnities
	 	 	46	 

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	18.3 Intellectual Property Indemnity
	 	 	46	 
	18.4 Indemnity Against Prohibited Liens
	 	 	47	 
	18.5 Defense of Indemnified Claims
	 	 	47	 
	 
	 	 	 	 
	ARTICLE 19 TAXES AND DUTIES
	 	 	48	 
	19.1 Cooperation
	 	 	48	 
	19.2 Payment Obligations
	 	 	48	 
	19.3 Assignment of Rights
	 	 	48	 
	 
	 	 	 	 
	ARTICLE 20 SUSPENSION; TERMINATION
	 	 	48	 
	20.1 Suspension of Work
	 	 	48	 
	20.2 Termination for Convenience
	 	 	49	 
	 
	 	 	 	 
	ARTICLE 21 DEFAULT; REMEDIES
	 	 	49	 
	21.1 Default by Contractor
	 	 	49	 
	21.2 Remedies for Contractor Default
	 	 	50	 
	21.3 Default by Owner
	 	 	51	 
	21.4 Remedies for Owner Default
	 	 	51	 
	21.5 Right to Suspend Performance
	 	 	51	 
	21.6 Effect of Termination
	 	 	52	 
	 
	 	 	 	 
	ARTICLE 22 TITLE AND RISK OF LOSS
	 	 	53	 
	22.1 Owner Procured Materials
	 	 	53	 
	22.2 Contractor Procured Materials
	 	 	53	 
	22.3 Care, Custody and Control
	 	 	53	 
	22.4 Risk of Loss
	 	 	53	 
	 
	 	 	 	 
	ARTICLE 23 REPRESENTATIONS AND WARRANTIES
	 	 	53	 
	23.1 Contractor’s Representations and Warranties
	 	 	53	 
	23.2 Owner’s Representations and Warranties
	 	 	54	 
	 
	 	 	 	 
	ARTICLE 24 LIMITATION OF LIABILITY
	 	 	55	 
	24.1 Aggregate Limit of Liability
	 	 	55	 
	24.2 Exclusion of Consequential Damages
	 	 	56	 
	 
	 	 	 	 
	ARTICLE 25 DISPUTE RESOLUTION
	 	 	56	 
	25.1 Informal Dispute Resolution
	 	 	56	 
	25.2 Steering Committee
	 	 	56	 
	25.3 Written Decisions
	 	 	56	 
	25.4 Litigation
	 	 	56	 
	25.5 Continued Performance
	 	 	56	 
	 
	 	 	 	 
	ARTICLE 26 INTELLECTUAL PROPERTY
	 	 	56	 
	26.1 Proprietary Information
	 	 	56	 
	26.2 Infringement Claims
	 	 	57	 
	26.3 Use of Trademarks
	 	 	57	 
	 
	 	 	 	 
	ARTICLE 27 CONFIDENTIAL INFORMATION
	 	 	57	 
	27.1 Protection of Confidential Information
	 	 	57	 
	27.2 Permitted Disclosures
	 	 	57	 
	27.3 Contractor’s Use of Confidential Information
	 	 	58	 

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	27.4 Survival
	 	 	58	 
	27.5 Contractor’s Proprietary Information
	 	 	58	 
	27.6 Contractor Information
	 	 	58	 
	 
	 	 	 	 
	ARTICLE 28 MISCELLANEOUS PROVISIONS
	 	 	58	 
	28.1 Governing Law
	 	 	58	 
	28.2 Notices
	 	 	58	 
	28.3 Entire Agreement
	 	 	59	 
	28.4 Severability
	 	 	60	 
	28.5 Independent Contractor
	 	 	60	 
	28.6 Assignment
	 	 	60	 
	28.7 Amendments
	 	 	60	 
	28.8 Precedence
	 	 	60	 
	28.9 Remedies Cumulative
	 	 	60	 
	28.10 Sole Benefit
	 	 	60	 
	28.11 Waiver
	 	 	60	 
	28.12 Counterparts
	 	 	60	 
	28.13 Survival
	 	 	61	 
	28.14 Small Business Investment Act
	 	 	61	 
	28.15 Announcements
	 	 	61	 

LIST OF EXHIBITS AND SCHEDULES

Exhibits

	 	 	 	A            Alliance Philosophy
	 
	 	 	 	B            Description of Facilities

Schedules

	 	1.1	 	Phases
	 
	 	4.13	 	Interconnection Points
	 
	 	7.4	 	Key Personnel
	 
	 	7.17	 	Contractor Required Insurance
	 
	 	9.2	 	Approved Subcontractors
	 
	 	10.2	 	Non-Craft Labor Multiplier
	 
	 	10.4	 	Out-of-Pocket Costs

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Alliance Agreement

for

Engineering, Construction and Project Management

This ALLIANCE AGREEMENT FOR ENGINEERING, CONSTRUCTION AND PROJECT MANAGEMENT, dated as of
February 28, 2007, is by and between TRANS-ALLEGHENY INTERSTATE LINE COMPANY (“Owner”), a
corporation organized under the laws of the Commonwealth of Virginia and the State of Maryland, and
KENNY CONSTRUCTION COMPANY (“Contractor”), a corporation organized under the laws of the State of
Illinois.

RECITALS

WHEREAS, based on PJM system requirements and load growth projections, PJM Interconnection, L.L.C.
has requested Owner to implement a transmission and substation capacity/reliability upgrade; and

WHEREAS, Owner wishes to engage Contractor, based on its experience and qualifications, to perform
the Work associated therewith; and

WHEREAS, the Parties seek to establish a collaborative relationship built upon mutual trust, in
which both Parties will utilize their respective strengths and best practices in order that each
may achieve its corporate objectives; and

WHEREAS, the Parties intend to observe the principles set forth in Exhibit A; and

WHEREAS, in order to incentivize Contractor to use all commercially reasonable efforts, consistent
with Good Utility Practices, to complete the Project no later than the date requested by PJM, but
with due regard for cost considerations, Owner is willing to offer Contractor [***].

NOW THEREFORE, in consideration of the undertakings, promises and agreements as set forth herein,
Owner and Contractor, each agree as follows:

ARTICLE 1

DEFINITIONS; INTERPRETATION

     1.1 Definitions. For the purpose of this Agreement, the following capitalized terms
shall have the meanings set forth below.

     “Acceptable LC Provider” means any bank or financial institution that: (a) has a
combined capital and surplus of at least $500,000,000; and (b) has unsecured long-term
indebtedness rated at least “A” by S&P and “A-2” by Moody’s.

     “Affiliate” means, with respect to any Person, another Person that directly or
indirectly controls, is under common control with, or is controlled by, such Person or any
successor thereto. For purposes of this definition, control of a Person shall mean the
power, direct or indirect, to: (a) vote fifty percent (50%) or more of the securities
having ordinary voting power for the election of the governing body of such Person; or (b)
direct

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or cause the direction of the management and policies of such Person, whether by
contract or otherwise.

     “Agreement” means this Alliance Agreement for Engineering, Construction and Project
Management by and between Owner and Contractor (including all Exhibits and Schedules
hereto), as the same may be amended, supplemented or otherwise modified from time to time in
accordance herewith.

     “Applicable Laws” means all laws, constitutions, statutes (including Environmental
Laws), treaties, judgments, decrees, edicts, codes, orders, rules (including rules
applicable to the Transmission Grid), ordinances, regulations and Permits of any
Governmental Authority pertaining to the Parties, the Project or the performance of the
Work.

     “Approved Subcontractors” means those Persons identified on Schedule 9.2.

     “Authorized Design” has the meaning set forth in Section 3.2.3.

     “Business Day” means any day other than a Saturday, Sunday or federal holiday.

     “Change-in-Law” means any change in, or enactment of, any Applicable Law or official
published policy regarding the interpretation or enforcement of any Applicable Law, in
either case that takes place after the date of this Agreement and affecting or related to
the Work, including the imposition of any new Permit requirements; provided, however, that a
change in Applicable Law affecting only a tax payable by Contractor or any other cost of
Contractor’s performance hereunder shall not constitute a Change-in-Law.

     “Change Order” means a document issued by Owner pursuant to Article 16, setting forth
adjustments to the scope of Work.

     “Claim” means any liability, claim, suit, demand, penalty, action, cause of action,
lien, cost (including attorney’s fees), expense, loss, damage or judgment.

     “Commissioning” means the process of verifying the safety, reliability and performance
of the Project.

     “[***]” has the meaning set forth in Section 13.4.1.

     “[***Date]” means [***], as such date may be extended pursuant to
Section 13.4.2.

     “[***]” means the amount of [***].

     “Confidential Information” has the meaning set forth in Section 27.1.1.

     “Construction Services” has the meaning set forth in Section 2.2(b).

     “Contractor” has the meaning set forth in the preamble to this Agreement.

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     “Contractor Default” has the meaning set forth in Section 21.1.

     “Contractor Indemnitees” has the meaning set forth in Section 18.1.2.

     “Contractor Lien” means any claim, lien, charge or encumbrance on the Project Real
Property, the Facilities or any part thereof or interest therein in favor of Contractor, any
Subcontractor or any of their respective employees, laborers, materialmen or other suppliers
of goods or services.

     “Contractor Permits” means all Permits other than Owner Permits.

     “Contractor Personnel” means all of Contractor’s employees performing any portion of
the scope of Work (but excluding any Subcontractors and their respective employees).

     “Contractor Procured Materials” has the meaning set forth in Section 5.1.2.

     “Contractor Required Insurance” has the meaning set forth in Section 7.17.1.

     “Craft Labor Costs” means, with respect to any period, the non-duplicative charges
assessed by Contractor for the use of Contractor Personnel who perform craft labor Work in
accordance with the terms of this Agreement, as approved by Owner pursuant to Section 10.3.

     “Dedicated Personnel” means any Contractor Personnel who are dedicated to performing
the Work.

     “Delayed Facilities” has the meaning set forth in Section 13.4.2.

     “Direct Supplier” means any Person providing any Owner Procured Materials to Owner.

     “Dollar” and “$” means the lawful currency of the United States of America.

     “Emergency” has the meaning set forth in Section 4.10.

     “Engineering Services” has the meaning set forth in Section 2.2(a).

     “Environmental Laws” means any applicable local, state or federal law regulating the
use, storage, transportation or disposal of hazardous or toxic materials, including without
limitation the Resource Conservation and Recovery Act, as amended (42 U.S.C. §§ 6901 et
seq.), the Comprehensive Environmental Response, Compensation, and Liability Act, as amended
by the Superfund Amendments and Reauthorization Act of 1986 (42 U.S.C. §§ 9601 et seq.), the
Clean Air Act, as amended (42 U.S.C. §§ 7401 et seq.), the Hazardous Materials
Transportation Act (49 U.S.C. §§ 1801 et seq.), the Clean Water Act (33 U.S.C. §§ 7401 et
seq.), the Toxic Substances Control Act (15 U.S.C. §§ 2601 et seq.), the Safe Drinking Water
Act (42 U.S.C. §§ 300f et seq.), the Uranium Mill Tailings Radiation Control Act (42 U.S.C.
§§ 7901 et seq.), the Federal Insecticide, Fungicide and

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Rodenticide Act (7 U.S.C. §§ 136 et seq.) and the amendments, regulations, orders,
decrees, Permits or licenses now or hereafter promulgated or issued under any of the
foregoing.

     “Facilities” means all of the equipment, material, installations and facilities
comprising the Trans-Allegheny Interstate Line project, as described in Exhibit B,
including: (a) two new substations, consisting of the Prexy 500/138kV step-down substation
located near Washington, Pennsylvania and the 502 Junction 500kV switchyard step-down
substation located near Mt. Morris, Pennsylvania; (b) approximately 210 miles of 500 kV
overhead transmission lines to be installed between the proposed Prexy Substation and a
point to the east of the existing Meadow Brook Substation where it will interconnect with a
Dominion Virginia Power transmission line; (c) three overhead radial 138 kV lines running
from the proposed Prexy Substation to each of (i) the existing Manifold-Houston 138kV
transmission line, (ii) the existing Washington-Charleroi transmission line, and (iii) the
existing Cecil-Peters 138kV transmission line; (d) an expansion of the existing Meadow Brook
Substation; and (e) such other facilities as are described in Exhibit B.

     “FERC” means the Federal Energy Regulatory Commission.

     “Field Office” means an office facility to be established by Contractor to monitor and
supervise the Work at a site in northern West Virginia mutually acceptable to the Parties.

     “Final Completion” means the achievement of the following conditions: (a) Contractor
shall have achieved Substantial Completion; (b) Contractor shall have completed all Punch
List items in accordance with this Agreement; (c) Contractor shall have delivered to Owner
the Project Design Book; and (d) Contractor shall have delivered to Owner written
certification, executed by an officer of Contractor, that the conditions set forth in
clauses (a) through (c) have been satisfied.

     “Force Majeure” means any event that: (a) renders a Party unable to comply with its
obligation under this Agreement; (b) is beyond the reasonable control of the affected Party;
(c) does not result from the fault, negligence or intentional act of the affected Party or
such Party’s failure to comply with Applicable Laws or Good Utility Practices; and (d) could
not have been avoided by the affected Party through the exercise of proper diligence
including the expenditure of reasonable monies and/or taking reasonable precautionary
measures, including (to the extent that such events satisfy the foregoing criteria), the
following:

	 	(i)	 	acts of God or the public enemy;
	 
	 	(ii)	 	expropriation or confiscation of facilities;
	 
	 	(iii)	 	war, terrorism, rebellion, sabotage or riot;
	 
	 	(iv)	 	floods;

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	 	(v)	 	fires, explosions, hurricanes, tornados, microbursts or other
natural catastrophes;
	 
	 	(vi)	 	actions or inaction of Governmental Authorities that render(s)
illegal performance required in connection with the Work;
	 
	 	(vii)	 	strikes and other concerted acts of workers;
	 
	 	(viii)	 	a Change-in-Law;
	 
	 	(ix)	 	delays in the delivery of Owner Procured Materials;
	 
	 	(x)	 	underground conditions at, on or under the Project Real
Property that Contractor could not reasonably anticipate, including the
existence of Hazardous Substances or archaeological materials;
	 
	 	(xi)	 	extraordinary delays by Governmental Authorities in issuing
Permits;
	 
	 	(xii)	 	unreasonable delays by Owner in applying for Owner Permits for
reasons other than Contractor’s failure to satisfy its obligations under this
Agreement;
	 
	 	(xiii)	 	delays by Governmental Authorities in granting right of entry onto Project
Real Property beyond the time periods specified in the Project Schedule;
	 
	 	(xiv)	 	injunctions issued by Governmental Authorities; and
	 
	 	(xv)	 	operating conditions on the Transmission Grid that restrict
outages, testing or access properly scheduled in accordance with the
requirements of the Transmission Grid operator;

     provided, however, that Force Majeure shall not include:

	 	(A)	 	lack of finances;
	 
	 	(B)	 	strikes or labor disturbances limited to a single employer
performing any of the Work, unless, as a result of any such strike or labor
disturbance, there is no other Person capable and reasonably available to
Contractor to perform such Work;
	 
	 	(C)	 	shortages or price fluctuations with respect to Contractor
Procured Material;
	 
	 	(D)	 	late delivery of Contractor Procured Material, except to the
extent caused by an event that would otherwise constitute a Force Majeure;
	 
	 	(E)	 	economic hardship;

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	 	(F)	 	shortages of manpower, except to the extent caused by an event
that would otherwise constitute a Force Majeure;
	 
	 	(G)	 	delay or failure to perform of a Subcontractor, except to the
extent caused by an event that would otherwise constitute a Force Majeure;
	 
	 	(H)	 	machinery or equipment breakdown, except to the extent caused
by an event that would otherwise constitute a Force Majeure;
	 
	 	(I)	 	unavailability at the Work Site of necessary water and other
utilities, except to the extent caused by an event that would otherwise
constitute a Force Majeure; or
	 
	 	(J)	 	flaws in any design, drawing or technical specifications
requiring Contractor to re-design or re-engineer any portion of the Facilities.

     “GAAP” means generally accepted accounting principles in the United States applied on a
consistent basis.

     “Good Utility Practices” means those practices, methods and standards that, in the
exercise of reasonable and prudent judgment by an electric utility company designing,
installing, constructing and operating high-voltage, interstate electric transmission lines
in the United States, based on the facts known or which reasonably should have been known at
the time a decision was made, would have been expected to efficiently accomplish the desired
result in a manner that: (a) is consistent with Applicable Laws and standards generally
utilized in projects similar to the Project; (b) makes due consideration for reliability,
safety and protection of equipment; and (c) is consistent with manufacturers’
recommendations and warranties.

     “Governmental Authority” means any Federal, state, municipal, foreign, governmental or
quasi-governmental ministry, department, court, commission, board or agency in any
jurisdiction having authority over Owner, Contractor, Direct Suppliers, Subcontractors or
the Project.

     “Hazardous Substance” means asbestos or any substance containing asbestos,
polychlorinated biphenyls, radioactive materials, pollutants, contaminants, infectious
wastes, any petroleum or petroleum-derived waste or product or related materials and any
items defined as hazardous, special or toxic materials, substances or waste under any
Environmental Laws.

     “Indemnitee” means an Owner Indemnitee or a Contractor Indemnitee, as applicable.

     “Initial Project Schedule” means a schedule for performance of the Work identifying, at
a minimum, major elements of Work associated with each Phase and the Management Fee
Milestones.

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     “Interest Rate” means an annual rate of interest equal to the lesser of: (a) the
“[***]” as published in The Wall Street Journal under the caption “Money Rates” in effect on
the date a payment hereunder is due [***]; and (b) the maximum rate of interest permitted by
Applicable Laws.

     “Labor Costs” means Craft Labor Costs and Non-Craft Labor Costs.

     “Lender” means any lender or institution providing or guaranteeing financing or
refinancing to Owner or any Affiliate of Owner in connection with the Project, and any
agent, consultant, advisor, counsel, consulting engineer or trustee therefor.

     “List of Materials” has the meaning set forth in Section 5.1.1.

     “Major Subcontractor” shall mean any Subcontractor that is party to one or more
Subcontracts expected to cost more than One Hundred Thousand Dollars ($100,000) in the
aggregate.

     “Management Fee” means [***]; provided, however, that if the Target Cost (including an
amended Target Cost pursuant to a Change Order) [***], the Management Fee shall be [***].

     “Management Fee Milestone” means each event, the satisfaction of which is a condition
to payment of a portion of the Management Fee, all of which Management Fee Milestones shall
be identified in the Management Fee Payment Schedule.

     “Management Fee Payment Schedule” means the schedule of Management Fee Milestones.

     “Material Milestone” means each milestone designated as a “Material Milestone” in the
Project Schedule.

     “Moody’s” means Moody’s Investors Service, Inc., a division of Moody’s Corporation, or
any successor thereto.

     “Non-Craft Labor Costs” means, with respect to any period, the actual cost to
Contractor for Contractor Personnel performing non-craft labor Work, as determined in
accordance with the terms of this Agreement.

     “Non-Craft Labor Multiplier” means, with respect to non-craft Contractor Personnel, the
factor by which the average salaries or wages of such personnel must be multiplied to result
in Contractor’s total cost of employing such personnel (but excluding any profit), as
further described in Section 10.2.

     “Non-Craft Labor Rates” means, with respect to non-craft Contractor Personnel, the
actual, unburdened salaries or wages of such personnel (without any profit component)
calculated on an hourly basis (based on 2,080 working hours).

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     “Notice of Final Completion” means the notice issued by Owner confirming that
Contractor has completed the conditions of Final Completion.

     “Notice of Substantial Completion” means the notice issued by Owner confirming that
Contractor has completed the conditions of Substantial Completion.

     “Out-of-Pocket Costs” means the reasonable and documented out-of-pocket costs incurred
by Contractor to perform the Work in accordance with the terms of this Agreement, including
amounts paid: (a) to Subcontractors; (b) to purchase Contractor Procured Materials; (c)
applicable per diems for Contractor Personnel; and (d) for other items identified in
Schedule 10.4; provided, however, that (i) Out-of-Pocket Costs shall not include any
overhead or general and administrative costs charged by Contractor related thereto or costs
incurred by Contractor with respect to defective or non-conforming Work, and (ii) Contractor
shall take advantage of, and credit toward Reimbursable Costs, all cash and trade discounts,
refunds, rebates, freight allowances, annual volume and other allowances, credits, salvages
and commissions to which Contractor is entitled in connection with Out-of-Pocket Costs.

     “Owner” has the meaning set forth in the preamble to this Agreement.

     “Owner Additional Insureds” means Allegheny Energy Service Corporation, Monongahela
Power Company, The Potomac Edison Company and West Penn Power Company.

     “Owner Default” has the meaning set forth in Section 21.3.

     “Owner Indemnitees” has the meaning set forth in Section 18.1.1.

     “Owner Nominee” means any Person, including a Lender, financial advisor, technical
advisor, inspector, outside auditor, consultant or expert, nominated in writing by Owner
from time to time to assist or advise Owner or a Lender in connection with the Project.

     “Owner Permits” has the meaning set forth in Section 7.7.1.

     “Owner Procured Materials” has the meaning set forth in Section 5.1.2.

     “Owner Reimbursed Insurance” has the meaning set forth in Section 7.17.3.

     “Owner Representative” has the meaning set forth in Section 8.2.

     “Party” means Owner or Contractor and “Parties” means Owner and Contractor.

     “Payment Act” means the Contractor and Subcontractor Payment Act, title 73 Pa. Stat.
Ann. §§501-516.

     “Permit” means any permit, license, authorization, consent, decree, waiver, privilege,
approval, exemption from, filing with and notice to, any Governmental

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Authority required in connection with: (a) the development of the Project; (b) the
engineering, construction, installation, operation or ownership of the Facilities; and/or
(c) the performance of the Work, regardless of whether such permits, licenses,
authorizations, consents, decrees, waivers, privileges, approvals, exemptions, filings or
notices are required to be obtained, maintained or filed in the name of Owner or Contractor,
and which Permits shall include (i) professional board certifications and licenses, and (ii)
all required approvals of the Authorized Design.

     “Person” means any individual, partnership, corporation, association, business, trust,
limited liability company, Governmental Authority or other legal entity.

     “Phase” means each discreet segment of the Facilities to be constructed by Contractor,
as identified on Schedule 1.1.

     “PJM” means PJM Interconnection, L.L.C.

     “PJM Extended Deadline” has the meaning set forth in Section 13.4.3.

     “PJM Extended Deadline [***]” means, if there are Savings as of Final Completion,
[***].

     “Procurement Management Services” has the meaning set forth in Section 2.1(c).

     “Procurement Plan” has the meaning set forth in Section 5.1.5.

     “Progress Report” has the meaning set forth in Section 7.14.

     “Prohibited Lien” means any Contractor Lien other than a Contractor Lien based on
Owner’s continuing failure to pay any amount claimed by Contractor to be owed pursuant to
this Agreement and not disputed in good faith by Owner.

     “Project” means: (a) the acquisition of the Project Real Property; (b) the procurement
of the Project Materials; and (c) the engineering, design, permitting, construction, testing
and Commissioning of the Facilities.

     “Project Budget” has the meaning set forth in Section 11.1.1.

     “Project Design Book” means the compilation, both in electronic and hard copy format,
of documents, drawings and information which reflects the final Project specifications and
design, including “as built” design, engineering and construction documents, as certified by
the Project Manager on behalf of the Contractor as being true, complete and correct.

     “Project Manager” has the meaning set forth in Section 7.3.

     “Project Materials” means Owner Procured Materials and Contractor Procured Materials,
in the aggregate.

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     “Project Real Property” means the rights-of-way, easements and other real property
interest on which the Facilities are to be located, including any rights-of-way, easements
and other real property interests necessary for access to the Facilities.

     “Project Release” has the meaning set forth in Section 2.1.

     “Project Schedule” has the meaning set forth in Section 11.2.1.

     “Project Workshop” has the meaning set forth in Section 2.3.1.

     “Proprietary Information” has the meaning set forth in Section 26.1.

     “Punch List” has the meaning set forth in Section 13.2.1.

     “Punch List Security Amount” means an amount equal to [***] of the reasonably estimated
cost of completing the Work set forth on the Punch List, determined by Contractor or, at
Owner’s option, an independent engineering and construction firm retained by Owner.

     “Real Property Acquisition Costs” means the aggregate cost incurred by Owner to acquire
all Project Real Property.

     “Real Property Management Services” has the meaning set forth in Section 2.2(d).

     “Real Property Plan” has the meaning set forth in Section 6.2.1.

     “Reimbursable Costs” means, subject to the limitations set forth in Section 10.5.3, all
Out-of-Pocket Costs and Labor Costs.

     “Replacement Contractor” means any Person other than Contractor retained by Owner to
perform some or all of the Work following Contractor’s failure to perform such Work.

     “Retention” has the meaning set forth in Section 10.7.1.

     “Retention Amount” has the meaning set forth in Section 10.7.1.

     “Retention Letter of Credit” means an irrevocable, stand-by letter of credit in form
and substance acceptable to Owner issued by a financial institution acceptable to Owner, as
further described in Section 10.7.2.

     “S&P” means Standard & Poor’s, a division of The McGraw-Hill Companies, Inc., or any
successor thereto.

     “Safety Standards” has the meaning set forth in Section 4.8.1.

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     “Savings” means the positive difference, if any, as of Final Completion, between: (a)
the Target Cost; and (b) the sum of (i) Reimbursable Costs actually incurred by Owner
pursuant to this Agreement, plus (ii) the amount of the Management Fee, plus (iii) [***].

     “[***]” means, in the event there are Savings, [***] of such Savings and [***] of
any
additional Savings; provided, however, that [***].

     “[***]” means [***].

     “[***]” means the [***].

     “Services” means Engineering Services, Construction Services, Procurement Management
Services and Real Property Management Services.

     “Steering Committee” has the meaning set forth in Section 12.1.

     “Subcontract” means any contract, agreement, purchase order or obligation between
Contractor and any Subcontractor.

     “Subcontractor” means any Person retained by Contractor to supply Contractor Procured
Materials or perform any portion of the Work on behalf of Contractor.

     “Substantial Completion” means the achievement of the following conditions: (a)
Contractor shall have completed the Work to the extent required for the safe, reliable and
continuous operation of the Facilities consistent with Good Utility Practices and all
Applicable Laws; (b) Contractor shall have completed testing and Commissioning of the
Facilities; (c) Contractor shall have delivered equipment documentation, start-up procedures
and any special tools necessary to support continued operation of the Facilities; (d) the
Facilities shall be energized and commercially operable; and (e) Contractor and
Subcontractors shall have delivered duly executed lien waivers and Contractor shall have
delivered a duly executed indemnity against Subcontractor liens relating to the Work, each
in form and substance reasonably acceptable to Owner and Contractor.

     “Substantial Completion Date” means the date on which Substantial Completion occurs.

     “Target Cost” means the sum of: (a) the total estimated Reimbursable Costs projected
to be incurred by Owner, as estimated by Contractor; plus (b) the amount of the Management
Fee; plus (c) the [***], which Target Cost shall not be subject to change for any reason
other than pursuant to a Change Order.

     “Target Cost Delivery Date” means April 15, 2007.

     “Transmission Grid” means the high-voltage electric transmission system with which the
Facilities will be directly interconnected, including transmission facilities owned and/or
operated by Allegheny Power, Dominion Virginia Power and PJM Interconnection, Inc.

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     “Unrestricted Information” means any information disclosed by one Party to the other
Party that: (a) is or becomes part of the public domain without fault of the receiving
Party; (b) was received by the receiving Party from a Person under no obligation to the
disclosing Party with respect to maintaining the confidentiality thereof; or (c) was already
in the receiving Party’s possession and not subject to confidentiality restrictions at the
time the information was made available by the disclosing Party.

     “Warranty Period” has the meaning set forth in Section 15.2.

     “Work” means the engineering, procurement, construction, management, testing,
Commissioning and other services and activities necessary to design, install and commission
the Facilities in accordance with Good Utility Practices, including the Engineering
Services, the Construction Services, the Procurement Management Services and the Real
Property Management Services and the completion of the Punch List.

     “Work Site” means the Project Real Property, the Field Office, any laydown areas and
storage yards required or used in connection with the Work and all access roads,
rights-of-way and easements used by Contractor, Subcontractors and their respective
employees, agents, representatives and invitees in respect thereto.

     1.2 Interpretation. The following rules of construction shall apply when interpreting
this Agreement:

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

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	 	 	 	provided, however, that if any conflicts exist between Exhibit A and
the remainder of this Agreement, such conflict shall be resolved in favor of
the remainder of this Agreement; and
	 
	 	(h)	 	no term of this Agreement shall be construed in favor of, or
against, a Party as a consequence of one Party having had a greater role in the
preparation or drafting of this Agreement, but shall be construed as if the
language were mutually drafted by both Parties with full assistance of counsel.

ARTICLE 2

SCOPE OF WORK; PROJECT WORKSHOP

     2.1 Project Releases. Contractor may elect to describe specified portions of the Work
through written documentation (each, a “Project Release”). Project Releases shall specify, among
other things, specific Contractor Procured Materials to be purchased, other portions of the Work to
be executed and the date(s) that such Work is scheduled to be completed, all in accordance with the
Project Schedule. The specific form of the Project Release shall be developed during the Project
Workshop. Project Releases shall not affect, in any way, Contractor’s obligations to perform all
the Work in accordance with the terms of this Agreement.

     2.2 Scope of Work. Contractor shall perform the following services:

	 	(a)	 	structural and design engineering for the Facilities, as
described further in Article 3 (the “Engineering Services”);
	 
	 	(b)	 	construction of the Facilities, as described further in Article
4 (the “Construction Services”);
	 
	 	(c)	 	management of the procurement of Project Materials, as
described further in Article 5 (the “Procurement Management Services”); and
	 
	 	(d)	 	management of the acquisition of the Project Real Property, as
described further in Article 6 (the “Real Property Management Services”).

     2.3 Project Workshop.

     2.3.1 Promptly after execution of this Agreement, Owner and Contractor shall schedule a
series of meetings (the “Project Workshop”) to be attended by qualified representatives of
Owner, Contractor and proposed major Subcontractors designated by Contractor and approved by
Owner. The purpose of the Project Workshop shall be to jointly develop an alliance culture,
a Project execution plan, to exchange information and to develop working protocols and other
policies and procedures deemed necessary or desirable for the efficient and timely
prosecution of the Work.

     2.3.2 The Project Workshop shall be divided into functional working groups and shall
take place at Owner’s corporate offices or another mutually agreeable location.

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     2.3.3 At the Project Workshop, Contractor shall present to Owner, for Owner’s review,
comment and approval:

	 	(a)	 	a proposed drug testing plan;
	 
	 	(b)	 	proposed Safety Standards;
	 
	 	(c)	 	a proposed environmental orientation
program;
	 
	 	(d)	 	a preliminary Procurement Plan and
preliminary List of Materials;
	 
	 	(e)	 	preliminary man-hour and labor cost
estimates for Engineering Services, Construction Services,
Procurement Management Services and Real Property Management
Services;
	 
	 	(f)	 	proposed Field Office locations;
	 
	 	(g)	 	a preliminary Real Property Plan; and
	 
	 	(h)	 	the identity of proposed survey and
geotechnical Subcontractors.

	 	2.3.4	 	At the Project Workshop, the Parties shall agree on:

	 	(a)	 	the Initial Project Schedule;
	 
	 	(b)	 	the Management Fee Payment Schedule;
	 
	 	(c)	 	a Project execution plan;
	 
	 	(d)	 	forms for monthly invoices, weekly and
monthly reports, and cost control reporting;
	 
	 	(e)	 	protocols, meeting schedules and
procedures for the Steering Committee;
	 
	 	(f)	 	detailed rules for Real Property
Management Services, including rules of engagement with landowners,
procedures for payment of landowners, access rules, record-keeping
requirements, training of agents on how to respond to questions
concerning the Project, manpower projections and preliminary plans
for initiating Real Property Management Services;
	 
	 	(g)	 	engineering standards that require
development prior to starting detailed engineering; and
	 
	 	(h)	 	the identity of the Project Manager and
Owner Representative.

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     2.3.5 The Project Workshop shall include any discussions necessary to permit Contractor
to prepare the Project Budget and a responsibilities matrix.

     2.3.6 No later than fourteen (14) days after completion of the Project Workshop,
Contractor shall provide Owner with a written report on all material decisions made and
agreements reached at the Project Workshop, which report, once acceptable to Owner, shall be
confirmed in writing by Owner.

     2.3.7 Costs incurred by Contractor and Subcontractors in connection with their
participation in the Project Workshop shall constitute Reimbursable Costs.

     2.4 Target Cost. No later than the Target Cost Delivery Date, Contractor shall notify
Owner in writing of the Target Cost. Such notice shall include a line item breakdown of the Target
Cost in a form reasonably acceptable to Owner.

     2.5 Special Termination Right. If: (a) [***]; or (b) the Parties have been unable to
agree on any of the matters set forth in Section 2.3.4(a) through (c), Owner shall have the
unilateral right, exercisable by written notice delivered to Contractor no later than ninety (90)
days after Target Cost Delivery Date, to terminate this Agreement. In the event Owner terminates
the Agreement pursuant to this Section 2.5, Owner’s sole liability pursuant to this Agreement shall
be to pay Contractor: (i) all Reimbursable Costs incurred through the date of termination; (ii)
reasonable demobilization costs incurred by Contractor and Subcontractors; and (iii) expenses
incurred to terminate Subcontracts. Upon any termination pursuant to this Section 2.5, Contractor
shall submit to Owner an invoice detailing all Reimbursable Costs incurred through the date of such
termination. Such invoice shall separately identify applicable taxes (including sales, gross
receipts and business and occupation taxes) and shall be accompanied by: (A) copies of receipts or
other evidence reasonably satisfactory to Owner documenting such Reimbursable Costs, including
evidence of hours worked by Contractor Personnel; and (B) lien waivers in form and substance
reasonably acceptable to Owner with respect to all Work performed, executed by Contractor and each
Subcontractor performing such Work. Any amounts owed by Owner pursuant to this Section 2.5 shall
be due to Contractor thirty (30) days after Owner’s receipt of such invoice.

ARTICLE 3

ENGINEERING SERVICES

     3.1 Preliminary Engineering. No later than the deadline(s) set forth in the Project
Schedule, Contractor shall engage Subcontractors to prepare surveys, environmental analyses and
reports, soils and subsurface studies and preliminary phase I engineering design services related
to the Project Real Property.

     3.2 Design of Facilities.

     3.2.1 Contractor shall design the Facilities, including the specification of all
materials and equipment to be incorporated therein, in accordance with Good Utility
Practices and any other requirements of Owner as communicated in writing to Contractor.

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     3.2.2 Contractor shall submit initial design drawings for review by Owner by the
deadline(s) set forth in the Project Schedule. Contractor shall cause the Subcontractor
that prepared such drawings to make its offices (or another mutually agreeable location)
available to Owner to review such drawings and Owner shall review such drawings at such
offices or other location and provide comments thereon, if any, to Contractor no later than
ten (10) Business Days after Owner’s receipt of notice that such drawings are available for
review. No later than ten (10) Business Days after Contractor’s receipt of comments from
Owner, Contractor shall provide revised design drawings incorporating Owner’s comments.
This process shall be repeated until the design drawings are accepted by Owner.

     3.2.3 No later than thirty (30) days after Owner’s acceptance of the design drawings,
Contractor shall provide detailed construction drawings of the Facilities and make such
drawings available to Owner for review and comment. Owner shall review such drawings and
provide comments thereon, if any, to Contractor no later than ten (10) Business Days after
Owner’s receipt of notice that such drawings are available for review. No later than ten
(10) Business Days after receipt of comments from Owner, Contractor shall provide revised
construction drawings incorporating Owner’s comments. This process shall be repeated until
the construction drawings are accepted by Owner (such drawings, once accepted, the
“Authorized Design”).

     3.2.4 All engineering design drawings shall be prepared using Microstation or PLS CADD
software and provided to Owner in hard copy and electronic formats.

     3.2.5 Notwithstanding anything to the contrary set forth herein, no review, comment or
acceptance by Owner of or on any design or engineering performed by Contractor shall: (a)
release Contractor from responsibility with respect to any design or engineering Work or any
requirements regarding any specifications set forth therein; (b) be taken as approval of any
engineering or design; or (c) release Contractor from liability resulting from errors or
omissions related to faulty design.

     3.3 Site Conditions. Contractor shall conduct core borings on the Project Real
Property as shall be reasonably necessary or appropriate based on Good Utility Practices.
Contractor shall design the Facilities having full regard for the actual ground conditions existing
at the Project Real Property.

     3.4 Incidental Engineering. Contractor shall be responsible for any engineering
necessary to facilitate the transportation and delivery of equipment and materials in connection
with the Work, including the transportation and delivery of Owner Procured Materials and Contractor
Procured Materials to the Work Site.

     3.5 Access to Design Information. Contractor shall furnish Owner with copies of
detail and working drawings, specifications, engineering calculations and other documents prepared
in connection with the engineering and design of the Facilities, and Contractor shall provide Owner
and Owner Nominees with access at reasonable times to design and engineering methods, calculations
and data used in performing the Engineering Services. Without limiting the generality of the
foregoing requirements, Contractor shall promptly provide Owner with copies of

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the most recent design drawings, specifications and other documents produced, created or used
in connection with the Project or pursuant to this Agreement, including those which have been
produced, created or used by Subcontractors, in a medium (e.g., disk, magnetic tape, network direct
transfer, etc.) approved by Owner.

ARTICLE 4

CONSTRUCTION SERVICES

     4.1 Scope of Construction Services. Contractor shall perform all work necessary or
appropriate to carry out and complete the construction, installation, testing and Commissioning of
the Facilities in accordance with the Authorized Design and the terms of this Agreement and the
performance of all warranty obligations hereunder. Contractor shall construct the Facilities (and
ensure that the Facilities are constructed) in conformance with the Authorized Design.

     4.2 Site Conditions.

     4.2.1 Contractor shall build the Facilities having full regard for the actual ground
conditions existing at the Project Real Property, regardless of whether such conditions are
discovered before or after the date of this Agreement, the Project Workshop or the issuance
of the Authorized Design.

     4.2.2 Contractor shall prepare and, if necessary, make improvements to the Project Real
Property for construction and installation of the Facilities, including clearing, grubbing,
introducing and removing fill, leveling, compacting and draining.

     4.3 Environmental Protection.

     4.3.1 Contractor shall be responsible for ensuring that the Work complies in all
respects with Applicable Laws regarding protection of the environment and archaeological and
cultural resources, including Environmental Laws. Contractor shall ensure that no Hazardous
Substances introduced by Contractor, Subcontractors or any of their respective employees,
agents, representatives or invitees is released at, on or under the Work Site. Contractor
shall promptly notify Owner of the discovery of any Hazardous Substances at, on or under the
Work Site.

     4.3.2 Contractor shall be responsible for all Hazardous Substances brought onto or
generated at the Work Site in connection with the Work, including the proper permitting,
removal and disposal of all such Hazardous Substances in accordance with Applicable Laws.
Without limiting the generality of the foregoing, Contractor shall implement, and ensure
that all Subcontractors implement, procedures to minimize the generation of Hazardous
Substances. These procedures shall include, at a minimum, process substitution, materials
recovery, and continued product use. When reasonably possible, Contractor shall select less
toxic alternatives to minimize the generation of Hazardous Substances.

     4.3.3 In the event Contractor discovers any Hazardous Substances at, on or under the
Work Site, Contractor shall: (a) promptly cease work in the affected area and

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direct all Contractor Personnel and Subcontractors not to remove or further disturb
such Hazardous Substances; (b) promptly notify Owner of such discovery; and (c) use all
reasonable efforts to mitigate the effects of any such discovery; provided, however, that
except as provided in Section 4.3.4, Contractor shall not be required to remediate Hazardous
Substances at, on or under the Work Site except as expressly provided for in this Agreement.

     4.3.4 In the event Contractor discovers any Hazardous Substances at, on or under the
Work Site which Contractor is not otherwise obligated to remediate under the terms of this
Agreement, Owner may authorize Contractor to perform any necessary remediation in accordance
with Applicable Laws, in which case, Contractor shall (directly or through one or more
Subcontractors) remediate such Hazardous Substances in accordance with Applicable Laws;
provided, however, that if the anticipated cost of the remediation is in excess of [***],
Contractor may request that Owner directly retain one or more third parties to perform such
remediation directly on behalf of Owner, in which case: (a) Contractor shall provide Owner
with the names of qualified Persons to evaluate and/or perform such remediation; and (b)
Contractor shall provide any Persons retained by Owner to perform such remediation access to
the applicable Work Site, inform such Persons of the Safety Standards and monitor such
Persons’ compliance therewith.

     4.3.5 Contractor shall provide Owner with a list of any Hazardous Substances to be
installed or otherwise incorporated into the Project or used in performing the Work.
Contractor shall not, nor shall Contractor permit any Subcontractor, directly or indirectly,
to: (a) bring any other Hazardous Substances on the Work Site; or (b) permit the
manufacture, storage, transmission or presence of any Hazardous Substances over, on or under
the Work Site except in accordance with Applicable Laws. Contractor shall maintain a log of
all Hazardous Substances, including their quantity, locations and place of disposal, and
provide copies of such log to Owner upon request.

     4.3.6 Contractor shall be fully liable for any Work Site contamination caused by the
negligence or willful misconduct of Contractor, Subcontractors and their respective
employees, agents, representatives and invitees with respect to Hazardous Substances
discovered at, on or under the Work Site. Without limiting Contractor’s obligations
pursuant to Section 18.2, Contractor shall be obligated to remediate, in accordance with all
Applicable Laws, any Hazardous Substances introduced or released by Contractor,
Subcontractors, their subcontractors at any level or any of their respective employees,
agents, representatives or invitees at, on or under the Work Site. Contractor shall not be
liable for Hazardous Substances not released by Contractor or its Subcontractors.

     4.4 Archeological Materials. In the event Contractor discovers any archaeological
materials at, on or under the Work Site, Contractor shall: (a) promptly cease work in the affected
area and direct all Contractor Personnel and Subcontractors not to remove or further disturb such
archaeological materials; (b) promptly notify Owner of such discovery; and (c) exercise all
commercially reasonable efforts, consistent with Applicable Laws, to protect such archaeological
materials.

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     4.5 Commissioning. Contractor shall be responsible for Commissioning, testing and
turning over to Owner fully operational Facilities. Without limiting the generality of the
foregoing, Contractor shall perform all tasks necessary for start-up, testing and Commissioning of
the Facilities, including: (a) performing all inspection, testing, operations and other tasks
inherent in Commissioning in accordance with Good Utility Practices and equipment manufacturers’
procedures; and (b) providing qualified, equipped and competent personnel to execute tasks as
described in this Agreement and the Project Schedule.

     4.6 Construction Management. Contractor shall manage the construction, installation,
inspection, storage, testing and Commissioning of materials and equipment comprising, or necessary
for the operation of, the Facilities through the Final Completion Date, all in accordance with Good
Utility Practices and otherwise as necessary for the timely completion of the Work in accordance
with the Project Schedule. Contractor shall be solely responsible for all construction means,
methods, techniques, sequences, procedures, safety and security programs in connection with the
performance of the Work.

     4.7 Scheduling. Contractor shall perform all scheduling activities necessary or
advisable in connection with the performance of the Work, including scheduling and coordinating
outages of the Facilities in accordance with Applicable Laws.

     4.8 Health and Safety.

     4.8.1 Contractor shall be responsible, until Final Completion, for assuring the health,
safety and protection of all Persons while at the Work Site or otherwise performing or
inspecting the Work. Without limiting the generality of the foregoing, Contractor shall
develop, implement, comply with and monitor compliance with a quality assurance program, a
construction safety program, a fire protection program, an accident prevention program and
any other programs (collectively, “Safety Standards”) necessary to: (a) comply with all
Applicable Laws, including laws pertaining to health and safety; and (b) satisfy, at a
minimum, the policies and procedures set forth Owner’s 2006 Safety Manual, a copy of which
has been provided by Owner to Contractor. Without limiting the generality of the foregoing,
Contractor shall: (i) erect and maintain reasonable safeguards for the protection of
equipment, workers and the public, including first-aid facilities at the Work Site; and (ii)
exercise reasonable efforts to eliminate or abate all reasonably foreseeable safety hazards
created by, or otherwise resulting from, performance of the Work.

     4.8.2 Owner may, at any time during performance of the Work, conduct a compliance audit
with respect to the Safety Standards. In the event such audit demonstrates non-compliance
with any aspect of the Safety Standards, Owner may notify Contractor of such non-compliance
and Contractor shall promptly undertake appropriate remedial action.

     4.8.3 Contractor shall: (a) promptly notify Owner in writing of all accidents,
injuries and near-misses to the Owner Representative, including providing reasonable back-up
documentation with respect thereto; (b) promptly notify Owner in writing of any
non-compliance with the Safety Standards; and (c) provide Owner with written monthly

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health and safety reports, which reports shall be in form and substance acceptable to
Owner.

     4.9 Cleanup. Contractor shall at all times keep the Work Site free from waste
materials and rubbish. As soon as practicable, and in no event later than Final Completion,
Contractor shall remove all of its equipment and materials not constituting part of the Facilities
and shall remove all waste material and rubbish from and around the Work Site.

     4.10 Emergencies. In the event of any condition that poses an imminent threat to
life, health or property (an “Emergency”), Contractor shall take such action as may be necessary to
prevent, avoid or mitigate injury, damage or loss and shall, as soon as practicable, report any
such incidents, including Contractor’s response thereto, to Owner. If Contractor fails to take
adequate measure to avoid, address or mitigate the effects of such an Emergency Owner may, but
shall be under no obligation to, take reasonable precautions to avoid, address or mitigate the
effects of such Emergency; provided, however, that neither the taking of such action by Owner nor
Owner’s failure to take such action shall limit Contractor’s liability or its obligations under
this Agreement.

     4.11 Cooperation.

     4.11.1 Contractor shall make available to Owner and Owner Nominees information relating
to the status of the Work, including information relating to the construction, testing and
Commissioning of the Facilities and such other matters as Owner may reasonably request.

     4.11.2 Contractor shall cooperate with Owner’s efforts to obtain, maintain and comply
with the terms of any third-party financing of the Facilities, including: (a) executing
documents (including consents, certifications, acknowledgements and legal opinions) as Owner
and Lenders may reasonably request, provided that the reasonable attorneys’ fees and costs
incurred by Contractor in connection therewith shall be Reimbursable Costs; (b) consenting
to the collateral assignment of this Agreement to Lenders; (c) agreeing not to amend this
Agreement without the consent of Lenders, except pursuant to a Change Order executed
pursuant to Article 16; and (d) agreeing to give Lenders notice of, and an opportunity to
cure, any Owner default(s) hereunder. Contractor shall also give due consideration to any
reasonable proposals to amend this Agreement proposed by Lenders to address financing
concerns; provided, however, that Contractor shall not be required to subordinate Contractor
Liens except to the extent expressly required hereunder.

     4.11.3 Contractor shall use all commercially reasonable efforts (including providing
documents and information requested by Owner) to assist Owner in efforts to obtain Owner
Permits.

     4.12 Work Site Security. Contractor shall be responsible for: (a) the proper
fencing, guarding, lighting and security of the Work Site as may be necessary to secure the Work
and to prevent damage or injury to owners or occupants of adjacent property, the public or others;
and (b) the security and protection of the Work Site and all equipment and materials located
thereon. Contractor’s responsibility pursuant to this Section 4.12 shall continue until the
Substantial

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Completion Date or such earlier date as Owner energizes certain Facilities or portions
thereof, at which time Contractor’s obligations pursuant to this Section 4.12 shall cease as to
such Facilities or portions thereof. Contractor shall not be required to fence any portion of the
Facilities consisting of transmission lines, but shall patrol the transmission lines with security
personnel to the extent reasonably necessary.

     4.13 Interconnections. Contractor shall be responsible for connecting the Facilities
to the electrical terminal points on the Transmission Grid designated on Schedule 4.13.
Contractor’s scope of Work with respect to the electrical interconnection shall include installing
all breakers, relays, switches, synchronization equipment, communications equipment and other
protective and control devices and metering equipment for full hook-up and parallel operation at
the specified voltage level in accordance with the Authorized Design and any requirements imposed
by Transmission Grid operators.

     4.14 Contractor Liens.

     4.14.1 Contractor shall not directly or indirectly create, incur, assume or suffer to
be created any Prohibited Liens. Contractor shall promptly pay or discharge, and discharge
of record, any claim, lien or encumbrance which, if unpaid, might be or become a Prohibited
Lien. Contractor shall immediately notify Owner of the assertion of any Contractor Lien.

     4.14.2 Upon the failure of Contractor promptly to pay or discharge any Prohibited Lien
within thirty (30) days of notice of the existence thereof from any source, Owner may, but
shall not be obligated to, pay or discharge such Prohibited Lien and, upon the payment or
discharge thereof, shall be entitled immediately to: (a) recover from Contractor any costs
incurred in removing such Prohibited Lien; or (b) set off any such costs against amounts
owed by Owner to Contractor; provided, however, that Contractor shall not be liable to
reimburse Owner for interest charges, reasonable attorneys’ fees and similar costs incurred
by Owner to release any Prohibited Lien filed pursuant to a Subcontract as a result of
Owner’s failure to timely pay Contractor the Out-of-Pocket Costs incurred with respect to
such Subcontract.

     4.14.3 Nothing in this Section 4.14 shall be construed as a limitation on or waiver by
Contractor of any of its rights to encumber the Facilities or the Project Real Property as
security for any payments owed to it by Owner hereunder; provided, however, that Contractor
shall provide Owner with thirty (30) days prior written notice of its intent to so encumber.

     4.15 Utilities and Consumables. Contractor shall provide utilities and other
consumables required in connection with the Construction Services, including potable water and
electricity.

     4.16 Laydown and Storage Areas. Contractor shall lease, maintain and provide security
for any real property and other facilities required for laydown areas and storage yards to be used
in connection with the performance of the Work.

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ARTICLE 5

PROCUREMENT MANAGEMENT SERVICES

     5.1 Procurement Plan.

     5.1.1 No later than the deadline(s) set forth in the Project Schedule, Contractor shall
provide Owner with a detailed list (the “List of Materials”) of equipment, supplies and
materials to be incorporated into the Facilities. The List of Materials shall include
proposed deadlines for the reservation of capacity and/or ordering in order that all such
equipment, supplies and materials can be manufactured, fabricated, purchased and/or
delivered in a manner to permit compliance with the Project Schedule. Contractor shall
promptly amend the List of Materials from time to time based on updated information
developed through the design process.

     5.1.2 Promptly after receipt of the List of Materials, Owner shall identify the
equipment, supplies and materials it proposes to procure directly (such equipment, supplies
and materials, the “Owner Procured Materials”); provided, however, that Owner may revise the
list of Owner Procured Materials at any time and from time to time. All equipment, supplies
and materials on the List of Materials that are not designed by Owner as Owner Procured
Materials shall constitute “Contractor Procured Materials”; provided, however, that
Contractor Procured Materials shall not include major equipment, lattice structures and
conductors.

     5.1.3 Owner shall directly procure all Owner Procured Materials pursuant to Owner
purchase orders or agreements; provided, however, that Contractor shall assist Owner in
connection with the procurement of Owner Procured Materials, including: (a) assisting Owner
in preparing bid packages; (b) assisting Owner in negotiating purchase orders and
agreements; (c) performing expediting service; (d) performing inventory control and receipt
inspection services; and (e) processing and prosecuting damage claims. Notwithstanding
anything to the contrary set forth herein, Owner shall: (i) directly pay each Direct
Supplier for Owner Procured Materials in accordance with the terms of applicable purchase
orders and agreements; and (ii) receive and sign for all acceptable Owner Procured
Materials. Warranties on all Owner Procured Materials shall be in the name of Owner.
Immediately following delivery of Owner Procured Materials to Owner, Contractor shall assume
care, custody and control of such Owner Procured Materials.

     5.1.4 Contractor shall procure all Contractor Procured Materials pursuant to terms and
conditions to be approved by Owner.

     5.1.5 No later than fifteen (15) days after Owner’s initial designation of Owner
Procured Materials, Contractor shall provide Owner with a proposed plan for the procurement
of all Project Materials, which proposed plan shall include a schedule for procuring the
Project Materials, including the timing for issuing bid packages, if applicable, estimated
production or fabrication times and potential Direct Suppliers and Subcontractors. Owner
shall review such proposed plan and provide comments thereon, if any, to Contractor no later
than ten (10) Business Days after Owner’s receipt thereof. Contractor shall incorporate any
written comments offered by Owner. Contractor shall

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provide a revised plan to Owner within ten (10) days of receipt of Owner’s comments and
such process shall be repeated until the plan is approved by Owner (such plan, as approved,
the “Procurement Plan”). Contractor shall amend or update the Procurement Plan as
reasonably necessary or as requested by Owner. The Parties shall jointly review the
Procurement Plan no less frequently than once per month.

     5.2 Scope of Procurement Management Services. The Procurement Management Services
shall consist of:

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

     5.3 Relationship With Direct Suppliers. Contractor’s performance of Procurement
Management Services shall not be construed to create any form of contractual relationship between
Contractor and any Direct Suppliers.

     5.4 Enforcement of Warranties. Contractor shall assure that all warranties issued
with respect to Contractor Procured Materials shall run directly, or be assignable by Contractor,
to Owner. Contractor shall assign any such assignable warranties to Owner no later than the

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Substantial Completion Date. Notwithstanding anything to the contrary set forth herein,
Contractor shall enforce warranties on Contractor Procured Materials and assist Owner in enforcing
warranties on Owner Procured Materials.

ARTICLE 6

REAL PROPERTY MANAGEMENT SERVICES

     6.1 Real Property Management Services. The Real Property Management Services shall
consist of:

	 	(a)	 	identification of landowners and required crossing permits, and
managing communications with such landowners so as to obtain required
permissions;
	 
	 	(b)	 	with the concurrence of Owner on a case by case basis, agreeing
on the terms for acquisition of each parcel of Project Real Property, including
all monetary payments associated therewith;
	 
	 	(c)	 	documenting by files and maps, in accordance with formats
designated by Owner, all Project Real Property; and
	 
	 	(d)	 	providing surveys as needed to obtain the Project Real
Property.

     6.2 Real Property Plan.

     6.2.1 No later than the deadline set forth in the Project Schedule, Contractor shall
provide Owner with a proposed plan for the acquisition of all Project Real Property, which
proposed plan shall be in writing and shall include: (a) a schedule for the acquisition of
the Project Real Property, including identification of real property interests and locations
thereof, that will need to be acquired; (b) the timing of optioning and acquiring the
Project Real Property; (c) the estimated costs of acquiring the Project Real Property,
including the costs of retaining rights to Project Real Property not acquired in fee simple;
and (d) guidelines and procedures to be utilized by Contractor in negotiating the
acquisition of the Project Real Property. Owner shall review such proposed plan and provide
comments thereon, if any, to Contractor no later than ten (10) Business Days after Owner’s
receipt thereof. Contractor shall incorporate any written comments offered by Owner.
Contractor shall provide a revised plan to Owner within ten (10) days of receipt of Owner’s
comments and such process shall be repeated until the plan is approved by Owner (such plan,
as approved, the “Real Property Plan”). Contractor shall amend or update the Real Property
Plan as reasonably necessary or as requested by Owner.

     6.2.2 Contractor shall diligently proceed to implement the Real Property Plan.
Contractor shall be responsible for negotiating the terms for the acquisition of the Project
Real Property in accordance with the Real Property Plan; provided, however, that Owner shall
have the right to participate in any such negotiations.

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     6.2.3 Notwithstanding anything to the contrary set forth herein, Contractor shall not
enter into any agreement or bind Owner in respect of any Project Real Property without
Owner’s express written consent.

     6.3 Ownership of Project Real Property. All Project Real Property shall be acquired,
and any options with respect thereto shall be executed, in the name of Owner pursuant to forms of
agreement(s) approved by Owner. Any amounts owed to landowners in respect of the acquisition of
Project Real Property shall be paid directly by Owner.

     6.4 Limitation. Real Property Management Services shall not include initiating or
managing litigation to condemn Project Real Property; provided, however, that Contractor shall
cooperate with, and provide support to, Owner and Owner’s legal counsel with respect to any such
litigation, including providing evidence and testimony regarding valuation, prior negotiations and
other matters related to the condemnation.

ARTICLE 7

CONTRACTOR’S GENERAL OBLIGATIONS

     7.1 Standards of Performance. Contractor shall perform the Work in a professional,
competent and diligent manner in accordance with the terms of this Agreement, Good Utility
Practices and all Applicable Laws, including standards of the appropriate engineering and
construction codes. Contractor shall conduct itself (and ensure that each Subcontractor conducts
itself) in accordance with appropriate ethical and professional standards.

     7.2 Contractor Liable for Work. Contractor shall be responsible for the manner and
methods by which the Work is performed, regardless of whether or not any changes are made as a
result of any comments received from any other Person, including Owner.

     7.3 Project Manager. Contractor shall designate an experienced and qualified person
acceptable to Owner (the “Project Manager”) to manage Contractor’s performance of the Work and
implementation of the Project. The Project Manager shall be exclusively dedicated to the Project
and shall be available to Owner and its representatives seven days per week, twenty-four hours per
day. Contractor shall ensure that Project Manager cooperates with, and promptly replies to
inquiries made by, Owner, Direct Suppliers and Owner Nominees regarding the Work or any other
matter related to this Agreement. The Project Manager shall have the authority to act for
Contractor with respect to all matters pertaining to the Work, this Agreement and Contractor’s
performance.

     7.4 Contractor Personnel.

     7.4.1 Contractor shall provide sufficient supervisory and other personnel to perform,
and control the progress of, the Work until Contractor’s performance under this Agreement
has been completed.

     7.4.2 None of the key personnel identified on Schedule 7.4 shall be reassigned
or removed from the Work by Contractor without the approval of Owner, unless such
reassignment or removal results from circumstances beyond Contractor’s

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control, such as death, incapacity or the employee leaving Contractor’s employment.
Any replacement key personnel must be approved in advance by Owner.

     7.4.3 Upon Owner’s instruction, Contractor shall promptly remove from the Work Site any
Contractor Personnel and shall cause Subcontractors to remove from the Work Site any of
their employees performing Work in an unsatisfactory manner. If Owner has a reasonable
basis for designating such removal, Contractor shall indemnify, defend and hold harmless
each Owner Indemnitee from and against any and all Claims of any kind whatsoever based on
negligence, defamation, wrongful discharge, wrongful dismissal or otherwise that such Owner
Indemnitee may suffer, sustain, pay or incur as the result of any such removal.

     7.5 Labor Disputes. Contractor shall take all steps reasonably necessary to minimize
and/or eliminate labor disputes with respect to this Agreement.

     7.6 Imports and Exports. Contractor shall be responsible for obtaining all Permits
necessary for the import or export (including customs clearances) of any equipment, materials,
tools and supplies (including Owner Procured Materials) necessary for the performance of the Work.

     7.7 Permits and Approvals.

     7.7.1 No later than the deadline set forth in the Project Schedule, Contractor shall
provide Owner with a list of all Permits. Promptly after receipt of such list, Owner shall
designate those Permits that Owner intends to obtain in its own name (such designated
Permits, the “Owner Permits”) which Owner Permits shall include all Permits required by
Applicable Laws to be obtained in the name of Owner. Contractor shall promptly amend the
list of all Permits as reasonably necessary based on any change in design, Change-in-Law or
other circumstances.

     7.7.2 Contractor shall obtain and maintain in full force and effect all Contractor
Permits and shall cooperate with, support and assist Owner in obtaining all Owner Permits,
including preparing documentation to be submitted by Owner to Governmental Authorities in
connection therewith. Contractor shall provide Owner with copies of each Contractor Permit
promptly after receipt thereof by Contractor.

     7.8 Reserved.

     7.9 Records. Contractor shall maintain, for a period of not less than seven (7) years
after Final Completion or such longer period as may be required by Applicable Laws, all
Project-related records, including: (a) records maintained by Affiliates; (b) payroll records and
daily time sheets and other personnel records; (c) Contractor and Subcontractor invoices; (d)
drawings, plans, specifications, schedules, instructions, samples, receipts, Subcontract
documentation, purchase orders and vouchers; (e) correspondence, minutes of meetings, daily logs,
including schedule status reports, memoranda and other similar data; (f) all Subcontracts; (g)
records of all Change Orders; (h) written and electronic records and books of account; and (i)
Contractor Permits. All such records shall be maintained in accordance with Contractor’s standard
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policies. Contractor shall, promptly upon Owner’s request, provide Owner with any such
records relating to the Project.

     7.10 Financial Statements.

     7.10.1 Upon Owner’s reasonable request, Contractor shall provide Owner with reasonable
assurances of the financial condition and ability to perform of Contractor and/or any
Subcontractors. Without limiting the generality of the foregoing, Contractor shall provide
to Owner, promptly upon the preparation thereof: (a) unaudited financial statements for the
most recent fiscal quarter; (b) audited financial statements for the three most recently
completed annual periods prepared in accordance with GAAP; and (c) such other financial
information as may be reasonably requested by Owner.

     7.10.2 Contractor shall: (a) include in all Subcontracts with Subcontractors expected
to perform Work costing more than [***] a provision requiring such Subcontractors to provide
audited financial statements (or unaudited financial statements for Subcontractors that do
not prepare audited financial statements) and information to Owner upon Owner’s reasonable
request; and (b) use commercially reasonable efforts to obtain from other Subcontractors
such financial information as may be reasonably requested by Owner.

     7.10.3 Owner shall hold in confidence and refrain from disclosing any information
(other than Unrestricted Information) made available to it pursuant to this Section 7.10;
provided, however, that Owner may disclose such information to Lenders.

     7.11 Quality Assurance Program. Contractor shall implement and comply with a quality
assurance program satisfactory to Owner. Owner may make recommendations to Contractor regarding
the implementation of, or suggested modification to, such program. Contractor shall undertake to
implement any reasonable recommendations made by Owner with respect thereto.

     7.12 Performance Testing. Contractor shall: (a) provide Owner with reasonable
advance notice of any inspections or tests of the Facilities; (b) afford Owner and Owner Nominees
the right to attend and witness such inspections and tests; and (c) provide Owner with true,
correct and complete copies of the results thereof.

     7.13 Office Space. Contractor shall provide for Owner and Owner Nominees temporary
furnished office space, clerical support, communication services, internet access and other similar
facilities and services at Contractor’s home office, the Field Office, each construction management
office maintained by Contractor in connection with the Project, and each Major Subcontractor’s
office, for purposes related to the Project.

     7.14 Progress Reports. Contractor shall prepare and submit to the Steering Committee
on a weekly basis written reports (each, a “Progress Report”). Each Progress Report shall be in
form and substance acceptable to Owner and shall include:

	 	(a)	 	the status of Contractor’s acquisition of Contractor Permits;

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

     7.15 Meetings. Contractor shall conduct meetings no less frequently than once each
month (and more frequently if reasonably requested by Owner) at the Work Site or such other
location(s) as may be mutually agreed (and at which the Project Manager shall be present) to
apprise the Steering Committee of the progress of the Work and to discuss the Progress Reports,
Contractor’s compliance with the Project Schedule and other matters related to Contractor’s
performance of the Work and compliance with this Agreement.

     7.16 Site Procedures. Contractor shall be responsible for ensuring that all
Contractor Personnel, all Subcontractors and their employees, agents, representatives and invitees
and all others permitted by Contractor to enter the Work Site or any other site(s) made available
by Owner for construction-related activities shall comply with Owner’s regulations and
requirements, this Agreement, Good Utility Practices and all Applicable Laws.

     7.17 Insurance.

     7.17.1 Contractor shall obtain and maintain in force the insurance coverage specified
in Schedule 7.17 (“Contractor Required Insurance”).

     7.17.2 Contractor shall require each Subcontractor (and each indirect subcontractor at
any level) to provide and maintain in force insurance coverage as shall be reasonable and
appropriate for the portions of the Work provided by such Subcontractor or other Person.
Such Subcontractors and other Persons shall name Contractor, Owner, Owner Additional
Insureds and Lenders as additional insureds on all liability policies (other than
professional liability policies and workers’ compensation policies).

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     7.17.3 The cost of Contractor Required Insurance specified in paragraphs (h) through
(m) of Schedule 7.17 and the incremental cost (based on additional revenues to be
derived from the Work) to maintain the Contractor Required Insurance specified in paragraphs
(f) and (g) of Schedule 7.17 (collectively, “Owner Reimbursed Insurance”) shall
constitute Out-of-Pocket Costs. The cost of Contractor Required Insurance other than Owner
Reimbursed Insurance shall not be an Out-of-Pocket Cost; provided, however, that: (a)
Contractor shall be entitled to recover the cost of certain insurance coverage (as
identified in Schedule 10.2) pursuant to the Non-Craft Labor Multiplier; and (b) to
the extent the cost of any insurance coverage is included as a component of the Non-Craft
Labor Multiplier, such cost shall not be reimbursed as an Out-of-Pocket Cost.

     7.17.4 Owner shall have the right, in its reasonable discretion and exercisable on not
less than thirty (30) days written notice to Contractor, to modify Owner Reimbursed
Insurance. Upon issuance of any such notice: (a) Schedule 7.17 shall automatically
be deemed amended to include the new requirements with respect to Owner Reimbursed
Insurance; and (b) if any such amendment of Schedule 7.17 increases or decreases the
cost of Owner Reimbursed Insurance by more than Two Hundred Thousand Dollars ($200,000) in
the aggregate, the Parties shall execute a Change Order to equitably adjust the Target Price
to account for the change in cost of Owner Reimbursed Insurance.

     7.17.5 In the event Owner elects to evaluate an “owner-controlled insurance program” or
a “contractor-controlled insurance program,” Contractor will cooperate in such evaluation
process. Owner shall have the right, in its reasonable discretion and exercisable on not
less than six (6) months written notice to Contractor, to implement an Owner Controlled
Insurance Program or a Contractor Controlled Insurance Program, in which case: (a) Owner
shall have the right to modify Owner Reimbursed Insurance and insurance requirements for
Subcontractors and their subcontractors at any level; (b) Schedule 7.17 shall
automatically be deemed amended to include the new requirements with respect to Owner
Reimbursed Insurance; and (c) if any such amendment of Schedule 7.17 materially
increases or decreases the cost of Owner Reimbursed Insurance or the Work, the Parties shall
execute a Change Order to equitably adjust the Target Price to account for such change(s).

     7.17.6 Contractor shall be responsible for the cost of all deductibles under Contractor
Required Insurance other than Owner Reimbursed Insurance. Owner shall be responsible for
the cost of all deductibles under Owner Reimbursed Insurance; provided, however, that
notwithstanding the foregoing, Contractor shall be responsible for: (a) the [***] for each
claim under the Builders Risk Insurance or Contractor Tools and Equipment Insurance which
results from Contractor’s negligence or failure to perform in accordance with the terms of
this Agreement; and (b) [***] under Workers’ Compensation Insurance.

     7.17.7 In the event any claims valued at more than [***] are made under Contractor’s
Professional Protection Indemnity Insurance, Contractor shall provide Owner with prompt
written notice thereof, which notice shall include a description of such claim(s) and the
basis of Contractor’s defenses thereto.

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     7.18 Alcohol and Drug Policy.

     7.18.1 Contractor shall ensure that no Contractor Personnel performs any Work while
under the influence of alcohol, drugs or any other substance that could reasonably be
expected to impair his or her ability to perform such Work in accordance with Good Utility
Practices. Contractor shall ensure that all Contractor Personnel are informed of, and
adhere to, such “zero tolerance” alcohol, drug and substance abuse policy.

     7.18.2 Contractor shall ensure that Contractor Personnel shall not abuse medications or
use, possess, distribute or sell alcohol and/or drugs when performing the Work or while in
transit to or from or on the Work Site. Contractor shall provide Owner with evidence of
pre-employment and other alcohol and drug testing on Contractor Personnel consistent with
the Safety Standards and policies and procedures established at the Project Workshop. To
the fullest extent permitted by Applicable Laws, Contractor shall immediately suspend any
Contractor Personnel that are in breach of, or are reasonably suspected of being in breach
of, any policy referred to in this Section 7.18. In addition, Owner shall have the right to
instruct Contractor to remove any Contractor Personnel that it reasonably suspects of being
in breach of any policy referred to in this Section 7.18. In those instances where any
Contractor Personnel have been suspended or removed from performing the Work due to
documented or suspected alcohol and drug abuse, Contractor may reinstate such Person only
with the prior written consent of Owner.

     7.18.3 Contractor shall develop and implement guidelines and procedures to ensure that
the policies set forth in this Section 7.18 are strictly adhered to and shall, upon Owner
request, provide a copy of such guidelines and procedures to Owner and provide evidence of
its effective implementation.

     7.19 Business Standards. Contractor, in performing its obligations under this
Agreement, shall establish and maintain in effect appropriate business standards, procedures and
controls to avoid any real or apparent impropriety that might affect adversely or conflict with the
best interests of Owner or violate any Applicable Laws. Contractor shall exercise all reasonable
care and diligence to prevent any actions or conditions which could adversely affect or result in a
conflict with the best interests of Owner or violate any Applicable Laws. Contractor shall ensure
the compliance by all Contractor Personnel with the obligations set forth in this Section 7.19,
which obligations shall apply to the activities of all Contractor Personnel with other Contractor
Personnel, Owner, each Owner Indemnitee and their respective families and third parties relating to
this Agreement or the Project. Such obligations shall include establishing precautions to prevent
Contractor Personnel from making, receiving, providing or offering any gifts, entertainment,
payments, loans, or other consideration that could constitute any real or apparent impropriety that
might adversely affect or conflict with the interests of Owner or violate any Applicable Laws.

     7.20 Compliance With Law. Contractor shall comply with, and shall ensure that all
Subcontractors comply with, all Applicable Laws in the performance of the Work. Notwithstanding
anything to the contrary set forth herein, no provision shall be interpreted or applied so as to
require Owner or Contractor to do, or refrain from doing, anything that would

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constitute a violation of, or result in a loss of economic benefit under, United States
anti-boycott and other export laws and regulations. Contractor shall not make, or permit any
Contractor Personnel or Subcontractor to make, any improper payments of money or anything of value
to a government official (whether appointed, elected, honorary or a career government employee) or
a Governmental Authority in connection with this Agreement or the Work, nor shall it make, or
permit any Contractor Personnel or Subcontractor to make, any improper payments of money or
anything of value to any Person knowing or suspecting that such Person will give any such payment
or thing of value, or a portion of it, to a government official or Governmental Authority.

     7.21 Authority. Contractor shall have no authority to make statements,
representations or commitments of any kind or take any other action binding on Owner, except as may
be specifically authorized by the terms of this Agreement.

ARTICLE 8

OWNER’S RIGHTS AND OBLIGATIONS

     8.1 Owner Permits. Owner shall obtain and maintain in full force and effect all Owner
Permits.

     8.2 Owner Representative. Owner shall appoint an individual (the “Owner
Representative”) who shall have the authority to act for Owner with respect to all matters
pertaining to the Work.

     8.3 Temporary Possession. Owner may take temporary possession of, and use partially
completed parts of, the Work prior to Substantial Completion by providing written notice thereof to
Contractor and, in any such case, shall use commercially reasonable efforts to coordinate with
Contractor in an effort to minimize any adverse impact on remaining Work. Such possession by Owner
shall not be deemed an acknowledgement of completion of said parts of the Work. In the event Owner
takes temporary possession or use of any material part of the Work pursuant to this Section 8.3,
the Project Schedule and the Project Budget shall be modified to the extent necessary to reflect
the impact of such temporary possession; provided, however, that no such modification shall be made
if such temporary possession or use by Owner is required due to failure by Contractor to: (i)
perform in accordance with this Agreement; or (ii) complete any part of the Work as set forth in
the Project Schedule.

     8.4 Approvals. No Owner approvals, authorizations or agreements shall: (a) be
effective unless in writing and signed by the Owner Representative or another authorized agent of
Owner; or (b) relieve Contractor of any of its obligations or responsibilities under this
Agreement.

     8.5 Inspections. Contractor shall provide to Owner and Owner Nominees: (a) full
access to the Work, wherever located and at any stage of completion, and the right to be present at
all inspections and testing at or outside the Work Site; and (b) the right to inspect the Work or
any part thereof at any other time. Contractor shall provide proper facilities for such access and
inspections. No inspection performed by or failed to be performed by Owner under this Section 8.5
will be deemed a waiver of Contractor’s obligations under this Agreement or be construed as an
approval or acceptance of the Work or any portion thereof.

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     8.6 Other Property. Owner may use any portion of its property for its own purpose and
may employ workers and/or hire contractors of its own choosing for constructing other facilities or
maintaining or changing any existing facilities. Owner may refuse any person admission to all or
any part of the Project Real Property or exclude any person from performing Work under this
Agreement, and Contractor shall cooperate with Owner with respect thereto.

     8.7 Disclosure. Owner shall keep Contractor reasonably apprised of information known
to Owner that would reasonably be expected to affect Contractor’s performance of the Work,
including: (a) siting studies; (b) litigation against Owner filed in connection with the Project;
(c) Owner agreements pertaining to Owner Procured Materials or Project Real Property; (d)
applications for, and decisions regarding, Owner Permits; (e) Owner applications for zoning on any
Project Real Property and decisions of Governmental Authorities with respect thereto; (f) written
notices received by Owner regarding material political opposition to the Project; and (g) the
status of condemnation proceedings, including motions to permit early access, provided, however,
that Owner’s failure to provide any such information to Contractor shall not be deemed a breach of
this Agreement unless such failure was knowing and intentional.

     8.8 Reserved.

     8.9 Condemnation Proceedings. Promptly upon, and in no event more than fifteen (15)
Business Days after, receipt by Owner of (a) written notice from Contractor that it has engaged in
good faith negotiations to acquire certain Project Real Property and that any owner of such Project
Real Property is unwilling to convey to Owner an interest therein to permit performance of the Work
and (b) all information and documentation necessary for Owner to commence a condemnation action to
acquire such Project Real Property, including the names of all owners of the subject property, a
legal description of the subject property and a written log of prior negotiations to acquire the
Project Real Property, Owner shall, to the extent permitted by Applicable Laws, commence, and
thereafter prosecute diligently and in good faith, an action to condemn such Project Real Property.

     8.10 Preliminary Routing Information. [***] after the execution of this Agreement,
Owner shall provide Contractor with information regarding potential transmission line routing in
order for Contractor to develop the Target Cost.

ARTICLE 9

SUBCONTRACTORS

     9.1 Right to Subcontract.

     9.1.1 Subject to the terms and conditions set forth herein, including the limitation
set forth in Section 9.1.2, Contractor shall have the right to utilize Subcontractors to
perform portions of the Work; provided, however, Contractor shall remain liable to Owner for
Work performed by Subcontractors to the same extent as if Contractor had performed such Work
directly.

     9.1.2 Contractor may not enter into a Subcontract with an Affiliate of Contractor
without Owner’s prior written consent. Without limiting the generality of the

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foregoing, in the event Contractor enters into any Subcontract with any of its
Affiliates, such Subcontract shall include the same limitations with respect to such
Subcontractor(s) as are set forth herein with respect to Contractor regarding charges for
labor, profit, overhead and general and administrative costs.

     9.2 Approval Rights. Owner shall have the right to review and approve: (a) all bid
lists for Subcontracts with Major Subcontractors; (b) proposed requests for proposals for all
Subcontracts with Major Subcontractors; (c) the identity of all Major Subcontractors; (d) the terms
and conditions of all Subcontracts with Major Subcontractors; and (e) the terms and conditions of
all Subcontracts that include any potential termination liability [***]. Without limiting Owner’s
rights to approve the terms of any Subcontracts, Owner hereby approves each Person identified in
Schedule 9.2 as a potential Subcontractor.

     9.3 Justification of Non-Competitive Contracts. In the event Contractor proposes to
retain any Subcontractor other than pursuant to a competitive bidding process, Contractor shall
demonstrate to Owner’s reasonable satisfaction that: (a) the pricing and all material terms and
conditions in the proposed Subcontract are no less favorable to Contractor than the pricing and
material terms and conditions that would have resulted from a competitive bidding process; or (b)
the proposed Subcontractor is uniquely qualified to perform the services or supply the materials or
equipments provided pursuant to the proposed Subcontract.

     9.4 Subcontractor Warranties. Contractor shall procure from all Subcontractors
warranties with respect to any materials, equipment or services provided by such Subcontractors and
shall require that all such Subcontractor warranties be assignable to Owner. Contractor shall
conditionally assign to Owner such Subcontractor warranties pursuant to an instrument in form and
substance reasonably acceptable to Owner, such conditional assignment to become effective following
the termination of this Agreement. Contractor shall diligently enforce all Subcontractor
warranties at all times prior to the termination of this Agreement. Contractor shall not take any
action which could amend, modify, release, void, impair, discharge or waive any Subcontractor
warranties, except in the event that a Subcontract is terminated by Contractor and replaced with
another Subcontract with an equivalent warranty.

     9.5 Manufacturer Information. Contractor shall require that Owner be a recipient of
manufacturer’s notices (including any and all health and safety advisories and notices) related to
any equipment, supplies, structures and/or materials supplied to Owner by Contractor or any
Subcontractor. Contractor shall also require Subcontractors to provide Owner with documentation
regarding equipment and materials comprising the Facilities, including design manuals, operation
and maintenance manuals and start-up documentation.

     9.6 No Contractual Relationship. None of Owner’s rights under this Agreement,
including its right to review and approve Subcontractors, shall create any contractual relationship
between Owner and any Subcontractor.

     9.7 Assignment of Subcontracts. Contractor shall be responsible for including in each
Subcontract a consent to the assignment of such Subcontract to Owner or Owner’s designee upon the
termination of this Agreement, which assignment shall be effected automatically, at Owner’s option,
by notice from Owner to the applicable Subcontractor.

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ARTICLE 10

PAYMENT TERMS

     10.1 Management Fee.

     10.1.1 Owner shall pay Contractor the Management Fee in installments based on the
completion of Management Fee Milestones. The Management Fee shall be allocated to the Work
associated with each Phase based on the relative cost of such Work.

     10.1.2 No later than the [***] day following the date on which Contractor believes it
has satisfied or completed, as applicable, a Management Fee Milestone, Contractor shall
submit to Owner an invoice setting forth in reasonable detail evidence to support
Contractor’s claim that such Management Fee Milestone has been satisfied or completed, as
applicable.

     10.1.3 If Owner agrees that a Management Fee Milestone has been satisfied or completed,
as applicable, Owner shall pay the invoice with respect thereto no later than [***] days
after Owner’s receipt thereof. In the event Owner disagrees that a Management Fee Milestone
has been satisfied or completed, as applicable, it shall promptly notify Contractor, which
notice shall include a written statement setting forth a reasonable basis upon which Owner
rejects Contractor’s claim. In the event that Owner notifies Contractor that a Management
Fee Milestone has not been achieved, Contractor shall diligently continue performing the
Work until such Management Fee Milestone is achieved.

     10.2 Non-Craft Labor Costs.

     10.2.1 Owner shall pay Contractor for all Non-Craft Labor Costs reasonably incurred
through Final Completion.

     10.2.2 Prior to submitting any invoice for Non-Craft Labor Costs, Contractor shall
provide to Owner all Non-Craft Labor Rates (including corresponding job titles,
qualifications and job responsibilities) represented in such Non-Craft Labor Costs.
Non-Craft Labor Rates may be adjusted in August of each year based on changes in the
salaries or wages of Contractor Personnel; provided, however, that: (a) any such annual
increases shall be limited to [***], in the aggregate, for individuals working on a
full-time basis on the Project; and (b) any such annual increases for other Contractor
Personnel shall be limited to [***]. Contractor warrants to Owner that all Non-Craft Labor
Rates shall be reasonable based on the qualifications and job descriptions of the relevant
Contractor Personnel.

     10.2.3 Subject to Sections 10.2.5 , the initial Non-Craft Labor Multiplier and the cost
categories used in the derivation thereof are shown in Schedule 10.2. At the
conclusion of each calendar year, the Non-Craft Labor Multiplier for the prior calendar year
shall be audited and revised to the extent necessary to account for Contractor’s actual
costs incurred for the relevant cost categories during such prior year.

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     10.2.4 No later than March 1 of each year (beginning with 2008), Contractor shall
provide Owner with evidence reasonably satisfactory to Owner documenting the employee
bonuses paid to Dedicated Personnel with respect to their performance during the prior
calendar year. To the extent that the amount charged to Owner with respect to employee
bonuses pursuant to the Non-Craft Labor Multiplier is greater than the aggregate amount of
employee bonuses paid to Dedicated Personnel, such excess amount shall be reimbursed to
Owner no later than ten (10) days after the due date for such information to be provided to
Owner. Nothing contained in this Agreement shall restrict Contractor from paying employee
bonuses to Dedicated Personnel in an aggregate amount greater than the amount paid to
Contractor for employee bonuses pursuant to the Non-Craft Labor Multiplier; provided,
however, that if Contractor seeks reimbursement from Owner of all or any portion of any such
additional employee bonus payments for Dedicated Personnel: (a) Contractor shall notify
Owner of its intent to seek reimbursement of such additional bonus payments and the
justification therefor; (b) Owner shall reasonably consider Contractor’s request for
reimbursement of any such additional bonus payments; and (c) if Owner determines, in its
sole judgment, that all or any portion of such additional bonus payments is warranted based
on the performance of Dedicated Personnel, Owner shall reimburse Contractor for all or such
portion of the additional bonus payments.

     10.2.5 Contractor shall notify Owner promptly upon its procurement of West Virginia
Workers’ Compensation Insurance and shall provide Owner with evidence of the cost of such
insurance. To the extent that the cost of such insurance affects the costs set forth for
Workers’ Compensation Insurance in Schedule 10.2, the initial Labor Cost Multiplier
shall be increased or decreased to reflect such cost.

     10.3 Craft Labor Costs. Subject to the limitations set forth in Section 10.7, Owner
shall pay Contractor for Craft Labor Costs reasonably incurred through Final Completion; provided,
however, that: (a) Contractor shall notify Owner in advance of its intention to utilize Contractor
Personnel to perform craft labor Work; (b) Contractor shall justify, to Owner’s satisfaction, any
Craft Labor Costs that Contractor proposes to charge in connection with such Work; (c) Owner shall
be given the opportunity to solicit and evaluate competitive bids from third parties to perform
such Work and/or to retain a third party to evaluate Contractor’s proposed Craft Labor Costs; and
(d) Owner shall approve the utilization of Contractor Personnel to perform craft labor Work and all
Craft Labor Costs associated with such Work.

     10.4 Out-of-Pocket Costs. Owner shall pay Contractor for all Out-of-Pocket Costs
reasonably incurred through Final Completion (including such costs that are incurred prior to Final
Completion but due thereafter) in connection with the performance of the Work. Such Out-of-Pocket
Costs shall include those cost items identified in Schedule 10.4. Out-of-Pocket Costs
shall not be subject to mark-up.

     10.5 Reimbursable Costs.

     10.5.1 No later than the [***] day following the end of each calendar month, Contractor
shall submit to Owner an invoice detailing all Reimbursable Costs incurred during the
preceding month. Each such invoice shall separately identify applicable taxes (including
sales, gross receipts and business and occupation taxes) and shall be

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accompanied by: (a) copies of receipts or other evidence reasonably satisfactory to
Owner documenting such Reimbursable Costs, including evidence of hours worked by Contractor
Personnel; and (b) lien waivers in form and substance reasonably acceptable to Owner with
respect to all Work performed through the end of such preceding month, executed by
Contractor and each Subcontractor performing Work in respect of which Reimbursable Costs are
being invoiced.

     10.5.2 No later than [***] days after Owner’s receipt of an invoice submitted in
accordance with Section 10.5.1, Owner shall pay such invoice. In the event Owner rejects
any portion of the invoiced amount, Owner shall, within such [***] day period: (a) pay the
undisputed portion of the invoice; and (b) provide Contractor with a written statement
setting forth a reasonable basis upon which Owner rejects such invoiced amount.

     10.5.3 Notwithstanding anything to the contrary set forth herein, costs and/or expenses
which may be incurred by Contractor (including interest and penalties assessed with respect
thereto) shall not constitute Reimbursable Costs to the extent such costs, expenses,
interest or penalties:

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

     10.6 Interest. Any amounts owed under this Agreement and not paid when due shall bear
interest from the date due until the date paid, calculated at the Interest Rate.

     10.7 Retention.

     10.7.1 Notwithstanding anything to the contrary set forth herein, but subject to
Section 10.7.2, all amounts owed by Owner in respect of the Craft Labor Costs shall be
subject to [***] retention (the “Retention”), which shall be retained or applied by Owner

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in accordance with the terms of this Agreement (the aggregate amount subject to such
Retention, the “Retention Amount”).

     10.7.2 In lieu of Retention, Contractor shall have the right, in its sole and absolute
discretion and at its sole cost and expense, to post and cause to be maintained a Retention
Letter of Credit with a face amount equal to the Retention Amount. If posted, a Retention
Letter of Credit shall be drawable: (a) if the issuer thereof ceases to constitute an
Acceptable LC Provider and a substitute Retention Letter of Credit issued by an Acceptable
LC Provider is not posted within ten (10) days of notice of such fact, or (b) if, on any
date, the Retention Letter of Credit has an expiry date within thirty (30) days of such
date. Contractor shall notify Owner promptly upon Contractor obtaining knowledge that the
issuer of a Retention Letter of Credit is no longer an Acceptable LC Provider.

     10.7.3 The Retention, or the Retention Letter of Credit, as applicable, shall be
drawable in whole or in part to satisfy Contractor’s obligations under the Agreement.

     10.7.4 Promptly after Substantial Completion, the Retention Amount shall be adjusted,
if necessary, to an amount equal to the Punch List Security Amount.

     10.7.5 On the Final Completion Date: (a) any remaining Retention held by Owner (net of
amounts applied by Owner pursuant to Section 10.7.3) shall be paid to Contractor; or (b) if
Contractor has posted a Retention Letter of Credit, such Retention Letter of Credit shall be
returned to Contractor.

     10.8 Payments.

     10.8.1 In the event a good faith dispute arises in connection with the payment by Owner
of any invoiced amount, Owner shall have the right to withhold the disputed portion of such
payment, provided that it deliver reasonably detailed notice of the basis of such dispute.
Any disputed payments shall be addressed in accordance with Article 25.

     10.8.2 Owner shall have the right to contest any invoice or charge submitted by
Contractor, regardless of whether such invoice or charge was previously paid, provided that
Owner notifies Contractor in writing of such contest no later than: (a) Final Completion;
or (b) one (1) year after the date of invoice, whichever occurs last.

     10.8.3 Owner shall have the right to set-off any amounts owed by Contractor pursuant to
this Agreement against any amounts that it owes to Contractor pursuant to this Agreement.
Notwithstanding the foregoing, Owner shall defer setting off any such amount owed by
Contractor to the extent: (a) Contractor or any Subcontractor is seeking recovery of such
amount from any of its/their respective insurers; and (b) Contractor or such Subcontractor,
as applicable is reasonably likely, in Owner’s reasonable judgment, to recover such amount
on behalf of Owner; provided, however, that Owner shall not be obligated to defer setting
off any such amounts if: (i) Contractor or such Subcontractor, as applicable, fails, after
a reasonable period of time, to recover such amount from its insurer; or (ii) Owner
determines, in its reasonable judgment, that Contractor or such

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Subcontractor, as applicable, is not reasonably likely to recover such amount on behalf
of Owner.

     10.9 Accuracy of Records. Contractor covenants that all financial settlements,
billings, and reports rendered by or on behalf of Contractor to Owner shall properly and accurately
reflect the facts about all activities and transactions which are the subject matter of such
financial settlements, billings and reports and shall not omit any information required to make
such financial settlement, bill or report true, complete, accurate or not misleading. Contractor
agrees to notify Owner immediately in writing upon discovery of any circumstance that would cause
Contractor not to be in compliance with this Section 10.9. If Contractor is not in compliance with
this Section 10.9, Contractor and Owner shall jointly review the errors and Contractor shall, if
appropriate, promptly take corrective action, including adjusting relevant invoices and refunding
overpayments, with accrued interest calculated at the Interest Rate.

     10.10 Breakdown of Agreement Price. At Owner’s request, and promptly following Final
Completion, Contractor shall prepare a breakdown of all amounts paid by Owner pursuant to this
Agreement categorized according to accounting classifications, which shall be specified by Owner
within ten (10) Business Days after execution of this Agreement, but which shall be subject to
revision upon the reasonable request of Owner.

     10.11 Audit Rights.

     10.11.1 Contractor shall permit Owner and Owner Nominees to have access to its offices
and work locations to examine, reproduce and retain copies (including electronic recordings)
of such documentation and data pertaining to this Agreement and the Work to the extent
necessary for Owner to audit: (a) any invoice submitted under this Agreement; (b) Labor
Costs (including the derivation of Non-Craft Labor Rates and the Non-Craft Labor Multiplier)
to determine whether they have been calculated in accordance with the terms of this
Agreement; (c) Reimbursable Costs; (d) Contractor’s and Subcontractors’ business practices;
(e) that the Work performed is free of any imperfection, defect and deficiency and that any
imperfection, defect or deficiency has been remedied; (f) Contractor’s implementation of,
and compliance with, the Safety Standards and the quality assurance program required
pursuant to Section 7.11; (g) Contractor’s compliance with the terms of this Agreement; and
(h) any other matters reasonably necessary for Owner to comply with Applicable Laws,
including the Sarbanes-Oxley Act. Owner shall hold in confidence and refrain from
disclosing any documentation and data (other than Unrestricted Information) made available
to it pursuant to this Section 10.11; provided, however, that Owner may disclose such
documentation and data to Lenders.

     10.11.2 Contractor shall include in each of its Subcontracts a provision granting Owner
the same audit rights vis-à-vis Subcontractors that Owner has with respect to Contractor
pursuant to this Agreement.

     10.12 Waiver under Payment Act. To the maximum extent permitted by Applicable Laws,
Contractor hereby waives all disclosures, notices, rights, claims, privileges, interests, penalties
and benefits under the Payment Act, and Owner and Contractor agree that none of the

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terms and provisions of the Payment Act shall apply to this Agreement or the Work, payment or
any Claims related thereto.

ARTICLE 11

PROJECT BUDGET; PROJECT SCHEDULE

     11.1 Project Budget.

     11.1.1 Contractor shall, with Owner’s participation and assistance, prepare and submit
to Owner no later than the Target Cost Delivery Date, a proposed budget of all costs to be
incurred in connection with the implementation of the Project. Such proposed budget shall:
(a) set forth in reasonable detail estimated monthly itemizations of all costs and
expenditures required to be incurred in connection with the Project; and (b) be in form and
substance reasonably acceptable to Owner. Owner shall review such proposed budget and
Contractor shall incorporate any written comments or changes directed by Owner until the
proposed budget is approved in writing by Owner (such budget, once approved, the “Project
Budget”)

     11.1.2 In the event any anticipated expenses deviate materially from the estimates set
forth for such expenses in the Project Budget, Contractor shall promptly notify Owner and
propose revisions to the Project Budget. Owner shall reasonably consider proposed
amendments to the Project Budget to the extent necessary to perform the Work in accordance
with Good Utility Practices; provided, however, that the Project Budget shall not be amended
to include any Contractor costs described in Section 10.5.3, and Owner shall not be
obligated to reimburse Contractor for any such costs.

     11.1.3 Subject to the terms and conditions set forth in this Agreement, Contractor
shall not be authorized or required to incur any Reimbursable Costs in excess of those
provided for in the Project Budget. In the event: (a) Contractor proposes a revision to
the Project Budget in accordance with Section 11.1.2; and (b) the Parties are unable to
agree on whether, or how, to amend the Project Budget based on such proposal, the Parties
shall immediately refer such matter to the Steering Committee for resolution. In the event
the Steering Committee is unable to resolve such dispute and Contractor is unable to proceed
with any portion of the Work as a result of such dispute, the affected portions of the Work
shall be deemed to have been suspended in accordance with Section 20.1.

     11.1.4 Contractor shall notify Owner in advance of incurring any material costs not
included in the Project Budget, except to the extent such costs are reasonably necessary to
respond to, or avoid, an Emergency.

     11.2 Project Schedule.

     11.2.1 No later than the Target Cost Delivery Date, Contractor shall provide Owner with
a proposed supplement to the Initial Project Schedule, which proposed supplement shall: (a)
be consistent with the Initial Project Schedule; and (b) be in form, substance and detail
acceptable to Owner. Owner shall review such proposed supplement

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and provide comments thereon, if any, to Contractor no later than ten (10) Business
Days after Owner’s receipt thereof. Contractor shall incorporate any written comments
offered by Owner. Contractor shall provide a revised supplement to Owner within ten (10)
days of receipt of Owner’s comments and such process shall be repeated until the supplement
to the Initial Project Schedule is approved in writing by Owner (such schedule, as approved,
the “Project Schedule”).

     11.2.2 Contractor shall perform the Work in accordance with, and subject to the timing
sequence set forth in, the Project Schedule.

     11.2.3 Contractor shall provide prompt notice to Owner of any conditions that exist or
that Contractor foresees that are reasonably likely to prevent Contractor from performing
any portion of the Work in accordance with the Project Schedule. Contractor shall prepare
proposed amendments to the Project Schedule as reasonably necessary based on changed
circumstances or conditions. Owner shall reasonably consider proposed amendments to the
Project Schedule and shall not withhold its approval of any proposed amendment to the
Project Schedule to the extent reasonably necessary based on such changed circumstances or
conditions.

     11.2.4 The Initial Project Schedule and all subsequent Project Schedules shall be
prepared by Contractor using Primavera software and provided to Owner in hard copy and
electronic formats.

     11.3 Adjustments Based on Suspension of Work. In the event Owner suspends the Work
pursuant to Section 20.1 other than for cause, the Project Budget and the Project Schedule
(including, if appropriate, the [***] Date) shall be amended, as appropriate based on Good Utility
Practices, due to such suspension, including any necessary remobilization.

     11.4 Adjustments Based on Force Majeure. Upon an event of Force Majeure, the Project
Budget and the Project Schedule shall be amended to the extent necessary to address the result(s)
of such Force Majeure, based on Good Utility Practices; provided, however, that adjustments to the
Project Schedule shall not necessarily be equal to the number of days of the suspension. The [***]
Date shall not be adjusted due to Force Majeure.

ARTICLE 12

STEERING COMMITTEE

     12.1 Formation. Within fifteen (15) days after execution of this Agreement, each
Party shall designate one or more representatives (one of whom must be the president of such Party)
to serve on a committee (the “Steering Committee”) to oversee execution of the Work and performance
under this Agreement.

     12.2 Availability. Each Party shall make its Steering Committee members available to
the other Party’s Steering Committee members at any reasonable time to address matters relating to
the Work or this Agreement or to direct communications to its corporate management.

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     12.3 Informed Status. Contractor shall keep the members of the Steering Committee
reasonably apprised of the progress of the Work and of significant or anticipated problems related
to the Work.

ARTICLE 13

COMPLETION

     13.1 Substantial Completion. Contractor shall notify Owner in writing when Contractor
believes it has achieved Substantial Completion. No later than thirty (30) days after Owner’s
receipt of such notice, Owner shall deliver to Contractor either: (a) a Notice of Substantial
Completion; or (b) written notice that Contractor has not achieved Substantial Completion, which
notice shall set forth in reasonable detail the basis of Owner’s determination. In the event that
Owner notifies Contractor that Substantial Completion has not been achieved, Contractor shall
diligently continue performing the Work until Substantial Completion is achieved.

     13.2 Punch List.

     13.2.1 The notice delivered by Contractor pursuant to Section 13.1 shall include a list
of all minor elements of the Work that remain to be completed but that do not affect
operation of the Facilities (which elements may not include items that may affect the
safety, performance or reliability of the Facilities) and a proposed schedule for the
completion of such remaining Work. After Owner’s review of such list, the Parties shall
confer in good faith and attempt to agree upon a detailed list of all elements of the Work
that remain to be completed and the schedule for completing such Work (once agreed to or
issued by Owner, the “Punch List”). If the Parties are unable to agree to a Punch List
within sixty (60) days after the Substantial Completion Date, Owner shall issue the Punch
List to Contractor.

     13.2.2 Contractor shall diligently proceed to complete all Work on the Punch List in
accordance with the proposed schedule set forth therein. Owner shall provide Contractor
with reasonable access to the Facilities and Project Real Property to perform Work specified
on the Punch List, but shall be entitled to schedule such Work in a manner so as to minimize
any adverse impact on the operation of the Facilities. If Contractor does not complete any
Work on the Punch List within the time limits set forth in the Punch List, Owner may
complete (or cause the completion of) such Work at Contractor’s sole cost and expense. Any
costs incurred by Owner in connection with the performance of Work on the Punch List may, at
Owner’s option: (a) if Contractor has posted a Retention Letter of Credit, be drawn from
the Retention Letter of Credit; (b) if Contractor has not posted a Retention Letter of
Credit, be deducted from any amounts due to Contractor under this Agreement; or (c) if the
Retention Letter of Credit or funds withheld as Retention, as applicable, are inadequate to
cover such cost and expense, be paid or reimbursed by Contractor within fifteen (15) days
following Owner’s demand therefor.

     13.3 Final Completion. Contractor shall notify Owner in writing when Contractor
believes it has achieved Final Completion. No later than fourteen (14) days after Owner’s receipt
of such notice, Owner shall deliver to Contractor either: (a) a Notice of Final Completion; or (b)
written notice that Contractor has not achieved Final Completion, which notice shall set forth in

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reasonable detail the basis of Owner’s determination. In the event that Owner notifies
Contractor that Final Completion has not been achieved, Contractor shall diligently continue
performing the Work until Final Completion is achieved.

     13.4 [***].

     13.4.1 In the event Contractor achieves Substantial Completion by the [***] Date, Owner
shall pay Contractor [***] which shall be equal to the sum of: (a) the [***]; plus (b) the
[***]. Such [***] shall be due and payable [***] after Final Completion or, if any [***] is
owed as part of the [***], [***] days after receipt of detailed accounting of all
Reimbursable Costs.

     13.4.2 If: (a) Owner applies to the FERC for authority pursuant to 16 U.S.C. § 824p to
construct any portion of the Facilities (such Facilities, the “Delayed Facilities”) and
Contractor achieves Substantial Completion with respect to all Facilities other than the
Delayed Facilities by the [***] Date, then the [***] Date shall be extended with respect to
the Delayed Facilities to the extent reasonably necessary to account for any delay
occasioned by the FERC approval process; or (b) the Facilities are capable of being
energized on [***], Contractor has made a timely request to PJM to permit an outage to allow
the Facilities to be energized and PJM is unable or unwilling to permit the Facilities to be
energized on or before [***], the [***] Date shall be extended until such time as PJM
permits the Facilities to be energized. The [***] Date shall not be extended for any reason
other than as provided in Section 11.3 and this Section 13.4.2.

     13.4.3 If: (a) the [***] Date is not extended pursuant to Section 13.4.2; (b) PJM
takes formal and final action to extend the deadline for completion of the Project beyond
the [***] Date (such extended deadline, the “PJM Extended Deadline”); and (c) Contractor
achieves Substantial Completion after the [***] Date but no later than the PJM Extended
Deadline, Owner shall pay Contractor the PJM Extended Deadline [***], if applicable;
provided, however, that in no event shall Owner be obligated to pay Contractor any PJM
Extended Deadline [***] if the Substantial Completion Date is [***] the [***] Date.

ARTICLE 14

SECURITY FOR PERFORMANCE

     14.1 Performance Bond. Upon Owner’s request, Contractor shall cause each
Subcontractor performing Construction Services expected, in the reasonable judgment of Owner, to
cost more than [***] to post a performance bond with respect to such Work. In the event Contractor
directly provides craft labor Construction Services expected, in the reasonable judgment of Owner,
to cost [***] Contractor shall post a performance bond with respect to such Work. Any performance
bond required to be posted pursuant to this Section 14.1 shall: (a) be in favor of Owner and
Lenders; (b) be in an amount equal to the anticipated cost of the Work; and (c) be issued by an
issuer and otherwise be in form and substance reasonably acceptable to Owner.

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ARTICLE 15

CONTRACTOR WARRANTIES

     15.1 Scope of Warranties. Contractor warrants to Owner that:

	 	(a)	 	the Facilities shall conform to the Authorized Design;
	 
	 	(b)	 	the Authorized Design shall be free from defects and shall be
in accordance with Good Utility Practices;
	 
	 	(c)	 	the Facilities and the Work shall comply with Applicable Laws
in effect on the Substantial Completion Date;
	 
	 	(d)	 	the Work shall be performed in a competent, diligent,
workmanlike manner in accordance with Good Utility Practices and Applicable
Laws;
	 
	 	(e)	 	all Work shall be free from defects in workmanship and
materials;
	 
	 	(f)	 	when energized, the Facilities shall be capable of safe and
reliable operation;
	 
	 	(g)	 	all Contractor Procured Materials shall be new, unused and of
good quality; and
	 
	 	(h)	 	title to all materials and equipment comprising the Facilities
and the Work (other than Owner Procured Materials) shall pass to Owner free and
clear of all liens and encumbrances in accordance with Section 22.2.

     15.2 Duration of Warranties. Contractor’s warranties set forth in Section 15.1 shall
apply to all Work until twelve (12) months after the Substantial Completion Date; provided,
however, that such warranties shall continue to apply to any repairs or replacements undertaken
pursuant to Contractor’s warranties until twelve (12) months after such repair or replacement or
twenty-four (24) months from the Substantial Completion Date, whichever occurs first (such periods,
in the aggregate, being referred to herein as the “Warranty Period”). The expiration of the
Warranty Period shall not affect any Subcontractor warranties which have been assigned to Owner.

     15.3 Warranty Obligations.

     15.3.1 Promptly upon receipt of written notice of any failure or defect covered by any
of the warranties set forth in Section 15.1, Contractor shall, at its own cost and expense,
promptly commence appropriate action and diligently continue repair, replacement or
re-performance of the Work as applicable; provided, however, that in the event of a failure
or defect which results in a shutdown of all or any portion of the Facilities, Contractor
shall immediately commence and shall exercise best efforts (including authorization of
overtime work) to complete any repair, replacement or re-performance necessary for the
Facilities to resume normal operation. Contractor shall

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provide at the Work Site, at no additional cost to Owner, technical advisory and
support service personnel reasonably necessary during performance of any warranty repairs,
replacements or re-performance promptly after receipt of notice of any warranty Claims.
Contractor shall perform all warranty obligations in cooperation with Owner and in a manner
that reasonably minimizes the duration of any Facilities being taken out of service.

     15.3.2 If, after notification of any warranty Claim pursuant to the warranties set
forth in Section 15.1, Contractor fails to commence, continue or complete any repairs,
replacements or re-performance in the manner required hereunder, Owner may perform or cause
one or more Replacement Contractors to perform such Work, and Contractor shall be liable
for, and shall promptly upon receipt of an invoice reimburse Owner for, all costs, charges
and expenses incurred by Owner in connection with such Work. Performance of any Work by
Owner or a Replacement Contractor shall not relieve Contractor of any obligation under this
Agreement.

     15.4 Exclusions. Notwithstanding anything to the contrary in this Agreement,
Contractor’s warranties do not extend or apply to: (a) Owner Procured Materials (except with
respect to Work performed on such Owner Procured Materials); or (b) damage, deterioration or
failure resulting from (i) normal wear and tear, (ii) failure of Owner to store, operate or
maintain the warranted item in accordance with written operation and maintenance manuals provided
by Contractor to Owner, or (iii) modifications made by Owner. The warranties set forth in this
Agreement are exclusive and in lieu of all other warranties, whether written, oral, implied or
statutory. NO IMPLIED STATUTORY WARRANTY OF MERCHANTABILITY OR OF FITNESS FOR A PARTICULAR PURPOSE
SHALL APPLY. Contractor does not warrant under this Agreement any product, material or services
that Owner has furnished or purchased (including Owner Procured Materials). Any oral or written
representation, warranty, course of dealing or trade usage not contained herein will not be binding
on any Party.

ARTICLE 16

CHANGE ORDERS

     16.1 Change in Scope. Owner shall have the right to revise the scope of Work pursuant
to a Change Order. No Change Order shall be required other than: (a) to modify the scope of the
Work or the scope of Services; or (b) as expressly provided for in this Agreement to adjust the
Target Cost. A Change Order revising the scope of Work shall include an equitable adjustment of
the Target Cost and Project Schedule. A Change Order revising the Management Fee shall include an
amended Management Fee Payment Schedule to account for such revisions to the Management Fee.

     16.2 Equitable Adjustments to Schedule. To the extent any Change Order has a material
affect on Contractor’s ability to achieve the [***] Date, such Change Order shall include an
equitable adjustment to the [***] Date; provided however, that such adjustment shall not
necessarily be equal to the number of days required to perform the changed Work. Notwithstanding
anything to the contrary set forth herein, Contractor shall not be entitled to a Change Order to
address delays or cost increases resulting from Contractor’s failure to perform in accordance with
the terms of this Agreement.

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     16.3 Preparation of Change Orders. Upon Owner’s request, Contractor shall prepare
proposed Change Orders. Any such proposed Change Order shall become effective only if and when
approved in writing by Owner.

ARTICLE 17

FORCE MAJEURE

     17.1 Excused Performance. A Party shall not be in default of its obligations
hereunder to the extent its delay in performance results from an event of Force Majeure, provided
that the Party affected by the Force Majeure uses all commercially reasonable efforts to: (a)
proceed with its obligations under this Agreement to the extent that it is not prevented from doing
so by the event of Force Majeure; (b) remove or relieve any event of Force Majeure or its
consequences and minimize the effects of the delay caused thereby; and (c) resume performance as
soon as practicable after the event of Force Majeure. The occurrence of an event of Force Majeure
shall not relieve the affected Party of its obligations to mitigate the effects thereof.

     17.2 Notification. A Party affected by an event of Force Majeure shall provide
written notice thereof to the other Party promptly upon the occurrence of the Force Majeure event,
and in no event later than ten (10) days after the occurrence thereof. Such notice shall describe
in reasonable detail the Force Majeure event, the damages suffered, the activities which are being
and will be undertaken to mitigate the effects of such event, and the length of delay anticipated
to result from such event. In addition, the affected Party shall timely provide the other Party
with written supplemental notices periodically during the period that the event of Force Majeure
continues detailing any changes, development, progress or other relevant information of which the
affected Party is aware. When the affected Party is able to resume performance of its obligations
under this Agreement, it shall give the other Party written notice to that effect.

ARTICLE 18

INDEMNIFICATION

     18.1 General Indemnity.

     18.1.1 To the fullest extent permitted by Applicable Laws, Contractor shall indemnify,
save harmless and defend Owner, Owner Nominees and their respective employees, agents,
directors and officers (collectively, the “Owner Indemnitees”) from all Claims, including
reasonable attorneys’ fees, growing out of personal injury, death or damage to property
(including Owner’s property, but excluding any of Owner’s property not covered by
Contractor’s Builders Risk Insurance) arising out of, or in any way connected with,
Contractor’s, any Subcontractor’s or any of their respective employees’, agents’ and
representatives’ performance or nonperformance hereunder (negligent or otherwise) suffered
or claimed to have been suffered by any Person (including Owner Indemnitees and anyone
directly or indirectly employed by Contractor or any Subcontractor), except to the extent
caused by the negligence of any Owner Indemnitee. Contractor’s obligations to each Owner
Indemnitee for Claims related to or brought by anyone directly or indirectly employed by
Owner or any Direct Suppliers shall not be limited in any way by any provision of any
workers’ compensation act, disability benefits act or other employee benefit act, and
Contractor hereby waives immunity under such acts

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to the extent such acts would bar recovery under, or full enforcement of, Contractor’s
obligations hereunder.

     18.1.2 To the fullest extent permitted by Applicable Laws, Owner shall indemnify, save
harmless and defend Contractor and its employees, agents, directors, officers and
representatives (collectively, the “Contractor Indemnitees”) from all Claims, including
reasonable attorneys’ fees, growing out of personal injury, death or damage to Contractor’s
property to the extent caused by Owner, its subcontractors at any level or any of their
respective employees or agents, except to the extent such injury, death or damage is caused
by Owner, its subcontractors at any level or their respective employees or agents acting at
the direction of Contractor or any of its Subcontractors.

     18.2 Environmental Indemnities.

     18.2.1 To the fullest extent permitted by Applicable Laws, Contractor shall indemnify,
save harmless and defend Owner Indemnitees from all Claims, including reasonable attorneys’
fees, to the extent arising from: (a) any release or disposal of (or arranging for the
disposal of) Hazardous Substances by Contractor or any Subcontractor; (b) the existence,
use, release, transportation or disposal of any Hazardous Substance that has been brought
onto the Work Site by Contractor, any Contractor Personnel, any Subcontractor, any employees
of any such Subcontractor or any Person acting on behalf of, or under the direction or
supervision of any such Person; (c) Contractor’s failure to timely notify Owner of the
presence of any Hazardous Substance on the Work Site; (d) Contractor’s failure to remove or
properly dispose of any Hazardous Substance brought onto the Work Site, or generated, by
Contractor, any Contractor Personnel, any Subcontractor, any employees of any such
Subcontractor or any Person acting on behalf of, or under the direction or supervision of
any such Person; or (e) the failure of Contractor, any Contractor Personnel, any
Subcontractor, any employees of any such Subcontractor or any Person acting on behalf of, or
under the direction or supervision of any such Person to comply with any Environmental Law.

     18.2.2 To the fullest extent permitted by Applicable Laws, Owner shall indemnify, save
harmless and defend Contractor Indemnitees from all Claims, including reasonable attorneys’
fees, to the extent arising from the existence of Hazardous Substances at, on or under the
Work Site prior to Contractor’s commencement of Work on such Work Site except to the extent
caused by the negligence of any Contractor Indemnitee.

     18.3 Intellectual Property Indemnity. To the fullest extent permitted by Applicable
Laws, Contractor shall indemnify, save harmless and defend Owner Indemnitees from any Claims,
including reasonable attorneys’ fees, to the extent arising from an infringement of patent, trade
secret, copyright or other intellectual property rights provided by Contractor in connection with
the Work; provided, however, that Contractor shall not be liable for any such Claim to the extent
arising out of: (a) the use of such intellectual property rights in combination with devices or
products not supplied by Contractor or any of its Subcontractors; or (b) the use of such
intellectual property rights in an application or environment other than as intended by Contractor.
Should any such Claim materially impair Contractor’s performance of the Work or continued
operations of the

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Facilities, Contractor shall, at its own cost and expense, timely procure the right to
continue its performance of the Work and/or the operation of the Facilities. If any Claim
described in this Section 18.3 is held to constitute an infringement of any intellectual property
rights and use of any equipment or process included in the Work is enjoined, Contractor shall, at
its own cost and expense: (a) procure for Owner the right to continue to use the infringing
equipment or process; (b) replace such equipment or process with non-infringing equipment or
process of equal utility and efficiency; or (c) modify such equipment or process so that it becomes
non-infringing without affecting its utility or efficiency; provided, however, that Contractor may
only elect the action described in clause (b) or (c) if Contractor and Owner agree upon a schedule
for such action which will allow Contractor to complete such action within a reasonable period of
time without unreasonably interfering with the operation of the Facilities.

     18.4 Indemnity Against Prohibited Liens. To the fullest extent permitted by
Applicable Laws, Contractor shall indemnify, save harmless and defend Owner Indemnitees from any
and all Prohibited Liens.

     18.5 Defense of Indemnified Claims.

     18.5.1 Within a reasonable time after receipt by any Indemnitee of any Claim as to
which the indemnity provided for in Section 18.1, 18.2, 18.3 or 18.4 may apply, such
Indemnitee shall notify the indemnifying Party in writing of such fact; provided, however,
that delay in notifying the indemnifying Party shall not relieve such Party of its
indemnification obligations except to the extent that it is materially prejudiced by such
delay.

     18.5.2 The indemnifying Party shall diligently, competently and in good faith control
and conduct the defense, with counsel reasonably satisfactory to the Indemnitee, of any
Claim as to which the indemnity provided for in Section 18.1, 18.2, 18.3 or 18.4 applies;
provided, however, that the indemnifying Party may not settle or compromise any such Claim
without the Indemnitee’s consent unless the terms of such settlement or compromise
unconditionally release the Indemnitee(s) from any and all liability with respect thereto
and do not impose any obligations on any Indemnitee.

     18.5.3 An Indemnitee shall have the right, at its option (but not the obligation), to
be represented by advisory counsel of its own selection and at its own expense and to
monitor the progress and handling of an indemnified Claim. An Indemnitee shall also have
the right, at its option (but not the obligation), to assume the defense of any such Claim
with counsel of its own choosing at its sole cost and expense; provided, however, that an
Indemnitee shall have the right to assume the defense of, and to settle or compromise, any
such indemnified Claim at the indemnifying Party’s expense if: (a) the indemnifying Party
fails to acknowledge, in writing, its responsibility to assume the defense of such Claim;
(b) the indemnifying Party fails to diligently, competently and in good faith control and
conduct the defense of such Claim with counsel reasonably satisfactory to the Indemnitee;
(c) there is an apparent conflict of interest between the indemnifying Party and the
Indemnitee with respect to such Claim; or (d) such Indemnitee shall have reasonably
concluded that there are legal defenses available to it which are different from, additional
to or inconsistent with those available to the indemnifying Party.

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     18.5.4 The indemnifying Party’s obligations to indemnify, defend and hold each
Indemnitee harmless shall not be reduced or limited by reason of any limitation on the
amount or type of damages, compensation or benefits payable by or for the indemnifying Party
or any of its subcontractors under workers’ compensation acts, disability benefit acts or
other employee benefit acts.

ARTICLE 19

TAXES AND DUTIES

     19.1 Cooperation. Contractor shall develop procedures to, and shall, minimize the
taxes, fees and assessments imposed on: (a) Contactor, Subcontractors and any employees of either
to the extent Owner is responsible for payment thereof as a Reimbursable Cost; and (b) Owner,
including with respect to the sale, manufacture, purchase, import or export of Services or Project
Materials under this Agreement. Contractor shall advise Owner on a timely basis of any actions or
filings required to be made or taken by Owner to minimize taxes, fees or assessments that would
otherwise be imposed on Owner in connection with the Project or the performance of the Work,
including providing exemption certificates and other documentation that may need to be completed or
filed.

     19.2 Payment Obligations. Contractor shall pay or cause to be paid when due, all
taxes, fees and assessments imposed on Contractor and Subcontractor in connection with the
performance of the Work, including: (a) sales, gross receipts, business and occupation, excise,
employment, consumption, use, income, profit, franchise and personal property taxes; (b) taxes and
contributions for unemployment compensation insurance, old age benefits, welfare funds, pensions
and annuities, and disability insurance; (c) registration fees; and (d) license fees, taxes and
duties on services, construction tools, equipment and materials (other than Owner Procured
Materials) imported or exported by Contractor or any Subcontractor. Contractor shall promptly
notify Owner of all notices and other communications of which it is aware pertaining to: (i)
nonpayment or payment under protest of; (ii) any claim for immunity or exemption from; or (iii) any
claim for refund of, or credit against, any taxes, fees, assessments and duties imposed in
connection with the Work.

     19.3 Assignment of Rights. Contractor shall assign and transfer to Owner all of its
right, title and interest in and to any and all refunds of sales and use taxes received as a result
of a claim for or entitlement to refund for materials, supplies or equipment purchased in
connection with this Agreement.

ARTICLE 20

SUSPENSION; TERMINATION

     20.1 Suspension of Work.

     20.1.1 Owner may, for any reason, suspend all or any part of the Work by giving notice
to Contractor specifying the part of the Work to be suspended and the effective date of such
suspension. Upon receipt of such notice, Contractor shall suspend the carrying out of the
Work or any part thereof for such time or times and in such manner

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as Owner may require but shall continue to perform any part of the Work not suspended,
if applicable.

     20.1.2 During any suspension of any portion of the Work, Contractor shall properly
protect and secure the Work (including care, custody and control of Project Materials) in
accordance with Good Utility Practices and otherwise as directed by Owner. Unless otherwise
directed by Owner, Contractor shall, during any such suspension, maintain staff, labor and
equipment on or near the Work Site ready to proceed with the Work upon receipt of Owner’s
further instructions.

     20.1.3 Owner may at any time following a suspension ordered under Section 18.1.1 give
Contractor notice to proceed with the Work previously suspended and upon receipt of any such
notice to proceed, Contractor shall proceed with the Work previously suspended.

     20.1.4 During any suspension of Work, Owner shall continue to pay Reimbursable Costs in
respect of staff, labor and equipment being maintained on or near the Work Site and any
non-suspended Work in accordance with the terms of this Agreement.

     20.2 Termination for Convenience.

     20.2.1 Owner may terminate this Agreement at any time, for any reason or no reason, by
giving notice of termination to Contractor specifying the effective date of such
termination.

     20.2.2 Owner shall have the option of having materials and equipment delivered to the
Work Site or, at Owner’s expense, to such other place as Owner shall direct.

     20.2.3 Upon termination for convenience of this Agreement by Owner pursuant to Section
20.2.1, Owner shall, as its exclusive liability to Contractor, pay Contractor: (a) all
Reimbursable Costs incurred through the date of termination plus any additional Reimbursable
Costs authorized by Owner to be incurred by Contractor to perform its obligations under
Section 21.6.1; (b) the share of any unpaid Management Fees fairly allocated to the portion
of Work performed by Contractor; (c) reasonable demobilization costs incurred by Contractor
and Subcontractors; and (d) expenses incurred to terminate Subcontracts. Any amounts owed
by Owner pursuant to this Section 20.2.3 shall be due to Contractor thirty (30) days after
the later of: (i) Owner’s receipt of a substantiated, itemized invoice; or (ii)
satisfaction of Contractor’s obligations under Section 21.6.1.

ARTICLE 21

DEFAULT; REMEDIES

     21.1 Default by Contractor. Each of the following circumstances or events shall
constitute a default by Contractor (each, a “Contractor Default”):

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

     21.2 Remedies for Contractor Default. If a Contractor Default occurs, Owner may
exercise any remedy available at law or in equity, including termination of this Agreement;
provided, however, that to the extent this Agreement explicitly specifies that a remedy is
exclusive, Owner shall be limited to the exercise of that remedy. Without limiting other remedies
to which Owner may be entitled hereunder, Owner may, whether or not this Agreement is terminated,
retain a Replacement Contractor to perform the Work by whatever method that Owner

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and such Replacement Contractor may deem expedient. Owner may make such expenditures as in
Owner’s sole judgment will best accomplish the timely completion of the Work; provided, however,
that Owner shall not be required or expected to terminate, repudiate or renegotiate any agreement
entered into among Contractor and any Subcontractor.

     21.3 Default by Owner. Each of the following circumstances or events shall constitute
a default by Owner (“Owner Default”):

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

     21.4 Remedies for Owner Default. If an Owner Default occurs, Contractor may exercise
any remedy available pursuant to this Agreement or at law or in equity, including termination of
this Agreement; provided, however, that to the extent this Agreement explicitly specifies that a
remedy is exclusive, Contractor shall be limited to the exercise of that remedy; and provided
further, that prior to terminating this Agreement based on an Owner Default, Contractor shall
deliver written notice of intent to terminate to Lenders and afford Lenders cure rights as may be
provided in the consent to assignment to be executed by Contractor and Lenders.

     21.5 Right to Suspend Performance. If Owner fails to pay any undisputed amount owed
to Contractor pursuant to this Agreement for a period of ten (10) days after notice of such
non-payment from Contractor, Contractor shall have the right to suspend its performance of the Work
until such undisputed amount is paid.

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     21.6 Effect of Termination.

     21.6.1 Upon termination of this Agreement for any reason, including a termination for
convenience pursuant to Section 20.2.1, Contractor shall:

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

     21.6.2 In the event the Agreement is terminated, Owner shall pay Contractor
Reimbursable Costs authorized by Owner to be incurred by Contractor to perform its
obligations under Section 21.6.1; provided, however, that Owner shall not be obligated to
compensate Contractor in respect of Work not performed.

     21.6.3 In the event of a termination by Owner based on a Contractor Default, any
payments owed to Contractor shall be reduced by: (a) amounts recoverable by Contractor
pursuant to Subcontracts, insurance policies, rebates, tax refunds and other recoveries in
connection with the performance of the Work; and (b) damages suffered by Owner as a result
of such Contractor Default including amounts owed by Contractor

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pursuant to its indemnity and warranty obligations hereunder. Owner’s rights under
this Section 21.6.3 are in addition to (but not duplicative of) any other rights and
remedies available to Owner.

ARTICLE 22

TITLE AND RISK OF LOSS

     22.1 Owner Procured Materials. Title to Owner Procured Materials and parts of the
Work supplied by Owner shall remain with Owner at all times.

     22.2 Contractor Procured Materials. Title to Contractor Procured Materials and Work
performed by Contractor shall pass to Owner upon the earliest of: (a) the occurrence of any event
by which, under any Applicable Laws, title passes from any Person providing such Contractor
Procured Materials or Work; (b) the date of payment therefor by Owner (or the date of exercise of
Owner’s right of offset with respect to payment therefor), notwithstanding any retention by Owner
in accordance with the terms of this Agreement; (c) with respect to Contractor Procured Materials,
the date Contractor Procured Materials are delivered to the Work Site or incorporated into the Work
or the Facilities; (d) the Substantial Completion Date; or (e) the date this Agreement is
terminated in accordance with its terms.

     22.3 Care, Custody and Control. Notwithstanding the passage of title from Contractor
to Owner or the retention of title by Owner, Contractor shall have care, custody and control of all
equipment, materials and supplies utilized in the Project, including Owner Procured Materials after
delivery thereof to Owner, until the Substantial Completion Date. Notwithstanding the foregoing,
Owner shall have the right to request in writing that Contractor convey, and upon such written
request Contractor shall convey, care, custody and/or control of any or all such equipment,
materials or supplies to Owner or any Owner Nominee prior to the Substantial Completion Date.

     22.4 Risk of Loss. With respect to the Facilities and the Work: (a) Contractor shall
bear the risk of loss on all equipment, materials, supplies and Work that are covered against, or
are required to be covered against, property or casualty loss by Contractor’s Builders Risk
Insurance, up to the applicable policy limits in such Builders Risk Insurance; and (b) Owner shall
bear all other risk of loss with respect to such equipment, materials, supplies and Work.

ARTICLE 23

REPRESENTATIONS AND WARRANTIES

     23.1 Contractor’s Representations and Warranties. Contractor hereby represents and
warrants to Owner as of the date hereof that:

	 	(a)	 	no Permit or other action by, and no notice to, or filing with,
any Governmental Authority which has not been obtained, taken or made is
required to be obtained, taken or made by or on behalf of Contractor in
connection with the execution, delivery and performance of this Agreement;

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

     23.2 Owner’s Representations and Warranties. Owner hereby represents and warrants to
Contractor, as of the date hereof, that:

	 	(a)	 	it is a corporation duly organized, validly existing and in
good standing under the laws of the Commonwealth of Virginia and the State of
Maryland;

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

ARTICLE 24

LIMITATION OF LIABILITY

     24.1 Aggregate Limit of Liability.

     24.1.1 Subject to the exclusions set forth in Section 24.1.2, Contractor’s aggregate
liability to Owner in connection with Work performed or not performed with respect to any
Phase, whether in contract, warranty, tort, negligence, strict liability or otherwise, shall
not exceed the total cost of the Work associated with such Phase (including the portion of
the Management Fee paid with respect to such Phase and a pro-rata portion of the [***]).

     24.1.2 The limitation set forth in Section 24.1.1: (a) shall be in excess of any
recoveries under Contractor Required Insurance; (b) shall not apply to the extent of
liability based on Contractor’s indemnity obligations hereunder, or Contractor’s gross

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negligence, fraud or willful misconduct; and (c) shall not apply to the extent of any
liability based on Contractor’s breach of its warranty set forth in Section 15.1(h).

     24.2 Exclusion of Consequential Damages. NOTWITHSTANDING ANY PROVISIONS IN THIS
AGREEMENT TO THE CONTRARY, NEITHER PARTY, SHALL BE LIABLE TO THE OTHER PARTY FOR ANY SPECIAL,
INDIRECT, INCIDENTAL, PUNITIVE, CONSEQUENTIAL OR EXEMPLARY DAMAGES OF ANY KIND OR NATURE
WHATSOEVER, OR DAMAGES ARISING FROM OR IN CONNECTION WITH SUCH OTHER PARTY’S LOSS OF ACTUAL OR
ANTICIPATED PROFITS OR REVENUES, IN EACH CASE ARISING OUT OF, IN CONNECTION WITH OR RESULTING FROM
THIS AGREEMENT, REGARDLESS OF WHETHER ANY CLAIM FOR SUCH LOSSES OR DAMAGES IS BASED ON CONTRACT,
WARRANTY, TORT (INCLUDING NEGLIGENCE), STRICT LIABILITY OR OTHERWISE.

ARTICLE 25

DISPUTE RESOLUTION

     25.1 Informal Dispute Resolution. Within five (5) Business Days after receipt by
either Party of a written notice describing a dispute between the Parties arising under or in
connection with this Agreement or the Project, the Project Manager and Owner Representative shall
meet, confer and attempt in good faith to resolve such dispute.

     25.2 Steering Committee. If a dispute is not resolved by the Project Manager and
Owner Representative within ten (10) Business Days after the first meeting conducted pursuant to
Section 25.1, each Party shall be obligated, by written notice to the other Party, to refer such
dispute to the Steering Committee. Within five (5) Business Days after such referral, the Steering
Committee shall meet, confer and attempt to resolve such dispute.

     25.3 Written Decisions. The terms of any resolution of a dispute by the Project
Manager and Owner Representative or by the Steering Committee shall be memorialized in writing and
signed by each Party.

     25.4 Litigation. If a dispute is not resolved within ten (10) Business Days after the
first meeting conducted pursuant to Section 25.2, either Party may initiate litigation to resolve
such dispute. Any communications between the Parties in connection with the process described in
Sections 25.1 and 25.2 may not be introduced by either Party in any such litigation.

     25.5 Continued Performance. The Parties shall continue to perform under this
Agreement during the pendency of any dispute hereunder.

ARTICLE 26

INTELLECTUAL PROPERTY

     26.1 Proprietary Information. All drawings, designs, specifications, databases,
computer software and other proprietary information created in connection with the Project or
pursuant to this Agreement or any Subcontracts (“Proprietary Information”) shall, immediately

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upon the creation thereof, become the property of Owner. Contractor shall procure from each
Subcontractor rights to Proprietary Information as provided for in this Section 26.1.

     26.2 Infringement Claims. Should Contractor become aware of any Claim based on
infringement, unauthorized use or misappropriation of any intellectual property right used by
Contractor or any Subcontractor in connection with or related to the Project or the Work,
Contractor shall: (a) promptly upon learning thereof, investigate such Claim; and (b) promptly
submit to Owner copies of all documents relating to such Claim and a detailed, written analysis of
such Claim, including the course of action recommended by Contractor with respect thereto, which
analysis shall be updated by Contractor as reasonably appropriate.

     26.3 Use of Trademarks. Contractor shall not, without the prior written consent of
Owner: (a) use the name or any trade name or registered trademark of Owner or any of its
Affiliates in any advertising or communications to the public in any format; (b) make publicity
releases or announcements regarding this Agreement, the Project or any activities related thereto;
or (c) except as required in connection with the performance of the Work, take any photographs,
video or other recordings of Owner’s property.

ARTICLE 27

CONFIDENTIAL INFORMATION

     27.1 Protection of Confidential Information.

     27.1.1 Contractor shall hold in confidence and refrain from disclosing all business,
technical and other information that is made available by Owner, directly or indirectly, or
developed or acquired by Contractor or any Subcontractor in connection with the Project or
pursuant to this Agreement, including any such information made available to Contractor
prior to the execution of this Agreement (collectively “Confidential Information”);
provided, however, that Confidential Information shall not include Unrestricted Information.

     27.1.2 Notwithstanding anything to the contrary set forth herein, all information
pertaining to the Work schedule, including the Project Schedule, shall constitute
Confidential Information.

     27.2 Permitted Disclosures.

     27.2.1 Contractor shall disclose Confidential Information to Contractor Personnel on a
need-to-know basis.

     27.2.2 Contractor may disclose Confidential Information to Subcontractors only to the
extent reasonably necessary in connection with their performance under Subcontracts and
provided that as a condition to such disclosure such Subcontractors shall execute
non-disclosure agreements on materially identical terms to those set forth in Section 27.1.

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     27.2.3 Contractor may disclose Confidential Information to its insurance providers to
the extent reasonably necessary to procure Contractor Required Insurance.

     27.2.4 If Contractor receives legal notice to compel disclosure of any Confidential
Information, Contractor shall provide Owner with prompt written notice thereof so that Owner
may seek a protective order or other appropriate remedy at Owner’s sole cost and expense.
If Contractor is legally obligated to disclose any Confidential Information, Contractor
shall furnish only that portion of such Confidential Information which it is legally
required to produce and Contractor shall cooperate with Owner and its legal counsel to
enable Owner to obtain a protective order or other reliable assurance that confidential
treatment will be accorded the Confidential Information.

     27.3 Contractor’s Use of Confidential Information. Contractor shall not, without the
prior written consent of Owner, use any Confidential Information for any purpose other than the
performance of the Work.

     27.4 Survival. This Article 27 shall remain in effect for a period of five (5) years
from the later of: (a) the Substantial Completion Date; or (b) the date of termination of this
Agreement.

     27.5 Contractor’s Proprietary Information. Owner shall hold in confidence and refrain
from disclosing information provided by Contractor relating to salaries, wages, overhead costs and
employee benefits of Contractor Personnel in connection with the Project or pursuant to this
Agreement; provided, however, that: (a) if Owner receives legal notice to compel disclosure of any
such information, Owner shall provide Contractor with prompt written notice thereof so that
Contractor may seek a protective order or other appropriate remedy at Contractor’s sole cost and
expense; and (b) if Owner is legally obligated to disclose any such information, Owner shall
furnish only that portion of such information which it is legally required to produce and Owner
shall cooperate with Contractor and its legal counsel to enable Contractor to obtain a protective
order or other reliable assurance that confidential treatment will be accorded such information.

     27.6 Contractor Information. Except as expressly provided in this Agreement, Owner
shall have no obligation of confidence with respect to any information disclosed to Owner by
Contractor or any Subcontractor, and Owner shall be free to use or disclose any or all such other
information without accounting to Contractor therefore, regardless of whether Contractor or any
Subcontractor places any restrictive notices on any information disclosed hereunder.

ARTICLE 28

MISCELLANEOUS PROVISIONS

     28.1 Governing Law. The validity, interpretation and construction of this Agreement
shall be governed by and construed in accordance with the laws of the State of New York, without
regard to its choice of law principles.

     28.2 Notices. Notices delivered pursuant to this Agreement shall be in writing and
shall be delivered by hand or sent by facsimile, certified mail or recognized overnight delivery
service to Contractor or Owner at the respective Party’s address set forth below:

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Owner:

Trans-Allegheny Interstate Line Company

c/o Allegheny Energy, Inc.

800 Cabin Hill Drive

Greensburg, PA 15601

Attn: James B. Kauffman

fax: 724-830-5692

with a copy to:

Trans-Allegheny Interstate Line Company

c/o Allegheny Energy, Inc.

800 Cabin Hill Drive

Greensburg, PA 15601

Attn: Kathryn L. Patton

fax: 724-838-6797

Contractor:

Kenny Construction Company

250 Northgate Parkway

Wheeling, IL 60090-2684

Attn: John E. Kenny, Jr.

fax: 847-541-8358

with a copy to:

Vedder, Price, Kaufman & Kammholz, P.C.

222 North LaSalle Street, Suite 2600

Chicago, Illinois 60601

Attn: Karen P. Layng, Esq.

fax: 312-609-5005

Notices shall be deemed to have been received upon the date of delivery if hand delivered or
delivered by recognized overnight delivery service or on the delivery date shown upon the return
receipt of such item, or three (3) Business Days after the date of mailing in the event delivery is
refused. Facsimile messages shall be deemed to be delivered by a successful transmission notice
generated by the facsimile machine.

     28.3 Entire Agreement. This Agreement contains the entire understanding of the
Parties with respect to the subject matter hereof and supersedes all prior negotiations,
representations or agreements, either oral or written, related to the subject matter hereof. There
are no oral or written understandings or terms or conditions with respect to the subject matter
hereof other than those expressly set forth in this Agreement.

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     28.4 Severability. If any provision or portion of this Agreement shall be adjudged
invalid or unenforceable by a court of competent jurisdiction or by operation of law, that
provision or portion of this Agreement shall be deemed omitted and the remaining provisions shall
remain in full force and effect.

     28.5 Independent Contractor. Contractor and each Subcontractor shall be an
independent contractor for, and not the agent or employee of, Owner. The relationship of employer
and employee shall not exist between Owner and any Contractor Personnel. Contractor acknowledges
and agrees that no Contractor Personnel shall be eligible to participate in, nor shall they
receive, any benefits from any employee benefit plan(s) sponsored by Owner. Neither this Agreement
nor the performance of the Work shall create or be construed to create any partnership or joint
venture or operation between Owner and Contractor or any Subcontractor.

     28.6 Assignment. Neither Party may assign this Agreement without the prior written
consent of the other Party and no permitted assignment shall relieve the assigning Party of its
obligations under this Agreement; provided, however, that Owner may assign this Agreement without
Contractor’s consent to: (a) any Lenders and their successors, assigns and designees in connection
with any financing or refinancing related to the development, construction, operation or
maintenance of the Facilities and, if requested by Lenders, Contractor shall execute a consent to
the assignment of this Agreement by Owner or Lenders in form and substance reasonably satisfactory
to Lenders; and (b) in whole or in part to Allegheny Energy, Inc. or any Affiliate thereof. Any
assignment made or purported to be made in violation of this Section 28.6 shall be void ab initio
and shall have no legal effect. This Agreement shall inure to the benefit of, and be binding upon,
the successors and permitted assigns of the Parties.

     28.7 Amendments. Amendments to the terms of this Agreement (including any Schedule or
Exhibit hereto) shall only be effective if made in writing and signed by each of Owner and
Contractor.

     28.8 Precedence. In the event of a conflict or inconsistency between terms and
conditions contained in Articles 1 through 28 of this Agreement and the terms and conditions set
forth in any Exhibits or Schedules hereto, the terms and conditions set forth in Articles 1 through
28 shall take precedence.

     28.9 Remedies Cumulative. The remedies provided for in this Agreement are cumulative
and shall be in addition to other remedies available at law or in equity.

     28.10 Sole Benefit. This Agreement and all rights under this Agreement are intended
for the sole benefit of the Parties and shall not imply or create any rights on the part of, or
obligations to, any other Person except to the extent expressly provided herein.

     28.11 Waiver. No waiver by a Party of a right or default under this Agreement shall
be effective unless in writing and signed by such Party. No such waiver shall be deemed a waiver
of any subsequent right or default of a similar nature or otherwise.

     28.12 Counterparts. This Agreement may be executed in counterparts which, when signed
by each of the Parties, shall constitute one and the same instrument.

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     28.13 Survival. The provisions of Articles 15, 18, 22 and 24 through 27 and Sections
10.9, 21.2, 21.4 and 21.6 shall survive the termination of this Agreement.

     28.14 Small Business Investment Act. Contractor agrees to perform the Work in
accordance with a plan agreed to with Owner so that small business concerns and those concerns
owned and controlled by socially and economically disadvantaged individuals, as defined in Section
8 of the Small Business Investment Act, 15 U.S.C. § 637, have the opportunity to compete for
Subcontracts to the fullest extent consistent with the requirements of this Agreement and to make
certifications and periodic reports required b such plan.

     28.15 Announcements. Contractor shall not make or issue any press release or other
public announcement or any other disclosure of any kind relating to this Agreement or the
transactions contemplated herein (including the existence of this Agreement or the terms and
conditions of this Agreement) to any third party without the prior written consent of Owner.

[signature page follows]

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IN WITNESS WHEREOF, the Parties, intending to be legally bound, have duly executed this Agreement
in duplicate originals as of the day and year first written above.

	 	 	 	 	 
	TRANS-ALLEGHENY INTERSTATE LINE COMPANY

	 
	By:

	 	/s/ David E. Flitman
 

David E. Flitman
	 	 
	 

	 	President	 	 
	 
	KENNY CONSTRUCTION COMPANY

	 
	By:

	 	/s/ John E. Kenny, Jr.
 

John E. Kenny, Jr.
	 	 
	 

	 	President	 	 

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