Contract
[Execution
Copy]
Exhibit
10.1
by
and
between
PENNSYLVANIA
POWER
COMPANY
and
FIRSTENERGY
NUCLEAR
GENERATION CORP.
NY
#649715 v11
SUBSCRIPTION
AND CAPITAL CONTRIBUTION
AGREEMENT,
dated as of May
10, 2005 between Pennsylvania Power Company, a Pennsylvania corporation ("Penn
Power") and FirstEnergy Nuclear Generation Corp., an Ohio corporation ("Nuclear
Genco").
R
E C I T A L
S
WHEREAS,
Penn Power
wishes to subscribe for 100 shares of common stock, without par value, of
Nuclear Genco (the "Shares"); and
WHEREAS,
Nuclear
Genco desires to accept the subscription for the Shares in consideration
for
Penn Power’s Contribution to Nuclear Genco of the Contributed Assets (in each
case as defined below) on the terms and conditions set forth herein;
and
WHEREAS,
the Board
of Directors of Penn Power and Nuclear Genco have each approved Penn Power’s
subscription for the Shares and the contribution by Penn Power of all of
Penn
Power’s right, title and interest in and to its undivided ownership interests in
(a)
Units Nos. 1 and 2
of the Beaver Valley Nuclear Power Plant, (b)
the Beaver Valley
Nuclear Power Plant Common Facilities, (c)
the Perry Nuclear
Power Plant and associated decommissioning trust funds, and (d)
certain other
assets associated therewith (the "Other Nuclear Assets"), all as more
specifically described in Annex A and in Annex C hereto (collectively, the
"Contributed Assets"), together with Penn Power’s transfer and assignment to
Nuclear Genco of all of Penn Power’s rights, liabilities and obligations in
respect of $63,650,000 aggregate principal amount of outstanding pollution
control revenue bonds with respect to the Contributed Assets (as more
specifically described in Annex B hereto) and other included liabilities
as more
specifically described in Annex C (collectively, the "Transferred Liabilities",
and together with the Contributed Assets, the "Contribution"); and
WHEREAS,
each of
the parties hereto has agreed to execute and deliver all such agreements,
certificates and other documents as they deem necessary or desirable to
implement the Contribution, with such terms, conditions, modifications,
amendments or alterations as the officers executing the same shall approve
as
necessary or desirable, such approval to be conclusively established by their
execution thereof, and to take all actions necessary or desirable in order
to
enable the parties to fulfill their obligations under such agreements,
certificates and other documents; and
WHEREAS,
each of
the parties hereto has determined that the Contribution is in its best
interests.
NOW,
THEREFORE, in
consideration of the premises and intending to be legally bound hereby, the
parties hereto agree as follows:
1. Subscription for
Shares.Subject
to the
terms and conditions hereof, Penn Power hereby agrees to subscribe for
the
Shares, and Nuclear Genco hereby agrees to accept the subscription and
the
Contribution of the Contributed Assets and to assume the Transferred Liabilities
in consideration for its issuance of the Shares and the Note (as defined
below)
to Penn Power. The parties hereby acknowledge and agree that the value
of the
Contribution will be the book value thereof, less accumulated depreciation,
of
the Contributed Assets
as shown on
Penn Power’s balance sheet as of the end of the fiscal quarter immediately
preceding the Contribution Date, less
the agreed upon
value of the Transferred Liabilities as of the Contribution Date.
NY
#649715v11
2.
Promissory
Note. In
further
consideration for the Contribution of the Contributed Assets, Nuclear Genco
hereby agrees to issue to Penn Power a promissory note (the "Note"),
substantially in the Form of Exhibit A hereto, in a principal amount equal
to
the value of the Other Plant Assets less the amount of the Assumed Liabilities
(as defined in paragraph 4c below).
3.
Effectiveness
of Transaction.
a.
Nuclear
Genco
agrees to issue the Shares and the Note to Penn Power and Penn Power agrees
to
accept the Shares and the Note and to make the Contribution as promptly as
practicable following receipt of all necessary regulatory authorizations
and
other consents and approvals as may be necessary, appropriate or advisable
to
consummate the transactions contemplated hereby.
b.
The
parties hereby
agree that the Contribution shall, to the extent they deem appropriate, be
further evidenced and effected through the taking of all such additional
actions
and the execution of all instruments, agreements and documents of transfer,
including without limitation such deeds, assignment and assumption agreements,
releases and other documents as may be necessary or desirable to further
evidence or carry out the Contribution.
4. Representations;
Covenants.
a.
Nuclear
Genco
agrees that upon their issuance to Penn Power pursuant hereto, the Shares
shall
be fully paid and non-assessable and free and clear of any and all liens,
claims, charges and encumbrances.
x.
Xxxx
Power hereby
undertakes and agrees that the Contributed Assets will be transferred to
Nuclear
Genco free and clear of the lien of the Indenture, dated as of November 1,
1945,
between Penn Power and the First National Bank of the City of New York, now
Citibank, N.A., as Trustee, as amended and supplemented, but may be subject
to
other liens, claims, liabilities and encumbrances, all of which Nuclear Genco
agrees to accept and assume, except as otherwise provided herein.
c. Nuclear Genco agrees to accept the assignment
of the
Transferred Liabilities, and all such other liabilities and obligations
of Penn
Power as may be associated with, or directly related to, the Contributed
Assets
including, without limitation, any decommissioning liabilities and obligations
associated with the Contributed Assets and other liabilities as more
specifically identified in the form of Assignment and Assumption Agreement
attached as Annex C hereto (the "Assumed Liabilities"), which include,
among
other liabilities, liability for the decommissioning and decontamination
of the
Contributed Assets, management of spent nuclear fuel, and all environmental
liabilities, as well as any liabilities associated with the ownership of
the
Contributed Assets from and after the Contribution Date, but otherwise
exclude
the liabilities and obligations associated with Penn Power’s ownership of the
Contributed
Assets prior to the Contribution Date. Nuclear Genco hereby agrees fully
to
perform and discharge the Assumed Liabilities in a timely fashion. Nuclear
Genco
further agrees to indemnify and hold harmless Penn Power from and against
any
and all liabilities, actions, claims, damages, costs and expenses which
Penn
Power may suffer or incur as a result of Nuclear Genco’s failure to perform the
foregoing obligations.
NY
#649715v11
d. The
parties
acknowledge and agree that other than the Transferred Liabilities and the
Assumed Liabilities, Penn Power shall retain and discharge all liabilities
and
obligations associated with, or directly relating to, the Contributed Assets
arising out of Penn Power’s ownership of the Contributed Assets prior to the
Contribution Date, including, without limitation, any liability or obligation
to
fund the deficiency as of the Contribution Date in Penn Power’s nuclear
decommissioning trusts associated with the Contributed Assets, in the amount
and
as may be required by the Nuclear Regulatory Commission in connection with
the
transactions contemplated hereby . Penn Power further agrees to timely and
fully
discharge all such liabilities and obligations and to indemnify and hold
harmless Nuclear Genco from and against any and all liabilities, actions,
claims, damages, costs and expenses which Nuclear Genco may suffer or incur
as a
result of Penn Power’s failure to perform the foregoing
obligations.
e. The
parties
covenant and agree to use all commercially reasonable efforts to obtain all
regulatory and other approvals, authorizations and consents, including rulings
from the Internal Revenue Service, and make all such filings necessary,
appropriate or desirable in order for Penn Power to make and for Nuclear
Genco
to accept the Contribution of the Contributed Assets, the Transferred
Liabilities and the Assumed Liabilities as contemplated hereby.
5. Governing
Law.
This Subscription
and Capital Contribution Agreement shall be governed by the substantive laws
of
the State of Ohio, without reference to its conflicts of laws
principles.
6. Counterparts.
This Subscription
and Capital Contribution Agreement may be executed in counterparts, each
of
which taken together shall be deemed one and the same instrument.
NY
#649715v11
IN
WITNESS WHEREOF, this Subscription and Capital Contribution Agreement has
been
duly executed and delivered by the parties as of the date first above
written.
| PENNSYLVANIA POWER COMPANY | ||
| |
|
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| By: | ||
|
Name:
Title:
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||
|
FIRSTENERGY NUCLEAR GENERATION CORP.
|
||
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|
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| By: | ||
|
Name:
Title:
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NY
#649715v11
ANNEX
A
General
Description of Contributed Assets
|
1.
|
Penn
Power’s
65% undivided ownership interest in Beaver Valley Nuclear Power
Plant Unit
1 (526.5 MW), Shippingport,
Pennsylvania
|
|
2.
|
Penn
Power’s
13.74% undivided ownership interest in Beaver Valley Nuclear Power
Plant
Unit 2 (112.7 MW), Shippingport,
Pennsylvania
|
|
3.
|
Penn
Power’s
39.37% undivided ownership interest in Beaver Valley Nuclear Power
Plant
Common Facilities, Shippingport,
Pennsylvania
|
|
4.
|
Penn
Power’s
5.24% undivided ownership interest in Perry Nuclear Power Plant,
North
Perry Village, Ohio
|
|
5.
|
Penn
Power’s
interest in the qualified and non-qualified nuclear decommissioning
trust
funds associated with the Beaver Valley and Perry Nuclear Power
Plants
|
|
6.
|
All
of Penn
Power’s right, title and interest in and to any and all other assets,
inventories, nuclear fuel, spare parts, equipment, supplies, construction
work in progress, and contract rights associated with, or necessary
for,
the ownership or operation of the
foregoing
|
in
each case as
more specifically described in the Assignment and Assumption Agreement attached
as Annex C.
ANNEX
B
Schedule
of
Outstanding Pollution Control Revenue Bonds
|
Issuer
|
Bonds
|
Principal
Amount
|
|
Beaver
County
Industrial Development Authority
|
Pollution
Control Revenue Refunding Bonds, 6.0% 1995 Series (Pennsylvania
Power
Company Beaver Valley Project) due 2028
|
$14,250,000
|
|
Beaver
County
Industrial Development Authority
|
Pollution
Control Revenue Refunding Bonds, Series 2001-A (Pennsylvania
Power Company
Beaver Valley Project) due 2021
|
$4,400,000
|
|
Ohio
Air
Quality Development Authority
|
Pollution
Control Revenue Refunding Bonds, Series 1994 (Pennsylvania Power
Company
Project) due 2023
|
$1,500,000
|
|
Ohio
Air
Quality Development Authority
|
Pollution
Control Revenue Refunding Bonds, Series 1997 (Pennsylvania Power
Company
Project) due 2027
|
$4,500,000
|
|
Ohio
Air
Quality Development Authority
|
Pollution
Control Revenue Bonds, Series 1988 (Pennsylvania Power Company
Project)
due 2018
|
$3,500,000
|
|
Ohio
Water
Development Authority
|
Pollution
Control Revenue Bonds, Series 1988 (Pennsylvania Power Company
Project)
due 2018
|
$13,300,000
|
|
Ohio
Water
Development Authority
|
Pollution
Control Revenue Refunding Bonds, Series 1994 (Pennsylvania Power
Company
Project) due 2023
|
$11,200,000
|
|
Ohio
Water
Development Authority
|
Pollution
Control Revenue Refunding Bonds, Series 1999-A (Pennsylvania
Power Company
Project) due 2033
|
$5,200,000
|
|
Ohio
Water
Development Authority
|
Pollution
Control Revenue Refunding Bonds, Series 1997 (Pennsylvania Power
Company
Project) due 2027
|
$5,800,000
|
|
TOTAL:
|
$63,650,000
|
