Unassociated Document


    

      [Execution
        Copy]

       

      Exhibit
        10.1


      PP
        NUCLEAR
        SUBSCRIPTION AND CAPITAL CONTRIBUTION AGREEMENT

       

       

      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.

       

      b.    
         Penn
        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
	 
 	 
 	 
 
	
              	 	By:
	 	
                
                  

                

                Name:

                Title:

              
	 	
              


      

       

       

      
        	 	 	 
	 	
                  
                  FIRSTENERGY NUCLEAR GENERATION CORP.

              
	 
 	 
 	 
 
	 	  	By:
	 	
                
                  

                

                Name:

                Title:

              
	 	
              


      

       

       

       

       

      


       


      
        
          
            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