EXHIBIT B-6
PP NUCLEAR SUBSCRIPTION AND CAPITAL CONTRIBUTION AGREEMENT
by and between
PENNSYLVANIA POWER COMPANY
and
FIRSTENERGY NUCLEAR GENERATION CORP.
SUBSCRIPTION AND CAPITAL CONTRIBUTION AGREEMENT, dated as of May 13,
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.
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.
2
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.
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: /s/ Xxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President & Controller
FIRSTENERGY NUCLEAR GENERATION CORP.
By: /s/ Xxxx Xxxxxxx
--------------------------------
Name: Xxxx Xxxxxxx
Title: Sole Incorporator
3
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 Pollutions Control Revenue $14,250,000
Development Authority Refunding Bonds, 6.0% 1995
Series (Pennsylvania Power
Company Beaver Valley Project)
Due 2028
--------------------------------------------------------------------------------
Beaver County Industrial Pollution Control Revenue $ 4,400,000
Development Authority Refunding Bonds, Series 2001-A
(Pennsylvania Power Company
Beaver Valley Project) due 2021
--------------------------------------------------------------------------------
Ohio Air Quality Development Pollution Control Revenue $ 1,500,000
Authority Refunding Bonds, Series 1994
(Pennsylvania Power Company
Project) due 2023
--------------------------------------------------------------------------------
Ohio Air Quality Development Pollution Control Revenue $ 4,500,000
Authority Refunding Bonds, Series 1997
(Pennsylvania Power Company
Project) due 2027
--------------------------------------------------------------------------------
Ohio Air Quality Development Pollution Control Revenue Bonds, $ 3,500,000
Authority Series 1988 (Pennsylvania Power
Company Project) due 2018
--------------------------------------------------------------------------------
Ohio Water Development Pollution Control Revenue Bonds, $13,300,000
Authority Series 1988 (Pennsylvania Power
Company Project) due 2018
--------------------------------------------------------------------------------
Ohio Water Development Pollution Control Revenue $11,200,000
Authority Refunding Bonds, Series 1994
(Pennsylvania Power Company
Project) due 2023
--------------------------------------------------------------------------------
Ohio Water Development Pollution Control Revenue $ 5,200,000
Authority Refunding Bonds, Series 1999-A
(Pennsylvania Power Company
Project) due 2033
--------------------------------------------------------------------------------
Ohio Water Development Pollution Control Revenue $ 5,800,000
Authority Refunding Bonds, Series 1997
(Pennsylvania Power Company
Project) due 2027
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
TOTAL: $63,650,000
--------------------------------------------------------------------------------
