EXHIBIT
10.8


 


EXECUTION COPY


 


BERKSHIRE GUARANTY AGREEMENT (P1)


 


BERKSHIRE GUARANTY AGREEMENT (P1) dated as of May 22,
2009 by and between OGLETHORPE POWER CORPORATION (AN ELECTRIC MEMBERSHIP
CORPORATION) (“Oglethorpe”), an electric membership generating and
transmission corporation organized under the laws of the State of Georgia, and
BERKSHIRE HATHAWAY ASSURANCE CORPORATION (“Berkshire”), a New York
insurance company.


 


W I T N E S S E T H:


 


WHEREAS, pursuant to a Participation Agreement (P1),
dated as of December 30, 1996 (the “Participation Agreement”), by
and among Oglethorpe, Rocky Mountain Leasing Corporation (“RMLC”), U.S.
Bank National Association, successor to SunTrust Bank, Atlanta (the “Facility
Lessor”), U.S. Bank National Association, successor to Fleet National Bank
(the “Owner Trustee”), Philip Morris Capital Corporation (the “Owner
Participant”) and Utrecht-America Finance Co. (the “Lender”), (i) Oglethorpe
has leased an undivided interest in its interest as tenant-in-common in the
Facility to the Facility Lessor pursuant to the Head Lease, (ii) the
Facility Lessor has leased such undivided interest in the Facility to RMLC
pursuant to the Facility Lease, (iii) RMLC has leased such undivided
interest in the Facility to Oglethorpe pursuant to the Facility Sublease, (iv) Oglethorpe
has leased an undivided interest in its interest as a tenant-in-common in the
Rocky Mountain Site to the Facility Lessor pursuant to the Ground Lease, (v) the
Facility Lessor has leased such undivided interest in the Rocky Mountain Site
to RMLC pursuant to the Ground Sublease, (vi) RMLC has leased such
undivided interest in the Rocky Mountain Site to Oglethorpe pursuant to the
Ground Sub-sublease, (vii) Oglethorpe has assigned a portion of its rights
and obligations under the Rocky Mountain Agreements to the Facility Lessor, and
the Facility Lessor has assumed such portion of Oglethorpe’s obligations,
pursuant to the Rocky Mountain Agreements Assignment, (viii) the Facility
Lessor has assigned its rights and obligations under the Rocky Mountain
Agreements to RMLC, and RMLC has assumed such obligation, pursuant to the Rocky
Mountain Agreements Re-assignment, and (ix) RMLC has assigned its rights
and obligations under the Rocky Mountain Agreements to Oglethorpe, and
Oglethorpe has assumed such obligations, pursuant to the Rocky Mountain
Agreements Second Re-assignment; and


 


WHEREAS, Berkshire has agreed to issue its Surety Bond
(Facility Sublease-P1) No. 98SRD102495 (the “Facility Sublease Surety
Bond”), guaranteeing certain payments required to be made by Oglethorpe
pursuant to the Facility Sublease and
certain obligations of AMBAC under the “AMBAC Surety Bond” (as defined in the
Facility Sublease Surety Bond), subject to the terms and conditions of
the Facility Sublease Surety Bond; and


 


WHEREAS, Berkshire has agreed to issue its Surety Bond
(Head Lease-P1) No. 98SRD102494 (the “Head Lease Surety Bond” and,
together with the Facility Sublease Surety Bond, the “Surety Bonds”),
guaranteeing certain payments required to be made by Oglethorpe 


 

















 


pursuant to the Head
Lease and the Participation Agreement and
certain obligations of AMBAC under the “AMBAC Surety Bond” (as defined in the
Head Lease Surety Bond), subject to the terms and conditions of the Head
Lease Surety Bond; and


 


WHEREAS, to induce Berkshire to issue the Surety
Bonds, Oglethorpe has agreed to (i) pay the Premium for such Surety Bonds
and to pay certain of Berkshire’s expenses related to the Overall Transaction, (ii) reimburse
Berkshire for all payments made by Berkshire pursuant to the Surety Bonds
and/or the Berkshire Agreement for Assignment on Default (P1) dated as of the
date hereof (the “Agreement for Assignment on Default”) among the Owner
Participant, the Facility Lessor, the Owner Trustee and Berkshire, and (iii) secure
its obligation to reimburse Berkshire pursuant to this Agreement in the manner
hereinafter set forth; and


 


WHEREAS, Oglethorpe understands that Berkshire
expressly requires the delivery of this Agreement as part of the consideration
for the issuance by Berkshire of the Surety Bonds.


 


NOW, THEREFORE, in consideration of the premises and
of the agreements herein contained and of the execution of the Surety Bonds,
Oglethorpe and Berkshire agree as follows:


 


ARTICLE I


 


DEFINITIONS; SURETY BONDS; PREMIUM; CERTAIN COSTS


 


Section 1.01.  Definitions.  Except as otherwise expressly provided herein
or unless the context otherwise requires, the terms which are capitalized
herein shall have the meanings specified in Annex A hereto.


 


Section 1.02.  Surety Bonds.  The maximum liability of Berkshire under the
Facility Sublease Surety Bond and the Head Lease Surety Bond, respectively, and
the respective coverages and terms thereof shall be subject to and limited by
the terms and conditions of the Facility Sublease Surety Bond and the Head
Lease Surety Bond, respectively.


 


Section 1.03.  Premium.


 


(a)                                  In
consideration of Berkshire’s agreeing to issue the Surety Bonds pursuant to the
Agreement Regarding Surety Bonds, Oglethorpe hereby agrees to pay, or cause to
be paid, to Berkshire, a premium (the “Premium”) equal to the sum of
1.25% of the average of the amounts shown on Schedule A hereto as the “Surety
Bond Coverage” for January and July for each calendar year during the
scheduled term of the Surety Bonds (i.e., from the date on which the Surety
Bonds are issued through January 11, 2027 (the “Scheduled Termination
Date”)), with the amount calculated for each calendar year being payable in
advance on October 31 of the preceding calendar year or, in the case of
calendar years 2009 and 2010, on the Closing Date, as the case may be, and
prorated for the first and last years of the scheduled term of the Surety
Bonds, in each case as follows:


 


 


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(i)                      on the Closing Date, Oglethorpe will pay
to Berkshire an amount equal to $2,089,615.06, which represents the portion of
the Premium calculated for 2009 and 2010, with the amount calculated for 2009
being prorated based on the weighted average of the amounts shown on Schedule A
as the “Surety Bond Coverage” for May and July for the number of days
remaining in such year;


 


(ii)                   for each calendar year subsequent to 2010
through 2026, Oglethorpe shall pay the portion of the Premium calculated for
such calendar year in advance on October 31 of the preceding calendar year
(or, if such day is not a Business Day, on the next succeeding Business Day);
and


 


(iii)                for the calendar year 2027, Oglethorpe shall pay the portion of the
Premium calculated for such calendar year in advance on October 31 of the
preceding calendar year (or, if such day is not a Business Day, on the next
succeeding Business Day), in an amount equal to $6,942.99, which represents the
portion of the Premium calculated for such calendar year, with the amount
payable for such calendar year being prorated based on the amount shown on
Schedule A as the “Surety Bond Coverage” for January for the number of
days from January 1 of such year to the Scheduled Termination Date.


 


(b)                                 Anything
contained herein to the contrary notwithstanding, the termination of either or
both of the Surety Bonds prior to the Scheduled Termination Date shall not
relieve Oglethorpe of its responsibility for payment of the full amount of the
Premium for the full scheduled term of the Surety Bonds through the Scheduled
Termination Date as provided above, provided that:


 


(i)                      if (A) either (1) the Overall
Transaction is terminated, (2) the claims paying ability and senior debt
obligations of AMBAC Assurance Corporation (formerly known as AMBAC Indemnity
Corporation) (“AMBAC”), as applicable, are rated at least AA by S&P
and Aa2 by Moody’s (and not on credit watch by either rating agency) or (3) the
Facility Lease is terminated pursuant to Section 14.1 or Section 17.1(b) thereof
and the Facility Sublease is terminated pursuant to Section 14.1 or Section 17.1(b) thereof,
(B) the Surety Bonds are released and terminated, (C) Oglethorpe has
paid to Berkshire, within 10 Business Days after the occurrence of (A) and
(B) above, all amounts in respect of the Premium due or to become due
hereunder for the period commencing on the Closing Date and ending December 31,
2012, (D) if the Surety Bonds are being terminated after December 31,
2012, Oglethorpe has paid to Berkshire, within 10 Business Days after the
occurrence of (A) and (B) above, all amounts in respect of the
Premium due hereunder for the period commencing on January 1, 2013 and
ending on December 31st of the year in which the termination occurs, (E) Oglethorpe
is not otherwise in default in the payment of any amounts due hereunder
(including, without limitation, if the Surety Bonds are being terminated
between October 31st and December 31st of any year, amounts due on October 31st
of such year in respect of the Premium for the succeeding calendar year) and (F) Oglethorpe
pays to Berkshire, without duplication of the amounts payable in the
parenthetical in clause (E) above, within 10 Business Days after the
occurrence of (A) and (B) above, an amount equal to the portion of
the Premium calculated for the calendar year succeeding the year in which the
termination occurs (or, 


 


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if terminated on
or prior to December 31, 2012, the calendar year ending December 31,
2013), together with interest, if any, at the Default Rate on any payments
under this clause (i) from the date the Surety Bonds are terminated until
the date paid, Oglethorpe shall not be required to pay any further amounts in
respect of the Premium;


 


(ii)                   if (A) Oglethorpe delivers
replacement Qualifying Surety Bonds or Qualifying Letters of Credit or other
credit enhancement acceptable to the Owner Participant in accordance with the
terms and conditions of Sections 8.5 and 8.6 of the Participation Agreement
(other than as a result of a reduction of Berkshire’s financial strength rating
to less than AA by S&P and less than Aa2 by Moody’s), (B) the Surety
Bonds are released and terminated, (C) Oglethorpe has paid to Berkshire
all amounts in respect of the Premium due or to become due hereunder for the
period commencing on the Closing Date and ending December 31, 2012, (D) if
the Surety Bonds are being terminated after December 31, 2012, Oglethorpe
has paid to Berkshire, within 10 Business Days after the occurrence of (A) and
(B) above, all amounts in respect of the Premium due hereunder for the
period commencing on January 1, 2013 and ending on December 31st of
the year in which the termination occurs, (E) Oglethorpe is not otherwise
in default in the payment of any amounts due hereunder (including, without limitation,
if the Surety Bonds are being terminated between October 31st and December 31st
of any year, amounts due on October 31st of such year in respect of the
Premium for the succeeding calendar year) and (F) Oglethorpe pays to
Berkshire, without duplication of the amounts payable in the parenthetical in
clause (E) above, within 10 Business Days after the occurrence of (A) and
(B) above, an amount equal to the portion of the Premium calculated for
the two years succeeding the year in which the termination occurs (or, if
terminated on or prior to December 31, 2012, the calendar years ending December 31,
2013 and December 31, 2014), together with interest, if any, at the
Default Rate on any payments under this clause (ii) from the date the
Surety Bonds are terminated until the date paid, Oglethorpe shall not be
required to pay any further amounts in respect of the Premium; and


 


(iii)                if (A) the financial strength rating of Berkshire is less than AA
by S&P and less than Aa2 by Moody’s, (B) the Surety Bonds are released
and terminated, (C) Oglethorpe has paid all amounts in respect of the
Premium due hereunder prior to the date of such termination (including, without
limitation, the portion of the Premium calculated for the calendar year in
which the termination occurs) and is not otherwise in default in the payment of
any amounts due hereunder (other than, if the Surety Bond is terminated between
October 31st and December 31st of any year, the amount in respect of
the Premium for the following year need not have been paid), Oglethorpe shall
not be required to pay any further amounts in respect of the Premium.


 


(c)                                  Once paid,
neither any payment in respect of the Premium nor any part thereof or payment
in respect of any portion thereof shall be subject to rebate, reduction or
refund for any reason or under any circumstances whatsoever.


 


(d)                                 Each payment in
respect of the Premium shall be paid by Oglethorpe by wire transfer to the
account of Berkshire designated in Section 5.07 as the “Account for
Payments” or such other account or in such other manner as may be designated by
Berkshire from time to time.  


 


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If Berkshire has not
received payment of any amount in respect of the Premium as and when due and
payable hereunder, Berkshire shall be authorized, without notice to or
authorization from Oglethorpe, and without any liability to Oglethorpe, to
deliver a Notice of Termination to the Beneficiaries under the Surety Bonds.


 


Section 1.04.  Certain Other Expenses.  Oglethorpe agrees to pay on the Closing Date,
the fees and disbursements of Berkshire’s counsel related to issuance of the
Surety Bonds and the preparation, negotiation and execution of the Surety Bond
Documents and all other documents and agreements relating thereto, in each case
to the extent invoiced to Oglethorpe prior to the Closing Date.


 


ARTICLE II


 


REIMBURSEMENT OBLIGATIONS; SECURITY; EXPENSES;


INDEMNITY; NOTICES; OTHER COVENANTS


 


Section 2.01.  Reimbursement for Payments Under the
Surety Bonds, Expenses and Indemnification.


 


(a)                    Oglethorpe will reimburse
Berkshire immediately, without demand or notice by Berkshire to Oglethorpe or
any other Person, to the extent of each Surety Bond Payment.  If and to the extent that Oglethorpe fails to
reimburse Berkshire immediately in respect of each such Surety Bond Payment,
Oglethorpe shall pay on the first Business Day of each month, on the date of
any demand therefor from time to time and on the date such reimbursement
payment is made hereunder, interest on each such Surety Bond Payment from and
including the Surety Bond Payment Date to the date of the reimbursement by
Oglethorpe at the Default Rate. 
To the extent that interest payments due hereunder are not paid on the
first Business Day of each month, or are not paid as each principal repayment
is made, interest shall accrue on such unpaid amounts at a rate equal to the
Default Rate.


 


(b)                   Oglethorpe also agrees to
reimburse Berkshire immediately and unconditionally upon demand (in the case of
enforcement expenses) and within 30 days after demand (in the case of other
expenses) for all costs, fees and expenses (including reasonable fees and
disbursements of Berkshire’s counsel) incurred by Berkshire in connection with
the Surety Bonds and the other Surety Bond Documents (including any amendment
thereof) and/or the enforcement by Berkshire of this Agreement and/or any of
the other Surety Bond Documents, in each case together with interest on all
such expenses from and including the date of demand (in the case of enforcement
expenses) or the date which is 30 days from the date a statement for such
expenses is received by Oglethorpe (in the case of other expenses) to the date
of payment at the Default Rate; provided, however, that
Oglethorpe shall not be obligated to pay any expenses of Berkshire in
terminating the Surety Bonds if at the time Berkshire’s financial strength
rating is less than AA by S&P and less than Aa2 by Moody’s.


 


Section 2.02.  Security for Payments; Instruments of
Further Assurance.


 


(a)                    In order to secure its
payment obligations to Berkshire hereunder, Oglethorpe has amended the
Subordinated Mortgage.  Oglethorpe hereby
represents to Berkshire 


 


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that the Subordinated
Mortgage grants to Berkshire a perfected security interest in the Subordinated
Collateral.


 


(b)                   Oglethorpe agrees that it
will, from time to time, execute, acknowledge and deliver, or cause to be
executed, acknowledged and delivered, any and all deeds of trust, mortgages
and/or financing statements, if applicable, and all other further instruments
as may be required by law, or as shall reasonably be requested by Berkshire,
for the perfection of the security interest in the Subordinated Collateral
granted to Berkshire pursuant to the Subordinated Mortgage and for the
preservation and protection of all rights of Berkshire thereunder.


 


Section 2.03.  Indemnification Rights.  In addition to any and all rights of
reimbursement, indemnification, subrogation and any other rights pursuant to
this Agreement or any of the other Surety Bond Documents or at law or in
equity, Oglethorpe agrees to pay and assume liability for, and to protect,
defend, indemnify and save harmless Berkshire and its Affiliates, and their
respective officers, directors, shareholders, employees, agents, attorneys and
advisors, and each Person, if any, who controls Berkshire or any Affiliate of
Berkshire within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, from any against any and all claims,
losses, liabilities, obligations, penalties, damages, suits, actions and other
proceedings, costs and expenses (including, without limitation, fees and
expenses of attorneys, consultants and auditors and costs of investigations) of
any nature in any way arising out of or relating to the Overall Transaction,
the Operative Documents, the AMBAC Guaranty and/or the Surety Bond Documents,
or any of the transactions contemplated thereby or the enforcement thereof
(including, without limitation, any claim (a) that any payment made or
collateral delivered to Oglethorpe is subject to the claims of any other Person
or subject to avoidance, disgorgement, repayment, redelivery or reimbursement
or (b) arising out of any failure by Oglethorpe to perform or observe any
covenant, condition or agreement in, or the falsity of any representation or
warranty of Oglethorpe made in or pursuant to, this Agreement or any of the
other Surety Bond Documents); provided, however, that, without
limitation of the foregoing provisions of this Section 2.03, if Berkshire
acquires the interests of the Owner Participant or any other Person under or in
respect of any of the Operative Documents, Berkshire shall thereupon be
entitled to all applicable indemnities contained in or provided under the terms
of the Operative Documents; provided  further, that Oglethorpe
shall not be obligated to pay any expenses of Berkshire in terminating the
Surety Bonds if at the time Berkshire’s financial strength rating is less than
AA by S&P and less than Aa2 by Moody’s.


 


Section 2.04.  Payments Generally.  All payments to Berkshire hereunder shall be
applied by Berkshire in such order and manner as Berkshire may determine in its
sole discretion.  All such payments shall
in all events be made by Oglethorpe without setoff, deduction, counterclaim,
withholding or any other reduction for any reason whatsoever.


 


Section 2.05.  Unconditional Obligation.  The obligations of Oglethorpe hereunder are
absolute and unconditional and will be paid or performed strictly in accordance
with this Agreement, irrespective of, and Oglethorpe waives any defense to the
performance of its obligations hereunder as a result of:


 


(a)                    any lack of validity or
enforceability of, or any amendment or other modification of, extension of time
for performance under or compliance under, or waiver 


 


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with respect to, this
Agreement, any of the Operative Documents, any of the AMBAC Surety Documents or
any of the other Surety Bond Documents or any other instrument, document or
agreement;


 


(b)                   any exchange, release or
nonperfection of any security interest in property now or hereafter securing
any obligation, whenever arising, under this Agreement, any of the Operative
Documents, any of the AMBAC Surety Documents or any of the other Surety Bond
Documents or any other instrument, document or agreement;


 


(c)                    any circumstances which
might otherwise constitute a defense available to, or discharge of, Oglethorpe
with respect to this Agreement, any of the Operative Documents, any of the
AMBAC Surety Documents or any of the other Surety Bond Documents or any other
instrument, document or agreement;


 


(d)                   whether or not any of the
acts mentioned in any of the provisions of this Agreement, any of the Operative
Documents, any of the AMBAC Surety Documents or any of the other Surety Bond
Documents or any other instrument, document or agreement referred to herein or
therein shall be done or omitted;


 


(e)                    whether the maturity of any
Covered Obligations shall be accelerated, or any Covered Obligations shall be
modified, supplemented or amended in any respect, or any right under any of the
Operative Documents, the Surety Bond Documents, the AMBAC Surety Documents or
any other instrument, document or agreement referred to herein or therein shall
be waived or any other guarantee for any Covered Obligations or any security
therefor shall be released or exchanged in whole or in part or otherwise dealt
with;


 


(f)                      any loss of
possession of the Facility by Oglethorpe, whether by reason of the foreclosure
of the Oglethorpe Mortgage or otherwise;


 


(g)                   the bankruptcy or insolvency
of Oglethorpe, the Facility Lessor, the Owner Participant, AMBAC or Berkshire
or any reorganization, arrangement, compromise, composition, liquidation or plan
affecting Oglethorpe, the Facility Lessor, the Owner Participant, AMBAC or
Berkshire shall occur; or


 


(h)                   whether this Agreement, any
of the Surety Bond Documents, any Operative Document or other instrument,
document or agreement referred to herein or therein shall be rejected or
limited in any bankruptcy, insolvency or similar proceeding (nothing herein
being a concession that any obligation hereunder or thereunder is properly
classifiable as an executory obligation).


 


Oglethorpe assumes all risks of the acts or omissions
of the Beneficiaries of the Surety Bonds with respect to their use of the
Surety Bonds and the proceeds thereof. 
Neither Berkshire nor any of its Affiliates, nor any of their respective
officers, directors, shareholders, employees, agents, attorneys and advisors,
shall be liable or responsible for:  (i) the
use that may be made of the Surety Bonds or any acts or omissions of any of the
Beneficiaries in connection therewith; (ii) the validity, sufficiency or
genuineness of any Demand for Payment or Demand for Avoided Payment (each as
defined in the Surety Bonds), even if the same should prove to be 


 


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in any or all respects
invalid, insufficient, fraudulent or forged; (iii) payment by Berkshire
against presentation of a Demand for Payment or Demand for Avoided Payment that
does not comply with the terms of the applicable Surety Bond; or (iv) any
other circumstances whatsoever in making or failing to make payment under
either Surety Bond.  In furtherance and
not in limitation of the foregoing, Berkshire may accept a Demand for Payment
or Demand for Avoided Payment that appears on its face to be in order, without
responsibility for further investigation, regardless of any notice or information
to the contrary.


 


In addition, Oglethorpe hereby expressly waives (a) demand
of payment, presentment, protest, notice of dishonor, nonpayment or
nonperformance on any and all forms of the obligations hereunder (except as
provided in Sections 2.01(b) and 2.03 hereof); (b) all of its
right to indemnification; (c) notice of acceptance of this Agreement and
notice of any liability to which it may apply; (d) all other notices and
demands of any kind and description relating to the obligations hereunder now
or hereafter provided for by any agreement, statute, law, rule or
regulation; and (e) any and all defenses pertaining to the obligations
hereunder except for the defense of discharge by indefeasible payment.  Oglethorpe shall not be exonerated with
respect to its liabilities hereunder by any act or thing except indefeasible
payment of the obligations hereunder, it being the purpose and intent of this
Agreement that the obligations hereunder constitute the direct and primary
obligations of Oglethorpe and that the covenants, agreements and all
obligations of Oglethorpe hereunder be absolute, unconditional and irrevocable.


 


Section 2.06.  Notices.  Oglethorpe hereby agrees that until the
termination or expiration of the Surety Bonds, it shall provide to Berkshire (a) on
each December 30, a certificate of a Responsible Officer of Oglethorpe to
the effect that there is no Transaction Event of Default or Transaction
Default; (b) the annual audited financial statements of Oglethorpe within
145 days of the close of Oglethorpe’s fiscal year; (c) written notice
of any assertion to Oglethorpe by any party to the Transaction Documents that
Sublease Supplemental Rent or any indemnity payment is owed by Oglethorpe
pursuant to any of the Transaction Documents within 30 days of any such
assertion, in either case, in an amount at least equal to $250,000; (d) upon
reasonable notice, the opportunity to meet with senior officers of Oglethorpe
and to discuss the business and financial condition of Oglethorpe; and (e) immediate
written notice of the occurrence of any Transaction Event of Default or
Transaction Default, or any event that requires Oglethorpe to deliver
Qualifying Additional Security pursuant to Section 8.8  of the Participation Agreement.


 


Section 2.07.  Other Covenants of Oglethorpe.  Oglethorpe agrees that, until the later of
the termination or expiration of the Surety Bonds and the date on which all
obligations owing to Berkshire under the Surety Bond Documents have been
indefeasibly paid in full in cash:


 


(a)                    Oglethorpe will fulfill any
and all obligations undertaken by it under each Operative Document (other than
its obligation under Section 8.5 and Section 8.6 of the Participation
Agreement to replace the Surety Bonds if the Surety Bonds cease to be
Qualifying Surety Bonds) to which it is a party in accordance with the terms
thereof (and, in the case of the obligations set forth in Section 7.1 of
the Facility Sublease, subject to the additional time periods and contest
rights set forth in the provisos in Section 16(e) of the Facility
Sublease) with the same effect as if set forth specifically herein; provided
that this Section 2.07(a) shall be deemed 


 


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to refer to the Operative
Documents as amended, modified, supplemented or waived from time to time with
the consent of Berkshire or as otherwise expressly permitted under Section 4(a) of
the Implementation Agreement.


 


(b)                   Oglethorpe shall name
Berkshire as an “Additional Insured” in each policy of insurance carried in
accordance with Section 11 of the Facility Sublease and fulfill all other
obligations with respect to such insurance as if Berkshire were listed as an “Additional
Insured” with the other parties named in Section 11.3 of the Facility
Sublease.


 


ARTICLE III


 


EVENTS OF DEFAULT; REMEDIES


 


Section 3.01.  Events of Default.  The following events shall constitute Events
of Default hereunder:


 


(a)                    Oglethorpe shall fail to pay
to Berkshire any amount payable under Section 1.03, 1.04 or 2.01(a) hereof
on the date when due;


 


(b)                   Oglethorpe shall fail to pay when due to
Berkshire any amount payable under any provision of this Agreement, other than
Sections 1.03, 1.04 and 2.01(a) hereof, provided that such failure
continues for more than 30 days after receipt by Oglethorpe of notice of such
failure to pay;


 


(c)                    Any representation or
warranty made by Oglethorpe in any of the Operative Documents, in the
Subordinated Mortgage, in this Agreement or any of the other Surety Bond
Documents or in any instrument, document or agreement provided by Oglethorpe in
connection with any of the Surety Bond Documents shall have been materially
false at the time when made;


 


(d)                   Except as otherwise provided in this Section 3.01,
Oglethorpe shall fail to perform any of its other convenants or obligations in
the Subordinated Mortgage or under this Agreement or any of the other Surety
Bond Documents, provided that such failure continues for more than 30 days
after receipt by Oglethorpe of notice of such failure to perform;


 


(e)                    Oglethorpe shall (i) voluntarily
commence any proceeding or file any petition seeking relief under the
Bankruptcy Code or any other federal, state or foreign bankruptcy, insolvency
or similar law, or consent to any order for relief thereunder, (ii) consent
to the institution of, or fail to controvert in a timely and appropriate
manner, any such proceeding or the filing of any such petition, (iii) apply
for or consent to the appointment of a receiver, trustee, custodian,
sequestrator or similar official for Oglethorpe or for a substantial part of
its property, (iv) file an answer admitting the material allegations of a
petition filed against it in any such proceeding, (v) make a general
assignment for the benefit of creditors, (vi) become unable, admit in
writing its inability or fail generally to pay its debts as they become due or (vii) take
action for the purpose of effecting any of the foregoing;


 


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(f)                      An involuntary proceeding
shall be commenced or an involuntary petition shall be filed in a court of
competent jurisdiction seeking (i) relief in respect of Oglethorpe, or of
a substantial part of its property, under the Bankruptcy Code or any other
federal, state or foreign bankruptcy, insolvency or similar law or (ii) the
appointment of a receiver, trustee, custodian, sequestrator or similar official
for Oglethorpe or for a substantial part of its property; and such proceeding
or petition shall continue undismissed for 60 days or an order or decree
approving or ordering any of the foregoing shall be entered;


 


(g)                   The occurrence of any Head Lessor Event of
Default under Section 11.1(a)-(c), (i) or (j) of the Head Lease
or Sublease Event of Default under Section 16(j)-(m), (p) or (q) of
the Facility Sublease; or


 


(h)                   The occurrence of any “Event of Default”
under any “Berkshire Guaranty Agreement” between Berkshire and Oglethorpe with
respect to any other transaction involving or relating to the Facility or any
part thereof or interest therein.


 


Section 3.02.  Remedies.  If an Event of Default shall occur and be
continuing, then Berkshire may take whatever action at law or in equity
necessary or desirable to collect all amounts then or that may thereafter
become due under this Agreement or any other Surety Bond Documents or any
related instrument or to enforce any obligation, agreement or covenant of
Oglethorpe under this Agreement or any of the other Surety Bond Documents or
Operative Documents, including, without limitation, any and all rights and
remedies available to Berkshire pursuant to the Subordinated Mortgage.   All rights and remedies of Berkshire under
this Section 3.02 are cumulative and the exercise of any one remedy does
not preclude the exercise of one or more of the other available remedies.


 


ARTICLE IV


 


SETTLEMENT


 


If Berkshire shall have received a claim or made any
payment under the Facility Sublease Surety Bond or the Head Lease Surety Bond,
and Oglethorpe shall not have reimbursed Berkshire in full in cash (or all or
any part of any such reimbursement has been avoided for any reason), Berkshire
shall have the exclusive right to decide and determine whether any claim,
liability, suit or judgment made or brought against Berkshire shall or shall
not be paid, compromised, resisted, defended, tried or appealed, and Berkshire’s
decision thereon, if made in good faith, shall be final and binding upon
Oglethorpe.  An itemized statement of
payments made by Berkshire that are described in Section 2.01(b) or
2.03, certified by an officer of Berkshire, or the voucher or vouchers for such
payments, shall be prima facie evidence of the liability of Oglethorpe, and if
Oglethorpe fails to reimburse Berkshire pursuant to Section 2.01 or 2.03
hereof upon the receipt of such statement of payments, interest shall be
computed on such amount from the date of any payment made by Berkshire at the
Default Rate.


 


10














 


ARTICLE V


 


MISCELLANEOUS


 


Section 5.01.  Computations.  All computations of the Premium, interest and
fees hereunder shall be made on the basis of the actual number of days elapsed
over a year of 360 days.


 


Section 5.02.  Exercise of Rights.  No failure or delay on the part of Berkshire
to exercise any right, power or privilege under this Agreement and no course of
dealing between Berkshire and Oglethorpe or any other party shall operate as a
waiver of any such right, power or privilege, nor shall any single or partial
exercise of any such right, power or privilege preclude any other or further
exercise thereof or the exercise of any other right, power or privilege.  The rights and remedies herein expressly
provided are cumulative and not exclusive of any rights or remedies which
Berkshire would otherwise have pursuant to law or equity.  No notice to or demand on any party in any
case shall entitle such party to any other or further notice or demand in
similar or other circumstances, or constitute a waiver of the right of the
other party to any other or further action in any circumstances without notice
or demand.


 


Section 5.03.  Amendment and Waiver.  Any provision of this Agreement may be
amended, waived, supplemented, discharged or terminated only with the prior
written consent of Oglethorpe and Berkshire.


 


Section 5.04.  Successors and Assigns; Descriptive
Headings.


 


(a)                    This Agreement shall bind,
and the benefits hereof shall inure to, Oglethorpe and Berkshire and their
respective successors and assigns; provided that Oglethorpe may not transfer or
assign any or all of its rights and obligations hereunder without the prior
written consent of Berkshire.


 


(b)                   The descriptive headings of
the various provisions of this Agreement are inserted for convenience of
reference only and shall not be deemed to affect the meaning or construction of
any of the provisions hereof.


 


Section 5.05.  Other Sureties.  If Berkshire shall procure any other surety
to reinsure any portion of its exposure under any of the Surety Bonds, this
Agreement shall inure to the benefit of such other surety, its successors and
assigns, so as to give to it a direct right of action against Oglethorpe to
enforce this Agreement, and “Berkshire,” wherever used herein, shall be deemed
to include such reinsuring surety, as its respective interests may appear, in
each case to the extent agreed by Berkshire with such other surety; provided,
however, that Oglethorpe shall not be required to give notices to, or to
obtain the consent of, any such reinsurer; provided further,
that Section 1.03, Section 1.04, Article 4 and Section 5.03
hereof shall only be for the benefit of Berkshire and shall not inure to the
benefit of any other surety.


 


Section 5.06.  Waiver.  Oglethorpe waives any defense that this
Agreement was executed subsequent to the date of issuance of the Surety Bonds,
admitting and covenanting that 


 


11

















 


such Surety Bonds were executed pursuant to
Oglethorpe’s request and in reliance on Oglethorpe’s promise to execute this
Agreement.


 


Section 5.07.  Notices, Requests, Demands.  Except as otherwise expressly provided
herein, all written notices, requests, demands or other communications to or
upon the respective parties hereto shall be deemed to have been given or made
when actually received, or in the case of telex or telecopier notice sent over
a telecopier machine owned or operated by a party hereto, when sent, addressed
as specified below or at such other address as either of the parties hereto may
hereafter specify in writing to the others:


 


	
  If to Oglethorpe:

  	
  Oglethorpe Power Corporation

  
	
   

  	
  2100 East Exchange Place

  
	
   

  	
  Tucker, Georgia 30085-1349

  
	
   

  	
  Attention: 
  Vice President, Finance

  
	
   

  	
  Telephone: 
  (770) 270-7325

  
	
   

  	
  Telecopier:  (770) 270-7920

  
	
   

  	
   

  
	
  If to Berkshire:

  	
  Berkshire Hathaway Assurance
  Corporation

  
	
   

  	
  c/o Berkshire Hathaway Group

  
	
   

  	
  100 First Stamford Place

  
	
   

  	
  Stamford, CT 06902

  
	
   

  	
  Attn:  General Counsel

  
	
   

  	
  Facsimile No.:  (203) 363 5221

  
	
   

  	
   

  
	
   

  	
  with copies to:

  
	
   

  	
   

  
	
   

  	
  Berkshire Hathaway Assurance
  Corporation

  
	
   

  	
  3024 Harney Street

  
	
   

  	
  Omaha, NE 68131

  
	
   

  	
  Attention:  President

  
	
   

  	
  Facsimile No.:  (402) 916-3237

  
	
   

  	
   

  
	
   

  	
  and

  
	
   

  	
   

  
	
   

  	
  Robert E. Bennett

  
	
   

  	
  99 Mill Lane

  
	
   

  	
  Norwell, MA 02061

  
	
   

  	
  Facsimile No.:  (781) 659-2491

  
	
   

  	
   

  
	
   

  	
  Account for Payments:

  
	
   

  	
   

  
	
   

  	
  Bank:

  	
  JPMorgan Chase Bank

  
	
   

  	
  ABA No.:

  	
  021000021

  
	
   

  	
  Acct No.:

  	
  747499341

  
	
   

  	
  Acct Name:

  	
  Berkshire Hathaway

  Assurance Corporation

  
	
   

  	
  Reference:

  	
  98SRD102494 and

  98SRD102495

  



 


12

















 


Section 5.08.  Survival of Representations and Warranties.  All representations, warranties and
obligations contained herein shall survive the execution and delivery of this
Agreement and the Surety Bonds.


 


Section 5.09.  Governing Law; Jurisdiction.  (a) This Agreement and the rights and
obligations of the parties under this Agreement shall be governed by and
construed and interpreted in accordance with the laws of the State of New York.


 


(b) Each of the
parties hereto (i) hereby irrevocably submits to the nonexclusive
jurisdiction of the Supreme Court of the State of New York, New York County
(without prejudice to the right of any party to remove to the United States
District Court for the Southern District of New York) and to the nonexclusive
jurisdiction of the United States District Court for the Southern District of
New York for the purposes of any suit, action or other proceeding arising out
of this Agreement, the other Surety Bond Documents, or the subject matter
hereof or thereof or any of the transactions contemplated hereby or thereby
brought by any of the parties hereto or their successors or assigns; (ii) hereby
irrevocably agrees that all claims in respect of such action or proceeding may
be heard and determined in such New York State court, or in such federal court;
and (iii) to the extent permitted by Applicable Law, hereby irrevocably
waives, and agrees not to assert, by way of motion, as a defense, or otherwise,
in any such suit, action or proceeding any claim that it is not personally
subject to the jurisdiction of the above-named courts, that the suit, action or
proceeding is brought in an inconvenient forum, that the venue of the suit,
action or proceeding is improper or that this Agreement, the other Surety Bond
Documents, or the subject matter hereof or thereof may not be enforced in or by
such court.


 


Section 5.10.  Counterparts.  This Agreement may be executed in any number
of copies and by the different parties hereto on the same or separate
counterparts, each of which shall be deemed to be an original instrument.


 


Section 5.11.  Severability.  In the event any provision of this Agreement
shall be held invalid or unenforceable by any court of competent jurisdiction,
such holding shall not invalidate or render unenforceable any other provision
hereof.


 


Section 5.12.  Specific Performance.  Oglethorpe agrees that the performances to be
rendered by it pursuant to this Agreement are of a special, unique, and unusual
character, the loss of which performances cannot reasonably or adequately be
compensated in damages in an action at law, that a breach of any of the
covenants contained herein will result in irreparable damage and harm to
Berkshire, that Berkshire has no adequate remedy at law in respect of any such
breach and, as a consequence, agrees that the covenants contained herein shall
be specifically enforceable against Oglethorpe and Oglethorpe hereby waives and
agrees not to assert any defenses against an action for specific performance of
such covenants.


 


[Remainder of Page Intentionally Left Blank]


 


13

















 


IN WITNESS WHEREOF, each of the parties hereto has
caused a counterpart of this Agreement to be duly executed and delivered as of
the date first above written.


 


 


	
   

  	
  OGLETHORPE POWER
  CORPORATION (AN ELECTRIC MEMBERSHIP CORPORATION)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Thomas A. Smith

  
	
   

  	
   

  	
  Name:

  	
  Thomas A. Smith

  
	
   

  	
   

  	
  Title:

  	
  President and
  Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Attest:

  	
  /s/  Patricia N. Nash

  
	
   

  	
   

  	
  Name:

  	
  Patricia N. Nash

  
	
   

  	
   

  	
  Title:

  	
  Secretary

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (CORPORATE SEAL)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BERKSHIRE
  HATHAWAY ASSURANCE CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Kara Raiguel

  
	
   

  	
   

  	
  Name:

  	
  Kara Raiguel

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  [signature illegible]

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
						



 

















 


ANNEX A


 


DEFINITIONS


 


For all purposes of this Agreement, except as
otherwise expressly provided herein or unless the context otherwise requires,
all capitalized terms shall have the meaning as set out below.  Capitalized terms used herein and not
otherwise defined herein shall have the respective meanings set forth in, or by
reference in, Appendix A to the Participation Agreement, without giving effect
to any change in the meaning of such terms due to any amendment or modification
to such agreement unless such amendment or modification has been approved in
writing by Berkshire.  The general rules of
usage set forth in such Appendix A shall also apply to this Agreement.


 


“Agreement” means this Berkshire Guaranty
Agreement (P1).


 


“Agreement
Regarding Surety Bonds” means the Agreement Regarding Surety Bonds
(P1), dated as of the date of this Agreement, among Oglethorpe, RMLC and
Berkshire.


 


“AMBAC
Surety Documents” has the meaning given that term in the Implementation
Agreement.


 


“Beneficiaries”
means, collectively, the Owner Participant, the Facility Lessor, the Facility
Sublessor, the RMLC Assignee and the Head Lessee, as beneficiaries of either or
both of the Surety Bonds.


 


“Business
Day” has the meaning given that term in the Surety Bonds.


 


“Closing
Date” means May 22, 2009.


 


“Covered
Obligations” has the meaning given that term in the Facility Sublease
Surety Bond or the Head Lease Surety Bond, as applicable.


 


“Default
Rate” means the lesser of the Reimbursement Rate or the maximum rate of
interest permitted by then applicable law.


 


“Event
of Default” means those events of default set forth in Section 3.01 of
this Agreement.


 


“Implementation
Agreement” means the Surety Bond Implementation Agreement (P1) dated as of
the date of this Agreement among Oglethorpe, Berkshire, AMBAC, RMLC, the Owner
Participant, U.S. Bank National Association, a national banking association,
not in its individual capacity, except as expressly provided therein, but
solely as a trustee under the Trust Agreement, as the Owner Trustee, and U.S.
Bank National Association, a national banking association, not in its
individual capacity, except as expressly provided therein, but solely as a
trustee under the Trust Agreement, as the Co-Trustee.


 


“Notice
of Termination” has the meaning given that term in the Surety Bonds.


 

















 


“Reimbursement
Rate” means, at any time, the sum of (a) the United States Prime Rate as
most recently published by the Wall Street Journal or, if such rate is
unavailable on any Business Day, at the option of Berkshire, the Reimbursement
Rate at any time shall be the rate announced from time to time by the Reference
Bank (as defined below) in New York, New York, as its prime rate or any
substitute therefor, plus (b) 2.00 percent per annum.  The rate of interest shall be calculated on
the basis of a 360-day year.  The term “Reference
Bank” means, at any time, any major United States bank designated as such
by Berkshire in good faith from time to time.


 


“RMLC
Assignee” has the meaning given that term in the Facility Sublease Surety
Bond.


 


“Subordinated
Mortgage” means the Subordinated Deed to Secure Debt and Security Agreement
(P1), dated as of December 30, 1996 from Oglethorpe, as grantor, to AMBAC
and SunTrust Bank, Atlanta, as amended as of the date hereof.


 


“Subordinated
Collateral” has the meaning given that term in the Subordinated Mortgage.


 


“Subrogation
Interest” has the meaning given that term in the Implementation Agreement.


 


“Surety
Bond Documents” means (a) this Agreement, (b) the Surety Bonds, (c) the
Agreement for Assignment on Default, (d) the Implementation Agreement, and
(e) the Agreement Regarding Surety Bonds.


 


“Surety
Bond Payment” means, without duplication, (a) the amount of each
payment made by Berkshire under or pursuant to any of the Surety Bonds,
including, without limitation, any payments made pursuant to Section 11(f) thereof
in order to exercise subrogation rights thereunder or otherwise to acquire the
Beneficial Interest or the Subrogation Interest or any part thereof or interest
therein, and (b) if a Sublease Event of Default or Head Lessor Event of
Default has occurred and is continuing or a payment has been made by Berkshire
under or pursuant to any of the Surety Bonds, the amount of each payment made
by Berkshire under or pursuant to the Agreement for Assignment on Default,
including, without limitation, any payments made pursuant to the terms thereof
in order to acquire the Beneficial Interest or any part thereof or interest
therein.


 


“Surety
Bond Payment Date” means the date on which any particular Surety Bond
Payment is made by Berkshire.


 


“Transaction
Default” means any event which, with the giving of notice or the passage of
time or both, could become a Transaction Event of Default.


 


“Transaction
Event of Default” means any Event of Default, any Head Lessor Event of
Default and any Sublease Event of Default.


 

















 


SCHEDULE
TO EXHIBIT 10.8


 


BERKSHIRE
GUARANTY AGREEMENT (P1)


 


The following table
indicates for each transaction the name of the corresponding Owner Participant:


 


	
  Agreement

  	
   

  	
  Date

  	
   

  	
  Owner Participant

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  P2

  	
   

  	
  May 22,
  2009

  	
   

  	
  Philip Morris Capital
  Corporation

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  F3

  	
   

  	
  May 22,
  2009

  	
   

  	
  First Chicago Leasing
  Corporation

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  F4

  	
   

  	
  May 22,
  2009

  	
   

  	
  First Chicago Leasing
  Corporation

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  N6

  	
   

  	
  May 22,
  2009

  	
   

  	
  Philip Morris Capital
  Corporation

  (transferee from NationsBanc Leasing & R.E. Corporation)