Document:

EX-10.1

 Exhibit 10.1 

CONSENT, SIXTH AMENDMENT AND WAIVER TO 

SECOND AMENDED AND RESTATED CREDIT AGREEMENT 

THIS CONSENT, SIXTH AMENDMENT AND WAIVER TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT (this “Amendment”) is entered into
as of March 29, 2018 by and among the lenders identified on the signature pages hereof (such lenders, together with their respective successors and permitted assigns, are referred to hereinafter each individually as a “Lender”
and collectively as “Lenders”), WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association, as administrative agent for each member of the Lender Group and the Bank Product Providers (in such capacity, together
with its successors and assigns in such capacity, “Agent”), POWER SOLUTIONS INTERNATIONAL, INC., a Delaware corporation (“Parent”), PROFESSIONAL POWER PRODUCTS, INC., an Illinois corporation
(“PPPI”), POWERTRAIN INTEGRATION ACQUISITION, LLC, an Illinois limited liability company (“PIA”), BI-PHASE TECHNOLOGIES, LLC, a Minnesota limited liability company (“Bi-Phase”; Parent,
PPPI, PIA and Bi-Phase are referred to hereinafter each individually as a “Borrower”, and individually and collectively, jointly and severally, as the “Borrowers”), and each of the parties listed on the signature
pages hereto as Loan Parties (together with Parent and Borrowers, collectively, jointly and severally, “Loan Parties” and each, individually, a “Loan Party”). 

WHEREAS, Borrowers, Agent, and Lenders are parties to that certain Second Amended and Restated Credit Agreement dated as of June 28, 2016
(as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”); 
 WHEREAS, Events of
Default may occur under Section 8.2 of the Credit Agreement as a result of Borrowers’ failure to deliver the annual audited financial statements of Parent and its Subsidiaries for the fiscal years ended December 31, 2016 and
December 31, 2017 within 90 days after the end of the fiscal year ended December 31, 2017 as required under Section 5.1 of the Credit Agreement and clause (g) of Schedule 5.1 to the Credit Agreement (the “Potential Events
of Default”); 
 WHEREAS, Borrowers have notified Agent that Parent desires to consummate the Specified Acquisition (as defined in
that certain Fifth Amendment Side Letter dated as of October 3, 2017 by Borrowers in favor of Agent (the “Fifth Amendment Side Letter”)); and 

WHEREAS, Borrowers, Agent and Lenders have agreed to waive the Potential Events of Default, consent to the Specified Acquisition and modify
the Credit Agreement subject to the terms and provisions hereof; 
 NOW THEREFORE, in consideration of the premises and mutual agreements
herein contained, the parties hereto agree as follows: 
 1. Defined Terms. Unless otherwise defined herein, capitalized terms used
herein shall have the meanings ascribed to such terms in the Credit Agreement. 

 2. Consent. Subject to the satisfaction of the conditions set forth in
Section 7 below and in reliance upon the representations and warranties of Borrowers set forth in Section 8 below, Lenders hereby consent to the consummation of the Specified Acquisition in accordance with the Specified
Purchase Agreement (as defined in the Fifth Amendment Side Letter) so long as (x) the Specified Acquisition is consummated on or prior to May 31, 2018, (y) after giving effect to the consummation of the Specified Acquisition, Excess
Availability is not less than $1,000,000 and (z) the Purchase Price does not exceed $6,000,000 plus the issuance of a $750,000 letter of credit. This is a limited consent and shall not be deemed to constitute a consent to any other modification
of the Loan Documents, and shall not be deemed to prejudice any right or rights which Agent or the Lenders may now have or may have in the future under or in connection with any Loan Documents or any of the instruments or agreements referred to
therein, as the same may be amended from time to time. 
 3. Amendments to Credit Agreement. Subject to the satisfaction of the
conditions set forth in Section 7 below and in reliance upon the representations and warranties of the Loan Parties set forth in Section 8 below, the Credit Agreement is amended as follows: 

(a) The definition of “Availability Block” set forth in Schedule 1.1 to the Credit Agreement is hereby amended and restated in its
entirety as follows: 
 “Availability Block” means (x) on and prior to September 30, 2018, an
amount equal to the greater of $6,500,000 and 10% of the Borrowing Base, but not more than $7,500,000 and (y) at any time thereafter, an amount equal to 12% of the Maximum Revolver Amount. 

(b) Clause (f) of the definition of “Eligible Accounts” set forth in Schedule 1.1 of the Credit Agreement is hereby amended and
restated in its entirety as follows: 
 (f) Accounts with respect to which the Account Debtor either (i) does not
maintain its chief executive office in the United States, or (ii) is not organized under the laws of the United States or any state thereof, or (iii) is the government of any foreign country or sovereign state, or of any state, province,
municipality, or other political subdivision thereof, or of any department, agency, public corporation, or other instrumentality thereof, unless the Account is supported by an irrevocable letter of credit reasonably satisfactory to Agent (as to
form, substance, and issuer or domestic confirming bank) that has been delivered to Agent and is directly drawable by Agent and the aggregate amount of such Accounts covered by such letters of credit does not exceed $5,000,000; provided,
however, that such Accounts not supported by a letter of credit shall not be excluded from Eligible Accounts in an aggregate amount not to exceed $6,000,000 as a result of this clause (f) to the extent that the Account Debtor is Hyundai
Group, Doosan Corporation, Anhui Heli Co., Ltd., GE Oil and Gas Australia, Enerflex Australia, Dover Australia, non-United States subsidiaries of Hyster-Yale Materials Handling or Oil Lift Australia, 

  
 -2- 

 (c) Clause (i) of the definition of “Eligible Accounts” set forth in Schedule 1.1
of the Credit Agreement is hereby amended and restated in its entirety as follows: 
 (i) Accounts with respect to an Account
Debtor whose total obligations owing to Borrowers exceed 30% (such percentage, as applied to a particular Account Debtor, being subject to reduction by Agent in its Permitted Discretion if the creditworthiness of such Account Debtor deteriorates) of
all Eligible Accounts (or (x) if the Account Debtor is Freightliner Trucks (a division of Daimler Trucks North America LLC), Bandit Industries, Inc., Kohler Co., or Mitsubishi-Caterpillar Forklifts of America, Inc., 25% of all Eligible Accounts
(y) if the Account Debtor is Navistar, 30% of all Eligible Accounts and (z) if the Account Debtor is Hyster-Yale Materials Handling, 35% of all Eligible Accounts), to the extent of the obligations owing by such Account Debtor in excess of
such percentage; provided, that, in each case, the amount of Eligible Accounts that are excluded because they exceed the foregoing percentage shall be determined by Agent based on all of the otherwise Eligible Accounts prior to giving effect to any
eliminations based upon the foregoing concentration limit, 
 (d) The definition of “Maturity Date” set forth in Schedule 1.1 of
the Credit Agreement is hereby amended and restated in its entirety as follows: 
 “Maturity Date” means the
earliest of (a) March 31, 2021 and (b) 60 days prior to the final maturity of the Notes Debt. 
 (e) The definition of
“Maximum Revolver Amount” set forth in Schedule 1.1 of the Credit Agreement is hereby amended and restated in its entirety as follows: 

“Maximum Revolver Amount” means $75,000,000, decreased by the amount of reductions in the Revolver Commitments
made in accordance with Section 2.4(c) of the Agreement. 
 4. Waiver. Subject to the satisfaction of the conditions set
forth in Section 7 below and in reliance upon the representations and warranties set forth in Section 8 below, Agent and Lenders hereby waive the Potential Events of Default. For the avoidance of doubt, the foregoing waivers
shall not be deemed to be a waiver of any other existing or hereafter arising Defaults or Events of Default or any other deviation from the express terms of the Credit Agreement or any other Loan Document. This is a limited waiver and shall not be
deemed to constitute a consent or waiver of any other term, provision or condition of the Credit Agreement or any other Loan Document, as applicable, or to prejudice any right or remedy that Agent or any Lender may now have or may have in the future
under or in connection with the Credit Agreement or any other Loan Document. 
 5. Continuing Effect. Except as expressly set forth
in Section 2 of this Amendment, nothing in this Amendment shall constitute a modification or alteration of the terms, conditions or covenants of the Credit Agreement or any other Loan Document, or a waiver of any other terms or
provisions thereof, and the Credit Agreement and the other Loan Documents shall remain unchanged and shall continue in full force and effect, in each case as amended hereby. 

  
 -3- 

 6. Reaffirmation and Confirmation. Each Loan Party hereby ratifies, affirms, acknowledges
and agrees that the Credit Agreement and the other Loan Documents represent the valid, enforceable and collectible obligations of such Loan Party, and further acknowledges that there are no existing claims, defenses, personal or otherwise, or rights
of setoff whatsoever with respect to the Credit Agreement or any other Loan Document. Each Loan Party hereby agrees that this Amendment in no way acts as a release or relinquishment of the Liens and rights securing payments of the Obligations. The
Liens and rights securing payment of the Obligations are hereby ratified and confirmed by the Loan Parties in all respects. 
 7.
Conditions to Effectiveness of Amendment. This Amendment shall become effective as of the date first written above upon the satisfaction of the following conditions precedent: 

(a) Each party hereto shall have executed and delivered this Amendment to Agent; 

(b) Agent shall have received each of the additional documents, instruments and agreements listed on the closing checklist attached hereto as
Annex A; 
 (c) Borrowers shall have paid to Agent the First Closing Fee Installment (as defined below); 

(d) All proceedings taken in connection with the transactions contemplated by this Amendment and all documents, instruments and other legal
matters incident thereto shall be reasonably satisfactory to Agent and its legal counsel; and 
 (e) No Default or Event of Default shall
have occurred and be continuing. 
 8. Representations and Warranties. In order to induce Agent and Lenders to enter into this
Amendment, each Loan Party hereby represents and warrants to Agent and Lenders, after giving effect to this Amendment: 
 (a) All
representations and warranties contained in the Credit Agreement (other than Sections 4.8 and 4.12 with respect to the facts and circumstances set forth in the RSM Letter) and the other Loan Documents are true and correct in all material respects
(except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) on and as of the date hereof (except to the extent that such
representations and warranties relate solely to an earlier date, in which case such representations and warranties shall be true and correct in all material respects (except that such materiality qualifier shall not be applicable to any
representations and warranties that already are qualified or modified by materiality in the text thereof) as of such earlier date); 
 (b)
No Default or Event of Default has occurred and is continuing; and 
 (c) This Amendment and the Credit Agreement, as amended hereby,
constitute legal, valid and binding obligations of such Loan Party and are enforceable against such Loan Party in accordance with their respective terms, except as enforcement may be limited by equitable principles or by bankruptcy, insolvency,
reorganization, moratorium, or similar laws relating to or limiting creditors’ rights generally. 

  
 -4- 

 9. Miscellaneous. 

(a) Other Agreement. Borrowers, Agent and Lenders agree that the Obligations shall continue to bear interest at a per annum rate equal
to 1 percentage point above the per annum rate otherwise applicable under the Credit Agreement until (x) Borrowers deliver to Agent audited financial statements for the fiscal years ending December 31, 2016 and ending December 31,
2017 and the financial statements for the fiscal quarter ending March 31, 2018, each as required under Schedule 5.1 to the Credit Agreement, and (y) Loan Parties and their Subsidiaries have completed all filings then required to be made
with the SEC. 
 (b) Amendment Fee. In consideration of entering into this Amendment, Borrowers shall pay to Agent, for the benefit
of each Lender, a closing fee equal to $750,000, which fee shall be fully earned as of the date hereof and shall be payable and non-refundable as follows: $375,000 on the date hereof (“First Closing Fee Installment”) and $375,000 on
March 29, 2019. 
 (c) Expenses. Borrowers agree to pay on demand all Lender Group Expenses of Agent in connection with the
preparation, negotiation, execution, delivery and administration of this Amendment in accordance with the terms of the Credit Agreement. 

(d) Governing Law. This Amendment shall be a contract made under and governed by, and construed in accordance with the internal laws of
the State of Illinois. 
 (e) Counterparts. This Amendment may be executed in any number of counterparts, and by the parties hereto
on the same or separate counterparts, and each such counterpart, when executed and delivered, shall be deemed to be an original, but all such counterparts shall together constitute but one and the same Amendment. Delivery of an executed signature
page of this Amendment by facsimile transmission or electronic photocopy (i.e. “pdf”) shall be effective as delivery of a manually executed counterpart hereof. 

10. Release. In consideration of the agreements of Agent and Lenders contained herein and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, each Loan Party, on behalf of itself and its respective successors, assigns, and other legal representatives, hereby absolutely, unconditionally and irrevocably releases, remises and
forever discharges Agent and Lenders, and their successors and assigns, and their present and former shareholders, affiliates, subsidiaries, divisions, predecessors, directors, officers, attorneys, employees, agents and other representatives (Agent,
each Lender and all such other Persons being hereinafter referred to collectively as the “Releasees” and individually as a “Releasee”), of and from all demands, actions, causes of action, suits, covenants,
contracts, controversies, agreements, promises, sums of money, accounts, bills, reckonings, damages and any and all other claims, counterclaims, defenses, rights of set-off, demands and liabilities whatsoever
(individually, a “Claim” and collectively, “Claims”) of every name and nature, known as of the date of this Amendment, both at law and in equity, which each Loan Party, or any of its respective successors, assigns,
or other legal representatives may now or 

  
 -5- 

 
hereafter own, hold, have or claim to have against the Releasees or any of them for, upon, or by reason of any circumstance, action, cause or thing whatsoever which arises at any time on or prior
to the day and date of this Amendment, in each case for or on account of, or in relation to, or in any way in connection with any of the Credit Agreement, or any of the other Loan Documents or transactions thereunder or related thereto. 

[Signature pages follow] 

  
 -6- 

 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their
respective officers thereunto duly authorized and delivered as of the date first above written. 
  

							
	BORROWERS:	 		 	POWER SOLUTIONS INTERNATIONAL, INC.,
		 		 	a Delaware corporation
				
		 		 	By:	 	 /s/ Charles F. Avery, Jr.

		 		 	Name:	 	 Charles F. Avery, Jr.

		 		 	Title:	 	 Chief Financial Officer

			
		 		 	PROFESSIONAL POWER PRODUCTS, INC.,
		 		 	an Illinois corporation
				
		 		 	By:	 	 /s/ Charles F. Avery, Jr.

		 		 	Name:	 	 Charles F. Avery, Jr.

		 		 	Title:	 	 Chief Financial Officer

			
		 		 	 POWERTRAIN INTEGRATION ACQUISITION, 

LLC, an Illinois limited liability company

				
		 		 	By:	 	 /s/ Charles F. Avery, Jr.

		 		 	Name:	 	 Charles F. Avery, Jr.

		 		 	Title:	 	 Chief Financial Officer

			
		 		 	BI-PHASE TECHNOLOGIES, LLC, a Minnesota
		 		 	limited liability company
				
		 		 	By:	 	 /s/ Charles F. Avery, Jr.

		 		 	Name:	 	 Charles F. Avery, Jr.

		 		 	Title:	 	 Chief Financial Officer

 Signature Page to Consent and Sixth Amendment to Second Amended and Restated Credit Agreement 

							
	LOAN PARTIES:	 		 	THE W GROUP, INC., a Delaware corporation
				
		 		 	By:	 	 /s/ Charles F. Avery, Jr.

		 		 	Name:	 	 Charles F. Avery, Jr.

		 		 	Title:	 	 Chief Financial Officer

			
		 		 	POWER SOLUTIONS, INC., an Illinois corporation
				
		 		 	By:	 	 /s/ Charles F. Avery, Jr.

		 		 	Name:	 	 Charles F. Avery, Jr.

		 		 	Title:	 	 Chief Financial Officer

			
		 		 	 POWER GREAT LAKES, INC., an Illinois

corporation

				
		 		 	By:	 	 /s/ Charles F. Avery, Jr.

		 		 	Name:	 	 Charles F. Avery, Jr.

		 		 	Title:	 	 Chief Financial Officer

			
		 		 	 AUTO MANUFACTURING, INC., an Illinois

corporation

				
		 		 	By:	 	 /s/ Charles F. Avery, Jr.

		 		 	Name:	 	 Charles F. Avery, Jr.

		 		 	Title:	 	 Chief Financial Officer

			
		 		 	 TORQUE POWER SOURCE PARTS, INC.,

an Illinois corporation

				
		 		 	By:	 	 /s/ Charles F. Avery, Jr.

		 		 	Name:	 	 Charles F. Avery, Jr.

		 		 	Title:	 	 Chief Financial Officer

 Signature Page to Consent and Sixth Amendment to Second Amended and Restated Credit Agreement 

 
			
	POWER PROPERTIES, L.L.C., an Illinois limited liability company
	
	By: The W Group, Inc., as sole managing member
		
	By:	 	 /s/ Charles F. Avery, Jr.

	Name:	 	 Charles F. Avery, Jr.

	Title:	 	 Chief Financial Officer

	
	 POWER PRODUCTION, INC.,
 an
Illinois corporation

		
	By:	 	 /s/ Charles F. Avery, Jr.

	Name:	 	 Charles F. Avery, Jr.

	Title:	 	 Chief Financial Officer

	
	POWER GLOBAL SOLUTIONS, INC., an Illinois corporation
		
	By:	 	 /s/ Charles F. Avery, Jr.

	Name:	 	 Charles F. Avery, Jr.

	Title:	 	 Chief Financial Officer

	
	PSI INTERNATIONAL, LLC, an Illinois limited liability company
		
	By:	 	 /s/ Charles F. Avery, Jr.

	Name:	 	 Charles F. Avery, Jr.

	Title:	 	 Chief Financial Officer

	
	XISYNC LLC, an Illinois limited liability company
	
	By: The W Group, Inc., as sole managing member
		
	By:	 	 /s/ Charles F. Avery, Jr.

	Name:	 	 Charles F. Avery, Jr.

	Title:	 	 Chief Financial Officer

 Signature Page to Consent and Sixth Amendment to Second Amended and Restated Credit Agreement 

							
	AGENT:	 		 	WELLS FARGO BANK, NATIONAL
		 		 	ASSOCIATION, a national banking association, as Agent, as Lead Arranger, as Book Runner, and as a Lender
				
		 		 	By:	 	 /s/ Brian Hynds

		 		 	Name:	 	 Brian Hynds

		 		 	Title:	 	 Vice President

 Signature Page to Consent and Sixth Amendment to Second Amended and Restated Credit Agreement 

 ANNEX A 

CLOSING CHECKLIST 

Loans by 
 Wells Fargo
Bank, N.A., 
 as Administrative Agent and Lender 

to 
 Power Solutions
International, Inc. and certain of its Affiliates 
 Consent and Sixth Amendment to 

Second Amended and Restated Credit Agreement 

Closing Date: March 29, 2018 
  

	I.	Parties: 

  

	A.	Wells Fargo Bank, N.A. (“WF”), as Administrative Agent (“Administrative Agent”) 

	  	10 South Wacker Drive, 13th Floor 

	  	Chicago, Illinois 60606 

  

	B.	Power Solutions International, Inc. (“Parent”) 

	  	Professional Power Products, Inc. (“Power Products”) 

	  	Powertrain Integration Acquisition, LLC (“PI Acquisition”) 

	  	Bi-Phase Technologies, LLC (“Bi-Phase”; together with Parent, Power Products, and PI 

	  	Acquisition, the “Borrowers”, and each, a “Borrower”) 

  

	  	The W Group, Inc. (“W Group”) 

	  	Power Solutions, Inc. (“PSI”) 

	  	Power Great Lakes, Inc. (“Great Lakes”) 

	  	Auto Manufacturing, Inc. (“Auto”) 

	  	Torque Power Source Parts, Inc. (“Torque”) 

	  	Power Properties, L.L.C. (“Power Properties”) 

	  	Power Production, Inc. (“Power Production”) 

	  	Power Global Solutions, Inc. (“Power Global”) 

	  	PSI International, LLC (“PSI International”) 

	  	XISYNC LLC (“XiSync”; together with W Group, PSI, Great Lakes, Auto, Torque, Power Properties, Power Production, Power Global, PSI International, and XiSync, the “Guarantors”, and each, a
“Guarantor”) 

	  	201 Mittel Drive 

	  	Wood Dale, Illinois 60191 

  

	  	The Borrowers and the Guarantors shall be collectively referred to herein as the “Loan Parties”, and each, a “Loan Party”. 

	II.	Counsel to Parties: 

  

	A.	Counsel to Administrative Agent: 

  

	  	Goldberg Kohn Ltd. 

	  	55 East Monroe Street, Suite 3300 

	  	Chicago, Illinois 60603 

	  	Telephone: (312) 201-4000 

	  	Telecopy: (312) 332-2196 

	  	Attention: Keith G. Radner 

  

	B.	Counsel to Loan Parties: 

  

	  	Paul Hastings LLP 

	  	200 Park Avenue 

	  	New York, New York 10166 

	  	Telephone: (212) 318-6000 

	  	Telecopy: (212) 319-4090 

	  	Attention: Leslie A. Plaskon 

	III.	Closing Documents: 

  

	A.	Loan Documents: 

  

	 	1.	Consent and Sixth Amendment 

  

	B.	Corporate Documents Pertaining to each Loan Party: 

  

	 	2.	Omnibus Secretary’s Certificate of Loan Parties with respect to: 

 Certified Certificates
of Incorporation/Formation 
 Bylaws/Operating Agreements 

Resolutions 
 Incumbency of
Officers 
  

	 	3.	Certificates of good standing as set forth on Exhibit A 

  

	C.	Other Items: 

  

	 	4.	Opinion of Loan Parties’ counsel re Loan Documents 

 EXHIBIT A 

CERTIFICATES OF GOOD STANDING 
  

			
	 Loan Party
	  	 Jurisdiction

	Power Solutions International, Inc.	  	Delaware, Illinois
	Professional Power Products, Inc.	  	Illinois, Wisconsin, New York, Pennsylvania
	Powertrain Integration Acquisition, LLC	  	Illinois, Michigan
	Bi-Phase Technologies, LLC	  	Minnesota
	The W Group, Inc.	  	Delaware, Illinois
	Power Solutions, Inc.	  	Illinois
	Power Great Lakes, Inc.	  	Illinois
	Auto Manufacturing, Inc.	  	Illinois
	Torque Power Source Parts, Inc.	  	Illinois
	Power Properties, L.L.C.	  	Illinois
	Power Production, Inc.	  	Illinois
	Power Global Solutions, Inc.	  	Illinois
	PSI International, LLC	  	Illinois
	XiSync LLC	  	Illinois

  
 Exhibit AEXHIBIT 4.1

 

TENTH AMENDED AND RESTATED LOAN CONTRACT

 

Dated as of January 30, 2018

 

between

 

OGLETHORPE POWER CORPORATION

(AN ELECTRIC MEMBERSHIP CORPORATION)

 

and

 

UNITED STATES OF AMERICA

 

RUS Project Designation:

Georgia 109 “AC-8” OPC

 

 

TABLE OF CONTENTS

 

	
 
    	
Page
    
	
 
    	
 
    
	
ARTICLE I – DEFINITIONS
    	
1
    
	
 
    	
 
    
	
ARTICLE II – REPRESENTATIONS AND WARRANTIES
    	
7
    
	
 
    	
 
    
	
ARTICLE III – THE LOANS
    	
9
    
	
Section 3.1
    	
The Loans
    	
9
    
	
Section 3.2
    	
No Further Advances
    	
9
    
	
Section 3.3
    	
Advances under any Partially   Unadvanced Note or the AC-8 FFB Note
    	
9
    
	
Section 3.4
    	
Interest Rates and Payment
    	
9
    
	
Section 3.5
    	
Prepayment
    	
10
    
	
Section 3.6
    	
Last Day for an Advance under   any Partially Unadvanced Note and the AC-8 FFB Note
    	
10
    
	
 
    	
 
    
	
ARTICLE IV – CONDITIONS OF LENDING
    	
10
    
	
Section 4.1
    	
General Conditions
    	
10
    
	
Section 4.2
    	
Conditions to Advances Under   any Partially Unadvanced Note or the AC-8 FFB Note
    	
11
    
	
 
    	
 
    
	
ARTICLE V – AFFIRMATIVE COVENANTS
    	
12
    
	
Section 5.1
    	
Generally
    	
12
    
	
Section 5.2
    	
Performance under Indenture
    	
13
    
	
Section 5.3
    	
Annual Compliance Certificate
    	
13
    
	
Section 5.4
    	
Simultaneous Prepayment of   Contemporaneous Loans
    	
13
    
	
Section 5.5
    	
Coverage Ratios
    	
13
    
	
Section 5.6
    	
Financial Books
    	
14
    
	
Section 5.7
    	
Rights of Inspection
    	
14
    
	
Section 5.8
    	
Real Property Acquisition
    	
14
    
	
Section 5.9
    	
Financial Reports
    	
14
    
	
Section 5.10
    	
Miscellaneous Reports and   Notices
    	
14
    
	
Section 5.11
    	
Variable Rate Indebtedness
    	
15
    
	
Section 5.12
    	
Special Construction Account
    	
15
    
	
Section 5.13
    	
Compliance with Laws
    	
16
    
	
Section 5.14
    	
Plant Agreements
    	
16
    
	
Section 5.15
    	
Lockbox Agreement
    	
16
    
	
Section 5.16
    	
Nuclear Fuel, Coal, Oil and   Natural Gas
    	
16
    
	
Section 5.17
    	
Power Requirements Studies
    	
17
    
	
Section 5.18
    	
Long Range Engineering Plans   and Construction Work Plans
    	
17
    
	
Section 5.19
    	
Design Standards, Construction   Standards and List of Materials
    	
17
    

 

i

 

	
Section 5.20
    	
Plans and Specifications
    	
17
    
	
Section 5.21
    	
Standard Forms of Construction   Contracts, and Engineering and Architectural Services Contracts
    	
17
    
	
Section 5.22
    	
Contract Bidding Requirements
    	
17
    
	
Section 5.23
    	
Nondiscrimination
    	
18
    
	
Section 5.24
    	
“Buy American” Requirements
    	
18
    
	
Section 5.25
    	
Maintenance of Credit Ratings
    	
19
    
	
Section 5.26
    	
Application of Advances
    	
19
    
	
Section 5.27
    	
Excepted Property
    	
19
    
	
Section 5.28
    	
Additional Affirmative   Covenants
    	
19
    
	
 
    	
 
    
	
ARTICLE VI – NEGATIVE COVENANTS
    	
19
    
	
Section 6.1
    	
General
    	
19
    
	
Section 6.2
    	
Limitations on System   Extensions, Additions and Dispositions
    	
19
    
	
Section 6.3
    	
Limitations on Employment and   Retention of General Manager
    	
20
    
	
Section 6.4
    	
Limitations on Certain Types of   Contracts
    	
20
    
	
Section 6.5
    	
Limitations on   Loans, Investments and Other Obligations
    	
22
    
	
Section 6.6
    	
Depreciation Rates
    	
23
    
	
Section 6.7
    	
Rate Reductions
    	
23
    
	
Section 6.8
    	
Indenture Restrictions
    	
23
    
	
Section 6.9
    	
Negative Pledge
    	
26
    
	
Section 6.10
    	
Environmental Allowances and   Credits
    	
27
    
	
Section 6.11
    	
Changes to Plant Agreements
    	
27
    
	
Section 6.12
    	
Fiscal Year
    	
27
    
	
Section 6.13
    	
Limits on Variable Rate   Indebtedness
    	
28
    
	
Section 6.14
    	
Limitations on Changing   Principal Place of Business
    	
28
    
	
Section 6.15
    	
Limitations on RUS Financed   Extensions and Additions
    	
28
    
	
Section 6.16
    	
Historic Preservation
    	
28
    
	
Section 6.17
    	
Impairment of Wholesale Power   Contracts
    	
28
    
	
Section 6.18
    	
State Regulation
    	
28
    
	
Section 6.19
    	
Limitations on Short-Term   Indebtedness
    	
28
    
	
Section 6.20
    	
Additional Negative Covenants
    	
29
    
	
 
    	
 
    
	
ARTICLE VII – EVENTS OF DEFAULT
    	
29
    
	
 
    	
 
    
	
ARTICLE VIII – REMEDIES
    	
30
    
	
Section 8.1
    	
Remedies
    	
30
    
	
Section 8.2
    	
Suspension of Advances
    	
31
    
	
 
    	
 
    
	
ARTICLE IX – MISCELLANEOUS
    	
31
    
	
Section 9.1
    	
Notice to RUS; Objection of RUS
    	
31
    
	
Section 9.2
    	
Notices
    	
31
    

 

ii

 

	
Section 9.3
    	
Expenses
    	
32
    
	
Section 9.4
    	
Late Payments
    	
32
    
	
Section 9.5
    	
Filing Fees
    	
33
    
	
Section 9.6
    	
No Waiver
    	
33
    
	
Section 9.7
    	
Governing Law
    	
33
    
	
Section 9.8
    	
Holiday Payments
    	
33
    
	
Section 9.9
    	
Successors and Assigns
    	
33
    
	
Section 9.10
    	
Complete Agreement; Amendments
    	
33
    
	
Section 9.11
    	
Headings
    	
34
    
	
Section 9.12
    	
Severability
    	
34
    
	
Section 9.13
    	
Right of Set Off
    	
34
    
	
Section 9.14
    	
Schedules and Exhibits
    	
34
    
	
Section 9.15
    	
Sole Benefit
    	
34
    
	
Section 9.16
    	
Existing Loan Contract
    	
35
    
	
Section 9.17
    	
Authority of RUS   Representatives
    	
35
    
	
Section 9.18
    	
Relation to RUS Regulations
    	
35
    
	
Section 9.19
    	
Term
    	
35
    
	
Section 9.20
    	
Relation to Indenture
    	
36
    

 

iii

 

SCHEDULES AND EXHIBITS

 

	
Schedule 1
    	
 
    	
Contemporaneous Loans and Outstanding Notes
    
	
 
    	
 
    	
 
    
	
Schedule 2
    	
 
    	
Plant Agreements
    
	
 
    	
 
    	
 
    
	
Schedule 3
    	
 
    	
Subsidiaries
    
	
 
    	
 
    	
 
    
	
Schedule 4
    	
 
    	
Additional Affirmative and Negative Covenants
    
	
 
    	
 
    	
 
    
	
Schedule 5
    	
 
    	
Litigation
    
	
 
    	
 
    	
 
    
	
Schedule 6
    	
 
    	
Certain Investments
    
	
 
    	
 
    	
 
    
	
Exhibit A
    	
 
    	
Equal Opportunity Contract Provisions
    
	
 
    	
 
    	
 
    
	
Exhibit B
    	
 
    	
Description of Rating Agency Services
    

 

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TENTH AMENDED AND RESTATED LOAN CONTRACT

 

THIS TENTH AMENDED AND RESTATED LOAN CONTRACT, dated as of January 30, 2018, is between OGLETHORPE POWER CORPORATION (AN ELECTRIC MEMBERSHIP CORPORATION), formerly known as Oglethorpe Power Corporation (An Electric Membership Generation & Transmission Corporation) (together with any successors and assigns, the “Borrower”), a corporation organized and existing under the laws of the State of Georgia (the “State”), and the UNITED STATES OF AMERICA (the “Government”), acting by and through the Administrator (together with any person succeeding to the powers and rights of the Administrator with respect to this Agreement, the “Administrator”) of the Rural Utilities Service (together with any agency succeeding to the powers and rights of the Rural Utilities Service with respect to this Agreement, the “RUS”), and amends and restates that certain Ninth Amended and Restated Loan Contract, dated as of September 2, 2014, between the Borrower and the Government, acting by and through the Administrator of the RUS (the “Existing Loan Contract”).

 

RECITALS

 

WHEREAS, the Borrower has incurred, pursuant to the Act (as defined in Article I) and under the Existing Loan Contract, certain indebtedness and other obligations to, or guaranteed by, the Government, acting by and through the Administrator of the RUS, which indebtedness and other obligations are evidenced by the Outstanding Notes (as defined in Article I); and

 

WHEREAS, the Borrower has entered into that certain Indenture (as defined in Article I), pursuant to which the Borrower has granted security title to and a security interest in substantially all of its real and personal property to secure the indebtedness and other obligations evidenced by the Outstanding Notes and to secure certain other indebtedness; and

 

WHEREAS, in order to provide for the Borrower incurring, pursuant to the Act, certain additional indebtedness and other obligations to, or guaranteed by, the Government, acting by and through the Administrator of the RUS, which additional indebtedness and other obligations will be evidenced by the AC-8 Notes (as defined in Article I), the Borrower and the RUS desire to amend and restate the Existing Loan Contract as hereinafter set forth.

 

NOW, THEREFORE, for and in consideration of the premises and the mutual covenants hereinafter contained, the parties hereto amend and restate the Existing Loan Contract to read in its entirety, and agree and bind themselves, as follows:

 

ARTICLE I - DEFINITIONS

 

Capitalized terms that are not defined herein shall have the meanings set forth in the Indenture.  The terms defined herein include both the plural and the singular.  Unless otherwise specifically provided, all accounting terms not otherwise defined herein shall have the meanings assigned to them, and all determinations and computations herein provided for shall be made, in accordance with Accounting Requirements.

 

“AC-8 Loan” shall have the meaning as defined in Section 3.1(b).

 

 

“AC-8 Loan Documents” shall mean, collectively, this Agreement, the AC-8 Notes and the supplement to the Indenture pursuant to which the AC-8 Notes are issued.

 

“AC-8 FFB Note” shall mean the note of the Borrower, dated January 30, 2018, payable to the order of FFB in the face principal amount of $448,307,000, the payment of which is guaranteed by the Government, acting by and through the Administrator of the RUS, pursuant to the Act, and all amendments, supplements, extensions and replacements to, of or for such note.

 

“AC-8 Notes” shall mean, collectively, the AC-8 FFB Note and the AC-8 Reimbursement Note.

 

“AC-8 Reimbursement Note” shall mean the note of the Borrower, dated January 30, 2018, evidencing the reimbursement obligations of the Borrower to the Government, acting by and through the Administrator of the RUS, with respect to the Government’s guarantee of the AC-8 FFB Note, and all amendments, supplements, extensions and replacements to, of or for such note.

 

“Accounting Requirements” shall have the meaning given such term in the Indenture.

 

“Act” shall mean the Rural Electrification Act of 1936, as amended.

 

“Advance” or “Advances” shall mean an advance or advances made or approved by the RUS under any Partially Unadvanced Note payable to FFB or under the AC-8 FFB Note.

 

“Agreement” shall mean this Tenth Amended and Restated Loan Contract, as it may be amended or supplemented from time to time, together with all schedules and exhibits hereto.

 

“Average Low MFI Period” shall mean any period commencing on the date that the Borrower, in accordance with the requirement in Section 5.9 hereof, delivers an audited annual report of its financial condition and of its operations showing that the Borrower failed to achieve Margins for Interest equal to at least 1.10 times Interest Charges, averaged for the best two (2) out of three (3) preceding fiscal years, and ending on the date that the Borrower delivers written notice to the Administrator evidencing that the Borrower has achieved Margins for Interest equal to at least 1.10 times Interest Charges, averaged for the best two (2) out of three (3) preceding fiscal years.

 

“Business Day” shall mean any day that the RUS and FFB are both open for business.

 

“Contemporaneous Loans” shall mean those loans identified as such on Schedule 1 hereto.  Any loan used to refinance or refund a Contemporaneous Loan is also considered to be a Contemporaneous Loan.

 

“Credit Rating” shall mean (i) a rating assigned by a Rating Agency to any long-term indebtedness (that is not subject to Credit Enhancement)(including, without limitation, indebtedness issued by any governmental authority with respect to which the Borrower is an obligor) secured directly or indirectly under the Indenture, or (ii) if a Rating Agency has not assigned a rating of the type described in clause (i) above, an indebtedness or company rating 

 

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assigned by a Rating Agency of the type that is the same or substantially similar to the type that the Borrower has in place on the date of this Agreement.

 

“Current Refunding” shall mean any refinancing or refunding of indebtedness that occurs not more than ninety (90) days following the Stated Maturity of such indebtedness.

 

“Designation Notice” shall have the meaning as defined in Section 4.1(c).

 

“Environmental Allowances and Credits” shall mean attributes of an environmental or similar nature that are created or otherwise arise from the generation, purchase or sale of electricity or that result from the avoidance or reduction of the emission of any gas, chemical or other substance (including any and all environmental air quality credits, green credits, white credits, renewable energy credits or certificates, carbon credits, emissions reduction credits, energy efficiency or energy use reduction credits, certificates, tags, offsets, tax credits, emission allowances, or similar products or rights as well as reporting rights, however entitled, currently existing or later arising under local, state, regional, federal, or international legislation or regulation or voluntary program).

 

“Equity” shall mean the Borrower’s total margins and equities computed in accordance with Accounting Requirements.

 

“Events of Default” shall have the meaning as defined in Article VII.

 

“FERC” shall mean the Federal Energy Regulatory Commission, or any agency or other governmental body succeeding to the functions thereof.

 

“FFB” shall mean the Federal Financing Bank, an instrumentality and wholly-owned corporation of the Government, and any successor to the powers and rights thereof with respect to the Notes.

 

“Financial and Operating Report Electric — Power Supply” shall mean the version of Financial and Operating Report Electric — Power Supply (including subdivisions thereof) submitted by the Borrower and dated as of December 31, 2016 or corresponding information in future versions of such form or any form required by RUS in substitution therefor containing corresponding information.

 

“Fitch” shall mean Fitch Ratings, Ltd. and any successor thereto.

 

“General Manager” shall mean the President and Chief Executive Officer of the Borrower or the person performing the duties of a chief executive officer if no person holds such title and, in the event of any dispute between the Borrower and the Government as to who is the General Manager, the Administrator may designate a person or position that shall be the General Manager for purposes of this Agreement.

 

“Highest Oversight Period” shall mean (x) as to an event described in clause (i) or (iv) below, any period commencing on the date that such event has occurred and ending on the date that such event has ended, and (y) as to an event described in clause (ii) or (iii) below, any period commencing on the date that the Borrower receives written notice from the Administrator that 

 

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such event has occurred (which notice shall set forth the basis for concluding that such event has occurred) and ending on the date that the Borrower receives written notice from the Administrator that such period has ended:

 

(i)                                     the Borrower has been assigned a Credit Rating of less than “Ba3” (or its then current equivalent) in the case of Moody’s, “BB-” (or its then current equivalent) in the case of S&P, “BB-” (or its then current equivalent) in the case of Fitch, or the then current equivalent by any other Rating Agency then assigning a Credit Rating;

 

(ii)                                  the Administrator determines that the System is incapable of providing reliable service to the members of the Borrower pursuant to the terms of the Wholesale Power Contracts;

 

(iii)                               the Administrator determines that, as a consequence of any change in the condition, financial or otherwise, operations, properties or business of the Borrower, the Borrower will be unable to perform its material obligations under (a) this Agreement, (b) the Wholesale Power Contracts, (c) the Notes, or (d) the Indenture; or

 

(iv)                              the occurrence of an Event of Default under the Indenture, or any event which with the passage of time or giving of notice, or both, would constitute an Event of Default under the Indenture.

 

“Increased Oversight Period” shall mean any period (other than a Highest Oversight Period) during which the Borrower has been assigned a Credit Rating below investment grade by at least two (2) Rating Agencies. For purposes of this definition, an investment grade Credit Rating shall mean, in the case of Moody’s, a rating of “Baa3” (or its then current equivalent) or higher, in the case of S&P, a rating of “BBB-” (or its then current equivalent) or higher, in the case of Fitch, a rating of “BBB-” (or its then current equivalent) or higher, and in the case of any other Rating Agency, the then current equivalent thereof.

 

“Indenture” shall mean the Indenture, dated as of March 1, 1997, entered into by the Borrower and U.S. Bank National Association, as successor to SunTrust Bank, formerly known as SunTrust Bank, Atlanta, as trustee (the “Trustee”), and all amendments and supplements thereto.

 

“Investment” shall mean any loan or advance to, or any investment in, or purchase or commitment to purchase any stock, bonds, notes or other securities of, or guaranty, assumption or other obligation or liability with respect to the obligations of, any other person, firm or corporation, except investments in securities or deposits issued, guaranteed or fully insured as to payment by the Government or any agency thereof and amounts deposited in an RUS cushion of credit or similar account.

 

“Laws” shall have the meaning as defined in Paragraph (e) of Article II.

 

“Loans” shall mean the loans and other obligations described in Article III.

 

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“Loan Documents” shall mean, collectively, this Agreement, the Notes, the Indenture, the supplements to the Indenture pursuant to which the Notes were issued and the Lockbox Agreement.

 

“Lockbox Agreement” shall mean that certain Lockbox Agreement, dated as of March 1, 1997, among the Borrower, U.S. Bank National Association, as successor to SunTrust Bank, formerly known as SunTrust Bank, Atlanta, and the Trustee.

 

“Material Adverse Effect” shall mean (a) an effect on the Borrower’s overall condition, financial or otherwise, operations, properties, margins or business, the result of which would be a material adverse effect on the ability of the Borrower to perform its obligations under the Loan Documents or (b) a material adverse effect on the validity or enforceability of this Agreement or the rights and remedies of the RUS hereunder.

 

“Moody’s” shall mean Moody’s Investors Service, Inc., and any successor thereto.

 

“Notes” shall mean, collectively, the Outstanding Notes and the AC-8 Notes.

 

“Outstanding Notes” shall mean those notes, other than the AC-8 Notes, of the Borrower outstanding on the date hereof payable to the order of FFB, the payment of which is guaranteed by the Government, acting by and through the Administrator of the RUS, pursuant to the Act, and those notes, other than the AC-8 Notes, of the Borrower outstanding on the date hereof payable to the order of the Government evidencing loans made by the Government, acting by and through the Administrator of the RUS, pursuant to the Act, or evidencing reimbursement obligations of the Borrower to the  Government with respect to the Government’s guarantee of the payment of certain notes payable to the order of FFB, all as specifically identified on Schedule 1 hereto, and all amendments, supplements, extensions and replacements to, of or for such notes.

 

“Partially Unadvanced Notes” shall mean those Outstanding Notes, if any, as to which portions of the available principal amount thereunder remain unadvanced.

 

“PILOT Transaction” shall mean any sale or lease, subject to the lien of the Indenture, of any portion of the Trust Estate to any government or governmental authority for ad valorem tax abatement purposes and a corresponding lease or sublease of such portion of the Trust Estate from such government or governmental authority to the Borrower.

 

“Plant Agreements” shall mean those agreements relating to the ownership and operation of generating facilities described on Schedule 2 hereto.

 

“Project” shall mean any facility, equipment or other capital asset, or any improvement or modification to any facility, equipment or other capital asset having a specific project number assigned thereto pursuant to a construction work plan of the Borrower approved by the RUS (as such plan may be amended from time to time with the approval of the RUS).

 

“Prudent Utility Practice” shall mean any of the practices, methods and acts engaged in or approved by a significant portion of the electric utility industry in the region during the relevant time period, or any of the practices, methods and acts that, in the exercise of reasonable 

 

5

 

judgment in light of the facts known at the time the decision was made, could have been expected to accomplish the desired result at lowest reasonable cost consistent with good business practices, reliability, safety and expedition.  “Prudent Utility Practice” is not intended to be limited to the optimum practice, method or act, to the exclusion of all others, but rather to include a spectrum of possible practices, methods or acts generally in acceptance in the region in light of the circumstances.

 

“Rates” shall have the meaning given such term in the Indenture.

 

“Rating Agency” shall mean S&P, Moody’s, Fitch or, provided that it is acceptable to the RUS, any other nationally recognized statistical rating organization (within the meaning of the rules of the United States Securities and Exchange Commission).

 

“RTO” shall mean any independent system operator and/or regional transmission organization under FERC’s jurisdiction that provides open-access transmission service and administers centralized markets for energy, capacity or ancillary services, or other private joint utility transmission organization or system that provides transmission service and energy, capacity or ancillary services.

 

“RUS Regulations” shall mean the rules, regulations and bulletins of general applicability published by the RUS from time to time as such rules, regulations and bulletins exist at the date of applicability thereof, and, unless the context clearly demonstrates a contrary intent, shall also include any rules and regulations of other Federal entities which the RUS is required by law to implement.

 

“S&P” shall mean Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., and any successor thereto.

 

“Short-Term Indebtedness” shall have the meaning as defined in Section 6.19.

 

“Special Construction Account” shall have the meaning as defined in Section 5.12.

 

“Subsidiary” shall mean a corporation or other entity that is a subsidiary of the Borrower and subject to the Borrower’s control, as defined by Accounting Requirements.

 

“System” shall mean all electric properties and interest in electric properties of the Borrower, it being the intent that “System” be broadly construed to encompass and include the Borrower’s interests in all electric production, transmission, distribution, conservation, load management, general plant and other related facilities, equipment or property and in any mine, well, pipeline, plant, structure or other facility for the development, production, manufacture, storage, fabrication or processing of fossil, nuclear or other fuel of any kind or in any facility or rights with respect to the supply of water, in each case for use, in whole or in major part, in any of the Borrower’s generating plants, now existing or hereafter acquired by lease, contract, purchase or otherwise or constructed by the Borrower, including any interest or participation of the Borrower in any such facilities or any rights to the output or capacity thereof, together with all additions, betterments, extensions and improvements to said System or any part thereof hereafter made and together with all lands, easements and rights-of-way of the Borrower and all other works, property or structures of the Borrower and contract rights and other tangible and 

 

6

 

intangible assets of the Borrower used or useful in connection with or related to said System, including, without limitation, a contract right or other contractual arrangement for the long-term or short-term interconnection, interchange, exchange, pooling, wheeling, transmission, purchase or sale of electric power and energy and other similar arrangements with entities having generation or transmission capabilities; provided, however, that “System” shall not include any property constituting Excepted Property or Excludable Property.

 

“Total Utility Plant” shall mean the amount constituting the total utility plant (gross) of the Borrower computed in accordance with Accounting Requirements.

 

“Wholesale Power Contracts” shall mean the Amended and Restated Wholesale Power Contracts, each dated as of January 1, 2003, by and between the Borrower and its members, as amended by the First Amendments to Amended and Restated Wholesale Power Contracts, each dated as of June 1, 2005, and all amendments, supplements or replacements thereto or thereof.

 

ARTICLE II - REPRESENTATIONS AND WARRANTIES

 

Recognizing that the RUS is relying hereon, the Borrower represents and warrants, as of the date of this Agreement, as follows:

 

(a)                                 Organization; Power, Etc.  The Borrower: (i) is duly organized, validly existing, and in good standing under the laws of the State; (ii) is duly qualified to do business and is in good standing in each jurisdiction in which the transaction of its business makes such qualification necessary; (iii) has all requisite corporate and legal power to own and operate its assets and to carry on its business and to enter into and perform its obligations under the Loan Documents; (iv) has duly and lawfully obtained and maintained all material licenses, certificates, permits, authorizations and approvals which are necessary to the conduct of its business or required by applicable Laws; and (v) is eligible to obtain the financial assistance from the RUS contemplated by this Agreement.

 

(b)                                 Authority.  The execution, delivery and performance by the Borrower of this Agreement and the other Loan Documents and the performance of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action and do not violate any provision of law or of the Articles of Incorporation or By-Laws of the Borrower or result in a breach of, or constitute a default under, any agreement, indenture or other instrument to which the Borrower is a party or by which it or its properties may be bound.

 

(c)                                  Consents.  No consent, permission, authorization, order or license of any governmental authority is necessary in connection with the execution, delivery or performance of the Loan Documents, except such as have been obtained and are in full force and effect.

 

(d)                                 Binding Agreement.  Each of the Loan Documents is, or when executed and delivered will be, the legal, valid, and binding obligation of the Borrower, enforceable in accordance with its terms, subject only to limitations on enforceability imposed in equity or by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally.

 

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(e)                                  Compliance With Laws.  The Borrower is in compliance in all material respects with all federal, state and local laws, rules, regulations, ordinances, codes and orders (collectively, “Laws”), the failure to comply with which could reasonably be expected to have a Material Adverse Effect.

 

(f)                                   Litigation.  Attached as Schedule 5 hereto is a list of all pending or, to the Borrower’s knowledge, threatened legal, arbitration or governmental actions or proceedings to which, as of the date of this Agreement, the Borrower is a party or to which any of its property is subject which could reasonably be expected to have a Material Adverse Effect.

 

(g)                                  Financial Statements; No Material Adverse Change; Etc.  The financial statements of the Borrower dated as of December 31, 2016, and for the period then ended, present fairly, in all material respects, the financial position of the Borrower and the results of its operations in conformity with Accounting Requirements.  Since the date thereof, there has been no change in the financial condition or operations of the Borrower that would reasonably be expected to have a Material Adverse Effect.

 

(h)                                 Budgets; Projections; Etc.  All budgets, projections, appraisals, feasibility studies and other documentation submitted by the Borrower to the RUS and any Rating Agency assigning a Credit Rating were based on assumptions that were reasonable at the time submitted; and, as of the date hereof, the Borrower has updated such budgets, projections, appraisals, feasibility studies and other documentation as required by RUS and any Rating Agency and in connection with customary updates provided to Rating Agencies assigning a Credit Rating.

 

(i)                                     Location of Properties.  All real property and interests therein of the Borrower comprising the Trust Estate are located in the states and counties identified in the Indenture.  As of the date of this Agreement, Exhibit A to the Indenture includes a description of all material real property owned or leased by the Borrower (other than Excepted Property or Excludable Property) to the extent a description is necessary for the lien of the Indenture to attach to such property.

 

(j)                                    Principal Place of Business; Records.  The principal place of business and chief executive office of the Borrower are at the address of the Borrower specified in Section 9.2.

 

(k)                                 Subsidiaries.  The Borrower’s Subsidiaries are identified on Schedule 3 hereto, and the Borrower has no other Subsidiaries.  Schedule 3 hereto may be updated by the Borrower from time to time by delivering a revised Schedule 3 to the RUS.

 

(l)                                     Defaults Under Other Agreements. No default by the Borrower has occurred under any agreement or instrument to which the Borrower is a party or to which any of its property is subject that could reasonably be expected to have a Material Adverse Effect.

 

(m)                             Title to Property.  As to the property which is included in the description of the Trust Estate, the Borrower holds good and marketable title to all of its fee and leasehold interests in real property and owns all of its personal property, subject to Permitted Exceptions, and such property is subject to no Prior Liens (other than Prior Liens permitted by Section 13.6 of the Indenture).

 

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(n)                                 Survival.  All representations and warranties made by the Borrower herein or made in any certificate delivered pursuant hereto shall survive the making of the Advances.

 

ARTICLE III - THE LOANS

 

Section 3.1                                   The Loans

 

(a)                                 Existing Loans Evidenced by the Outstanding Notes.  To finance, pursuant to the provisions of the Act, the construction of the System for the purpose of furnishing electric energy to persons in rural areas not receiving central station electric service, (i) the Borrower has borrowed funds from the Government, acting by and through the Administrator of the RUS, evidenced by the Outstanding Notes payable to the Government, (ii) the Borrower has borrowed funds from FFB, evidenced by the Outstanding Notes payable to FFB, and the Government, acting by and through the Administrator of the RUS, has guaranteed the repayment of such funds, and (iii) the Borrower has agreed to reimburse the Government, acting by and through the Administrator of the RUS, for amounts paid by the Government on account of its guarantee of funds borrowed by the Borrower from FFB, which reimbursement obligations are evidenced by the Outstanding Notes payable to the Government in respect of such reimbursement obligations.

 

(b)                                 AC-8 Loan.  To finance, pursuant to the provisions of the Act, certain improvements to the System, the RUS agrees to guarantee the payment of a loan in the amount of $448,307,000 to be made by FFB to the Borrower (the “AC-8 Loan”).

 

Section 3.2                                   No Further Advances

 

Except with respect to any Partially Unadvanced Note, the Borrower acknowledges and agrees that all amounts to be advanced to the Borrower under the Outstanding Notes have been advanced and neither FFB nor the Government, acting by and through the Administrator of the RUS, is under any obligation to make any further advances to the Borrower under such Outstanding Notes (other than with respect to payments by the Government on account of its guarantees of certain Outstanding Notes payable to FFB).

 

Section 3.3                                   Advances under any Partially Unadvanced Note or the AC-8 FFB Note

 

With respect to Advances to be made under any Partially Unadvanced Note or the AC-8 FFB Note, the RUS agrees to make or approve and the Borrower agrees to request such Advances on the terms and conditions of this Agreement.  The Borrower shall give the RUS written notice of the date on which each Advance is requested to be made in accordance with RUS policies and procedures.

 

Section 3.4                                   Interest Rates and Payment

 

(a)                                 Interest Rates.  The Notes shall be payable and bear interest as therein provided.

 

(b)                                 Electronic Funds Transfer.  Except as otherwise prescribed by the RUS, the Borrower shall make all payments on the Notes utilizing electronic funds transfer procedures as specified by the RUS.

 

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Section 3.5                                   Prepayment

 

The Borrower has no right to prepay any Note in whole or in part except such rights, if any, as are expressly provided for in each Note or as may be provided by Law.  However, prepayment of any Outstanding Note (and any penalties) relating to a Contemporaneous Loan shall be mandatory under Section 5.4.

 

Section 3.6                                   Last Day for an Advance under any Partially Unadvanced Note and the AC-8 FFB Note

 

Funds will only be advanced under any Partially Unadvanced Note and the AC-8 FFB Note pursuant to this Agreement and such Partially Unadvanced Note or the AC-8 FFB Note, as applicable, on or before the Last Day for an Advance, as specified in such Partially Unadvanced Note or the AC-8 FFB Note, as applicable.  No funds will be advanced under any Partially Unadvanced Note or the AC-8 FFB Note subsequent to the applicable Last Day for an Advance unless prior to such date the Administrator has extended this date by written agreement.  However, under no circumstances shall the RUS ever make or approve an Advance under any Partially Unadvanced Note or the AC-8 FFB Note, regardless of the applicable Last Day for an Advance or any extension by the Administrator, later than September 30 of the fifth year after the Fiscal Year of Obligation for such Partially Unadvanced Note or the AC-8 FFB Note if such date would result in the RUS obligating or permitting advances of funds contrary to the Antideficiency Act, 31 U.S.C. §1341.  The Fiscal Year of Obligation for the AC-8 FFB Note is identified in Schedule 1 hereto.

 

ARTICLE IV - CONDITIONS OF LENDING

 

Section 4.1                                   General Conditions

 

In connection with the execution and delivery of this Agreement, each of the following conditions shall be satisfied (all documents, certificates and other evidence of such conditions are to be satisfactory to the RUS in its discretion; such satisfaction (or waiver thereof) to be evidenced by the RUS’ delivery of notification or other form of confirmation, including the making of the initial advance under the AC-8 FFB Note, to the Borrower of its clearance of the AC-8 Loan Documents):

 

(a)                                 Legal Matters.  All legal matters incident to the consummation of the transactions hereby contemplated shall be satisfactory to counsel for the RUS;

 

(b)                                 FFB.  FFB shall have agreed, with RUS approval, to make the AC-8 Loan.

 

(c)                                  Loan Documents.  The RUS shall receive duly executed originals of the AC-8 Loan Documents.  The AC-8 FFB Note, the AC-8 Reimbursement Note and this Agreement must be received within ninety (90) days of the date of the Designation Notice for the AC-8 FFB Note committing FFB to purchase such AC-8 FFB Note (the “Designation Notice”) in the manner prescribed in such Designation Notice and all conditions set forth in such Designation Notice and the contract of guarantee must be satisfied;

 

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(d)                                 Authorization.  The RUS shall receive evidence satisfactory to it that all corporate documents and proceedings of the Borrower necessary for duly authorizing the execution, delivery and performance of the AC-8 Loan Documents have been obtained and are in full force and effect;

 

(e)                                  Approvals.  The RUS shall receive evidence satisfactory to it that all consents and approvals which are necessary for, or required as a condition of, the validity and enforceability of each of the AC-8 Loan Documents have been obtained and are in full force and effect;

 

(f)                                   Indenture Filing.  That a supplement to the Indenture shall be duly executed and delivered and, to the extent necessary to secure the AC-8 Notes under the lien of the Indenture, duly recorded and filed in all jurisdictions where the Borrower owns real property and fixtures comprising part of the Trust Estate, all in accordance with applicable Laws, and the Borrower shall cause satisfactory evidence thereof to be furnished to the RUS;

 

(g)                                  AC-8 Notes.  That each of the AC-8 Notes shall be authenticated and delivered by the Trustee and shall be entitled to the benefits of and secured by the lien of the Indenture equally and ratably with all other Outstanding Secured Obligations under the Indenture, and RUS shall have received copies of all certificates and opinions that were delivered to the Trustee in connection with the Trustee’s authentication and delivery of the AC-8 Notes; and

 

(h)                                 Opinion of Counsel.  The RUS shall receive an opinion of counsel for the Borrower (who shall be acceptable to the RUS) with respect to the AC-8 Loan Documents, in form and content acceptable to the RUS.

 

Section 4.2                                   Conditions to Advances Under any Partially Unadvanced Note or the AC-8 FFB Note

 

The obligation of the RUS to approve any Advance under any Partially Unadvanced Note or the AC-8 FFB Note is subject to the satisfaction of each of the following conditions precedent on or before the date of such Advance (all documents, certificates and other evidence of such conditions precedent are to be satisfactory to the RUS in its reasonable discretion; such satisfaction (or waiver thereof) to be evidenced by the approval or making of the requested Advance):

 

(a)                                 Continuing Representations and Warranties.  That the representations and warranties of the Borrower contained in this Agreement be true and correct in all material respects on and as of the date of such Advance as though made on and as of such date (except for any representation or warranty limited by its terms to a specific date; provided that the representations contained in Paragraph (g) of Article II shall be deemed made as of and since the date of the last audited financials of the Borrower);

 

(b)                                 Wholesale Power Contract.  That the Borrower shall not be in default under the terms of, or contesting the validity of, any Wholesale Power Contract;

 

(c)                                  Material Adverse Effect.  That no event shall have occurred since the date hereof that has had or is likely to have a Material Adverse Effect;

 

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(d)                                 Event of Default.  That no Event of Default, and no event which with the passage of time or giving of notice specified under Article VII hereof or both would constitute an Event of Default, shall have occurred and be continuing, or shall have occurred after giving effect to such Advance on the books of the Borrower;

 

(e)                                  Requisitions.  That the Borrower shall have requisitioned such Advance by submitting a requisition to the RUS in form and substance satisfactory to the RUS;

 

(f)                                   Flood Insurance.  That for any such Advance used in whole or in part to finance the construction or acquisition of any building in any area identified by the Secretary of Housing and Urban Development pursuant to the Flood Disaster Protection Act of 1973 (the “Flood Insurance Act”) or any rules, regulations or orders issued to implement the Flood Insurance Act as any area having special flood hazards, or to finance any facilities or materials to be located in any such building, or in any building owned or occupied by the Borrower and located in such a flood hazard area, the Borrower shall have submitted evidence, in form and substance satisfactory to the RUS or the RUS has otherwise determined, that (i) the community in which such area is located is then participating in the national flood insurance program, as required by the Flood Insurance Act and any related regulations, and (ii) the Borrower has obtained flood insurance coverage with respect to such building and contents as may then be required pursuant to the Flood Insurance Act and any related regulation;

 

(g)                                  Compliance With this Agreement and Indenture.  That the Borrower is in material compliance with this Agreement and the Indenture;

 

(h)                                 Oversight Period.  That an Increased Oversight Period or a Highest Oversight Period shall not exist;

 

(i)                                     Application of Advances.  That the Borrower agrees to apply the proceeds of the Advances under any Partially Unadvanced Note or the AC-8 FFB Note to pay the costs, or reimburse the costs paid, by or on behalf of the Borrower to make the improvements to the System that have been approved by the RUS;

 

(j)                                    Additional Documents.  That the Borrower agrees to provide or cause to be provided to RUS such additional documents as RUS may reasonably request from the Trustee; and

 

(k)                                 Conditions Precedent to Advance.  That all conditions precedent under the Indenture and this Agreement to such Advance have been satisfied or waived, that the RUS has received copies of all certificates and opinions delivered to the Trustee in connection therewith, and that the Trustee has consented to each Advance pursuant to Section 4.8 of the Indenture and the RUS has received a copy of such consent.

 

ARTICLE V - AFFIRMATIVE COVENANTS

 

Section 5.1                                   Generally

 

Unless otherwise agreed to in writing by the RUS, while this Agreement is in effect, the Borrower shall duly observe each of the affirmative covenants contained in this Article V.

 

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Section 5.2                                   Performance under Indenture

 

The Borrower shall duly observe and perform all of its obligations under the Indenture in all material respects including, without limitation, the obligation to establish and collect Rates in accordance with Section 13.14 of the Indenture.

 

Section 5.3                                   Annual Compliance Certificate

 

Within one hundred twenty (120) days after the close of each fiscal year, the Borrower shall deliver to the RUS a written statement signed by its General Manager, stating that, to the knowledge of the General Manager, during such year the Borrower has fulfilled its obligations under the Loan Documents throughout such year in all material respects or, if there has been a material default in the fulfillment of such obligations, specifying each such default known to the General Manager and the nature and status thereof.  In addition, if the Borrower has treated any Bondable Property, which Bondable Property would otherwise be considered as Retired pursuant to the definition thereof in the Indenture, as not being considered Retired pursuant to the proviso relating to the recovery of a regulatory or similar asset in the definition of Retired in the Indenture, within one hundred and twenty (120) days after the close of each fiscal year during the period such Bondable Property is not considered Retired and otherwise from time to time as RUS shall request during the entirety of the period in which such Bondable Property continues to not be considered as Retired, the Borrower shall deliver to RUS a written statement, including supporting documentation, signed by its General Manager confirming continued amortization and recovery of such regulatory or similar asset in accordance with such proviso, with such written statement and supporting documentation to be in such form as RUS may reasonably request.

 

Section 5.4                                   Simultaneous Prepayment of Contemporaneous Loans

 

If the Borrower shall at any time prepay in whole or in part any Contemporaneous Loan, the Borrower shall prepay the related Outstanding Note to the Government in the ratio that the unpaid principal balance of such Outstanding Note to the Government bears to the aggregate unpaid principal amount of both such Outstanding Note and the note evidencing the Contemporaneous Loan.  If either such Outstanding Note or such other note calls for a prepayment penalty or premium, such amount shall be paid but shall not be used in computing the amount needed to be paid to the Government under this Section 5.4 to maintain such ratio.  Prepayments associated with refinancing or refunding a Contemporaneous Loan are not considered to be prepayments for purposes of this Agreement if (i) the principal amount of such refinancing or refunding loan is not less than the amount of loan principal being refinanced and (ii) the weighted average life of the refinancing or refunding loan is not less than the weighted average remaining life of the loan being refinanced.

 

Section 5.5                                   Coverage Ratios

 

(a)                                 Routine Reporting of Coverage Ratios. In connection with the furnishing of its annual report to the RUS pursuant to Section 5.9, the Borrower shall report to the RUS, in such written format as RUS may require, the Margins for Interest level which was achieved during such fiscal year.

 

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(b)                                 Corrective Plans.  Within thirty (30) days of (i) sending a notice to the RUS under Subsection (a) above that shows the Margins for Interest level specified by Section 13.14 of the Indenture was not achieved for any fiscal year, or (ii) being notified by the RUS that the Margins for Interest level specified by Section 13.14 of the Indenture was not achieved for any fiscal year, whichever is earlier, the Borrower in consultation with the RUS shall provide a written plan reasonably satisfactory to the RUS setting forth the actions that shall be taken to achieve the specified Margins for Interest level on a timely basis.

 

Section 5.6                                   Financial Books

 

The Borrower shall at all times keep, and safely preserve, proper books, records and accounts in which full and true entries shall be made of all of the dealings, business and affairs of the Borrower and its Subsidiaries, in accordance with any applicable Accounting Requirements.

 

Section 5.7                                   Rights of Inspection

 

The Borrower shall afford the RUS, through its representatives, reasonable opportunity, at all times during business hours and upon prior notice, to have access to and the right to inspect the System, any other property encumbered by the Indenture, and any or all books, records, accounts, invoices, contracts, leases, payrolls, canceled checks, statements and other documents and papers of every kind belonging to or in the possession of the Borrower or in any way pertaining to its property or business, including its Subsidiaries, if any, and to make copies or extracts therefrom.

 

Section 5.8                                   Real Property Acquisition

 

In acquiring real property, the Borrower shall comply in all material respects with the provisions of the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended by the Uniform Relocation Act Amendments of 1987, and 49 C.F.R. part 24, referenced by 7 C.F.R. part 21, to the extent applicable to such acquisition.

 

Section 5.9                                   Financial Reports

 

The Borrower shall cause to be prepared and furnished to the RUS, within one hundred twenty (120) days after the end of each fiscal year of the Borrower, a full and complete annual report of its financial condition and of its operations in form and substance satisfactory to the RUS, audited and certified by an independent certified public accountant satisfactory to the RUS and accompanied by a report of such audit in form and substance reasonably satisfactory to the RUS. If requested by the RUS, the Borrower shall also furnish to the RUS from time to time such other reports concerning the financial condition or operations of the Borrower, including its Subsidiaries, as the RUS may reasonably request or RUS Regulations require.

 

Section 5.10                            Miscellaneous Reports and Notices

 

The Borrower shall furnish to the RUS:

 

(a)                                 Notice of Default.  Promptly after becoming aware thereof, notice of: (i) the occurrence of any Event of Default or event which with the giving of notice or the passage of 

 

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time, or both, would become an Event of Default; and (ii) the receipt of any notice given pursuant to the Indenture with respect to the occurrence of any event which with the giving of notice or the passage of time, or both, could become an “Event of Default” under the Indenture;

 

(b)                                 Notice of Litigation.  Promptly after the commencement thereof, notice of the commencement of all actions, suits or proceedings before any court, arbitrator, or governmental department, commission, board, bureau, agency or instrumentality affecting the Borrower which could reasonably be expected to have a Material Adverse Effect;

 

(c)                                  Notice of Change of Place of Business.  Promptly in writing, notice of any change in location of its principal place of business or the office where its records concerning accounts and contract rights are kept;

 

(d)                                 Regulatory and Other Notices.  Promptly after receipt thereof, copies of any notices or other communications received from any governmental authority with respect to any matter or proceeding which could reasonably be expected to have a Material Adverse Effect;

 

(e)                                  Ratings.  Promptly after receipt thereof, copies of Credit Ratings and copies of any reports with respect to the Borrower or its Credit Rating issued by any Rating Agency;

 

(f)                                   Material Adverse Effect.  Promptly after becoming aware thereof, notice of any matter that would reasonably be expected to have a Material Adverse Effect; and

 

(g)                                  Other Information.  Such other information regarding the condition, financial or otherwise, operations, properties or business of the Borrower as the RUS may, from time to time, reasonably request.

 

Section 5.11                            Variable Rate Indebtedness

 

In connection with the furnishing of its annual report to the RUS pursuant to Section 5.9, if requested by the RUS, the Borrower shall report to the RUS, in such written format as may be acceptable to the RUS, the specific maturities of all of the Borrower’s outstanding indebtedness and the interest rates applicable thereto, including, without limitation, with respect to any indebtedness not bearing a fixed rate through the maturity of such indebtedness the method and timing for adjustment and readjustment of the applicable interest rate.

 

Section 5.12                            Special Construction Account

 

The Borrower shall continue to maintain the “Special Construction Account” maintained under the Existing Loan Contract and continue to hold therein all moneys currently held therein, as provided in this Section 5.12.  The Special Construction Account shall be insured to the extent insurable by the Federal Deposit Insurance Corporation or other federal agency acceptable to the RUS and shall be designated by the corporate name of the Borrower followed by the words “Special Construction Account.”  The Borrower shall promptly deposit proceeds from all Advances, including previously advanced funds whose original expenditure has been disallowed by a RUS loan fund audit, into the Special Construction Account.  Moneys in the Special Construction Account shall be used solely for the purposes for which the Advance was made or for such other purposes as may be approved by the RUS.

 

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Section 5.13                            Compliance with Laws

 

The Borrower shall operate and maintain the System and its properties in compliance in all material respects with all applicable Laws the failure to comply with which could reasonably be expected to have a Material Adverse Effect.

 

Section 5.14                            Plant Agreements

 

(a)                                 Enforcement.  If the RUS, in its absolute discretion, shall determine it appropriate or necessary to preserve the security for the Loans, subject to the provisions of the Indenture and provided not inconsistent with the provisions of the applicable Plant Agreement, the RUS may require in writing the Borrower to authorize and empower the Government to enforce any Plant Agreement to the extent the Borrower has a right to enforce such Plant Agreement, with the form of such written authorization to be prescribed by the RUS.

 

(b)                                 Appointment of Agent.  If the appointment of Georgia Power Company as agent under any Plant Agreement is terminated in whole or in part, and if the Borrower is not qualified to serve as agent, then the RUS may require the Borrower to take all action that the Borrower is entitled to take to cause the appointment of the Government or such agency of the Government or other third party as the RUS shall designate in writing, as agent under any such Plant Agreement, to the extent and with such duties, rights, power and authority as the RUS shall prescribe in writing, not inconsistent with the provisions of such Plant Agreement.

 

Section 5.15                            Lockbox Agreement

 

The Borrower shall not, without first complying with the requirements of Section 9.1, amend, supplement, or otherwise modify the Lockbox Agreement.  During a Highest Oversight Period, the Borrower shall, if so directed in writing by the Administrator of the RUS, (a) deposit, pursuant to such Lockbox Agreement, all cash proceeds of the Trust Estate, including, without limitation, checks, money and the like (other than cash proceeds deposited or required to be deposited with the Trustee pursuant to the Indenture), which cash proceeds shall include, without limitation, all payments by members of the Borrower on account of the Wholesale Power Contracts, in separate deposit or other accounts, segregated from all other monies, revenues and investments of the Borrower, and (b) take all such other actions as the RUS shall request to continue perfection of the lien of the Indenture in such proceeds for the benefit of all Holders of the Outstanding Secured Obligations.

 

Section 5.16                            Nuclear Fuel, Coal, Oil and Natural Gas

 

Upon the written request of the RUS, to the extent the Borrower owns nuclear fuel, coal, oil or natural gas located outside the State of Georgia as to which a security interest can be created under the Uniform Commercial Code and perfected solely by the filing of a financing statement under the Uniform Commercial Code, the Borrower shall cause such nuclear fuel, coal, oil or natural gas to be subjected to the lien of the Indenture.

 

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Section 5.17                            Power Requirements Studies

 

The Borrower shall prepare and use power requirements studies of its electric loads and future energy and capacity requirements in conformance with Prudent Utility Practice and an RUS approved plan for preparation of such power requirements studies, taking into account the limited obligation of the Borrower under the Wholesale Power Contracts; provided, however, that during a Highest Oversight Period, or in connection with acquisition or construction financed in whole or in part by RUS, the Borrower shall prepare and use such studies in conformance with RUS Regulations.  The Borrower shall provide the RUS with copies of such studies.

 

Section 5.18                            Long Range Engineering Plans and Construction Work Plans

 

The Borrower shall develop, maintain and use up-to-date long-range engineering plans and construction work plans in conformance with Prudent Utility Practice; provided, however, that during a Highest Oversight Period, or in connection with acquisition or construction financed in whole or in part by RUS, the Borrower shall develop, maintain and use such plans in conformance with RUS Regulations.

 

Section 5.19                            Design Standards, Construction Standards and List of Materials

 

The Borrower shall use design standards, construction standards and lists of acceptable materials in conformance with Prudent Utility Practice; provided, however, that during a Highest Oversight Period, or in connection with construction financed in whole or in part by RUS, the Borrower shall use such standards and lists in conformance with RUS Regulations.

 

Section 5.20                            Plans and Specifications

 

The Borrower shall submit plans and specifications for construction to the RUS for review and approval, as directed in writing by the RUS, for construction financed in whole or in part by the RUS.

 

Section 5.21                            Standard Forms of Construction Contracts, and Engineering and Architectural Services Contracts

 

The Borrower shall use the standard forms of contracts promulgated by the RUS for construction, procurement, engineering services and architectural services, if directed in writing by the RUS, for construction, procurement, or services financed in whole or in part by the RUS.

 

Section 5.22                            Contract Bidding Requirements

 

The Borrower shall follow the RUS contract bidding procedures in conformance with RUS Regulations when contracting for construction or procurement financed in whole or in part by the RUS.

 

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Section 5.23                            Nondiscrimination

 

(a)                                 Equal Opportunity Provisions in Construction Contracts.  The Borrower shall incorporate or cause to be incorporated into any construction contract, as defined in Executive Order 11246 of September 24, 1965 and implementing regulations, which is paid for in whole or in part with funds obtained from the RUS or borrowed on the credit of the United States pursuant to a grant, contract, loan, insurance or guarantee, or undertaken pursuant to any RUS program involving such grant, contract, loan, insurance or guarantee, the equal opportunity provisions set forth in Exhibit A attached hereto entitled Equal Opportunity Contract Provisions.

 

(b)                                 Equal Opportunity Contract Provisions Also Bind the Borrower.  The Borrower further agrees that it shall be bound by such equal opportunity clause in any federally assisted construction work which it performs itself other than through the permanent work force directly employed by an agency of government.

 

(c)                                  Sanctions and Penalties.  The Borrower agrees that it shall cooperate actively with the RUS and the Secretary of Labor in obtaining the compliance of contractors and subcontractors with the equal opportunity clause and the rules, regulations and relevant orders of the Secretary of Labor, that it shall furnish the RUS and the Secretary of Labor such information as they may require for the supervision of such compliance, and that it shall otherwise assist the administering agency in the discharge of the RUS’s primary responsibility for securing compliance.  The Borrower further agrees that it shall refrain from entering into any contract or contract modification subject to Executive Order 11246 with a contractor debarred from, or who has not demonstrated eligibility for, Government contracts and federally assisted construction contracts pursuant to Part II, Subpart D of Executive Order 11246 and shall carry out such sanctions and penalties for violation of the equal opportunity clause as may be imposed upon contractors and subcontractors by the RUS or the Secretary of Labor pursuant to Part II, Subpart D of Executive Order 11246. In addition, the Borrower agrees that if it fails or refuses to comply with these undertakings the RUS may cancel, terminate or suspend in whole or in part this Agreement, may refrain from extending any further assistance under any of its programs subject to Executive Order 11246 until satisfactory assurance of future compliance has been received from the Borrower, or may refer the case to the Department of Justice for appropriate legal proceedings.

 

Section 5.24                            “Buy American” Requirements

 

The Borrower shall use or cause to be used in connection with the expenditures of funds if such funds were obtained in whole or in part by a loan being made or guaranteed by the RUS only such unmanufactured articles, materials, and supplies as have been mined or produced in the United States or any eligible country, and only such manufactured articles, materials, and supplies as have been manufactured in the United States or any eligible country substantially all from articles, materials, and supplies mined, produced or manufactured, as the case may be, in the United States or any eligible country, except to the extent the RUS shall determine that such use shall be impracticable or that the cost thereof shall be unreasonable.  For purposes of this section, an “eligible country” is any country that has with respect to the United States an agreement ensuring reciprocal access for United States products and services and United States 

 

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suppliers to the markets of that country, as determined by the United States Trade Representative.

 

Section 5.25                            Maintenance of Credit Ratings

 

As long as any Note remains outstanding, the Borrower shall (a) maintain a Credit Rating from at least two (2) Rating Agencies and (b) continuously subscribe with a Rating Agency for the services described in Exhibit B attached hereto.

 

Section 5.26                            Application of Advances

 

The Borrower shall apply the proceeds of Advances as provided in Section 4.2(i) above, with only such modifications as may be mutually agreed upon.

 

Section 5.27                            Excepted Property

 

During a Highest Oversight Period, the Borrower shall take all actions necessary to include in the Trust Estate, subject to the first lien of the Indenture, the Excepted Property designated in writing by the Government; provided, however, the Borrower shall not be required to subject to the lien of the Indenture cash and/or securities held for working capital purposes in an amount up to the greater of (i) twenty five percent (25%) of the Borrower’s aggregate cost of operation and maintenance for the preceding twelve (12) calendar month period or (ii) the Borrower’s aggregate cost of operation and maintenance for three (3) consecutive calendar months designated by the Borrower during such preceding twelve (12) calendar month period as  shown on Financial and Operating Report Electric — Power Supply, lines 14 and 19.

 

Section 5.28                            Additional Affirmative Covenants

 

The Borrower also shall comply with the additional covenants identified in Schedule 4 hereto.

 

ARTICLE VI - NEGATIVE COVENANTS

 

Section 6.1                                   General

 

Unless otherwise agreed to in writing by the RUS, while this Agreement is in effect, the Borrower shall duly observe each of the negative covenants set forth in this Article VI.

 

Section 6.2                                   Limitations on System Extensions, Additions and Dispositions

 

(a)                                 Additions to Capacity.  The Borrower shall not, without first complying with the requirements of Section 9.1, purchase, construct, lease or otherwise acquire Special Assets (as defined below) if the aggregate amount expended for purchase, construction, lease or other acquisition of all Special Assets (i) in the current fiscal year of the Borrower is greater than 5% of the Borrower’s Total Utility Plant or (ii) in the current and two immediately preceding fiscal years of the Borrower is greater than 10% of the Borrower’s Total Utility Plant.  For the purposes of this Subsection (a), “Special Assets” means capital assets that constitute utility or non-utility plant and that:  (1) taking into account any substantially contemporaneous or 

 

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otherwise related sale, transfer, lease or other disposition, increase the generating capacity of the System or any generating plant of the Borrower by more than 5%; (2) are not subject to the lien of the Indenture and are not nuclear fuel; or (3) are not used or useful as a part of the System.

 

(b)                                 Dispositions of System Assets.  The Borrower shall not, without first complying with the requirements of Section 9.1, request the release of capital assets that constitute utility plant from the lien of the Indenture pursuant to Section 5.2 of the Indenture if (taking into account any substantially contemporaneous or otherwise related purchase, construction, lease or other acquisition of similar property that is subject to the lien of the Indenture) there will result a decrease in the generating capacity of the System or any generating plant by more than 5% if the aggregate net book value of all such assets released from the lien of the Indenture (i) in the current fiscal year of the Borrower is greater than 5% of the Borrower’s Total Utility Plant or (ii) in the current and two immediately preceding fiscal years of the Borrower is greater than 10% of the Borrower’s Total Utility Plant.

 

(c)                                  Legal Requirements.  The requirements of this Section 6.2 shall not apply to any purchase, construction, lease or other acquisition, or any sale, transfer, lease or other disposition, of capital assets to the extent that any of the foregoing is required to comply with (i) “Legal Requirements” (as defined in the Wholesale Power Contract), or (ii) obligations of the Borrower under any joint ownership agreement that has been approved by the RUS or which has been entered into in compliance with the terms of this Agreement.  No such purchase, construction, lease or other acquisition and no such sale, transfer, lease or other disposition shall be considered in calculating the aggregate limitations specified in Subsections (a) or (b) hereof.

 

(d)                                 Highest Oversight Period.  During a Highest Oversight Period, the Borrower shall not, without the prior written approval of the RUS, purchase, construct, lease or otherwise acquire, or sell, transfer, lease or otherwise dispose of, any capital asset, or enter into any agreement therefor.

 

Section 6.3                                   Limitations on Employment and Retention of General Manager

 

At any time an Event of Default, or an event which with the passage of time or the giving of notice, or both, would become an Event of Default, occurs and is continuing, the Borrower shall not, without the prior written approval of the RUS, enter into an employment relationship with any person to serve as General Manager unless such employment shall first have been approved by the RUS.  If an Event of Default, or an event which with the passage of time or the giving of notice, or both, would become an Event of Default, occurs and is continuing and the RUS requests the Borrower to terminate the employment of its General Manager, the Borrower shall do so within thirty (30) days after the date of such request.  All contracts in respect of the employment of the General Manager hereafter entered into shall contain provisions to permit compliance with this Section 6.3.

 

Section 6.4                                   Limitations on Certain Types of Contracts

 

(a)                                 Approval of Certain Contracts.  The Borrower shall not, without first complying with the requirements of Section 9.1, enter into any of the following:

 

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(i)                                     any contract for the management or operation of all or substantially all of the System;

 

(ii)                                  any contract for the purchase, exchange or sale of electric power and energy that has a term exceeding five (5) years and under which committed purchases, exchanges or sales exceed ten percent (10%) of the peak demand of the System for the most recently completed fiscal year;

 

(iii)                               any pooling or similar power supply agreement that has a term exceeding five (5) years;

 

(iv)                              any amendment or modification to any of the Wholesale Power Contracts, including the Schedules thereto and the form of Withdrawal Agreement incorporated therein, except that the Borrower may amend or modify any of (A) Exhibit 1 to “Rate Schedule A” thereto; (B) the Exhibits to Appendix 1 to “Rate Schedule A” thereto in the manner expressly provided in the Wholesale Power Contracts; (C) Sections I and II of Appendix 2 (Control Area Services) to “Rate Schedule A” thereto; (D) Appendix 3 (General Terms and Conditions) to “Rate Schedule A” thereto; (E) Schedule B — Form of Subscription Agreement in the manner expressly provided in Section 13.3.1 of the Wholesale Power Contracts; and (F) the Wholesale Power Contracts in the manner expressly provided in any “Withdrawal Agreement” (as defined in the Wholesale Power Contracts) entered into in connection with such Wholesale Power Contracts; or

 

(v)                                 as and to the extent RUS approval is required by the RUS Regulations, any contract for construction or procurement or for architectural and engineering services in connection with a new generating facility if the project will be financed in whole or in part by the RUS.

 

(b)                                 Terminations.  The Borrower shall not, without first complying with the requirements of Section 9.1, exercise any option to terminate any contract, including, without limitation, any Wholesale Power Contract, if such contract, based upon its nature, remaining term (not taking into account any option of the Borrower to terminate) and size, would be required to be approved by the RUS pursuant to Subsection (a) above if the Borrower were to have entered into such contract on the proposed termination date.  The Borrower further agrees at the written direction of the RUS to exercise any option to terminate a contract if the exercise by the Borrower of that option would require compliance with the requirements of Section 9.1 pursuant to the immediately preceding sentence; provided, however, the Borrower shall not be required to exercise any such option to terminate if such exercise could reasonably be expected to have a Material Adverse Effect.  For the purpose of illustration only, and not by way of limitation, the Borrower shall be required to comply with the requirements of Section 9.1 before terminating, and the RUS can require the Borrower to terminate, in any year before year five (5) thereof, a ten (10) year contract for the sale of electric power and energy that exceeds ten percent (10%) of the Borrower’s peak demand because the portion of the contract to be terminated meets the standards of Subsection (a)(ii) above (i.e., a term greater than five (5) years for the

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committed sale of electric power and energy that exceeds ten percent (10%) of the Borrower’s peak demand).  The Borrower can terminate without first complying with the requirements of Section 9.1, and the RUS cannot require the Borrower to terminate, that same contract after year five (5) thereof.

 

(c)                                  Highest Oversight Period.  During a Highest Oversight Period, the Borrower shall not, without the prior written approval of the RUS, enter into or amend or modify any of the contracts of the type described in this Section 6.4, regardless of duration or size.

 

(d)                                 Determination of Term.  For purposes of this Section 6.4, the term of any contract shall be determined in accordance with this Subsection.  The term of any contract shall be the period during which performance (other than payment) is to occur and not the period commencing when such contract is executed.  The term of any contract shall be based upon the period prior to the first date upon which the Borrower could, at its option, terminate the contract (taking into account any notice period required for termination), unless the exercise of such termination right could reasonably be expected to have a Material Adverse Effect.

 

(e)                                  Amendments; Extensions.  Any amendment or modification to an existing contract (including an extension thereof) shall be governed by this Section 6.4 only to the extent such specific amendment or modification (and not the contract as a whole), judged as if it were a separate contract, would be required to be approved by the RUS pursuant to Subsection (a) above.

 

(f)                                   Legal Requirements.  The requirements of this Section 6.4 shall not apply to entering into, or the termination, amendment or extension of, any contract to the extent that any of the foregoing is required to comply with applicable Law or the requirements of any applicable RTO.

 

Section 6.5                                   Limitations on Loans, Investments and Other Obligations

 

The Borrower shall not, without first complying with the requirements of Section 9.1, make any Investment, except (i) Investments made for the purpose of funds management or designated as a reserve against the decommissioning of utility plant that are made pursuant to an investment policy approved by the Borrower’s Board of Directors, a copy of which has been provided to the RUS, (ii) those Investments identified on Schedule 6 hereto and Investments specifically approved by the RUS in writing under this clause (ii), (iii) retained earnings or patronage of Subsidiaries, (iv) patronage allocated to the Borrower as a result of transactions in the ordinary course of business with cooperatives, such as, National Rural Utilities Cooperative Finance Corporation and CoBank, ACB, (v) investments set forth in RUS Regulations (7 C.F.R. § 1717.655, as such RUS Regulations exist on the date hereof) as excluded from computations of the amounts and type of Investments for which RUS approval is required, and (vi) other Investments (valued at the initial cost thereof) that do not in the aggregate with all other Investments other than Investments described in clauses (i) through (v) above exceed fifteen percent (15%) of the Borrower’s Total Utility Plant; provided, however, that during an Increased Oversight Period, or Highest Oversight Period, the Borrower shall not, without the prior written approval of the RUS, make any additional Investments of the type described in clause (vi) above.

 

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Section 6.6                                   Depreciation Rates

 

The Borrower shall not, without first complying with the requirements of Section 9.1, adopt any depreciation rate for the purposes of financial reporting or the establishment of Rates not previously approved for the Borrower by the RUS.

 

Section 6.7                                   Rate Reductions

 

The Borrower shall not, without first complying with the requirements of Section 9.1, decrease its Rates if it has failed to comply with the provisions of Section 13.14 of the Indenture for the fiscal year prior to such reduction.

 

Section 6.8                                   Indenture Restrictions

 

Notwithstanding the provisions of the Indenture, the Borrower shall not, without first complying with the requirements of Section 9.1:

 

(a)                                 issue Additional Obligations under the Indenture on the basis of the $200,000,000 carry forward amount described in Section 4.2B(1) of the Indenture, unless the proceeds of such Additional Obligations are used (i) to pay premiums and other penalties and charges in respect of any Existing Obligation held by FFB or the RUS, (ii) to fund the acquisition or construction of additions or extensions to the System that are subject to the lien of the Indenture, or (iii) to pay premiums and other penalties, charges and other costs of issuance incurred in connection with a Current Refunding in an aggregate amount not to exceed five percent (5%) of the principal amount of the Obligations subject to the Current Refunding;

 

(b)                                 issue Additional Obligations under the Indenture while any amounts are outstanding under any RUS Reimbursement Obligation or during an Increased Oversight Period or a Highest Oversight Period;

 

(c)                                  consolidate or merge with any other corporation or convey or transfer the Trust Estate under the Indenture substantially as an entirety unless the aggregate amount of the Borrower’s Equity is not reduced as a result of such transaction and the Borrower provides the RUS with evidence reasonably satisfactory to the RUS that the consummation of such transaction will not result in the commencement of an Increased Oversight Period or a Highest Oversight Period; provided, however, that during an Increased Oversight Period or a Highest Oversight Period, the Borrower shall not consolidate or merge with any corporation or convey or transfer the Trust Estate substantially as an entirety;

 

(d)                                 elect pursuant to Section 1.1D of the Indenture to apply Accounting Requirements in effect as of the date of execution and delivery of the Indenture;

 

(e)                                  (i) include as Property Additions, under any provision of the Indenture, any property that would not qualify as Property Additions but for paragraph C of the definition of Property Additions in the Indenture, except such Property Additions related to a PILOT Transaction or (ii) sell, lease or sublease any portion of the Trust Estate pursuant to paragraph H of Section 5.1 of the Indenture, except in connection with a PILOT Transaction;

 

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(f)                                   submit an Available Margins Certificate under Article IV of the Indenture for the purpose of issuing Additional Obligations unless such Available Margins Certificate is accompanied by an Independent Accountant’s certificate stating in substance that nothing came to the attention of such Accountant in connection with its unaudited review of the applicable period that would lead such Accountant to believe that there was any incorrect or inaccurate statement in such Available Margins Certificate;

 

(g)                                  enter into a Supplemental Indenture pursuant to Section 12.1H of the Indenture;

 

(h)                                 enter into a Supplemental Indenture pursuant to Section 12.1B or 12.1C of the Indenture if (i) the Holders of the Obligations issued under such Supplemental Indenture are granted greater security rights in and to the Trust Estate than those security rights enjoyed by the Government in its capacity as a Holder of Obligations under the Indenture, provided, however, that neither (A) the existence of Credit Enhancement nor (B) the creation and maintenance of debt service or similar funds for the payment of the principal and interest on Obligations issued under such Supplemental Indenture (to the extent such debt service or other similar funds are funded from the proceeds of the issuance of such Obligations or funded in connection with the refinancing of other debt by such Obligations), shall constitute greater security rights in and to the Trust Estate requiring the Borrower to comply with the requirements of Section 9.1; (ii) the Supplemental Indenture provides for covenants, restrictions, limitations, conditions, events of defaults or remedies not applicable to all Obligations then Outstanding or not equally available to all Holders of Obligations then Outstanding, provided, however, that provisions for covenants and events of default that relate solely to assuring that the interest on such Obligations (or other indebtedness secured by such Obligations) is excludable from the gross income of the holder thereof pursuant to the Internal Revenue Code, as amended, shall not constitute the providing of covenants or events of default requiring the Borrower to comply with the requirements of Section 9.1; or (iii) the Obligations issued under such Supplemental Indenture, or the indebtedness secured by such Obligations, can be accelerated, or effectively accelerated through a mandatory purchase or similar mechanism, in either case, as a consequence of a breach or default by the Borrower under the related loan agreement or similar agreement entered into in connection with such Obligation or indebtedness, provided, however, that acceleration and similar rights may be granted to development authorities, government or governmental entities, or trustees without first complying with the requirements of Section 9.1 in connection with the issuance of Obligations (or other indebtedness secured by or issued in connection with such Obligations) the interest on which is excludable from the gross income of the holder thereof pursuant to the Internal Revenue Code, as amended, if such acceleration and similar rights are substantially similar to those customarily granted to development authorities, government or governmental entities, or trustees;

 

(i)                                     create or incur or suffer or permit to be created or incurred or to exist any pledge of current assets secured under the Indenture to secure current liabilities; provided, however, that the Borrower may pledge current receivables due from the RTO or other counterparties to secure current payables due to the RTO or other counterparties if the contracts under which such receivables and payables arise are secured under the Indenture;

 

(j)                                    provide any certificate of an Appraiser under the Indenture, unless such Appraiser is Independent, if the amount of the property or securities as to which the Appraiser’s certificate

 

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applies is greater than two million dollars ($2,000,000); provide any certificate of an Engineer under the Indenture, unless such Engineer is a licensed professional, if the amount of the property as to which the Engineer’s certificate applies is greater than one hundred thousand dollars ($100,000); or provide any certificate of an Engineer under the Indenture with respect to all or any portion of a Project, unless such Engineer is Independent, if the fair value or the repair cost of such Project is greater than ten million dollars ($10,000,000) (or, upon the prior written request of the RUS, such lower amount as the RUS may designate in such notice as to any Project or Projects referenced in such notice);

 

(k)                                 issue any Additional Obligations upon the basis of Designated Qualifying Securities unless the Borrower has a one hundred percent (100%) ownership or membership interest in the Subsidiary entering into a Qualifying Securities Indenture in connection with such Designated Qualifying Securities;

 

(l)                                     modify or alter Section 8.7 of the Indenture or the obligation of the Trustee under the Indenture to hold the Trust Estate for the equal and proportionate benefit and security of the Holders, without any priority of any Obligation over any other Obligation;

 

(m)                             issue any Additional Obligations upon the basis of Certified Progress Payments;

 

(n)                                 release any part of the Trust Estate pursuant to Section 5.2 of the Indenture other than in connection with selling, exchanging or otherwise disposing of such part of the Trust Estate;

 

(o)                                 enter into a Supplemental Indenture pursuant to Section 12.2 of the Indenture permitting the creation of any lien ranking prior to or on a parity with the Indenture with respect to the Trust Estate;

 

(p)                                 treat any Bondable Property, which Bondable Property would otherwise be considered as Retired pursuant to the definition thereof in the Indenture, as not being considered Retired pursuant to the proviso relating to rate recovery in the definition of Retired in the Indenture; or

 

(q)                                 enter into a Supplemental Indenture pursuant to Section 12.1K of the Indenture providing for the amendment or change of the Indenture based on the reasonable judgment of the Trustee that such change will not materially and adversely affect the rights of the Holders.

 

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Section 6.9                                   Negative Pledge

 

The Borrower shall not, without first complying with the requirements of Section 9.1, directly or indirectly create, incur, assume or permit to exist any lien, mortgage, pledge, security interest, charge or encumbrance of any kind, whether voluntary or involuntary (including any conditional sale or other title retention agreement, any lease in the nature thereof, and any other agreement to give any security interest) on or with respect to any of the Excepted Property (other than the Excepted Property described in paragraph P of the definition of Excepted Property, which property shall not be subject to this Section 6.9) except for:

 

(a)                                 Permitted Exceptions (other than the Permitted Exception described in paragraph Y of the definition of Permitted Exceptions in the Indenture unless the current assets pledged are due from an RTO or other counterparty and are pledged to secure current liabilities of the Borrower due to such RTO or other counterparty);

 

(b)                                 as to the Excepted Property described in paragraphs B through E, inclusive, and paragraph K of the definition of Excepted Property in the Indenture, liens, mortgages, pledges, security interests, charges and encumbrances in connection with purchase money, construction or acquisition indebtedness (or renewals or extensions thereof) that encumber only the asset or assets so purchased, constructed or acquired or property improved through such purchase, construction or acquisition, and the proceeds upon a sale, transfer or exchange thereof;

 

(c)                                  liens, mortgages, pledges, security interests, charges and encumbrances (i) for the benefit of all Holders of the Obligations issued under the Indenture, (ii) in connection with any bond or similar fund established by the Borrower with respect to any debt securities, the interest on which is excludable from gross income of the holder thereof pursuant to the Internal Revenue Code, as amended, to the extent of amounts deposited in such funds in the ordinary course to make regularly scheduled payments on such debt securities, or (iii) in connection with any debt service or similar fund established by the Borrower for the payment of principal or interest on debt securities, the interest on which is excludable from gross income of the holder thereof pursuant to the Internal Revenue Code, as amended, if such fund is funded solely from the proceeds of the issuance of such debt securities (or funded in connection with the refinancing of other debt by such debt securities);

 

(d)                                 liens, pledges, security interests, charges and encumbrances with respect to any interest, debt or equity, of the Borrower in the National Rural Utilities Cooperative Finance Corporation or CoBank, ACB purchased or otherwise acquired by the Borrower in connection with membership in any such entity or any borrowing from any such entity;

 

(e)                                  liens, pledges, security interests, charges and encumbrances arising in connection with any legal or economic defeasance of indebtedness, unless the funding of the defeasance is during an Increased Oversight Period or a Highest Oversight Period and more than twenty percent (20%) of the defeasance is funded other than with the proceeds of the issuance of new indebtedness (in which case the Borrower shall first comply with the requirements of Section 9.1 before permitting or creating any such lien, pledge, security interest, charge or encumbrance);

 

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(f)                                   liens, pledges, security interests, charges and encumbrances with respect to deposit, brokerage, commodity and other similar accounts to the extent such liens, pledges, security interests, charges and encumbrances do not secure indebtedness for borrowed money other than indebtedness incurred in connection with acquiring securities or other investments deposited in any such account; or

 

(g)                                  liens, pledges, security interests, charges and encumbrances on (i) cash, (ii) securities or deposits issued, guaranteed or fully insured as to payment by the Government or any agency thereof, or (iii) Investments of the type permitted under Section 6.5 hereof, to the extent required to be provided by the Borrower as collateral for any obligation of the Borrower under (A) any agreement or other instrument relating to any rate, index or price swap, basis swap, forward rate, index or price transaction, commodity swap, commodity option, cap, collar or floor transaction, or other similar transaction entered into by the Borrower for the purpose of directly mitigating risks associated with interest expense, fuel or other commodity expense, (B) any power purchase or sale obligation, (C) any agreement or arrangement entered into, with or through, the RTO, (D) any other similar obligation, commitment or liability of the Borrower, or (E) any letter of credit issued on behalf of the Borrower, in each case of subclauses (A) through (E), arising in connection with the Borrower’s business and properties and not entered into for the purpose of speculation; provided, however, that at any time the amount of such cash, securities, deposits and Investments subject to any lien, pledge, security interest, charge or encumbrance under this clause (g) in the aggregate may not exceed ten percent (10%) of the Borrower’s Total Utility Plant.

 

Section 6.10                            Environmental Allowances and Credits

 

The Borrower shall not, without first complying with the requirements of Section 9.1, sell, assign or otherwise dispose of (or enter into any agreement therefor) any Environmental Allowances and Credits, except Environmental Allowances and Credits that (i) exceed those necessary in any particular fiscal year for the Borrower to operate its generating facilities during such year, as evidenced by a written certification by the Borrower and provided to the RUS no more than 90 days after such sale, assignment or other disposition, (ii) are sold, assigned or otherwise disposed of pursuant to any power purchase or sale, joint ownership or similar agreement that has been approved by the RUS or which has been entered into in compliance with the terms of this Agreement, or (iii) with respect to which the sale, assignment or other disposition thereof is required by applicable Law.

 

Section 6.11                            Changes to Plant Agreements

 

The Borrower shall not, without first complying with the requirements of Section 9.1, amend, supplement, waive, extend, terminate or assign the Plant Agreements or agree to do so.

 

Section 6.12                            Fiscal Year

 

The Borrower shall not, without first complying with the requirements of Section 9.1, change its fiscal year.

 

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Section 6.13                            Limits on Variable Rate Indebtedness

 

During an Increased Oversight Period or a Highest Oversight Period, the Borrower shall not, if so directed in writing by the RUS, increase the outstanding principal amount of indebtedness of the Borrower, the interest rate with respect to which is adjusted or readjusted at intervals of less than two (2) years, including, without limitation, Additional Obligations issued as a Periodic Offering, the interest rate on which is subject to such adjustment or readjustment, to an amount exceeding the amount thereof outstanding on the date of such notice from the RUS.

 

Section 6.14                            Limitations on Changing Principal Place of Business

 

Without prior written notification to the RUS, the Borrower shall not change its principal place of business.

 

Section 6.15                            Limitations on RUS Financed Extensions and Additions

 

The Borrower shall not extend or add to its System either by construction or acquisition without the prior written approval of the RUS (which may include any approval of a construction work plan that describes such extension or addition to its System) if the construction or acquisition is financed or will be financed in whole or in part by the RUS.

 

Section 6.16                            Historic Preservation

 

The Borrower shall not, without approval in writing by the RUS, use any Advance to construct any facility which shall involve any district, site, building, structure or object which is  included in, or eligible for inclusion in, the National Register of Historic Places maintained by the Secretary of the Interior pursuant to the Historic Sites Act of 1935 and the National Historic Preservation Act of 1966.

 

Section 6.17                            Impairment of Wholesale Power Contracts

 

The Borrower shall not materially breach any obligation to be paid or performed by the Borrower on any Wholesale Power Contract, or take any action which is likely to materially impair the value of any Wholesale Power Contract.

 

Section 6.18                            State Regulation

 

The Borrower shall not elect to be regulated by any state governmental agency or authority.

 

Section 6.19                            Limitations on Short-Term Indebtedness

 

The Borrower shall not, without first complying with the requirements of Section 9.1 hereof, on any date permit Short-Term Indebtedness to exceed (i) thirty percent (30%) of the Borrower’s Total Utility Plant or (ii) during an Increased Oversight Period, a Highest Oversight Period or an Average Low MFI Period, fifteen percent (15%) of the Borrower’s total capitalization (determined in accordance with Accounting Requirements, except that such determination and calculation shall not be made on a consolidated basis and shall not, therefore,

 

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take into account total capitalization of the Borrower’s Affiliates and Subsidiaries) as of the end of the fiscal quarter immediately preceding such date.  As used in this Section 6.19, “Short-Term Indebtedness” means the result of (a) all indebtedness of, or guaranteed or in effect guaranteed (whether directly or indirectly, contingent or otherwise) against loss in respect thereof to the holder thereof by, the Borrower (other than trade payables) which on the date of original issuance is classified as short-term debt under Accounting Requirements minus (b) the sum of (1) all indebtedness covered in clause (a) of this sentence owed to any one or more members of the Borrower plus (2) all unadvanced amounts under closed, long-term (with a stated maturity date of greater than one year from the date of closing) loan, credit or similar facilities of the Borrower.

 

Section 6.20                            Additional Negative Covenants

 

The Borrower also shall comply with the additional negative covenants identified in Schedule 4 attached hereto.

 

ARTICLE VII - EVENTS OF DEFAULT

 

The following shall be “Events of Default” under this Agreement:

 

(a)                                 Representations and Warranties.  Any representation or warranty made by the Borrower in Article II hereof, in any certificate furnished to the RUS hereunder or in the Indenture shall be incorrect in any material respect at the time made;

 

(b)                                 Payment.  Default shall be made in the payment of or on account of interest on or principal of any Note when and as the same shall be due and payable, whether by acceleration or otherwise, which shall remain unsatisfied for five (5) Business Days;

 

(c)                                  Borrowing Under the Indenture in Violation of the Loan Contract.  Default by the Borrower in the observance or performance of any covenant or agreement contained in Subsection (a) or (b) of Section 6.8;

 

(d)                                 Other Covenants.  Default by the Borrower in the observance or performance of any other covenant or agreement contained in any of the Loan Documents, which shall remain unremedied for thirty (30) calendar days after written notice thereof shall have been given to the Borrower by the RUS, unless such default cannot be reasonably cured within such thirty (30) day period, then in such event and so long as a cure is being diligently pursued, the Borrower shall have a reasonable period of time beyond such thirty (30) days to complete such cure;

 

(e)                                  Corporate Existence.  The Borrower shall forfeit or otherwise be deprived of its corporate charter or any franchises, permits, easements, consents or licenses required to carry on any material portion of its business;

 

(f)                                   Other Obligations.  Default by the Borrower in the payment of any obligation, whether direct or contingent, for borrowed money in excess of ten million dollars ($10,000,000) or in the performance or observance of the terms of any instrument pursuant to which such obligation was created or securing such obligation which default shall have resulted in such

 

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obligation becoming or being declared due and payable prior to the date on which it would otherwise be due and payable;

 

(g)                                  Bankruptcy.  A court having jurisdiction in the premises shall enter a decree or order for relief in respect of the Borrower in an involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official, or ordering the winding up or liquidation of its affairs, and such decree or order shall remain unstayed and in effect for a period of ninety (90) consecutive days or the Borrower shall commence a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or under any such law, or consent to the appointment or taking possession by a receiver, liquidator, assignee, custodian or trustee, of a substantial part of its property, or make any general assignment for the benefit of creditors;

 

(h)                                 Dissolution or Liquidation.  Other than as provided in Subsection (g) above, the dissolution or liquidation of the Borrower, or failure by the Borrower promptly to forestall or remove any execution, garnishment or attachment of such consequence as shall impair its ability to continue its business or fulfill its obligations and such execution, garnishment or attachment shall not be vacated within thirty (30) days.  The term “dissolution or liquidation of the Borrower,” as used in this Subsection (h), shall not be construed to include the cessation of the corporate existence of the Borrower resulting either from a merger or consolidation of the Borrower into or with another corporation following a transfer of all or substantially all its assets as an entirety, under the conditions permitting such actions; and

 

(i)                                     Indenture.  Any Event of Default as set forth in Section 8.1 of the Indenture.

 

ARTICLE VIII - REMEDIES

 

Section 8.1                                   Remedies

 

Upon the occurrence of an Event of Default, then the RUS may pursue all rights and remedies available to the RUS that are contemplated by this Agreement in the manner, upon the conditions and with the effect provided in this Agreement, including, but not limited to, a suit for specific performance, injunctive relief or compensatory damages. The RUS is hereby authorized, to the maximum extent permitted by applicable Law, to demand specific performance of this Agreement at any time when the Borrower shall have failed to comply with any provision of this Agreement applicable to it.  The Borrower hereby irrevocably waives, to the maximum extent permitted by applicable Law, any defense based on the adequacy of a remedy at law that might be asserted as a bar to such remedy of specific performance. Nothing herein shall limit the right of the RUS to pursue all rights and remedies available to a creditor at law or in equity following the occurrence of an Event of Default, or any right or remedy available to the RUS as a Holder of an Obligation under the Indenture.  Each right, power and remedy of the RUS shall be cumulative and concurrent, and recourse to one or more rights or remedies shall not constitute a waiver of any other right, power or remedy.

 

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Section 8.2                                   Suspension of Advances

 

In addition to the rights, powers and remedies referred to in Section 8.1, the RUS may, in its absolute discretion, suspend or terminate the obligation to make or approve Advances hereunder if (i) any Event of Default, or any occurrence which with the passage of time or giving of notice would be an Event of Default, occurs and is continuing; or (ii) an event shall have occurred that has had or is likely to have a Material Adverse Effect.

 

ARTICLE IX - MISCELLANEOUS

 

Section 9.1                                   Notice to RUS; Objection of RUS

 

Before undertaking any transaction described in Article V or Article VI that requires compliance with the requirements of this Section 9.1, the Borrower shall give to the RUS (i) notice in writing describing in reasonable detail the proposed transaction and expressly stating that the transaction is covered by this Section 9.1 and (ii) drafts of all material documents to effect such transaction.  If the RUS delivers to the Borrower written notice that it objects to the proposed transaction within (I) 60 days (or such shorter period as the parties shall agree to in writing) in the case of any transaction of the nature described in paragraph (a) below, or (II) 30 days (or such shorter period as the parties shall agree to in writing) in the case of any transaction of the nature described in paragraph (b) below, the Borrower shall not complete the transaction without RUS approval.

 

(a)                                 Transactions requiring compliance with the requirements of this Section 9.1 pursuant to Sections 5.15, 6.2, 6.4, 6.6, 6.8 (a), 6.8 (b), 6.8 (c), 6.8 (e), 6.8 (g), 6.8 (h), 6.8(m), 6.8(n), 6.8(o), 6.8(p), 6.9, 6.11, 6.12 and 6.19 shall be subject to a 60-day review and objection period (or such shorter period as the parties shall agree to in writing); and

 

(b)                                 Transactions requiring compliance with the requirements of this Section 9.1 pursuant to Sections 6.5, 6.7, 6.8 (d), 6.8 (f), 6.8 (i), 6.8 (j), 6.8(k), 6.8(l) and 6.10 shall be subject to a 30-day review and objection period (or such shorter period as the parties shall agree to in writing).

 

 

Section 9.2                                   Notices

 

All notices, requests and other communications provided for herein, including, without limitation, any modifications of, or waivers, requests or consents under, this Agreement, shall be given or made in writing (including, without limitation, by telecopy) and delivered to the intended recipient at the “Address for Notices” specified below; or, as to any party, at such other address as shall be designated by such party in a notice to the other party.  Except as otherwise provided in this Agreement, all such communications shall be deemed to have been duly given when transmitted by telecopier or personally delivered or, in the case of a mailed notice, upon receipt, in each case given or addressed as provided for herein.  The Address for Notices of the respective parties are as follows:

 

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The Government:

 

Rural Utilities Service

United States Department of Agriculture

Room No. 5135 South

1400 Independence Avenue, S.W.

STOP:  1510

Washington, DC  20250-1510

Fax:  (202) 720-1725

Attention:  Administrator

 

With a copy to:

 

Rural Utilities Service

United States Department of Agriculture

Room No. 0270 South

1400 Independence Avenue, S.W.

STOP:  1568

Washington, DC  20250-1568

Fax:  (202) 205-1264

Attention:  Office of Portfolio Management & Risk Assessment

 

The Borrower:

 

Oglethorpe Power Corporation

2100 East Exchange Place

Tucker, Georgia 30084-5336

Fax:  (770) 270-7872

Attention:  President and Chief Executive Officer

With a copy to:  Vice President, Treasurer

 

Section 9.3                                   Expenses

 

To the extent permitted by Law, the Borrower shall pay all costs and expenses of the RUS, including reasonable fees of counsel, incurred in connection with the enforcement of the Loan Documents or with the preparation for such enforcement if the RUS has reasonable grounds to believe that such enforcement may be necessary.

 

Section 9.4                                   Late Payments

 

If payment of any amount due hereunder is not received at the United States Treasury in Washington, DC, or such other location as the RUS may designate to the Borrower, within five (5) Business Days after the due date thereof or such other longer time period as the RUS may prescribe from time to time in its policies of general application in connection with any late payment charge (such unpaid amount being herein called the “delinquent amount,” and the period beginning after such due date until payment of the delinquent amount being herein called the “late-payment period”), the Borrower shall pay to the RUS, in addition to all other amounts

 

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due under the terms of the Notes and this Agreement, any late-payment charge as may be fixed by RUS Regulations from time to time on the delinquent amount for the late-payment period.

 

Section 9.5                                   Filing Fees

 

To the extent permitted by Law, the Borrower agrees to pay all expenses of the RUS (including the fees and expenses of its counsel) in connection with the filing or recordation of all financing statements and instruments as may be required by the RUS in connection with this Agreement, including, without limitation, all documentary stamps, recordation and transfer taxes and other costs and taxes incident to recordation of any document or instrument in connection herewith.  The Borrower agrees to save harmless and indemnify the RUS from and against any liability resulting from the failure to pay any required documentary stamps, recordation and transfer taxes, recording costs, or any other expenses incurred by the RUS in connection with this Agreement.  The provisions of this Section 9.5 shall survive the execution and delivery of this Agreement and the payment of all other amounts due hereunder or due on the Notes.

 

Section 9.6                                   No Waiver

 

No failure on the part of the RUS to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise by the RUS of any right hereunder preclude any other or further exercise thereof or the exercise of any other right.

 

Section 9.7                                   Governing Law

 

EXCEPT TO THE EXTENT GOVERNED BY APPLICABLE FEDERAL LAW, THE LOAN DOCUMENTS SHALL BE DEEMED TO BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF GEORGIA.

 

Section 9.8                                   Holiday Payments

 

If any payment to be made by the Borrower hereunder shall become due on a day which is not a Business Day, such payment shall be made on the next succeeding Business Day and such extension of time shall be included in computing any interest in respect of such payment.

 

Section 9.9                                   Successors and Assigns

 

This Agreement shall be binding upon and inure to the benefit of the Borrower and the RUS and their respective successors and assigns, except that the Borrower may not assign or transfer its rights or obligations hereunder without the prior written consent of the RUS.

 

Section 9.10                            Complete Agreement; Amendments

 

This Agreement and the other Loan Documents are intended by the parties to be a complete and final expression of their agreement.  However, the RUS reserves the right to waive its rights to compliance with any provision of this Agreement, the RUS Regulations and the other Loan Documents.  No amendment, modification, or waiver of any provision of this Agreement, the RUS Regulations or the other Loan Documents (other than the Indenture), and no consent to

 

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any departure of the Borrower herefrom or therefrom, shall be effective unless approved in writing by the RUS in the form of either RUS Regulations or other writing signed by or on behalf of the RUS, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. Any Schedule or Exhibit to this Agreement may be amended and replaced by attaching a revised Schedule or Exhibit hereto, which revised Schedule or Exhibit shall have been signed by both parties hereto.

 

Section 9.11                            Headings

 

The headings and sub-headings contained in the titling of this Agreement are intended to be used for convenience only and do not constitute part of this Agreement.

 

Section 9.12                            Severability

 

If any term, provision or condition, or any part thereof, of this Agreement shall for any reason be found or held invalid or unenforceable by any governmental agency or court of competent jurisdiction, such invalidity or unenforceability shall not affect the remainder of such term, provision or condition nor any other term, provision or condition, and this Agreement, the Notes, and the Indenture shall survive and be construed as if such invalid or unenforceable term, provision or condition had not been contained herein.

 

Section 9.13                            Right of Set Off

 

Upon the occurrence and during the continuance of any Event of Default, the RUS is hereby authorized at any time and from time to time, without prior notice to the Borrower, to exercise rights of set off or recoupment and apply any and all amounts held or hereafter held, by the RUS or owed to the Borrower or for the credit or account of the Borrower against any and all of the obligations of the Borrower now or hereafter existing hereunder or under the Notes.  The RUS agrees to notify the Borrower promptly after any such set off or recoupment and the application thereof, provided that the failure to give such notice shall not affect the validity of such set off, recoupment or application.  The rights of the RUS under this Section 9.13 are in addition to any other rights and remedies (including other rights of set off or recoupment) which the RUS may have.  The Borrower waives all rights of set off, deduction, recoupment or counterclaim.

 

Section 9.14                            Schedules and Exhibits

 

Each Schedule and Exhibit attached hereto and referred to herein is an integral part of this Agreement.

 

Section 9.15                            Sole Benefit

 

The rights and benefits set forth in this Agreement are for the sole benefit of the parties hereto and may be relied upon only by them.

 

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Section 9.16                            Existing Loan Contract

 

This Agreement amends the Existing Loan Contract so that, as of the date of this Agreement, it reads in its entirety as herein provided.  As of the date hereof, this Agreement replaces and supersedes the Existing Loan Contract.

 

Section 9.17                            Authority of RUS Representatives

 

In the case of any consent, approval or waiver from the RUS that is required under this Agreement or any other Loan Document, such consent, approval or waiver must be in writing and signed by an authorized RUS representative to be effective.  As used in this Section 9.17, “authorized RUS representative” means the Administrator, and also means a person to whom the Administrator has officially delegated specific or general authority to take the action in question.  If not publicly available, the RUS will provide evidence of the authority of such authorized RUS representative upon the request of the Borrower.

 

Section 9.18                            Relation to RUS Regulations

 

(a)                                 In case of any conflict between the terms of this Agreement or the Indenture and the provisions of the RUS Regulations, the terms of this Agreement and the Indenture shall control.

 

(b)                                 The RUS Regulations shall apply to the Borrower to the extent and under the conditions expressly set forth in this Agreement (other than in Section 5.13 hereof), including, without limitation, Subsections (c) and (d) of this Section 9.18; provided, however, that, as provided in Section 9.10, such applicability may from time to time be amended, modified or waived by the issuance by RUS of one or more letters, documents, declarations or other writings that provide supplemental guidance with respect to such applicability.

 

(c)                                  The Borrower recognizes that some RUS Regulations implement Federal statutes or regulatory policies that are not limited to rural electrification but apply to many types of Federal assistance.  Nothing herein is intended to, or shall be deemed to, waive the requirements of any Federal statute or regulation that is applicable to the Borrower independently of any requirement made applicable solely by the RUS Regulations.

 

(d)                                 Subject to Subsections (b) and (c) above, if any RUS Regulation conflicts with the terms of this Agreement or the Indenture or imposes additional or different requirements, pursuant to 7 C.F.R. § 1710.113(c)(2), the provisions of this Agreement or the Indenture shall control and the RUS hereby waives compliance by the Borrower with such RUS Regulations.

 

Section 9.19                            Term

 

This Agreement shall remain in effect until one of the following two events has occurred:

 

(a)                                 The Borrower and the RUS replace this Agreement with another written agreement; or

 

35

 

(b)                                 All of the Borrower’s obligations under this Agreement and the Notes have been discharged and paid.

 

Section 9.20                            Relation to Indenture

 

The RUS is a party to this Agreement and a Holder of Outstanding Secured Obligations under the Indenture.  Both this Agreement and the Indenture govern the relationship between the Borrower and the RUS, and the parties intend that the Indenture and this Agreement independently govern such relationship.  Each provision of this Agreement is intended to and shall be fully operative and enforceable as written whether or not the subject matter of any such provision is or is not addressed by the Indenture, or, if so addressed, is addressed in a different way from that set forth in this Agreement.

 

(Signatures begin on next page.)

 

36

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed, and the Borrower’s execution to be attested under seal, as of the day and year first above written.

 

	
 
    	
OGLETHORPE   POWER CORPORATION (AN ELECTRIC MEMBERSHIP CORPORATION)
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Elizabeth B. Higgins
    
	
 
    	
 
    	
Executive   Vice President and
    
	
 
    	
 
    	
Chief   Financial Officer
    
	
 
    	
 
    
	
 
    	
Attest:
    	
/s/   Kimberly D. Adams
    
	
 
    	
 
    	
Secretary
    
	
 
    	
 
    
	
 
    	
[CORPORATE SEAL]
    
				

 

(Signatures continued on next page.)

 

37

 

(Signatures continued from previous page.)

 

	
 
    	
UNITED   STATES OF AMERICA,
    
	
 
    	
acting   by and through the Administrator of the Rural Utilities Service
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Christopher McLean
    
	
 
    	
 
    	
Administrator
    

 

38

 

SCHEDULE 1

 

to the Tenth Amended and Restated Loan Contract,

dated as of January 30, 2018, between Oglethorpe Power Corporation

(An Electric Membership Corporation)

and the United States of America

 

CONTEMPORANEOUS LOANS AND OUTSTANDING NOTES

 

1.                                      “Contemporaneous Loans” shall mean the loans evidenced by the following:

 

None.

 

2.                                      “Outstanding Notes” shall mean the following notes:

 

(a)                                 Retained Indebtedness Note, dated as of March 1, 1997, from the Borrower to FFB, in the original face principal amount of $2,637,782,327.56, as amended by each of the six Agreements Amending Note, made as of May 22, 2007, among the Borrower, FFB and the Government, acting through the Administrator of the RUS;

 

(b)                                 Reimbursement Note, dated as of March 1, 1997, from the Borrower to the Government, acting through the Administrator of the RUS;

 

(c)                                  Note (M-8), dated as of March 31, 2003, from the Borrower, to FFB, in the original face principal amount of $275,000,000;

 

(d)                                 Reimbursement Note (M-8), dated as of March 31, 2003, from the Borrower to the Government, acting through the Administrator of the RUS;

 

(e)                                  Note (N-8), dated as of March 31, 2003, from the Borrower to FFB, in the original face principal amount of $313,665,000;

 

(f)                                   Reimbursement Note (N-8), dated as of March 31, 2003, from the Borrower to the Government, acting through the Administrator of the RUS;

 

(g)                                  Note (P-8), dated as of May 31, 2006, from the Borrower to FFB, in the original face principal amount of $92,000,000;

 

(h)                                 Reimbursement Note (P-8), dated as of May 31, 2006, from the Borrower to the Government, acting through the Administrator of the RUS;

 

(i)                                     Note (R-8), dated as of July 25, 2007, from the Borrower to FFB, in the original face principal amount of $78,418,600; and

 

(j)                                    Reimbursement Note (R-8), dated as of July 25, 2007, from the Borrower to the Government, acting through the Administrator of the RUS.

 

 

(k)                                 Note (S-8), dated as of September 5, 2008, from the Borrower to FFB, in the original face principal amount of $441,522,000.

 

(l)                                     Reimbursement Note (S-8), dated as of September 5, 2008, from the Borrower to the Government, acting through the Administrator of the RUS.

 

(m)                             Note (V-8), dated as of August 13, 2010, from the Borrower to FFB, in the original face principal amount of $310,228,000.

 

(n)                                 Reimbursement Note (V-8), dated as of August 13, 2010, from the Borrower to the Government, acting through the Administrator of the RUS.

 

(o)                                 Note (W-8), dated as of April 15, 2011, from the Borrower to FFB, in the original face principal amount of $203,100,000.

 

(p)                                 Reimbursement Note (W-8), dated as of April 15, 2011, from the Borrower to the Government, acting through the Administrator of the RUS.

 

(q)                                 Note (X-8), dated as of April 15, 2011, from the Borrower to FFB, in the original face principal amount of $170,000,000.

 

(r)                                    Reimbursement Note (X-8), dated as of April 15, 2011, from the Borrower to the Government, acting through the Administrator of the RUS.

 

(s)                                   Note (Y-8), dated as of April 23, 2013, from the Borrower to FFB, in the original face principal amount of $127,703,000.

 

(t)                                    Reimbursement Note (Y-8), dated as of April 23, 2013, from the Borrower to the Government, acting through the Administrator of the RUS.

 

(u)                                 Note (AA-8), dated as of April 23, 2013, from the Borrower to FFB, in the original face principal amount of $492,610,000.

 

(v)                                 Reimbursement Note (AA-8), dated as of April 23, 2013, from the Borrower to the Government, acting through the Administrator of the RUS.

 

(w)                               Note (AB-8), dated as of September 2, 2014, from the Borrower to FFB, in the original face principal amount of $230,050,000.

 

(x)                                 Reimbursement Note (AB-8), dated as of September 2, 2014, from the Borrower to the Government, acting through the Administrator of the RUS.

 

3.                                      The Fiscal Year of Obligation is 2016 for the AC-8 FFB Note.

 

 

SCHEDULE 2

 

to the Tenth Amended and Restated Loan Contract,

dated as of January 30, 2018, between Oglethorpe Power Corporation

(An Electric Membership Corporation)

and the United States of America

 

PLANT AGREEMENTS

 

“Plant Agreements” shall mean, collectively, the following agreements relating to the ownership and operation of generating facilities:

 

1.                                      Plant Robert W. Scherer Units Numbers One and Two Purchase and Ownership Participation Agreement among Georgia Power Company, the Borrower, Municipal Electric Authority of Georgia and City of Dalton, Georgia (the “Co-Owners”), dated as of May 15, 1980, as amended by that certain Amendment, among the Co-Owners, dated as of December 30, 1985; and as amended by that certain Amendment Number Two, among the Co-Owners, dated as of July 1, 1986; and as amended by that certain Amendment Number Three, among the Co-Owners, dated as of August 1, 1988; and as amended by that certain Amendment Number Four, among the Co-Owners, dated as of December 31, 1990;

 

2.                                      Plant Robert W. Scherer Units Numbers One and Two Operating Agreement among the Co-Owners, dated as of May 15, 1980, as amended by that certain Amendment, among the Co-Owners, dated as of December 30, 1985; and as amended by that certain Amendment Number Two, among the Co-Owners, dated as of December 31, 1990;

 

3.                                      Plant Scherer Managing Board Agreement, among the Co-Owners, Gulf Power Company, Florida Power & Light Company and Jacksonville Electric Authority, dated as of December 31, 1990;

 

4.                                      Alvin W. Vogtle Nuclear Units Numbers One and Two Purchase and Ownership Participation Agreement, among the Co-Owners, dated as of August 27, 1976, as amended by that certain Amendment Number One, among the Co-Owners dated as of January 18, 1977; and as amended by that certain Amendment Number Two, among the Co-Owners, dated as of February 24, 1977;

 

5.                                      Plant Alvin W. Vogtle Additional Units Ownership Participation Agreement, among the Co-Owners, dated as of April 21, 2006, as amended by that certain Amendment No. 1 to Plant Alvin W. Vogtle Additional Units Ownership Participation Agreement, among the Co-Owners, dated as of April 8, 2008; and as amended by that certain Omnibus Amendment Regarding Plant Vogtle Additional Units Description, among the Co-Owners, dated as of December 1, 2013; and as amended by that certain Agreement and Amendment No. 2 to Plant Alvin W. Vogtle Additional Units Ownership Participation Agreement, among the Co-Owners, dated as of February 20, 2014; and as amended by that certain Owners Consent to Assignment and Direct Agreement and Amendment to Plant Alvin W. Vogtle Additional Units Ownership Participation Agreement, among the Co-Owners, the United States Department of Energy and PNC Bank, National 

 

 

Association, dated as of February 20, 2014; and as amended by that certain Agreement and Amendment No. 3 to  Plant Alvin W. Vogtle Additional Units Ownership Participation Agreement, among the Co-Owners, dated as of November 2, 2017;

 

6.                                      Plant Alvin W. Vogtle Nuclear Units Amended and Restated Operating Agreement, among the Co-Owners, dated as of April 21, 2006, as amended by that certain Amendment No. 1 to Plant Alvin W. Vogtle Nuclear Units Amended and Restated Operating Agreement, among the Co-Owners, dated as of April 8, 2008; and as amended by that certain Omnibus Amendment Regarding Plant Vogtle Additional Units Description, among the Co-Owners, dated as of December 1, 2013; and as amended by that certain Agreement and Amendment No. 2 to Plant Alvin W. Vogtle Nuclear Units Amended and Restated Operating Agreement, among the Co-Owners, dated as of February 20, 2014;

 

7.                                      Plant Hal Wansley Purchase and Ownership Participation Agreement, between Georgia Power Company and the Borrower, dated as of March 26, 1976;

 

8.                                      Plant Hal Wansley Operating Agreement, between Georgia Power Company and Borrower, dated as of March 26, 1976, as amended by that certain Amendment, dated as of January 15, 1995, and as amended by that certain Second Amendment, dated as of October 31, 2016;

 

9.                                      Plant Hal Wansley Combustion Turbine Agreement, between Georgia Power Company and the Borrower, dated as of August 2, 1982, and Amendment No. 1, dated as of October 20, 1982;

 

10.                               Edwin I. Hatch Nuclear Plant Purchase and Ownership Participation Agreement, between Georgia Power Company and the Borrower, dated as of January 6, 1975;

 

11.                               Edwin I. Hatch Nuclear Plant Operating Agreement, between Georgia Power Company and the Borrower, dated as of January 6, 1975;

 

12.                               The Rocky Mountain Pumped Storage Hydroelectric Project Operating Agreement, dated as of November 18, 1988, between the Borrower and Georgia Power Company;

 

13.                               The Rocky Mountain Pumped Storage Hydroelectric Project Ownership Participation Agreement, dated as of November 18, 1988, between the Borrower and Georgia Power Company;

 

14.                               Plant Wansley CC Projects Operating Agreement, dated as of June 1, 2002, among Georgia Power Company (GPC), Chattahoochee, Municipal Electric Authority of Georgia (MEAG) and Southern Power Company (SPC);

 

15.                               Wansley CC Projects Agreement Regarding Allocation of Costs, Administration of the Allocation of Natural Resources and Other Matters, dated as of June 1, 2002 among Chattahoochee, GPC, the Borrower, MEAG, the City of Dalton and SPC;

 

 

16.                               Plant Wansley CC Projects Ownership Participation Agreement, dated as of November 15, 2001, among GPC, Borrower and MEAG; and

 

17.                               Agreement For Operation and Maintenance of the Hal B. Wansley Combined Cycle Plant, dated as of July 11, 2001, between the Borrower and Siemens Westinghouse Operating Services Company, as amended by amendment or change order.

 

 

SCHEDULE 3

 

to the Tenth Amended and Restated Loan Contract,

dated as of January 30, 2018, between Oglethorpe Power Corporation

(An Electric Membership Corporation)

and the United States of America

 

SUBSIDIARIES

 

Rocky Mountain Leasing Corporation

 

 

SCHEDULE 4

 

to the Tenth Amended and Restated Loan Contract,

dated as of January 30, 2018, between Oglethorpe Power Corporation

(An Electric Membership Corporation)

and the United States of America

 

ADDITIONAL AFFIRMATIVE AND NEGATIVE COVENANTS

 

Section 1                                             Definitions

 

Capitalized terms that are not defined in this Schedule 4 shall have the meanings set forth in the Agreement.  The terms defined herein include both the plural and the singular.

 

“Chattahoochee and Talbot Projects” shall mean, collectively, the Chattahoochee Project and the Talbot Project.

 

“Chattahoochee Project” shall mean an intermediate generation facility located in Heard and Carroll Counties, Georgia, with a nominal capacity of approximately 520 MW, consisting of two Siemens Westinghouse V84.3A Combustion Turbines and auxiliaries, heat recovery steam generators (HRSG), and steam turbines operating in combined cycle service in a “2 on 1” configuration.

 

“Contract” shall mean any one of the NMBA and the Umbrella Agreement, including any schedules or exhibits thereto other than Appendix A to the NMBA, and including any executed Nuclear Operating Agreement or other contract described at Section 2.3.2 of the NMBA.

 

“Intercreditor Agreement” shall have the meaning given such term in the Rocky Mountain Participation Agreements.

 

“NMBA” shall mean the Second Amended and Restated Nuclear Managing Board Agreement, among the Co-Owners, dated as of April 21, 2006.

 

“PCB Documents” shall mean the indentures, loan agreements, notes, letters of representation, insurance policies, tender agent agreements, remarketing agreements and liquidity and standby bond purchase agreements entered into in connection with the Pollution Control Bonds.

 

“Pollution Control Bonds” shall mean those pollution control revenue bonds issued for the benefit of the Borrower between January 1, 1992 and March 11, 1997, for which security was provided, on the date of their respective issuances, under the RUS Mortgage.

 

“Rocky Mountain Lease Transaction” shall mean the lease and leaseback arrangements of the Borrower’s undivided interest in the Rocky Mountain Pumped Storage Hydroelectric Project, as contemplated by the Rocky Mountain Participation Agreements.

 

“Rocky Mountain Operative Documents” shall have the meaning given the term “Operative Documents” in the Rocky Mountain Participation Agreements.

 

 

“Rocky Mountain Participation Agreements” shall mean those certain four (4) Participation Agreements, dated as of December 30, 1996 and those certain two (2) Participation Agreements, dated as of January 3, 1997, between the Borrower, Rocky Mountain Leasing Corporation and certain other parties identified therein, including Philip Morris Capital Corporation, NationsBanc Leasing and R. E. Corporation and First Chicago Leasing Corporation, as Owner Participants, as such agreements may hereafter be amended or supplemented from time to time.

 

“Scherer Participation Agreements” shall mean the Participation Agreements, dated as of December 30, 1985, between the Borrower and each of IBM Credit Finance Corporation, HEI Investment Corp., Ford Motor Credit Corporation and Chrysler Capital Corporation, as such agreements have been or may hereafter be amended or supplemented from time to time.

 

“Scherer Transaction” shall mean the sale and leaseback arrangements of the Borrower’s 60% undivided interest in Unit No. 2 of Plant Robert W. Scherer, as contemplated by the Scherer Participation Agreements.

 

“Scherer Transaction Documents” shall be as defined in the Scherer Participation Agreements.

 

“Senior Creditors” shall have the meaning given such term in the Intercreditor Agreement.

 

“Senior Financing Agreements” shall have the meaning given such term in the Intercreditor Agreement.

 

“Senior Secured Parties” shall have the meaning given such term in the Intercreditor Agreement.

 

“Talbot Project” shall mean a peaking generation facility located in Talbot County, Georgia, with a nominal aggregate capacity of approximately 648 MWs, consisting of six Siemens Westinghouse V-84.2 combustion turbines and auxiliaries operating in simple cycle service;

 

“Umbrella Agreement” shall mean the ITSA, Power Sale and Coordination Umbrella Agreement, dated as of November 12, 1990.

 

Section 2                                             Notices

 

The Borrower shall promptly furnish to the RUS, or notify the RUS of, any of the following as soon as practical after receipt thereof or after it has obtained actual knowledge thereof:

 

(i)                                     Copies of:

 

(a)                                 All notices, certificates and opinions which the Borrower receives in connection with the transaction under the terms of the Scherer Transaction Documents;

 

 

(b)                                 Any executed “Nuclear Operating Agreement” (as defined by the NMBA);

 

(c)                                  Any and all “Strategic Plans” (as defined in the NMBA) approved under the NMBA;

 

(d)                                 Any amendment to Appendix A of the NMBA; or

 

(e)                                  All notices or other communications given to or received by the Borrower with respect to any “Event of Default,” “Loan Event of Default” or “Subordinated Deed to Secure Debt and Security Agreement Event of Default” under any “Operative Document” (all as defined in the Rocky Mountain Participation Agreements).

 

(ii)                                  Any attempt to remove the Borrower as agent under Article IV of the Rocky Mountain Pumped Storage Hydroelectric Project Operating Agreement, dated as of November 18, 1988, between the Borrower and Georgia Power Company (the “Ownership Agreement”), or Article VIII of the Ownership Agreement; or the occurrence of any default under the Ownership Agreement or the Rocky Mountain Pumped Storage Hydroelectric Project Ownership Agreement, dated as of November 18, 1988, between the Borrower and Georgia Power Company, which is material and is continuing; or

 

(iii)                               Any of the following and, if the RUS so requests in writing, the Borrower shall provide information concerning any of the following in form and substance satisfactory to the RUS:

 

(a)                                 That a default or event of default has occurred under any of the PCB Documents;

 

(b)                                 That a default or event of default under any of the PCB Documents has been cured;

 

(c)                                  That the Borrower has been called upon to protect, indemnify or otherwise hold harmless any person or entity pursuant to any of the PCB Documents;

 

(d)                                 That any trustee under any PCB Document has resigned, been removed or has become incapable of acting;

 

(e)                                  That any of the PCB Documents have been terminated or partially terminated;

 

(f)                                   That any of the Contracts have expired or have been terminated, extended or assigned either by any of the parties thereto or by a “Governmental Authority” (as defined in the applicable Contract) or that the parties to such Contract have executed an amendment to such Contract or any Governmental Authority has amended such Contract;

 

 

(g)                                  That a party to the NMBA, including the Borrower, has referred a dispute to arbitration pursuant to Section 9.14 of the NMBA, and thereafter, the results of such arbitration;

 

(h)                                 That a party to any Contract, including the Borrower, has commenced a legal proceeding either before a court or governmental agency with respect to such Contract (including, but not limited to, applications to FERC);

 

(i)                                     The President and Chief Executive Officer of the Borrower has concluded, or any other party to a Contract has given the Borrower written notice alleging, that a party to such Contract has failed to act in accordance with Prudent Utility Practices (as defined in the applicable Contract) or has engaged in willful misconduct; provided, however, that Borrower shall not be obligated to notify the RUS of any action which could not reasonably be expected to have a Material Adverse Effect;

 

(j)                                    That a person or entity has made a claim against any party to a Contract (including the Borrower); provided, however, that the Borrower need not provide notice of any claim the payment of which could not reasonably be expected to have a Material Adverse Effect;

 

(k)                                 That any member of the Borrower has sought service from Georgia Power Company pursuant to the “Antitrust Conditions” (as defined in the Umbrella Agreement);

 

(l)                                     That any representation or warranty of Georgia Power Company under Section 7.2 of the Umbrella Agreement or any matter in the legal opinion furnished to Borrower under Section 7.4 of the Umbrella Agreement is incorrect or in dispute;

 

(m)                             That as the result of any audit conducted pursuant to a party’s rights under any Contract, such party has made a claim or reserved the right to make a claim for an adjustment in an amount in excess of $10,000,000 for any charge made by Georgia Power Company under such contract; provided however, that the dollar amount stated in this condition is in January 1, 1991 dollars and shall be escalated annually for inflation using the Handy-Whitman Index of Public Utility Construction Costs (South Atlantic Region);

 

(n)                                 That a Governmental Authority (as defined in the NMBA) has assessed against the Operating Agent (as defined in the NMBA) a criminal penalty of any kind or a civil penalty of more than $110,000 or, when added to any other civil penalty assessed within the previous 12 months, is in the aggregate in excess of $440,000;

 

(o)                                 That a management audit is being conducted pursuant to Section 5.4 of the NMBA and, when applicable, that such audit has been concluded; or

 

 

(p)                                 That the Borrower has received notice pursuant to Section 5.1.2 of the Nuclear Operating Agreement (as defined by the NMBA) that a proceeding has been initiated in which the “Operating Agent” (as defined in the NMBA) is a party;

 

Section 3                                             Amendments

 

3.1                               PCB Documents; Scherer Transaction Documents; the Contracts. The Borrower shall not, without first complying with the requirements of Section 9.1 of the Agreement, amend, supplement, waive, terminate, extend or assign any of the agreements set forth below or agree to do so (except to the extent specifically governed by Section 5 of this Schedule 4):

 

(a)                                 The PCB Documents;

 

(b)                                 The Scherer Transaction Documents; or

 

(c)                                  The Contracts.

 

3.2                               Rocky Mountain Operative Documents. The Borrower shall not, without first complying with the requirements of Section 9.1 of the Agreement, terminate, extend or assign any of the Rocky Mountain Operative Documents.

 

3.3                               Notice and Objection Process.  Each of the foregoing actions shall be considered described in paragraph (a) of Section 9.1 of the Agreement and shall be subject to the review and objection period set forth in such paragraph.

 

Section 4                                             1985 — Plant Scherer Leveraged Lease

 

4.1                               Direction of the RUS.  Whenever requested in writing to do so by the RUS, such requests to be made for good cause as determined solely in the absolute discretion of the RUS, the Borrower shall exercise such rights and powers as may be vested in the Borrower and make such elections and requests as may be available to the Borrower, under the terms of the Scherer Transaction Documents in such manner and at such times as the RUS may so specify.

 

4.2                               Options to Purchase; Assignment; Etc.  The Borrower shall not, without the prior written approval of the RUS, exercise any of its options to purchase or renew its lease of an “Undivided Interest” as defined in the Scherer Participation Agreements; or assign, sublease, transfer or encumber its leasehold interest in the Undivided Interest.

 

Section 5                                             GPC Agreements

 

5.1                               Actions Requiring Consent of the RUS.  The Borrower shall not, without the prior written consent of the RUS, execute any conforming amendment to the “Joint Committee Agreement” (as defined in the NMBA).

 

5.2                               Notice of Approval or Rejection of Certain Contracts.  The Borrower shall not, without the prior written approval of the RUS, vote as a member of the “Nuclear Managing 

 

 

Board” (as defined in the NMBA) to approve or reject any Contract as described in Section 2.3.2 of the NMBA that would have been subject to the prior approval of the Securities and Exchange Commission pursuant to the Public Utility Holding Company Act of 1935 and the regulations thereunder, in each case as in effect on August 1, 2005, including, without limitation, 17 C.F.R. §§ 250.80 — 250.95, unless and until the Borrower shall have first given the RUS written notice of the proposed vote not less than 60 days prior to such vote.  If, upon receipt of such notice, the RUS shall notify the Borrower within the 60-day period preceding the vote of an objection to the proposed vote, then the Borrower shall not vote until it has obtained RUS approval of such vote.

 

5.3                               Audits.  Upon the request of the RUS, the Borrower shall conduct, to the satisfaction of the RUS, either a management audit or a cost audit, as provided in Sections 5.4 and 5.5, respectively, of the NMBA.  If the RUS requests in writing, the Borrower shall appoint the United States Department of Agriculture and the employees and representatives thereof as its duly authorized representative for the purpose of conducting any such management audit or cost audit, whether or not such audit is initiated at the direction of the RUS.

 

Section 6                                             Rocky Mountain Lease Transaction

 

The Borrower will not enter into or consent to any amendments or modifications of, or accept any waivers with respect to, any of the Rocky Mountain Operative Documents which would adversely affect the rights or remedies of the Senior Secured Parties and Senior Creditors with respect to the “Undivided Interest,” the “Ground Interest” or the “Rocky Mountain Agreements” (as such terms are defined in the Rocky Mountain Participation Agreements) under the Intercreditor Agreement or under the Senior Financing Agreements without the consent of the Government (which consent may be given or withheld in the sole and absolute discretion of the Government).

 

Section 7                                             Chattahoochee Project and Talbot Project

 

7.1                               Insurance on Chattahoochee and Talbot Projects

 

The Borrower will maintain insurance against acts of terrorism on the Chattahoochee and Talbot Projects, naming the Trustee as an additional insured and loss payee; provided, however, at least thirty (30) days prior to the initial date of such policy of insurance or any renewal date thereof, the Borrower will provide RUS a quote for such insurance against acts of terrorism, and RUS may waive the requirement for such insurance if RUS determines the cost of such insurance is unreasonable.

 

7.2                               Fuel Supply Plan

 

Upon reasonable written request of RUS, the Borrower will provide to RUS its then current fuel supply plan for the Chattahoochee and Talbot Projects.

 

7.3                               Maintenance of Warranties

 

The Borrower shall undertake all maintenance and other activities with respect to the Chattahoochee and Talbot Projects as necessary to keep in full force and effect all manufacturer’s warranties applicable to the Chattahoochee and Talbot Projects.

 

 

7.4                               Engineer’s Certification

 

The Borrower agrees that upon reasonable written request of RUS, which request shall be made no more frequently than once every two years, the Borrower will supply promptly to RUS a certification (the “Engineer’s Certification”), in form satisfactory to RUS, prepared by a professional engineer, who shall be satisfactory to RUS, as to the condition of the Chattahoochee and Talbot Projects.  In the event such Engineer’s Certification identifies any defects with respect to the Chattahoochee and Talbot Projects, the Borrower will undertake such remedial action to correct such defects as RUS may reasonably request.

 

7.5                               PILOT Transactions

 

In the event the Borrower enters into a PILOT Transaction with respect to either of the Chattahoochee and Talbot Projects, the Borrower agrees:

 

(a)                                 That it will duly observe and perform in all material respects its obligations under any such PILOT Transaction;

 

(b)                                 That it will not transfer or convey to any third party any bond or other evidence of indebtedness it may purchase in connection with any such PILOT Transaction; and

 

(c)                                  That it will terminate, upon written request of RUS, any such PILOT Transaction if the ad valorem tax abatement benefits achieved as a consequence of such PILOT Transaction are no longer being realized in any material part.

 

Section 8                                             Waiver

 

Any of the requirements contained in this Schedule 4 may be waived by the RUS upon written notice provided to the Borrower; provided, however, that such waiver may be rescinded by the RUS, in the sole discretion of the RUS, upon written notice of such rescission provided to the Borrower.  In the event written notice is provided to the Borrower that a waiver has been rescinded, then the requirements to which the notice relates shall be fully binding upon and enforceable against the Borrower 30 days after such notice is received by the Borrower, and such rescission shall not affect any action taken pursuant to any such waiver during the period of its effectiveness.

 

 

SCHEDULE 5

 

to the Tenth Amended and Restated Loan Contract,

dated as of January 30, 2018, between Oglethorpe Power Corporation

(An Electric Membership Corporation)

and the United States of America

 

LITIGATION

 

None.

 

 

SCHEDULE 6

 

to the Tenth Amended and Restated Loan Contract,

dated as of January 30, 2018, between Oglethorpe Power Corporation

(An Electric Membership Corporation)

and the United States of America

 

CERTAIN INVESTMENTS

 

1.                                      The Borrower’s existing Investment in the National Renewables Cooperative Organization, and any future Investments in respect of the National Renewables Cooperative Organization in the form of appreciation or patronage allocations.

 

2.                                      The Borrower’s existing Investment in ACES Power Marketing, and any future Investments in respect of ACES Power Marketing in the form of appreciation or patronage allocations.

 

3.                                      The Borrower’s existing Investment in the form of loans or advances to, or guaranties with respect to the obligations of, Georgia System Operations Corporation.

 

 

EXHIBIT A

 

to the Tenth Amended and Restated Loan Contract,

dated as of January 30, 2018, between Oglethorpe Power Corporation

(An Electric Membership Corporation)

and the United States of America

 

EQUAL OPPORTUNITY CONTRACT PROVISIONS

 

During the performance of this contract, the contractor agrees as follows:

 

(a)                                 The contractor shall not discriminate against any employee or applicant for employment because of race, color, religion, sex or national origin.  The contractor shall take affirmative action to ensure that applicants are employed, and that employees are treated during employment without regard to their race, color, religion, sex or national origin.  Such action shall include, but not be limited to the following: employment, upgrading, demotion or transfer, recruitment or recruitment advertising; layoff or termination; rates of pay or other forms of compensation; and selection for training, including apprenticeship.  The contractor agrees to post in conspicuous places, available to employees and applicants for employment, notices to be provided setting forth the provisions of this nondiscrimination clause.

 

(b)                                 The contractor shall, in all solicitations or advertisements for employees placed by or on behalf of the contractor, state that all qualified applicants shall receive consideration for employment without regard to race, color, religion, sex or national origin.

 

(c)                                  The contractor shall send to each labor union or representative of workers with which he has a collective bargaining agreement or other contract or understanding, a notice to be provided advising the said labor union or workers’ representative of the contractor’s commitments under this section, and shall post copies of the notice in conspicuous places available to employees and applicants for employment.

 

(d)                                 The contractor shall comply with all provisions of Executive Order 11246 of September 24, 1965, and of the rules, regulations and relevant orders of the Secretary of Labor.

 

(e)                                  The contractor shall furnish all information and reports required by Executive Order 11246 of September 24, 1965, and by the rules, regulations and orders of the Secretary of Labor, or pursuant thereto, and shall permit access to his books, records and accounts by the administering agency and the Secretary of Labor for purposes of investigation to ascertain compliance with such rules, regulations and orders.

 

(f)                                   In the event of the contractor’s noncompliance with the non-discrimination clauses of this contract or with any of the said rules, regulations or orders, this contract may be canceled, terminated or suspended in whole or in part and the contractor may be declared ineligible for further Government contracts or federally assisted construction contracts in accordance with procedures authorized in Executive Order 11246 of September 24, 1965, and such other sanctions may be imposed and remedies invoked as provided in said Executive Order or by rule, regulation or order of the Secretary of Labor, or as otherwise provided by law.

 

 

(g)                                  The contractor shall include the provisions of paragraphs (a) through (g) in every subcontract or purchase order unless exempted by rules, regulations or orders of the Secretary of Labor issued pursuant to section 204 of Executive Order 11246, dated September 24, 1965, so that such provisions shall be binding upon each subcontractor or vendor.  The contractor shall take such action with respect to any subcontract or purchase order as the administering agency may direct as a means of enforcing such provisions, including sanctions for noncompliance.  Provided, however, that in the event a contractor becomes involved in, or is threatened with, litigation with a subcontractor or vendor as a result of such direction by the agency, the contractor may request the United States to enter into such litigation to protect the interests of the United States.

 

 

EXHIBIT B

 

to the Tenth Amended and Restated Loan Contract,

dated as of January 30, 2018, between Oglethorpe Power Corporation

(An Electric Membership Corporation)

and United States of America

 

DESCRIPTION OF RATING AGENCY SERVICES

 

(a)                                 Credit evaluation and assignment of long term Credit Rating;

 

(b)                                 Ongoing evaluation of Borrower’s Credit Rating, including a credit report published annually;

 

(c)                                  Annual presentation by senior Rating Agency analysts on Borrower’s Credit Rating to the RUS, if requested by the RUS; and

 

(d)                                 Furnish to the RUS copies of any written reports to Borrower (to be provided by the Borrower pursuant to Section 5.10 or upon the request of the RUS).

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