Document:

Exhibit 10.3

 

AMENDMENT
NO. 1

[EMPLOYMENT][SEVERANCE]
AGREEMENT

 

	
   

  	
  November       ,
  2010

  

 

[Name]

c/o Cobalt International Energy, Inc.

Two Post Oak Central

1980 Post Oak Blvd., Suite 1200

Houston, TX  77056

 

Dear [Name]:

 

In connection with the initial public
offering (the “IPO”) of shares of common stock of
Cobalt International Energy, Inc. (the “Company”),
you entered into an [employment][severance] agreement with the Company dated as
of [October 23, 2009](1) (the “[Employment][Severance]
Agreement”).

 

Pursuant to Annex II of the
[Employment][Severance] Agreement, you agreed not to transfer a specified
number of shares of Company common stock issued to you in connection with the
IPO.  We are pleased to inform you that
Annex II of the Employment Agreement is hereby amended as follows.

 

The references to “[80 %]”(2) in
the definition of “Specified Number” are hereby amended effective immediately
to be “[60 %]”(3).

 

This Amendment No. 1 to the
[Employment][Severance] Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware.  

 

(1)  Mr. Bryant’s amendment will provide:
November 12, 2009.

(2)  Mr. Bryant’s amendment will provide:
90%.

(3)  Mr. Bryant’s amendment will provide:
70%.

 

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  COBALT INTERNATIONAL
  ENERGY, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:EXHIBIT 4.1

 

SIXTH
AMENDED AND RESTATED LOAN CONTRACT

 

 

Dated
as of August 13, 2010

 

 

between

 

 

OGLETHORPE
POWER CORPORATION

 

(AN
ELECTRIC MEMBERSHIP CORPORATION)

 

 

and

 

 

UNITED
STATES OF AMERICA

 

 

RUS
Project Designation:

Georgia
109 “V8” OPC

 

 

TABLE
OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  
	
  ARTICLE I -DEFINITIONS

  	
  1

  
	
   

  	
   

  
	
  ARTICLE II - REPRESENTATIONS AND WARRANTIES

  	
  6

  
	
   

  	
   

  
	
  ARTICLE III - THE LOANS

  	
  8

  
	
  Section 3.1

  	
  The Loans

  	
  8

  
	
  Section 3.2

  	
  No
  Further Advances

  	
  8

  
	
  Section 3.3

  	
  Advances
  under any Partially Unadvanced Note and the V-8 FFB Note

  	
  9

  
	
  Section 3.4

  	
  Interest
  Rates and Payment

  	
  9

  
	
  Section 3.5

  	
  Prepayment

  	
  9

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV - CONDITIONS OF LENDING

  	
  9

  
	
  Section 4.1

  	
  General
  Conditions

  	
  9

  
	
  Section 4.2

  	
  Conditions
  to Advances Under any Partially Unadvanced Note and the V-8 FFB Note

  	
  10

  
	
   

  	
   

  	
   

  
	
  ARTICLE V - AFFIRMATIVE COVENANTS

  	
  11

  
	
  Section 5.1

  	
  Generally

  	
  11

  
	
  Section 5.2

  	
  Performance
  under Indenture

  	
  12

  
	
  Section 5.3

  	
  Annual
  Compliance Certificate

  	
  12

  
	
  Section 5.4

  	
  Simultaneous
  Prepayment of Contemporaneous Loans

  	
  12

  
	
  Section 5.5

  	
  Rates and
  Coverage Ratios

  	
  12

  
	
  Section 5.6

  	
  Financial
  Books

  	
  13

  
	
  Section 5.7

  	
  Rights of
  Inspection

  	
  13

  
	
  Section 5.8

  	
  Real
  Property Acquisition

  	
  13

  
	
  Section 5.9

  	
  Financial
  Reports

  	
  13

  
	
  Section 5.10

  	
  Miscellaneous
  Reports and Notices

  	
  13

  
	
  Section 5.11

  	
  Variable
  Rate Indebtedness

  	
  14

  
	
  Section 5.12

  	
  Special
  Construction Account

  	
  14

  
	
  Section 5.13

  	
  Compliance
  with Laws

  	
  15

  
	
  Section 5.14

  	
  Plant
  Agreements

  	
  15

  
	
  Section 5.15

  	
  Lockbox
  Agreement

  	
  15

  
	
  Section 5.16

  	
  Nuclear
  Fuel

  	
  15

  
	
  Section 5.17

  	
  Power
  Requirements Studies

  	
  15

  
	
  Section 5.18

  	
  Long
  Range Engineering Plans and Construction Work Plans

  	
  16

  
	
  Section 5.19

  	
  Design
  Standards, Construction Standards and List of Materials

  	
  16

  
	
  Section 5.20

  	
  Plans and
  Specifications

  	
  16

  
	
  Section 5.21

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

  	
  16

  
	
  Section 5.22

  	
  Contract
  Bidding Requirements

  	
  16

  

 

i

 

	
  Section 5.23

  	
  Nondiscrimination

  	
  16

  
	
  Section 5.24

  	
  “Buy
  American” Requirements

  	
  17

  
	
  Section 5.25

  	
  Maintenance
  of Credit Ratings

  	
  18

  
	
  Section 5.26

  	
  Application
  of Advances

  	
  18

  
	
  Section 5.27

  	
  Excepted
  Property

  	
  18

  
	
  Section 5.28

  	
  Additional
  Affirmative Covenants

  	
  18

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI - NEGATIVE COVENANTS

  	
  18

  
	
  Section 6.1

  	
  General

  	
  18

  
	
  Section 6.2

  	
  Limitations
  on System Extensions, Additions and Dispositions

  	
  18

  
	
  Section 6.3

  	
  Limitations
  on Employment and Retention of General Manager

  	
  19

  
	
  Section 6.4

  	
  Limitations
  on Certain Types of Contracts

  	
  19

  
	
  Section 6.5

  	
  Limitations
  on Loans, Investments and Other Obligations

  	
  21

  
	
  Section 6.6

  	
  Depreciation
  Rates

  	
  21

  
	
  Section 6.7

  	
  Rate Reductions

  	
  22

  
	
  Section 6.8

  	
  Indenture
  Restrictions

  	
  22

  
	
  Section 6.9

  	
  Negative
  Pledge

  	
  24

  
	
  Section 6.10

  	
  Emissions
  Allowances

  	
  25

  
	
  Section 6.11

  	
  Changes
  to Plant Agreements

  	
  25

  
	
  Section 6.12

  	
  Fiscal
  Year

  	
  25

  
	
  Section 6.13

  	
  Limits on
  Variable Rate Indebtedness

  	
  25

  
	
  Section 6.14

  	
  Limitations
  on Changing Principal Place of Business

  	
  25

  
	
  Section 6.15

  	
  Limitations
  on RUS Financed Extensions and Additions

  	
  26

  
	
  Section 6.16

  	
  Historic
  Preservation

  	
  26

  
	
  Section 6.17

  	
  Impairment
  of Wholesale Power Contracts

  	
  26

  
	
  Section 6.18

  	
  State
  Regulation

  	
  26

  
	
  Section 6.19

  	
  Limits on
  Short-Term Indebtedness

  	
  26

  
	
  Section 6.20

  	
  Additional
  Negative Covenants

  	
  27

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII - EVENTS OF DEFAULT

  	
  27

  
	
   

  	
   

  
	
  ARTICLE VIII - REMEDIES

  	
  28

  
	
  Section 8.1

  	
  Remedies

  	
  28

  
	
  Section 8.2

  	
  Suspension
  of Advances

  	
  28

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX - MISCELLANEOUS

  	
  29

  
	
  Section 9.1

  	
  Notice to
  RUS; Objection of RUS

  	
  29

  
	
  Section 9.2

  	
  Notices

  	
  29

  
	
  Section 9.3

  	
  Expenses

  	
  30

  
	
  Section 9.4

  	
  Late
  Payments

  	
  30

  
	
  Section 9.5

  	
  Filing
  Fees

  	
  31

  
	
  Section 9.6

  	
  No Waiver

  	
  31

  
	
  Section 9.7

  	
  Governing
  Law

  	
  31

  
	
  Section 9.8

  	
  Holiday
  Payments

  	
  31

  
	
  Section 9.9

  	
  Successors
  and Assigns

  	
  31

  

 

ii

 

	
  Section 9.10

  	
  Complete
  Agreement; Amendments

  	
  31

  
	
  Section 9.11

  	
  Headings

  	
  32

  
	
  Section 9.12

  	
  Severability

  	
  32

  
	
  Section 9.13

  	
  Right of
  Set Off

  	
  32

  
	
  Section 9.14

  	
  Schedules
  and Exhibits

  	
  32

  
	
  Section 9.15

  	
  Sole
  Benefit

  	
  32

  
	
  Section 9.16

  	
  Existing
  Loan Contract

  	
  33

  
	
  Section 9.17

  	
  Authority
  of RUS Representatives

  	
  33

  
	
  Section 9.18

  	
  Relation
  to RUS Regulations

  	
  33

  
	
  Section 9.19

  	
  Term

  	
  33

  
	
  Section 9.20

  	
  Relation
  to Indenture

  	
  34

  

 

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

  
	
   

  	
   

  	
   

  
	
  Exhibit A

  	
   

  	
  Equal Opportunity Contract
  Provisions

  
	
   

  	
   

  	
   

  
	
  Exhibit B

  	
   

  	
  Description of Rating
  Agency Services

  

 

i

 

SIXTH
AMENDED AND RESTATED LOAN CONTRACT

 

THIS SIXTH AMENDED AND RESTATED
LOAN CONTRACT, dated as of August 13, 2010, 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 Fifth Amended and Restated Loan Contract,
dated as of December 22, 2008, 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 V-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.

 

 

“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 V-8 FFB Note.

 

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

 

“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 a
rating assigned by a Rating Agency (i) 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 to indebtedness of the
type described in clause (i) hereof, a “shadow rating” of the
Borrower’s senior, secured long-term indebtedness (that is not subject to
Credit Enhancement).

 

“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(b).

 

“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.

 

“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 

 

2

 

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), 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), any period commencing on the date that the Borrower
receives written notice from the Administrator that 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 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, 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 

 

3

 

corporation, except
investments in securities or deposits issued, guaranteed or fully insured as to
payment by the Government or any agency thereof.

 

“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.

 

“Loan Documents” shall mean,
collectively, this Agreement, the Indenture and the related documents delivered
thereunder, the Notes 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 material adverse effect on the Borrower’s overall condition,
financial or otherwise, operations, properties, margins or business or on the
ability of the Borrower to perform its obligations under the Loan Documents.

 

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

 

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

 

“Outstanding Notes” shall
mean those notes, other than the V-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 V-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, identified as Partially Unadvanced
Notes on Schedule 1 hereto, as to which portions of the available
principal amount thereunder remain unadvanced.

 

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

 

“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 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 

 

4

 

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).

 

“RUS Form 12” shall
mean the version of RUS Form 12 (including subdivisions thereof including,
but not limited to, RUS Form 12a) submitted by the Borrower and dated as
of December 31, 2009 or corresponding information in future versions of
such form or any form required by RUS in substitution therefor containing
corresponding information.

 

“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
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 

 

5

 

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.

 

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

 

“V-8 Loan Documents” shall
mean, collectively, this Agreement, the V-8 Notes and the supplement to the
Indenture and the related documents delivered thereunder pursuant to which the
V-8 Notes are issued.

 

“V-8 FFB Note” shall mean
the note of the Borrower, dated as of August 13, 2010, payable to the
order of FFB in the face principal amount of $310,228,000, 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.

 

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

 

“V-8 Reimbursement Note”
shall mean the note of the Borrower, dated as of August 13, 2010,
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 V-8 FFB Note, and all amendments, supplements,
extensions and replacements to, of or for such note.

 

“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.

 

6

 

(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.

 

(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.  There are no pending legal,
arbitration or governmental actions or proceedings to which the Borrower is a
party or to which any of its property is subject which, if adversely
determined, could reasonably be expected to have a Material Adverse Effect, and
to the best of the Borrower’s knowledge, no such actions or proceedings are
threatened or contemplated, except as the Borrower has disclosed to the RUS in
writing.

 

(g)           Financial Statements; No Material
Adverse Change; Etc.  The financial statements of the Borrower
dated as of December 31, 2009, 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
material adverse change in the financial condition or operations of the Borrower.

 

(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, Oglethorpe 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 is located in the states and counties identified in the
Indenture.

 

7

 

(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.

 

(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, free and clear of any lien or encumbrance
other than the lien of the Indenture, Permitted Exceptions and liens permitted
by Section 13.6 of the Indenture.

 

(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)           V-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 $310,228,000 to be made by FFB
to the Borrower (the “V-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).

 

8

 

Section 3.3            Advances under any Partially Unadvanced Note and the V-8 FFB Note

 

With respect to Advances to
be made under any Partially Unadvanced Note or the V-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.

 

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.

 

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 execution by the RUS of
this Agreement):

 

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

 

(b)           Loan Documents.  The RUS shall receive duly
executed originals of the V-8 Loan Documents. 
The V-8 FFB Note, the V-8 Reimbursement Note and this Agreement must be
received within ninety (90) days of the date of the Designation Notice for the
V-8 FFB Note committing FFB to purchase such V-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;

 

(c)           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
V-8 Loan Documents have been obtained and are in full force and effect;

 

9

 

(d)           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 V-8
Loan Documents have been obtained and are in full force and effect;

 

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

 

(f)            V-8 Notes.  That each of the V-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

 

(g)           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 V-8 Loan Documents, in form and content acceptable to the RUS.

 

Section 4.2            Conditions to Advances Under any Partially Unadvanced Note and the V-8
FFB Note

 

The obligation of the RUS to
approve any Advance under any Partially Unadvanced Note or the V-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 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;

 

(d)           Event of Default.  That no Event of Default, and
no event which with the passage of time or giving of notice 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;

 

10

 

 

 

(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 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 V-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.

 

11

 

Section 5.2            Performance under Indenture

 

The
Borrower shall duly observe and perform all of its obligations under the
Indenture 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.

 

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            Rates and Coverage Ratios

 

(a)           Prospective Notice of Change in
Rates.  The
Borrower shall give the RUS sixty (60) days’ prior written notice of any
proposed change in the Borrower’s general rate structure.

 

(b)           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.

 

(c)           Corrective Plans.  Within thirty (30) days of (i) sending
a notice to the RUS under Subsection (b) 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.

 

12

 

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 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 

 

13

 

department,
commission, board, bureau, agency or instrumentality affecting the Borrower
which, if adversely determined, 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.

 

14

 

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, the RUS may
require in writing the Borrower to authorize and empower the Government to
enforce any 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 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

 

Upon the written request of
the RUS, to the extent the Borrower owns nuclear fuel 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
to be subjected to the lien of the Indenture.

 

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 

 

15

 

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.

 

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 

 

16

 

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

 

17

 

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 RUS Form 12(a),
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 otherwise related sale, transfer, lease or
other disposition, increase the generating capacity of the 

 

18

 

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 “Legal Requirements” (as
defined in the Wholesale Power Contract). 
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:

 

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

 

19

 

(ii)           any contract for the purchase, exchange or
sale of electric power and energy that has a term exceeding three (3) 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 three (3) 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)           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 seven (7) 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
three (3) years for the 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

 

20

 

 

requirements
of Section 9.1, and the RUS cannot require the Borrower to terminate, that
same contract after year seven (7) 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.

 

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 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) 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.

 

Section 6.6                                   Depreciation Rates

 

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

 

21

 

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; 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)           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, or sell, lease or sublease any portion of the Trust Estate pursuant
to paragraph H of Section 5.1 of the Indenture;

 

(f)            submit an Available
Margins Certificate under Article IV of the Indenture for the purpose of
issuing Additional Obligations unless such 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 Certificate;

 

22

 

(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
and trustees without first complying with the requirements of Section 9.1
in connection with the issuance of Obligations (or other indebtedness secured
by 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
currently granted to development authorities and trustees in connection with
the Existing Obligations;

 

(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;

 

(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 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, unless such
Engineer is Independent, if the amount of the property as to which the Engineer’s
Certificate applies is greater than ten million dollars ($10,000,000);

 

(k)           issue any Additional
Obligations upon the basis of Designated Qualifying Securities unless the
Borrower has a one hundred percent (100%) ownership or membership 

 

23

 

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; or

 

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

 

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);

 

(b)           as to the Excepted
Property described in paragraphs B through E, inclusive, and paragraph K of the
definition of Excepted Property, 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;

 

24

 

(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); or

 

(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.

 

Section 6.10                            Emissions Allowances

 

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 allowances
for emissions or similar rights granted by any governmental authority, except
allowances or similar rights that 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 at the time of such sale, assignment or other disposition.

 

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.

 

Section 6.13                            Limits on Variable Rate Indebtedness

 

During
an Increased Oversight Period or 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.

 

25

 

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 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
voluntarily allow or permit itself to be regulated by any state governmental
agency or authority.

 

Section 6.19                            Limits on Short-Term Indebtedness

 

The
Borrower shall not, without first complying with the requirements of Section 9.1,
on any date permit Short-Term Indebtedness to exceed fifteen percent (15%) of
the Borrower’s total capitalization (determined in accordance with Accounting
Requirements, except that such determination and calculations shall not be made
on a consolidated basis and shall not, therefore, take into account the
Short-Term Indebtedness, total capitalization  of
the Borrower’s Affiliates and Subsidiaries) as of the end of the fiscal quarter
immediately preceding such date; provided, however, that
notwithstanding and in lieu of the foregoing, (i) for the period from the
date hereof through December 31, 2014, the Borrower shall not on any date
permit Short-Term Indebtedness to exceed thirty percent (30%) of the Borrower’s
Total Utility Plant and (ii) for any subsequent period or periods as to
which RUS provides its prior written consent, the Borrower shall not on any
date permit Short-Term Indebtedness to exceed thirty percent (30%) of the
Borrower’s Total Utility Plant or such other threshold as the RUS shall specify
in such prior written consent.  As used
in this Section 6.19, “Short-Term Indebtedness” means 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.

 

26

 

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 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, 

 

27

 

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 and any
event (as set forth in such Section 8.1) that with the giving of notice or
the passage of time, or both, could become an Event of Default.

 

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.

 

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.

 

28

 

ARTICLE IX - MISCELLANEOUS

 

Section 9.1                                   Notice to RUS; Objection of RUS

 

Before undertaking any
transaction described in 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), 6.9, 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:

 

29

 

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) 720-1401

Attention:  Power Supply Division

 

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

 

30

 

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
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 

 

31

 

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 hereof or thereof, and no consent to 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 to this Agreement may be amended and replaced by attaching a revised
Schedule hereto, which revised Schedule 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.

 

32

 

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).

 

(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 on the date of this Agreement 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

 

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

 

33

 

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.)

 

34

 

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/  Patricia N. Nash

  
	
   

  	
   

  	
   

  	
  Secretary

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  [CORPORATE SEAL]

  

 

(Signatures
continued on next page.)

 

35

 

(Signatures
continued from previous page.)

 

 

	
   

  	
  UNITED STATES OF AMERICA,

  
	
   

  	
  acting by and through the
  Administrator

  
	
   

  	
  of the Rural Utilities
  Service

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Jonathan Adelstein

  
	
   

  	
   

  	
  Administrator

  

 

36

 

SCHEDULE
1

 

to the Sixth Amended and Restated Loan Contract,

dated as of August 13, 2010, 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:

 

(a)                                  Promissory
Note, dated March 1, 1997, made by the Borrower to the order of CoBank, ACB, in
the original face principal amount of $1,856,475.12; and

 

(b)                                 Promissory
Note, dated March 1, 1997, made by the Borrower to the order of CoBank, ACB, in
the original face principal amount of $7,102,740.26.

 

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)                                  Mortgage Note,
dated as of March 1, 1997, from the Borrower to the Government, acting through
the Administrator of the RUS, in the original face principal amount of
$3,820,352.89;

 

(d)                                 Mortgage Note,
dated as of March 1, 1997, from the Borrower to the Government, acting through
the Administrator of the RUS, in the original face principal amount of
$14,786,985.70;

 

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

 

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

 

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

 

 

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

 

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

 

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

 

(k)                                  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

 

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

 

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

 

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

 

3.                                       “Partially
Unadvanced Notes” shall mean the following notes:

 

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

 

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

 

 

SCHEDULE
2

 

to the Sixth Amended and Restated Loan Contract,

dated as of August 13, 2010, 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 (the “Vogtle Additional Units Ownership Agreement”);

 

6.                                       Plant Alvin W.
Vogtle Nuclear Units Amended and Restated Operating Agreement, among the
Co-Owners, dated as of April 21, 2006;

 

 

7.                                       Plant Hal
Wansley Purchase and Ownership Participation Agreement, between Georgia Power
Company and the Borrower, dated as of March 26, 1976, as amended by that
certain Amendment, dated as of January 15, 1995;

 

8.                                       Plant Hal
Wansley Operating Agreement, between Georgia Power Company and Borrower, dated
as of March 26, 1976;

 

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 Option 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 Sixth Amended and Restated Loan Contract,

dated as of August 13, 2010, between Oglethorpe Power Corporation

(An
Electric Membership Corporation)

and the United States of America

 

SUBSIDIARIES

 

1.                                       Black Diamond
Energy, Inc.

 

2.                                       Rocky Mountain
Leasing Corporation

 

 

SCHEDULE
4

 

to the Sixth Amended and Restated Loan Contract,

dated as of August 13, 2010, 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 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.

 

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

 

“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                                             Talbot
Project and Chattahoochee Project

 

7.1          Insurance on Projects

 

The Borrower will maintain
insurance against acts of terrorism on the 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 Projects.

 

 

7.3          Maintenance of Warranties

 

The Borrower shall undertake
all maintenance and other activities with respect to the Projects as necessary
to keep in full force and effect all manufacturer’s warranties applicable to
the 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 Projects.  In the
event such Engineer’s Certification identifies any defects with respect to the
Projects, the Borrower will undertake such remedial action to correct such
defects as RUS may reasonably request.

 

7.5          Tax Abatement Arrangements

 

In
the event the Borrower enters into a lease pursuant to Section 5.1 H of
the Indenture with respect to either of the Projects for purposes of ad valorem
tax abatement, the Borrower agrees:

 

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

 

(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 lease; and

 

(c)                                  That it will
terminate, upon written request of RUS, any such lease if the ad valorem tax
abatement benefits achieved as a consequence of such lease 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 Sixth Amended and Restated Loan Contract,

dated as of August 13, 2010, between Oglethorpe Power
Corporation

(An Electric Membership Corporation)

and the United States of America

 

LITIGATION

 

Environmental Matters

 

Atomic
Safety and Licensing Board Proceedings regarding Vogtle Units 3 & 4

 

Oglethorpe is one of the
applicants for an Early Site Permit (“ESP”) with respect to two proposed
additional nuclear electric generating units at the Vogtle Electric Generating
Plant site, of which Oglethorpe is a part owner. Southern Nuclear Operating
Company, on behalf of all of the owners of the proposed additional Plant Vogtle
units, filed the ESP application. A petition for intervention in the Vogtle ESP
process was filed in December, 2006 by five entities (Center for a Sustainable
Coast, Savannah Riverkeeper, Southern Alliance for Clean Energy, Atlanta Women’s
Action for New Directions, and Blue Ridge Environmental Defense League) which
included seven contentions. The Nuclear Regulatory Commission (“NRC”) appointed
an Atomic Safety and Licensing Board (“ASLB”) panel consisting of three
administrative law judges to review the contentions and determine
admissibility. The ASLB panel held a pre-hearing in February 2007 to
review the contentions and rejected all but two of the proposed contentions.
The contentions that were admitted alleged 1) that the analysis of impacts on
aquatic life in the Savannah River, including impingement, entrainment,
chemical and thermal impacts of the proposed cooling system intake and
discharge structures was not adequate, including the baseline description of
aquatic life in the vicinity of the proposed units to the extent it is related
to impacts, and 2) that the Environmental Report (“ER”) fails to fully address
alternative cooling technologies, in particular, dry cooling. On September 22,
2008, the above named intervenors filed an additional contention, which was
admitted for hearing by the ASLB panel on October 24, 2008. The contention
alleges that the analysis of impacts of potential dredging in the Savannah
River in the Environmental Impact Statement was not adequate. The ASLB panel
held a hearing in March 2009, at which time testimony was heard and the
ASLB panel questioned Southern Nuclear Operating Company (on behalf of the
applicants), the intervenors, and the NRC staff. On June 22, 2009 the ASLB
ruled in favor of the applicants and the NRC Staff, and against the Joint
Intervenors, as to each of the contentions.

 

The Joint Intervenors filed
a Petition for Review with the Commission on two issues - 1) the exclusion by
the ASLB of evidence on Contention 1 that was deemed outside the scope of the
contention and 2) the alleged deferral by the ASLB of the resolution of the
dredging contention to the Army Corps of Engineers Environmental Review.
Southern Nuclear Operating Company and the NRC Staff opposed the Petition on
the grounds that: 1) the ASLB decision was correct and 2) the ASLB did not
defer to the Army Corps of Engineers on the dredging issue but considered and
disposed of the contention on the merits.

 

 

On August 17, 2009, the
ASLB entered an Order on uncontested issues in the ESP proceeding, affirming
the sufficiency of the NRC Staff’s safety and environmental reviews and finding
that the ESP and Limited Work Authorization (“LWA”), allowing subsurface
foundation work on Vogtle 3 and 4 to proceed in advance of a Combined License,
should be issued. The ESP and LWA were issued by NRC on August 26,
2009.  The Petition for Review was denied
by the Commission on January 7, 2010.

 

On May 31, 2008, the
NRC docketed applications for two Combined Construction Permit and Operating
Licenses (“COL”) submitted by Southern Nuclear Operating Company on behalf of
the owners of the proposed Vogtle Units 3 and 4, including Oglethorpe. On September 16,
2008 the NRC issued a Notice of Hearing and of Opportunity to Intervene in the
COL application (“COLA”) proceeding. On November 17, 2008 an ASLB panel
was appointed to preside over the mandatory hearing and any contested hearing
that may be ordered in the proceeding. On November 17, 2008 the same
intervenors in the Vogtle ESP proceeding filed a joint petition to intervene
and three proposed contentions. On December 12, 2008 Southern Nuclear and
NRC Staff responded to the contentions in separate Answers opposing the
admission of each of the contentions. On January 28, 2009, oral arguments
were presented to the ASLB panel by Southern Nuclear Operating Company, on
behalf of all the owners of the proposed Vogtle Units 3 and 4, and by the
intervenors, with respect to the three contentions raised by the
intervenors.  On March 5, 2009 the
ASLB rejected two of the proffered COLA contentions and admitted one
contention, alleging that the COLA omitted required information related to the
plan for long term storage of low level radioactive waste in the event the new
Vogtle units do not have access to a licensed disposal facility. On March 14
and 16, 2009, respectively, Southern Nuclear and the NRC Staff appealed the
admission of the Contention to the Commission. The NRC affirmed the ASLB’s
admission of the contention on July 31, 2009 and the ASLB allowed the
intervenors to amend the contention on January 8, 2010.  A separate contention was filed related to
the same Savannah River dredging concern addressed during the ESP
proceeding.  The ASLB refused to admit
the new dredging contention for hearing in the COLA proceeding in an order
dated September 24, 2009 on the ground that it was not ripe for review.

 

On October 23, 2009,
the Joint Intervenors filed a Petition for Review of the ESP decisions in
the United States Court of Appeals for the District of Colombia Circuit,
asserting that the issuance of the ESP by the NRC violated the Atomic
Energy Act, the National Environmental Policy Act, and the Administrative
Procedures Act. The NRC and Southern Nuclear have moved to dismiss the Petition
for Review on the grounds that the petitioners failed to exhaust their
administrative remedies before the NRC prior to filing the Petition in the
Court of Appeals. Additionally, five individuals filed a Petition to Intervene
asserting that a proposed amendment to the Army Corps of Engineers Drought
Contingency Plan constituted new and significant information that must be
considered by the NRC under the National Environmental Policy Act in the COLA
proceeding.  The ASLB rejected this
contention on January 8, 2010.  No
petition for review has been filed.

 

On January 29, 2010,
Southern Nuclear moved for summary disposition of the contention, as amended,
pending in the Vogtle COLA proceeding. 
On May 19, 2010, the ASLB granted Southern Nuclear’s motion for
summary disposition and ruled in favor of Southern 

 

 

Nuclear on the merits of the
COLA contention, concluding the contested portion of the COLA proceeding.  On March 5, 2010, the intervenors filed
an additional Petition for Review in the D.C. Circuit Court of Appeals of the
NRC’s denial of the Petition for Review of the issuance of the ESP.  The intervenors voluntarily withdrew all
petitions for Review of the issuance of the ESP pending in the Court of Appeals
on April 7, 2010 and the Court dismissed the petitions on April 8,
2010.

 

Property
Lawsuit

 

Sewell Creek Noise Lawsuits (February 5,
2007)

 

On February 5, 2007,
twelve lawsuits were filed against Oglethorpe and Smarr EMC in the Superior
Court of Polk County, Georgia (Cedartown) by plaintiffs owning property near
the Sewell Creek Energy Facility, which is owned by Smarr EMC and operated by
Oglethorpe.  The plaintiffs allege that
noise and vibration from the plant have interfered with the plaintiffs’ right
of quiet enjoyment of their property and diminished their property values.  Plaintiffs seek unspecified damages based on
various claims, including trespass, nuisance, inverse condemnation and
negligence.  The plaintiffs subsequently
dismissed some of the original claims, and Oglethorpe and Smarr EMC filed a
motion for summary judgment on those remaining, arguing that if the Sewell
Creek facility is a nuisance, it is a permanent nuisance, meaning that the
statute of limitations began running in September 2000, when all units
began operating, and that plaintiffs’ claims were barred under the applicable
one- or four-year limitations period. 
The trial court denied this motion, but allowed an interlocutory appeal
to be taken to the Georgia Court of Appeals. 
On March 30, 2010, in a 3-1-3 decision, the Georgia Court of
Appeals affirmed the trial court’s denial of summary judgment. On April 16,
2010, Oglethorpe and Smarr EMC filed an application for certiorari with the
Georgia Supreme Court. The Supreme Court has yet to take any action on the
application for certiorari. Georgia Power Company, MEAG Power, Georgia Electric
Membership Corporation and Georgia Energy Cooperative have all filed amicus
briefs in support of Oglethorpe and Smarr EMC in the Court of Appeals and/or in
support of the application for certiorari.

 

Pursuant to the
indemnification provision contained in the management agreement between
Oglethorpe and Smarr EMC, Smarr EMC would be responsible for indemnifying
Oglethorpe for any liability it may incur in this litigation. Smarr EMC has
insurance that is expected to cover any liability resulting from these claims.

 

 

EXHIBIT A

 

to the Sixth Amended and Restated Loan Contract,

dated as of August 13, 2010, 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 Sixth Amended and Restated Loan Contract,

dated as of August 13, 2010, 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
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.

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