[United States Department of Agriculture Letterhead]
31 AUG 1994
Mr. Tom D. Kilgore
President and Chief Executive Officer
Oglethorpe Power Corporation
P.O. Box 1349
Tucker, Georgia 30085-1349
Dear Mr. Kilgore:
We are pleased to advise you that the United States of America (the
"Government"), acting through the Administrator of the Rural Electrification
Administration ("REA"), hereby consents, subject to the conditions set forth
below, to a Type II Pollution Control accommodation of the Government's mortgage
lien to Trust Company Bank ("Trustee") in its capacity as trustee under two
Trust Indentures. This lien accommodation will provide security for up to an
aggregate principal amount of $39,605,000 plus interest on long-term financing
in connection with the sale of the Development Authority of Appling County,
Georgia (the "Appling Development Authority"), fixed-rate Pollution Control
Revenue Bonds, Series 1994 (the "1994 Appling Bonds") and the Development
Authority of Burke County, Georgia (the "Burke Development Authority"), fixed-
rate Pollution Control Revenue Bonds, Series 1994B (the "1994B Burke Bonds")
(collectively, the "1994 Refunding Bonds").
The proceeds of the sale of the 1994 Refunding Bonds, together with certain
other funds to be provided by Oglethorpe Power Corporation ("Oglethorpe") and
other available moneys, are to be used to pay the principal of, redemption
premium and interest on the following issues of fixed rate Pollution Control
Revenue Bonds:
1. The Appling Development Authority, Series 1985, which mature on
January 1 in the years 1995, 1996, 1997, 1998, 1999, 2000, 2001, 2005,
2010 and 2016 (the "1985 Appling Bonds").
2. The Burke Development Authority, Series 1982, which mature on January
1, 1995 (the "1982 Burke Bonds").
3. The Burke Development Authority, Series 1985, which mature on January
1 in the years 1995, 1996, 1997, 1998, and 1999 (the "1984B Burke
Bonds").
The 1985 Appling Bonds, the 1982 Burke Bonds and the 1984B Burke Bonds
(collectively, the "Refunded Bonds") are intended to be redeemed on January 3,
1995.
Mr. Tom D. Kilgore 2
REA understands that:
1. The following documents will be used to effectuate the sale of the
1994 Refunding Bonds:
a. Trust Indenture between the Appling Development Authority and
Trust Company Bank, as trustee, dated as of September 1, 1994;
b. Trust Indenture between the Burke Development Authority and Trust
Company Bank, as trustee, dated as of September 1, 1994;
c. Loan Agreement between the Appling Development Authority and
Oglethorpe, dated as of September 1, 1994;
d. Loan Agreement between the Burke Development Authority and
Oglethorpe, dated as of September 1, 1994;
e. Purchase Contract between Smith Barney Inc. ("Smith Barney") and
the Appling Development Authority, dated the date of the sale of
the 1994 Refunding Bonds;
f. Purchase Contract between Smith Barney and the Burke Development
Authority, dated the date of the sale of the 1994 Refunding
Bonds;
g. Letter of Representation from Oglethorpe to Smith Barney and the
Appling Development Authority, dated the date of the sale of the
1994 Refunding Bonds;
h. Letter of Representation from Oglethorpe to Smith Barney and the
Burke Development Authority, dated the date of the sale of the
1994 Refunding Bonds;
i. 1994 Note from Oglethorpe to the Trustee as assignee and pledgee
of the Appling Development Authority, dated as of September 1,
1994 (the "1994 Appling Note"); and
j. 1994B Note from Oglethorpe to the Trustee as assignee and pledgee
of the Burke Development Authority, dated as of September 1, 1994
(the "1994B Burke Note").
(The above listed documents, as executed and delivered and as the same may
hereafter be substituted, amended or supplemented, shall hereinafter
collectively be referred to as the "Financing Documents".)
Mr. Tom D. Kilgore 3
2. The following document will be used to secure the 1994 Appling Note
and the 1994B Burke Note:
Consolidated Mortgage and Security Agreement (hereinafter
called the "Mortgage"), dated as of September 1, 1994, made
by and among Oglethorpe, as Mortgagor, and the Government,
the National Bank for Cooperatives, Credit Suisse, acting by
and through its New York Branch, and Trust Company Bank, as
trustee under the bond indentures referenced therein, as
Mortgagees.
The Government, acting through the Administrator of the REA (the
"Administrator"), hereby also consents, subject to the conditions set forth
below, to the pollution control financing transaction described in the Financing
Documents and to the execution, delivery and performance by Oglethorpe of those
Financing Documents to which it is a party.
The effectiveness of REA's approvals set forth herein are hereby made subject to
the following conditions:
1. That each of the Financing Documents are executed and delivered with
only such changes from the drafts of those documents indicated on
Enclosure 1 as REA may approve;
2. That Oglethorpe provides to REA such legal opinions as the
Administrator may desire; and
3. That Oglethorpe provides to REA certified board resolutions
authorizing the execution, delivery and performance of each of the
Financing Documents to which Oglethorpe is a party.
The satisfaction of such conditions shall be evidenced by the delivery by REA of
a written consent to the execution and delivery of the 1994 Appling Note and the
1994B Burke Note.
REA's approvals set forth herein are also made subject to the condition that
Oglethorpe accept the following provisions, which provisions shall amend and
supplement that certain Amended and Consolidated Loan Contract, dated as of June
1, 1984, between Oglethorpe and the Government, as heretofore amended and
supplemented (the "REA Loan Contract"):
1. Oglethorpe agrees that all provisions of the REA Loan Contract shall
be applicable to the pollution control bond financing transaction
described in the Financing Documents, except to the extent that the
Administrator determines such provisions to be inapplicable;
Mr. Tom D. Kilgore 4
2. Oglethorpe agrees that it will not, without the prior written approval
of the Administrator, enter into or consent to any amendment or
supplement to, or any assignment, modification or waiver of, any of
the Financing Documents;
3. Oglethorpe shall comply with all of the material terms, obligations
and conditions of the Financing Documents and shall not permit there
to exist any default or event of default on its part under any of the
Financing Documents;
4. Oglethorpe shall, as soon as practicable, after it has actual notice
of the following events, inform the Administrator of such event and
shall, if the Administrator so requests, provide information
concerning such event in form and substance satisfactory to the
Administrator:
a. That a default or event of default has occurred under any of the
Financing Documents;
b. That a default or event of default under any of the Financing
Documents has been cured;
c. That Oglethorpe has been called upon to protect, indemnify or
otherwise hold harmless any person or entity pursuant to any of
the Financing Documents; and
d. That any of the Financing Documents have been terminated or
partially terminated, amended or assigned.
5. Oglethorpe shall not request reimbursement from either insured or
guaranteed loan funds of the general fund expenditures made by
Oglethorpe for fees and expenses for which Oglethorpe is obligated
under any of the Financing Documents and for which REA approval is
herein given;
6. Oglethorpe will, by March 31, 1995, provide REA with a report on the
amount of the 1994 Refunding Bonds sold, the interest rate, the level
of the Debt Service Reserve Fund, and certification that the Refunded
Bonds have been refunded;
7. Oglethorpe will provide REA, as an attachment to its year-ending REA
Form 12 Operating Report - Financial, an annual report relative to the
amount of the 1994 Refunding Bonds outstanding;
Mr. Tom D. Kilgore 5
8. Oglethorpe agrees that the information contained in any Preliminary
Offering Statement and any Offering Statement used in connection with
the sale of the Refunding Bonds shall be correct in all material
respects and shall not contain any untrue statement of material fact
necessary to make the statements made therein not misleading; and
9. Oglethorpe hereby reaffirms its obligations to consider and negotiate
in good faith with the REA appropriate additional or alternative
financial coverage ratios to be incorporated into Oglethorpe's
mortgage or the REA Loan Contract (as the REA may determine).
If the date of Closing (as such term is defined in the Purchase Contract) does
not occur on or prior to March 31, 1995, then the approvals set forth herein
shall expire.
Oglethorpe's execution and return of the second copy of this letter shall
constitute its acknowledgement and acceptance of the provisions and conditions
of this letter as amendments to the REA Loan Contract.
Within 90 days of Closing (as such term is defined in the Purchase Contract),
please promptly furnish us with three complete bound volumes containing all
documents, certificates, opinions, exhibits and schedules executed or delivered
in connection with the transaction described in the Financing Documents. One
volume should contain executed copies of the documents; the other two volumes
may contain conformed copies.
Copies of this letter are being sent to Trust Company Bank and to Mr. J. Calvin
Earwood, Chairman of the Board of Oglethorpe.
Sincerely,
/s/ Wally Beyer
Wally Beyer
Administrator
Enclosure
ACKNOWLEDGED AND ACCEPTED:
OGLETHORPE POWER CORPORATION
(AN ELECTRIC MEMBERSHIP
GENERATION & TRANSMISSION
CORPORATION):
By: /s/ T. D. Kilgore
--------------------------
Title: CEO
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Date: 9/9/94
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ENCLOSURE 1
DRAFT FINANCING DOCUMENTS TO BE EXECUTED AND DELIVERED TO REA AS PART OF THE
SALE OF THE FOLLOWING FIXED-RATE POLLUTION CONTROL REVENUE BONDS: APPLING COUNTY
DEVELOPMENT AUTHORITY, SERIES 1994 AND BURKE COUNTY DEVELOPMENT AUTHORITY,
SERIES 1994B (COLLECTIVELY, THE "1994 REFUNDING BONDS") AS SUCH FINANCING
DOCUMENTS ARE REFERENCED AND INCORPORATED IN THE ADMINISTRATOR'S LETTER
APPROVING THE SALE OF THE 1994 REFUNDING BONDS.
1. Trust Indenture - 1994 Appling Bonds, draft dated June 16, 1994
2. Trust Indenture - 1994B Burke Bonds, draft dated June 16, 1994
3. Loan Agreement - 1994 Appling Bonds, draft dated June 16, 1994
4. Loan Agreement - 1994B Burke Bonds, draft dated June 16, 1994
5. 1994 Appling Note, draft dated June 16, 1994
6. 1994B Burke Note, draft dated June 16, 1994
7. Purchase Contract - 1994 Appling Bonds, draft dated June 16, 1994
8. Purchase Contract - 1994B Burke Bonds, draft dated June 16, 1994
9. Letter of Representation - 1994 Appling Bonds, draft dated June 16, 1994
10. Letter of Representation - 1994B Burke Bonds, draft dated June 16, 1994