-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JgLq/B47SuK/pBYK/auF3Th0NsXQ4CmmcZrQVitE6XXpSc3C712saO0Ns9uJ+x/0 XnnIg0M9pWiCU0OjQV9Xnw== 0001047469-97-008372.txt : 19971222 0001047469-97-008372.hdr.sgml : 19971222 ACCESSION NUMBER: 0001047469-97-008372 CONFORMED SUBMISSION TYPE: S-4 PUBLIC DOCUMENT COUNT: 10 FILED AS OF DATE: 19971219 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: OGLETHORPE POWER CORP CENTRAL INDEX KEY: 0000788816 STANDARD INDUSTRIAL CLASSIFICATION: COGENERATION SERVICES & SMALL POWER PRODUCERS [4991] IRS NUMBER: 581211925 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: SEC FILE NUMBER: 333-42759 FILM NUMBER: 97741513 BUSINESS ADDRESS: STREET 1: 2100 EAST EXCHANGE PL STREET 2: P O BOX 1349 CITY: TUCKER STATE: GA ZIP: 30085-1349 BUSINESS PHONE: 4042707600 S-4 1 S-4 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 19, 1997 REGISTRATION NO. 333- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 ------------------------ FORM S-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------------------ OGLETHORPE POWER CORPORATION (AN ELECTRIC MEMBERSHIP CORPORATION) (Exact Name of Registrant as Specified in Its Charter) ------------------------------ GEORGIA 4911 58-1211925 (State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer Incorporation or Organization) Classification Code Number) Identification Number)
POST OFFICE BOX 1349 2100 EAST EXCHANGE PLACE TUCKER, GEORGIA 30085-1349 (770) 270-7600 (Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant's Principal Executive Offices) -------------------------- ROBERT D. STEELE OGLETHORPE POWER CORPORATION POST OFFICE BOX 1349 2100 EAST EXCHANGE PLACE TUCKER, GEORGIA 30085-1349 (770) 270-7617 (Name, Address Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service) -------------------------- COPIES TO: HERBERT J. SHORT, JR. SUTHERLAND, ASBILL & BRENNAN LLP 999 PEACHTREE STREET, N.E., 23RD FLOOR ATLANTA, GEORGIA 30309-3996 (404) 853-8491 -------------------------- Approximate date of commencement of proposed sale to the public: AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT. -------------------------- If any of the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box: / / If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: / / If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: / / -------------------------- CALCULATION OF REGISTRATION FEE PROPOSED MAXIMUM PROPOSED MAXIMUM TITLE OF EACH CLASS AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF OF SECURITIES TO BE REGISTERED REGISTERED UNIT PRICE(1) REGISTRATION FEE Serial Facility Bonds Due June 30, 2011 $224,702,000 100% $224,702,000 $66,288
(1) Estimated pursuant to Rule 457(f)(2) of the Securities Act of 1933 solely for the purpose of calculating the registration fee. -------------------------- THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SUBJECT TO COMPLETION, DATED DECEMBER 19, 1997 INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. P R O S P E C T U S OFFER TO EXCHANGE 6.974% SERIAL FACILITY BONDS DUE JUNE 30, 2011 INTEREST PAYABLE JUNE 30 AND DECEMBER 31 FOR ALL OUTSTANDING 6.974% SERIAL FACILITY BONDS DUE JUNE 30, 2011 ------------------------ THE FACILITY BONDS WILL BE PAYABLE FROM AND SECURED, AS DESCRIBED HEREIN, BY RENTALS TO BE PAID UNDER SEVERAL LEASES RELATING TO PLANT ROBERT W. SCHERER UNIT NO. 2 BY OGLETHORPE POWER CORPORATION THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON , 1998, UNLESS EXTENDED. OPC Scherer 1997 Funding Corporation A, a Delaware corporation created for the purpose of the refinancings described herein ("OPC Scherer 1997 Funding Corporation"), hereby offers (the "Exchange Offer"), upon the terms and subject to the conditions set forth in this Prospectus and the accompanying Letter of Transmittal (the "Letter of Transmittal") relating to the Exchange Offer, to exchange $1,000 principal amount of its Serial Facility Bonds Due June 30, 2011 (the "Exchange Facility Bonds"), which will be registered under the Securities Act of 1933, as amended (the "Securities Act"), pursuant to a Registration Statement of which this Prospectus is a part, for $1,000 principal amount of its outstanding Serial Facility Bonds Due June 30, 2011 (the "Private Facility Bonds"), of which an aggregate of $224,702,000 in principal amount is outstanding as of the date of this Prospectus. The form and terms of the Exchange Facility Bonds will be identical in all material respects to the form and terms of the Private Facility Bonds, except that (i) the Exchange Facility Bonds will not contain certain restrictions on transfer or registration rights contained in the Private Facility Bonds and (ii) the Exchange Facility Bonds will not contain any provision for additional interest in the event of certain defaults in obligations relating to the Exchange Offer. The Exchange Facility Bonds will evidence the same indebtedness as the Private Facility Bonds and will be entitled to the benefits of the Collateral Trust Indenture described herein. The Exchange Facility Bonds and any Private Facility Bonds not exchanged in the Exchange Offer are sometimes referred to herein collectively as the "Facility Bonds." The Private Facility Bonds were issued to finance the refunding of certain nonrecourse notes of four owner trusts (the "Lessors"), which are the owners and lessors of undivided ownership interests aggregating 60% of Plant Robert W. Scherer Unit No. 2, an 818 megawatt ("MW") coal-fired, steam electric generating unit located near Forsyth, Georgia ("Scherer Unit No. 2"). The Facility Bonds will be secured by a pledge and assignment of nonrecourse Refunding Lessor Notes (the "Refunding Lessor Notes") issued by the Lessors under four Lease Indentures described herein. The Refunding Lessor Notes are secured by, among other things, liens on and security interests in the basic rentals and certain other amounts payable by Oglethorpe Power Corporation (An Electric Membership Corporation) ("Oglethorpe") to the Lessors under the several Leases described herein and the respective undivided ownership interest of each Lessor in Scherer Unit No. 2. Although the Facility Bonds will not be, and the Refunding Lessor Notes are not, direct obligations of or guaranteed by Oglethorpe, Oglethorpe is unconditionally obligated to make basic rental and certain other payments under the Leases in amounts that will be at least sufficient to pay in full, when due, all payments of principal of and premium, if any, and interest on the Facility Bonds. For a more detailed description of the Facility Bonds and the relationships among Oglethorpe, the Lessors and OPC Scherer 1997 Funding Corporation, see "INTRODUCTION," "SECURITY AND SOURCE OF PAYMENT FOR THE FACILITY BONDS," "OPC SCHERER 1997 FUNDING CORPORATION," "FLOW OF FUNDS FOR DEBT SERVICE PAYMENTS ON THE FACILITY BONDS," "DESCRIPTION OF THE FACILITY BONDS," "DESCRIPTION OF THE LEASE INDENTURES" AND "DESCRIPTION OF THE LEASES." Interest on the Facility Bonds will be payable on June 30 and December 31 of each year, commencing June 30, 1998. The Facility Bonds will mature on June 30, 2011. The Facility Bonds will not be subject to optional redemption prior to maturity. The Facility Bonds will be redeemable through operation of a sinking fund on certain specified dates at the principal amount thereof, together with interest accrued to the redemption date. In certain instances, the Facility Bonds will be subject to special mandatory redemption at 100% of their principal amount, together with interest accrued to the redemption date. In certain other instances, the Facility Bonds will be subject to special mandatory redemption at redemption prices declining from an initial price of 106.974% of par to 100% of par at maturity, together with interest accrued to the redemption date. See "DESCRIPTION OF THE FACILITY BONDS." OPC Scherer 1997 Funding Corporation will accept for exchange any and all validly tendered Private Facility Bonds on or prior to 5:00 p.m., New York City time, on , 1998, unless extended by Oglethorpe (if and as extended, the "Expiration Date"). Tenders of Private Facility Bonds may be withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration Date. See "THE EXCHANGE OFFER." -------------------------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. -------------------------- The Date of this Prospectus is . AVAILABLE INFORMATION Oglethorpe has filed with the Securities and Exchange Commission (the "Commission") a Registration Statement (which term includes any amendment thereto) on Form S-4 under the Securities Act with respect to the Exchange Facility Bonds offered hereby. This Prospectus does not contain all of the information set forth in the Registration Statement. Any statements contained herein concerning the provisions of any document are not complete. With respect to each such document filed as an exhibit to the Registration Statement, reference is made to the exhibit to the Registration Statement, and each such statement is qualified in its entirety by such reference. Oglethorpe has been filing periodic reports with the Commission since 1987 and intends to continue filing such reports, to the extent permitted by the Commission, for as long as any of the Facility Bonds are outstanding, regardless of whether it is required to do so. Oglethorpe is required to file with the Collateral Trust Trustee described herein copies of all periodic reports filed with the Commission and will provide the Collateral Trust Trustee with copies of its annual report containing audited financial statements. Reports and other information filed with the Commission can be inspected and copied at the offices of the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549 and at the regional offices of the Commission at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661, and Seven World Trade Center, 13th Floor, New York, New York 10048. Copies of such material can be obtained from the Public Reference Section of the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549 at prescribed rates. The Commission maintains a World Wide Web site (http://www.sec.gov) that contains reports, proxy and information statements and other information regarding registrants, such as Oglethorpe, that file electronically with the Commission. UNTIL , ALL DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS. i NOTICE TO INVESTORS The Exchange Facility Bonds are being offered hereunder in order to satisfy certain obligations of Oglethorpe contained in the Exchange and Registration Rights Agreement described herein. Based on interpretations by the staff of the Commission set forth in no-action letters issued to third parties in other transactions, Oglethorpe believes that the Exchange Facility Bonds issued pursuant to the Exchange Offer in exchange for Private Facility Bonds may be offered for resale, resold and otherwise transferred by any holder thereof (other than broker-dealers, as set forth below, and any such holder that is an "affiliate" of Oglethorpe within the meaning of Rule 405 under the Securities Act) without compliance with the registration and prospectus delivery requirements of the Securities Act, provided that such Exchange Facility Bonds are acquired in the ordinary course of such holder's business and that such holder does not intend to participate, and has no arrangement or understanding with any person to participate, in the distribution of such Exchange Facility Bonds. Any holder who tenders in the Exchange Offer with the intention to participate, or for the purpose of participating, in a distribution of the Exchange Facility Bonds or who is an affiliate of Oglethorpe may not rely upon such interpretations by the staff of the Commission and, in the absence of any exemption therefrom, must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any secondary resale transaction. Holders of the Private Facility Bonds wishing to accept the Exchange Offer must represent to Oglethorpe in the Letter of Transmittal that such conditions have been met. Each broker-dealer who holds Private Facility Bonds acquired for its own account as a result of market making or other trading activities and who receives Exchange Facility Bonds for its own account pursuant to the Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Facility Bonds. The Letter of Transmittal states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Exchange Facility Bonds received in exchange for Private Facility Bonds where such Private Facility Bonds were acquired by such broker-dealer as a result of market making activities or other trading activities. Oglethorpe has agreed that, for a period of up to 90 days after the Expiration Date, it will make this Prospectus available to any such broker-dealer for use in connection with any such resale. (See "PLAN OF DISTRIBUTION.") Any broker-dealer who is an affiliate of Oglethorpe may not rely on such no-action letters and must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction. Oglethorpe believes that none of the registered holders of the Private Facility Bonds is an "affiliate" as such term is defined in Rule 405 under the Securities Act of Oglethorpe. Neither Oglethorpe nor OPC Scherer 1997 Funding Corporation will receive any cash proceeds from this Exchange Offer. No dealer-manager is being used in connection with this Exchange Offer. The Exchange Facility Bonds will be a new issue of securities for which there is currently no market. Accordingly, there can be no assurance as to the liquidity of any markets that may develop for the Exchange Facility Bonds, the ability of holders to sell the Exchange Facility Bonds, or the price at which holders would be able to sell the Exchange Facility Bonds. The Exchange Facility Bonds will not be listed on any securities exchange and will not be quoted on the National Association of Securities Dealers Automated Quotation System. Oglethorpe has been advised that Goldman, Sachs & Co. and Morgan Stanley & Co. Incorporated have heretofore acted as market makers for the Private Facility Bonds. Each of these market makers has informed Oglethorpe that it currently intends to make a market in the Exchange Facility Bonds but they are not obligated to do so, and any such market making may be discontinued at any time without notice. Future trading prices of the Exchange Facility Bonds will depend on many factors, including among other things, prevailing interest rates, Oglethorpe's operating results and the market for similar securities. ii Any Private Facility Bonds not tendered or accepted in the Exchange Offer will remain outstanding and will be entitled to all the same rights and will be subject to the same limitations applicable thereto under the Collateral Trust Indenture (except for those rights which terminate upon consummation of the Exchange Offer). Following the consummation of the Exchange Offer, the holders of Private Facility Bonds will continue to be subject to all of the existing restrictions upon transfer thereof and neither Oglethorpe or OPC Scherer 1997 Funding Corporation will have any further obligation to such holders to provide for registration under the Securities Act of the Private Facility Bonds held by them. THIS PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT INFORMATION. HOLDERS OF PRIVATE FACILITY BONDS ARE URGED TO READ THIS PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CAREFULLY BEFORE DECIDING WHETHER TO TENDER THEIR PRIVATE FACILITY BONDS PURSUANT TO THE EXCHANGE OFFER. iii THE MATERIAL SET FORTH IN THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE COMPLETE INFORMATION AND FINANCIAL STATEMENTS, INCLUDING THE NOTES THERETO, APPEARING ELSEWHERE IN THIS PROSPECTUS. CAPITALIZED TERMS USED HEREIN AND ON THE COVER PAGE AND NOT OTHERWISE DEFINED SHALL HAVE THE SAME MEANINGS GIVEN SUCH TERMS ELSEWHERE IN THIS PROSPECTUS. SUMMARY INFORMATION RELATING TO THE EXCHANGE OFFER Oglethorpe.............. Oglethorpe is an electric membership corporation incorporated in 1974 in the State of Georgia. Oglethorpe is headquartered in metropolitan Atlanta. Historically, Oglethorpe operated as a generation and transmission cooperative. On March 11, 1997, in connection with the Corporate Restructuring described herein, Oglethorpe sold its transmission and system operations businesses to recently formed companies. Oglethorpe continues to own and operate its power supply business. (See "SUMMARY INFORMATION RELATING TO OGLETHORPE AND THE MEMBERS" and "BUSINESS OF OGLETHORPE--Corporate Restructuring.") Registration Rights Agreement............. The Private Facility Bonds were sold by OPC Scherer 1997 Funding Corporation on December 17, 1997, and were subsequently resold to qualified institutional buyers pursuant to Rule 144A under the Securities Act. In connection with the offering of Private Facility Bonds, Oglethorpe and OPC Scherer 1997 Funding Corporation entered into an Exchange and Registration Rights Agreement (the "Registration Rights Agreement"), which grants holders of the Private Facility Bonds certain exchange and registration rights. The Exchange Offer is intended to satisfy such exchange and registration rights, which will terminate upon the consummation of the Exchange Offer. (See "THE EXCHANGE OFFER--Purpose and Effect of the Exchange Offer.") The Exchange Offer...... Oglethorpe is hereby offering to exchange $1,000 principal amount of the Exchange Facility Bonds for each $1,000 principal amount of Private Facility Bonds. As of the date hereof, $224,702,000 aggregate principal amount of Private Facility Bonds are outstanding. Based on interpretations by the staff of the Commission set forth in no-action letters issued to third parties in other transactions, Oglethorpe believes that the Exchange Facility Bonds issued pursuant to the Exchange Offer in exchange for Private Facility Bonds may be offered for resale, resold and otherwise transferred by any holder thereof (other than broker-dealers, as set forth below, and any such holder who is an "affiliate" of Oglethorpe within the meaning of Rule 405 under the Securities Act) without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that such Exchange Facility Bonds are acquired in the ordinary course of such holder's business and that such holder does not intend to participate and has no arrangement or understanding with any person to participate in the distribution of such Exchange Facility Bonds. Any holder who tenders in the Exchange Offer with the intention to participate, or for the purpose of participating, in a distribution of the Exchange Facility Bonds may not rely on such interpretations by the staff of the Commission and, in the absence of an exemption therefrom, must comply with the registration and
1 prospectus delivery requirements of the Securities Act in connection with any secondary resale transaction. Failure to comply with such requirements in such instances may result in such holder incurring liability under the Securities Act. (See "THE EXCHANGE OFFER--Resale of the Exchange Facility Bonds.") Each broker-dealer who holds Private Facility Bonds acquired for its own account as a result of market making or other trading activities and who receives Exchange Facility Bonds for its own account pursuant to the Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Facility Bonds. The Letter of Transmittal states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Exchange Facility Bonds received in exchange for Private Facility Bonds where such Private Facility Bonds were acquired by such broker-dealer as a result of market making activities or other trading activities. Oglethorpe has agreed that for a period of up to 90 days after the Expiration Date, it will make this Prospectus available to any such broker-dealer for use in connection with any such resale. (See "PLAN OF DISTRIBUTION.") Expiration Date......... 5:00 p.m., New York City time, on , 1998, unless the Exchange Offer is extended by Oglethorpe, in which case the term "Expiration Date" means the latest date and time to which the Exchange Offer is extended. (See "THE EXCHANGE OFFER--Expiration Date; Extensions; Amendments.") Interest on the Exchange Facility Bonds........ The Exchange Facility Bonds will bear interest from the later of the date of issuance of the Private Facility Bonds that are tendered in exchange for the Exchange Facility Bonds and the most recent interest payment date to which interest on such Private Facility Bonds has been paid. (See "THE EXCHANGE OFFER--Interest on the Exchange Facility Bonds and the Private Facility Bonds.") Conditions to the Exchange Offer........ The Exchange Offer is subject to certain customary conditions, which may be waived by Oglethorpe. (See "THE EXCHANGE OFFER--Conditions.") Procedures for Tendering Private Facility Bonds................. Each holder of the Private Facility Bonds wishing to accept the Exchange Offer must (i) complete, sign and date the Letter of Transmittal, or a facsimile thereof, in accordance with the instructions contained herein and therein, and mail or otherwise deliver such Letter of Transmittal, or such facsimile, together with any other required documentation to the Exchange Agent described herein and (ii) deliver their Private Facility Bonds to OPC Scherer 1997 Funding Corporation by book-entry transfer. (See "THE EXCHANGE OFFER--Procedures for Tendering.") By executing the Letter of Transmittal, each holder will represent to Oglethorpe that, among other things, the person receiving such Exchange Facility Bonds, whether or not such person is the holder, is
2 acquiring the Exchange Facility Bonds in the ordinary course of business and that neither the holder nor any such other person has any arrangement or understanding with any person to participate in the distribution of such Exchange Facility Bonds. (See "THE EXCHANGE OFFER--Resale of Exchange Facility Bonds.") Special Procedures for Beneficial Owners..... Any beneficial owner whose Private Facility Bonds are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and who wishes to tender should contact the registered holder promptly and instruct such registered holder to tender on such beneficial owner's behalf. (See "THE EXCHANGE OFFER--Procedures for Tendering.") Guaranteed Delivery Procedures............ Holders of Private Facility Bonds who wish to tender their Private Facility Bonds and who cannot deliver the Letter of Transmittal or any other documents required by the Letter of Transmittal to the Exchange Agent or comply with the procedures for book-entry transfer prior to the Expiration Date must tender their Private Facility Bonds according to the guaranteed delivery procedures set forth in "THE EXCHANGE OFFER--Guaranteed Delivery Procedures." Withdrawal Rights....... Tenders of Private Facility Bonds may be withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration Date pursuant to the procedures described under "THE EXCHANGE OFFER--Withdrawals of Tenders." Acceptance of Private Facility Bonds and Delivery of Exchange Facility Bonds........ OPC Scherer 1997 Funding Corporation will accept for exchange any and all Private Facility Bonds that are properly tendered in the Exchange Offer prior to 5:00 p.m., New York City time, on the Expiration Date. The Exchange Facility Bonds issued pursuant to the Exchange Offer will be delivered promptly following the Expiration Date. Absence of Cash Proceeds.............. Neither Oglethorpe nor OPC Scherer 1997 Funding Corporation will receive any cash proceeds from the issuance of the Exchange Facility Bonds. (See "ABSENCE OF CASH PROCEEDS.") Federal Income Tax Consequences of the Exchange Offer........ The issuance of the Exchange Facility Bonds to holders of the Private Facility Bonds who are U.S. Holders described herein pursuant to the terms set forth in this Prospectus should not constitute a taxable event to U.S. Holders for federal income tax purposes. Consequently, no gain or loss should be recognized by U.S. Holders of the Private Facility Bonds upon receipt of the Exchange Facility Bonds. (See "CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES.") Effect on Holders of the Private Facility Bonds................. As a result of completing the Exchange Offer, Oglethorpe will have fulfilled
3 certain of its obligations under the Registration Rights Agreement. Any Private Facility Bonds not tendered or accepted in the Exchange Offer will remain outstanding and will be entitled to all the same rights and will be subject to the same limitations applicable thereto under the Collateral Trust Indenture (except for those rights which terminate upon consummation of the Exchange Offer). Following the consummation of the Exchange Offer, the holders of Private Facility Bonds will continue to be subject to all of the existing restrictions upon transfer thereof and neither Oglethorpe or OPC Scherer 1997 Funding Corporation will have any further obligation to such holders to provide for registration under the Securities Act of the Private Facility Bonds held by them. Because Oglethorpe anticipates that most holders of Private Facility Bonds will elect to exchange such Private Facility Bonds for Exchange Facility Bonds due to the absence of restrictions on the resale of Exchange Facility Bonds under the Securities Act, Oglethorpe anticipates that the liquidity of the market for any Private Facility Bonds remaining after the consummation of the Exchange Offer may be substantially limited. (See "THE EXCHANGE OFFER--Consequences of Failure to Exchange.") Exchange Agent.......... (the "Exchange Agent"). SUMMARY INFORMATION RELATING TO THE FACILITY BONDS Securities Offered...... $224,702,000 aggregate principal amount of 6.974% Serial Facility Bonds Due June 30, 2011. The form and terms of the Exchange Facility Bonds are identical in all material respects to the form and terms of the Private Facility Bonds except that the Exchange Facility Bonds will not contain certain restrictions on transfer or registration rights contained in the Private Facility Bonds, and the Exchange Facility Bonds will not contain any provision for additional interest in the event of certain defaults in obligations of Oglethorpe related to the Exchange Offer. The Exchange Facility Bonds will evidence the same indebtedness as the Private Facility Bonds and will be entitled to the benefits of the Collateral Trust Indenture. (See "THE EXCHANGE OFFER--Terms of the Exchange Offer.") Maturity Date........... June 30, 2011 Interest Payment Dates................. June 30 and December 31 (commencing June 30, 1998). Sinking Fund............ The Facility Bonds will be subject to pro-rata sinking fund redemption commencing December 31,1998. (See "DESCRIPTION OF THE FACILITY BONDS--Sinking Fund Redemption.") Optional Redemption..... The Facility Bonds will not be subject to optional redemption prior to maturity. (See "DESCRIPTION OF THE FACILITY BONDS--Optional Redemption.") Special Mandatory Redemption............ In certain instances, the Facility Bonds will be subject to special mandatory redemption at 100% of their principal amount, together with interest accrued to the redemption date. In certain other instances, the Facility Bonds will be subject to special mandatory redemption at redemption prices declining from an initial price of 106.974% of par to
4 100% of par at maturity, together with interest accrued to the redemption date. (See "DESCRIPTION OF THE FACILITY BONDS--Special Mandatory Redemption at Par" and "--Special Mandatory Redemption with Premium.") Settlement, Book-Entry- Only, Form and Denomination.......... Delivery of the Facility Bonds will be made in book-entry-only form as described below. The Facility Bonds will be issued only in registered form in denominations of $1,000 principal amount and integral multiples thereof. Exchange Facility Bonds issued in exchange for Private Facility Bonds currently evidenced by one or more fully registered global certificates will be evidenced by one or more certificates in global form, which will be deposited with a custodian for, and registered in the name of, a nominee of The Depository Trust Company ("DTC"). Except as described herein, beneficial interests in such global certificates will be shown on, and transfers thereof will be effected only through, records maintained by DTC and its direct and indirect participants. Such interests will trade in DTC's Same-Day Funds Settlement System, and secondary market trading activity in such interests will therefore settle in immediately available funds, subject in all cases to the rules and procedures of DTC and its participants. (See "DESCRIPTION OF THE FACILITY BONDS-- Book-Entry-Only System." Security and Source of Payments.............. The Facility Bonds will be secured by a nonrecourse Refunding Lessor Note of each of the Lessors, issued to OPC Scherer 1997 Funding Corporation and pledged and assigned to the Collateral Trust Trustee. The payments due on the Refunding Lessor Notes pledged to the Collateral Trust Trustee will equal all payments due on the Facility Bonds. To the extent that additional Lessor Notes described herein are issued, such Lessor Notes will be secured on a parity basis with the applicable Refunding Lessor Note under the applicable Lease Indenture. All Lessor Notes, including the Refunding Lessor Notes, will be secured by, among other things, a lien on and security interest in the respective undivided ownership interest of each such Lessor in Scherer Unit No. 2 and the rights of each such Lessor under its Lease with Oglethorpe, including the right to receive the basic rentals and certain other amounts payable by Oglethorpe to the Lessor thereunder. The holders of the Facility Bonds will have no recourse against the general credit of the Lessors or the Equity Investors described herein. Accordingly, the Facility Bonds will constitute, in effect, a nonrecourse borrowing by and on behalf of the Lessors, secured by the interest in Scherer Unit No. 2 of each Lessor and Oglethorpe's obligations to each such Lessor under its Lease with Oglethorpe. The Refunding Lessor Notes are senior to the interests of the Equity Investors in respect of payments made under the Leases (other than Excepted Payments as defined therein). Oglethorpe is unconditionally obligated to make payments under the Leases in amounts that will be at least sufficient to provide for the payment of principal of and premium, if any, and interest on the Refunding Lessor
5 Notes, which amounts, in turn, will be sufficient to pay the principal of and premium, if any, and interest on the Facility Bonds when due, whether at maturity, upon redemption or otherwise. (See "DESCRIPTION OF THE FACILITY BONDS--Sinking Fund Redemption," "--Special Mandatory Redemption at Par" and "--Special Mandatory Redemption with Premium" and "DESCRIPTION OF THE LEASES--Term and Rentals.") However, the Facility Bonds will not be, and the Refunding Lessor Notes are not, direct obligations of or guaranteed by Oglethorpe, and they will not be secured by the lien on Oglethorpe's assets created under the Mortgage Indenture described herein. (See "SECURITY AND SOURCE OF PAYMENT FOR THE FACILITY BONDS.") For information with respect to certain factors which may affect the obligations of Oglethorpe described above, see "DESCRIPTION OF THE FACILITY BONDS-- Considerations Relating to Security." Scherer Unit No. 2...... Scherer Unit No. 2 is an 818 MW coal-fired, steam electric generating unit located in Monroe County near Forsyth, Georgia. It was placed in commercial operation in February 1984. Scherer Unit No. 2 is one of four units in operation located at the Robert W. Scherer Plant which are of similar size and design. On December 30, 1985, Oglethorpe sold undivided ownership interests to the Lessors aggregating its entire 60% undivided ownership interest in Scherer Unit No. 2 as part of the Sale and Leaseback Transactions. Scherer Unit No. 2 is owned by Georgia Power Company (8.4%), Municipal Electric Authority of Georgia (30.2%), the City of Dalton, Georgia (1.4%) and the Lessors (60%). The Lessors are leasing their respective interests back to Oglethorpe pursuant to the Leases. (See "INTRODUCTION--Sale and Leaseback Transactions" and "MEMBER REQUIREMENTS AND POWER SUPPLY RESOURCES--Generating Facilities" and "CO-OWNERS OF THE PLANTS AND THE PLANT AGREEMENTS--The Plant Agreements.") OPC Scherer 1997 Funding Corporation........... OPC Scherer 1997 Funding Corporation is a special purpose corporation incorporated in Delaware for the purpose of facilitating the refinancing of the respective undivided ownership interests of the Lessors in Scherer Unit No. 2. The only business of OPC Scherer 1997 Funding Corporation is the issuance and sale of the Private Facility Bonds, application of the proceeds thereof, the issuance of the Exchange Facility Bonds and the completion of the Exchange Offer, and, possibly, the issuance of other indebtedness, the proceeds of which would be used to make loans to the Lessors to finance, among other things, additions or improvements to Scherer Unit No. 2. The assets of OPC Scherer 1997 Funding Corporation consist primarily of the Refunding Lessor Notes issued with respect to the Facility Bonds and, if additional loans are made to the Lessors by OPC Scherer 1997 Funding Corporation, additional Lessor Notes. The Refunding Lessor Notes are, and such other Lessor Notes, if any, will be, payable from basic rental and certain other payments made by Oglethorpe to the Lessors under the Leases. OPC Scherer 1997 Funding Corporation is to function only as an agent of the Lessors (and not as principal) with respect to the Facility Bonds and to represent itself only as an agent of the Lessors (and not as principal) in dealings with third parties relating to the Facility Bonds. Neither Oglethorpe nor any Lessor or Equity
6 Investor holds any ownership interest in OPC Scherer 1997 Funding Corporation, and no person affiliated with Oglethorpe, any Lessor or Equity Investor is an officer, director or employee of OPC Scherer 1997 Funding Corporation. (See "OPC SCHERER 1997 FUNDING CORPORATION.") Reporting Obligations... Oglethorpe is not subject to the reporting requirements of the Securities Exchange Act of 1934, as amended. Oglethorpe, however, has been filing periodic reports with the Commission since 1987 and intends to continue filing such reports, to the extent permitted by the Commission, for so long as any of the Facility Bonds are outstanding regardless of whether it is required to do so. Oglethorpe is required to file with the Collateral Trust Trustee copies of all periodic reports filed with the Commission and will provide the Collateral Trust Trustee with copies of its annual report containing audited financial statements. Market for Exchange Facility Bonds........ The Exchange Facility Bonds will not be listed on any securities exchange and will not be quoted on the National Association of Securities Dealers Automated Quotation System. As a result, there can be no assurance that there will be a secondary market for the Exchange Facility Bonds. Oglethorpe has been advised that Goldman, Sachs & Co. and Morgan Stanley & Co. Incorporated, the initial purchasers of the Private Facility Bonds, have heretofore acted as market makers for the Private Facility Bonds. Each of these market makers has informed Oglethorpe that it currently intends to make a market in the Exchange Facility Bonds, but they are not obligated to do so, and any such market making may be discontinued at any time without notice. Accordingly, there can be no assurance as to the development or liquidity of any market for the Exchange Facility Bonds.
7 SUMMARY INFORMATION RELATING TO OGLETHORPE AND THE MEMBERS Oglethorpe and the Members............... Oglethorpe is an electric membership corporation engaged primarily in the business of providing wholesale electric power to its 39 retail electric distribution cooperative members (the "Members"), which provide retail electric service to their customers in the State of Georgia. As with electric cooperatives generally, Oglethorpe and the Members operate on a not-for-profit basis and design their rates to recover their respective costs-of-service and to generate margins sufficient to establish reasonable reserves and meet financial coverage requirements. Oglethorpe's principal executive offices are located at 2100 East Exchange Place, Tucker, Georgia 30085-1349, and its telephone number is (770) 270-7600. (See "INTRODUCTION," "BUSINESS OF OGLETHORPE" and "THE MEMBERS OF OGLETHORPE.") Corporate Restructuring......... Oglethorpe and the Members completed a corporate restructuring (the "Corporate Restructuring") on March 11, 1997, in which Oglethorpe was divided into three specialized operating companies to respond to increasing competition and regulatory changes in the electric industry. As part of the Corporate Restructuring, Oglethorpe's transmission business was sold to, and is now owned and operated by, Georgia Transmission Corporation (An Electric Membership Corporation) ("GTC"), a recently formed Georgia electric membership corporation. Oglethorpe's system operations business was sold to, and is now owned and operated by, Georgia System Operations Corporation ("GSOC"), a recently formed Georgia nonprofit corporation. Oglethorpe continues to own and operate its power supply business. Oglethorpe and the 39 Members are members of GTC and GSOC. (See "BUSINESS OF OGLETHORPE--Corporate Restructuring," "--Relationship with GTC" and "--Relationship with GSOC.") Consumers and Service Area.......... Oglethorpe is the largest electric cooperative in the United States in terms of operating revenues, assets, kilowatt-hour sales and, through the Members, consumers served. The Members serve approximately 1.2 million electric consumers (meters) representing approximately 2.6 million people. The Members serve a region covering approximately 40,000 square miles, which is approximately 70% of the land area in the State of Georgia, encompassing 150 of the State's 159 counties. Sales by the Members in 1996 amounted to approximately 19.6 million megawatt-hours, with 72% to residential consumers, 26% to commercial and industrial consumers and 2% to other consumers. Pursuant to the Georgia Territorial Electric Service Act, which was enacted in 1973 (the "Territorial Act"), the Georgia Public Service Commission assigned substantially all areas in the State of Georgia to specific retail suppliers. With limited exceptions, the Members have the exclusive right to provide retail electric service in their respective assigned territories,
8 which are predominantly outside of municipal limits. The chief exception to this exclusivity is that electric suppliers may compete for most new retail loads of 900 kilowatts or greater. The Georgia Public Service Commission may not reassign territory or transfer service except in limited circumstances provided by the Territorial Act. (See "THE MEMBERS OF OGLETHORPE--Service Area and Competition.") Power Supply Business... Oglethorpe provides wholesale electric service to the Members pursuant to long-term Wholesale Power Contracts described herein. Oglethorpe supplies capacity and energy to the Members from a combination of owned and leased generating plants and power purchased under long-term contracts with power marketers and other power suppliers. GENERATION. Oglethorpe owns or leases undivided interests in thirteen generating units currently in commercial operation. These units provide Oglethorpe with a total of 3,335 MW of nameplate capacity, consisting of 1,500.6 MW of coal-fired capacity, 1,185 MW of nuclear-fueled capacity, 632.5 MW of pumped storage hydroelectric capacity, 14.8 MW of oil-fired combustion turbine capacity and 2.1 MW of conventional hydroelectric capacity. (See "BUSINESS OF OGLETHORPE--Power Supply Business," "MEMBER REQUIREMENTS AND POWER SUPPLY RESOURCES--General" and "--Generating Facilities.") POWER MARKETER ARRANGEMENTS. Oglethorpe utilizes long-term power marketer arrangements to reduce the cost of power to the Members. Oglethorpe has entered into power marketer agreements with LG&E Energy Marketing Inc. ("LEM") effective January 1, 1997 for approximately 50% of the load requirements of the Members and with Morgan Stanley Capital Group Inc. ("Morgan Stanley") effective May 1, 1997, with respect to 50% of the forecasted load requirements of the Members. The LEM agreements are based on the actual requirements of the Members during the contract term, whereas the Morgan Stanley agreement represents a fixed supply obligation. Under these power marketer agreements, Oglethorpe purchases energy at fixed prices covering a portion of the costs of energy to its Members. LEM and Morgan Stanley, in turn, have certain rights to market excess energy from the Oglethorpe system. All of Oglethorpe's existing generating facilities and power purchase arrangements are available for use by LEM and Morgan Stanley for the term of the respective agreements. Oglethorpe continues to be responsible for all the costs of its system resources but receives revenue from LEM and Morgan Stanley for the use of the resources. (See "MEMBER REQUIREMENTS AND POWER SUPPLY RESOURCES-- General" and "--Power Marketer Arrangements.") PURCHASED POWER. Oglethorpe purchases a total of approximately 1,250 MW of power pursuant to power purchase agreements with Georgia Power Company, Big Rivers Electric Corporation, Entergy Power, Inc. and Hartwell Energy Limited Partnership. Oglethorpe has also contracted to purchase 275 MW of peaking capacity from Florida Power Corporation
9 during the summer of 1998. (See "MEMBER REQUIREMENTS AND POWER SUPPLY RESOURCES--Power Purchase and Sale Arrangements.") TRANSMISSION. In connection with the Corporate Restructuring, Oglethorpe sold its transmission business and assets to GTC. GTC now provides transmission services to the Members for delivery of the Members' power purchases from Oglethorpe, Southeastern Power Administration and any other power suppliers. Oglethorpe has entered into a transmission agreement with GTC for GTC to provide transmission services for third party transactions and for service to Oglethorpe's facilities. GTC owns approximately 2,300 miles of transmission line and 450 substations of various voltages. GTC succeeded to Oglethorpe's rights in the Integrated Transmission System, which consists of transmission facilities owned by GTC, Georgia Power Company, Municipal Electric Authority of Georgia and the City of Dalton, Georgia. Common access to the Integrated Transmission System enables its owners to use their combined resources to make deliveries to or for their respective consumers, to provide transmission service to third parties and to make off-system purchases and sales. (See "BUSINESS OF OGLETHORPE--Relationship with GTC.") Wholesale Power Contracts............. Oglethorpe and each of the Members have entered into substantially similar Wholesale Power Contracts, each of which extends through December 31, 2025. Under its Wholesale Power Contract, a Member is unconditionally obligated on an express "take-or-pay" basis for a fixed allocation of Oglethorpe's costs for its existing generation and purchased power resources, as well as the costs with respect to any future resources in which such Member elects to participate. Each Wholesale Power Contract permits a Member to take future incremental power requirements either from Oglethorpe or other sources. Each Member's cost responsibility under its Wholesale Power Contract is based on agreed-upon fixed percentage capacity responsibilities ("PCRs"). PCRs have been assigned for all of Oglethorpe's existing generation and purchased power resources. PCRs for any future resource will be assigned only to Members choosing to participate in that resource. The Wholesale Power Contracts provide that each Member is jointly and severally responsible for all costs and expenses of all existing generation and purchased power resources, as well as for any future resources that are approved by 75% of Oglethorpe's Board of Directors and 75% of the Members. For resources so approved in which less than all Members participate, costs are shared first among the participating Members, and if all participating Members default, each non-participating Member is expressly obligated to pay a proportionate share of such default. (See "BUSINESS OF OGLETHORPE--Wholesale Power Contracts" and "MEMBER REQUIREMENTS AND POWER SUPPLY RESOURCES-- Power Marketer Arrangements.")
10 Rate Regulation and Rates............. MORTGAGE INDENTURE RATE COVENANT. The Mortgage Indenture requires Oglethorpe, subject to any necessary regulatory approval, to establish and collect rates which, together with other revenues of Oglethorpe, are reasonably expected to yield an MFI Ratio described herein for each fiscal year equal to at least 1.10. MFI Ratio is determined by dividing the sum of (i) net margins of Oglethorpe (after certain defined adjustments), (ii) interest charges, whether capitalized or expensed, on all indebtedness secured under the Mortgage Indenture or by a lien equal or prior to the lien of the Mortgage Indenture, including amortization of debt discount and expense or premium but excluding interest charges on indebtedness assumed by GTC ("Interest Charges"), and (iii) any amount included in net margins for accruals for federal or state income taxes by Interest Charges. (See "BUSINESS OF OGLETHORPE--Electric Rates" and "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS--General--RATES AND FINANCIAL COVERAGE REQUIREMENTS.") FORMULARY RATE AND PRIOR PERIOD ADJUSTMENT MECHANISM. The formulary rate established by Oglethorpe in the rate schedule to the Wholesale Power Contracts employs a rate methodology under which all categories of costs are specifically separated as components of the formula to determine Oglethorpe's revenue requirements. The rate schedule also implements the responsibility for fixed costs assigned to each Member (I.E., the PCR). The rate schedule formula also includes a prior period adjustment ("PPA") mechanism designed to ensure that Oglethorpe achieves the minimum 1.10 MFI Ratio. The PPA provides for the retention of margins within a range from a 1.10 MFI Ratio to a 1.20 MFI Ratio. Amounts, if any, by which Oglethorpe fails to achieve a 1.10 MFI Ratio would be accrued as of December 31 of the applicable year and collected from the Members during the period April through December of the following year. Amounts, if any, by which Oglethorpe exceeds the maximum 1.20 MFI Ratio would be charged against revenues as of December 31 of the applicable year and refunded to the Members during the period April through December of the following year. (See "BUSINESS OF OGLETHORPE--Electric Rates" and "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS--General--RATES AND FINANCIAL COVERAGE REQUIREMENTS.") RATE REGULATION OF OGLETHORPE. Under the Mortgage Indenture and related loan contract with the Rural Utilities Service ("RUS"), adjustments to Oglethorpe's rates to reflect changes in Oglethorpe's budgets are not subject to RUS approval, except in limited circumstances. Changes to the rate schedule under the Wholesale Power Contracts are subject to RUS approval. Oglethorpe's rates are not subject to the approval of any other federal or state agency or authority, including the Georgia Public Service Commission.
11 RATE REGULATION OF MEMBERS. Through provisions in its loan documents, RUS exercises control and supervision over the rates for the sale of power of the 34 Members that borrow from it. The RUS mortgages of such Members require them to design rates with a view to maintaining an average Times Interest Earned Ratio of not less than 1.50 and an average Debt Service Coverage Ratio of not less than 1.25 for the two highest out of every three successive years. Five Members have prepaid their RUS indebtedness and are no longer RUS borrowers. Each of these Members now has a rate covenant with its current lender. Although the setting of the retail rates of the Members is not subject to approval by any federal or state agency or authority other than, where applicable, RUS, the Territorial Act prohibits the Members from unreasonable discrimination in the setting of rates. (See "THE MEMBERS OF OGLETHORPE--Rate Regulation of Members.") Competition............. The electric utility industry in the United States is undergoing fundamental change and is becoming increasingly competitive. (See "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS--Competition.")
12 SUMMARY FINANCIAL DATA The following table presents summary historical and pro forma financial data of Oglethorpe. The summary historical financial data presented as of the end of and for each year in the three-year period ended December 31, 1996, have been derived from the audited financial statements of Oglethorpe included in this Prospectus. The historical financial statements of Oglethorpe as of and for the fiscal years ended December 31, 1996, and December 31, 1995, have been audited by Coopers & Lybrand L.L.P., independent public accountants. The historical financial statements of Oglethorpe as of and for the fiscal year ended December 31, 1994, have been audited by Arthur Andersen LLP, independent public accountants. The summary historical financial data presented in the following table as of and for the twelve-month period ended September 30, 1997, are derived from the unaudited financial statements of Oglethorpe also contained in this Prospectus which, in the opinion of Oglethorpe's management, include all adjustments (constituting only normal recurring adjustments) necessary for a fair presentation of the unaudited financial information. Due to the Corporate Restructuring, the historical results of operations and financial condition reflect operations as a combined power supply, transmission and system operations company through March 31, 1997 and operations solely as a power supply company thereafter. The results of operations for the twelve months ended September 30, 1997 are not necessarily indicative of the results of operations for a fiscal year. The summary pro forma statement of operations data for the twelve months ended September 30, 1997, and the year ended December 31, 1996, give effect to the Corporate Restructuring as if it had occurred at October 1, 1996, and January 1, 1996, respectively. The summary pro forma financial data are provided for informational purposes only and are not necessarily indicative of Oglethorpe's results of operations had the Corporate Restructuring actually occurred as of such date and are not intended to project Oglethorpe's results of operations for any future period. These data should be read in conjunction with the financial statements of Oglethorpe and the notes thereto included in this Prospectus, "BUSINESS OF OGLETHORPE--Corporate Restructuring," "UNAUDITED PRO FORMA CONDENSED FINANCIAL DATA" and "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS."
PRO FORMA HISTORICAL ------------------------------- --------------------------------------------------- TWELVE MONTHS YEAR TWELVE MONTHS ENDED ENDED ENDED YEAR ENDED DECEMBER 31, SEPTEMBER 30, DECEMBER 31, SEPTEMBER 30, ---------------------------------- 1997 1996 1997 1996 1995 1994 --------------- -------------- --------------- ---------- ---------- ---------- (DOLLARS IN THOUSANDS) STATEMENT OF OPERATIONS DATA: Operating revenues........... $ 1,009,245 $ 995,710 $ 1,069,813 $1,101,437 $1,149,561 $1,056,082 Operating expenses........... 776,648 758,834 812,162 818,688 840,884 768,675 Operating margin............. 232,597 236,876 257,651 282,749 308,677 287,407 Net margin................... 8,023 18,414 9,600 21,752 22,258 23,082
DECEMBER 31, SEPTEMBER 30, ---------------------------------- 1997 1996 1995 1994 -------------- ---------- ---------- ---------- (DOLLARS IN THOUSANDS) BALANCE SHEET DATA: Electric plant, net...................................... $3,624,291 $4,376,381 $4,471,762 $4,519,228 Total assets............................................. 4,527,280 5,362,175 5,438,496 5,346,330 Long-term debt, excluding amounts due within one year.... 3,171,511 4,052,470 4,207,320 4,128,080 Obligation under capital leases, long-term............... 289,825 293,682 296,478 303,749 Other obligations........................................ 51,325 41,685 -- -- Patronage capital and membership fees(1)................. 321,771 356,229 338,891 309,496
- ------------------------ (1) Patronage capital currently constitutes all of Oglethorpe's equity. See Note 1 to the Financial Statements included in this Prospectus. 13 SELECTED DEFINITIONS When used herein the following terms will have the meanings indicated below:
TERM MEANING - -------------------- ---------------------------------------------------------------------- ADSCR............... Annual Debt Service Coverage Ratio AFUDC............... Allowance For Funds Used During Construction BPSA................ Block Power Sale Agreement CFC................. National Rural Utilities Cooperative Finance Corporation DSC................. Debt Service Coverage Ratio EMCs................ Electric Membership Cooperatives EPI................. Entergy Power, Inc. FERC................ Federal Energy Regulatory Commission FFB................. Federal Financing Bank GPC................. Georgia Power Company GPSC................ Georgia Public Service Commission GSOC................ Georgia System Operations Corporation GTC................. Georgia Transmission Corporation (An Electric Membership Corporation) ITS................. Integrated Transmission System ITSA................ Revised and Restated Integrated Transmission System Agreement kWh................. Kilowatt-hours LEM................. LG&E Energy Marketing Inc. Members............. The 39 retail distribution cooperatives that are members of Oglethorpe MEAG................ Municipal Electric Authority of Georgia MFI................. Margins for Interest MW.................. Megawatts MWh................. Megawatt-hours NRC................. Nuclear Regulatory Commission PCBs................ Pollution Control Revenue Bonds PCR................. Percentage Capacity Responsibility PPA................. Prior Period Adjustment PURPA............... Public Utility Regulatory Policies Act RUS................. Rural Utilities Service SEPA................ Southeastern Power Administration SONOPCO............. Southern Nuclear Operating Company TIA................. Trust Indenture Act of 1939, as amended TIER................ Times Interest Earned Ratio TVA................. Tennessee Valley Authority
14 INTRODUCTION OGLETHORPE POWER CORPORATION Oglethorpe Power Corporation (An Electric Membership Corporation) ("Oglethorpe") is a Georgia electric membership corporation incorporated in 1974 and headquartered in metropolitan Atlanta. Oglethorpe is owned by its 39 retail electric distribution cooperative members (the "Members"), which, in turn, are owned by their retail consumers. Oglethorpe is the largest electric cooperative in the United States in terms of operating revenues, assets, kilowatt-hour ("kWh") sales and, through the Members, consumers served. (See "BUSINESS OF OGLETHORPE.") As discussed below, the Facility Bonds described herein will be payable from and secured by basic rentals and certain other amounts to be paid by Oglethorpe to the Lessors under several leases relating to Plant Robert W. Scherer Unit No. 2 ("Scherer Unit No. 2"). SCHERER UNIT NO. 2 Scherer Unit No. 2 is an 818 megawatt ("MW") coal-fired, steam electric generating unit located in Monroe County near Forsyth, Georgia. It was placed in commercial operation in February 1984. Scherer Unit No. 2 is one of four units in operation located at the Robert W. Scherer Plant ("Plant Scherer") which are of similar size and design. On December 30, 1985, Oglethorpe sold its entire 60% undivided ownership interest in Scherer Unit No. 2 as part of the Sale and Leaseback Transactions described herein. The purchasers are leasing their respective interests back to Oglethorpe. The remaining 40% interest in Scherer Unit No. 2 is owned by Georgia Power Company ("GPC") (8.4%), Municipal Electric Authority of Georgia ("MEAG") (30.2%) and the City of Dalton, Georgia ("Dalton") (1.4%). SALE AND LEASEBACK TRANSACTIONS On December 30, 1985, in four separate transactions (the "Sale and Leaseback Transactions"), Oglethorpe sold its entire 60% undivided ownership interest in Scherer Unit No. 2 to four separate owner trusts (the "Lessors") established by four different institutional investors (the "Equity Investors"). Each Lessor holds its respective undivided ownership interest in Scherer Unit No. 2 for the benefit of its respective Equity Investor. Each Lessor has leased its respective undivided ownership interest back to Oglethorpe on a long-term net lease basis under a separate lease. Wilmington Trust Company and NationsBank, N.A., as successor by merger to The Citizens and Southern National Bank, acting through its agent, The Bank of New York, currently serve as co-owner trustees for each of the four Lessors. Oglethorpe received total proceeds of $395,000,000 from the Lessors for the undivided ownership interests in Scherer Unit No. 2 sold pursuant to the Sale and Leaseback Transactions. Such proceeds were used by Oglethorpe primarily to repay financing for Scherer Unit No. 2 provided by the Federal Financing Bank (the "FFB"). Of the total consideration, the Lessors severally borrowed an aggregate of $275,446,000 on a nonrecourse basis from CoBank, ACB ("CoBank"), formerly known as Columbia Bank for Cooperatives, which borrowings were evidenced by four promissory notes (the "CoBank Lessor Notes"), each issued under a separate trust indenture. The Lessors financed the remaining aggregate of $119,554,000 of the purchase price for Oglethorpe's undivided ownership interest in Scherer Unit No. 2 with funds contributed as equity by the Equity Investors. On October 20, 1986, three of the Lessors repaid their respective CoBank Lessor Notes issued in the Sale and Leaseback Transactions with the proceeds of a loan from OPC Scherer Funding Corporation to each such Lessor following a public offering of debt obligations of OPC Scherer Funding Corporation. The loans to such Lessors by OPC Scherer Funding Corporation were nonrecourse to the Lessors and were evidenced by promissory notes (the "1986 Lessor Notes") issued under three of the trust indentures. Approximately $9,858,500 of the proceeds of the 1986 Lessor Notes was paid to the Equity Investors as a partial repayment of their equity investments. 15 On December 17, 1997, OPC Scherer 1997 Funding Corporation A ("OPC Scherer 1997 Funding Corporation") issued $224,702,000 aggregate principal amount of Serial Facility Bonds Due June 30, 2011 (the "Private Facility Bonds"). OPC Scherer 1997 Funding Corporation loaned the proceeds of the offering of the Private Facility Bonds to the Lessors, who used such funds and certain other funds provided by Oglethorpe to prepay in full the CoBank Lessor Note and the three 1986 Lessor Notes. OPC Scherer Funding Corporation applied the payments on the 1986 Lessor Notes to redeem the outstanding public debt issued in 1986. ABSENCE OF CASH PROCEEDS This offering (the "Exchange Offer") of Serial Facility Bonds Due June 30, 2011 (the "Exchange Facility Bonds") is intended to satisfy certain obligations of Oglethorpe under an Exchange and Registration Rights Agreement (the "Registration Rights Agreement"), which grants holders of Private Facility Bonds certain exchange and registration rights. Neither Oglethorpe nor OPC Scherer 1997 Funding Corporation will receive any cash proceeds from the issuance of the Exchange Facility Bonds offered hereby. The Lessors have agreed to pay the expenses of the Exchange Offer. The Private Facility Bonds surrendered in exchange for the Exchange Facility Bonds will be retired and canceled and cannot be reissued. The Exchange Facility Bonds and any Private Facility Bonds not exchanged in the Exchange Offer are sometimes referred to herein collectively as the "Facility Bonds." SECURITY AND SOURCE OF PAYMENT FOR THE FACILITY BONDS The Facility Bonds will be issued under a Collateral Trust Indenture, dated as of December 1, 1997 (the "Collateral Trust Indenture"), among OPC Scherer 1997 Funding Corporation, Oglethorpe and SunTrust Bank, Atlanta, as indenture trustee (in such capacity, the "Collateral Trust Trustee"). Pursuant to the Collateral Trust Indenture, the Facility Bonds will be payable from, and secured by a pledge and assignment of, a nonrecourse note issued by each Lessor (collectively, the "Refunding Lessor Notes") under a separate Amended and Restated Indenture of Trust, Deed to Secure Debt and Security Agreement, each dated as of December 1, 1997 (the "Lease Indentures"), between the respective Lessor and the respective trustee of each Lease Indenture (the "Lease Indenture Trustees"). The Refunding Lessor Notes issued by the Lessors will equal in the aggregate the principal amount of the Facility Bonds and have been pledged to the Collateral Trust Trustee. As described below, the source of payments on the Refunding Lessor Notes is amounts payable by Oglethorpe under four separate leases amended in connection with the offering of the Private Facility Bonds pursuant to which each Lessor leases its respective undivided ownership interest in Scherer Unit No. 2 (the "Leases"). The Refunding Lessor Notes issued with respect to the Facility Bonds will be payable on such dates and in such amounts as are required to pay in full the principal of and premium, if any, and interest on the Facility Bonds when due. The Facility Bonds will constitute, in effect, a nonrecourse borrowing by and on behalf of the Lessors, secured by the Lessors' interests in Scherer Unit No. 2 and Oglethorpe's obligations to the Lessors under the Leases (as more fully described below and herein). The Refunding Lessor Note of each Lessor is secured under its Lease Indenture by, among other things, a lien on and security interest in (i) such Lessor's interest in its Lease with Oglethorpe, including the rights of such Lessor to receive all basic rental and certain other payments thereunder (other than Excepted Payments as defined therein); (ii) such Lessor's undivided ownership interest in Scherer Unit No. 2; and (iii) such Lessor's rights under the Support Agreements described herein. Each Lease requires that basic rental and certain other payments be made by Oglethorpe in such amounts and at such times as will always provide for the payment of the principal of and premium, if any, and interest on all Lessor Notes (as described herein) issued by the related Lessor, including such Lessor's Refunding Lessor Notes, when due, whether at maturity, upon redemption or otherwise. The Refunding Lessor Notes are without recourse to the general credit of any Lessor or Equity Investor. As such, the only 16 sources of payment for the Refunding Lessor Notes, and thus for the Facility Bonds, will be the basic rentals and certain other payments to be made by Oglethorpe to the Lessors under the Leases and, if ultimately required, the proceeds of collateral securing such obligations. Each such Lease is a net lease pursuant to which Oglethorpe is unconditionally obligated to make all payments thereunder without any right of counterclaim, setoff, deduction or defense. However, the Facility Bonds will not be, and the Refunding Lessor Notes are not, direct obligations of or guaranteed by Oglethorpe. For information with respect to certain factors that may affect the foregoing, see "DESCRIPTION OF THE FACILITY BONDS-- Considerations Relating to Security." Subject to certain exceptions described herein, the Lease Indenture Trustee is entitled to exercise applicable remedies on behalf of the holder of each Refunding Lessor Note in the event of a default thereunder. Holders of the Facility Bonds will be entitled, through the Collateral Trust Trustee as holder of the Refunding Lessor Notes, to direct the Lease Indenture Trustees with respect to matters relating to such exercise of remedies as permitted by the Lease Indentures. (See "DESCRIPTION OF THE FACILITY BONDS--Voting of Lessor Notes.") Subject to the limitations described below, additional notes of each Lessor ("Additional Notes"; together with the Refunding Lessor Notes, the "Lessor Notes") are permitted to be issued under each Lessor's Lease Indenture (i) to refinance any previously issued Lessor Notes, including the Refunding Lessor Notes, and to finance all costs and expenses in connection therewith; (ii) to provide funds in connection with certain requirements of the related Tax Indemnification Agreement described herein; and (iii) to provide funds for all or any portion of any addition or improvement to Scherer Unit No. 2 ("Capital Improvements"). No Additional Notes to be issued for the purpose set forth in (ii) above may be issued if the aggregate principal amount of all Lessor Notes outstanding under the applicable Lease Indenture (including the proposed Additional Notes) exceeds 80% of the purchase price for the acquisition of such Lessor's undivided interest in Scherer Unit No. 2 ("Lessor's Cost"). No Additional Notes to be issued for the purpose set forth in (iii) above may be issued: (1) if the aggregate principal amount of all Lessor Notes issued and outstanding under such Lease Indenture (including the proposed Additional Notes) exceeds an amount equal to 80% of the sum of (A) the Lessor's Cost, (B) such Lessor's share of the cumulative cost of all Capital Improvements theretofore incorporated or installed during the term of the Lease and financed by such Lessor or with Lessor Notes, and (C) such Lessor's share of the cost of the Capital Improvements proposed to be financed with such Additional Notes; or (2) if the aggregate principal amount of all Additional Notes issued under such Lease Indenture for Capital Improvements (including the proposed Additional Notes) exceeds an amount equal to 80% of the sum of (A) such Lessor's share of the cumulative cost of all Capital Improvements theretofore incorporated or installed during the term of the Lease and (B) the cost of the Capital Improvements proposed to be financed with such Additional Notes. Moreover, the aggregate principal amount of all Lessor Notes issued under all Lease Indentures for the purpose set forth in (iii) above may not exceed $125,000,000. In addition, before Additional Notes may be issued for the purposes set forth in (ii) and (iii) above, the applicable Lease Indenture Trustee must give ten days notice to the holders of the related Lessor Notes of the proposed issuance of Additional Notes. No Additional Notes may be issued if, during such ten day period, such holders of Lessor Notes notify such Lease Indenture Trustee that certain requirements for issuing Additional Notes have not been met and direct such Lease Indenture Trustee not to allow the issuance of such Additional Notes. For further information with respect to the source of payment for the Facility Bonds and the provisions of the Collateral Trust Indenture and the Lease Indentures relating thereto, see "DESCRIPTION OF THE FACILITY BONDS" and "DESCRIPTION OF THE LEASE INDENTURES." 17 OPC SCHERER 1997 FUNDING CORPORATION OPC Scherer 1997 Funding Corporation is a special purpose corporation incorporated in Delaware on May 28, 1997, for the purpose of facilitating the refinancing of the respective undivided ownership interest of each Lessor in Scherer Unit No. 2. The business of OPC Scherer 1997 Funding Corporation is restricted by its certificate of incorporation (which cannot be amended without the consent of the Lease Indenture Trustees) to the issuance and sale of the Private Facility Bonds, application of the proceeds thereof, the issuance of the Exchange Facility Bonds and completion of the Exchange Offer and, possibly, the issuance of other indebtedness, the proceeds of which would be used to make loans to the Lessors to finance, among other things, additions or improvements to Scherer Unit No. 2. The assets of OPC Scherer 1997 Funding Corporation consist of (i) the Refunding Lessor Notes issued with respect to the Facility Bonds and, if additional loans are made to the Lessors by OPC Scherer 1997 Funding Corporation, additional Lessor Notes and (ii) $1,000 in cash, representing the equity capital contributed by its sole shareholder. The Refunding Lessor Notes, and such other Lessor Notes, if any, will be payable from basic rental and certain other payments made by Oglethorpe to the Lessors under the Leases. OPC Scherer 1997 Funding Corporation is to function only as an agent of the Lessors (and not as principal) with respect to the Facility Bonds and to represent itself only as an agent of the Lessors (and not as principal) in dealings with third parties relating to the Facility Bonds. The sole shareholder of OPC Scherer 1997 Funding Corporation is the Scherer Trust, a Massachusetts charitable trust. J H Holdings Corporation, a Massachusetts corporation, is the trustee of the Scherer Trust. J.H. Management Corporation, a Massachusetts corporation, is the sole beneficiary of the Scherer Trust. All of the stock of J H Holdings Corporation and J.H. Management Corporation is held by the 1960 Trust, an independent charitable organization qualified under Section 501(c)(3) of the Internal Revenue Code, and operated for the benefit of a Massachusetts charitable institution. Neither Oglethorpe nor any Lessor or Equity Investor holds any ownership interest in OPC Scherer 1997 Funding Corporation, J H Holdings Corporation or J.H. Management Corporation, and no person affiliated with Oglethorpe, any Lessor or Equity Investor is an officer, director or employee of OPC Scherer 1997 Funding Corporation, J H Holdings Corporation or J.H. Management Corporation. 18 FLOW OF FUNDS FOR DEBT SERVICE PAYMENTS ON THE FACILITY BONDS [CHART] 19 BUSINESS OF OGLETHORPE GENERAL Oglethorpe is a Georgia electric membership corporation incorporated in 1974 and headquartered in metropolitan Atlanta. Oglethorpe is owned by its 39 Members, who, in turn, are owned by their retail consumers. Oglethorpe is the largest electric cooperative in the United States in terms of operating revenues, assets, kWh sales and, through the Members, consumers served. Oglethorpe has approximately 170 employees, after reflecting the effect of a recent corporate restructuring and a business alliance transaction. (See "Corporate Restructuring" and "Relationship with Intellisource" herein.) As with cooperatives generally, Oglethorpe operates on a not-for-profit basis. Oglethorpe's principal business is providing wholesale electric power to the Members. (See "Power Supply Business" herein.) The Members are local consumer-owned distribution cooperatives providing retail electric service on a not-for-profit basis. In general, the customer base of the Members consists of residential, commercial and industrial consumers within specific geographic areas. The Members serve approximately 1.2 million electric consumers (meters) representing approximately 2.6 million people. For information on the Members, see "THE MEMBERS OF OGLETHORPE." Oglethorpe's mailing address is 2100 East Exchange Place, Post Office Box 1349, Tucker, Georgia 30085-1349, and its telephone number is (770) 270-7600. COOPERATIVE PRINCIPLES Cooperatives like Oglethorpe are business organizations owned by their members, which are also either their wholesale or retail customers. As not-for-profit organizations, cooperatives are intended to provide services to their members at the lowest possible cost, in part by eliminating the need to produce profits or a return on equity. Cooperatives may make sales to non-members, the effect of which is generally to reduce costs to members. Today, cooperatives operate throughout the United States in such diverse areas as utilities, agriculture, irrigation, insurance and credit. All cooperatives are based on similar business principles and legal foundations. Generally, an electric cooperative designs its rates to recover its cost-of-service and plans to collect a reasonable amount of revenues in excess of expenses (I.E., margins) to increase its patronage capital, which is the equity component of its capitalization. Any such margins, which are considered capital contributions (I.E., equity) from the members, are held for the accounts of the members without interest and returned to them when the board of directors of the cooperative deems it prudent to do so. The timing and amount of any actual return of capital to the members depends on the financial goals of the cooperative and the cooperative's loan and security agreements. CORPORATE RESTRUCTURING Oglethorpe and the Members completed a corporate restructuring (the "Corporate Restructuring") on March 11, 1997, in which Oglethorpe was divided into three specialized operating companies to respond to increasing competition and regulatory changes in the electric industry. As part of the Corporate Restructuring, Oglethorpe's transmission business was sold to and is now owned and operated by Georgia Transmission Corporation (An Electric Membership Corporation) ("GTC"), a recently formed Georgia electric membership corporation. Oglethorpe's system operations business was sold to and is now owned and operated by Georgia System Operations Corporation ("GSOC"), a recently formed Georgia nonprofit corporation. Oglethorpe continues to own and operate its power supply business. The purchase price GTC paid Oglethorpe for the transmission business was based on an appraisal of the fair market value of such business, as determined by an independent appraiser, and was approximately $709 million. The purchase price was paid primarily by GTC's assumption of a portion 20 (approximately 16.86%) of Oglethorpe's long-term secured debt in an amount equal to approximately $686 million. Approximately $541 million of this debt (payable to the Rural Utilities Service ("RUS"), FFB and CoBank) became the sole obligation of GTC, and Oglethorpe was released from all liability with regard to this debt. The remaining $145 million of debt assumed by GTC relates to Oglethorpe's pollution control revenue bonds ("PCBs"). While GTC assumed and agreed to pay this $145 million of debt, Oglethorpe was not legally released from its obligation to repay this debt. For financial reporting purposes, this debt is not shown on Oglethorpe's balance sheet and is shown on Oglethorpe's capitalization table as being assumed by GTC. (See "UNAUDITED PRO FORMA CONDENSED FINANCIAL DATA," "SELECTED FINANCIAL DATA," "CAPITALIZATION" and the Financial Statements of Oglethorpe and the notes thereto included in this Prospectus.) The remainder of the purchase price was paid by GTC from cash obtained through a loan from National Rural Utilities Cooperative Finance Corporation ("CFC") and the assumption of approximately $2 million of other Oglethorpe liabilities. Oglethorpe also made a special patronage capital distribution of approximately $49 million to the Members which was used by the Members to establish equity in and to provide initial working capital to GTC. Oglethorpe and the 39 Members are the owners and members of GTC. GTC now provides transmission services to the Members, Oglethorpe and third parties. GTC has succeeded to all of Oglethorpe's rights and obligations with respect to the Integrated Transmission System ("ITS"). (See "Relationship with GTC" herein for further discussion of the ITS.) The system operations business and assets sold to GSOC consist of the system control center and related energy control and revenue metering systems equipment. The purchase price totaled approximately $9.4 million and was paid by (i) GSOC's assumption of Oglethorpe's obligations under an existing note held by the RUS, (ii) delivery of a purchase money note payable to Oglethorpe, and (iii) the assumption of certain other liabilities of Oglethorpe. Oglethorpe, the Members and GTC are the owners and members of GSOC. GSOC now operates the system control center and provides system operations services to the Members, Oglethorpe and GTC. Oglethorpe continues to operate its power supply business. Oglethorpe retained all of its owned and leased generation assets and, as of September 30, 1997, had total assets of approximately $4.5 billion and total long-term debt of approximately $3.5 billion. Oglethorpe also continues to administer its power purchase contracts and provide marketing support functions to the Members. (See "Power Supply Business" herein and "MEMBER REQUIREMENTS AND POWER SUPPLY RESOURCES.") Effective with the Corporate Restructuring, the Members amended Oglethorpe's Bylaws to implement a new governance structure with an 11-member board of directors consisting of six directors elected from the Members, four independent outside directors and Oglethorpe's President and Chief Executive Officer. This smaller board replaced Oglethorpe's former 39-member board comprised of directors nominated from and by each Member. (See "MANAGEMENT" for further information.) Contemporaneously with the Corporate Restructuring, Oglethorpe replaced its prior Consolidated Mortgage and Security Agreement, dated as of September 1, 1994, by and among Oglethorpe and the United States of America, acting through the Administrator of the RUS, and certain other mortgagees (the "RUS Mortgage"), with an Indenture, dated as of March 1, 1997, from Oglethorpe to SunTrust Bank, Atlanta ("SunTrust"), as trustee (as supplemented, the "Mortgage Indenture"). As did the RUS Mortgage, the Mortgage Indenture constitutes a lien on substantially all of the owned tangible and certain intangible property of Oglethorpe. (See "Electric Rates" herein and "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS--General--RATES AND FINANCIAL COVERAGE REQUIREMENTS" for further discussion of the revenue requirements of the Mortgage Indenture.) Immediately after the Corporate Restructuring, Oglethorpe's corporate name was changed from "Oglethorpe Power Corporation (An Electric Membership Generation & Transmission Corporation)" to 21 "Oglethorpe Power Corporation (An Electric Membership Corporation)" to reflect that it no longer provides transmission services. In connection with the Corporate Restructuring, Oglethorpe agreed to remove the costs of its marketing services business from its general rates and recover these costs on a fee-for-services basis beginning in 1998. Oglethorpe has created a stock subsidiary, EnerVision, Inc., Tailored Energy Solutions, to which it may transfer its marketing services business, which includes 36 full-time and 12 part-time employees. Further, all or part of this subsidiary may be sold to third parties. Oglethorpe does not expect any of these potential actions to have a material effect on its financial condition or results of operations. POWER SUPPLY BUSINESS Oglethorpe provides wholesale electric service to the 39 Members pursuant to long-term, take-or-pay Wholesale Power Contracts described herein that obligate the Members on a joint and several basis to pay rates sufficient to pay all the costs of owning and operating Oglethorpe's power supply business. (See "Wholesale Power Contracts" herein.) Oglethorpe supplies capacity and energy to the Members from a combination of owned and leased generating plants and power purchased under long-term contracts with other power suppliers and power marketers. GTC provides transmission services to the Members for delivery of the Members' power purchases. Oglethorpe owns or leases undivided interests in thirteen generating units currently in commercial operation. These units provide Oglethorpe with a total of 3,335 MW of nameplate capacity, consisting of 1,500.6 MW of coal-fired capacity, 1,185 MW of nuclear-fueled capacity, 632.5 MW of pumped storage hydroelectric capacity, 14.8 MW of oil-fired combustion turbine capacity and 2.1 MW of conventional hydroelectric capacity. Oglethorpe's generating units consist of 30% undivided interests in the Edwin I. Hatch Plant ("Plant Hatch"), the Hal B. Wansley Plant ("Plant Wansley") and the Alvin W. Vogtle Plant ("Plant Vogtle"), a 60% undivided interest in the Robert W. Scherer Unit No. 1 ("Scherer Unit No. 1"), a 60% undivided interest in Scherer Unit No. 2, a 100% interest in the Tallassee Project at the Walter W. Harrison Dam ("Tallassee") and a 74.61% undivided interest in the Rocky Mountain Pumped Storage Hydroelectric Facility ("Rocky Mountain"). Plant Hatch consists of two nuclear-fueled units, with nameplate ratings of 810 MW and 820 MW, respectively. Plant Wansley consists of two coal-fired units, each with a nameplate rating of 865 MW. Plant Wansley also includes a 49.2 MW oil-fired combustion turbine. Plant Vogtle consists of two nuclear-fueled units, each with a nameplate rating of 1,160 MW. Plant Scherer consists of four coal-fired units, each with a nameplate rating of 818 MW, with Oglethorpe having an interest only in Scherer Unit No. 1 and Scherer Unit No. 2. Tallassee is a conventional hydroelectric facility with a nameplate rating of 2.1 MW. Rocky Mountain is a 3 unit pumped storage hydroelectric facility with a nameplate rating of 847.8 MW. (See "MEMBER REQUIREMENTS AND POWER SUPPLY RESOURCES--General" and "--Generating Facilities--GENERAL.") Participants in Plants Hatch, Wansley and Vogtle and Scherer Units No. 1 and No. 2 also include MEAG, Dalton and GPC. GPC serves as operating agent for these units. GPC is also a participant in Rocky Mountain which is operated by Oglethorpe. Oglethorpe utilizes long-term power marketer arrangements to reduce the cost of power to the Members. Oglethorpe has entered into power marketer agreements with LG&E Energy Marketing Inc. ("LEM") effective January 1, 1997, for approximately 50% of the load requirements of the Members and with Morgan Stanley Capital Group Inc. ("Morgan Stanley") effective May 1, 1997, with respect to 50% of the forecasted load requirements of the Members. The LEM agreements are based on the actual requirements of the Members during the contract term, whereas the Morgan Stanley agreement represents a fixed supply obligation. Under these power marketer agreements, Oglethorpe purchases energy at fixed prices covering a portion of the costs of energy to its Members. LEM and Morgan Stanley, in turn, have certain rights to market excess energy from the Oglethorpe system. All of Oglethorpe's existing 22 generating facilities and power purchase arrangements are available for use by LEM and Morgan Stanley for the term of the respective agreements. Oglethorpe continues to be responsible for all the costs of its system resources but receives revenue from LEM and Morgan Stanley for the use of the resources. (See "MEMBER REQUIREMENTS AND POWER SUPPLY RESOURCES--General" and "--Power Marketer Arrangements.") Oglethorpe purchases a total of approximately 1,250 MW of power pursuant to power purchase agreements with GPC, Big Rivers Electric Corporation ("Big Rivers"), Entergy Power, Inc. ("EPI"), and Hartwell Energy Limited Partnership ("Hartwell"). Oglethorpe has also contracted to purchase 275 MW of peaking capacity from Florida Power Corporation during the summer of 1998. (See "MEMBER REQUIREMENTS AND POWER SUPPLY RESOURCES--Power Purchase and Sale Arrangements.") WHOLESALE POWER CONTRACTS In connection with the Corporate Restructuring, Oglethorpe and each of the Members entered into substantially similar Amended and Restated Wholesale Power Contracts, dated August 1, 1996 (the "Wholesale Power Contracts"), each of which extends through December 31, 2025. Each Wholesale Power Contract permits a Member to take future incremental power requirements either from Oglethorpe or other sources. Under its Wholesale Power Contract, a Member is unconditionally obligated on an express "take-or-pay" basis for a fixed allocation of Oglethorpe's costs for its existing generation and purchased power resources, as well as the costs with respect to any future resources in which such Member elects to participate. Each Wholesale Power Contract specifically provides that the Member must make payments whether or not power is delivered and whether or not a plant has been sold or is otherwise unavailable. Oglethorpe is obligated to use its reasonable best efforts to operate, maintain and manage its resources in accordance with prudent utility practices. The Wholesale Power Contracts provide that Oglethorpe will be responsible for power supply planning, resource procurement and sales of capacity and energy for Members unless a Member notifies Oglethorpe that it does not want Oglethorpe to provide those services to it. Each Member's cost responsibility under its Wholesale Power Contract is based on agreed-upon fixed percentage capacity responsibilities ("PCRs"). PCRs have been assigned for all of Oglethorpe's existing generation and purchased power resources. PCRs for any future resource will be assigned only to Members choosing to participate in that resource. The Wholesale Power Contracts provide that each Member will be jointly and severally responsible for all costs and expenses of all existing generation and purchased power resources, as well as for any future resources (whether or not such Member has elected to participate in such future resource) that are approved by 75% of Oglethorpe's Board of Directors and 75% of the Members. For resources so approved in which less than all Members participate, costs are shared first among the participating Members, and if all participating Members default, each non-participating Member is expressly obligated to pay a proportionate share of such default. The Wholesale Power Contracts contain covenants by each Member (i) to establish, maintain and collect rates and charges for the service of its electric system, and (ii) to conduct its business in a manner which will produce revenues and receipts at least sufficient to enable the Member to pay to Oglethorpe, when due, all amounts payable by the Member under its Wholesale Power Contract and to pay any and all other amounts payable from, or which might constitute a charge or a lien upon, the revenues and receipts derived from its electric system, including all operation and maintenance expenses and the principal of, premium, if any, and interest on all indebtedness related to the Member's electric system. See "MEMBER REQUIREMENTS AND POWER SUPPLY RESOURCES" for a description of the Members' demand and energy requirements and the related power supply resources. See also "MEMBER REQUIREMENTS AND POWER SUPPLY RESOURCES--Power Marketing Arrangements--RELATED AGREEMENTS" regarding supplemental agreements to the Wholesale Power Contracts relating to the power marketer agreements. 23 ELECTRIC RATES Each Member is required to pay Oglethorpe for capacity and energy furnished under its Wholesale Power Contract in accordance with rates established by Oglethorpe. Oglethorpe reviews its rates at such intervals as it deems appropriate but is required to do so at least once every year. Oglethorpe is required to revise its rates as necessary so that the revenues derived from such rates, together with its revenues from all other sources, will be sufficient, but only sufficient to pay all costs of its system, including operating and maintenance costs, the cost of purchased power, the cost of transmission services, and principal and interest on all indebtedness (including capital lease obligations) of Oglethorpe, all costs associated with decommissioning or otherwise retiring any generating facility, and to provide for the establishment and maintenance of reasonable reserves. Rates are also required to be established so as to enable Oglethorpe to comply with all financial requirements under the Mortgage Indenture. (See "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS--General--RATES AND FINANCIAL COVERAGE REQUIREMENTS.") Under the Mortgage Indenture, Oglethorpe is required, subject to any necessary regulatory approval, to establish and collect rates which are reasonably expected, together with other revenues of Oglethorpe, to yield an MFI Ratio described herein for each fiscal year equal to at least 1.10. Margins for Interest ("MFI") is defined in the Mortgage Indenture to be the sum of net margins of Oglethorpe (which includes revenues of Oglethorpe subject to refund at a later date but excludes provisions for (i) non-recurring charges to income, including the non-recoverability of assets or expenses, except to the extent Oglethorpe determines to recover such charges in rates, and (ii) refunds of revenues collected or accrued subject to refund) plus interest charges, whether capitalized or expensed, on all indebtedness secured under the Mortgage Indenture or by a lien equal or prior to the lien of the Mortgage Indenture, including amortization of debt discount and expense or premium but excluding interest charges on indebtedness assumed by GTC ("Interest Charges"), plus any amount included in net margins for accruals for federal or state income taxes imposed on income after deduction of interest expense. MFI takes into account any item of net margin, loss, gain or expenditure of any affiliate or subsidiary of Oglethorpe only if Oglethorpe has received such net margins or gains as a dividend or other distribution from such affiliate or subsidiary or if Oglethorpe has made a payment with respect to such losses or expenditures. "MFI Ratio" is the ratio of MFI to total Interest Charges for a given period. (See "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS-- General--RATES AND FINANCIAL COVERAGE REQUIREMENTS.") The formulary rate established by Oglethorpe in the rate schedule to the Wholesale Power Contracts employs a rate methodology under which all categories of costs are specifically separated as components of the formula to determine Oglethorpe's revenue requirements. The rate schedule also implements the responsibility for fixed costs assigned to each Member (I.E., the PCR). The monthly charges for capacity and other non-energy charges are based on Oglethorpe's annual budget. Such capacity and other non-energy charges may be adjusted by the Board of Directors, if necessary, during the year through an adjustment to the annual budget. Energy charges reflect the pass-through of actual energy costs whether incurred from generation or purchased power resources or under the power marketing arrangements. The rate schedule formula also includes a prior period adjustment ("PPA") mechanism designed to ensure that Oglethorpe achieves the minimum 1.10 MFI Ratio. The PPA provides for the retention of margins within a range from a 1.10 MFI Ratio to a 1.20 MFI Ratio. Amounts, if any, by which Oglethorpe fails to achieve a minimum 1.10 MFI Ratio would be accrued as of December 31 of the applicable year and collected from the Members during the period April through December of the following year. Amounts, if any, by which Oglethorpe exceeds the maximum 1.20 MFI Ratio would be charged against revenues as of December 31 of the applicable year and refunded to the Members during the period April through December of the following year. The rate schedule formula is intended to provide for the collection of revenues which, together with revenues from all other sources, are equal to all costs and 24 expenses recorded by Oglethorpe, plus amounts necessary to achieve at least the minimum 1.10 MFI Ratio. Under the terms of Oglethorpe's prior RUS Mortgage, all rate revisions by Oglethorpe were subject to the approval of RUS. Under the Mortgage Indenture and related loan contract with RUS, however, adjustments to Oglethorpe's rates to reflect changes in Oglethorpe's budgets are not subject to RUS approval, except for any reduction in rates in a fiscal year following a fiscal year in which Oglethorpe has failed to meet the minimum 1.10 MFI Ratio set forth in the Mortgage Indenture. Changes to the rate schedule under the Wholesale Power Contracts are subject to RUS approval. Oglethorpe's rates are not subject to the approval of any other federal or state agency or authority, including the Georgia Public Service Commission (the "GPSC"). For information regarding future rates, see "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS--General--RATES AND FINANCIAL COVERAGE REQUIREMENTS." RELATIONSHIP WITH GTC GTC purchased and is operating the transmission system as described in "Corporate Restructuring" herein. Oglethorpe and the 39 Members are members of GTC. GTC provides transmission services to the Members for delivery of the Members' power purchases from Oglethorpe, Southeastern Power Administration ("SEPA") and any other power suppliers. GTC also provides transmission services to Oglethorpe and third parties. Oglethorpe has entered into a transmission agreement with GTC to provide transmission services for third party transactions and for service to Oglethorpe's headquarters and the administration building at Rocky Mountain. In connection with the Corporate Restructuring, GTC and the Members entered into Member Transmission Service Agreements (the "Member Transmission Agreements") under which GTC provides transmission service to the Members pursuant to a transmission tariff. The Member Transmission Agreements have a minimum term for network service for current load until December 31, 2025. After an initial ten-year term, load growth above 1995 requirements may, with notice to GTC, be served by others. The Member Transmission Agreements provide that if a Member elects to purchase a part of its network service elsewhere, it must pay appropriate stranded costs to protect the other Members from any rate increase that could otherwise occur. Under the Member Transmission Agreements, Members have the right to design, construct and own new distribution substations. The Member Transmission Agreements provide that the Members are responsible, on a joint and several basis, for all of GTC's costs relating to its transmission business. The Member Transmission Agreements contain express covenants of the Members to set and collect retail rates sufficient to allow the Members to meet their respective obligations under the Member Transmission Agreements. The rate formula set forth in the transmission tariff is intended to recover all costs and expenses paid or incurred by GTC. The rate expressly includes in the description of costs to be recovered all principal and interest on indebtedness of GTC (including any indebtedness of Oglethorpe assumed by GTC). The rate further expressly provides for GTC to earn sufficient margins to satisfy the requirements of its new mortgage indenture, which is substantially similar to Oglethorpe's Mortgage Indenture. The GTC transmission tariff and associated Member Transmission Agreements were developed to be consistent with federal transmission policy as expressed in Order 888 of the Federal Energy Regulatory Commission ("FERC"). FERC's Order 888 mandates open access to essentially all transmission systems in order to promote competition in the bulk power markets and provides that non-regulated utilities (such as Oglethorpe and GTC) must provide access to their transmission systems on reciprocal terms and conditions in order to obtain transmission from FERC-regulated utilities. The transmission tariff and Member Transmission Agreements have been designed to facilitate the operation of GTC in the new regulatory environment and, accordingly, provide for GTC to serve on a nondiscriminatory basis 25 both member and non-member customers on terms intended to meet FERC's reciprocity requirement. For information regarding a FERC filing relating to GTC and Oglethorpe, see "Legal Proceedings" herein. GTC owns approximately 2,300 miles of transmission line and 450 substations of various voltages. In connection with the Corporate Restructuring, GTC succeeded to Oglethorpe's rights in the ITS, which consists of transmission facilities owned by GTC, GPC, MEAG and Dalton. Through agreements, common access to the combined facilities that compose the ITS enables the owners to use their combined resources to make deliveries to or for their respective consumers, to provide transmission service to third parties and to make off-system purchases and sales. GTC's rights and obligations with respect to the ITS are governed by the Revised and Restated Integrated Transmission System Agreement with GPC (the "ITSA"), which was assigned to GTC in connection with the Corporate Restructuring. The ITSA provides for the transmission and distribution of electric energy in the State of Georgia, other than in certain counties, and for bulk power transactions, through use of the ITS. The ITS was established in order to obtain the benefits of a coordinated development of the parties' transmission facilities and to make it unnecessary for any party to construct duplicative facilities. The ITS consists of all transmission facilities, including land, owned by the parties on the date the ITSA became effective and those thereafter acquired, which are located in the State of Georgia (other than in the excluded counties) and which are used or usable to transmit power of a certain minimum voltage and to transform power of a certain minimum voltage and a certain minimum capacity (the "Transmission Facilities"). GPC has entered into agreements with MEAG and Dalton that are substantially similar to the ITSA, and GPC may enter into such agreements with other entities. The ITSA will remain in effect through December 31, 2012 and, if not then terminated by five years' prior written notice by either party, will continue until so terminated. The ITSA is administered by a committee (the "Joint Committee") composed of two representatives from each of GTC, GPC, MEAG and Dalton. Each year, the Joint Committee determines a four-year plan of additions to the Transmission Facilities that will reflect the current and anticipated future transmission requirements of the parties. Each ITS participant is generally required to maintain an original cost investment in the Transmission Facilities in proportion to their respective Peak Loads (as defined in the ITSA). GTC and GPC are parties to a Transmission Facilities Operation and Maintenance Contract (the "Transmission Operation Contract"), under which GPC provides System Operator Services (as defined in the Transmission Operation Contract) for GTC. In addition, GPC is required to provide such supervision, operation and maintenance supplies, spare parts, equipment and labor for the operation, maintenance and construction of Transmission Facilities as may be specified by GTC. GPC is also required to perform certain emergency work under the Transmission Operation Contract. GTC is permitted, upon notice to GPC, to perform, or contract with others for the performance of, certain services performed by GPC. Absent termination or amendment of the Transmission Operation Contract, however, GPC will continue to perform System Operator Services for GTC. The term of the Transmission Operation Contract will continue from year to year unless terminated by either party upon four years' notice. GTC is required to pay its proportionate share of the cost for the services provided by GPC. RELATIONSHIP WITH GSOC Oglethorpe, the 39 Members and GTC are members of GSOC. GSOC now owns and operates the system control center and provides system operations services to the Members, Oglethorpe and GTC. GTC has contracted with GSOC to provide certain transmission system operation services including reliability monitoring, switching operations, and the real-time management of the transmission system. 26 RELATIONSHIP WITH GPC Oglethorpe's relationship with GPC is a significant factor in several aspects of Oglethorpe's business. GPC is one of Oglethorpe's principal suppliers of purchased power, and Oglethorpe is one of GPC's largest customers. All of Oglethorpe's co-owned generating facilities, except Rocky Mountain, are operated by GPC on behalf of itself as a co-owner and as agent for the other co-owners. GPC and Oglethorpe, through the Members, are competitors in the State of Georgia for electric service to new customers that have a choice of supplier under the Georgia Territorial Electric Service Act, which was enacted in 1973 (the "Territorial Act"). For further information regarding the various relationships and agreements with GPC, see "THE MEMBERS OF OGLETHORPE--Service Area and Competition," "MEMBER REQUIREMENTS AND POWER SUPPLY RESOURCES--Power Purchase and Sale Arrangements--POWER PURCHASES FROM GPC," "--Other Power Purchase and Sale Arrangements--OTHER POWER SYSTEM ARRANGEMENTS," "--Generating Facilities--FUEL SUPPLY," "CO-OWNERS OF THE PLANTS AND THE PLANT AGREEMENTS--Co-Owners of the Plants--GEORGIA POWER COMPANY" and "--The Plant Agreements." RELATIONSHIP WITH RUS Historically, federal loan programs administered by RUS have provided the principal source of financing for electric cooperatives. Loans guaranteed by RUS and made by FFB have been a major source of funding for Oglethorpe. However, in recent years, there have been legislative, administrative and budgetary initiatives intended to reduce or, in some cases, eliminate federal funding for electric cooperatives. In any event, Oglethorpe does not have any new generation facilities under construction, and Oglethorpe's management does not anticipate the need for loans for construction of any new capacity well into the future. (See "MEMBER REQUIREMENTS AND POWER SUPPLY RESOURCES-- Power Marketer Arrangements" for a discussion of the long-term power marketer arrangements.) In connection with the Corporate Restructuring, Oglethorpe replaced its RUS Mortgage with the Mortgage Indenture, which, like the RUS Mortgage, constitutes a lien on substantially all of the owned tangible and certain intangible property of Oglethorpe. Oglethorpe also entered into a new loan contract with RUS in connection with the Mortgage Indenture. Under the new loan contract, RUS has retained approval rights over certain significant actions and arrangements, including, without limitation, (i) significant additions to or dispositions of system assets, (ii) significant power purchase and sale contracts, (iii) changes to the Wholesale Power Contracts, including the rate schedule contained therein, (iv) changes to plant ownership and operating agreements and (v) in limited circumstances, issuance of additional secured debt. The extent of RUS's approval rights under the new loan contract with Oglethorpe is substantially less than the supervision and control RUS has traditionally exercised over borrowers under its standard loan and security documentation. In addition, the Mortgage Indenture improves Oglethorpe's ability to borrow funds in the public capital markets. (See "THE MEMBERS OF OGLETHORPE--Members' Relationship with RUS" for a discussion of the impact of changes in the RUS lending program on the Members.) RELATIONSHIP WITH INTELLISOURCE In conjunction with the Corporate Restructuring and as a part of its continuing efforts to reduce costs, effective February 1, 1997, Oglethorpe implemented a business alliance with Intellisource, Inc., a national provider of outsourcing services. Pursuant to an agreement with Intellisource, approximately 150 support services division employees of Oglethorpe in the areas of accounting, auditing, communications, human resources, facility management, purchasing, telecommunications and information technology became employees of Intellisource. Oglethorpe, GTC and GSOC are key customers of Intellisource and are being served on-site by the managers and employees of Oglethorpe's former support services division. 27 LEGAL PROCEEDINGS On June 17, 1997, PECO Energy Company--Power Team ("PECO") filed an application with FERC pursuant to Section 211 of the Federal Power Act requesting FERC to compel Oglethorpe and/or GTC to provide PECO with 250 MW of firm point-to-point transmission service from the Tennessee Valley Authority ("TVA")-ITS interface to the Florida-ITS interface for an initial three-year period, with an automatic roll-over provision. PECO also seeks $10,000 per day in penalties from Oglethorpe and/or GTC, alleging bad faith and delays in negotiations. In their response to FERC, GTC and Oglethorpe contend that they negotiated with PECO in good faith, and thus there is no reasonable basis for imposing the penalties sought by PECO. GTC also responded that it does not have firm "available transfer capability" at the TVA-ITS interface to fulfill PECO's request, after taking into account the need to protect system reliability, existing firm commitments, and use of the TVA-ITS interface to serve "native load," in accordance with North American Electric Reliability Council guidelines. In the event GTC is ordered by FERC to provide the requested service, PECO would be required to compensate GTC at rates set by FERC in the order. As a consequence of any such order, power purchased by Oglethorpe for delivery through the TVA-ITS interface would probably be curtailed, and could result in higher purchased power cost than would otherwise be the case. Although FERC transmission pricing policy is designed to ensure that a transmission provider is fully compensated for the cost of providing transmission service, potentially including opportunity cost, there can be no assurance that rates ordered by FERC for service to PECO would fully compensate GTC, Oglethorpe and the Members for the use of the transmission system and for any resulting increase in the cost of power. Oglethorpe is a party to various other actions and proceedings incident to its normal business. Liability in the event of final adverse determinations in any of these matters is either covered by insurance or, in the opinion Oglethorpe's management, after consultation with counsel, should not in the aggregate have a material adverse effect on the financial position or results of operations of Oglethorpe. 28 UNAUDITED PRO FORMA CONDENSED FINANCIAL DATA The following unaudited pro forma condensed statements of revenues and expenses for the year ended December 31, 1996, and the twelve months ended September 30, 1997, are based on the historical financial statements of Oglethorpe included in this Prospectus, adjusted to give effect to the Corporate Restructuring effective April 1, 1997, as if it had occurred at January 1, 1996, and October 1, 1996, respectively. Therefore, the unaudited pro forma condensed statement of revenues and expenses for the twelve months ended September 30, 1997, reflects operations of Oglethorpe solely as a power supply company after the Corporate Restructuring for the six months ended September 30, 1997. For information regarding the Corporate Restructuring, see "BUSINESS OF OGLETHORPE--Corporate Restructuring." The unaudited pro forma condensed financial data and accompanying notes should be read in conjunction with the financial statements of Oglethorpe and the notes thereto included in this Prospectus and "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS." The unaudited pro forma financial data and accompanying notes are provided for informational purposes only. They are not necessarily indicative of what Oglethorpe's results of operations would have been if the Corporate Restructuring had actually occurred as of the dates indicated and are not intended to project Oglethorpe's results of operations for any future period, nor do they give effect to any matters other than those described in the notes thereto. However, the unaudited pro forma condensed financial data contain, in the opinion of management, all adjustments necessary for a fair presentation thereof. 29 PRO FORMA CONDENSED STATEMENT OF REVENUES AND EXPENSES FOR THE YEAR ENDED DECEMBER 31, 1996 (UNAUDITED)
OGLETHORPE PRO FORMA OGLETHORPE HISTORICAL ADJUSTMENTS PRO FORMA ------------ ----------- ---------- (DOLLARS IN THOUSANDS) OPERATING REVENUES: Sales to Members.................................................................... $1,023,094 $ (95,938)(1) $927,156 Sales to non-Members................................................................ 78,343 (9,789)(2) 68,554 ------------ ----------- ---------- TOTAL OPERATING REVENUES.......................................................... 1,101,437 (105,727) 995,710 ------------ ----------- ---------- OPERATING EXPENSES: Fuel................................................................................ 206,524 -- 206,524 Production.......................................................................... 129,178 -- 129,178 Purchased power..................................................................... 229,089 -- 229,089 Power delivery...................................................................... 18,216 (18,216)(3) -- Depreciation and amortization....................................................... 163,130 (25,122)(4) 138,008 Taxes other than income taxes....................................................... 30,262 (7,534)(5) 22,728 Other operating expenses............................................................ 42,289 (8,982)(6) 33,307 ------------ ----------- ---------- TOTAL OPERATING EXPENSES.......................................................... 818,688 (59,854) 758,834 ------------ ----------- ---------- OPERATING MARGIN...................................................................... 282,749 (45,873) 236,876 ------------ ----------- ---------- OTHER INCOME (EXPENSE): Interest income..................................................................... 23,485 (3,356)(7) 20,129 Amortization of deferred margins.................................................... 32,047 (2,711)(8) 29,336 Allowance for equity funds used during construction................................. 238 (124)(9) 114 Other............................................................................... 9,564 706(10) 10,270 ------------ ----------- ---------- TOTAL OTHER INCOME................................................................ 65,334 (5,485) 59,849 ------------ ----------- ---------- INTEREST CHARGES: Interest on long-term debt and other obligations.................................... 328,907 (49,365)(11) 279,542 Allowance for debt funds used during construction................................... (2,576) 1,345(9) (1,231) ------------ ----------- ---------- NET INTEREST CHARGES.............................................................. 326,331 (48,020) 278,311 ------------ ----------- ---------- NET MARGIN............................................................................ $ 21,752 $ (3,338)(12) $ 18,414 ------------ ----------- ---------- ------------ ----------- ----------
SEE ACCOMPANYING NOTES TO UNAUDITED PRO FORMA CONDENSED STATEMENTS OF REVENUES AND EXPENSES. 30 PRO FORMA CONDENSED STATEMENT OF REVENUES AND EXPENSES FOR THE TWELVE MONTHS ENDED SEPTEMBER 30, 1997 (UNAUDITED)
OGLETHORPE PRO FORMA OGLETHORPE HISTORICAL ADJUSTMENTS PRO FORMA ------------ ----------- ---------- (DOLLARS IN THOUSANDS) OPERATING REVENUES: Sales to Members................................................................... $1,019,430 $ (55,473)(1) $963,957 Sales to non-Members............................................................... 50,383 (5,095)(2) 45,288 ------------ ----------- ---------- TOTAL OPERATING REVENUES....................................................... 1,069,813 (60,568) 1,009,245 ------------ ----------- ---------- OPERATING EXPENSES: Fuel............................................................................... 200,858 -- 200,858 Production......................................................................... 139,645 -- 139,645 Purchased power.................................................................... 254,996 -- 254,996 Power delivery..................................................................... 10,210 (10,278)(3) (68) Depreciation and amortization...................................................... 149,891 (14,303)(4) 135,588 Taxes other than income taxes...................................................... 27,309 (3,933)(5) 23,376 Other operating expenses........................................................... 29,253 (7,000)(6) 22,253 ------------ ----------- ---------- TOTAL OPERATING EXPENSES....................................................... 812,162 (35,514) 776,648 ------------ ----------- ---------- OPERATING MARGIN..................................................................... 257,651 (25,054) 232,597 ------------ ----------- ---------- OTHER INCOME (EXPENSE): Interest income.................................................................... 27,049 (218)(7) 26,831 Amortization of deferred margins................................................... 7,927 (717)(8) 7,210 Allowance for equity funds used during construction................................ 182 (120)(9) 62 Other.............................................................................. 14,180 724(10) 14,904 ------------ ----------- ---------- TOTAL OTHER INCOME............................................................. 49,338 (331) 49,007 ------------ ----------- ---------- INTEREST CHARGES: Interest on long-term debt and other obligations................................... 299,353 (24,538)(11) 274,815 Allowance for debt funds used during construction.................................. (1,964) 730(9) (1,234) ------------ ----------- ---------- NET INTEREST CHARGES........................................................... 297,389 (23,808) 273,581 ------------ ----------- ---------- NET MARGIN........................................................................... $ 9,600 $ (1,577)(12) $ 8,023 ------------ ----------- ---------- ------------ ----------- ----------
SEE ACCOMPANYING NOTES TO UNAUDITED PRO FORMA CONDENSED STATEMENTS OF REVENUES AND EXPENSES. 31 NOTES TO UNAUDITED PRO FORMA CONDENSED STATEMENTS OF REVENUES AND EXPENSES (1) The adjustment to sales to Members includes revenues based on estimates of the transmission portion of rates charged to the Members and an allocation of the portion of rates related to transmission-related overhead costs. (2) The adjustment to sales to non-Members represents actual transmission-related sales. (3) The adjustment to power delivery includes actual operation and maintenance costs of transmission and an allocation of related overhead costs. (4) The adjustment to depreciation and amortization is an estimate of depreciation and amortization of the transmission and system operations assets sold to GTC and GSOC, respectively, primarily based on the estimated depreciation and amortization of Oglethorpe's transmission assets. (5) The adjustment to taxes other than income taxes is an estimate of taxes on the transmission and system operations assets sold to GTC and GSOC, respectively, based on the ratio of the estimated depreciation and amortization of Oglethorpe's transmission assets to total depreciation and amortization of Oglethorpe's assets. (6) The adjustment to other operating expenses is primarily an allocation of overhead costs related to transmission. (7) The adjustment to interest income is primarily based on the ratio of investments of GTC and GSOC acquired in the Corporate Restructuring to total investments of Oglethorpe, GTC and GSOC as of April 1, 1997. (8) The adjustment to amortization of deferred margins is based on a ratio of the estimated transmission Member revenues determined by the method described in Note 1 above to total Member capacity revenues. (9) The adjustment to allowance for equity and debt funds used during construction is based on a ratio of construction work in progress of the transmission and system operations businesses to total construction work in progress for the period then ended. (10) The adjustment to other includes net expenses identified as related to the transmission business. (11) The adjustment to interest on long-term debt and other obligations is based on a ratio of debt assumed by GTC and GSOC in the Corporate Restructuring to total debt of Oglethorpe, GTC and GSOC as of April 1, 1997. (12) The adjustment to net margin includes (i) 7% of the estimated interest on debt relating to the transmission and system operations businesses for the appropriate period ending December 31, 1996, in order to meet Oglethorpe's Times Interest Earned Ratio of 1.07 (see "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS"), and (ii) net margins based on pro forma operations (as a result of applying the methodologies described in Notes 1 through 11 above) for the three months ended March 31, 1997. 32 SELECTED FINANCIAL DATA The following table presents selected historical financial data of Oglethorpe. The financial data presented as of the end of and for each year in the five-year period ended December 31, 1996, have been derived from the audited financial statements of Oglethorpe. The financial statements of Oglethorpe as of and for the years ended December 31, 1996 and 1995 have been audited by Coopers & Lybrand L.L.P., independent public accountants. The financial statements of Oglethorpe as of and for the years ended December 31, 1994, 1993 and 1992 have been audited by Arthur Andersen LLP, independent public accountants. Balance Sheets at December 31, 1996 and 1995, and the related Statements of Revenues and Expenses, Patronage Capital and Cash Flows for the years ended December 31, 1996, 1995 and 1994 and notes thereto are included in this Prospectus. The financial data presented in the following table as of and for the twelve-month period ended September 30, 1997, are derived from the unaudited financial statements of Oglethorpe also included in this Prospectus which, in the opinion of Oglethorpe's management, include all adjustments (constituting only normal recurring adjustments) necessary for a fair presentation of the unaudited financial information. Due to the Corporate Restructuring, the results of operations and financial condition reflect operations as a combined power supply, transmission and system operations company through March 31, 1997, and operations solely as a power supply company thereafter. The results of operations for the twelve months ended September 30, 1997, are not necessarily indicative of the results of operations for a fiscal year. These data should be read in conjunction with the financial statements of Oglethorpe and the notes thereto included in this Prospectus, "BUSINESS OF OGLETHORPE--Corporate Restructuring," "UNAUDITED PRO FORMA CONDENSED FINANCIAL DATA" and "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS."
TWELVE MONTHS ENDED YEAR ENDED DECEMBER 31, SEPTEMBER 30, ---------------------------------------------------------- 1997 1996 1995 1994 1993 1992 ------------- ---------- ---------- ---------- ---------- ---------- (DOLLARS IN THOUSANDS, EXCEPT RATIOS AND REVENUES PER KILOWATT-HOUR) STATEMENT OF OPERATIONS DATA: OPERATING REVENUES: Sales to Members.............................. $1,019,430 $1,023,094 $1,030,797 $ 930,875 $ 899,720 $ 816,000 Sales to non-Members.......................... 50,383 78,343 118,764 125,207 200,940 268,763 ------------- ---------- ---------- ---------- ---------- ---------- TOTAL OPERATING REVENUES.................... 1,069,813 1,101,437 1,149,561 1,056,082 1,100,660 1,084,763 ------------- ---------- ---------- ---------- ---------- ---------- OPERATING EXPENSES: Fuel.......................................... 200,858 206,524 219,062 203,444 176,342 167,288 Production.................................... 139,645 129,178 133,858 132,723 129,972 115,915 Purchased power............................... 254,996 229,089 264,844 227,477 271,970 230,510 Depreciation and amortization................. 149,891 163,130 139,024 131,056 128,060 126,047 Taxes......................................... 27,309 30,262 27,561 24,741 25,148 19,634 Other operating expenses...................... 39,463 60,505 56,535 49,234 44,876 50,578 ------------- ---------- ---------- ---------- ---------- ---------- TOTAL OPERATING EXPENSES.................... 812,162 818,688 840,884 768,675 776,368 709,972 ------------- ---------- ---------- ---------- ---------- ---------- OPERATING MARGIN................................ 257,651 282,749 308,677 287,407 324,292 374,791 OTHER INCOME, NET............................... 49,338 65,334 33,710 40,795 38,741 45,928 NET INTEREST CHARGES............................ (297,389) (326,331) (320,129) (305,120) (350,652) (393,247) ------------- ---------- ---------- ---------- ---------- ---------- MARGIN BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE.......................... 9,600 21,752 22,258 23,082 12,381 27,472 CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING FOR INCOME TAXES.................................. -- -- -- -- 13,340 -- ------------- ---------- ---------- ---------- ---------- ---------- NET MARGIN...................................... $ 9,600 $ 21,752 $ 22,258 $ 23,082 $ 25,721 $ 27,472 ------------- ---------- ---------- ---------- ---------- ---------- ------------- ---------- ---------- ---------- ---------- ----------
33
TWELVE MONTHS ENDED YEAR ENDED DECEMBER 31, SEPTEMBER 30, ---------------------------------------------- 1997 1996 1995 ----------------- ------------------ ------------------ (DOLLARS IN THOUSANDS, EXCEPT RATIOS AND REVENUES PER KILOWATT-HOUR) ENERGY SUPPLY (MEGAWATT- HOURS): Generated................... 17,609,459 17,866,143 18,402,839 Purchased................... 6,347,414 6,606,931 5,738,634 ----------------- ------------------ ------------------ Available for sale.......... 23,956,873 24,473,074 24,141,473 ----------------- ------------------ ------------------ ----------------- ------------------ ------------------ MEMBER REVENUE PER KWH SOLD... 5.03 CENTS 5.11 CENTS 5.53 CENTS ----------------- ------------------ ------------------ ----------------- ------------------ ------------------ RATIO OF EARNINGS TO FIXED CHARGES(1)(2)............... 1.03 1.07 1.07 ----------------- ------------------ ------------------ ----------------- ------------------ ------------------ BALANCE SHEET DATA (END OF PERIOD): ELECTRIC PLANT, NET: In service................ $ 3,611,232 $ 4,345,200 $ 4,436,009 Construction work in progress................ 13,059 31,181 35,753 ----------------- ------------------ ------------------ Total electric plant, net................... $ 3,624,291 $ 4,376,381 $ 4,471,762 ----------------- ------------------ ------------------ ----------------- ------------------ ------------------ TOTAL ASSETS.................. $ 4,527,280 $ 5,362,175 $ 5,438,496 ----------------- ------------------ ------------------ ----------------- ------------------ ------------------ CAPITALIZATION: Long-term debt, excluding amounts due within one year...................... $ 3,171,511 $ 4,052,470 $ 4,207,320 Obligation under capital leases, long-term......... 289,825 293,682 296,478 Other obligations........... 51,325 41,685 -- Patronage capital and membership fees........... 321,771 356,229 338,891 ----------------- ------------------ ------------------ Total capitalization...... $ 3,834,432 $ 4,744,066 $ 4,842,689 ----------------- ------------------ ------------------ ----------------- ------------------ ------------------ PROPERTY ADDITIONS............ $ 74,367 $ 93,704 $ 138,921 ----------------- ------------------ ------------------ ----------------- ------------------ ------------------ 1994 1993 1992 ------------------ ------------------ ------------------ ENERGY SUPPLY (MEGAWATT- HOURS): Generated................... 16,924,038 14,575,920 13,805,683 Purchased................... 4,381,087 7,620,815 6,233,262 ------------------ ------------------ ------------------ Available for sale.......... 21,305,125 22,196,735 20,038,945 ------------------ ------------------ ------------------ ------------------ ------------------ ------------------ MEMBER REVENUE PER KWH SOLD... 5.65 CENTS 5.47 CENTS 5.55 CENTS ------------------ ------------------ ------------------ ------------------ ------------------ ------------------ RATIO OF EARNINGS TO FIXED CHARGES(1)(2)............... 1.07 1.07 1.08 ------------------ ------------------ ------------------ ------------------ ------------------ ------------------ BALANCE SHEET DATA (END OF PERIOD): ELECTRIC PLANT, NET: In service................ $ 3,980,439 $ 4,054,956 $ 4,122,411 Construction work in progress................ 538,789 450,965 322,628 ------------------ ------------------ ------------------ Total electric plant, net................... $ 4,519,228 $ 4,505,921 $ 4,445,039 ------------------ ------------------ ------------------ ------------------ ------------------ ------------------ TOTAL ASSETS.................. $ 5,346,330 $ 5,323,890 $ 5,359,597 ------------------ ------------------ ------------------ ------------------ ------------------ ------------------ CAPITALIZATION: Long-term debt, excluding amounts due within one year...................... $ 4,128,080 $ 4,058,251 $ 4,095,796 Obligation under capital leases, long-term......... 303,749 303,458 302,061 Other obligations........... -- -- -- Patronage capital and membership fees........... 309,496 289,982 264,261 ------------------ ------------------ ------------------ Total capitalization...... $ 4,741,325 $ 4,651,691 $ 4,662,118 ------------------ ------------------ ------------------ ------------------ ------------------ ------------------ PROPERTY ADDITIONS............ $ 206,345 $ 235,285 $ 232,283 ------------------ ------------------ ------------------ ------------------ ------------------ ------------------
- ------------------------ (1) It should be noted that Oglethorpe does not take this ratio into account in setting its rates since its rates are not intended to produce a profit or provide a return on equity. Rates are designed to achieve a level of coverage of fixed charges that is generally less than that sought to be achieved by investor-owned utilities. Oglethorpe is, however, required under the Mortgage Indenture to establish and collect rates which are reasonably expected to yield an MFI for each fiscal year equal to at least 1.10 times total interest charges during such fiscal year on all indebtedness secured under the Mortgage Indenture. For information on the computation of MFI see "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS--General--RATES AND FINANCIAL COVERAGE REQUIREMENTS." (2) For computation of these ratios (i) earnings consist of net margin before income taxes and extraordinary items plus fixed charges less undistributed earnings attributable to Oglethorpe's investments and (ii) fixed charges consist of interest on all indebtedness and the estimated interest factor of rental expense. 34 CAPITALIZATION The capitalization of Oglethorpe, as of September 30, 1997, is shown below. The information presented below is derived from the unaudited financial statements of Oglethorpe and notes thereto included elsewhere in this Prospectus and should be read in conjunction therewith. The proceeds of the Private Facility Bonds were used to refund certain nonrecourse debt of the Lessors incurred in connection with the Sale and Leaseback Transactions. Accordingly, the issuance of the Private Facility Bonds did not change the capitalization of Oglethorpe since the Private Facility Bonds are not direct obligations of Oglethorpe and since the debt refunded by the Private Facility Bonds was already recorded as a portion of the obligations under capital leases. The Exchange Facility Bonds are offered in exchange for the Private Facility Bonds and will not result in any increase in the outstanding debt of Oglethorpe.
OUTSTANDING ----------------------- (UNAUDITED) (DOLLARS IN THOUSANDS) LONG-TERM DEBT(1): Mortgage notes payable to the Federal Financing Bank (FFB) at interest rates varying from 5.20% to 8.43% (average rate of 6.87% at September 30, 1997), due in quarterly installments through 2023...... $ 2,472,601 Mortgage notes payable to the Rural Utilities Service (RUS) at an interest rate of 5%, due in monthly installments through 2021............................................................................ 14,586 Mortgage notes issued in conjunction with the sale by public authorities of pollution control revenue bonds (PCBs): - Series 1992A Serial bonds, 5.35% to 6.80%, due serially from 1998 to 2012..................................... 124,690 - Series 1993 Serial bonds, 3.75% to 5.25%, due serially from 1998 through 2013................................ 36,380 - Series 1993A Adjustable tender bonds, 4.10%, due 2016(2)...................................................... 199,690 - Series 1993B Serial bonds, 3.75% to 5.05%, due serially from 1998 through 2008................................ 126,935 - Series 1994 Serial bonds, 5.45% to 7.125%, due serially from 1998 through 2015............................... 10,035 Term bonds, 7.15%, due 2021...................................................................... 11,550 - Series 1994A Adjustable tender bonds, 4.10%, due 2019(2)...................................................... 122,740 - Series 1994B Serial bonds, 5.45% to 6.45%, due serially from 1998 through 2005................................ 11,140 - Series 1997A Adjustable tender bonds, 3.60%, due December 1, 1997(3).......................................... 216,925 Unsecured notes issued in conjunction with the sale by public authorities of pollution control revenue bonds: - Series 1996 Adjustable rate bonds, 3.88% through October 1997, due in 2017................................... 37,885 CoBank, ACB notes payable: - Headquarters note payable: fixed at 6.97% through October 1997, due in quarterly installments through January 1, 2009........................................................................... 4,478 - Mortgage note payable: fixed at 6.50% through September 1997, due in bimonthly installments through November 1, 2018.................................................................................. 1,847 - Mortgage note payable: fixed at 6.50% through October 1997, due in bimonthly installments through September 1, 2019................................................................................. 7,070 ------------ Total long-term debt................................................................................... 3,398,552 Less: Mortgage notes issued in conjunction with the sale by public authorities of PCBs assumed by GTC.................................................................................................. (145,045) ------------ Total long-term debt, net.............................................................................. 3,253,507 Less: Long-term debt due within one year............................................................... (81,996) ------------ TOTAL LONG-TERM DEBT, EXCLUDING AMOUNT DUE WITHIN ONE YEAR............................................... 3,171,511 OTHER LONG-TERM LIABILITIES: Obligation under capital leases, long-term............................................................. 289,825 Obligation under Rocky Mountain transactions, long-term................................................ 51,325 EQUITIES Patronage capital and membership fees.................................................................. 321,771 ------------ TOTAL CAPITALIZATION..................................................................................... $ 3,834,432 ------------ ------------
- -------------------------- (1) All notes secured under the Mortgage Indenture are designated as mortgage notes. Reference is made to Note 5 of Notes to Financial Statements herein for information as to maturities of Oglethorpe's long-term debt. (2) Oglethorpe has entered into interest rate swap arrangements with respect to these mortgage notes for the purpose of obtaining a fixed rate. The fixed swap rate is 5.67% for the Series 1993A bonds and is 6.01% for the Series 1994A bonds. (3) The Series 1997A bonds were refunded in October 1997 by Series 1997B bonds due May 28, 1998. (See "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS--Financial Condition--REFINANCING TRANSACTIONS.") 35 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL CORPORATE RESTRUCTURING Oglethorpe and the Members completed the Corporate Restructuring on March 11, 1997, in which Oglethorpe was divided into three specialized operating companies to respond to increasing competition and regulatory changes in the electric industry. As part of the Corporate Restructuring, Oglethorpe's transmission business was sold to, and is now owned and operated by, GTC. Oglethorpe's system operations business was sold to, and is now owned and operated by, GSOC. Oglethorpe continues to own and operate its power supply business. Oglethorpe retained all of its owned and leased generation assets. Oglethorpe also continues to administer its power purchase contracts and provide marketing support functions to the Members. (See "BUSINESS OF OGLETHORPE--Corporate Restructuring.") MARGINS AND PATRONAGE CAPITAL Oglethorpe operates on a not-for-profit basis and, accordingly, seeks only to generate revenues sufficient to recover its cost of service and to generate margins sufficient to establish reasonable reserves and meet certain financial coverage requirements. Revenues in excess of current period costs in any year are designated as net margin in Oglethorpe's statements of revenues and expenses and patronage capital. Retained net margins are designated on Oglethorpe's balance sheets as patronage capital, which is allocated to each of the Members on the basis of its electricity purchases from Oglethorpe. Since its formation in 1974, Oglethorpe has generated a positive net margin in each year. Oglethorpe's equity ratio (patronage capital and membership fees divided by total capitalization) increased from 7.0% at December 31, 1995 to 7.5% at December 31, 1996 and to 8.4% at September 30, 1997. In connection with the Corporate Restructuring, Oglethorpe made a $49 million special patronage capital distribution to the Members which was used by the Members to establish equity in and to provide initial working capital to GTC, resulting in a decrease in patronage capital from $356 million at December 31, 1996, to $322 million at September 30, 1997. Patronage capital constitutes the principal equity of Oglethorpe. Any distributions of patronage capital are subject to the discretion of the Board of Directors. Under Oglethorpe's patronage capital retirement policy, margins are to be returned to the Members 30 years after the year in which the margins are earned. Pursuant to such policy, no patronage capital would be retired until 2010, at which time the 1979 patronage capital would be returned, subject to Mortgage Indenture requirements. Under the Mortgage Indenture, distributions of patronage capital are no longer subject to the approval of RUS, but are subject to certain restrictions set forth therein. Oglethorpe is prohibited by the Mortgage Indenture from making any distribution of patronage capital to the Members if, at the time thereof or after giving effect thereto, (i) an event of default exists under the Mortgage Indenture, (ii) Oglethorpe's equity as of the end of the immediately preceding fiscal quarter is less than 20% of Oglethorpe's total capitalization, or (iii) the aggregate amount expended for distributions on or after the date on which Oglethorpe's equity first reaches 20% of Oglethorpe's total capitalization exceeds 35% of Oglethorpe's aggregate net margins earned after such date. This last restriction, however, will not apply if, after giving effect to such distribution, Oglethorpe's equity as of the end of the immediately preceding fiscal quarter is not less than 30% of Oglethorpe's total capitalization. 36 RATES AND FINANCIAL COVERAGE REQUIREMENTS Pursuant to the Wholesale Power Contracts, Oglethorpe is required to design capacity and energy rates that generate sufficient revenues to recover all costs as described in such contracts, to establish and maintain reasonable margins and to meet its financial coverage requirements. Oglethorpe reviews its capacity rates at least annually to ensure that its fixed costs are being adequately recovered and, if necessary, adjusts its rates to meet its net margin goals. Oglethorpe's energy rate is established to recover actual fuel and variable operations and maintenance costs. Under the Mortgage Indenture, Oglethorpe's rates are not subject to RUS approval except in limited circumstances. The capacity rate applied by Oglethorpe throughout 1994 utilized a proportional allocation of fixed costs based on the previous year's billing demand for each Member. Consequently, the 1994 rate produced capacity revenues which were virtually unaffected by 1994 factors. In 1995, Oglethorpe implemented two additional capacity rate options in an effort to provide greater flexibility to the Members. These options allocated fixed costs using billing determinants of the current year. These rates produced differing monthly amounts of capacity revenues throughout 1995 and introduced some variability and uncertainty as to the level of revenues and margins to be received. Due to extreme weather conditions and other factors, the 1995 rates options produced $2.5 million of revenues in excess of budgeted amounts. Such excess amounts were returned to the Members in 1996. Under a capacity rate mechanism effective throughout 1996, each Member was responsible for an assigned share of fixed costs based on an agreed-upon allocation. Under this approach, capacity costs were collected in equal monthly amounts. This interim rate mechanism was extended through March 31, 1997 until the new rate schedule became effective under the Wholesale Power Contracts on April 1, 1997. This new rate schedule implements on a long-term basis the assignment of responsibility for fixed costs. The monthly charges for capacity and other non-energy charges are based on a rate formula using the Oglethorpe budget. Such capacity and other non-energy charges may be adjusted by the Board of Directors, if necessary, during the year through an adjustment to the annual budget. Energy charges are based on actual energy costs, whether incurred from generation or purchased power resources or under the power marketing arrangements. Under the Mortgage Indenture, Oglethorpe is required, subject to any necessary regulatory approval, to establish and collect rates which are reasonably expected, together with other revenues of Oglethorpe, to yield an MFI Ratio for each fiscal year equal to at least 1.10. MFI Ratio is determined by dividing the sum of (i) Oglethorpe's net margins (after certain defined adjustments), (ii) Interest Charges and (iii) any amount included in net margins for accruals for federal or state income taxes by Interest Charges. The definition of MFI takes into account any item of net margin, loss, gain or expenditure of any affiliate or subsidiary of Oglethorpe only if Oglethorpe has received such net margins or gains as a dividend or other distribution from such affiliate or subsidiary or if Oglethorpe has made a payment with respect to such losses or expenditures. The rate schedule also includes a PPA mechanism designed to ensure that Oglethorpe achieves the minimum 1.10 MFI Ratio. The PPA provides for the retention of margins within a range from a 1.10 MFI Ratio to a 1.20 MFI Ratio. Amounts, if any, by which Oglethorpe fails to achieve a minimum 1.10 MFI Ratio would be accrued as of December 31 of the applicable year and collected from the Members during the period April through December of the following year. Amounts, if any, by which Oglethorpe exceeds the maximum 1.20 MFI Ratio would be charged against revenues as of December 31 of the applicable year and refunded to the Members during the period April through December of the following year. The rate schedule formula is intended to provide for the collection of revenues which, together with revenues from all other sources, are equal to all costs and expenses recorded by Oglethorpe, plus amounts necessary to achieve at least the minimum 1.10 MFI Ratio. (See "BUSINESS OF OGLETHORPE--Electric Rates.") 37 The MFI Ratio requirement went into effect upon the substitution of the Mortgage Indenture for the prior RUS Mortgage. For comparative purposes only, the pro forma MFI Ratio for 1996 would have been 1.09. Oglethorpe's rates are now set to meet an MFI Ratio of 1.10 on an annual basis. Prior to 1997, Oglethorpe utilized a Times Interest Earned Ratio ("TIER") as the basis for establishing its annual net margin goal. The RUS Mortgage required Oglethorpe to implement rates that were designed to maintain an annual TIER of not less than 1.05. Oglethorpe's Board of Directors set an annual net margin goal to be the amount required to produce a TIER of 1.07 in 1994 through 1996. In addition to the TIER requirement under the RUS Mortgage, Oglethorpe was also required under the RUS Mortgage to implement rates designed to maintain a Debt Service Coverage Ratio ("DSC") of not less than 1.0 and an Annual Debt Service Coverage Ratio ("ADSCR") of not less than 1.25. Oglethorpe always met or exceeded the TIER, DSC and ADSCR requirements of the RUS Mortgage. (See "BUSINESS OF OGLETHORPE--Electric Rates.") TIER is determined by dividing the sum of Oglethorpe's net margin plus interest on long-term debt (including interest charged to construction) by Oglethorpe's interest on long-term debt (including interest charged to construction). DSC is determined by dividing the sum of Oglethorpe's net margin plus interest on long-term debt (including interest charged to construction) plus depreciation and amortization (excluding amortization of nuclear fuel and debt discount and expense) by Oglethorpe's interest and principal payable on long-term debt (including interest charged to construction). ADSCR is determined by dividing the sum of Oglethorpe's net margin plus interest on long-term debt (excluding interest charged to construction) plus depreciation and amortization (excluding amortization of nuclear fuel and debt discount and expense) by Oglethorpe's interest and principal payable on long-term debt secured under the RUS Mortgage (excluding interest charged to construction). RESULTS OF OPERATIONS HISTORICAL FACTORS AFFECTING FINANCIAL PERFORMANCE Oglethorpe has utilized both long-term contractual arrangements with GPC and a rate mechanism utilizing deferred margins to allow for a gradual absorption of costs of generating plants into rates over several years. As of May 31, 1995, Oglethorpe's Members have fully absorbed into rates additional responsibility for the cost of its ownership interests in Plant Vogtle Units No. 1 and No. 2, and as of December 31, 1996, Oglethorpe's Members have fully absorbed into rates the costs of Rocky Mountain. Contractual arrangements with GPC provided that Oglethorpe sell to GPC a declining percentage of Oglethorpe's entitlement to the capacity and energy of certain co-owned generating plants during the initial seven to ten years of operation of such units (the "GPC Sell-back"). As of May 31, 1995, the GPC Sell-back expired for all units. The historical ability of Oglethorpe to sell power from new units to GPC under the GPC Sell-back enabled Oglethorpe to moderate the effects of the higher costs associated with new generating units on Oglethorpe's cost of service and, therefore, on the rates charged to Members. Furthermore, the GPC Sell-back enabled Oglethorpe to obtain the generating capacity needed to serve anticipated increases in Member loads while minimizing the risks and costs of excess generating capacity. Prior to the completion of the first unit of Plant Vogtle in 1987, Oglethorpe's Board of Directors implemented policies that resulted in the gradual absorption of the costs of Plant Vogtle by the Members. In each of the years 1985 through 1995, Oglethorpe exceeded its net margin goal. The Board adopted resolutions in each of these years requiring that these excess margins be retained and used to mitigate rate increases associated with Plant Vogtle and, subsequently, with Rocky Mountain. In each year beginning with 1989, a portion of these margins was returned to the Members through billing credits. (See Note 1 of Notes to Financial Statements.) As of December 31, 1996, all amounts previously retained have been returned to the Members and this rate mechanism ended. 38 CORPORATE RESTRUCTURING As a result of the Corporate Restructuring, the Condensed Statements of Revenues and Expenses for the twelve months ended September 30, 1997 reflect operations as a combined power supply, transmission and system operations company through March 31, 1997, and operations solely as a power supply company thereafter. Although the Corporate Restructuring was completed on March 11, 1997, pursuant to the restructuring agreement among Oglethorpe, GTC and GSOC, all transmission-related and systems operations-related revenues were assigned to Oglethorpe, and all transmission-related and systems operations-related costs were paid or reimbursed by Oglethorpe during the period March 11, 1997 through March 31, 1997. Decreases in operating revenues, power delivery expenses, depreciation and amortization, taxes other than income taxes, operating margin and net interest charges from 1996 to 1997 are primarily attributable to the Corporate Restructuring. POWER MARKETER ARRANGEMENTS Oglethorpe is utilizing long-term power marketer arrangements to reduce the cost of power to the Members. Oglethorpe has entered into power marketer agreements with LEM effective January 1, 1997, for approximately 50% of the load requirements of the Members and with Morgan Stanley, effective May 1, 1997, with respect to 50% of the Members' forecasted load requirements. The LEM agreements are based on the actual requirements of the Members during the contract term, whereas the Morgan Stanley agreement represents a fixed supply obligation. Under these power marketer agreements, Oglethorpe purchases energy at fixed prices covering a portion of the costs of energy to its Members. LEM and Morgan Stanley, in turn, have certain rights to market excess energy from the Oglethorpe system. All of Oglethorpe's existing generating facilities and power purchase arrangements are available for use by LEM and Morgan Stanley for the term of the respective agreements. Oglethorpe continues to be responsible for all of the costs of its system resources but receives revenue from LEM and Morgan Stanley for the use of the resources. (See "MEMBER REQUIREMENTS AND POWER SUPPLY RESOURCES--General" and "--Power Marketer Arrangements.") Oglethorpe utilized short-term power marketer arrangements during 1996. The initial agreement was with Enron Power Marketing, Inc. ("EPMI") and was in place January through August. From September through December 1996, another power marketer arrangement was utilized with Duke/Louis Dreyfus L.L.C. ("DLD"). Under each of the agreements, the power marketer was required to provide to Oglethorpe at a favorable fixed rate all the energy needed to meet the Members' requirements and Oglethorpe was required to provide to the power marketer at cost, subject to certain limitations, upon request, all energy available from Oglethorpe's total power resources. Under both agreements, Oglethorpe continued to operate the power supply system and continued to dispatch the generating resources to ensure system reliability. OPERATING REVENUES Oglethorpe's operating revenues are derived from sales of electric services to the Members and non-Members. Revenues from Members are collected pursuant to wholesale power contracts and are a function of the demand for power by the Members' consumers and Oglethorpe's cost of service. (See "OPERATING EXPENSES" herein.) Historically, most of Oglethorpe's non-Member revenues resulted from various plant operating agreements with GPC as discussed below. However, in recent years, an increasing amount of non-Member revenues has been derived by off-system sales to other utilities and power marketers. Although total revenues have only varied slightly from January 1, 1994 to September 30, 1997, the scheduled reduction of the GPC Sell-back has resulted in the planned decrease of non-Member revenues from GPC of about $45 million. As expected, the capacity and energy no longer being sold to GPC have been used by Oglethorpe to meet increased Member requirements. In addition to increasing sales to Members, Oglethorpe achieved reductions in fixed and operating costs, which mitigate the need to recover from the Members costs which were previously recovered through sales to GPC. The refinancing transactions discussed under "Financial Condition--REFINANCING TRANSACTIONS" herein resulted in a reduction in gross interest charges from $330 million in 1994 to $308 39 million in 1996, or a 7% decrease in that fixed cost component of the capacity rates. Gross interest charges decreased in the twelve months ended September 30, 1997 to $275 million primarily as a result of the debt assumed by GTC in connection with the Corporate Restructuring. SALES TO MEMBERS. Revenues from sales to Members decreased by 0.4% for the twelve months ended September 30, 1997 compared to the year ended December 31, 1996, decreased by 0.7% in 1996 compared to 1995 and increased 10.7% in 1995 compared to 1994. These changes reflect both cost-related and volume-related factors. For the twelve months ended September 30, 1997 compared to the year 1996, capacity revenues decreased by $68 million primarily as a result of the transfer of the transmission business in connection with the Corporate Restructuring. This decrease in capacity revenues was offset by a $69 million increase in energy revenues primarily because the short-term power marketer arrangements with DLD and EPMI allowed Oglethorpe to pass through significant savings during the first nine months of 1996 (see the discussion of purchased power under "OPERATING EXPENSES" herein). The 1996 revenues decreased compared to 1995 due to the pass-through of savings in energy costs, which more than offset higher capacity revenue requirements and the effect of increased amounts of energy sold. The increase in revenues between 1995 and 1994 was due to higher capacity revenue requirements and additional amounts of energy sold, which more than offset savings in energy costs (see the discussion of savings in fuel and purchased power costs under "OPERATING EXPENSES" herein). As non-Member revenues from GPC have declined, Oglethorpe's Member capacity revenues have increased to reflect the recovery of the fixed costs which had previously been recovered from GPC through the GPC Sell-back. (See the discussion of this type of revenues under "OPERATING REVENUES-- SALES TO NON-MEMBERS" herein.) Member capacity revenues in 1996 and 1995 were also affected by additional fixed costs related to the commercial operation of Rocky Mountain beginning in June 1995. Since April 1, 1997, Member capacity revenues have declined due to the reduced level of fixed costs to be recovered from the Members by Oglethorpe relating to the transmission business transferred to GTC in connection with the Corporate Restructuring. The energy portion of Member revenues per kWh increased 23.7% in the twelve months ended September 30, 1997 compared to 1996, declined 13.2% in 1996 compared to 1995 and declined 7.6% in 1995 compared to 1994. Actual energy costs are passed through to the Members such that energy revenues equal energy costs. The increase in the twelve months ended September 30, 1997 resulted from the $69 million increase in net energy costs discussed above. The decrease in 1996 resulted from savings of approximately $32 million in energy costs (compared to budget) achieved under the power marketer arrangements in effect during 1996. In 1995, the decrease reflected savings in fuel and production costs and lower average purchased power costs. The following table summarizes the amounts of kWh sold to Members and revenues per kWh during each of the past three years and the twelve months ended September 30, 1997:
CENTS PER KILOWATT-HOURS KILOWATT-HOUR -------------- ----------------- (IN THOUSANDS) Twelve Months Ended September 30, 1997.................. 20,148,077 5.03 CENTS(1) 1996........................................ 19,807,101 5.11 1995........................................ 18,442,153 5.53 1994........................................ 16,285,127 5.65
- ------------------------ (1) Excludes revenues related to the transmission business effective April 1, 1997. Member sales have been affected by weather conditions during the twelve months ended September 30, 1997 and during two of the prior three years. In spite of mild weather in 1997, kWh sales to Members increased by 1.7% compared to 1996. Member sales increased 7.4% in 1996 despite a 40 summer in which temperatures were lower than 1995, due to continued growth in the Member systems' service territories. In 1995, prolonged hot weather increased sales, while in 1994 record-breaking rainfall amounts statewide moderated Member sales. SALES TO NON-MEMBERS. Sales of electric services to non-Members were primarily made pursuant to contractual arrangements with GPC and from energy sales to other utilities and power marketers. The following table summarizes the amounts of non-Member revenues from these sources for the past three years and the twelve months ended September 30, 1997:
TWELVE MONTHS ENDED SEPTEMBER 30, 1997 1996 1995 1994 --------------------- --------- --------- --------- (DOLLARS IN THOUSANDS) GPC--plant operating agreements.... $ -- $ -- $ 10,096 $ 45,392 GPC--power supply arrangements..... 15,678 13,703 43,226 26,280 ITS transmission agreements........ 5,095 9,789 12,614 10,974 Sales to power marketers........... 10,557 15,895 -- -- Sales to other utilities........... 19,053 38,956 52,828 42,561 -------- --------- --------- --------- Total.............................. $ 50,383 $ 78,343 $ 118,764 $ 125,207 -------- --------- --------- --------- -------- --------- --------- ---------
Revenues from sales to non-Members declined in the twelve months ended September 30, 1997 compared to the year ended December 31, 1996, in 1996 compared to 1995 and in 1995 compared to 1994. The first source of non-Member revenue was plant operating agreements with GPC. The elimination of the revenues from the plant operating agreements was due to the scheduled conclusion, effective June 1, 1995, of the GPC Sell-back with respect to Plant Vogtle. The second source of non-Member revenues was power supply arrangements with GPC. These revenues were derived, for the most part, from energy sales arising from dispatch situations whereby GPC caused co-owned coal-fired generating resources to be operated when Oglethorpe's system did not require all of its contractual entitlement to the generation. These revenues compensated Oglethorpe for its costs because, under the operating agreements (before the agreements were recently amended as discussed below), Oglethorpe was responsible for its share of fuel costs any time a unit operated. Revenues from sales of this type to GPC were higher in the twelve months ended September 30,1997 compared to 1996, lower in 1996 compared to 1995 and were higher in 1995 compared to 1994. In 1997, the power marketers and Oglethorpe retained less of the output from Plant Wansley than in 1996. In 1996, the power marketers elected to retain more of the output from Plant Wansley than in 1995. In 1995, Oglethorpe retained less of its share of the output from Plant Wansley units than in 1994 because the added cost associated with emission allowances made those units less attractive than certain purchased resources. The 1994 revenues reflect that Oglethorpe retained much of its share of the output from Plant Scherer and Plant Wansley units because the lower average fuel costs made those units more attractive than certain purchased resources. Emission allowances for Plant Wansley were not required in 1994. (See the discussion under "OPERATING EXPENSES" below of the lower average fuel costs of the coal-fired generating units in 1996 and 1995.) Pursuant to the amendments to the Plant Scherer ownership and operating agreements, Oglethorpe elected to separately dispatch its ownership interest in Plant Scherer beginning May 1, 1994. Thereafter, Plant Scherer ceased to be a source of this type of sales transaction. Pursuant to similar amendments to the Plant Wansley operating agreement, Oglethorpe began separately dispatching its ownership interest in Plant Wansley beginning May 1, 1997; therefore, this type of sale to GPC has ended. The third source of non-Member revenues was primarily payments from GPC for use of the ITS and related transmission interfaces. GPC compensated Oglethorpe to the extent that Oglethorpe's percentage of investment in the ITS exceeded its percentage use of the system. In such case, Oglethorpe was 41 entitled to compensation for the use of its investment by the other ITS participants. As a result of the Corporate Restructuring, all of the revenues in this category have accrued to GTC since April 1, 1997. The change in revenues for 1996 through 1994 resulted from normal variations of Oglethorpe's investment percentages and its use of the system. Under the LEM and Morgan Stanley power marketer arrangements, and previously, under the EPMI and DLD power marketer arrangements, sales to the power marketers represented the net energy transmitted on behalf of LEM, Morgan Stanley, EPMI and DLD off-system on a daily basis from Oglethorpe's total resources. Such energy was sold to LEM, EPMI and DLD at Oglethorpe's cost, subject to certain limitations, and to Morgan Stanley at a contractually fixed price. The volume of sales to power marketers depends primarily on the power marketers' decisions for servicing their load requirements. Sales to other utilities in the twelve months ended September 30, 1997 represent sales made directly by Oglethorpe. Oglethorpe sells for its own account any energy available from the portion of its resources dedicated to Morgan Stanley that is not scheduled by Morgan Stanley pursuant to its power marketer arrangements. (See "MEMBER REQUIREMENTS AND POWER SUPPLY RESOURCES-- Power Marketer Arrangements--MORGAN STANLEY AGREEMENT.") Sales to other utilities were initiated by EPMI and DLD in 1996. In 1996, where the power marketer did not have a contractual relationship with the purchaser and Oglethorpe did, Oglethorpe recorded the sale and credited the revenues to the power marketer in its monthly billing. In 1995 and 1994, these sales were made by Oglethorpe directly to other utilities. OPERATING EXPENSES Oglethorpe's operating expenses decreased 0.8% in the twelve months ended September 30, 1997 compared to 1996, decreased 2.6% in 1996 compared to 1995 and increased 9.4% in 1995 compared to 1994. The overall decrease in operating expenses for 1997 compared to 1996 was primarily attributable to the expenses relating to the transmission business assumed by GTC in connection with the Corporate Restructuring. However, the decrease in fuel expense and the increase in production operations and maintenance costs were unaffected by the Corporate Restructuring. The decrease in operating expenses in 1996 compared to 1995 was primarily attributable to energy cost savings achieved under the short-term power marketer arrangements offset somewhat by an increase in depreciation and amortization. The increase in operating expenses in 1995 compared to 1994 was primarily attributable to a 13% increase in kWhs sold to Members and non-Members. In addition, depreciation and amortization, sales, and administrative and general expenses were also higher. Fuel costs decreased in the twelve months ended September 30, 1997 partly as a result of lower generation and partly as a result of the difference in the mix of generation, with more nuclear and less fossil generation. Fossil generation decreased primarily due to a maintenance outage during February and March 1997 at Scherer Unit No. 1. The higher nuclear generation during the twelve months ended September 30, 1997 compared to 1996 was achieved as a result of having three refueling outages in 1996 compared to two in the twelve months ended September 30, 1997. Conversely, the increase in production operations and maintenance costs was partly attributable to the maintenance outage at Scherer Unit No. 1. In addition, effective January 1, 1996, the costs of nuclear refueling outages are deferred and amortized over the 18-month period following the outage. Such change in accounting resulted in a $12.9 million deferral of maintenance costs in 1996 in relation to the comparable period of 1997. The decrease in total fuel costs in 1996 as compared to 1995 resulted partly from unplanned outages at Plant Scherer and Plant Wansley Unit No. 1 and partly from the power marketer electing to dispatch the fossil units less. These factors resulted in 3.1% lower fossil generation in 1996 compared to 1995. The increase in total fuel costs in 1995 versus 1994 resulted from 23% higher generation at Plant Scherer. The continued use of lower-priced western coal combined with a greater reliance on a favorable spot market for coal resulted in a per unit fuel cost decrease for Plant Scherer of 5% in 1995 from 1994 levels. Because of the decline in fuel cost per kWh at Plant Scherer, the usage of the units increased 42 significantly. Oglethorpe retained significantly less of its output from Plant Wansley in 1995 compared to 1994 primarily as a result of relatively higher costs compared to Plant Scherer due to its emission allowance requirement and due to cost reductions at Plant Scherer discussed above. Purchased power cost increased 11.3% in the twelve months ended September 30, 1997 compared to 1996. A total of 3.9% fewer megawatt-hours ("MWhs") were purchased in the twelve months ended September 30, 1997 compared to 1996. Consequently, average purchased power cost increased by 15.9%. As noted below, significant energy cost savings were realized in 1996 from the EPMI and DLD power marketer arrangements. Purchased power cost decreased by 14% in 1996 compared to 1995 and increased by 16% in 1995 compared to 1994. Lower purchased power costs were achieved in 1996 despite the 15% increase in energy purchases in 1996 from 1995 levels. The 1996 cost reduction was due to (1) energy cost savings of $32 million realized from the short-term power marketer arrangements and (2) reductions in purchased power capacity costs due to (a) proceeds of $10.8 million from the settlement of a lawsuit with GPC and (b) savings resulting from the elimination effective September 1, 1996, of a 250 MW component block (coal-fired units) of the Block Power Sale Agreement between Oglethorpe and GPC (the "BPSA"). In 1995, the 13% higher kWh sales, including the increased Member sales and sales to GPC pursuant to power supply arrangements (see the discussion under "OPERATING REVENUES" above), resulted in higher utilization of purchased power resources. Energy purchases increased 31% in 1995 compared to 1994. Purchased power expenses for the year 1994 compared to the twelve months ended September 30, 1997 reflect the cost of capacity and energy purchases under various long-term power purchase agreements. These long-term agreements have, in some cases, take-or-pay minimum energy requirements. For 1994 through September 30, 1997, Oglethorpe utilized its energy from these purchase power agreements in excess of the take-or-pay requirements. Oglethorpe's power purchases from these agreements amounted to approximately $173 million in 1997, $191 million in 1996, $207 million in 1995 and $183 million in 1994. (For a discussion of the power purchase agreements, see Note 9 of Notes to Financial Statements.) The increase in depreciation and amortization in 1996 was partly due to a full year of depreciation on Rocky Mountain which began commercial operation in June 1995 and to $14 million of Board- approved accelerated amortization of deferred charges of the discontinued Pickens County pumped storage hydroelectric project. All remaining unamortized charges related to this project were expensed in 1996. The decrease in other operating expenses for the twelve months ended September 30, 1997 compared to 1996 was due primarily to the transfer of administrative and general expenses relating to the transmission and system operations business in connection with the Corporate Restructuring. Sales, administrative and general expenses increased in 1995 as compared to 1994 primarily resulting from increased marketing efforts in support of the Members. OTHER INCOME Interest income increased for the twelve months ended September 30, 1997 compared to 1996, 1996 compared to 1995 and 1995 compared to 1994. Interest income was higher in the twelve months ended September 30, 1997 as a result of higher earnings from the decommissioning fund and partly due to income from the deposits from the Rocky Mountain transactions. The deposits were made in December 1996 and January 1997. In 1996, interest income was higher due to higher average investment balances. In 1995, interest income increased partly due to higher short-term interest rates and due to higher investment returns in the decommissioning trust fund. 43 In 1996, Oglethorpe utilized all remaining amounts available ($32 million) under its deferred margin rate mechanism, and, as scheduled, this mechanism ended. Likewise, deferred margins of $16 million and $18 million were amortized as credits against Member revenue requirements in 1995 and 1994, respectively, to mitigate the rate impact of increased capacity costs related to Plant Vogtle and Rocky Mountain. Also, in 1995 and 1994, Oglethorpe's Board of Directors authorized the retention of approximately $14 million and $9 million, respectively, in excess of the 1.07 TIER margin requirement as deferred margins under the mechanism. (See Note 1 of Notes to Financial Statements for a discussion of deferred margins and amortization of deferred margins.) The decrease in amortization of deferred gains in 1996 and 1995 as compared to 1994 resulted from the completion of amortization in September 1994 of a gain on the sale of Plant Scherer common facilities. (Also see Note 1 of Notes to Financial Statements for a discussion of the sale.) INTEREST CHARGES Net interest charges for the twelve months ended September 30, 1997 decreased compared to 1996 primarily due to the debt assumed by GTC in connection with the Corporate Restructuring. Net interest charges increased in 1996 compared to 1995 and in 1995 compared to 1994. The increases were due to the decrease in allowance for debt funds used during construction ("AFUDC") in 1996 compared to 1995 and 1995 compared to 1994 as a result of the three units of Rocky Mountain becoming commercially operable in June and July 1995. The continued decrease in gross interest on long-term debt and capital leases in 1996 and 1995 was due to the refinancing efforts discussed under "Financial Condition--REFINANCING TRANSACTIONS" below. The increase in other interest expense in 1995 compared to 1994 was due to higher investment returns in the decommissioning trust fund. (See Note 1 of Notes to Financial Statements for explanation of Oglethorpe's accounting for decommissioning gains and losses.) NET MARGIN Net margin for the twelve months ended September 30, 1997 was $9.6 million compared to $21.8 million for 1996. This decrease in net margin was the result of certain nonrecurring expenses and capacity revenue adjustments reflected in the fourth quarter of 1996. As noted above, the accelerated amortization of deferred charges of the discontinued Pickens County pumped storage hydroelectric project and other rate making adjustments resulted in a net loss for the quarter of $4.5 million. After reflecting these fourth quarter adjustments, 1996 net margin was consistent with the TIER margin requirement. For calendar year-to-date 1997, net margin of $14.1 million is currently sufficient to meet the MFI margin requirements. Oglethorpe has always met or exceeded its margin requirements. FINANCIAL CONDITION GENERAL The principal changes in Oglethorpe's financial condition from January 1, 1996 to September 30, 1997, were due to property additions, reductions in the cost of capital and a special patronage capital distribution. Property additions totaled $94 million and $74 million, respectively, for the year ended December 31, 1996 and twelve months ended September 30, 1997. These property additions were funded primarily with funds from operations. A decrease in the cost of capital was achieved through the refinancing of $106 million of long-term debt during 1996 and the prepayment of an additional $116 million of long-term debt in March 1997. The average interest rate on long-term debt decreased from 6.76% at December 31, 1995 to 6.56% at December 31, 1996, and further to 6.43% at September 30, 1997. (For a further discussion of the refinancing transactions, see "REFINANCING TRANSACTIONS" and "ROCKY MOUNTAIN LEASE TRANSACTIONS" herein.) 44 Finally, Oglethorpe's equity was reduced by $49 million due to a special patronage capital distribution made to the Members in conjunction with the Corporate Restructuring. CAPITAL REQUIREMENTS As part of its ongoing capital planning, Oglethorpe forecasts expenditures required for generation facilities and other capital projects. The table below details these expenditure forecasts for 1998 through 2000. Actual construction costs may vary from the estimates listed below because of factors such as changes in business conditions, fluctuating rates of load growth, environmental requirements, design changes and rework required by regulatory bodies, delays in obtaining necessary federal and other regulatory approvals, construction delays, and cost of capital, equipment, material and labor. CAPITAL EXPENDITURES
GENERATING NUCLEAR GENERAL YEAR PLANT(1) FUEL PLANT AFUDC(2) TOTAL - ---------------------------------- ----------- --------- ----------- ----------- --------- (DOLLARS IN THOUSANDS) 1998.............................. $ 15,303 $ 35,337 $ 1,940 $ 1,290 $ 53,870 1999.............................. 13,147 33,301 1,875 1,800 50,123 2000.............................. 10,916 39,780 1,931 1,800 54,427 ----------- --------- ----------- ----------- --------- Total............................. $ 39,366 $ 108,418 $ 5,746 $ 4,890 $ 158,420 ----------- --------- ----------- ----------- --------- ----------- --------- ----------- ----------- ---------
- ------------------------ (1) Consists of capital expenditures required for replacements and additions to facilities in service and compliance with environmental regulations. (2) Allowance for funds used during construction of generation and general plant facilities. Currently, Oglethorpe does not have any new generation facilities under construction, and management does not anticipate the need for construction of any new capacity well into the future. (See "MEMBER REQUIREMENTS AND POWER SUPPLY RESOURCES--Future Power Resources.") Oglethorpe's investment in electric plant, net of depreciation, was approximately $3.6 billion as of September 30, 1997 and $4.4 billion as of December 31, 1996. The reduction in net plant was primarily due to the transfer of assets to GTC and GSOC in connection with the Corporate Restructuring. Expenditures for property additions during 1996 amounted to $94 million, of which $91 million was provided from operations. These expenditures were primarily for additions and replacements to generation and transmission facilities. In addition to the funds needed for capital expenditures, approximately $286 million will be required over the next three years (1998-2000) for current sinking fund requirements and maturities of long-term debt. Of this amount, $221 million, or 77%, relates to the repayment of RUS and FFB debt. Excluded from these amounts is the amount of debt assumed by GTC and GSOC as part of the Corporate Restructuring. (See "BUSINESS OF OGLETHORPE--Corporate Restructuring" and Note 5 of Notes to Financial Statements for further discussion regarding long-term debt maturities.) LIQUIDITY AND SOURCES OF CAPITAL In the past, Oglethorpe has obtained the majority of its long-term financing from RUS-guaranteed loans funded by FFB. Oglethorpe has also obtained a substantial portion of its long-term financing requirements from tax-exempt PCBs. In addition, Oglethorpe's operations have consistently provided a sizable contribution to its funding of capital requirements, such that internally generated funds have provided interim funding or long-term 45 capital for nuclear fuel reloads, new generation, transmission and general plant facilities, replacements and additions to existing facilities, and retirement of long-term debt. Oglethorpe anticipates that it will meet its future capital requirements through 2000 primarily with funds generated from operations and, if necessary, with short-term borrowings. To meet short term cash needs and liquidity requirements, Oglethorpe had, as of September 30, 1997, (i) approximately $60 million in cash and temporary cash investments, (ii) $96 million in other short term investments and (iii) up to $300 million total available under the following credit facilities ($92 million of which was in use):
SHORT-TERM CREDIT FACILITIES AMOUNT - ------------------------------------------------------------- ------------- Commercial Paper............................................. $ 250,000,000 Committed lines of credit: SunTrust................................................... $ 30,000,000 Uncommitted lines of credit: CFC........................................................ $ 50,000,000
Under its commercial paper program, Oglethorpe may issue commercial paper not to exceed $250 million outstanding at any one time. The commercial paper is backed 100% by committed lines of credit provided by a group of banks for which SunTrust acts as agent. The maximum amount that can be outstanding at any one time under the commercial paper program and the other lines of credit totals $300 million due to certain restrictions contained in the SunTrust committed line of credit agreement. Oglethorpe expects this maximum amount to increase in December 1997 to $330 million due to a $30 million increase in the amount of its commercial paper program. As of September 30, 1997, $92 million of commercial paper was outstanding which was issued to fund the defeasance of certain PCBs in conjunction with the Corporate Restructuring. (See "REFINANCING TRANSACTIONS" below for a further discussion of this defeasance.) REFINANCING TRANSACTIONS Over the past few years, Oglethorpe has implemented a program to reduce its interest costs by refinancing a sizable portion of its high-interest rate PCB and FFB debt. Since the first transaction was completed in June 1992, Oglethorpe has refinanced $1.1 billion in PCB debt and $1.2 billion in FFB debt. Oglethorpe has also prepaid another $222 million of FFB debt, including a prepayment of $92 million of FFB debt on March 13, 1997 in connection with the Rocky Mountain transactions described herein and a prepayment of $25 million of FFB debt on April 1, 1997 in connection with the Corporate Restructuring. (See Note 5 of Notes to Financial Statements.) The net result of these transactions has been to reduce the average interest rate on Oglethorpe's total long-term debt from 8.83% at December 31, 1991 to 6.43% at September 30, 1997. In connection with the Corporate Restructuring, Oglethorpe defeased approximately $92 million in principal amount of Series 1992 PCBs. Initially these bonds have been defeased through the issuance of commercial paper. Oglethorpe expects to refinance the commercial paper issuance with medium-term notes or PCBs at some point in the future. Also, in connection with the Corporate Restructuring, Oglethorpe refinanced approximately $217 million in principal amount of Series 1992A PCBs through the issuance of refunding bonds having a nine-month maturity (the "Series 1997A Bonds"), which were in turn refunded through the issuance of bonds maturing on May 28, 1998 (the "Series 1997B Bonds"). Payment of principal and interest on the Series 1997B Bonds is insured by a municipal bond insurance policy issued by Ambac Assurance Corporation. Oglethorpe is required by Ambac Assurance Corporation to maintain liquidity during the term of the Series 1997B Bonds in an amount equal to $222 million. Oglethorpe expects to refund the Series 1997B Bonds through the issuance of long-term bonds. 46 INTEREST RATE SWAP TRANSACTIONS To refinance high-interest rate PCBs, Oglethorpe entered into two interest rate swap transactions with a swap counterparty, AIG Financial Products Corp. ("AIG-FP"), which were designed to create a contractual fixed rate of interest on $322 million of variable rate PCBs. These transactions were entered into in early 1993 on a forward basis, pursuant to which approximately $200 million of variable rate PCBs were issued on November 30, 1993 and approximately $122 million of variable rate PCBs were issued on December 1, 1994. Oglethorpe is obligated to pay the variable interest rate that accrues on these PCBs; however, the swap arrangements provide a mechanism for Oglethorpe to achieve a contractual fixed rate which is lower than Oglethorpe would have obtained had it issued fixed rate bonds. Oglethorpe's use of financial derivatives is for the purpose of mitigating business risks and is not for speculative purposes. Oglethorpe's use of derivatives is limited to these two swap transactions. In connection with GTC's assumption of liability on a portion of the PCBs pursuant to the Corporate Restructuring, commencing April 1, 1997, GTC assumed and agreed to pay 16.86% of any amounts due from Oglethorpe under these swap arrangements, including the net swap payments and termination payments described below. Should GTC fail to make such payments under the assumption, Oglethorpe remains obligated for the full amount of such payments. Under the swap arrangements, Oglethorpe is obligated to make periodic payments to AIG-FP based on a notional principal amount equal to the aggregate principal amount of the bonds outstanding during the period and a contractual fixed rate ("Fixed Rate"), and AIG-FP is obligated to make periodic payments to Oglethorpe based on a notional principal amount equal to the aggregate principal amount of the bonds outstanding during the period and a variable rate equal to the variable rate of interest accruing on the bonds during the period ("Variable Rate"). These payment obligations are netted, such that if the Variable Rate is less than the Fixed Rate, Oglethorpe makes a net payment to AIG-FP. Likewise, if the Variable Rate is higher than the Fixed Rate, Oglethorpe receives a net payment from AIG-FP. Thus, although changes in the Variable Rate affect whether Oglethorpe is obligated to make payments to AIG-FP or is entitled to receive payments from AIG-FP, the effective interest rate Oglethorpe pays with respect to the PCBs is not affected by changes in interest rates. The Fixed Rate for the $200 million of variable rate bonds issued in 1993 is 5.67% and the Fixed Rate for the $122 million of variable rate bonds issued in 1994 is 6.01%. For the three years ended December 31, 1994, 1995 and 1996, Oglethorpe has made in connection with both interest rate swap arrangements combined net swap payments to AIG-FP of $6.0 million, $6.4 million and $8.2 million, respectively. The swap arrangements extend for the life of these PCBs. If the swap arrangements were to be terminated while the PCBs are still outstanding, Oglethorpe or AIG-FP may owe the other party a termination payment depending on a number of factors, including whether the fixed rate then being offered under comparable swap arrangements is higher or lower than the Fixed Rate. Under the terms of the swap agreements, AIG-FP has limited rights to terminate the swaps only upon the occurrence of specified events of default or a reduction in ratings on Oglethorpe's PCBs, without credit enhancement, to a level that is below investment grade. Oglethorpe estimates that its maximum aggregate liability (net of GTC's assumed percentage) for termination payments under both swap arrangements had such payments been due on September 30, 1997 would have been approximately $31 million. In connection with these interest rate swap arrangements, Oglethorpe (but not GTC) is obligated to maintain minimum liquidity in an amount equal to 25% of the principal amount of the variable rate refunding bonds outstanding. As of September 30, 1997, the minimum liquidity requirement equaled $81 million and will decrease proportionately as such bonds are retired as a result of scheduled sinking fund payments. ROCKY MOUNTAIN LEASE TRANSACTIONS Oglethorpe completed, in two separate closings on December 31, 1996 and January 3, 1997, lease transactions for its 74.61% undivided ownership interest in Rocky Mountain. Under the terms of these 47 transactions, Oglethorpe leased the facility to three institutional investors for the useful life of the facility, who in turn leased it back to Oglethorpe for a term of 30 years. Rocky Mountain is subject to the lien of the Mortgage Indenture. The leasehold interest transferred is subject and subordinate to such lien. Oglethorpe will continue to control and operate the plant during the leaseback term, and will exercise its fixed price purchase option at the end of the leaseback period so as to retain all other rights of ownership with respect to the plant if it is advantageous for Oglethorpe to exercise such option. As a result of these transactions, Oglethorpe received net present value cash benefits of approximately $96 million which is being recorded as a deferred credit and will be recognized in income over the term of the leaseback. Approximately $92 million was used for the early retirement of FFB debt and approximately $4 million was used to pay alternative minimum taxes on the transactions. The combination of the debt prepayment and the amortized gain will result in an estimated $11 million in annual savings through 2001, and additional savings in declining amounts for the remaining 25 years of the lease. In connection with these transactions, Oglethorpe is obligated to maintain minimum liquidity of $50 million. COMPETITION The electric utility industry in the United States is undergoing fundamental change and is becoming increasingly competitive. This change is promoted by the Energy Policy Act, recently adopted and proposed policies from FERC regarding transmission access and pricing, state deregulation initiatives, increased consolidation and mergers of electric utilities, the proliferation of power marketers and independent power producers, surplus generation in certain regional markets and other factors. Several states are in the process of implementing varying forms of "retail wheeling" (the transmission of power for a third party directly to a retail customer) and most others are in the various stages of considering retail competition. Proposed federal legislation could mandate retail wheeling in every state. No legislation related to retail wheeling has yet been enacted in Georgia, and, currently, no bill is pending in the Georgia legislature which would amend the Georgia Territorial Electric Service Act (the "Territorial Act") or otherwise affect the exclusive right of the Members to supply power to their current service territories. In 1997, the staff of the GPSC conducted a series of workshops to solicit views from the various parties impacted by electric industry restructuring and to discuss potential resolutions of these issues. The GPSC staff anticipates presenting a report to the GPSC that will identify electric industry restructuring issues, potential resolutions and the views of the parties who participated in the workshops. The GPSC does not have the authority under Georgia law to order retail wheeling or amend the Territorial Act. Oglethorpe and the Members participated in the GPSC staff workshops and are actively monitoring and studying legislative initiatives in Congress and in other states to take advantage of the experiences of cooperatives and other utilities in other states to protect their interests in future legislative activities in Georgia. Under current Georgia law, the Members generally have the exclusive right to provide retail electric service in their respective territories. Since 1973, however, Georgia has permitted limited competition among electric utilities located in Georgia for sales of electricity to certain large commercial or industrial customers. Pursuant to the Territorial Act, the owner of any new facility may receive electric service from the power supplier of its choice if the facility is located outside of municipal limits and has a connected demand upon initial full operation of 900 kilowatts or more. (See "THE MEMBERS--Service Area and Competition.") The Members, with Oglethorpe's support, are actively engaged in competition with other retail electric suppliers for these new commercial and industrial loads. While the competition for 900 kilowatt loads represents only limited competition in Georgia, this competition has given Oglethorpe and the Members the opportunity to develop resources and strategies to operate in an increasingly competitive market. Over the past years, Oglethorpe has taken several steps to prepare for and adapt to the fundamental changes which have occurred or are likely to occur in the electric utility industry and to reduce the possibility of incurring stranded costs. Most importantly, Oglethorpe completed the Corporate Restructuring and divided itself into generation, transmission and system operations companies in order to 48 better serve its Members in a deregulated and competitive environment. (See "General--CORPORATE RESTRUCTURING" herein.) Since 1992, Oglethorpe also has pursued an interest cost reduction program. As a result of this program, Oglethorpe has prepaid $222 million of FFB debt and refinanced $1.1 billion of PCB debt and $1.2 billion of FFB debt. These steps have reduced Oglethorpe's interest costs significantly. (See "Financial Condition--REFINANCING TRANSACTIONS" herein.) Oglethorpe and the Members also amended the Wholesale Power Contracts in connection with the Corporate Restructuring. The Wholesale Power Contracts provide that the Members are jointly and severally responsible for all costs and expenses of all of the generation and purchased power resources of Oglethorpe existing on March 11, 1997, as well as certain future power resources. (See "BUSINESS OF OGLETHORPE--Wholesale Power Contracts.") Each Wholesale Power Contract specifically provides that the Member must make payments whether or not power has been delivered and whether or not a plant has been sold or is otherwise unavailable. The formulary rate established by Oglethorpe in the rate schedule to the Wholesale Power Contracts employs a rate methodology under which all categories of costs are specifically separated as components of a formula to determine Oglethorpe's revenue requirements. The rate schedule also allocates to the Members the responsibility for all of Oglethorpe's fixed costs. Oglethorpe's charges under the Wholesale Power Contracts may be adjusted by the Board of Directors. With respect to Oglethorpe, the RUS has retained certain approval rights over the changes to the Wholesale Power Contracts, including the rate schedule. (See "General--RATES AND FINANCIAL COVERAGE REQUIREMENTS" herein.) As a result of these contractual agreements, the Members ultimately are liable for the existing power resources of Oglethorpe. Oglethorpe has also entered into arrangements with power marketers to obtain the value that can be brought by power marketers and to provide for future load requirements without taking all the risk associated with traditional suppliers. (See "Results of Operations--POWER MARKETER ARRANGEMENTS" herein.) Oglethorpe and the Members continue to consider and evaluate a wide array of other potential actions to reduce costs and to maintain their competitiveness in anticipation of future competition. These activities on the part of Oglethorpe and the Members are in various stages of study or preliminary consideration. Many Members are now providing or considering proposals to provide non-traditional products and services such as telecommunications and other services. Depending on the nature of future competition in Georgia, there could be reasons for the Members to separate their physical distribution business from their energy business, or otherwise restructure their current businesses to operate effectively under retail competition. Oglethorpe continues to seek to identify and evaluate opportunities to reduce the cost of wholesale power to the Members. Oglethorpe currently defers certain costs of providing services to the Members pursuant to Statement of Financial Accounting Standards ("SFAS") No. 71, "Accounting for the Effects of Certain Types of Regulation." Note 1 of Notes to Financial Statements in Oglethorpe's Annual Report on Form 10-K for the fiscal year ended December 31, 1996, sets forth the regulatory assets and liabilities reflected on Oglethorpe's balance sheet as of December 31, 1996. Regulatory assets represent probable future revenues to Oglethorpe associated with certain costs which will be recovered from Members through the rate-making process. Regulatory liabilities represent probable future reduction in revenues associated with amounts that are to be credited to Members through the rate-making process. (See "General-- RATES AND FINANCIAL COVERAGE REQUIREMENTS" herein.) In the event that Oglethorpe is no longer subject to the provisions of SFAS No. 71, Oglethorpe would be required to write off regulatory assets and liabilities. In addition, Oglethorpe would be required to determine any impairment to other assets, including plant, and write down the assets, if impaired, to their fair value. At this time, Oglethorpe cannot predict the outcome of the various developments that may lead to increased competition in the electric utility industry or the effect of such developments on Oglethorpe or the Members. 49 MISCELLANEOUS DECOMMISSIONING COSTS The staff of the Securities and Exchange Commission (the "Commission") has questioned certain of the current accounting practices of the electric utility industry regarding the recognition, measurement and classification of decommissioning costs for nuclear generating facilities in financial statements of electric utilities. In response to these questions, the Financial Accounting Standards Board has issued an Exposure Draft of a proposed Statement on "Accounting for Certain Liabilities Related to Closure or Removal of Long-Lived Assets". The proposed Statement would require the recognition of the entire obligation for decommissioning at its present value as a liability in the financial statements. Rate-regulated utilities would also recognize an offsetting asset for differences in the timing of recognition of the costs of decommissioning for financial reporting and rate-making purposes. Oglethorpe's management does not believe that this proposed Statement would have an adverse effect on results of operations due to its current and future ability to recover decommissioning costs through rates. Beginning in years 2014 through 2029, it is expected that Plant Hatch and Plant Vogtle units will begin the decommissioning process. The expected timing of payments for decommissioning costs will extend for a period of 9 to 14 years. Oglethorpe's management does not expect such payments to have an adverse impact on liquidity or capital resources due to available amounts which have been set aside in reserves for this purpose. INFLATION As with utilities generally, inflation has the effect of increasing the cost of Oglethorpe's operations and construction program. Operating and construction costs have been less affected by inflation over the last few years because rates of inflation have been relatively low. YEAR 2000 ISSUE Many information systems have been designed to function based on years that begin with "19". Oglethorpe expects that by the year 2000 it will have adapted its systems, to the extent it considers necessary, to process years that begin with "20", and does not expect that the year 2000 issue will have a material adverse effect on its financial condition or results of operations. FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS This Prospectus contains forward-looking statements, including statements regarding, among other items, (i) anticipated trends in Oglethorpe's business and (ii) Oglethorpe's future liquidity requirements and capital resources. These forward-looking statements are based largely on Oglethorpe's expectations and are subject to a number of risks and uncertainties, certain of which are beyond Oglethorpe's control. For factors that could cause actual results to differ materially from those anticipated by these forward-looking statements, see "Competition" herein and "CERTAIN FACTORS AFFECTING THE ELECTRIC UTILITY INDUSTRY." In light of these risks and uncertainties, there can be no assurance that events anticipated by the forward-looking statements contained in this Prospectus will in fact transpire. 50 THE MEMBERS OF OGLETHORPE SERVICE AREA AND COMPETITION The Members are listed below and include 39 of the 42 electric distribution cooperatives in the State of Georgia. Altamaha EMC Habersham EMC Planters EMC Amicalola EMC Hart EMC Rayle EMC Canoochee EMC Irwin EMC Satilla Rural EMC Carroll EMC Jackson EMC Sawnee EMC Central Georgia EMC Jefferson EMC Slash Pine EMC Coastal EMC Lamar EMC Snapping Shoals EMC Cobb EMC Little Ocmulgee EMC Sumter EMC Colquitt EMC Middle Georgia EMC Three Notch EMC Coweta-Fayette EMC Mitchell EMC Tri-County EMC Excelsior EMC Ocmulgee EMC Troup EMC Flint EMC Oconee EMC Upson County EMC Grady EMC Okefenoke Rural EMC Walton EMC GreyStone Power Corporation, Pataula EMC Washington EMC an EMC
The Members serve approximately 1.2 million electric consumers (meters) representing approximately 2.6 million people. The Members serve a region covering approximately 40,000 square miles, which is approximately 70% of the land area in the State of Georgia, encompassing 150 of the State's 159 counties. Sales by the Members in 1996 amounted to approximately 19.6 million MWh, with 72% to residential consumers, 26% to commercial and industrial consumers and 2% to other consumers. The Members are the principal suppliers for the power needs of rural Georgia. While the Members do not serve any major cities, portions of their service territories are in close proximity to urban areas and are experiencing substantial growth due to the expansion of urban areas, including metropolitan Atlanta, into suburban areas and the growth of suburban areas into neighboring rural areas. The Members have experienced average annual compound growth rates from 1994 through 1996 of 5% in number of consumers, 9% in MWh sales and 7% in electric revenues. The Territorial Act regulates the service rights of all retail electric suppliers in the State of Georgia. Pursuant to the Territorial Act, the GPSC assigned substantially all areas in the State to specified retail suppliers. With limited exceptions, the Members have the exclusive right to provide retail electric service in their respective territories, which are predominately outside of the municipal limits existing at the time the Territorial Act was enacted in 1973. The chief exception to this rule of exclusivity is that electric suppliers may compete for most new retail loads of 900 kilowatts or greater. The GPSC may reassign territory only if it determines that an electric supplier has breached the tenets of public convenience and necessity. The GPSC may transfer service for specific premises only if: (i) the GPSC determines, after joint application of electric suppliers and proper notice and hearing, that the public convenience and necessity require a transfer of service from one electric supplier to another; or (ii) the GPSC finds, after proper notice and hearing, that an electric supplier's service to a premise is not adequate or dependable or that its rates, charges, service rules and regulations unreasonably discriminate in favor of or against the consumer utilizing such premises and the electric utility is unwilling or unable to comply with an order from GPSC regarding such service. Since 1973, unlike in the electric utility industry in general, the Territorial Act has allowed limited competition among electric utilities in Georgia by allowing the owner of any new facility located outside of municipal limits and having a connected demand upon initial full operation of 900 kilowatts or greater to receive electric service from the retail supplier of its choice. The Members, with Oglethorpe's support, 51 are actively engaged in competition with other retail electric suppliers for these new commercial and industrial loads. The number of commercial and industrial loads served by the Members continues to increase annually. While the competition for 900 kilowatt loads represents only limited competition in Georgia, this competition has given Oglethorpe and the Members the opportunity to develop resources and strategies to operate in an increasingly competitive market. The electric utility industry in the United States is undergoing fundamental change and is becoming increasingly competitive. (See "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS--Competition.") From time to time, utilities are approached by other parties interested in purchasing their systems. Some of the Members have been approached in the past by third parties indicating an interest in purchasing their systems. The Wholesale Power Contracts provide that a Member may not dissolve, liquidate or otherwise wind up its affairs without Oglethorpe's approval. The Member may not consolidate or merge with any person or reorganize or change the form of its business organization from an electric membership corporation or sell, transfer, lease or otherwise dispose of all or substantially all of its assets to any person, whether in a single transaction or series of transactions, unless either: (i) the transaction is approved by Oglethorpe or (ii) other specified conditions are satisfied including, but not limited to, an assumption agreement by the transferee, satisfactory to Oglethorpe, containing an assumption by the transferee of the performance and observance of every covenant and condition of the Member under the Wholesale Power Contract, and certifications of accountants as to certain specified financial requirements of the transferee (taking into account the transfer). COOPERATIVE STRUCTURE The Members are cooperatives that operate their systems on a not-for-profit basis. Accumulated margins derived after payment of operating expenses and provision for depreciation constitute patronage capital of the consumers of the Members. Refunds of accumulated patronage capital to the individual consumers may be made from time to time subject to limitations contained in mortgages between the Members and RUS or loan documents with other lenders. The RUS mortgages generally prohibit such distributions unless, after any such distribution, the Member's total equity will equal at least 40% (30% in the case of Members, if any, that have the new form of RUS loan documents) of its total assets, except that distributions may be made of up to 25% of the margins and patronage capital received by the Member in the preceding year (provided that equity is at least 20% in the case of Members, if any, that have the new form of RUS loan documents). (See "Members' Relationship with RUS" herein.) Oglethorpe is a membership corporation, and the Members are not subsidiaries of Oglethorpe. Except with respect to the obligations of the Members under each Member's Wholesale Power Contract with Oglethorpe and Oglethorpe's rights under such contracts to receive payment for power and energy supplied, Oglethorpe has no legal interest in, or obligations in respect of, any of the assets, liabilities, equity, revenues or margins of the Members. (See "BUSINESS OF OGLETHORPE--Wholesale Power Contracts.") The revenues of the Members are not pledged as security to Oglethorpe but are the source from which moneys are derived by the Members to pay for power supplied by Oglethorpe under the Wholesale Power Contracts. Revenues of the Members are, however, pledged under their respective RUS mortgages or loan documents with other lenders. RATE REGULATION OF MEMBERS Through provisions in the loan documents securing loans to the Members, RUS exercises control and supervision over the rates for the sale of power of the 34 Members that borrow from it. The RUS mortgages of such Members require them to design rates with a view to maintaining an average TIER of 52 not less than 1.50 and an average DSC of not less than 1.25 for the two highest out of every three successive years. Although the setting of the rates of the Members is not subject to approval by any federal or state agency or authority other than RUS, the Territorial Act prohibits the Members from unreasonable discrimination in the setting of rates, charges, service rules or regulations and requires the Members to obtain GPSC approval of long-term borrowings. Snapping Shoals EMC, Mitchell EMC, Troup EMC, Walton EMC and Cobb EMC have prepaid their RUS indebtedness and are no longer RUS borrowers. Each of these Members now has a rate covenant with its current lender. Other Members may also pursue this option. To the extent that a Member who is not an RUS borrower engages in wholesale sales or transmission in interstate commerce, it would be subject to regulation by FERC under the Federal Power Act. MEMBERS' RELATIONSHIP WITH RUS Through provisions in the loan documents securing loans to the Members, RUS also exercises control and supervision over the Members that borrow from it in such areas as accounting, borrowings, construction and acquisition of facilities, and the purchase and sale of power. Historically, federal loan programs providing direct loans from RUS to electric cooperatives have been a major source of funding for the Members. However, in recent years, there have been legislative, administrative and budgetary initiatives intended to reduce or, in some cases, eliminate federal funding for electric cooperatives. In addition, the RUS loan and guarantee programs have been characterized by the imposition of increasingly problematic terms and conditions and extended delays in access to necessary funding. RUS has adopted new standard forms of mortgages and loan contracts for distribution borrowers the stated purpose of which is to update and modernize the loan and security documentation employed by RUS. Distribution borrowers are required to adopt these new forms as a condition to receiving new loans from RUS. Recent changes and proposals for further changes have made the direct loan program administered by RUS more costly. The Rural Electrification Loan Restructuring Act of 1993 eliminated the long-standing 5% loan program and substituted a new program, the interest rates for which are based on rates being paid on municipal bonds with comparable maturities. Certain borrowers with either low consumer density or higher-than-average rates and lower-than-average consumer income are still eligible for special loans at 5%. The future cost, availability and amount of RUS direct and guaranteed loans which may be available to the Members cannot be predicted. MEMBERS RELATIONSHIP WITH GTC AND GSOC For information about the Members' relationship with GTC and GSOC, see "BUSINESS OF OGLETHORPE--Relationship with GTC" and "--Relationship with GSOC." CONTRACTS WITH SEPA In addition to energy received from Oglethorpe under the Wholesale Power Contracts, the Members purchase hydroelectric power under contracts with SEPA. In 1996, the aggregate SEPA allocation to the Members was 542 MW plus associated energy, representing approximately 11% of total Member peak demand and approximately 5% of total Member energy requirements. New 20-year contracts between each of the Members and SEPA have recently been executed. The provisions of the new contracts are essentially the same as the existing contracts with a few exceptions. Each Member must schedule its energy allocation, and each Member has designated Oglethorpe to perform this function. Pursuant to a separate agreement, Oglethorpe will schedule, through GSOC, the Members' SEPA power deliveries. Further, each Member may be required, if certain conditions are met, to contribute funds for capital 53 improvements for Corps of Engineers projects from which its allocation is derived in order to retain the allocation. GTC delivers the Members' SEPA purchases under its network tariff and contract with each Member. The new contracts are subject to RUS approval. The amount of capacity and energy available from SEPA is not expected to increase in an amount sufficient to serve a material portion of the projected growth in the Members' requirements. (See "BUSINESS OF OGLETHORPE--Wholesale Power Contracts" and "MEMBER REQUIREMENTS AND POWER SUPPLY RESOURCES--Member Demand and Energy Requirements" and the table thereunder.) During 1996, legislative proposals were made that would have resulted in the privatization of several of the federal power marketing administrations, in particular SEPA. Ultimately, no proposal for the privatization of the power marketing administrations was passed by Congress. The President's Budget for fiscal year 1998 does not include any proposals to privatize the federal power marketing administrations. The ultimate outcome of this issue in Congress cannot be predicted with certainty. 54 MEMBER REQUIREMENTS AND POWER SUPPLY RESOURCES GENERAL Oglethorpe supplies capacity and energy to the Members from a combination of owned and leased generating plants and from power purchased under long-term contracts with other power suppliers and power marketers. Oglethorpe owns or leases 3,335 MW of nameplate capacity, consisting of 1,500.6 MW of coal-fired capacity, 1,185 MW of nuclear-fueled capacity, 632.5 MW of pumped storage hydroelectric capacity, 14.8 MW of oil-fired combustion turbine capacity and 2.1 MW of conventional hydroelectric capacity. (See "Generating Facilities--GENERAL" and "Generating Facilities--PLANT PERFORMANCE" herein for a description of Oglethorpe's generating facilities.) These resources are generally scheduled and dispatched so as to minimize the operating cost of Oglethorpe's system. However, Oglethorpe has entered into long-term arrangements with power marketers to better utilize its resources to reduce the cost of capacity and energy delivered to the Members, in part by giving certain dispatch rights to the power marketers. (See "Power Marketer Arrangements" herein.) MEMBER DEMAND AND ENERGY REQUIREMENTS The following table shows the aggregate peak demand and energy requirements of the Members for the years 1994 through 1996 and the twelve months ended September 30, 1997, and also shows the amounts of such requirements supplied by Oglethorpe and SEPA. For the years 1994 through 1996, demand and energy requirements increased at an average annual compound growth rate of 13.2% and 9.7%, respectively.
DEMAND (MW) ENERGY REQUIREMENTS (MWH) --------------------------------------------- ------------------------------------------ TOTAL SUPPLIED BY SUPPLIED BY TOTAL SUPPLIED BY SUPPLIED BY REQUIREMENTS(1) OGLETHORPE(2) SEPA(3) REQUIREMENTS OGLETHORPE(2) SEPA(3) --------------- ------------- ----------- ------------ ------------- ----------- 1994.......................... 3,938 3,396 542 17,278,812 16,285,127 993,685 1995.......................... 4,850 4,308 542 19,403,703 18,442,153 961,550 1996.......................... 5,045 4,503 542 20,793,864 19,807,101 986,763 Twelve months ended September 30, 1997.......... 5,252 4,710 542 20,388,886 20,148,077 912,295
- ------------------------------ (1) System peak demand of the Members measured at the Members' delivery points (net of system losses). The significant increase in peak demand from 1994 to 1995 was due in large part to a mild summer in 1994. (2) Includes purchased power. (See "Power Marketer Arrangements," "Other Power Purchase and Sale Arrangements--POWER PURCHASES FROM GPC" and "Other Power Purchase and Sale Arrangements--OTHER POWER PURCHASES" herein.) (3) Supplied by SEPA through existing contracts with the Members. (See "THE MEMBERS OF OGLETHORPE--Contracts with SEPA.") In 1996, Cobb EMC and Jackson EMC accounted for approximately 12.5% and 11.2% of Oglethorpe's total revenues, respectively. For the twelve months ended September 30, 1997, Cobb EMC and Jackson EMC accounted for approximately 12.8% and 11.5% of Oglethorpe's total revenues, respectively. None of the other Members accounted for as much as 10% of Oglethorpe's total revenues in 1996 or the twelve months ended September 30, 1997. Due to greater than average growth rates, certain of Oglethorpe's customers, including its larger customers such as Cobb EMC and Jackson EMC, have historically accounted for an increasing percentage of Oglethorpe's total revenues. However, under the new Wholesale Power Contracts described above, a Member may choose to supply all or a portion of its increased requirements with purchases from other suppliers. Although the Members have contracted for significant portions of their anticipated future needs by participating in Oglethorpe's power marketer agreements, certain of the Members' future needs during the terms of the power marketer agreements could still be purchased from other suppliers. (See "Power Marketer Arrangements" herein.) 55 SEASONAL VARIATIONS The demand for energy by the Members is influenced by seasonal weather conditions. Historically, Oglethorpe's peak demand has occurred during the months of June through August. (See "BUSINESS OF OGLETHORPE--Electric Rates.") Energy revenues track energy costs as they are incurred and also fluctuate month to month. Capacity revenues reflect the recovery of Oglethorpe's fixed costs, which do not vary significantly from month to month; therefore, capacity charges are billed and capacity revenues are recognized in equal monthly amounts. POWER MARKETER ARRANGEMENTS In 1996, Oglethorpe began utilizing power marketer arrangements to reduce the cost of power to the Members. It has entered into long-term power marketer agreements with LEM for approximately 50% of the load requirements of the Members and with Morgan Stanley with respect to 50% of the Members' forecasted load requirements. The LEM agreements are based on the actual requirements of the Members during the contract term, whereas the Morgan Stanley agreement represents a fixed supply obligation. Generally, these arrangements reduce the cost of supplying power to the Members by limiting the risk of fuel cost variations and unit availability, by providing a guaranteed benefit for the use of excess resources and by providing future power needs at a fixed price. All of Oglethorpe's existing generating facilities and power purchase arrangements are available for use by LEM and Morgan Stanley for the term of the respective agreements. Oglethorpe continues to be responsible for all of the costs of its system resources but receives revenue, as described below, from LEM and Morgan Stanley for the use of the resources. LEM AGREEMENTS Effective January 1, 1997, Oglethorpe entered into power marketer agreements with LEM for 50% of the load requirements of the Members. Under the agreements, LEM is obligated to deliver, and Oglethorpe is obligated to take, approximately 50% of the load requirements of the participating Members less the load requirements for certain customers who have the right to choose electric suppliers, plus 50% of the delivery obligations under Oglethorpe's existing firm power off-system sale contracts. For certain smaller customer choice loads, LEM is obligated to deliver, if Oglethorpe requests, 50% of the associated load requirements. Oglethorpe has the option of purchasing the energy requirements for any customer choice load from another supplier. Oglethorpe is obligated to sell and LEM is obligated to buy 50% of the output of each participating Member's PCR share of the "must run" units (primarily nuclear units). Oglethorpe is also obligated to make available the same share of all other resources, which LEM may schedule. LEM does not have the right to the output of upgrades to these resources. LEM pays Oglethorpe the costs associated with the energy taken, subject to certain adjustments. Oglethorpe must pay LEM a contractually specified price for each MWh purchased. The LEM agreement relating to 37 of the 39 Members has a term extending through 2011. With one year's notice, Oglethorpe has the right to terminate the LEM agreement beginning in 2002. With 18 months' notice, LEM has the right to terminate the LEM agreement beginning in 2005. The LEM agreement relating to the other two Members has a term extending through 1999. LEM is a subsidiary of LG&E Energy Corp., a Kentucky corporation, which is a diversified energy services holding company. LG&E Energy Corp. is subject to the informational requirements of the Securities Exchange Act of 1934, as amended, and, in accordance therewith, files reports and other information with the Commission. 56 MORGAN STANLEY AGREEMENT Effective May 1, 1997, Oglethorpe entered into a power marketer agreement with Morgan Stanley with respect to 50% of the Members' forecasted load requirements. The agreement obligates Oglethorpe to purchase fixed quantities of energy at fixed prices. Each Member selected a term for its obligation, as well as the portion of its forecasted requirements to be purchased as a fixed quantity. Oglethorpe is obligated to sell and Morgan Stanley is obligated to buy 50% of the output, in contractually fixed amounts, of each Member's PCR share (for the term and portion selected) of the "must run" units (primarily nuclear units). Oglethorpe is also obligated to make available the same share of all other resources, in contractually fixed amounts, which Morgan Stanley may schedule for each 24-hour day. This schedule is set the day prior based on availability limitations in the contract. Morgan Stanley pays a contractually fixed amount each month and an amount for the scheduled energy based on contractually fixed prices. The agreement has a term extending to March 31, 2005, but the purchases for certain Members decline to zero prior to that date. Oglethorpe plans to manage the portion of the system resources covered by the Morgan Stanley agreement through scheduling and dispatching such resources. Oglethorpe will also make purchases and sales to balance the fixed purchase obligation against the actual requirements and to optimize the use of the resources after receiving the daily schedule from Morgan Stanley. Morgan Stanley is a subsidiary of Morgan Stanley, Dean Witter, Discover & Co., a diversified investment banking and financial services company. Morgan Stanley, Dean Witter, Discover & Co. is subject to the informational requirements of the Securities Exchange Act of 1934, as amended, and, in accordance therewith, files reports and other information with the Commission. RELATED AGREEMENTS Oglethorpe has contracted with GTC to provide available transmission services to deliver to the border of the ITS any energy sold to LEM or Morgan Stanley, as well as any other wholesale power purchase. Each Member will use its Member Transmission Agreement for delivery of energy purchased by Oglethorpe from LEM, Morgan Stanley and others. In connection with the LEM and Morgan Stanley arrangements, each Member has entered into supplemental agreements to its Wholesale Power Contract. The supplemental agreements are the vehicle through which Oglethorpe and the Members assure that the Members receive the benefits of and support the obligations for the power marketer arrangements under the Wholesale Power Contracts. Each Member has approved the agreements with LEM and Morgan Stanley as "future resources" under the Wholesale Power Contracts. Accordingly, each Member has a PCR for each of the LEM and Morgan Stanley agreements and all costs incurred by Oglethorpe under such agreements are recovered from the Members under the Wholesale Power Contracts on a joint and several basis. To this extent, the Members have elected, under the Wholesale Power Contracts, to purchase a substantial portion of their future requirements from Oglethorpe. (See "Future Power Resources" herein and "BUSINESS OF OGLETHORPE--Wholesale Power Contracts.") POWER PURCHASE AND SALE ARRANGEMENTS POWER PURCHASES FROM GPC Oglethorpe purchases 750 MW of capacity and associated energy from GPC on a take-or-pay basis under the BPSA, which extends through December 31, 2003. The capacity purchases under the BPSA are from four Component Blocks (as defined in the BPSA), composed of two Component Blocks of 250 MW each (coal-fired units) and two Component Blocks of 125 MW each (combustion turbine units). The capacity in one or more Component Blocks may, however, be less than the MW stated above, as the result of scheduled retirement of units or retirements due to force majeure events. Although Oglethorpe 57 may not increase its capacity purchases under the BPSA, it may reduce or extend its purchases of one or more Component Blocks upon proper notice to GPC. Oglethorpe has given notice of its intent to reduce its purchases by two 250 MW Component Blocks (coal-fired units) effective September 1, 1998 and September 1, 1999. Also, pursuant to its long-term power marketer agreements with LEM, Oglethorpe has committed to continue reducing its purchases from GPC as permitted under the BPSA and thus will no longer purchase any energy under the BPSA effective September 1, 2001. (See "Power Marketer Arrangements" herein for a discussion of the LEM agreement.) OTHER POWER PURCHASES Oglethorpe purchases 100 MW of capacity from each of EPI and Big Rivers, under agreements extending through June and July 2002, respectively. The availability of capacity under the EPI contract is dependent on the availability of two specific generating units available to EPI. TVA provides the transmission service to deliver the power from the Big Rivers electric system to the ITS. TVA and Southern Company Services, as agent for Alabama Power Company and Mississippi Power Company, provide the transmission service necessary to deliver the power from EPI to the ITS. (See Note 9 of Notes to Financial Statements.) Oglethorpe also has a contract through 2019 to purchase approximately 300 MW of capacity from Hartwell, a partnership owned 50% by NGC Corporation and 50% by American National Power, Inc., a subsidiary of National Power, PLC. This capacity is provided by two 150 MW gas-fired turbine generating units on a site near Hartwell, Georgia. Oglethorpe intends to use the units for peaking capacity but has the right to dispatch the units fully. Prior to the merger of Destec Energy, Inc. and NGC Corporation, Oglethorpe notified Hartwell that Oglethorpe's rights under the power purchase agreement to consent to the merger or to exercise its rights of first refusal to purchase equity interests in the partnership would be triggered by the merger. Hartwell, however, refused to recognize Oglethorpe's rights, and Oglethorpe is currently seeking to resolve the issues regarding its rights of consent and first refusal. In addition to the purchases from GPC, Big Rivers, EPI and Hartwell, Oglethorpe also purchases small amounts of capacity and energy from "qualifying facilities" under the Public Utility Regulatory Policies Act of 1978 ("PURPA"). Under a waiver order from FERC, Oglethorpe historically made all purchases the Members would have otherwise been required to make under PURPA and Oglethorpe was relieved of its obligation to sell certain services to "qualifying facilities" so long as the Members make those sales. Oglethorpe historically provided the Members with the necessary services to fulfill these sale obligations. Purchases by Oglethorpe from such qualifying facilities provided 0.2% of Oglethorpe's energy requirements for the Members in 1996. As a result of the Corporate Restructuring, the Members may make such purchases in the future instead of Oglethorpe. Finally, Oglethorpe has contracted with Florida Power Corporation to purchase 275 MW of peaking capacity during the summer of 1998. LONG-TERM POWER SALES Oglethorpe has an agreement to sell 100 MW of base capacity to Alabama Electric Cooperative beginning June 1, 1998, and extending through December 31, 2005. During the term of the power marketer agreements, LEM and Morgan Stanley will be responsible for supplying Oglethorpe with sufficient power to fulfill these power sales. OTHER POWER SYSTEM ARRANGEMENTS Oglethorpe has interchange, transmission and/or short-term capacity and energy purchase or sale agreements with over 60 utilities, power marketers and other power suppliers. The agreements provide variously for the purchase and/or sale of capacity and energy and/or for the purchase of transmission service. The development of and access to the ITS and the interconnections with other utilities are key 58 elements in Oglethorpe's ability to make off-system sales and purchases through its transmission contract with GTC and to compete in an increasingly competitive market. GENERATING FACILITIES GENERAL The following table sets forth certain information with respect to the generating facilities in which Oglethorpe currently has ownership or leasehold interests, all of which are in commercial operation. Plant Hatch, Plant Wansley, Plant Vogtle and Scherer Unit No. 1 and Scherer Unit No. 2 are co-owned by Oglethorpe, GPC, MEAG and Dalton. GPC is the operating agent for each of these co-owned plants. Rocky Mountain is co-owned by Oglethorpe and GPC, and Oglethorpe is the operating agent. Oglethorpe is the sole owner of Tallassee. (See "CO-OWNERS OF THE PLANTS AND THE PLANT AGREEMENTS--The Plant Agreements.")
OGLETHORPE'S SHARE OF NAMEPLATE COMMERCIAL LICENSE TYPE OF PERCENTAGE CAPACITY OPERATION EXPIRATION FACILITIES FUEL INTEREST(1) (MW) DATE DATE - ------------------------------------------------------------ -------------- ---------- ------------ ---------- ---------- Plant Hatch (near Baxley, Ga.) Unit No. 1................................................ Nuclear 30 243.0 1975 2014 Unit No. 2................................................ Nuclear 30 246.0 1979 2018 Plant Vogtle (near Waynesboro, Ga.) Unit No. 1................................................ Nuclear 30 348.0 1987 2027 Unit No. 2................................................ Nuclear 30 348.0 1989 2029 Plant Wansley (near Carrollton, Ga.) Unit No. 1................................................ Coal 30 259.5 1976 N/A(2) Unit No. 2................................................ Coal 30 259.5 1978 N/A(2) Combustion Turbine........................................ Oil 30 14.8 1980 N/A(2) Plant Scherer (near Forsyth, Ga.) Unit No. 1................................................ Coal 60 490.8 1982 N/A(2) Unit No. 2................................................ Coal 60 490.8 1984 N/A(2) Tallassee (near Athens, Ga.)................................ Hydro 100 2.1 1986 2023 Rocky Mountain (near Rome, Ga.)............................. Pumped Storage 74.61 632.5 1995 2027 Hydro ------------ Total Ownership 3,335.0 ------------ ------------
- ------------------------ (1) The 60% interest in Scherer Unit No. 2 is leased under leases that expire in 2013, subject to options to renew for a total of 8.5 years. The 74.61% interest in Rocky Mountain is leased under leases that expire in 2016. Oglethorpe has an ownership interest in all of the other facilities. (See "INTRODUCTION--Sale and Leaseback Transactions" and "CO-OWNERS OF THE PLANTS AND THE PLANT AGREEMENTS--The Plant Agreements--ROCKY MOUNTAIN.") (2) Coal-fired units and combustion turbines do not operate under operating licenses similar to those granted to nuclear units by the Nuclear Regulatory Commission and to hydroelectric plants by FERC. 59 PLANT PERFORMANCE The following table sets forth certain operating performance information of each of the major generating facilities in which Oglethorpe currently has ownership or leasehold interests:
EQUIVALENT AVAILABILITY(1) CAPACITY FACTOR(2) ---------------------------------- ---------------------------------- TWELVE MONTHS TWELVE MONTHS ENDED ENDED SEPTEMBER 30, SEPTEMBER 30, UNIT 1997 1996 1995 1994 1997 1996 1995 1994 - -------------------------------------------------- ------------- ---- ---- ---- ------------- ---- ---- ---- Plant Hatch Unit No. 1...................................... 98% 83% 98% 84% 98% 83% 100% 85% Unit No. 2...................................... 86 97 75 78 86 99 75 79 Plant Vogtle Unit No. 1...................................... 87 80 98 86 87 80 98 86 Unit No. 2...................................... 96 88 89 91 97 89 90 91 Plant Wansley Unit No. 1...................................... 88 88 90 92 56 58 56 62 Unit No. 2...................................... 92 91 89 88 58 62 56 58 Plant Scherer Unit No. 1...................................... 76 92 95 97 59 74 73 64 Unit No. 2...................................... 88 84 97 85 74 72 85 60 Rocky Mountain(3) Unit No. 1...................................... 99 94 83 N/A 15 15 16 N/A Unit No. 2...................................... 96 95 92 N/A 11 13 15 N/A Unit No. 3...................................... 97 95 92 N/A 16 10 16 N/A
- ------------------------ (1) Equivalent Availability is a measure of the percentage of time that a unit was available to generate if called upon, adjusted for periods when the unit is partially derated from the "maximum dependable capacity" rating. (2) Capacity Factor is a measure of the output of a unit as a percentage of the maximum output, based on the "maximum dependable capacity" rating, over the period of measure. (3) Rocky Mountain Commercial Operation Dates: Unit 1--July 24, 1995; Unit 2--June 19, 1995; Unit 3--June 1, 1995. This information was calculated beginning from the commercial operation date for each unit. As a pumped storage plant, Rocky Mountain primarily operates in peaking service. The nuclear refueling cycle for Plants Hatch and Vogtle exceeds twelve months. Therefore, in some calendar years the units at these plants are not taken out of service for refueling, resulting in higher levels of equivalent availability and capacity factor. FUEL SUPPLY COAL. Coal for Plant Wansley is currently purchased under long-term contracts and in spot market transactions. As of September 30, 1997, there was a 17-day coal supply at Plant Wansley based on nameplate rating. Low-sulfur "compliance" coal for Scherer Units No. 1 and No. 2 is purchased under long-term contracts and in spot market transactions. As of September 30, 1997, the coal stockpile at Plant Scherer contained a 26-day supply based on nameplate rating. During 1994, Plant Scherer was converted to burn both sub-bituminous and bituminous coals, and a separate stockpile of sub-bituminous coal was built in addition to the stockpile of bituminous coal. 60 Coal inventories are lower at Plants Wansley and Scherer primarily due to recent problems associated with rail transportation and the seasonal demands of summer. The rail transportation providers expect operations to return to normal by the beginning of 1998. Should deliveries of coal be subject to ongoing delay or disruption, there is a potential for upward price pressure on such coal with a consequent possibility of increased prices for energy. The Plant Scherer and Wansley ownership and operating agreements were amended in 1993 and 1996, respectively, to allow each co-owner (i) to dispatch separately its respective ownership interest in conjunction with contracting separately for long-term coal purchases procured by GPC and (ii) to procure separately long-term coal purchases. Pursuant to the amendments, Oglethorpe implemented separate dispatch of Plant Scherer in 1994 and at Plant Wansley in May 1997. Oglethorpe continues to use GPC as its agent for fuel procurement. To take advantage of these changes at Plants Scherer and Wansley, Oglethorpe formed a wholly owned subsidiary, Black Diamond Energy, Inc., to acquire rail cars. This subsidiary has purchased or leased 299 rail cars. Oglethorpe entered into an initial 15-year lease with this subsidiary which obligates Oglethorpe to pay all of the ownership and operating expenses of the subsidiary relating to the rail cars during the lease term. For information relating to the impact that the Clean Air Act will have on Oglethorpe, see "CERTAIN FACTORS AFFECTING THE ELECTRIC UTILITY INDUSTRY--Environmental and Other Regulations." NUCLEAR FUEL. GPC, as operating agent, has the responsibility to procure nuclear fuel for Plants Hatch and Vogtle. GPC has contracted with Southern Nuclear Operating Company ("SONOPCO"), a subsidiary of The Southern Company specializing in nuclear services, to operate these plants, including nuclear fuel procurement. (See "CO-OWNERS OF THE PLANTS AND PLANT AGREEMENTS--The Plant Agreements.") SONOPCO employs both spot purchases and long-term contracts to satisfy nuclear fuel requirements. The nuclear fuel supply and related services are expected to be adequate to satisfy current and future nuclear generation requirements. FUTURE POWER RESOURCES Under the Wholesale Power Contracts, Oglethorpe provides joint planning services for all participating Members. A Member may elect not to have Oglethorpe provide joint planning, procurement or bulk power marketing services. Although the existing long-term power marketer arrangements with LEM and Morgan Stanley provide substantially all of the Members' requirements during their contract terms, Oglethorpe will continue to offer these planning services for requirements beyond the contract terms as well as for evaluation of contract options and balancing of actual requirements against fixed purchase obligations. Consequently, Oglethorpe has forecasted that peak requirements for the Members may exceed contracted purchases over the next several years and has issued a request for proposals for an aggregate of 100 MW to 1,100 MW to supply these additional requirements. All Members currently participate in joint planning. 61 CO-OWNERS OF THE PLANTS AND THE PLANT AGREEMENTS CO-OWNERS OF THE PLANTS Plants Hatch, Vogtle, Wansley and Scherer Units No. 1 and No. 2 are co-owned by Oglethorpe, GPC, MEAG and Dalton, and Rocky Mountain is co-owned by Oglethorpe and GPC. Each such co-owner owns, and Oglethorpe owns or leases, undivided interests in the amounts shown in the following table (which excludes the Plant Wansley combustion turbine). Oglethorpe is the operating agent for Rocky Mountain. GPC is the operating agent for each of the other plants. (See "The Plant Agreements" herein.)
NUCLEAR COAL-FIRED -------------------------- ----------------------------- PLANT PLANT PLANT SCHERER UNITS HATCH VOGTLE WANSLEY NO. 1 & NO. 2 ------------ ------------ ------------ --------------- % MW(1) % MW(1) % MW(1) % MW(1) ----- ----- ----- ----- ----- ----- ----- ----- Oglethorpe........................................ 30.0 489 30.0 696 30.0 519 60.0(2) 982 GPC............................................... 50.1 817 45.7 1,060 53.5 926 8.4 137 MEAG.............................................. 17.7 288 22.7 527 15.1 261 30.2 494 Dalton............................................ 2.2 36 1.6 37 1.4 24 1.4 23 ----- ----- ----- ----- ----- ----- ----- ----- Total............................................. 100.0 1,630 100.0 2,320 100.0 1,730 100.0 1,636 ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- PUMPED STORAGE ------------------ ROCKY MOUNTAIN ------------------ TOTAL % MW(1) MW(1) -------- ----- ----- Oglethorpe........................................ 74.61(2) 633 3,319 GPC............................................... 25.39 215 3,155 MEAG.............................................. -- -- 1,570 Dalton............................................ -- -- 120 -------- ----- ----- Total............................................. 100.00 848 8,164 -------- ----- ----- -------- ----- -----
- ------------------------ (1) Based on nameplate ratings. (2) Oglethorpe leases its interest in Scherer Unit No. 2 and Rocky Mountain pursuant to long-term net leases. GEORGIA POWER COMPANY GPC is a wholly owned subsidiary of The Southern Company, a registered holding company under the Public Utility Holding Company Act, and is engaged primarily in the generation and purchase of electric energy and the transmission, distribution and sale of such energy within the State of Georgia at retail in over 600 communities (including Athens, Atlanta, Augusta, Columbus, Macon, Rome and Valdosta), as well as in rural areas, and at wholesale to Oglethorpe, MEAG and three municipalities. GPC is the largest supplier of electric energy in the State of Georgia. (See "BUSINESS OF OGLETHORPE-- Relationship with GPC.") GPC is subject to the informational requirements of the Securities Exchange Act of 1934, as amended, and, in accordance therewith, files reports and other information with the Commission. MUNICIPAL ELECTRIC AUTHORITY OF GEORGIA MEAG, an instrumentality of the State of Georgia, was created for the purpose of providing electric capacity and energy to those political subdivisions of the State of Georgia that owned and operated electric distribution systems at that time. MEAG, also known as MEAG Power, has entered into power sales contracts with each of 48 cities and one county in the State of Georgia. Such political subdivisions, located in 39 of the State's 159 counties, collectively serve approximately 270,000 electric customers. CITY OF DALTON, GEORGIA The City of Dalton, located in northwest Georgia, supplies electric capacity and energy to consumers in Dalton, and presently serves more than 10,000 residential, commercial and industrial customers. 62 THE PLANT AGREEMENTS HATCH, WANSLEY, VOGTLE AND SCHERER SUMMARY OF OWNERSHIP AND OPERATING AGREEMENTS. Oglethorpe's rights and obligations with respect to Plants Hatch, Wansley, Vogtle and Scherer are contained in a number of contracts between Oglethorpe and GPC and, in some instances, MEAG and Dalton. Oglethorpe is a party to four Purchase and Ownership Participation Agreements ("Ownership Agreements") under which it acquired from GPC a 30% undivided interest in each of Plants Hatch, Wansley and Vogtle, a 60% undivided interest in Scherer Units No. 1 and No. 2 and a 30% undivided interest in those facilities at Plant Scherer intended to be used in common by Scherer Units No. 1, No. 2, No. 3 and No. 4 (the "Scherer Common Facilities"). Oglethorpe has also entered into four Operating Agreements ("Operating Agreements") relating to the operation and maintenance of Plants Hatch, Wansley, Vogtle and Scherer, respectively. The Ownership Agreements and Operating Agreements relating to Plants Hatch and Wansley are two-party agreements between Oglethorpe and GPC. The Ownership Agreements and Operating Agreements relating to Plants Vogtle and Scherer are agreements among Oglethorpe, GPC, MEAG and Dalton. The parties to each Ownership Agreement and Operating Agreement are referred to as "Participants" with respect to each such agreement. SALE AND LEASEBACK TRANSACTIONS. In connection with the Sale and Leaseback Transactions, Oglethorpe assigned its rights with respect to Scherer Unit No. 2 under the Ownership Agreement and Operating Agreement for that Unit to the Lessors, who assigned such rights back to Oglethorpe for the term of the Leases. Oglethorpe retained all of its rights as a Participant under those agreements relating to Scherer Unit No. 1 and to the Scherer Common Facilities. In addition, GPC, MEAG and Dalton agreed that, during the term of the Leases, Oglethorpe would be treated as the owner of the undivided ownership interests of the Lessors in Scherer Unit No. 2 and would continue to possess all the rights and obligations of a Participant with respect to such interests, including the right to vote and give consents under both agreements. (In the following discussion, references to Participants "owning" a specified percentage of interests include Oglethorpe's rights as a deemed owner with respect to its leased interests in Scherer Unit No. 2.) The Ownership Agreement and Operating Agreement for Scherer Units No. 1 and No. 2 also were amended to allow separate voting with respect to each of such Units and the Scherer Common Facilities. The Sale and Leaseback Transactions agreements also provide that Oglethorpe will discharge all obligations relating to the undivided ownership interests of the Lessors in Scherer Unit No. 2 during the term of the Leases, and that Oglethorpe will continue as a Participant under the Ownership Agreement and Operating Agreement with respect to such interests in Scherer Unit No. 2. At the expiration of the Leases, the Lessors would become Participants under the Ownership Agreement and Operating Agreement with respect to their undivided ownership interests in Scherer Unit No. 2 if Oglethorpe does not purchase such interests. (See "INTRODUCTION--Sale and Leaseback Transactions" and Note 4 of Notes to Financial Statements.) GPC'S RESPONSIBILITIES AS AGENT. The Ownership Agreements appoint GPC as agent with sole authority and responsibility for, among other things, the planning, licensing, design, construction, renewal, addition, modification and disposal of Plants Hatch, Vogtle, Wansley and Scherer Units No. 1 and No. 2 and the Scherer Common Facilities. The Operating Agreements gives GPC, as agent, sole authority and responsibility for the management, control, maintenance and operation of the plant to which it relates and provides for the use of power and energy from such plant and the sharing of the costs thereof by the parties thereto in accordance with their respective interests therein. In performing its responsibilities under the Ownership and Operating Agreements, GPC is required to comply with prudent utility practices. GPC's liabilities with respect to its duties under the Ownership and Operating Agreements are limited by the terms thereof. OGLETHORPE'S PAYMENT OBLIGATIONS. Under the Ownership Agreements, Oglethorpe is obligated to pay a percentage of capital costs of the respective plants, as incurred, equal to the percentage interest 63 which it owns or leases at each plant. GPC has responsibility for budgeting capital expenditures subject to, in the case of Scherer Units No. 1 and No. 2, certain limited rights of the Participants to disapprove capital budgets proposed by GPC and to substitute alternative capital budgets and, in the case of Plants Hatch and Vogtle, the right of any co-owner to disapprove large discretionary capital improvements. As noted above, Oglethorpe continues to be liable for capital costs related to the undivided ownership interests of the Lessors in Scherer Unit No. 2 during the term of the Leases. Thereafter, unless Oglethorpe purchases such interests, the Lessors will be liable to the other Participants for all such costs other than costs associated with the disposal, retirement and salvaging of Scherer Unit No. 2. Under agreements relating to the Sale and Leaseback Transactions, the Equity Investors have agreed to reimburse Oglethorpe for a portion of the costs of disposal, retirement and salvaging determined pursuant to a formula in such agreements. REMEDIES FOR NON-PAYMENT. The Hatch and Wansley Ownership and Operating Agreements provide that, should Oglethorpe fail to make any payment when due, interest would be added to the overdue amount and Oglethorpe would indemnify GPC for any damages arising out of Oglethorpe's failure to make timely payment. In addition, GPC has the right, but not the obligation, to make any payment of principal or interest due and owing from Oglethorpe to the FFB or the RUS in respect of financing Oglethorpe's obligations under the respective Ownership Agreements and to be reimbursed, with interest, therefor by Oglethorpe. The Scherer and Vogtle Ownership and Operating Agreements provide that, should a Participant fail to make any payment when due, among other things, such non-paying Participant's rights to output of capacity and energy would be suspended, and, in certain circumstances, the other Participants would have the right to acquire all or a part of the non-paying Participant's ownership interest in Plant Vogtle or the unit or units and common facilities at Plant Vogtle. The other Participants also have the right under the Scherer Ownership Agreement, but not the obligation, to make any payment of principal or interest (or rent or any other payment) due the FFB or the RUS (or any lessor or lessor's lender) in respect of a financing of Oglethorpe's obligations under the respective Ownership Agreements and to be reimbursed, with interest, by Oglethorpe. The Scherer Ownership Agreement also provides that a transferee of the possession of an interest in Scherer Units No. 1 or No. 2 will have the right to cure a default by its transferor. GPC has agreed to notify the Lessors of any failure by Oglethorpe to pay its obligations under the Ownership Agreement. If a Lessor cures such default within five days after receiving such notice, the payment will be deemed made by the Lessor and no interest will be due from the Lessor, although Oglethorpe will remain liable. The other Participants have the option, if a Lessor continues so to cure such default by Oglethorpe for six months and does not declare a Lease Event of Default, to require the Lessor to offer to the other Participants a lease of the Lessor's undivided ownership interest. Where a Participant which owns an interest in Scherer Unit No. 1 or No. 2 defaults with respect to an obligation relating to the Scherer Common Facilities or facilities used in common by such Units, such default shall give the other Participants the same rights to deny the defaulting Participant its share of the output of capacity and energy from the Unit or Units which it owns. Oglethorpe has never failed to make any payments when due under the various Ownership Agreements. MANAGEMENT OF PLANTS. In 1990, the co-owners of Plants Hatch and Vogtle entered into the Nuclear Managing Board Agreement which amended the Plant Hatch and Plant Vogtle Ownership and Operating Agreements, primarily with respect to GPC's reporting requirements, but did not alter GPC's role as agent with respect to the nuclear plants. In 1993, the co-owners entered into the Amended and Restated Nuclear Managing Board Agreement (the "Amended and Restated NMBA") which provides for a managing board (the "Nuclear Managing Board") to coordinate the implementation and administration of the Plant Hatch and Plant Vogtle Ownership and Operating Agreements, provides for increased 64 rights for the co-owners regarding certain decisions and allows GPC to contract with a third party for the operation of the nuclear units. Upon approval in March 1997 by the Nuclear Regulatory Commission (the "NRC") of GPC's application to add SONOPCO to the operating license of each unit of Plants Hatch and Vogtle and designate SONOPCO as the operator, the Nuclear Operating Agreement between GPC and SONOPCO, which the co-owners had previously approved, became effective. In connection with the amendments to the Plant Scherer Ownership and Operating Agreements, the co-owners of Plant Scherer entered into the Plant Scherer Managing Board Agreement which provides for a managing board (the "Plant Scherer Managing Board") to coordinate the implementation and administration of the Plant Scherer Ownership and Operating Agreements and provides for increased rights for the co-owners regarding certain decisions, but does not alter GPC's role as agent with respect to Plant Scherer. ALIENATION AND ASSIGNMENT OF OWNERSHIP INTERESTS. The parties to the Hatch, Vogtle and Wansley Ownership Agreements have rights to transfer ownership interests subject to first refusal rights of the other parties, subject to certain conditions. Except with the consent of Participants owning at least an aggregate 95% interest in Scherer Units No. 1 and No. 2, no Participant in such Units may sell or otherwise transfer any portion of its interest in such Units or the Scherer Common Facilities without first offering such portion to the other Participants (on a pro rata basis). No such sale or transfer by GPC shall relieve it of its obligation to act as agent under the Scherer Ownership Agreement and Operating Agreement. GPC, MEAG and Dalton unanimously consented to the Sale and Leaseback Transactions to the extent required by the Scherer Ownership Agreement. They also consented to the exercise by Oglethorpe of any of its options to renew the Leases or to purchase the undivided ownership interests of the Lessors subject to any required approval of RUS. (See "DESCRIPTION OF THE LEASES--Purchase and Renewal Options.") In addition, in the event Oglethorpe does not exercise such options, GPC, MEAG and Dalton may do so on the same terms and conditions. The obligation of the Lessors to attempt to lease the undivided ownership interests prior to the exercise of any of their remedies under the respective Leases also is subject to this right of first refusal. (See "DESCRIPTION OF THE LEASE INDENTURES--Rights of Lessors to Cure and Purchase Lessor Notes" and "DESCRIPTION OF THE LEASES--Events of Default.") PLANT SCHERER COAL STOCKPILE AND INVENTORIES. Oglethorpe retained ownership of a 60% undivided interest in the fossil fuel (the "Coal Stockpile") and non-capital assets ("Inventories") at Plant Scherer following the Sale and Leaseback Transactions. GPC, MEAG, and Dalton agreed that Oglethorpe may sell to the Lessors upon the termination of the Leases, if Oglethorpe does not purchase their interests in Scherer Unit No. 2, a portion of the Coal Stockpile and Inventories allocable to such interests. The Lessor may offset against the purchase price any amounts which it has paid to cure a default by Oglethorpe under the Ownership Agreement or Operating Agreement. OGLETHORPE'S ENTITLEMENT TO OUTPUT. The Operating Agreements provide that Oglethorpe is entitled to a percentage of the net capacity and net energy output of each plant or unit equal to its percentage undivided interest owned or leased in such plant or unit. GPC, as agent, schedules and dispatches Plants Hatch and Vogtle. Pursuant to amendments to the plant agreements, Oglethorpe began separately dispatching its ownership share of Scherer Units No. 1 and No. 2 in 1993 and of Plant Wansley in 1997. (See "MEMBER REQUIREMENTS AND POWER SUPPLY RESOURCES--Generating Facilities--FUEL SUPPLY.") RESPONSIBILITY FOR OPERATING COSTS. Except as otherwise provided, each party is responsible for a percentage of Operating Costs (as defined in the Operating Agreements) and fuel costs of each plant or unit equal to the percentage of its undivided interest which is owned or leased in such plant or unit. For Scherer Units No. 1 and No. 2 and for Plant Wansley, each party will be responsible for its fuel costs and for variable Operating Costs in proportion to the net energy output for its ownership interest, while responsibility for fixed Operating Costs will continue to be equal to the percentage undivided ownership 65 interest which is owned or leased in such unit. GPC is required to furnish budgets for Operating Costs, fuel plans and scheduled maintenance plans subject to, in the case of Scherer Units No. 1 and No. 2, certain limited rights of the Participants to disapprove such budgets proposed by GPC and to substitute alternative budgets. The Ownership Agreements and Operating Agreements provide that, should a Participant fail to make any payment when due, among other things, such nonpaying Participant's rights to output of capacity and energy would be suspended. TERMS. The Operating Agreement for Plant Hatch will remain in effect with respect to Hatch Units No. 1 and No. 2 until 2009 and 2012, respectively. The Operating Agreement for Plant Vogtle will remain in effect with respect to each unit at Plant Vogtle until 2018. The Operating Agreement for Plant Wansley will remain in effect with respect to Wansley Units No. 1 and No. 2 until 2016 and 2018, respectively. The Operating Agreement for Scherer Units No. 1 and No. 2 will remain in effect with respect to Scherer Units No. 1 and No. 2 until 2022 and 2024, respectively. Upon termination of each Operating Agreement, following any extension agreed to by the parties, GPC will retain such powers as are necessary in connection with the disposition of the property of the applicable plant, and the rights and obligations of the parties shall continue with respect to actions and expenses taken or incurred in connection with such disposition. ROCKY MOUNTAIN SUMMARY OF ROCKY MOUNTAIN OWNERSHIP AND OPERATING AGREEMENTS. Oglethorpe's rights and obligations with respect to Rocky Mountain are contained in several contracts between Oglethorpe and GPC, the co-owners of Rocky Mountain (the "Co-Owners"). Pursuant to Rocky Mountain Pumped Storage Hydroelectric Ownership Participation Agreement, by and between Oglethorpe and GPC (the "Rocky Mountain Ownership Agreement"), Oglethorpe initially acquired a 3% undivided interest in Rocky Mountain which interest increased as Oglethorpe expended funds to complete construction of Rocky Mountain. The final ownership percentages for Rocky Mountain are Oglethorpe 74.61% and GPC 25.39%. In connection with this acquisition, Oglethorpe and GPC also entered into the Rocky Mountain Pumped Storage Hydroelectric Project Operating Agreement (the "Rocky Mountain Operating Agreement"). OGLETHORPE'S RESPONSIBILITIES AS AGENT. The Rocky Mountain Ownership Agreement appoints Oglethorpe as agent with sole authority and responsibility for, among other things, the planning, licensing, design, construction, operation, maintenance and disposal of Rocky Mountain. The Rocky Mountain Operating Agreement gives Oglethorpe, as agent, sole authority and responsibility for the management, control, maintenance and operation of Rocky Mountain. PAYMENT OBLIGATIONS. In general, each Co-Owner is responsible for payment of its respective ownership share of all Operating Costs and Pumping Energy Costs (as defined in the Rocky Mountain Operating Agreement) as well as costs incurred as the result of any separate schedule or independent dispatch. A Co-Owner's share of net available capacity and net energy is the same as its respective ownership interest under the Rocky Mountain Ownership Agreement. Oglethorpe and GPC have each elected to schedule separately their respective ownership interests. The Rocky Mountain Operating Agreement will terminate in 2035. REMEDIES FOR NON-PAYMENT. The Rocky Mountain Ownership and Operating Agreements provide that, should a Co-Owner fail to make any payment when due, among other things, such non-paying Co-Owner's rights to output of capacity and energy or to exercise any other right of a Co-Owner would be suspended until all amounts due, together with interests, had been paid. The capacity and energy of a non-paying Co-Owner may be purchased by a paying Co-Owner or sold to a third party. ALIENATION AND ASSIGNMENT OF OWNERSHIP INTERESTS. Except with the consent of Co-Owners owning at least an aggregate 95% interest in Rocky Mountain, no Co-Owner may sell or otherwise 66 transfer any portion of its interests in Rocky Mountain without first offering such portion to the other Co-Owner. No such sale or transfer by Oglethorpe shall relieve it of its obligations to act as agent under the Rocky Mountain Ownership and Operating Agreements. ROCKY MOUNTAIN LEASE TRANSACTIONS. In late 1996 and early 1997, Oglethorpe completed lease transactions for its 74.61% undivided ownership interest in Rocky Mountain. Under the terms of these transactions, Oglethorpe leased the facility to three institutional investors for the useful life of the facility, who in turn leased it back to Oglethorpe for a term of 30 years. Oglethorpe will continue to control and operate Rocky Mountain during the leaseback term, and it will exercise its fixed price purchase option at the end of the leaseback period so as to retain all other rights of ownership with respect to the plant if it is advantageous for Oglethorpe to exercise such option. 67 CERTAIN FACTORS AFFECTING THE ELECTRIC UTILITY INDUSTRY GENERAL The electric utility industry has been and in the future will continue to be affected by a number of factors which could have an impact on the financial condition of an electric utility such as Oglethorpe. These factors likely would affect individual utilities in different ways. Such factors include, among others: (i) the transition to increasing competition in the generation of electricity and the corresponding increase in competition from other suppliers of electricity, (ii) fluctuations in the market price for electricity, (iii) effects of compliance with rapidly changing environmental, licensing and regulatory requirements, (iv) regulatory and other changes in national and state energy policy, including open access transmission, (v) uncertain access to low cost capital for replacement of aging fixed assets, (vi) increases in operating costs, including the cost of fuel for the generation of electric energy, (vii) recovery of the cost of existing facilities, (viii) fluctuations in demand, including rates of load growth and changes in competitive market share, (ix) unbundling of services and corresponding corporate and functional restructurings by electric utility companies, and (x) the effects of conservation and energy management on the use of electric energy. These factors present an increasing challenge to companies in the electric utility industry, including Oglethorpe and the Members, to reduce costs, improve the management of resources and respond to the changing environment. (See "Environmental and Other Regulations" herein, "BUSINESS OF OGLETHORPE--Corporate Restructuring," "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS--Competition," "MEMBER REQUIREMENTS AND POWER SUPPLY RESOURCES--General" and "--Other Power Purchase and Sale Arrangements--OTHER POWER PURCHASES.") COMPETITION The electric utility industry in the United States is undergoing fundamental change and is becoming increasingly competitive. (See "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS--Competition.") ENVIRONMENTAL AND OTHER REGULATIONS GENERAL As is typical for electric utilities, Oglethorpe is subject to various federal, state and local air and water quality requirements which, among other things, regulate emissions of pollutants, such as particulate matter, sulfur oxides and nitrogen oxides into the air and discharges of other pollutants, including heat, into waters of the United States. Oglethorpe is also subject to federal, state and local waste disposal requirements that regulate the manner of transportation, storage and disposal of various types of waste. In general, environmental requirements are becoming increasingly stringent. New requirements may substantially increase the cost of electric service, by requiring changes in the design or operation of existing facilities or changes or delays in the location, design, construction or operation of new facilities. Failure to comply with these requirements could result in the imposition of civil and criminal penalties as well as the complete shutdown of individual generating units not in compliance. There is no assurance that Oglethorpe's units will always remain subject to the regulations currently in effect or will always be in compliance with future regulations. Compliance with environmental standards will continue to be reflected in Oglethorpe's capital expenditures and operating costs. Based on the current status of regulatory requirements, Oglethorpe does not anticipate that any capital expenditures or operating expenses associated with its compliance with current laws and regulations will have a material effect on its results of operations or its financial condition. Oglethorpe's direct capital costs to achieve compliance with environmental requirements are expected to be an aggregate of approximately $250,000 for 1997, 1998 and 1999. 68 CLEAN AIR ACT Environmental concerns of the public, the scientific community and Congress have resulted in the enactment of legislation that has had and will continue to have a significant impact on the electric utility industry. In particular, on November 15, 1990, legislation was enacted (the "1990 Amendments") that substantially revised the Clean Air Act. One of the principal purposes of the 1990 Amendments is to improve air quality by reducing the emissions of sulfur dioxide and nitrogen oxides from affected utility units, which include the coal-fired units that generate electric power at Plants Wansley and Scherer. These sulfur dioxide reductions are being imposed through a sulfur dioxide emission allowance trading program. An emission allowance, which gives the holder the authority to emit one ton of sulfur dioxide during a calendar year, is transferable and can be bought, sold or banked for use in the years following its issuance. Allowances are issued by the U.S. Environmental Protection Agency ("EPA") to impose limited reductions on certain affected units in Phase I (1995-1999) and more stringent reductions on all affected units in Phase II (after the year 1999). After 1999, aggregate emissions of sulfur dioxide from all units subject to this program will be capped at 8.9 million tons per year. Oglethorpe is now complying with this program by using lower-sulfur fuel at Plant Wansley. After 1999, Oglethorpe could use a variety of options for compliance at Plants Wansley and Scherer, including the use of emission allowances (issued, banked or purchased, if needed), fuel-switching or installation of flue gas desulfurization equipment. A number of recently finalized regulations, proposed regulations, petitions and on-going studies could result in more stringent controls on all emissions, including utility emissions. The most significant of these appear to be the following. First, because nitrogen oxides are considered to be a precursor to ozone, coupled with the fact that metropolitan Atlanta is classified as a "serious nonattainment area" with regard to the ozone National Ambient Air Quality Standards ("NAAQS"), EPA and the State of Georgia may impose further limits on emissions of nitrogen oxides at Plants Wansley and/or Scherer. Second, EPA has tightened the NAAQS for both ozone and particulate matter, an action that could affect any source that emits nitrogen oxides and sulfur dioxide, including utility units. Court challenges to both standards are now being made. Third, EPA has issued a proposed regulation for the regional control of ozone which, if implemented as proposed, could require substantial reductions in nitrogen oxides emissions from Plants Wansley and Scherer. Fourth, EPA has proposed a new regional haze program, an action that could affect any source that emits nitrogen oxides or sulfur dioxide and that may contribute to the degradation of visibility in mandatory federal Class I areas, including utility units. Fifth, various Northeastern states have filed petitions under the Clean Air Act asking EPA to set more stringent nitrogen oxides limits on sources that are significantly contributing to ozone nonattainment in their own states. Georgia was named in only one of these petitions. Sixth, although EPA has decided not to impose a new NAAQS for sulfur dioxide, that decision has been appealed, so it is still possible that a new short-term standard for sulfur dioxide could be established. Finally, the 1990 Amendments require that several studies be conducted regarding the health effects from power plant emissions of certain hazardous air pollutants. These studies will be used in making decisions on whether additional controls of utility emissions of such pollutants are necessary. Depending on the final outcome of these developments, and the implementation approach selected by EPA and the State of Georgia, significant capital expenditures and increased operation expenses could be incurred by Oglethorpe for the continued operation of Plants Wansley and/or Scherer. The power marketer arrangements generally do not provide for the recovery from the power marketers of increased environmental costs. (See "MEMBER REQUIREMENTS AND POWER SUPPLY RESOURCES--Power Marketer Arrangements.") Because of the uncertainty associated with these various developments, Oglethorpe cannot now predict the effect that any of these potential requirements may have on the operations of Plants Wansley and/or Scherer. 69 Compliance with the requirements of the Clean Air Act may also require increased capital or operating expenses on the part of GPC. Any increases in GPC's capital or operating expenses may cause an increase in the cost of power purchased from GPC. (See "MEMBER REQUIREMENTS AND POWER SUPPLY RESOURCES--Power Purchase and Sale Arrangements--POWER PURCHASES FROM GPC.") NUCLEAR REGULATION Oglethorpe is subject to the provisions of the Atomic Energy Act of 1954, as amended (the "Atomic Energy Act"), which vests jurisdiction in the NRC over the construction and operation of nuclear reactors, particularly with regard to certain public health, safety and antitrust matters. The National Environmental Policy Act has been construed to expand the jurisdiction of the NRC to consider the environmental impact of a facility licensed under the Atomic Energy Act. Plants Hatch and Vogtle are being operated under licenses issued by the NRC. All aspects of the operation and maintenance of nuclear power plants are regulated by the NRC. From time to time, new NRC regulations require changes in the design, operation and maintenance of existing nuclear reactors. Operating licenses issued by the NRC are subject to revocation, suspension or modification, and the operation of a nuclear unit may be suspended if the NRC determines that the public interest, health or safety so requires. The operating licenses issued for each unit of Plants Hatch and Vogtle expire in 2014 and 2018 and 2027 and 2029, respectively. Pursuant to the Nuclear Waste Policy Act of 1982, as amended, the Federal government has the regulatory responsibility for the final disposition of commercially produced high-level radioactive waste materials, including spent nuclear fuel. Such Act requires the owner of nuclear facilities to enter into disposal contracts with the Department of Energy ("DOE") for such material. These contracts require each such owner to pay a fee, which is currently one dollar per MWh for the net electricity generated and sold by each of its reactors. Oglethorpe is a party to agreements with DOE regarding Plants Hatch and Vogtle. Plants Hatch and Vogtle currently have on-site spent fuel storage capacity. Based on normal operations and retention of all spent fuel in the reactor, it is anticipated that existing on-site pool capacity would be sufficient until 2003 and 2008, respectively, to accept the number of spent fuel assemblies that would normally be removed from the reactor during a refueling. Contracts with the DOE have been executed to provide for the permanent disposal of spent nuclear fuel produced at Plants Hatch and Vogtle. The services to be provided by DOE are scheduled to begin in 1998; however, the DOE has stated that permanent nuclear waste storage facilities will not be available by that date, and it is uncertain when they will be available. If DOE does not begin receiving the spent fuel from Plant Hatch in 2003 or from Plant Vogtle in 2008, alternative methods of spent fuel storage will be needed. Activities for adding dry cast storage capacity at Plant Hatch by as early as 1999 are in progress. (See Note 1 of Notes to Financial Statements regarding nuclear fuel cost.) For information concerning nuclear insurance, see Note 8 of Notes to Financial Statements. For information regarding NRC's regulation relating to decommissioning of nuclear facilities and regarding DOE's assessments pursuant to the Energy Policy Act for decontamination and decommissioning of nuclear fuel enrichment facilities, see Note 1 of Notes to Financial Statements. OTHER ENVIRONMENTAL REGULATION In 1993, EPA issued a ruling confirming the non-hazardous status of coal ash. That ruling may apply, however, only to situations where those wastes are not co-managed, I.E., not mixed with other wastes. Pursuant to court order, EPA has until 1998 to classify co-managed utility wastes as either hazardous or non-hazardous. If the wastes are classified as hazardous, substantial additional costs for the management of such wastes might be required of Oglethorpe, although the full impact would depend on the subsequent development of requirements pertaining to these wastes. 70 Oglethorpe is subject to other environmental statutes including, but not limited to, the Clean Water Act, the Georgia Water Quality Control Act, the Georgia Hazardous Site Response Act, the Toxic Substances Control Act, the Resource Conservation & Recovery Act, the Endangered Species Act, the Comprehensive Environmental Response, Compensation and Liability Act, the Emergency Planning and Community Right to Know Act, and to the regulations implementing these statutes. Oglethorpe does not believe that compliance with these statutes and regulations will have a material impact on its financial condition or results of operations. Changes to any of these laws, some of which are being reviewed by Congress, could affect many areas of Oglethorpe's operations. Although compliance with new environmental legislation could have a significant impact on Oglethorpe, those impacts cannot be fully determined at this time and would depend in part on the final legislation and the development of implementing regulations. The scientific community, regulatory agencies and the electric utility industry are continuing to examine the issues of global warming and the possible health effects of electromagnetic fields. While no definitive scientific conclusions have been reached regarding these issues, it is possible that new laws or regulations pertaining to these matters could increase the capital and operating costs of electric utilities, including Oglethorpe or entities from which Oglethorpe purchases power. In addition, the potential for liability exists from lawsuits that might be brought alleging damages from electromagnetic fields. 71 MANAGEMENT BOARD OF DIRECTORS AND SENIOR OFFICERS As part of the Corporate Restructuring, Oglethorpe amended its Bylaws to provide for an eleven member board of directors consisting of six directors elected from the Members (the "Member Directors"), four independent outside directors (the "Outside Directors") and Oglethorpe's President and Chief Executive Officer. Each Member Director must be a director or general manager of an Oglethorpe Member. Five of the six Member Directors must be located in each of five geographical regions of the State of Georgia. The sixth Member Director is elected statewide. None of the four Outside Directors may be a director, officer or employee of Oglethorpe or any Member. All eleven directors are nominated by representatives from each Member whose weighted nomination is based on the number of retail customers served by each Member. After nomination, the directors are elected by a majority vote of each Member, voting on a one-Member, one-vote basis. The Bylaws provide for staggering the terms of the Member Directors and Outside Directors by dividing the number of directors into three groups. As noted below, some of the directors were elected to an initial term of one year, some two years and some three years. As these initial terms expire, directors will thereafter be elected for a term of three years. Oglethorpe is managed and operated under the direction of a President and Chief Executive Officer, who is appointed by the Board of Directors. The Senior Officers and Directors of Oglethorpe are as follows:
NAME AGE POSITION - ----------------------------------------- --- ---------------------------------------------------------------- J. Calvin Earwood........................ 55 Chairman of the Board of Directors, Member Director, Statewide T. D. Kilgore............................ 49 President and Chief Executive Officer and Director Clarence D. Mitchell..................... 44 Senior Vice President, Power Supply Thomas A. Smith.......................... 43 Senior Financial Officer Nelson G. Hawk........................... 47 Senior Vice President and Group Executive, Marketing Larry N. Chadwick........................ 56 Member Director, Northwest Region Benny W. Denham.......................... 67 Member Director, Southwest Region and Vice Chairman Sammy M. Jenkins......................... 71 Member Director, Southeast Region Mac F. Oglesby........................... 65 Member Director, Northeast Region and Treasurer J. Sam L. Rabun.......................... 66 Member Director, Central Region Ashley C. Brown.......................... 51 Outside Director Newton A. Campbell....................... 69 Outside Director Wm. Ronald Duffey........................ 56 Outside Director John S. Ranson........................... 68 Outside Director
J. Calvin Earwood is the Chairman of the Board and is the Member Director elected statewide. Mr. Earwood has served as an executive officer of Oglethorpe since March 1984 (from March 1984 to July 1986, as Vice President; from July 1986 to March 1989, as Vice Chairman of the Board; and since March 1989, as Chairman of the Board). Mr. Earwood has served on the Board of Directors of Oglethorpe since March 1981. His present term will expire in March 2000. He was previously a member of the Operations Review Committee. From 1965 through 1982, Mr. Earwood was a salesman and part owner of Builders Equipment Company. Since January 1983, he has been the owner and President of Sunbelt Fasteners, Inc., which sells specialty tools and fasteners to the commercial construction trade. He is also Vice Chairman of the Board of Directors of both Community Trust Financial Services and Community Trust Bank in Hiram, Georgia and a Director of GreyStone Power Corporation. 72 T. D. Kilgore is the President and Chief Executive Officer of Oglethorpe and has served as a senior officer of Oglethorpe since July 1984 (from July 1984 to July 1986, as Division Manager, Power Supply; July 1986 to July 1991, as Senior Vice President, Power Supply; and since July 1991, as President and Chief Executive Officer). He also currently serves as the President and Chief Executive Officer and as a director of both GTC and GSOC. Mr. Kilgore has over 20 years of experience in the electric utility industry, including five years in senior management positions with Arkansas Power & Light Co. and seven years as a civilian employee with the Department of the Army in positions ranging from reliability engineering to construction management. Mr. Kilgore has served on various industry committees including Electric Power Research Institute's Board of Directors and its Advanced Power Systems Division and Coal System Division Advisory Committees. He has also served on the Boards of Directors of the U.S. Committee for Energy Awareness, the Advanced Reactor Corporation, on the Edison Electric Institute's Power Plant Availability Improvement Task Force and the Nuclear Power Oversight Committee. Mr. Kilgore currently serves on the Board of Directors of the Georgia Chamber of Commerce and on the National Rural Electric Cooperative Association's Power and Generation Committee. Mr. Kilgore has a Bachelor of Science degree in Mechanical Engineering from the University of Alabama, where he has been recognized as a Distinguished Engineering Fellow, and a Masters of Engineering degree in industrial engineering from Texas A&M. Clarence D. Mitchell is the Senior Vice President, Power Supply and has served as a senior officer of Oglethorpe since January 1995. Prior to that time, Mr. Mitchell served as Assistant to the Senior Vice President for Generation from February 1994 to December 1994; Manager of Corporate Planning from September 1992 to January 1994; Manager of Construction from January 1992 to August 1992; Program Director of Technical Services (environmental, survey and mapping, land acquisition and R&D) from January 1989 to December 1991; and from April 1981 to December 1988 held various positions in the generation area, including supervisor, project engineer and generation engineer. Before coming to Oglethorpe, Mr. Mitchell spent four years as a field engineer with General Electric Company and worked various installation and maintenance projects related to coal, nuclear, gas and oil-fired generation. Mr. Mitchell has a Masters of Science degree in Management from Georgia State University, a Bachelor of Science degree in Mechanical Engineering from Georgia Institute of Technology and a Bachelor of Science degree in Interdisciplinary Science from Morehouse College. Mr. Mitchell is presently the Oglethorpe representative on both the Nuclear Managing Board and the Plant Scherer Managing Board. (For information about the Managing Boards see "CO-OWNERS OF THE PLANTS AND THE PLANT AGREEMENTS--The Plant Agreements.") Mr. Mitchell also serves as a Trustee of the Foundation of the Southern Polytechnic State University. Thomas A. Smith is the Senior Financial Officer and has served as a senior officer of Oglethorpe since August 1997. He previously served as Vice President, Finance of Oglethorpe from 1986 to 1990, Manager of Finance from 1983 to 1986 and Manager, Financial Services from 1979 to 1983. From 1990 to 1997, Mr. Smith was Senior Vice President of the Rural Utility Banking Group of CoBank, where he managed the bank's eastern division, rural utilities. Mr. Smith is a Certified Public Accountant, has a Master of Science degree in Industrial Management-Finance from the Georgia Institute of Technology, a Master of Science degree in Analytical Chemistry from Purdue University and a Bachelor of Arts degree in Mathematics and Chemistry from Catawba College. Nelson G. Hawk is the Senior Vice President and Group Executive, Marketing and has served as a senior officer of Oglethorpe since February 1994, responsible for Market Planning, Economic Development, Commercial/Industrial Marketing and Pricing, Commercial/Industrial Services, and Residential Marketing. Prior to coming to Oglethorpe, Mr. Hawk spent almost 24 years with the Florida Power & Light Company and related subsidiaries, serving as Director of Regulatory Affairs from October 1993 to January 1994, Director of Market Planning from July 1991 to September 1993, and as Director of Strategic Business from April 1989 to June 1991. Mr. Hawk has a wide range of utility management experience in energy management, finance, strategic planning, marketing, system planning, quality 73 assurance, and distribution engineering. Mr. Hawk is a board member of the Georgia Electrification Council, Inc. and the Georgia Partnership for Excellence in Education, and served on the board of directors as well as President of the National Association of Energy Services Companies (NAESCO), a national trade association, during the late 1980s. Mr. Hawk is a registered Professional Engineer in Florida and has a Bachelor of Science degree in Electrical Engineering from the Georgia Institute of Technology and a Master of Business Administration degree from Florida International University. Larry N. Chadwick is the Member Director from the Northwest Region. He has been the owner of Chadwick's Hardware in Woodstock, Georgia since 1983. He has served on the Board of Directors of Oglethorpe since July 1989. His present term will expire in March 1999. Mr. Chadwick is an engineer, with experience in the design of hydrogen gas plants. He is Chairman of the Board of Cobb EMC. Benny W. Denham is the Vice Chairman of the Board and is the Member Director from the Southwest Region. He has served on the Board of Directors of Oglethorpe since December 1988. His present term will expire in March 1998. He was previously the Vice-Chairman of the Executive Committee and a member of the Power Planning and Technical Advisory Committee. Mr. Denham has been co-owner of Denham Farms in Turner County, Georgia since 1980. He served on the Turner County Commission from 1980 to 1990, and was Chairman for six of those years. Mr. Denham is a Director of Community National Bank in Ashburn, Georgia and a Director of Irwin EMC. Sammy M. Jenkins is the Member Director from the Southeast Region. He has been a self-employed farmer for over 20 years. In addition, from 1973 to 1995, he was President of Jenkins Ford Tractor Co., Inc., a seller of farm machinery. He has served on the Board of Directors of Oglethorpe since March 1988. His present term will expire in March 1999. He was Vice Chairman of the Board of Oglethorpe from March 1989 to March 1990. Mac F. Oglesby is the Member Director from the Northeast Region and the Treasurer of Oglethorpe. He served as Assistant Secretary-Treasurer of the Board of Directors of Hart EMC from July 1986 through December 1987, when he was appointed President of the Board. He has served on the Board of Directors of Oglethorpe since February 1987. His present term will expire in March 2000. Mr. Oglesby was a U.S. Postal Service Rural Carrier for 30 years until he retired in 1991. J. Sam L. Rabun is the Member Director from the Central Region. He has been the owner and operator of a farm in Jefferson County, Georgia since 1979. He is also a 50% owner of R&R Livestock Farms, Inc. He has served on the Board of Directors of Oglethorpe since March 1993. His present term will expire in March 1998. Mr. Rabun served as the President of the Board of Jefferson EMC from 1993 to 1996, was employed as General Manager from 1974 to 1979 and as Office Manager and Accountant from 1970 to 1974. Ashley C. Brown is an Outside Director. He has served on the Board of Directors of Oglethorpe since March 1997. His present term will expire in March 1999. He has been Executive Director of the Harvard Electricity Policy Group at Harvard University's John F. Kennedy School of Government since 1993. In addition, he is a consultant to the law firm of LeBouef, Lamb, Greene and MacRae. From April 1983 through April 1993, Mr. Brown served as Commissioner of the Public Utilities Commission of Ohio. Prior to his appointment to the Ohio Commission, he was Coordinator and Counsel of the Montgomery County, Ohio, Fair Housing Center. From 1979 to 1981, he was Managing Attorney for the Legal Aid Society of Dayton (Ohio), Inc. From 1977 to 1979, he was Legal Advisor of the Miami Valley Regional Planning Commission in Dayton, Ohio. In addition, Mr. Brown has extensive teaching experience in public schools and universities and has published widely in the field of utility regulation. Mr. Brown has a law degree from the University of Dayton School of Law, a Master of Arts degree from the University of Cincinnati, and a Bachelor of Science degree from Bowling Green State University. Newton A. Campbell is an Outside Director. He has served on the Board of Directors of Oglethorpe since March 1997. His term will expire in March 2000. He retired in January 1994 as Chairman and Chief 74 Executive Officer of Burns & McDonnell Engineering Company after serving 41 years with the firm. Mr. Campbell directed the overall operations of Burns & McDonnell from 1982 until his retirement. From 1976 through 1982, he served as Vice President and General Manager of the Power Division, and was responsible for directing the company's work in the planning and design of fossil fueled power generation facilities, high voltage transmission systems, and other power related facilities. Mr. Campbell has been involved in feasibility, planning and financial studies for numerous new and existing public and privately owned electric utilities during various phases of their organization and development. He also has considerable experience in conceptual studies, design, and project management for large electric utility generation, transmission, substation and distribution facilities throughout the United States. Mr. Campbell received a Master of Business Administration degree from the University of Missouri at Kansas City with a concentration in finance. He also holds a Bachelor of Science degree in Electrical Engineering from the University of Illinois. Mr. Campbell is a Director of UMB Financial Corporation in Kansas City, Missouri. Wm. Ronald Duffey is an Outside Director. He has served on the Board of Directors of Oglethorpe since March 1997. His term will expire in March 1998. Mr. Duffey is the President and Chief Executive Officer and a director of Peachtree National Bank in Peachtree City, Georgia, a wholly owned subsidiary of Synovus Financial Corp. Prior to his employment in 1985 with Peachtree National Bank, Mr. Duffey served as Executive Vice President and Member of the Board of Directors for First National Bank in Newnan, Georgia. He holds a Bachelor of Business Administration from Georgia State College with a concentration in finance and has completed banking courses at the Banking School of the South, the American Bankers Association School of Bank Investments, and The Stonier Graduate School of Banking, Rutgers University. John S. Ranson is an Outside Director. He has served on the Board of Directors of Oglethorpe since March 1997. His term will expire in March 1999. He has been the President of Ranson Municipal Consultants, L.L.C. in Wichita, Kansas since 1994. From 1990 to 1994, Mr. Ranson was Chairman of Ranson Capital Corp. an investment banking firm. Mr. Ranson has approximately 40 years experience in the investment banking business. His public finance clients have included the Kansas Local Utility Improvement Authority, the Kansas Municipal Energy Agency, the Kansas Municipal Gas Agency, and the Kansas City (Kansas) Board of Public Utilities. Mr. Ranson received his Bachelor of Science in Business Administration from the University of Kansas (Lawrence, Kansas) and attended the Navy Supply Corps School in Bayonne, New Jersey. 75 SUMMARY COMPENSATION TABLE The following table sets forth, for Oglethorpe's President and Chief Executive Officer and the other five most highly compensated senior executives, all compensation paid or accrued for services rendered in all capacities during the years ended December 31, 1996, 1995 and 1994. Amounts included in the table under "Bonus" represent payments based on an incentive compensation policy. All amounts paid under this policy are fully at risk each year and are earned based upon the achievement of corporate goals and each individual's contribution to achieving those goals. In conjunction with this policy, base salaries are targeted below the market valuations for similar positions and remain fairly stable unless the job content changes.
ANNUAL COMPENSATION NAME AND ---------------------- ALL OTHER PRINCIPAL POSITION YEAR SALARY BONUS (1) COMPENSATION - ----------------------------------------- --------- --------- ----------- -------------- T. D. Kilgore............................ 1996 $ 265,627 $ 0 $ 6,246(2) President and Chief Executive Officer 1995 235,000 10,000 6,012 1994 224,997 0 6,758 W. Clayton Robbins (3)................... 1996 144,460 17,112 5,425(2) Sr. Vice President, Support Services 1995 142,310 10,631 4,716 1994 140,366 11,946 4,986 Nelson G. Hawk........................... 1996 142,535 16,530 5,246(2) Sr. Vice President, Marketing 1995 140,000 10,899 4,589 1994 116,005 9,620 32,821 Clarence D. Mitchell..................... 1996 133,369 17,112 3,887(2) Sr. Vice President, Power Supply 1995 110,058 7,776 4,251 1994 91,705 5,765 3,354 Wiley H. Sanders (4)..................... 1996 123,750 9,340 82,715(2)(4) Vice President, Transmission 1995 135,000 9,295 5,703 1994 119,785 12,737 25,178 Eugen Heckl (5).......................... 1996 99,480 16,734 117,245(2)(5) Sr. Vice President, Finance 1995 142,114 13,174 7,651 1994 142,114 13,919 7,600
- ------------------------ (1) All executives listed above, except Mr. Kilgore, participate in an incentive compensation program. Mr. Kilgore's compensation is governed solely by the Board of Directors. (2) Includes contributions made in 1996 by Oglethorpe under the 401(k) Retirement Savings Plan on behalf of Messrs. Kilgore, Robbins, Hawk, Mitchell, Sanders and Heckl of $4,750, $4,072, $4,446, $2,969, $3,654 and $2,958, respectively; and insurance premiums paid on term life insurance on behalf of Messrs. Kilgore, Robbins, Hawk, Mitchell, Sanders and Heckl of $1,496, $1,353, $800, $918, $2,831 and $2,200, respectively. (3) In conjunction with the Corporate Restructuring, Mr. Robbins ceased to be a senior executive of Oglethorpe as of January 31, 1997. Mr. Robbins now serves as Vice President of Intellisource's Southeast operations, including support services to Oglethorpe, GTC and GSOC. (See "BUSINESS OF OGLETHORPE--Relationship with Intellisource" for further discussion.) (4) Mr. Sanders retired from Oglethorpe as of November 30, 1996. Mr. Sanders' 1996 compensation includes accrued severance benefits of $59,114, payment of accrued vacation and sick benefits of $4,998 and relocation costs of $12,118. (5) Mr. Heckl elected to retire from Oglethorpe under the provisions of an early retirement program as of September 11, 1996. Mr. Heckl's 1996 compensation includes severance benefits of $65,258, retirement-related contributions to his deferred compensation account of $34,938 and payment of accrued vacation and sick benefits of $11,891. 76 PENSION PLAN TABLE
YEARS OF CREDITED SERVICE ----------------------------------------------------- AVERAGE COMPENSATION 5 10 15 20 25 - -------------------------------------------- --------- --------- --------- --------- --------- $ 50,000.................................... $ 4,228 $ 8,456 $ 12,684 $ 16,911 $ 21,139 75,000.................................... 6,728 13,456 20,184 26,911 33,639 100,000.................................... 9,228 18,456 27,684 36,911 46,139 125,000.................................... 11,728 23,456 35,184 46,911 58,639 150,000.................................... 14,228 28,456 42,684 56,911 71,139 175,000.................................... 16,728 33,456 50,184 66,911 83,639 200,000.................................... 19,228 38,456 57,684 76,911 96,139 225,000.................................... 21,728 43,456 65,184 86,911 108,639 250,000.................................... 24,228 48,456 72,684 96,911 121,139 275,000.................................... 26,728 53,456 80,184 106,911 133,639
The preceding table shows estimated annual straight life annuity benefits payable upon retirement to persons in specified compensation and years-of-service classifications assuming such persons had attained age 65 and retired during 1996. For purposes of calculating pension benefits, compensation is defined as total salary and bonus, as shown in the above Summary Compensation Table. Because covered compensation changes each year, the estimated pension benefits for the classifications above will also change in future years. The above pension benefits are not subject to any deduction for Social Security or other offset amounts. As of December 31, 1996, the years of credited service under the Pension Plan for the individuals listed in the Summary Compensation Table are as follows:
YEARS OF NAME CREDITED SERVICE - ----------------------------------------------------------------- --------------------- Mr. Kilgore...................................................... 11 Mr. Robbins...................................................... 10 Mr. Hawk......................................................... 1 Mr. Mitchell..................................................... 15 Mr. Sanders...................................................... 1 Mr. Heckl........................................................ 20
COMPENSATION OF DIRECTORS Under a policy adopted by the Board of Directors in March 1997, Oglethorpe pays its Outside Directors a fee of $5,500 per Board meeting for four meetings in a year; a fee of $1,000 per Board meeting will be paid for the remaining other Board meetings in a year. Outside Directors are also paid $1,000 per day for attending committee meetings, annual meetings of the Members or other official meetings of Oglethorpe. Member Directors are paid a fee of $1,000 per Board meeting and $300 per day for attending committee meetings, annual meetings of the Members or other official business of Oglethorpe. In addition, Oglethorpe reimburses all Directors for out-of-pocket expenses incurred in attending a meeting. All Directors are paid $50 per day when participating in meetings by conference call. The Chairman of the Board is paid an additional 20% of his Director's fee per Board meeting for time involved in preparing for the meetings. 77 In 1996, Oglethorpe paid its Directors a fee of $200 for meetings attended or $50 for participating in meetings by conference call, and reimbursed Directors for out-of-pocket expenses incurred in attending a meeting. The Chairman of the Board was also paid at least one day's per diem of $200 each month for time involved in carrying out his official duties in addition to the regularly scheduled Board meetings. EMPLOYMENT CONTRACTS Effective January 1, 1996, Oglethorpe entered into an employment agreement with its President and Chief Executive Officer. The agreement extends to December 31, 1999. Pursuant to the agreement, Mr. Kilgore's base salary and bonus will be determined by Oglethorpe's Board, with annual base salary being at least $240,000. Under the agreement, if Oglethorpe terminates Mr. Kilgore's employment without cause, he will be entitled to a severance payment equal to all salary and benefits he would have received between the date of termination to the end of the agreement. If Oglethorpe terminates Mr. Kilgore's employment without cause or meaningfully reduces his stated duties or prerogatives within three months prior to or 24 months subsequent to a Change in Control of Oglethorpe (as defined in the agreement), such severance payment will not be less than two times Mr. Kilgore's annual base salary on the date of termination or the date on which his duties or prerogatives are reduced, whichever is applicable. If such reduction in duties occurs, Mr. Kilgore will be entitled to severance regardless whether he is terminated or resigns. If Mr. Kilgore voluntarily separates himself from Oglethorpe, he will be prohibited from working with a competitor of Oglethorpe for a period of one year thereafter and will be paid an amount equal to his then current salary, bonus and benefits for such period. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION E. J. Martin, Jr., J. Calvin Earwood, John B. Floyd, Jr., and J. G. McCalmon served as members of the Oglethorpe Human Resources Management Committee which functioned as Oglethorpe's compensation committee for 1996. Mr. Earwood has served as an executive officer of Oglethorpe since 1984 and has served as the Chairman of the Board since 1989. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS T. D. Kilgore is the President and Chief Executive Officer and a Director of Oglethorpe, GTC and GSOC. Oglethorpe plans to make payments to GSOC for system operations services in 1997 of approximately $5.4 million, which is 56% of GSOC's budgeted revenues. (See "BUSINESS OF OGLETHORPE--Corporate Restructuring.") 78 THE EXCHANGE OFFER PURPOSE AND EFFECT OF THE EXCHANGE OFFER The Private Facility Bonds were sold by OPC Scherer 1997 Funding Corporation on December 17, 1997, and were subsequently resold to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"). In connection with the offering of Private Facility Bonds, Oglethorpe and OPC Scherer 1997 Funding Corporation entered into the Registration Rights Agreement, which requires, among other things, that on or before June 15, 1998, Oglethorpe (i) will file with the Commission a registration statement under the Securities Act with respect to an issue of new bonds of OPC Scherer 1997 Funding Corporation identical in all material respects to the Private Facility Bonds, (ii) use its best efforts to cause such registration statement to become effective under the Securities Act and (iii) upon the effectiveness of that registration statement, offer to the holders of the Private Facility Bonds the opportunity to exchange their Private Facility Bonds for a like principal amount of such new bonds, which would be issued without a restrictive legend and may be reoffered and resold by the holder without restrictions or limitations under the Securities Act (other than any such holder that is an "affiliate" of Oglethorpe within the meaning of Rule 405 under the Securities Act). A copy of the Registration Rights Agreement has been filed as an exhibit to the Registration Statement of which this Prospectus is a part. The term "holder" with respect to the Exchange Offer means any person in whose name the Private Facility Bonds are registered on the books of the Bond Registrar (as defined in the Collateral Trust Indenture) or any other person who has obtained a properly completed bond power from the registered holder. Because the Exchange Offer is for any and all Private Facility Bonds, the number of Private Facility Bonds tendered and exchanged in the Exchange Offer will reduce the principal amount of Private Facility Bonds outstanding. Following the consummation of the Exchange Offer, holders of the Private Facility Bonds who did not tender their Private Facility Bonds will not have any further registration rights under the Registration Rights Agreement, and such Private Facility Bonds will continue to be subject to certain restrictions on transfer. Because Oglethorpe anticipates that most holders of Private Facility Bonds will elect to exchange such Private Facility Bonds for Exchange Facility Bonds due to the absence of restrictions on the resale of Exchange Facility Bonds under the Securities Act, Oglethorpe anticipates that the liquidity of the market for any Private Facility Bonds remaining after the consummation of the Exchange Offer may be substantially limited. TERMS OF THE EXCHANGE OFFER Oglethorpe, and OPC Scherer 1997 Funding Corporation acting at the direction of Oglethorpe, will conduct the Exchange Offer. Upon the terms and subject to the conditions set forth in this Prospectus and in the accompanying Letter of Transmittal (the "Letter of Transmittal"), OPC Scherer 1997 Funding Corporation will accept any and all Private Facility Bonds validly tendered and not withdrawn prior to 5:00 p.m. New York City time, on the Expiration Date described herein. OPC Scherer 1997 Funding Corporation will issue $1,000 principal amount of Exchange Facility Bonds in exchange for each $1,000 principal amount of outstanding Private Facility Bonds accepted in the Exchange Offer. Holders may tender some or all of their Private Facility Bonds pursuant to the Exchange Offer. However, Private Facility Bonds may be tendered only in integral multiples of $1,000. Holders of the Private Facility Bonds do not have any approval or dissenters' rights in connection with the Exchange Offer. Oglethorpe intends to conduct the Exchange Offer in accordance with the provisions of the Registration Rights Agreement and the applicable requirements of the Securities Act and the rules and regulations of the Commission thereunder. The form and terms of the Exchange Facility Bonds will be the same as the form and terms of the Private Facility Bonds except that (i) the Exchange Facility Bonds will be registered under the Securities Act and hence will not bear legends restricting the transfer thereof, (ii) the holders of the Exchange 79 Facility Bonds will not be entitled to registration rights under the Registration Rights Agreement, which rights are being fulfilled by and will terminate upon consummation of the Exchange Offer, and (iii) the Exchange Facility Bonds will not contain any provision for additional interest in the event of certain defaults in obligations of Oglethorpe relating to the Exchange Offer. The Exchange Facility Bonds will evidence the same debt as the Private Facility Bonds and will be entitled to the benefits of the Collateral Trust Indenture. The Exchange Facility Bonds and any Private Facility Bonds not exchanged in the Exchange Offer will be deemed a single series under the Collateral Trust Indenture. OPC Scherer 1997 Funding Corporation shall be deemed to have accepted validly tendered Private Facility Bonds when, as and if OPC Scherer 1997 Funding Corporation has given oral or written notice thereof to the Exchange Agent. The Exchange Agent will act as agent for the tendering holders for the purpose of receiving the Exchange Facility Bonds from OPC Scherer 1997 Funding Corporation. Holders who tender Private Facility Bonds in the Exchange Offer will not be required to pay brokerage commissions or fees or, subject to the instructions in the Letter of Transmittal, transfer taxes with respect to the exchange of Private Facility Bonds pursuant to the Exchange Offer. The Lessors will pay all charges and expenses, other than transfer taxes in certain circumstances, in connection with the Exchange Offer. See "--Fees and Expenses." EXPIRATION DATE; EXTENSIONS; AMENDMENTS The term "Expiration Date" shall mean 5:00 p.m., New York City time, on , 1998, unless Oglethorpe, in its sole discretion, extends the Exchange Offer, in which case the term "Expiration Date" shall mean the latest date and time to which the Exchange Offer is extended. To extend the Exchange Offer, Oglethorpe will notify the Exchange Agent of any extension by oral or written notice, followed by a public announcement thereof no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled expiration date. Oglethorpe reserves the right, in its reasonable judgment, (a)(i) to instruct OPC Scherer 1997 Funding Corporation to delay accepting any Private Facility Bonds, (ii) to extend the Exchange Offer or (iii) to terminate the Exchange Offer, if any of the conditions set forth below under "--Conditions" shall not have been satisfied, by giving oral or written notice of such delay, extension or termination to the Exchange Agent or (b) to amend the terms of the Exchange Offer in any manner. Any such delay in acceptance, extension, termination or amendment will be followed as promptly as practicable by a public announcement thereof. If the Exchange Offer is amended in a manner determined by Oglethorpe to constitute a material change, Oglethorpe will promptly disclose such amendment by means of a prospectus supplement that will be distributed to the registered holders, and, depending upon the significance of the amendment and the manner of disclosure to the registered holders, Oglethorpe will extend the Exchange Offer for a period of five to ten business days if the Exchange Offer would otherwise expire during such five to ten business-day period. Without limiting the manner in which Oglethorpe may choose to make public announcement of any delay, extension, amendment or termination of the Exchange Offer, Oglethorpe shall have no obligation to publish, advertise or otherwise communicate any such public announcement, other than by making a timely release to an appropriate news agency. INTEREST ON EXCHANGE FACILITY BONDS AND THE PRIVATE FACILITY BONDS The Exchange Facility Bonds will bear interest from the later of the date of issuance of the Private Facility Bonds and the most recent interest payment date to which interest on such Private Facility Bonds has been paid. Accordingly, holders of Private Facility Bonds that are accepted for exchange will not receive interest on the Private Facility Bonds that is accrued but unpaid at the time of tender, but such interest will be payable on the Exchange Facility Bonds on the first interest payment date after the 80 Expiration Date. Interest on the Exchange Facility Bonds will be payable semiannually on each June 30 and December 31, commencing on June 30, 1998. PROCEDURES FOR TENDERING Only a holder of Private Facility Bonds may tender such Private Facility Bonds in the Exchange Offer. To tender in the Exchange Offer, a holder must (i) complete, sign and date the Letter of Transmittal, or a facsimile thereof, have the signatures thereon guaranteed if required by the Letter of Transmittal and mail or otherwise deliver such Letter of Transmittal or such facsimile, together with any other required documents, to the Exchange Agent so as to be received by the Exchange Agent at the address set forth below prior to 5:00 p.m., New York City time, on the Expiration Date and (ii) deliver the Private Facility Bonds to OPC Scherer 1997 Funding Corporation by book-entry transfer in accordance with the procedures described below. Confirmation of such book-entry transfer must be received by the Exchange Agent prior to the Expiration Date. The tender by a holder and the acceptance thereof by OPC Scherer 1997 Funding Corporation will constitute an agreement between such holder and OPC Scherer 1997 Funding Corporation in accordance with the terms and subject to the conditions set forth herein and in the Letter of Transmittal. THE METHOD OF DELIVERY OF THE LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. NO LETTER OF TRANSMITTAL SHOULD BE SENT TO OGLETHORPE OR OPC SCHERER 1997 FUNDING CORPORATION. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES OR NOMINEES TO EFFECT THE ABOVE TRANSACTIONS FOR SUCH HOLDERS. Any beneficial owners whose Private Facility Bonds are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and who wishes to tender should contact the registered holder promptly and instruct such registered holder to tender on such beneficial owner's behalf. Signatures on the Letter of Transmittal or a notice of withdrawal, as the case may be, must be guaranteed by an Eligible Institution described herein unless the Private Facility Bonds tendered pursuant thereto are tendered (i) by a registered holder who has not completed the box entitled "Special Registration Instructions" or "Special Delivery Instructions" on the Letter of Transmittal or (ii) for the account of an Eligible Institution. In the event that signatures on a Letter of Transmittal or a notice of withdrawal, as the case may be, are required to be guaranteed, such guarantee must be by a member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc., a commercial bank or trust company having an office or correspondent in the United States or an "eligible guarantor institution" within the meaning of Rule 17Ad-15 under the Exchange Act (each an "Eligible Institution"). If the Letter of Transmittal is signed by a person other than the registered holder of any Private Facility Bonds listed therein, such holder must deliver to the Exchange Agent a properly completed bond power, signed by such registered holder as such holder's name is registered on the books of the Bond Registrar with the signature thereon guaranteed by an Eligible Institution. If the Letter of Transmittal or bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and unless waived by Oglethorpe, evidence satisfactory to Oglethorpe of their authority to so act must be submitted with the Letter of Transmittal. 81 Oglethorpe understands that the Exchange Agent will make a request promptly after the date of this Prospectus to establish accounts with respect to the Private Facility Bonds at The Depository Trust Company ("DTC") for the purpose of facilitating the Exchange Offer, and subject to the establishment thereof, any financial institution that is a participant in DTC's system may make book-entry delivery of the Private Facility Bonds by causing DTC to transfer such Private Facility Bonds into the Exchange Agent's account with respect to the Private Facility Bonds in accordance with DTC's procedures for such transfer period. Although delivery of the Private Facility Bonds may be effected through book-entry transfer into the Exchange Agent's account at DTC, an appropriate Letter of Transmittal properly completed and duly executed with any required signature guarantee and all other required documents must in each case be transmitted to and received or confirmed by the Exchange Agent at its address set forth below on or prior to the Expiration Date, or, if the guaranteed delivery procedures described below are complied with, within the time period provided under such procedures. DELIVERY OF DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT. All questions as to the validity, form, eligibility (including time of receipt), acceptance of tendered Private Facility Bonds and withdrawal of tendered Private Facility Bonds will be determined by Oglethorpe in its sole discretion, which determination will be final and binding. Oglethorpe reserves the absolute right to instruct OPC Scherer 1997 Funding Corporation to reject any and all Private Facility Bonds not properly tendered or any Private Facility Bonds OPC Scherer 1997 Funding Corporation's acceptance of which would, in the opinion of counsel for Oglethorpe, be unlawful. Oglethorpe also reserves the right to waive any defects, irregularities or conditions of tender as to particular Private Facility Bonds. Oglethorpe's interpretation of the terms and conditions of the Exchange Offer (including the instructions in the Letter of Transmittal) will be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of Private Facility Bonds must be cured within such time as Oglethorpe shall determine. Although Oglethorpe intends to notify holders of defects or irregularities with respect to tenders of Private Facility Bonds, none of Oglethorpe, OPC Scherer 1997 Funding Corporation, the Exchange Agent or any other person shall incur any liability for failure to give such notification. Tenders of Private Facility Bonds will not be deemed to have been made until such defects or irregularities have been cured or waived. Any Private Facility Bonds received by the Exchange Agent that are not properly tendered and as to which the defects or irregularities have not been cured or waived will be returned by the Exchange Agent to the tendering holders, unless otherwise provided in the Letter of Transmittal, as soon as practicable following the Expiration Date. GUARANTEED DELIVERY PROCEDURES Holders of Private Facility Bonds who wish to tender their Private Facility Bonds and (i) who cannot deliver the Letter of Transmittal or any other documents required by the Letter of Transmittal to the Exchange Agent or (ii) who cannot comply with the procedures for book-entry transfer of their Private Facility Bonds, prior to the Expiration Date, may effect a tender if: (a) the tender is made through an Eligible Institution; (b) prior to the Expiration Date, the Exchange Agent receives from such Eligible Institution a properly completed and duly executed Notice of Guaranteed Delivery (by facsimile transmission, mail or hand delivery) setting forth the name and address of the holder, the principal amount of Private Facility Bonds tendered, stating that the tender is being made thereby and guaranteeing that, within three New York Stock Exchange trading days after the Expiration Date, the Letter of Transmittal (or facsimile thereof), together with a confirmation of book-entry transfer of such Private Facility Bonds into the Exchange Agent's account at DTC and any other documents required by the Letter of Transmittal, will be deposited by the Eligible Institution with the Exchange Agent; and (c) such properly completed and executed Letter of Transmittal (or facsimile thereof), as well as a confirmation of book-entry transfer of such Private Facility Bonds into the Exchange Agent's 82 account at DTC and all other documents required by the Letter of Transmittal, are received by the Exchange Agent within three New York Stock Exchange trading days after the Expiration Date. Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be sent to holders who wish to tender their Private Facility Bonds according to the guaranteed delivery procedures set forth above. WITHDRAWALS OF TENDERS Except as otherwise provided herein, tenders of Private Facility Bonds may be withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration Date. To withdraw a tender of Private Facility Bonds in the Exchange Offer, a written or facsimile transmission notice of withdrawal must be received by the Exchange Agent at is address set forth herein prior to 5:00 p.m., New York City time, on the Expiration Date. Any such notice of withdrawal must (i) specify the name of the person having deposited the Private Facility Bonds to be withdrawn (the "Depositor"), (ii) identify the Private Facility Bonds to be withdrawn (including the name and number of the account at DTC to be credited), (iii) be signed by the holder in the same manner as the original signature on the Letter of Transmittal by which such Private Facility Bonds were tendered (including any required signature guarantees) or be accompanied by documents of transfer sufficient to have the Bond Registrar register the transfer of such Private Facility Bonds into the name of the person withdrawing the tender and (iv) specify the name in which any such Private Facility Bonds are to be registered, if different from that of the Depositor. All questions as to the validity, form and eligibility (including time or receipt) of such notices will be determined by Oglethorpe, whose determination shall be final and binding on all parties. Any Private Facility Bonds so withdrawn will be deemed not have been validly tendered for purposes of the Exchange Offer and no Exchange Facility Bonds will be issued with respect thereto unless the Private Facility Bonds so withdrawn are validly retendered. Any Private Facility Bonds which have been tendered but which are not accepted for exchange will be returned to the holder thereof without cost to such holder as soon as practicable after withdrawal, rejection of tender or termination of the Exchange Offer. Properly withdrawn Private Facility Bonds may be retendered by following one of the procedures described above under "--Procedures for Tendering" at any time prior to the Expiration Date. CONDITIONS Notwithstanding any other term of the Exchange Offer, OPC Scherer 1997 Funding Corporation shall not be required to accept for exchange, or to exchange Exchange Facility Bonds for any Private Facility Bonds, and Oglethorpe may terminate or amend the Exchange Offer as provided herein before the acceptance of such Private Facility Bonds, if: (a) any law, statute, rule, regulation or interpretation by the staff of the Commission is proposed, adopted or enacted, which, in the reasonable judgment of Oglethorpe, might materially impair the ability of Oglethorpe or OPC Scherer 1997 Funding Corporation to proceed with the Exchange Offer or materially impair the contemplated benefits of the Exchange Offer to Oglethorpe; or (b) any governmental approval has not been obtained, which approval Oglethorpe shall, in its reasonable judgment, deem necessary for the consummation of the Exchange Offer as contemplated hereby. If Oglethorpe determines in its reasonable judgment that any of the above conditions are not satisfied, Oglethorpe may (i) instruct OPC Scherer 1997 Funding Corporation to refuse to accept any Private Facility Bonds and return all tendered Private Facility Bonds to the tendering holders, (ii) extend the Exchange Offer and instruct OPC Scherer 1997 Funding Corporation to retain all Private Facility Bonds tendered prior to the expiration of the Exchange Offer, subject, however, to the rights of holders to 83 withdraw such Private Facility Bonds (see "--Withdrawals of Tenders") or (iii) waive such unsatisfied conditions with respect to the Exchange Offer and instruct OPC Scherer 1997 Funding Corporation to accept all properly tendered Private Facility Bonds which have not been withdrawn. If such waiver constitutes a material change to the Exchange Offer, Oglethorpe will promptly disclose such waiver by means of a prospectus supplement that will be distributed to the registered holders, and, depending upon the significance of the waiver and the manner of disclosure to the registered holders, Oglethorpe will extend the Exchange Offer for a period of five to ten business days if the Exchange Offer would otherwise expire during such five to ten business-day period. EXCHANGE AGENT ____________________________ will act as Exchange Agent for the Exchange Offer. Questions and requests for assistance, requests for additional copies of this Prospectus or of the Letter of Transmittal for the Private Facility Bonds and requests for copies of Notice of Guaranteed Delivery should be directed to the Exchange Agent, addressed as follows: By mail or delivery services: ---------------------------------------------------- ---------------------------------------------------- ---------------------------------------------------- ---------------------------------------------------- By hand delivery: ---------------------------------------------------- ---------------------------------------------------- ---------------------------------------------------- By facsimile (Eligible Institutions only): (______) ______-______ For telephone inquiries: (______) ______-______ FEES AND EXPENSES The expense of the Exchange Offer will be borne by the Lessors. The principal solicitation is being made by mail; however, additional solicitations may be made by telegraph, telephone, facsimile or in person by officers and regular employees of Oglethorpe and its affiliates or the Exchange Agent. Oglethorpe has not retained a dealer-manager in connection with the Exchange Offer and neither Oglethorpe nor the Lessors will make any payments to brokers or other persons soliciting acceptances of the Exchange Offer. The Lessors, however, will pay the Exchange Agent reasonable and customary fees for its services and will reimburse it for its reasonable out-of-pocket expenses in connection therewith and pay other registration expenses, including fees and expenses of the Collateral Trust Trustee, filing fees, blue sky fees and printing and distribution expenses. The Lessors will generally pay all transfer taxes, if any, applicable to the exchange of the Private Facility Bonds pursuant to the Exchange Offer. If, however, tendered Private Facility Bonds are registered 84 in the name of any person other than the person signing the Letter of Transmittal, or if a transfer tax is imposed for any reason other than the exchange of the Private Facility Bonds pursuant to the Exchange Offer, then the amount of any such transfer taxes (whether imposed on the registered holder or any other person) will be payable by the tendering holder. ACCOUNTING TREATMENT The Exchange Facility Bonds will be recorded at the same carrying value as the Private Facility Bonds, which is the aggregate principal amount, as reflected in Oglethorpe's accounting records on the date of exchange. Accordingly, no gain or loss for accounting purposes will be recognized in connection with the Exchange Offer. The expenses of the Exchange Offer will be amortized over the term of the Exchange Facility Bonds. RESALE OF EXCHANGE FACILITY BONDS Based on interpretations by the staff of the Commission set forth in no-action letters issued to third parties in other transactions, Oglethorpe believes that the Exchange Facility Bonds issued pursuant to the Exchange Offer in exchange for Private Facility Bonds may be offered for resale, resold and otherwise transferred by any holder of such Exchange Facility Bonds (other than any such holder who is an "affiliate" of Oglethorpe within the meaning of Rule 405 under the Securities Act) without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that such Exchange Facility Bonds are acquired in the ordinary course of such holder's business and such holder does not intend to participate, and has no arrangement or understanding with any person to participate, in the distribution of such Exchange Facility Bonds. Any holder who tenders in the Exchange Offer with the intention to participate, or for the purpose of participating, in a distribution of the Exchange Facility Bonds or who is an affiliate of Oglethorpe may not rely on the position of the staff of the Commission enunciated in Exxon Capital Holdings Corporation (available April 13, 1989) and Morgan Stanley & Co., Incorporated (available June 5, 1991), or similar no-action letters, and, in the absence of an exemption therefrom, must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any secondary resale transaction. In addition, any such resale transaction should be covered by an effective registration statement containing the selling security holders information required by Item 507 of Regulation S-K of the Securities Act. Each broker-dealer that receives Exchange Facility Bonds for its own account in exchange for Private Facility Bonds, where such Private Facility Bonds were acquired by such broker-dealer as a result of market making activities or other trading activities, may be deemed a statutory underwriter and must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Facility Bonds. By tendering in the Exchange Offer, each holder will represent to Oglethorpe that, among other things, (i) the Exchange Facility Bonds acquired pursuant to the Exchange Offer are being obtained in the ordinary course of business of the person receiving such Exchange Facility Bonds, whether or not such person is a holder, (ii) neither the holder nor any such other person has an arrangement or understanding with any person to participate in the distribution of such Exchange Facility Bonds and (iii) the holder and such other person acknowledge that if they participate in the Exchange Offer for the purpose of distributing the Exchange Facility Bonds (a) they must, in the absence of an exemption therefrom, comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale of the Exchange Facility Bonds and cannot rely on the no-action letters referenced above and (b) failure to comply with such requirements in such instance could result in such holder incurring liability under the Securities Act. Further, by tendering in the Exchange Offer, each holder that may be deemed an "affiliate" (as defined under Rule 405 of the Securities Act) of Oglethorpe will represent to Oglethorpe that such holder understands and acknowledges that the Exchange Facility Bonds may not be offered for resale, resold or otherwise transferred by that holder without registration under the Securities Act or an exemption therefrom. 85 CONSEQUENCES OF FAILURE TO EXCHANGE As a result of completing this Exchange Offer, Oglethorpe will have fulfilled certain of its obligations under the Registration Rights Agreement, and holders of Private Facility Bonds who do not tender their Private Facility Bonds will not have any further registration rights under the Registration Rights Agreement or otherwise. Accordingly, any holder of Private Facility Bonds that does not exchange that holder's Private Facility Bonds for Exchange Facility Bonds will continue to hold such Private Facility Bonds and will be entitled to all the same rights and will be subject to the same limitations applicable thereto under the Collateral Trust Indenture, except to the extent that such rights, by their terms, terminate or cease to have further effectiveness as a result of the Exchange Offer. The Private Facility Bonds that are not exchanged for Exchange Facility Bonds pursuant to the Exchange Offer will remain restricted securities. Accordingly, such Private Facility Bonds may be resold only (i) so long as the Private Facility Bonds are eligible for resale pursuant to Rule 144A, to a person who such holder reasonably believes is a qualified institutional buyer within the meaning of Rule 144A under the Securities Act (acquiring for its own account or for the account of a qualified institutional buyer) in a transaction meeting the requirements of Rule 144A, (ii) pursuant to an exemption from registration under the Securities Act provided by Rule 144 thereunder (if available), (iii) to an institutional accredited investor within the meaning of Rule 501(a)(1),(2),(3) or (7) of Regulation D under the Securities Act in a transaction exempt from the registration requirements of the Securities Act (if available), subject to the right of Oglethorpe to require the delivery of an opinion of counsel, certification and/or other information satisfactory to it, or (iv) pursuant to an effective Registration Statement under the Securities Act, in each case in accordance with any applicable securities laws of the states of the United States and other jurisdictions. Oglethorpe has no present plans to acquire any Private Facility Bonds that are not tendered in the Exchange Offer or to file a registration statement to permit resales of any untendered Private Facility Bonds. OTHER Participation in the Exchange Offer is voluntary and holders should carefully consider whether to tender their Private Facility Bonds. Holders of the Private Facility Bonds are urged to consult their financial and tax advisors in making their decisions on what action to take with respect to the Exchange Offer. 86 DESCRIPTION OF THE FACILITY BONDS The statements under this caption are summaries and do not purport to be complete. Each summary is qualified in its entirety by reference to the Collateral Trust Indenture, the Registration Rights Agreement and the Facility Bonds, copies of which have been filed as an exhibit to the Registration Statement of which this Prospectus is a part. (See "AVAILABLE INFORMATION.") Upon the effectiveness of the Exchange Offer Registration Statement described herein, the Collateral Trust Indenture will be subject to and governed by the Trust Indenture Act of 1939, as amended (the "TIA"). Each summary is further qualified in its entirety by reference to the TIA, including the definitions of certain terms and those terms made a part of the Collateral Trust Indenture by reference to the TIA. Capitalized terms used under this caption but not otherwise defined shall have the meanings set forth in the Collateral Trust Indenture. GENERAL The form and terms of the Exchange Facility Bonds will be the same as the form and terms of the Private Facility Bonds except that (i) the Exchange Facility Bonds will be registered under the Securities Act and hence will not bear legends restricting the transfer thereof, (ii) the holders of the Exchange Facility Bonds will not be entitled to registration rights under the Registration Rights Agreement, which rights are being fulfilled by and will terminate upon consummation of the Exchange Offer, and (iii) the Exchange Facility Bonds will not contain any provision for additional interest in the event of certain defaults in obligations of Oglethorpe relating to the Exchange Offer. The Exchange Facility Bonds will evidence the same debt as the Private Facility Bonds and will be entitled to the benefits of the Collateral Trust Indenture. The Exchange Facility Bonds and any Private Facility Bonds not exchanged in the Exchange Offer will be deemed a single series under the Collateral Trust Indenture, and are sometimes collectively referred to herein as the "Facility Bonds." The Facility Bonds will be issued under the Collateral Trust Indenture among OPC Scherer 1997 Funding Corporation, Oglethorpe and SunTrust Bank, Atlanta, as Collateral Trust Trustee. The Facility Bonds are limited to an aggregate principal amount of $224,702,000 of 6.974% Serial Facility Bonds Due June 30, 2011. The Facility Bonds will bear interest from the later of the date of issuance of the Private Facility Bonds or the most recent interest payment date to which interest on such Private Facility Bonds has been paid. Interest is payable semiannually on June 30 and December 31 in each year, commencing June 30, 1998, to the person in whose name such Facility Bond is registered at the close of business on the June 15 or December 15, as the case may be, next preceding such interest payment date, subject to certain exceptions. If any scheduled payment date for a Facility Bond is not a Business Day, payment will be made on the next Business Day with the same effect as though made on the date due. Interest on any overdue principal and premium, if any, and (to the extent permitted by applicable law) any overdue interest shall be paid, on demand, from the due date thereof at the lesser of (i) 2% above the greater of (A) the published base rate of Citibank, N.A., in effect from time to time and (B) 6.974%, and (ii) the highest amount permitted by applicable law. Interest on the Facility Bonds will be computed on the basis of a 360-day year of twelve 30-day months. (Collateral Trust Indenture, Sections 2.01, 2.07 and 1.13.) The Facility Bonds will be issued in book-entry-only form as described under "Book-Entry-Only System" below. So long as the Facility Bonds are subject to the book-entry-only system of registration and transfer described under the "Book-Entry-Only System" below, all payments with respect to principal of and premium, if any, and interest on such Facility Bonds will be made to DTC. If the Facility Bonds are not subject to such book-entry-only system, the principal of and premium (if any) and interest on the Facility Bonds will be payable at the Collateral Trust Trustee's corporate trust office: SunTrust Bank, Atlanta, c/o First Chicago Trust Company, 14 Wall Street, New York, New York 10005 (the "Collateral Trust Trustee's New York Office"), except that payment of interest will be made by check mailed to the address of the person entitled thereto as shown in the Bond Register. (Collateral Trust Indenture, Sections 2.01 and 2.07.) 87 If the Facility Bonds are no longer subject to such book-entry-only system, the Facility Bonds are to be issued in fully registered form without coupons in denominations of $1,000 or any integral multiple thereof and the Facility Bonds may be surrendered for registration of transfer or exchange for Facility Bonds of the same series at the Collateral Trust Trustee's New York Office. No service charge will be required of any Bondholder participating in any transfer or exchange of Facility Bonds in respect of such transfer or exchange, but payment may be required of any tax or other governmental charges that may be imposed in connection therewith. (Collateral Trust Indenture, Sections 2.02 and 2.05.) SINKING FUND REDEMPTION The Collateral Trust Indenture will provide for the redemption of the Facility Bonds, on a pro rata basis, through operation of a sinking fund on each of the dates set forth below (other than maturity dates), at the principal amount thereof, together with interest accrued to the redemption date, on not less than 20 and not more than 60 days' notice by mail. The principal amounts of the Facility Bonds to be redeemed on such dates, as well as the principal amounts payable on the final maturity date, are set forth opposite such dates. (Collateral Trust Indenture, Sections 6.05 and 7.01.)
FACILITY BONDS -------------- June 30, 1998............................................... $ 0 December 31, 1998........................................... 6,555,000 June 30, 1999............................................... 0 December 31, 1999........................................... 11,112,000 June 30, 2000............................................... 0 December 31, 2000........................................... 11,719,000 June 30, 2001............................................... 0 December 31, 2001........................................... 12,064,000 June 30, 2002............................................... 0 December 31, 2002........................................... 14,067,000 June 30, 2003............................................... 0 December 31, 2003........................................... 16,117,000 June 30, 2004............................................... 3,513,000 December 31, 2004........................................... 13,719,000 June 30, 2005............................................... 3,651,000 December 31, 2005........................................... 14,564,000 June 30, 2006............................................... 5,485,000 December 31, 2006........................................... 15,371,000 June 30, 2007............................................... 23,883,000 December 31, 2007........................................... 0 June 30, 2008............................................... 25,453,000 December 31, 2008........................................... 0 June 30, 2009............................................... 20,383,000 December 31, 2009........................................... 0 June 30, 2010............................................... 17,724,000 December 31, 2010........................................... 0 June 30, 2011............................................... 9,322,000
The amortization schedules for the Refunding Lessor Notes are designed to match the sinking fund schedules for the Facility Bonds. In the event that there has been any partial redemption of Facility Bonds (other than pursuant to the sinking fund), the principal amounts of Facility Bonds to be redeemed pursuant to the sinking fund schedules indicated above after any such redemption shall be adjusted in a manner which will preserve the relationship between such amortization schedules and the sinking fund schedules for the remaining outstanding Facility Bonds. (Collateral Trust Indenture, Section 7.01.) 88 OPTIONAL REDEMPTION The Facility Bonds will not be subject to optional redemption prior to maturity. Except in the case of sinking fund payments as provided above or in the case of certain events resulting in mandatory redemption as provided below, the Facility Bonds may not be redeemed, in whole or in part, prior to maturity. SPECIAL MANDATORY REDEMPTION AT PAR The Facility Bonds will be subject to mandatory redemption at par, in whole or in part as indicated below, on not less than 20 nor more than 60 days' notice by mail, at the principal amount thereof, together with interest accrued to the redemption date, at such times as any Refunding Lessor Note is to be prepaid in accordance with the terms of the respective Lease Indentures, but only if such prepayment is made under one of the following circumstances, as certified to the Collateral Trust Trustee by Oglethorpe and the Lessor whose Refunding Lessor Note is being prepaid: (a) EVENT OF LOSS RELATING TO SCHERER UNIT NO. 2. The Facility Bonds will be redeemed in whole in connection with a prepayment of the Refunding Lessor Notes with the proceeds of the payment by Oglethorpe of Stipulated Loss Value under the Leases upon the occurrence of any of the following: (i) the loss of Scherer Unit No. 2, in its entirety or substantially in its entirety, due to destruction or, in the good faith and reasonable opinion of Oglethorpe, damage beyond economic repair (Collateral Trust Indenture, Section 6.01(b)(i)(A)); (ii) the receipt of insurance proceeds based upon an actual or constructive total loss with respect to Scherer Unit No. 2 (Collateral Trust Indenture, Section 6.01(b)(i)(B)); and (iii) Scherer Unit No. 2, the Scherer Unit No. 2 Site or the Scherer Common Facilities (in their entirety or a substantial portion of any thereof such that the then remaining portion cannot practically be utilized for the purposes intended) shall have been condemned or otherwise permanently rendered unfit for normal use, confiscated or seized, or title thereto or use thereof shall have been requisitioned by any governmental authority and, in the case of any such requisition, Oglethorpe shall have lost the use or possession of substantially all of Scherer Unit No. 2 or the Scherer Unit No. 2 Site for a period exceeding 48 months. (Collateral Trust Indenture, Section 6.01(b)(i)(C).) (See "DESCRIPTION OF THE LEASES--Events of Loss.") (b) OBSOLESCENCE TERMINATION. The Facility Bonds will be redeemed in whole in connection with a prepayment of the Refunding Lessor Notes resulting from an election by Oglethorpe to exercise its rights of early termination under each Lease as a result of the adoption by its Board of Directors of a resolution determining that (i) the leased undivided interests in Scherer Unit No. 2 are surplus to the requirements of Oglethorpe or (ii) Scherer Unit No. 2 is economically obsolete. (Collateral Trust Indenture, Section 6.01(b)(i)(D).) (See "DESCRIPTION OF THE LEASES--Optional Termination for Obsolescence.") (c) REGULATION. Subject to certain exceptions, the Facility Bonds will be redeemed in a principal amount equal to the principal amount of the Refunding Lessor Note prepaid as a result of the payment by Oglethorpe of amounts required or permitted under any Lease in the event that (i) solely by reason of the Sale and Leaseback Transactions and without regard to any other activities or transactions, the Lessor under such Lease, the related Equity Investor or any of their affiliates (A) becomes subject to regulation pursuant to the Public Utility Holding Company Act of 1935 or the Federal Power Act or (B) becomes subject to regulation under certain provisions of state and federal laws pertaining to the regulation of public utilities as such (other than regulation under which the obligations of such Lessor or such affiliate may be discharged by Oglethorpe pursuant to the applicable Lease and which Oglethorpe has not failed timely to discharge) unless (w) in the case of regulation under the Public Utility Holding Company Act of 1935 or the Federal Power Act such regulation shall not be materially adverse with respect to such Lessor in the reasonable judgment of such Lessor, (x) in either case, such regulation results from an ownership or leasehold interest in any other electric generation facility or transmission 89 facility acquired on or after December 30, 1985, or any such person was subject to such regulation prior to such date or prior to becoming a Lessor or Equity Investor, (y) in either case, such person has waived in writing the treatment of such regulation as an event requiring Oglethorpe to make any payments, or (z) in either case, Oglethorpe, at its sole cost and expense, is contesting such regulation, subject to certain conditions; or (ii) the Lessor under such Lease or the related Equity Investor shall become subject to regulation pursuant to the Public Utility Holding Company Act of 1935 or the Federal Power Act and, as a result thereof, (A) such Lease is deemed to be a contract for the sale by such Lessor of electric energy to Oglethorpe under Section 205 or 206 of the Federal Power Act, (B) Oglethorpe shall become subject to regulation which is contrary to the terms of any agreement to which Oglethorpe is a party or applicable law to which Oglethorpe is subject relating to the generation, transmission, production or sale of electric power or steam energy, or (C) Oglethorpe shall become subject to regulation which would not otherwise be applicable to Oglethorpe and which Oglethorpe, in its reasonable judgment, determines to be materially adverse to it and action shall not have been taken within 60 days to eliminate such regulation. (Collateral Trust Indenture, Section 6.01(b)(ii)(A) and (B).) (See "DESCRIPTION OF THE LEASES-- Events of Loss.") (d) BURDENSOME TAX INDEMNITY; CHANGE IN TAX LAW. The Facility Bonds will be redeemed in a principal amount equal to the principal amount of the Refunding Lessor Note prepaid as a result of the exercise by Oglethorpe of its option under any Lease to purchase the undivided ownership interest of a Lessor in Scherer Unit No. 2 in the event that a tax indemnity becomes payable to such Lessor's related Equity Investor under the Tax Indemnification Agreement between Oglethorpe and such Equity Investor as a result of a change in tax laws enacted by the 99th Congress or a final determination that such undivided interest constitutes "public utility property" (as such term is defined in the Code), but, in the case of a change in tax law, only if the aggregate of the present value of increases in basic rent payable under such Lessor's Lease resulting from such indemnity payment would exceed 4% of Lessor's Cost. (Collateral Trust Indenture, Section 6.01(b)(ii)(C).) (See "DESCRIPTION OF THE LEASES--Purchase and Renewal Options.") (e) CERTAIN CAPITAL IMPROVEMENTS. The Facility Bonds will be redeemed in a principal amount equal to the principal amount of the Refunding Lessor Note prepaid as a result of the exercise by Oglethorpe of its option under any Lease to purchase the undivided ownership interest of the applicable Lessor in Scherer Unit No. 2, which option may be exercised on any December 31 between December 31, 1997 and December 31, 2010, if (x) "scrubbers" or any similar capital improvement intended to remove pollutants from the effluent discharged from the boiler of Scherer Unit No. 2 are required by applicable law, (y) capital improvements consisting of a single project are included in the Ownership Agreement budget for Scherer Unit No. 2, 60% of the value of which (expressed in December 30, 1985 dollars) equals or exceeds $100,000,000, or (z) capital improvements are included in such budget in any two-year period, 60% of the value of which (expressed in December 30, 1985 dollars) equals or exceeds $50,000,000, and the related Equity Investor does not finance such improvements through an equity investment. (Collateral Trust Indenture, Section 6.01(b)(ii)(D).) (See "DESCRIPTION OF THE LEASES-- Purchase and Renewal Options.") SPECIAL MANDATORY REDEMPTION WITH PREMIUM The Facility Bonds will also be subject to mandatory redemption, in whole or in part as indicated below, at the redemption prices set forth below, together with interest accrued to the redemption date, as follows: (a) PURCHASE OPTIONS. The Facility Bonds will be redeemed in a principal amount equal to the principal amount of the applicable Refunding Lessor Note prepaid in connection with the exercise by Oglethorpe of its option under any Lease to purchase the undivided ownership interest of the Lessor thereunder, which option may be exercised on December 31, 2000, December 31, 2005, or December 31, 2010. (Collateral Trust Indenture, Section 6.01(a)(i).) Such redemption will be made on not less 90 than 20 nor more than 60 days' notice by mail. (Collateral Trust Indenture, Section 6.05.) (See "DESCRIPTION OF THE LEASES--Purchase and Renewal Options.") (b) DECOMMISSIONING OF SCHERER UNIT NO. 2. The Facility Bonds will be redeemed in whole in connection with a prepayment of the Refunding Lessor Notes with the proceeds of the payment by Oglethorpe of Stipulated Loss Values under the Leases upon the occurrence of the permanent decommissioning and retiring from commercial service of Scherer Unit No. 2. (Collateral Trust Indenture, Section 6.01(a)(ii).) Such redemption will be made on not less than 20 nor more than 60 days' notice by mail. (Collateral Trust Indenture, Section 6.05.) (See "DESCRIPTION OF THE LEASES--Events of Loss.") (c) DEFAULT UNDER LESS THAN ALL LEASE INDENTURES. The Facility Bonds will be redeemed in part on the third Business Day following receipt by the Collateral Trust Trustee of any amount recovered by the Collateral Trust Trustee in respect of the Facility Bonds in excess of $5,000,000 as the result of the exercise of remedies by the Collateral Trust Trustee in respect of defaulted Refunding Lessor Notes in accordance with the Collateral Trust Indenture under circumstances in which less than all Refunding Lessor Notes are in default. The principal amount of Facility Bonds to be redeemed on any such date will be equal to the amounts so recovered on or prior to the third Business Day immediately preceding such redemption date and not theretofore applied toward the redemption of Facility Bonds on such date, reduced by any premium payable and the interest on the Facility Bonds being redeemed on such date. (Collateral Trust Indenture, Section 6.01(a)(iii).) Notice of such redemption will be given by telephone, telex, telecopier or other electronic or wire transmission as promptly as practicable after amounts in excess of $5,000,000 are so recovered, confirmed by mail. (Collateral Trust Indenture, Section 6.05.) (See "Events of Default, Notice and Waiver" below.) (d) DETERMINATION THAT UNDIVIDED INTEREST IS SURPLUS. The Facility Bonds will be redeemed in a principal amount equal to the principal amount of the Refunding Lessor Notes prepaid in connection with an election by Oglethorpe to exercise its rights of early termination under less than all the Leases, as a result of the adoption by its Board of Directors of a resolution determining that the undivided ownership interest covered by the Lease or Leases being terminated is surplus to the requirements of Oglethorpe. (Collateral Trust Indenture, Section 6.01(a)(iv).) Such redemption will be made on not less than 20 nor more than 60 days' notice by mail. (Collateral Trust Indenture, Section 6.05.) (See "DESCRIPTION OF THE LEASES--Optional Termination for Obsolescence.") (e) REDEMPTION PRICES. The Facility Bonds subject to mandatory redemption as described in paragraphs (a) through (d) above on the following dates shall be redeemed at the following redemption prices (expressed as a percentage amount), together with interest accrued to the redemption date:
TWELVE MONTHS REDEMPTION PERIOD BEGINNING PRICE - ------------------------------------------------------------------------------ ------------- January 1, 1998............................................................... 106.974% January 1, 1999............................................................... 106.438 January 1, 2000............................................................... 105.901 January 1, 2001............................................................... 105.365 January 1, 2002............................................................... 104.828 January 1, 2003............................................................... 104.292 January 1, 2004............................................................... 103.755 January 1, 2005............................................................... 103.219 January 1, 2006............................................................... 102.682 January 1, 2007............................................................... 102.146 January 1, 2008............................................................... 101.609 January 1, 2009............................................................... 101.073 January 1, 2010............................................................... 100.536 January 1, 2011............................................................... 100.000
91 SELECTION OF FACILITY BONDS TO BE REDEEMED If less than all of the Facility Bonds are to be redeemed, other than through operation of the sinking fund, the Facility Bonds to be redeemed will be selected, not more than 60 days prior to the redemption date, by the Collateral Trust Trustee as follows: the Collateral Trust Trustee will select for redemption an aggregate principal amount of Facility Bonds equal to the aggregate amounts of principal which are being prepaid, or in respect of which amounts have been recovered, such selection to be made pro rata as among all Facility Bonds; provided that the Collateral Trust Trustee shall make such adjustments as it shall deem necessary so that the principal amount of the Facility Bonds from any holder shall be $1,000 or any integral multiple thereof. (Collateral Trust Indenture, Sections 6.04 and 7.02.) SECURITY AND SOURCE OF PAYMENT FOR THE FACILITY BONDS OPC Scherer 1997 Funding Corporation was formed for the exclusive purpose of facilitating the financing of Scherer Unit No. 2 and has only nominal equity capital. As such, the source of payments of principal of and premium, if any, and interest on the Facility Bonds will be derived from payments made on the Refunding Lessor Notes issued by the Lessors pursuant to their respective Lease Indentures. The aggregate principal amount of the Refunding Lessor Notes to be delivered to the Collateral Trust Trustee equals the aggregate principal amount of the Facility Bonds. The payment schedules for the Refunding Lessor Notes are structured to coincide as to dates and amounts with the payment schedules for the Facility Bonds. Each of these schedules, in turn, is structured to coincide as to dates and amounts with the rental payment dates under the Leases. As described below, Oglethorpe's obligation to pay rent pursuant to the Leases provides the sources of payment for the Refunding Lessor Notes. Accordingly, subject to the matters discussed below under "Considerations Relating to Security," the timely payment of the principal of and premium, if any, and interest of the Refunding Lessor Notes of the Lessors will provide for the payment in full of the principal of and premium, if any, and interest on the Facility Bonds when due. Each Lease is a net lease under which Oglethorpe is unconditionally obligated to make basic rental and certain other payments at least sufficient to provide for the payments of the Lessor Notes of the Lessor which is a party to such Lease, without any right of counterclaim, setoff, deduction or defense on the part of Oglethorpe. Each Lease, by its terms, requires that rent be paid by Oglethorpe in such amounts and at such times as will always provide for the payment of the principal of and premium, if any, and interest on all such Lessor Notes when due. As such, the expected sources of payment for the Refunding Lessor Notes, and thus for the Facility Bonds, are the payments to be made by Oglethorpe under the Leases, subject to the matters discussed below under "Consideration Relating to Security." The Refunding Lessor Notes were issued under separate Lease Indentures by the Lessors without recourse to the general credit of any Lessor or its Equity Investor. The Refunding Lessor Note of each Lessor are secured under a separate Lease Indenture by, among other things: (i) a lien on and security interest in each Lessor's respective undivided ownership interest in Scherer Unit No. 2; (ii) each Lessor's rights under its Lease, including the right to receive all rents payable thereunder other than amounts which constitute Excepted Payments; and (iii) each Lessor's rights under the related Support Agreements, which are designed to provide to such Lessor such additional resources, services and facilities as are necessary or desirable to operate Scherer Unit No. 2 for a period from the expiration of such Lessor's Lease to the end of the estimated useful life of Scherer Unit No. 2. The Support Agreements provide for (x) the common use of certain facilities which are necessary for the operation of all generating units located at the Scherer Unit No. 2 Site and the operation of Scherer Unit No. 2 following the expiration or earlier termination (other than in connection with an Event of Loss) of any Lease and (y) the lease to the Lessors of portions of the real property comprising the Scherer Unit No. 2 Site (including the property upon which Scherer Unit No. 2 is located). 92 Subject to the limitations described below, Additional Notes will be permitted to be issued under each Lessor's Lease Indenture (i) for the purpose of refinancing any previously issued Lessor Notes, including the Refunding Lessor Notes; (ii) to provide funds in connection with certain requirements of the related Tax Indemnification Agreement; and (iii) to provide funds for Capital Improvements. No Additional Notes to be issued for the purposes set forth in (ii) above may be issued if the aggregate principal amount of all Lessor Notes outstanding under such Lease Indenture (including the proposed Additional Notes) exceeds 80% of Lessor's Cost. No Lessor Notes to be issued for the purpose set forth in (iii) above may be issued: (1) if the aggregate principal amount of all Lessor Notes issued and outstanding under such Lease Indenture (including the proposed Additional Notes) exceeds an amount equal to 80% of the sum of (A) the Lessor's Cost, (B) such Lessor's share of the cumulative cost of all additions and improvements theretofore incorporated or installed in Scherer Unit No. 2 during the term of the Lease and financed by such Lessor or with Lessor Notes, and (C) such Lessor's share of the cost of the additions and improvements proposed to be financed with such Additional Notes; or (2) if the aggregate principal amount of all Additional Notes issued under such Lease Indenture for the purpose set forth in (iii) above (including the proposed Additional Notes) exceeds an amount equal to 80% of the sum of (A) such Lessor's share of the cumulative cost of all additions and improvements theretofore incorporated or installed in Scherer Unit No. 2 during the term of the Lease and (B) the cost of the additions and improvements proposed to be financed with such Additional Notes. Moreover, the aggregate principal amount of all Lessor Notes issued under all Lease Indentures for the purpose set forth in (iii) above may not exceed $125,000,000. As a further condition to the issuance of Additional Notes for the purposes set forth in (ii) and (iii) above, at least 10 days must have passed from the time the applicable Lease Indenture Trustee shall have given notices to holders of the related Lessor Notes of the proposed issuance of such Additional Notes, and the holders of such Lessor Notes shall not have notified such Lease Indenture Trustee that certain requirements for issuing Additional Notes have not been met and directed such Lease Indenture Trustee not to allow the issuance of such Additional Notes. CONSIDERATIONS RELATING TO SECURITY As described above, the Refunding Lessor Notes have been pledged and assigned to the Collateral Trust Trustee as security for the Facility Bonds. Set forth below are certain factors which may affect the ability of the Collateral Trust Trustee to realize upon the security afforded by such notes. POSSIBLE REJECTION OF LEASES BY A TRUSTEE IN BANKRUPTCY Under Georgia law, it is likely that the Leases will be viewed as leases of real, rather than personal, property. Under Section 502(b)(6) of the Bankruptcy Reform Act of 1978 (the "Bankruptcy Code"), a claim by a lessor for damages resulting from the termination of a lease of real property in connection with bankruptcy proceedings affecting the lessee may be limited to an amount equal to the rent reserved under the lease, without acceleration, for the greater of one year or 15 percent (but not more than three years) of the remaining term of the lease, plus rent already due but unpaid. A lease of real property would not be subject to the foregoing limitations, however, if it constituted a "financing lease" within the meaning of the Bankruptcy Act. Although the issue has not been definitively addressed by the courts, a court reasonably could conclude that the Leases constitute "financing leases" for purposes of the Bankruptcy Code. To the extent that the Leases were held not to constitute "financing leases," however, if Oglethorpe or its trustee elected to reject the Leases in connection with a bankruptcy or reorganization proceeding involving Oglethorpe, Oglethorpe might not be required to pay the full amount of rental payments thereunder and the resulting claims of the Lease Indenture Trustees, as assignees of the Lessors, for damages resulting from such rejection of the Leases may be limited to an amount less than the then outstanding principal amount of the Lessor Notes and, consequently, less than the outstanding principal amount of the Facility Bonds. It should be noted that rejection of the Leases by Oglethorpe or its trustee 93 in such a bankruptcy proceeding would deprive Oglethorpe or such trustee of the use of the interest in Scherer Unit No. 2 represented by such rejected Leases and any revenues which could be derived from the sale of the output of such Unit allocable to such interest. If, on the other hand, the Leases were held to constitute "financing leases," no such limitations would apply and the Lessors would have available to them all of the remedies described under "DESCRIPTION OF THE LEASES--Events of Default." MORTGAGE INDENTURE All of the revenues of Oglethorpe, including revenues derived under the Wholesale Power Contracts with its Members, are subject to the first mortgage lien of the Mortgage Indenture. In the event of a default by Oglethorpe under the Mortgage Indenture, the Mortgage Indenture Trustee could take steps which might result in a diversion of all or a portion of such revenues from payment of the obligations of Oglethorpe under the Leases. BOOK-ENTRY-ONLY SYSTEM GENERAL The following description of the operations and procedures of DTC is provided solely as a matter of convenience. These operations and procedures are solely within the control of DTC and are subject to change from time to time. Neither Oglethorpe nor OPC Scherer 1997 Funding Corporation takes responsibility for these operations and procedures and urges investors to contact DTC or its participants directly to discuss these matters. The Facility Bonds will be issued only in book-entry-only form in denominations of $1,000 principal amount and integral multiples thereof. The Exchange Facility Bonds issued in exchange for Private Facility Bonds currently evidenced by one or more fully registered global certificates initially will be represented by one or more certificates in registered, global form without interest coupons. The global certificates will be deposited upon issuance with the Collateral Trust Trustee as custodian for DTC in New York, New York and registered in the name of Cede & Co., as nominee for DTC, in each case for credit to an account of a direct or indirect participant in DTC as described below. DTC is a limited purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). DTC holds securities that its participants (the "Direct Participants") deposit with DTC. DTC also facilitates the settlement among Direct Participants of securities transactions, such as transfer and pledges, in deposited securities through electronic computerized book-entry changes in Direct Participants' accounts, thereby eliminating the need for physical movement of securities certificates. Direct Participants include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations. DTC is owned by a number of its Direct Participants and by the New York Stock Exchange, Inc., the American Stock Exchange, Inc. and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others, such as securities brokers and dealers, banks and trust companies that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (the "Indirect Participants," and together with the Direct Participants, the "Participants"). The rules applicable to DTC and its Participants are on file with the Commission. Purchases of Facility Bonds under the DTC system must be made by or through Direct Participants, who will receive a credit for such Facility Bonds on DTC's records. The ownership interest of each actual purchaser of each Facility Bond (a "Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participant's records. Beneficial Owners will not receive written confirmation from DTC of their 94 purchases, but Beneficial Owners are expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through whom such Beneficial Owner entered into the transaction. Transfers of ownership interests in the Facility Bonds are to be accomplished by entries made on the books of Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive nor have the right to receive physical delivery of certificates representing their ownership interests in the Facility Bonds, and will not be or be considered to be holders thereof under the Collateral Trust Indenture, except as specifically provided in the Collateral Trust Indenture in the event the book-entry-only system is discontinued. So long as Cede & Co. is the registered owner of the Facility Bonds subject to the book-entry-only system, as nominee for DTC, references herein to the bondholders or registered owners or owners of such Facility Bonds shall mean Cede & Co., as aforesaid, and shall not mean the beneficial owners of such Facility Bonds, as the case may be. To facilitate subsequent transfer, the Facility Bonds deposited by Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co. The deposit of Facility Bonds with DTC and their registration in the name of Cede & Co. effect no change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Facility Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts such Facility Bonds are credited, which may or may not be the Beneficial Owners. The Participants will remain responsible for keeping account of their holdings on behalf of their customers. Oglethorpe, OPC Scherer 1997 Funding Corporation and the Collateral Trust Trustee may treat DTC (or its nominee) as the sole and exclusive owner of the Facility Bonds registered in its name for the purpose of: payment of the principal of or interest on such Facility Bonds; selecting such Facility Bonds and portions thereof to be redeemed; giving any notice permitted or required to be given to holders under the Collateral Trust Indenture, including any notice of redemption; registering the transfer of the Facility Bonds; obtaining any consent or other action to be taken by holders; and for all other purposes whatsoever, and shall not be affected by any notice to the contrary. Oglethorpe, OPC Scherer 1997 Funding Corporation and the Collateral Trust Trustee shall not have any responsibility or obligation to any Direct Participant, any person claiming a beneficial ownership interest in the Facility Bonds under or through DTC or any Direct Participant, or any other person which is not shown on the books of registration kept by the Bond Registrar as being a holder, with respect to: the accuracy of any records maintained by DTC or any Direct or Indirect Participant regarding ownership interests in the Facility Bonds; the payment by DTC or any Direct or Indirect Participant of any amount in respect of the principal of or interest on the Facility Bonds; the delivery to any Direct or Indirect Participant or any Beneficial Owner of any notice which is permitted or required to be given to holders under the Collateral Trust Indenture, including any notice of redemption; the selection by DTC or any Direct or Indirect Participant of any person to receive payment in the event of a partial redemption of such Facility Bonds; or any consent given or other action taken by DTC as an owner of the Facility Bonds. Neither DTC nor Cede & Co. will consent or vote with respect to the Facility Bonds. Under its usual procedures, DTC mails an Omnibus Proxy to the issuer as soon as possible after the "record date." The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts securities, such as the Facility Bonds, are credited on the record date (identified in a listing attached to the Omnibus Proxy). Except as described below, neither DTC nor Cede & Co. will take any action to enforce covenants with respect to any security registered in the name of Cede & Co. Under its current procedures, on the written instructions of a Direct Participant, DTC will cause Cede & Co. to sign a demand to exercise certain bondholder rights. In accordance with DTC's current procedures, Cede & Co. will sign such document only as a record holder of the quantity of securities referred to therein (which is to be specified in the Direct Participant's request to DTC for such document) and not as record holder of all the 95 securities of that issue registered in the name of Cede & Co. Also, in accordance with DTC's current procedures, all factual representations to the issuer, the trustee or any other party to be made by Cede & Co. in such document must be made to DTC and Cede & Co. by the Direct Participant in its request to DTC. For so long as the Facility Bonds are issued in book-entry-only form through the facilities of DTC, any Beneficial Owner desiring to cause Oglethorpe, OPC Scherer 1997 Funding Corporation or the Collateral Trust Trustee to comply with any of its obligations with respect to the Facility Bonds, as the case may be, must make arrangements with the Direct Participant or Indirect Participant through whom such Beneficial Owner's ownership interest in the Facility Bonds is recorded in order for the Direct Participant in whose DTC account such ownership interest is recorded is make the request of DTC described above. None of Oglethorpe, OPC Scherer 1997 Funding Corporation or the Collateral Trust Trustee will have any obligation to the Direct Participants, the Indirect Participants or the persons for whom they act as nominees with respect to DTC's procedures or any procedures or arrangements between Direct Participants, Indirect Participants and the persons for whom they act relating to the making of any demand by Cede & Co. As the registered owner of Facility Bonds, the adherence to such procedures or arrangements or the effectiveness of any action taken pursuant to such procedures or arrangements. Subject to the following considerations, beneficial interests in the Facility Bonds will trade in DTC's Same-Day Funds Settlement System, and secondary market trading activity in such interests will therefore settle in immediately available funds. Oglethorpe expects that DTC, upon receipt of payment of principal and interest in respect of a beneficial interest in the Facility Bonds, will immediately credit Direct Participants' accounts with payments in amounts proportional to their respective beneficial interests in the principal amount of the Facility Bonds as shown on its records. Oglethorpe also expects payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC, Oglethorpe, OPC Scherer 1997 Funding Corporation or the Collateral Trust Trustee, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal and interest to DTC is the responsibility of the Collateral Trust Trustee, disbursement of such payments to Direct Participants shall be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners shall be the responsibility of Direct and Indirect Participants. As long as the book-entry-only system is used for the Facility Bonds, the Collateral Trust Trustee will give any notice of redemption or any other notices required to be given to holders of the Facility Bonds only to DTC. Any failure of DTC to advise any Direct Participant, or of any Direct Participant to notify any Indirect Participant, or of any Direct or Indirect Participant to notify any Beneficial Owner, of any such notice and its content or effect will not affect the validity of the redemption of the Facility Bonds called for such redemption or of any other action premised on such notice. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants and by Direct and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners may desire to make arrangements with a Direct or Indirect Participant so that all notices of redemption or other communications to DTC which affect such Beneficial Owners will be forwarded in writing by such Direct or Indirect Participant. If less than all of the Facility Bonds are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant to be redeemed. For every transfer and exchange of a beneficial ownership interest in the Facility Bonds, a Beneficial Owner may be charged a sum sufficient to cover any tax, fee or other governmental charge that may be imposed in relation thereto. 96 DISCONTINUATION OF THE BOOK-ENTRY-ONLY SYSTEM DTC may determine to discontinue providing its service with respect to the Facility Bonds at any time by giving reasonable notice to Oglethorpe, OPC Scherer 1997 Funding Corporation or the Collateral Trust Trustee. In addition, if Oglethorpe determines that: (i) DTC is unable to discharge its responsibilities with respect to the Facility Bonds or (ii) continuation of the system of book-entry- only transfers through DTC is not in the best interests of the Beneficial Owners of the Facility Bonds or of Oglethorpe, Oglethorpe may thereupon terminate the services of DTC with respect to the Facility Bonds. Upon the resignation of DTC or determination of Oglethorpe that DTC is unable to discharge its responsibilities, Oglethorpe may, within 30 days, appoint a successor depository. If no such successor is appointed or Oglethorpe determines to discontinue the book-entry-only system, Facility Bond certificates will be delivered in fully registered form in authorized denominations to the identifiable Beneficial Owners in replacement of such Beneficial Owners' beneficial interests in the Facility Bonds. Transfer and exchanges of the Facility Bonds shall thereafter be made as described herein under the caption "General" above. If the book-entry-only system is discontinued with respect to the Facility Bonds, the persons to whom Facility Bonds certificates are delivered will be treated as "bondholders" for all purposes of the Collateral Trust Indenture, including without limitation the payment of principal and interest, the redemption of such Facility Bonds and the giving to Oglethorpe, OPC Scherer 1997 Funding Corporation or the Collateral Trust Trustee of any notice, consent, request or demand pursuant to the Collateral Trust Indenture for any purpose whatsoever. In such event, principal and interest on the Facility Bonds, as applicable, will be payable in the manner described under the caption "General" above. MERGER, CONSOLIDATION AND TRANSFER OF ASSETS The certificate of incorporation of OPC Scherer 1997 Funding Corporation provides, among other things, that OPC Scherer 1997 Funding Corporation shall not, without the consent of each Lease Indenture Trustee, (i) dissolve or liquidate, in whole or in part, or (ii) merge into or consolidate with, or sell all or any part of its assets to, any person, firm, corporation, partnership or other entity unless, in the case of a merger or consolidation, the surviving corporation in such merger or the corporation resulting from such consolidation shall have a certificate of incorporation containing identical provisions to those of OPC Scherer 1997 Funding Corporation restricting the nature of its business and purposes and its ability to take certain action, and, in the case of a sale of assets, the acquiring corporation shall have assumed all the liabilities and obligations of OPC Scherer 1997 Funding Corporation and shall have such identical provisions in its certificate of incorporation. In addition, OPC Scherer 1997 Funding Corporation has agreed in each of the Participation Agreements and in the Collateral Trust Indenture that it will not amend those provisions of its certificate of incorporation which restrict the nature of its business and its purposes or restrict its activities or which provide for its capitalization without the consent of the holders of not less than 66 2/3% in aggregate principal amount of the Facility Bonds then outstanding. (Collateral Trust Indenture, Section 5.08.) 97 EVENTS OF DEFAULT, NOTICE AND WAIVER Events of Default under the Collateral Trust Indenture include: (a) default in the payment of any principal of or premium, if any, or interest on any Facility Bond, including any sinking fund payment, when it becomes due and payable, and continuance of such default for a period of three Business Days; (b) default in the performance, or breach, of any covenant of Oglethorpe or OPC Scherer 1997 Funding Corporation contained in the Collateral Trust Indenture and continuance of such default or breach for a period of 30 days after there has been given, by registered or certified mail, to Oglethorpe and OPC Scherer 1997 Funding Corporation by the Collateral Trust Trustee, or to Oglethorpe, OPC Scherer 1997 Funding Corporation and the Collateral Trust Trustee by the holders of at least 25% in principal amount of outstanding Facility Bonds, a written notice specifying such failure and requiring it to be remedied and stating that such notice is a "NOTICE OF DEFAULT" under the Collateral Trust Indenture; (c) the occurrence of an "Event of Default" under any Lease Indenture; and (d) certain events of bankruptcy or insolvency involving OPC Scherer 1997 Funding Corporation. (Collateral Trust Indenture, Section 8.01.) OPC Scherer 1997 Funding Corporation has agreed in the Collateral Trust Indenture that it will not dissolve or liquidate or institute any proceedings to be adjudicated bankrupt or insolvent or consent to the institution of bankruptcy or insolvency proceedings against it. (Collateral Trust Indenture, Section 5.08.) Oglethorpe, the Lessors, the Equity Investors, the Lease Indenture Trustees and the Collateral Trust Trustee have agreed in the respective Participation Agreements that none of them will file, or participate in the filing of, a petition seeking reorganization, arrangement, adjustment or composition of or in respect of OPC Scherer 1997 Funding Corporation or appointing a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of OPC Scherer 1997 Funding Corporation or of any substantial part of their respective properties, or ordering the winding up or liquidation of their respective affairs. Upon the occurrence of an Event of Default under the Collateral Trust Indenture (except in the case of an Event of Default under any Lease Indenture), the Collateral Trust Trustee may, and upon the direction of not less than a majority in principal amount of the Facility Bonds outstanding shall, declare all Facility Bonds due and payable. In the case of an Event of Default based on an Event of Default under any Lease Indenture (including an Event of Default which has resulted in a default in payment of the Facility Bonds) under circumstances in which there has been an acceleration of the maturity of the Refunding Lessor Notes issued under all the Lease Indentures, the Collateral Trust Trustee also is required to declare all the Facility Bonds to be immediately due and payable. However, no declaration will be made in the case of a payment default which results directly from a failure by Oglethorpe to make a payment under a Lease until such time as the Lessor has been given an opportunity to exercise its rights, if any, to cure such default under the related Lease Indenture, nor will a declaration be made if an Event of Default occurs under a Lease Indenture under circumstances where an Event of Default has not occurred and been continuing under all the Lease Indentures. (See "--Special Mandatory Redemption with Premium" above and "DESCRIPTION OF THE LEASE INDENTURES--Rights of Lessors to Cure and Purchase Lessor Notes.") In addition, upon the happening and continuance of an Event of Default or a default under any Lease Indenture or any Event of Loss with respect to Scherer Unit No. 2, if the Collateral Trust Trustee is deemed to have notice thereof, the Collateral Trust Trustee will be required to give notice to the Facility Bondholders of such fact in accordance with the provisions of the Collateral Trust Indenture and, thereafter, except as provided in the last sentence of this paragraph, each such Facility Bondholder will have the right to direct the Collateral Trust Trustee, as a holder of the Refunding Lessor Note issued under such Lease Indenture, to vote the principal amount of such Refunding Lessor Note equal to the principal amount of the Facility Bonds owned by such Facility Bondholder in favor of directing the applicable Lease Indenture Trustee (a) to declare all Lessor Notes, including the Refunding Lessor Note, issued under such Lease Indenture to be immediately due and payable (to the extent not previously so declared), in the case of an Event of Default under a Lease Indenture, and (b) to take other specific action or refrain from taking action, or to exercise remedies, all as permitted under the terms of such Lease Indenture. Under each Lease Indenture, the applicable Lease Indenture Trustee will be required to act with respect to such matters upon direction of the holders of a majority in principal 98 amount of all Lessor Notes outstanding thereunder which, until such time, if any, that Additional Notes are issued under such Lease Indenture, will mean a majority in aggregate principal amount of the Facility Bonds outstanding as a result of the pass-through voting mechanism described above. To the extent an Event of Default occurs under a Lease Indenture under circumstances where an Event of Default has not occurred and been continuing under all the Lease Indentures, the Collateral Trust Trustee will be required to take certain action in respect of the Refunding Lessor Note then in default, including making demand upon the applicable Lease Indenture Trustee for such Refunding Lessor Note (i) to cause the principal of such defaulted Refunding Lessor Note to be declared immediately due and payable, (ii) to terminate any Lease which is then in default and demand redelivery of the related undivided ownership interest in Scherer Unit No. 2, (iii) to demand payment from Oglethorpe of all rent then due under any defaulted Lease, including a stipulated amount calculated to be at least sufficient to pay such defaulted Refunding Lessor Note in full and (iv) to commence appropriate legal proceedings against Oglethorpe for recovery of the amounts demanded. (Collateral Trust Indenture, Sections 8.02, 9.02 and 3.03.) No registered owner of any Facility Bond shall have any right to institute any suit, action or proceeding in equity or at law for the foreclosure of the Collateral Trust Indenture, for the appointment of a receiver or for the enforcement of any remedy unless the Collateral Trust Trustee shall have been notified of a continuing Event of Default, the holders of not less than 25% in aggregate principal amount of Facility Bonds then outstanding shall have made written request to the Collateral Trust Trustee and shall have offered indemnity as provided in the Collateral Trust Indenture, the Collateral Trust Trustee shall have failed to act for 60 days thereafter and no inconsistent direction shall have been received from the holders of not less than a majority in aggregate principal amount of the Facility Bonds outstanding during such 60 day period. Nothing contained in the Collateral Trust Indenture, however, affects or impairs the right of any Facility Bondholder to enforce the payment of the principal of, or premium, if any, or interest on, any Facility Bond at and after the maturity thereof. (Collateral Trust Indenture, Sections 8.09 and 8.11.) Oglethorpe and OPC Scherer 1997 Funding Corporation will each be required to deliver annually to the Collateral Trust Trustee a written statement of their respective officers to the effect that all of their respective obligations under the Collateral Trust Indenture during such year have been fulfilled, or if there has been a default in the fulfillment of any such obligation, specifying each such default and the nature and status thereof. (Collateral Trust Indenture, Section 5.09.) RESCISSION OF ACCELERATION If, after the principal of the Facility Bonds has been declared to be due and payable by an acceleration and before any sale of the pledged property, all arrears of interest and the principal and premium, if any, on all the Facility Bonds then outstanding which shall have become due and payable otherwise than by acceleration and all other sums payable under the Collateral Trust Indenture are paid, all other matters in default under the Collateral Trust Indenture have been cured or waived and all charges of the Collateral Trust Trustee are paid, then the holders of a majority in principal amount of the Facility Bonds outstanding may rescind and annul such declaration and its consequences by written notice to OPC Scherer 1997 Funding Corporation and the Collateral Trust Trustee. Such annulment will be binding upon all holders of the Facility Bonds. However, no such annulment will extend to or affect any subsequent default or impair any right or remedy consequent thereon, and no such annulment can take place unless all declarations of acceleration of Lessor Notes theretofore given have been annulled in accordance with the terms of the Lease Indenture. (Collateral Trust Indenture, Section 8.02.) The Collateral Trust Trustee will be required to rescind any declaration of acceleration of the principal of and interest on the Facility Bonds as a consequence of an Event of Default under the Collateral Trust Indenture which results from an "Event of Default" under any Lease and which results in the subsequent acceleration of the Refunding Lessor Note issued under the related Lease Indenture, if the declaration of the Refunding Lessor Note has been rescinded in accordance with the terms of such 99 Lease Indenture and the conditions set forth in the immediately preceding paragraph have been met. In case of any rescission, OPC Scherer 1997 Funding Corporation, Oglethorpe, the Collateral Trust Trustee and the Facility Bondholders will be restored to their former positions and rights, but no rescission will extend to any subsequent or other default or Event of Default or impair any right consequent thereon. (Collateral Trust Indenture, Section 8.02.) VOTING OF LESSOR NOTES The Collateral Trust Trustee, as holder of the Refunding Lessor Notes, will have certain rights to vote and give consents and waivers in respect of such Refunding Lessor Notes and the Lease Indentures. The Collateral Trust Indenture provides that the Collateral Trust Trustee may not direct any action or cast any votes as the holder of the Refunding Lessor Notes except that the Collateral Trust Trustee will be required to take certain action (i) as described above when a default has occurred under less than all the Lease Indentures and (ii) as directed by Facility Bondholders. Upon receiving directions from Facility Bondholders, all such directions must be given to the applicable Lease Indenture Trustee, as permitted by the Lease Indentures. The principal amount of the Refunding Lessor Notes directing any action or being voted for or against any proposal or not being voted will be proportionate to the principal amount of Facility Bonds taking the corresponding position. (Collateral Trust Indenture, Section 3.03.) SUPPLEMENTAL INDENTURES OPC Scherer 1997 Funding Corporation, Oglethorpe and the Collateral Trust Trustee may enter into indentures supplemental to the Collateral Trust Indenture without the consent of, or notice to, the holders of the Facility Bonds for any one or more of the following purposes: (i) to evidence the succession of another corporation to Oglethorpe and the assumption by any such successor of the covenants of Oglethorpe in the Collateral Trust Indenture, or to evidence the succession of another corporation to OPC Scherer 1997 Funding Corporation and the assumption by such successor of the covenants of OPC Scherer 1997 Funding Corporation contained in the Collateral Trust Indenture and the Facility Bonds; (ii) to add to the covenants of Oglethorpe or OPC Scherer 1997 Funding Corporation, for the benefit of the holders of the Facility Bonds, or to evidence the surrender of any right or power conferred in the Collateral Trust Indenture upon Oglethorpe or OPC Scherer 1997 Funding Corporation; (iii) to convey, transfer and assign to the Collateral Trust Trustee and to subject to the lien of the Collateral Trust Indenture, additional properties or assets, and to correct or amplify the description of any property at any time subject to the lien of the Collateral Trust Indenture or better to assure, convey and confirm to the Collateral Trust Trustee any property subject or required to be subject to the lien of the Collateral Trust Indenture; (iv) to cure any ambiguity, to correct or supplement any provision in the Collateral Trust Indenture which may be defective or inconsistent with any other provision therein, or to make any other provisions with respect to matters or questions arising under the Collateral Trust Indenture, in each case so long as such action does not in the opinion of Oglethorpe adversely affect the interests of the applicable Facility Bondholders in any material respect; (v) to evidence the succession of a new Collateral Trust Trustee; (vi) to provide for the issuance of one or more additional series of bonds pursuant to the Collateral Trust Indenture; (vii) to permit or facilitate the issuance of bonds in uncertificated form; (viii) to change or eliminate any provision of the Collateral Trust Indenture, so long as if such change or elimination shall materially adversely affect the interests of the holders of any bonds, such change or elimination shall become effective with respect to such bonds only when no such bonds remain Outstanding; or (ix) to qualify the Collateral Trust Indenture under the TIA. In addition, OPC Scherer 1997 Funding Corporation, Oglethorpe and the Collateral Trust Trustee may enter into indentures supplemental to the Collateral Trust Indenture without the consent of, or notice to, the holders of the Facility Bonds if the TIA is further amended after the date of execution of the Collateral Trust Indenture, for the purpose of evidencing any such amendments that (i) require changes to or the inclusion of additional provisions in the Collateral Trust Indenture or (ii) permit changes to, or the elimination of, any provisions which as of the date of execution of such Collateral Trust Indenture was 100 required by the TIA to be contained in the Collateral Trust Indenture. (Collateral Trust Indenture, Sections 2.01 and 11.01.) The Collateral Trust Indenture will provide for the issuance of additional bonds, in one or more series, in connection with the issuance of additional Lessor Notes by the Lessors under the Lease Indentures. If additional bonds are issued, all bonds outstanding under the Collateral Trust Indenture including the Facility Bonds, would be secured equally and ratably by all collateral pledged thereunder, including the Refunding Lessor Notes and any additional Lessor Notes. Exclusive of supplemental indentures for the purposes set forth in the previous paragraph, the holders of not less than a majority in aggregate principal amount of the Facility Bonds will have the right, from time to time, to consent to and approve any supplemental indenture, except that, without consent of the holders of all the Facility Bonds then outstanding affected thereby, no such supplemental indenture may permit: (i) a change in the terms of the Collateral Trust Indenture with respect to the time of payment of the principal of, or any installment of interest on, or the dates or circumstances of payment of premium, if any, on any Facility Bond or a reduction in the principal amount of or the interest on or any premium payable upon any redemption of any Facility Bond or change the place of payment where, or the coin or currency in which, any Facility Bond or the premium or interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment after the time of payment of the Facility Bond (or, in the case of redemption, on or after the redemption date), or change the dates or amounts of payment to be made through the operation of the sinking fund; (ii) the creation of any lien prior or equal to the lien of the Collateral Trust Indenture with respect to any of the Lessor Notes pledged thereunder, or terminate the lien of the Collateral Trust Indenture on such Lessor Notes (except as permitted by the Collateral Trust Indenture) or deprive any Facility Bondholder of the security afforded by the Collateral Trust Indenture; (iii) a reduction in the percentage in principal amount of the outstanding Facility Bonds, the consent of whose holders is required for any such supplemental indenture, or the consent of whose holders is required for any waiver provided for in the Collateral Trust Indenture; or (iv) modification of the above provisions or the provisions of the Collateral Trust Indenture dealing with the rights of holders of Facility Bonds to institute any suit, action or proceeding at law or equity. (Collateral Trust Indenture, Section 11.02.) No supplemental indenture can become effective unless and until OPC Scherer 1997 Funding Corporation and Oglethorpe shall have consented to the execution and delivery thereof. DISCHARGE OF LIEN; DEFEASANCE The Collateral Trust Indenture will cease to be of further effect when, among other things, (i) either all Facility Bonds theretofore authenticated and delivered have been delivered to the Collateral Trust Trustee for cancellation or all the Facility Bonds not theretofore delivered to the Collateral Trust Trustee for cancellation are deemed paid as described in the following paragraph and (ii) all other sums then due and payable thereunder have been paid. (Collateral Trust Indenture, Section 12.01.) The Facility Bonds shall be deemed paid if OPC Scherer 1997 Funding Corporation deposits with the Collateral Trust Trustee, in trust, money or U.S. Government Obligations, or a combination thereof, which through the payment of interest thereon and principal thereof in accordance with their terms will provide money in an amount sufficient to pay all the principal (including any mandatory sinking fund payments) of, and interest on, the Facility Bonds on the dates such payments are due (including upon redemption if an irrevocable notice of redemption has been given to the Collateral Trust Trustee) in accordance with the terms of the Facility Bonds. To exercise such option, OPC Scherer 1997 Funding Corporation will be required to deliver to the Collateral Trust Trustee an opinion of counsel nationally recognized in matters relating to Federal income taxes to the effect that the deposit and related defeasance would not cause the holders of the Facility Bonds to recognize income, gain or loss for Federal income tax purposes. (Collateral Trust Indenture, Section 12.02.) 101 All obligations of OPC Scherer 1997 Funding Corporation for its covenants under the Collateral Trust Indenture will be released, and the lien of the Collateral Trust Indenture on the pledged Lessor Notes will be released, if OPC Scherer 1997 Funding Corporation deposits with the Collateral Trust Trustee, in trust, money or U.S. Government Obligations, or a combination thereof, which through the payment of interest thereon and principal thereof in accordance with their terms will provide money in an amount sufficient to pay all the principal (including any mandatory sinking fund payments) of, and interest on, Facility Bonds on the dates such payments are due (including upon redemption if an irrevocable notice of redemption has been given to the Collateral Trust Trustee) in accordance with the terms of the Facility Bonds. (Collateral Trust Indenture, Section 12.03.) THE COLLATERAL TRUST TRUSTEE SunTrust Bank, Atlanta is the Collateral Trust Trustee under the Collateral Trust Indenture. SunTrust Bank, Atlanta serves as the Mortgage Indenture Trustee and as trustee for thirteen separate pollution control bond issues issued on behalf of Oglethorpe. The Collateral Trust Indenture provides that in the case of any Event of Default under the Collateral Trust Indenture, the Collateral Trust Trustee must exercise such of the rights and powers vested in it by the Collateral Trust Indenture and must use the same degree of care and skill as a prudent man would exercise under the circumstances in the conduct of his own affairs. The Collateral Trust Trustee is not liable for any error of judgment made in good faith unless the Collateral Trust Trustee was negligent in ascertaining the pertinent facts, or any action taken or omitted to be taken by it in good faith in accordance with the direction of the holders of a majority in principal amount of Facility Bonds outstanding under the Collateral Trust Indenture. Subject to such provision, the Collateral Trust Trustee is under no obligation to exercise any of its rights and powers under the Collateral Trust Indenture at the request of any holder of Facility Bonds unless such holder shall have offered to the Collateral Trust Trustee reasonable security or indemnity. The Collateral Trust Indenture provides that the Collateral Trust Trustee may acquire and hold Facility Bonds and, subject to certain conditions, may otherwise deal with Oglethorpe and OPC Scherer 1997 Funding Corporation with the same rights it would have if it were not the Collateral Trust Trustee. (Collateral Trust Indenture, Sections 9.01 and 9.03.) 102 DESCRIPTION OF THE LEASE INDENTURES The statements under this caption are summaries and do not purport to be complete. The summaries are qualified in their entirety by reference to the Lease Indentures, a copy of the form of which has been filed as an exhibit to the Registration Statement of which this Prospectus is a part. (See "AVAILABLE INFORMATION.") Capitalized terms used in this section but not otherwise defined shall have the meanings set forth in the Lease Indentures. GENERAL The Refunding Lessor Notes were issued under four separate Amended and Restated Indentures of Trust, Deeds to Secure Debt and Security Agreements, each dated December 1, 1997, between the respective Lessors and the respective Lease Indenture Trustees (the "Lease Indentures"). The Refunding Lessor Notes were issued by the Lessors to OPC Scherer 1997 Funding Corporation, and were pledged and assigned by OPC Scherer 1997 Funding Corporation to the Collateral Trust Trustee for the benefit of the holders of Private Facility Bonds and Exchange Facility Bonds. The Refunding Lessor Notes will be payable on such dates and bear interest at rates sufficient to make payment in full of the principal of and premium, if any, and interest on the Facility Bonds when due. The final payment date of each Refunding Lessor Note corresponds to the maturity date of the Facility Bonds. Each Refunding Lessor Note will bear interest at a rate corresponding to the stated rate on the Facility Bonds. LIEN AND NOTES; PAYMENTS Under each Lease Indenture, a Lessor conveyed to the applicable Lease Indenture Trustee a security interest and security title in the undivided ownership interest of the Lessor in Scherer Unit No. 2; the interests of such Lessor under the related Support Agreements, Lease and other operative agreements, the rents and other payments due under such agreements (other than Excepted Payments), the rights of such Lessor to exercise any election, option or determination with respect to such documents as well as certain rights upon a default under a Lease; all rents, profits issues, royalties, products, revenues and other benefits from property subject to the Lease Indenture, including all of such Lessor's rights thereto; any moneys and securities required to be deposited with such Lease Indenture Trustee and held pursuant to such Lease Indenture; all rights of such Lessor to restitution by Oglethorpe upon the invalidity of contracts assigned by Oglethorpe to such Lessor and all other property, rights and privileges acquired or held by the Lessor pursuant to any such assigned contract under the Lease Indenture; and proceeds of the foregoing (collectively, the "Lease Indenture Estate"), subject to certain rights of such Lessor, including certain rights to cure defaults under the Lease Indentures. Each Lease Indenture Estate secures the repayment of the related Lessor Notes and any advances made by the applicable Lease Indenture Trustee to protect such Lease Indenture Estate. Each Lease Indenture Trustee holds the respective Lease Indenture Estate for the benefit of the holders of the related Lessor Notes, including the Collateral Trust Trustee as holders of the related Refunding Lessor Notes. The terms of the Lessor Notes have been established by the Lease Indentures. The principal amount of all Lessor Notes issued and outstanding under each of the Lease Indentures may not exceed the product of $1,000,000,000 and a fraction, the numerator of which is the related Lessor's percentage undivided ownership interest in Scherer Unit No. 2 and the denominator of which is 60. (Lease Indentures, Section 2.1.) Interest on any overdue principal and, to the extent permitted by applicable law, interest thereon is to be paid at the respective rates set forth in each such series of Refunding Lessor Notes. (Lease Indentures, Section 2.4.) Payments are to be made solely from the Lease Indenture Estate. Although each Lessor has agreed to punctually pay or cause to be paid the principal of and premium, if any, and interest on all Lessor Notes according to the applicable Lease Indenture, neither 103 such Lessor, the applicable Equity Investor nor the applicable Lease Indenture Trustee has any obligation in respect of the Lessor Notes except from the Lease Indenture Estate. (Lease Indentures, Section 2.5.) All payments are to be made on the date such payment is due by mailing a check payable in New York Clearing House funds or in the manner specified by the holder of each Lessor Note, subject to certain conditions contained in the Lease Indentures. Each Refunding Lessor Note provides that, unless otherwise directed by the holder thereof, payments shall be made by wire transfer to the holder in immediately available funds. A payment to be made by wire transfer may be made on the next business day if funds are received by the Lease Indenture Trustee after 10:00 a.m., New York City time. (Lease Indentures, Section 2.6.) Subject to other provisions of the Lease Indentures discussed below, payments are to be applied first to accrued interest (including interest on overdue principal and, to the extent permitted by applicable law, overdue interest), then to principal and premium, if any, then due under the Lessor Notes, and then, to the extent permitted by the Lease Indentures, to the prepayment of principal and premium, if any. (Lease Indentures, Section 2.7.) PREPAYMENT The Refunding Lessor Notes are prepayable in the circumstances described above under "DESCRIPTION OF THE FACILITY BONDS--Special Mandatory Redemption at Par" and "--Special Mandatory Redemption with Premium" and in connection with a defeasance of the Facility Bonds. The redemption price in each such event will be equal to the principal amount of the Refunding Lessor Notes plus the premium, if any, and accrued interest on the Refunding Lessor Notes to the date fixed for repayment, which amounts in the aggregate will equal the amount then payable on the Facility Bonds. In addition, each Refunding Lessor Note are prepayable upon the receipt of moneys by reason of acceleration of such Refunding Lessor Note following an Event of Default under the respective Lease Indenture. Amounts received by reason of a prepayment (other than by reason of acceleration upon a default or by reason of Oglethorpe assuming the obligations and liabilities of the applicable Lessor as a result of the applicable Lessor becoming subject to certain regulations relating to public utilities) are to be applied first to reimburse the applicable Lease Indenture Trustee for any unpaid fees and expenses, then to pay the principal of and premium, if any, and interest on the applicable Lessor Notes, ratably among the holders of such Lessor Notes, then to make any indemnification payment to the holders of such Lessor Notes, and finally to such Lessor for distribution to the related Equity Investors. (Lease Indentures, Section 3.2.) ADDITIONAL LESSOR NOTES Additional Notes may be issued under and secured by each Lessor's Lease Indenture, at any time or from time to time, (i) for the purpose of refinancing any previously issued Lessor Notes, including the Refunding Lessor Notes, subject to the terms of the Lease Indenture; (ii) to provide funds to the Equity Investors in connection with certain requirements of the related Tax Indemnification Agreement; and (iii) to provide funds for Capital Improvements. Before any Additional Notes may be issued, each Lessor must deliver to the related Lease Indenture Trustee, at least 15 days, but not more than 30 days, prior to their issuance, a request and authorization to issue such Additional Notes, setting forth the amount of such Additional Notes and a certification that the terms of the Additional Notes are not inconsistent with the Lease Indenture. All such Additional Notes will rank PARI PASSU with all other Lessor Notes issued under such Lease Indenture and must be payable not later than the last day of the basic term of the Leases. In the case of Additional Notes issued for the purposes set forth in (ii) above, the aggregate principal amount of all Lessor Notes, including the proposed additional Lessor Notes, issued and outstanding may not exceed 80% of the Lessor's Cost. (See "DESCRIPTION OF THE LEASES--Term and Rentals.") No Additional Notes to be issued for the purpose set forth in (iii) above may be issued: (1) if the aggregate principal amount of all Lessor Notes issued and outstanding under such Lease Indenture (including the proposed Additional Notes) exceeds an amount equal to 80% of the sum of (A) the Lessor's Cost, (B) such Lessor's share of the cumulative cost of all additions and improvements 104 theretofore incorporated or installed in Scherer Unit No. 2 during the term of the Lease and financed by such Lessor or with Lessor Notes, and (C) such Lessor's share of the cost of the additions and improvements proposed to be financed with such Additional Notes; or (2) if the aggregate principal amount of all Additional Notes issued under such Lease Indenture for the purpose set forth in (iii) above (including the proposed Additional Notes) exceeds an amount equal to 80% of the sum of (A) such Lessor's share of the cumulative cost of all additions and improvements theretofore incorporated or installed in Scherer Unit No. 2 during the term of the Lease and (B) the cost of the additions and improvements proposed to be financed with such Additional Notes. (Leases, Section 10.2; Lease Indentures, Section 2.12.) As a further condition to the issuance of Additional Notes for the purposes set forth in (ii) and (iii) above, at least ten days must have passed from the time the applicable Lease Indenture Trustee shall have given notice to holders of the applicable Lessor Notes of the proposed issuance of such Additional Notes, and the holders of a majority in principal amount of such Lessor Notes shall not have notified such Lease Indenture Trustee that certain requirements for issuing Additional Notes have not been met and directing such Lease Indenture Trustee not to allow the issuance of such Additional Notes. (Lease Indentures, Section 2.12.) In addition, in the case of Additional Notes issued for the purposes set forth in (ii) and (iii) above, the Lease Indenture Trustee shall have received a certificate of Lessee's independent public accountants verifying the calculations set forth in the related Lease Indenture plus, in the case of (iii), a certificate of an engineer, appraiser or other expert to the effect that the fair market value of all Capital Improvements as of their respective dates of incorporation or installation was not less than the cost of such Capital Improvements as of such dates. EVENTS OF DEFAULT "Events of Default" under each Lease Indenture include: (i) any "Event of Default" under the related Lease (other than the failure of Oglethorpe to pay any Excepted Payment), subject to the rights of the related Lessor to cure defaults in the payment of rent and to purchase Lessor Notes upon the occurrence of an "Event of Default" by Oglethorpe under its Lease with such Lessor as described below; (ii) a failure by such Lessor to make any payment in respect of the principal of or premium, if any, or interest on the Lessor Notes within three business days after the same shall have become due; (iii) a failure by the Lessor or by Wilmington Trust Company or NationsBank, N.A., as successor by merger to The Citizens and Southern National Bank, individually, to perform or observe any covenant, condition or agreement to be performed or observed by it under the Lease Indenture, to discharge any Lessor's liens or to give notice of a change in its principal place of business, or a failure by the related Equity Investor to remove any Equity Investor's liens or to remove the Lessor in certain events, if any such failure shall continue for a period of 30 days after notice thereof shall have been given to the related Lessor, Equity Investor and Lessee by the related Lease Indenture Trustee, specifying such failure and requiring it to be remedied; (iv) certain events of bankruptcy or insolvency shall have occurred in respect of the trust established under the related Trust Agreement or the related Equity Investor; and (v) the Lessor shall fail to pay certain taxes not being contested in good faith and such failure continues for 20 business days after notice shall have been given to the Lessor. (Lease Indentures, Section 4.1.) RIGHTS OF LESSOR TO CURE AND PURCHASE LESSOR NOTES Each Lease Indenture provides that an "Event of Default" thereunder that results from a nonpayment of rent under the related Lease is to be deemed cured if the Lessor thereunder shall have paid, within ten business days after receipt by such Lessor and the related Equity Investor of notice or actual knowledge of such nonpayment, an amount equal to the principal of or premium, if any, and interest on the Lessor Notes then due (otherwise than by declaration of acceleration), plus any interest on such amount on account of the delayed payment thereof, unless, if such nonpayment is of basic rent, Oglethorpe shall have failed to make all payments of basic rent (i) on three consecutive semiannual 105 basic rent payment dates or (ii) on any six due dates during the term of the Lease. (Lease Indentures, Section 4.3(a).) Each Lease Indenture also provides that an Event of Default that results from the failure of Oglethorpe to perform any other obligation relating to its interest in Scherer Unit No. 2 (including, without limitation, the payment of all amounts other than basic rent required to be paid by Oglethorpe) is deemed cured if the related Lessor shall have performed such obligation within ten business days after receipt by such Lessor of notice of the occurrence of such failure. (Lease Indentures, Section 4.3(b).) Upon any such payment of rent or performance of Oglethorpe's obligations, such Lessor shall be subrogated to the rights of the applicable Lease Indenture Trustee and the holders of the applicable Lessor Notes to payment of rent from Oglethorpe as reimbursement, to the extent set forth in such Lease Indenture, but such Lessor shall not obtain any lien on the applicable Lease Indenture Estate for such reimbursement. (Lease Indentures, Section 4.3(c).) Even if Oglethorpe later pays such rent, the Lease Indenture Trustee shall not remit such payment to such Lessor if any Lease Default or Event of Default has occurred and is continuing or the payment of the principal of, and premium if any, and interest on any Note is overdue. If an "Event of Default" under any Lease Indenture based solely upon an "Event of Default" under the related Lease has occurred and is continuing, and if the related Lessor Notes have been accelerated and such acceleration has not been rescinded, the related Lessor, within 20 days after receiving notice from the related Lease Indenture Trustee of such acceleration, may give written notice to such Lease Indenture Trustee of its intention to purchase all of such Lessor Notes. Each holder of a Lessor Note issued by such Lessor then will be required to sell such Lessor Note and its interest in such Lease Indenture to such Lessor if (i) within ten business days after such notice, such Lessor tenders an amount equal to all of the aggregate unpaid principal of and premium, if any, and interest on all of the unpaid Lessor Notes issued by such Lessor plus all other amounts, including interest on the overdue amounts, which would then be payable to the holders of such Lessor Notes in the case of an Event of Default under the Lease Indenture and (ii) such conveyance is not in violation of applicable law. (Lease Indentures, Section 4.3(e).) All amounts so paid to the Collateral Trust Trustee, as the holder of the Refunding Lessor Notes, will be immediately applied to the payment of the Facility Bonds. If an "Event of Default" has occurred under any Lease, the Lessor thereunder also shall have the right to terminate that Lease and arrange for the substitution of another party as lessee under a new lease substantially similar to such Lease, subject to (i) any "Event of Default" under the related Lease Indenture having been cured by such Lessor as described above, (ii) such substituted lessee having assumed all of the obligations of Oglethorpe under such Lease; (iii) such lessee being GPC, MEAG or Dalton or a person having an assigned credit rating from Moody's Investors Service, Inc. or Standard & Poor's Rating Services equal to or better than "A1" or "AA-," respectively, and (iv) such lessee making an irrevocable commitment to assume the lease obligation within two months after the occurrence of the "Event of Default" under such Lease and actually assuming such obligation within six months of such occurrence. In such event, such substituted lease shall be deemed the Lease subject to the lien of applicable Lease Indenture. (Lease Indentures, Section 4.3(f).) Under each Lease, the applicable Lessor will be obligated to attempt to lease its undivided ownership interest to GPC, MEAG, or Dalton or a utility with a net worth of at least $200,000,000 or an electric cooperative with a net worth of at least $25,000,000 for 30 days prior to the exercise of any of the Lessor's remedies under such Lease. (See "DESCRIPTION OF THE LEASES--Events of Default.") NOTICE OF EVENTS OF DEFAULT; ACTION BY TRUSTEE; WAIVER Each Lease Indenture requires the related Lessor to give the related Lease Indenture Trustee, Oglethorpe and the related Equity Investor prompt written notice of each "Event of Default" or default under the related Lease Indenture or Event of Loss with respect to Scherer Unit No. 2, to the extent it has actual knowledge thereof. In the event a Lease Indenture Trustee has actual knowledge of an "Event of Default" or default under the related Lease Indenture or such an Event of Loss, such Lease Indenture 106 Trustee will be required to give prompt written notice thereof to the related Lessor, Oglethorpe and each holder of a related Lessor Note, including the Collateral Trust Trustee as holder of the Refunding Lessor Notes. Subject to the terms of each Lease Indenture relating to the enforcement of remedies and the rights of a Lease Indenture Trustee to indemnification in the taking of any action, and further subject to the right of each Lessor to cure defaults and to purchase its Lessor Notes as described above, a Lease Indenture Trustee will be required to take such action (including the waiver of past defaults), or refrain from taking such action, with respect to any such "Event of Default," default under the related Lease Indenture or Event of Loss as it shall be directed by a majority in interest of the Noteholders (a "Directive"), which, during such time as the Refunding Lessor Notes are the only outstanding Lessor Notes, means a majority in principal amount of the Facility Bonds. (See "DESCRIPTION OF THE FACILITY BONDS--Voting of Lessor Notes.") If a Lease Indenture Trustee has not received directions as above provided within 20 days after the mailing by such Lease Indenture Trustee of notice of such "Event of Default," default under the Lease Indenture or Event of Loss, such Lease Indenture Trustee may, but will not be required to, take such action, or refrain from taking such action, as it deems advisable in the best interests of holders of the related Lessor Notes, subject to the subsequent receipt of a Directive from holders of Lessor Notes as above provided. (Lease Indentures, Section 5.1.) A Lease Indenture Trustee may, and upon receipt of a Directive shall, waive any past "Event of Default" or default under the related Lease Indenture except a default or an "Event of Default" (i) in the payment of the principal of or premium, if any, or interest on any Lessor Note or (ii) in respect of a covenant or provision of such Lease Indenture which under the Lease Indenture cannot be modified or amended without the consent of each holder of a Lessor Note issued under such Lease Indenture then outstanding. (Lease Indentures, Section 4.14.) ACCELERATION; RESCISSION If an "Event of Default" shall have occurred and be continuing under any Lease Indenture, a Lease Indenture Trustee may, or upon receipt of a Directive shall, declare the unpaid principal amount of all Lessor Notes under that Lease Indenture, with accrued interest and premium, if any, thereon, to be due and payable, subject to the right of the related Lessor to cure such "Event of Default" as described above. (Lease Indentures, Section 4.2 and 5.1.) The holders of such Lessor Notes by a Directive may rescind and annul any such declaration at any time if (i) all amounts of principal of and premium, if any, and interest which are then due and payable (otherwise than by declaration of acceleration), together with interest on such overdue amounts and all other sums payable (including all costs and expenses incurred in connection therewith), shall have been paid and (ii) every other Event of Default under the Lease Indenture shall have been remedied. (Lease Indentures, Section 4.4.) REMEDIES Each Lease Indenture provides that, if an "Event of Default" under such Lease Indenture has occurred and is continuing, the related Lease Indenture Trustee may exercise certain rights or remedies available to it under applicable law, including the public sale under power of sale of the undivided ownership interest in Scherer Unit No. 2 of the related Lessor and, if an "Event of Default" under the related Lease has occurred, one or more of the remedies with respect to such Lessor's undivided ownership interest in Scherer Unit No. 2 afforded to the Lessor by the Lease for "Events of Default" thereunder. (See "DESCRIPTION OF THE LEASES--Events of Default".) Such remedies may be exercised by a Lease Indenture Trustee to the exclusion of that Lessor and, to the extent there is an "Event of Default" under that Lease, to the exclusion of Oglethorpe. (Lease Indentures, Section 4.2.) Any undivided ownership interest in Scherer Unit No. 2 sold in the exercise of such remedies will be sold free and clear of any rights of those parties, including the rights of Oglethorpe under the Lease, provided that no exercise of any remedies by the Lease Indenture Trustee may affect the rights of Oglethorpe under the 107 Lease unless an "Event of Default"under the Lease has occurred and is continuing. (Lease Indentures, Section 4.6.) If an "Event of Default" under any Lease Indenture occurs and is continuing, any sums held or received by the related Lease Indenture Trustee thereunder may be applied to reimburse the Lease Indenture Trustee for any expense or other loss incurred by it and to pay its fees and any other amounts due to such Lease Indenture Trustee prior to any payments to holders of Lessor Notes. (Lease Indentures, Section 3.3.) If the remaining amounts available are not sufficient to pay the holders of Lessor Notes issued under such Lease Indenture in full, they will be paid ratably, in proportion to the principal amounts of their respective Lessor Notes. RIGHTS OF LESSOR The Lessor under each Lease at all times has, among other things, the right, to the exclusion of the related Lease Indenture Trustee, to demand and receive payment of, and to commence an action at law to obtain payment of, Excepted Payments (but Lessor will have no remedy or right with respect to any such payment against the related Lease Indenture Estate nor any right to collect any such payment by the exercise of certain remedies specified in the related Lease), to adjust Basic Rent, Stipulated Loss Value and Termination Values under the related Lease (subject to certain limitations), and, in certain circumstances, to exercise its rights with respect to appraisals. Any such adjustments, however, shall not result in the amount of each basic rent payment on each basic rent payment date being at least equal to the aggregate amount of all principal, premium, if any, and accrued interest payable on such payment date on all Lessor Notes then outstanding under such Lease Indenture or Stipulated Loss Value and Termination Value (together with all other amounts required to be paid by Lessee under the Lease in respect of any Event of Loss or purchase of the Undivided Interest) than the amount sufficient, as of the date of payment, to pay in full, the principal of, premium, if any, and interest on all Lessor Notes outstanding on such date of payment. The Lessor also has the right at all times, not to the exclusion of the related Lease Indenture Trustee, to receive notices, opinions and other materials from Oglethorpe, to inspect Scherer Unit No. 2, the Scherer Unit No. 2 Site and the Scherer Common Facilities pursuant to the related Lease, to obtain additional insurance and, in certain circumstances, to perform the obligations of Oglethorpe under such Lease. As long as the Lessor Notes have not been accelerated and a Lease Indenture Trustee has not exercised its remedies under the related Lease Indenture, the related Lessor may, to the exclusion of such Lease Indenture Trustee, exercise its rights under the related Lease with respect to renewals, purchase options, early termination, redelivery of the undivided ownership interest in Scherer Unit No. 2, Supplemental Financings and, in certain circumstances, payment of Stipulated Loss Value upon an Event of Loss. (See "DESCRIPTION OF THE LEASES--Redelivery," "--Alterations and Improvements," "--Optional Termination for Obsolescence," "--Purchase and Renewal Options" and "--Events of Loss.") In such circumstances, such Lessor may also exercise certain other rights jointly with the related Lease Indenture Trustee. A Lease Indenture Trustee may terminate the exercise of any of the foregoing rights by notice to the related Lessor if an "Event of Default" under the related Lease Indenture has occurred. (Lease Indentures, Section 5.6.) AMENDMENTS AND SUPPLEMENTS Each Lease Indenture Trustee may amend or supplement its Lease Indenture with the consent of the related Lessor but without the consent of the holders of any Lessor Notes (including the Collateral Trust Trustee, as the holders of the Refunding Lessor Notes), in order to (i) evidence the succession of any person as Lessor or the appointment of any additional or successor Lease Indenture Trustee; (ii) confirm or amplify the description of any property at any time subject to the lien of such Lease Indenture or convey, transfer, assign, mortgage or pledge any property to or with the Lease Indenture Trustee; (iii) provide for and evidence the creation and issuance of Additional Notes in accordance with 108 the terms of such Lease Indenture; (iv) cure any ambiguity in, correct or supplement any defective or inconsistent provision of, or add to or modify any other provisions and agreements in, such Lease Indenture in any manner that will not in the judgment of the Indenture Trustee materially adversely affect the interests of the holders of such Lessor Notes; (v) grant or confer upon such Lease Indenture Trustee for the benefit of the holders of any Lessor Notes any additional rights, remedies, powers, authority or security which may be lawfully granted or conferred and which are not contrary or inconsistent with such Lease Indenture; (vi) add to the covenants or agreements to be observed by the related Lessor and which are not contrary to such Lease Indenture or surrender any right or power of such Lessor with its consent; (vii) if required by applicable law, qualify such Lease Indenture under the TIA; or (viii) enter into any indenture or indentures supplemental thereto or any amendment, modification, supplement or waiver or consent to any Operative Document so long as it shall not, in the opinion of such Indenture Trustee, materially adversely effect the interest of the holders of such Lessor Notes. (Lease Indentures, Section 8.2.) Except as described in the preceding paragraph, no amendment or supplement to a Lease Indenture or to any of the agreements forming a part of the security for the Lessor Notes, including the related Lease and Support Agreements, may be made except upon receipt of a Directive. In addition, the Lessor and the holders of the Lessor Notes representing 100% of the outstanding principal amount of the Lessor Notes (determined in the same manner as the determination of a Directive), including the Collateral Trust Trustee, as holder of the Refunding Lessor Notes, must consent to any amendment of such agreements which will (i) modify the net lease nature of Oglethorpe's obligations, the quiet enjoyment provisions of the related Lease, the restriction on liens under such Lease, the definitions of default, "Event of Default," "Lease Default," "Lease Event of Default," "Indenture Event of Default," "Indenture Default," "Majority in Interest of Noteholders" and "Excepted Payments" or the percentage of Noteholders required to take or approve any action under such Lease and related Lease Indenture, or the percentage of holders of related Lessor Notes required to direct the related Lease Indenture Trustee to take action or to consent to an amendment; (ii) change the amount or time of payment under any Lessor Note or change the rate or manner of calculation of interest payable thereunder; (iii) modify or alter the manner of payment specified in the related Lease Indenture; (iv) reduce, modify or amend the indemnities under the related Participation Agreement; (v) change the nature, amount or timing of any payments due under the related Lease; (vi) consent to any assignment of such Lease not permitted thereby or any sublease by Oglethorpe or any reduction in Oglethorpe's obligations thereunder; (vii) reduce the term of the related Lease or any related Support Agreements; (viii) change the nonrecourse nature of the obligations of the related Lessor; (ix) alter the effect of the consent to the Sale and Leaseback Transactions of the RUS; or (x) otherwise in the judgment of the Lease Indenture Trustee materially adversely affect the rights of any holder of a Lessor Note, permit the creation of a lien on the Indenture Estate or deprive the Noteholder of the benefit of the lien of the Lease Indenture. (Lease Indentures, Section 8.1.) LIMITATION OF LIABILITY OF LESSORS The Refunding Lessor Notes which secure the Facility Bonds will not be direct obligations of, or guaranteed by, Oglethorpe, any Equity Investor or Wilmington Trust Company, NationsBank, N.A. or its agent, The Bank of New York. None of the Equity Investors, Wilmington Trust Company, NationsBank, N.A. or its agent, The Bank of New York, or any Lease Indenture Trustee will be liable to any holder of a Refunding Lessor Note or a Facility Bond or, in the case of the Equity Investors and Wilmington Trust Company and NationsBank, N.A. or its agent, The Bank of New York to the Lease Indenture Trustees, for any amounts payable under the Refunding Lessor Notes or, except as provided in the Lease Indentures, for any liability under the Lease Indentures. All payments of principal of and premium, if any, and interest on the Refunding Lessor Notes will be made only from the assets subject to the lien of the respective 109 Lease Indentures or the income and proceeds received by the related Lease Indenture Trustee therefrom (including basic rent and certain other amounts payable by Oglethorpe under the Lease). (Lease Indentures, Section 2.5.) DISCHARGE OF LIEN AND DEFEASANCE OF LESSOR NOTES Each Lease Indenture provides that if the related Lessor Notes, including the related Refunding Lessor Note, shall have become due and payable in accordance with their terms or otherwise or when provision has been made for such payment and the whole amount of the principal of and premium, if any, and interest on such Lessor Notes then outstanding shall be paid and all other sums secured by or otherwise required to be paid under the related Leases, then the related Lease Indenture Trustee shall take all actions necessary to terminate and discharge the lien created thereby. (Lease Indentures, Sections 5.3 and 9.1.) Upon such payment of any Lessor Note, such Lessor Note shall no longer be secured by or entitled to the benefits of the related Lease Indenture. Lessor Notes shall be deemed paid if there shall be deposited with the Lease Indenture Trustee, in trust, money or U.S. Government Obligations, which will provide moneys, without reinvestment, sufficient to pay the principal of and premium, if any, and interest due on such Lessor Notes on and prior to the redemption date or maturity date thereof. LEASE INDENTURE TRUSTEES The Bank of New York Trust Company of Florida, N.A., as successor trustee to Wachovia Bank of Georgia, N.A., is the Lease Indenture Trustee under each of the Lease Indentures. The Bank of New York, an affiliate of The Bank of New York Trust Company of Florida, N.A., has guaranteed the obligations of The Bank of New York Trust Company of Florida, N.A. If an "Event of Default" under any Lease Indenture occurs and is continuing, any sums held or received by the related Lease Indenture Trustee may be applied to the payment of obligations incurred by such Lease Indenture Trustee prior to any payments to holders of the related Lessor Notes. (Lease Indentures, Section 3.3.) Each Lease Indenture provides that the related Lease Indenture Trustee shall not be answerable or accountable under any circumstances, unless for its own willful misconduct or gross negligence, and except for liabilities on account of representations, warranties or covenants made by it in its individual capacity. Each Lease Indenture further provides that, in the case of any "Event of Default" under such Lease Indenture, the related Lease Indenture Trustee shall exercise such of the rights and remedies vested in it by such Lease Indenture and shall use the same degree of care in their exercise as a prudent man would exercise or use in the circumstances in the conduct of his own affairs. (Lease Indentures, Section 6.1.) 110 DESCRIPTION OF THE LEASES The statements under this caption are summaries and do not purport to be complete. The summaries are qualified in their entirety by reference to the Leases, a copy of the form of which has been filed as an exhibit to the Registration Statement of which this Prospectus is a part. (See "AVAILABLE INFORMATION.") TERM AND RENTALS The Lessors have acquired separate undivided ownership interests in Scherer Unit No. 2 aggregating 60% of such unit and are leasing such interests to Oglethorpe pursuant to separate Leases, each having a lease term expiring on June 30, 2013, unless earlier terminated or extended as described below (40% of such unit is owned by GPC, MEAG and Dalton). Basic rent is required to be paid by Oglethorpe under the Leases in immediately available funds before 10:00 a.m. local time at the place of payment on each June 30 and December 31, unless the scheduled due date is not a business day, in which case such basic rent is required to be paid in immediately available funds before 10:00 a.m. local time on the next business day. (Leases, Section 3.6). The basic rent payable under each Lease on each payment date is required to be at least equal to the installment of principal and interest payable on such date on the Lessor Notes of such Lessor. (Leases, Section 3.4). Except in the case of an Event of Loss, a purchase of the undivided ownership interest by Oglethorpe, early termination of the Lease or any event of default under the related Lease Indenture, each payment of basic rent by Oglethorpe during such time as such Lease Indenture is in effect will be made to the Lease Indenture Trustee and applied, first to the payment of principal and interest due from a Lessor on its Lessor Notes on each June 30 and December 31 (basic rent having commenced on December 31, 1985), unless the scheduled payment date is not a business day, in which case such payment is required to be made on the next business day. The balance of any payment of basic rent under the Leases, after payment of the scheduled principal and interest on the Lessor Notes and any unreimbursed fees or expenses of the Lessor, will be paid to the respective Equity Investors, as beneficial owners of undivided ownership interests in Scherer Unit No. 2. (Lease Indentures, Section 3.1.) The amount of rent payable under each Lease is subject to adjustment if additional Lessor Notes are issued (see "DESCRIPTION OF THE LEASE INDENTURES--Additional Lessor Notes"), and if Oglethorpe is obligated to indemnify the related Equity Investor under the Tax Indemnification Agreement for a loss of tax benefits. In such event, a portion of the proceeds of such increased loans would be retained by the related Equity Investor. The amount of rent, as adjusted in any of the foregoing circumstances, must be sufficient at all times to pay in full all amounts of principal of and premium, if any, and interest on the related Lessor Notes when due and payable. OWNERSHIP AGREEMENT AND OPERATING AGREEMENT Scherer Unit No. 2 is operated by GPC, as agent for the owners of Scherer Unit No. 2, pursuant to the Scherer Ownership Agreement and the Scherer Operating Agreement. (See "CO-OWNERS OF THE PLANTS AND THE PLANT AGREEMENTS--The Plant Agreements.") Oglethorpe assigned its rights with respect to Scherer Unit No. 2 under the Scherer Ownership Agreement and the Scherer Operating Agreement to the Lessors, who assigned such rights back to Oglethorpe for the term of the Leases. GPC, MEAG and Dalton agreed that, during such term, Oglethorpe will be treated as the owner of the undivided ownership interests of the Lessors in Scherer Unit No. 2 and would continue to possess all of the rights and obligations of a participant with respect to such interests. The Lessors will be treated as participants under the Scherer Ownership Agreement or the Scherer Operating Agreement only upon the termination of the Leases, if Oglethorpe does not then purchase such interests. Until that time, Oglethorpe also is obligated under the Participation Agreements not to consent to any amendment to such agreements which would adversely effect the interests of the Lessors. 111 Under the Leases, Oglethorpe is obligated to perform and discharge all indebtedness, obligations, and liabilities assessed against the undivided ownership interests of the Lessors in Scherer Unit No. 2 pursuant to the Scherer Operating Agreement and the Scherer Ownership Agreement. (Leases, Section 10.6). Oglethorpe also is obligated under the Participation Agreements to perform and comply with all the terms of such agreements and any other agreements relating to the ownership and operation of Scherer Unit No. 2. (Participation Agreements, Section 5.5(cc).) REDELIVERY Under the Leases, unless the undivided ownership interests of the Lessors in Scherer Unit No. 2 are transferred to Oglethorpe pursuant to the Leases, Oglethorpe is obligated to redeliver such interest to the Lessors, or to any transferees or assignees of the Lessors, free and clear of all liens (other than certain permitted liens) and in such condition as would result from Scherer Unit No. 2 having been maintained during the term of the Leases in accordance with a standard of care not less than "prudent utility practice," as defined in the Scherer Ownership Agreement. If Scherer Unit No. 2 is not in such condition, the sole remedy of each Lessor is to demand that Oglethorpe pay it an amount equal to the actual decrease in the fair market sales value of its respective undivided ownership interest in Scherer Unit No. 2 on such date, as determined by qualified appraisers in the manner specified in the Leases, to the extent attributable to the failure of such Unit to have been so maintained. The Leases set forth objective standards relating to electric generating capacity, availability for service and economic useful life, which, if met, will result in Scherer Unit No. 2 being deemed to have been so maintained. (Leases, Section 7.1.) NET LEASE The obligations of Oglethorpe under each Lease are those of a lessee under a "net lease". Payments of basic rent under the Leases by Oglethorpe are to be made without notice or demand, and all rent is to be paid without counterclaim, setoff, deduction, defense, and without abatement, suspension, deferment, diminution, or reduction. (Leases, Section 3.8.) ALTERATIONS AND IMPROVEMENTS Alterations and improvements may be made to Scherer Unit No. 2 from time to time pursuant to the provisions of the Scherer Ownership Agreement and the Scherer Operating Agreement. Any such alterations and improvements will become the property of the Lessors. (Leases, Section 10.1.) As described above, Oglethorpe is obligated to make all payments due under such agreements, including payments for its share of such alterations and improvements except to the extent such costs may be financed by a Lessor through the issuance of Additional Notes under the related Lease Indenture (a "Supplemental Financing"). Any Supplemental Financing is subject to the fulfillment of certain conditions, including the following: (i) there shall be no more than one Supplemental Financing in any calendar year, and the aggregate cost of the improvements covered by such Supplemental Financing under all Leases must be at least $3,000,000; (ii) the aggregate principal amount of all Lessor Notes issued and outstanding under such Lease Indenture (including the proposed Additional Notes) must not exceed an amount equal to 80% of the sum of (A) the Lessor's Cost, (B) such Lessor's share of the cumulative cost of all additions and improvements theretofore incorporated or installed in Scherer Unit No. 2 during the term of the Lease and financed by such Lessor or with Lessor Notes, and (C) such Lessor's share of the cost of the additions and improvements proposed to be financed with such Additional Notes; (iii) the aggregate principal amount of all Additional Notes issued under such Lease Indenture for additions and improvements (including the proposed Additional Notes) must not exceed an amount equal to 80% of the sum of (A) such Lessor's share of the cumulative cost of all additions and improvements theretofore incorporated or installed in Scherer Unit No. 2 during the term of the Lease and (B) the cost of the additions and improvements proposed to be financed with such Additional Notes; 112 (iv) the total amount of all Supplemental Financings with respect to the undivided ownership interests under all four Leases to and including the stated termination date of the Leases must not exceed $125,000,000; (v) Oglethorpe's then outstanding debt must be rated (or, if not rated, deemed by the related Equity Investor to be) no less than "investment grade"; (vi) Oglethorpe must indemnify the related Equity Investor against the loss of any available tax benefits and against any adverse tax consequences; (vii) the additional Lessor Notes must have a final maturity no later than June 30, 2013; (viii) no default or event of default under the Leases shall have occurred and be continuing; and (ix) the RUS must consent to such Supplemental Financing. (Leases, Section 10.2.) In the event of a Supplemental Financing, the rent shall be adjusted to cover the additional debt service. (See "DESCRIPTION OF THE LEASES--Additional Lessor Notes.") INSURANCE Property insurance and liability insurance are to be maintained with respect to Scherer Unit No. 2 by GPC pursuant to the Scherer Ownership Agreement and the Scherer Operating Agreement. As described above, under such agreements and the Leases Oglethorpe is obligated to pay the portion of the cost of such insurance attributable to the undivided ownership interests of the Lessors. Under the Participation Agreements, Oglethorpe is obligated to monitor all insurance which is so maintained, and to take any and all reasonable actions to assure that at all times such insurance is maintained consistent with "prudent utility practice," as defined in the Scherer Ownership Agreement. Oglethorpe also is to monitor and maintain the endorsements in favor of the Lessors and the other parties to the Participation Agreements. Under the Leases, the Lessors may provide additional insurance for Scherer Unit No. 2. (Leases, Article 12.) ASSIGNMENT, SUBLEASE AND TRANSFER Except in connection with a merger, consolidation or transfer, conveyance or lease of assets permitted by the Participation Agreements and except for the assignment of its leasehold rights to the RUS and the other secured parties under the Mortgage Indenture, Oglethorpe is not permitted to assign or transfer or encumber (except for permitted liens) any of its rights or interests under any of the Leases without the prior consent of the respective Lessors, except that Oglethorpe is permitted to sublease its interests under the Leases without such consent if such sublease (i) do not extend beyond June 30, 2013, (ii) do not impair or diminish any of the rights of the respective Lessors or obligations of Oglethorpe under the Leases and (iii) are expressly subject to and subordinate to the provisions of the Leases and the related operative documents. No such sublease shall relieve Oglethorpe of its obligations under the applicable Lease. (Leases, Article 13.) OPTIONAL TERMINATION FOR OBSOLESCENCE In the absence of an event of default under a Lease, Oglethorpe has the option, on at least 180 days' prior notice, to terminate any Lease on any subsequent June 30 or December 31 specified in such notice (the "Termination Date"), if the Board of Directors of Oglethorpe has adopted a resolution determining that (i) the interest in Scherer Unit No. 2 subject to the Lease is surplus to the requirements of Oglethorpe or (ii) Scherer Unit No. 2 is economically obsolete. If, at the time Oglethorpe exercises the foregoing option, Scherer Unit No. 1 has not been permanently decommissioned and retired from commercial service, and Scherer Unit No. 2 is determined by appraisers pursuant to procedures specified in the Leases to be technically superior or identical to Scherer Unit No. 1, then it is a condition to the exercise of this option that Oglethorpe shall have disposed of all of its ownership interest, if any, in Scherer Unit No. 1. If Oglethorpe has given such a termination notice, it is required, upon request of the Lessor to which such notice has been given, to use its best efforts to obtain cash bids for the purchase of such Lessor's undivided ownership interest in Scherer Unit No. 2. Each Lessor has the right to elect to retain its 113 undivided ownership interest in Scherer Unit No. 2, provided that it shall first have paid to the holders of the related Lessor Notes the principal of and premium, if any, and interest on such Lessor Notes to the proposed date of prepayment. If a Lessor has not elected to retain its undivided ownership interest, the Lessor is required to transfer its interest in Scherer Unit No. 2 and the Support Agreements for cash to the bidder which has submitted the highest bid before the Termination Date. On the Termination Date, if any Lessor has not elected to retain its undivided ownership interest, Oglethorpe also is required to pay or deliver, as applicable to the Lessor (a) the excess, if any, of the Termination Value as of such date over such sales price (after deducting all expenses incurred by such Lessor in connection with such sale), (b) all basic rent accrued and unpaid to and including the Termination Date, including any premium due on the Lessor Notes which are being redeemed, (c) either (i) an amount of moneys which will be sufficient to pay on the specified redemption date (45 to 60 days following the Termination Date), interest to become due on the Notes from the Termination Date to such redemption date, or (ii) U.S. Government Obligations maturing no later than the business day prior to the specified redemption date, the principal of and the interest on which when due will provide moneys which, together with the moneys, if any, available therefor, will be sufficient to pay, on the redemption date, interest due and to become due on the Lessor Notes on and prior to the redemption date, and (d) all other rent then due under the related Lease. Upon compliance by Oglethorpe with such provision, its obligation to pay basic rent under the applicable Lease for any period after the Termination Date shall cease and the term of such Lease shall end on such Termination Date. If no sale occurs on the Termination Date (other than as a result of a Lessor's election to retain its undivided ownership interest in Scherer Unit No. 2) or Oglethorpe fails to comply in full with the early termination provisions, such Lease will continue in full force and effect. (Leases, Article 6.) PURCHASE AND RENEWAL OPTIONS Oglethorpe has the option under each of the Leases to purchase the Lessor's undivided ownership interest in Scherer Unit No. 2 on the following dates, for a purchase price payable in immediately available funds in an amount equal to the greater of Stipulated Loss Value payable on the proposed purchase date or the fair market sales value of the Lessor's undivided ownership interest in Scherer Unit No. 2 on such date, in either case together with premium, if any, due on the Lessor Notes: (1) on December 31, 2000, December 31, 2005, and December 31, 2010; and (2) on any December 31 between December 31, 1997 and December 31, 2010, if (x) "scrubbers" or any similar capital improvement intended to remove pollutants from the effluent discharged from the boiler of Scherer Unit No. 2 are required by applicable law, (y) capital improvements are included in the Scherer Ownership Agreement budget for Scherer Unit No. 2, 60% of the value of which (expressed in December 30, 1985 dollars) equals or exceeds $100,000,000, or (z) capital improvements are included in such budget within any two years, 60% of the value of which (expressed in December 30, 1985 dollars) equals or exceeds $50,000,000, and the related Equity Investor does not finance such improvements through an equity investment. Oglethorpe also has the option under each Lease to purchase such undivided ownership interest on each June 30 during the fixed rate renewal term (described below) at the purchase price specified above. In the case of all of these options, fair market sales value is to be determined by agreement between Oglethorpe and the Lessor and, failing agreement, by independent appraisers pursuant to procedures specified in the Leases. The option to purchase the undivided ownership interest under each Lease on the dates in clause (1) is subject to 24 months notice of a tentative election so to purchase, and at least 12 months irrevocable notice of the election so to purchase. The option to purchase the undivided ownership interests on the dates in clause (2) may be exercised on any June 30 or December 31 following a determination of fair market sales value as of such June 30 or December 31. Oglethorpe also has the option to purchase a Lessor's undivided ownership interest in Scherer Unit No. 2 of any June 30 or December 31, after an indemnity payment becomes due under a Tax Indemnification Agreement with such Lessor's Equity Investor as a result of a final determination that such undivided interest constitutes public utility property. The purchase price in such event will be the greater 114 of the Termination Value payable on the purchase date or the fair market sales value of the Lessor's undivided ownership interest in Scherer Unit No. 2 on such date, in either case together with premium, if any, due on the Lessor Notes of such Lessor. (Leases, Section 5.1.) The foregoing options to purchase the undivided ownership interests or to renew the Lease are subject to the rights of first refusal granted to the other owners of Scherer Unit No. 2. The consent of such Co-Owners to the Leases provides that Oglethorpe may exercise any of the foregoing options, but that, if Oglethorpe does not do so, the other Co-Owners shall have the right to exercise such options on substantially the same terms and conditions and at the same time. At the end of the basic term of each Lease, unless an "Event of Default" under such Lease, shall have occurred and be continuing, Oglethorpe will have the option to renew such Lease at a fixed rental for a period of at least 8.5 years, as determined pursuant to formulas set forth in such Lease unless a Lease Event of Default. (Leases, Section 4.1.) Oglethorpe also will have the right at the end of the basic term or any renewal term of a Lease, unless a Lease Event of Default shall have occurred and be continuing to renew the term of such Lease for a period of up to five years at the fair market rental value for such undivided ownership interest in Scherer Unit No. 2, as determined by negotiation between Oglethorpe and the Lessor and, failing agreement, by independent appraisers pursuant to procedures specified in such Lease. (Leases, Sections 4.2, 4.3 and 4.4.) Oglethorpe also has the right at the end of the basic term or any renewal term of a Lease to purchase the Lessor's undivided ownership interest in Scherer Unit No. 2 at a purchase price equal to the fair market sales value of such interest, determined in the manner described above. (Leases, Section 5.1.) EVENTS OF LOSS An Event of Loss means any of the following events: (i) The loss of Scherer Unit No. 2, in its entirety or substantially in its entirety, due to theft, disappearance, destruction or damage beyond economic repair; (ii) The receipt of insurance proceeds based upon an actual or constructive total loss with respect to Scherer Unit No. 2; (iii) Scherer Unit No. 2, the Scherer Unit No. 2 Site, or the Scherer Common Facilities having been condemned or otherwise permanently rendered unfit for normal use, confiscated or seized, or title thereto or use thereof having been requisitioned by any governmental authority and Oglethorpe having lost the use or possession of substantially all of Scherer Unit No. 2 or the Site for a period exceeding 48 months; (iv) The permanent decommissioning and retiring from commercial service of Scherer Unit No. 2; (v) With respect to any Lessor or Equity Investor, such Lessor or Equity Investor or any affiliate of either of them, solely by reason of the Sale and Leaseback Transactions and without regard to any of its other activities, having become subject to regulation under any Federal or state law relating to utilities or the generation, transmission, production, or sale of electric power during the term of any Lease and prior to the time that Oglethorpe ceases to be in possession of Scherer Until No. 2, unless (A) such regulation results from the ownership or leasehold interest in any other electric generation facility or transmission facility acquired on or after December 30, 1985, or such Lessor, Equity Investor or affiliate was subject to such regulation prior to such date or upon becoming a Lessor or Equity Investor, (B) if such regulation is pursuant to any law other than the Public Utility Holding Company Act of 1935, as amended, or the Federal Power Act, as amended, and the effect of such regulation is not materially adverse, in the reasonable judgment of the person subject to such regulation, (C) such person has waived in writing the treatment of such regulation as 115 an Event of Loss, or (D) Oglethorpe, at its sole cost and expense, is contesting such regulation, subject to certain conditions; or (vi) At Oglethorpe's election, if any Lessor or Equity Investor becomes subject to the type of regulation described in (v) above under circumstances described in the Leases and such Lessor or Equity Investor does not take such action as may be necessary in order to cease to be so regulated within 60 days or does not transfer its undivided interest to a nonregulated entity and, as a result thereof, (A) the Lease is deemed to be a contract for the sale by such Lessor of electric energy to Oglethorpe under the Federal Power Act, as amended, (B) Oglethorpe becomes subject to regulation which is contrary to the terms of the Mortgage Indenture, its Member contracts, or any other agreement to which it is a party or any applicable law, or (C) Oglethorpe becomes subject to regulation which otherwise would not be applicable, which regulation Oglethorpe, in its reasonable judgment, determines to be materially adverse. If an Event of Loss described in clauses (i), (ii), (iii) or (iv) occurs with respect to Scherer Unit No. 2, Oglethorpe is required to pay to each Lessor on the June 30 or December 31 (or, if such Event of Loss occurs within 90 days of the next succeeding June 30 or December 31, the 90th day) following the date of such Event of Loss, the Stipulated Loss Value of such Lessor's undivided ownership interest in Scherer Unit No. 2, together with certain additional amounts. In the case of an Event of Loss described in clauses (v) and (vi), such payment will made only to the Lessor with respect to which the Event of Loss has occurred. If Oglethorpe pays the Stipulated Loss Value to a Lessor, together with the additional amounts then required to be paid (which in all circumstances will be in excess of the principal of and premium, if any, and interest on the Lessor Notes of such Lessor then outstanding), the lien of the related Lease Indenture and Lease of the Lessor's undivided ownership interest in Scherer Unit No. 2, shall be terminated, title thereto shall be transferred to or upon the order of Oglethorpe, the obligation of Oglethorpe thereafter to make rental payments with respect to such interest in Scherer Unit No. 2 will cease, and the aggregate of the Stipulated Loss Value and other payments made by Oglethorpe shall be applied as provided in the Lease Indenture to the prepayment of the Lessor Notes. (Leases, Section 11.1; Lease Indentures, Section 3.2.) Notwithstanding the foregoing, upon the occurrence of an Event of Loss described in clause (v) above, Oglethorpe may elect, upon the satisfaction of certain conditions specified in each Lease Indenture, to assume all of the liabilities and obligations of the Lessor under the related Lease Indenture. Upon such assumption, all such liabilities and obligations shall be made fully recourse to Oglethorpe, and Oglethorpe's obligation to pay such Stipulated Loss Value and other amounts shall be reduced by the principal amount of and accrued interest on the Lessor Notes so assumed and not otherwise due on the date of such payment. (Lease Indentures, Section 2.10(a).) EVENTS OF DEFAULT "Events of Default" under each Lease include, among other things: (i) failure by Oglethorpe to pay basic rent within three business days after the same shall have become due; (ii) the failure to pay Stipulated Loss Value or Termination Value, together with premium, if any, on the Lessor Notes of the related Lessor, within ten business days after the same becomes due; (iii) the failure to pay any amount payable by Oglethorpe under the Scherer Ownership Agreement, the Scherer Operating Agreement or certain related documents upon the earlier of ten days after such payment becomes due or the enforcement by any Co-Owner or the operator of Scherer Unit No. 2 under the Scherer Operating Agreement of the right to deny Oglethorpe the output of capacity or energy derived from Scherer Unit No. 2; (iv) the failure to pay any other amount payable under the Lease within fifteen business days after demand therefor; (v) the failure by Oglethorpe to perform or observe any material covenant or agreement under the Lease or any other operative document (except the related Tax Indemnification Agreement) and the continuance of such failure for a period of 60 days after notice; (vi) any representation or warranty made by Oglethorpe in any related operative document (except the related Tax Indemnification Agreement) shall prove to have been incorrect in any material respect when made, and shall remain 116 material and uncured; (vii) certain events of bankruptcy or insolvency shall have occurred with respect to Oglethorpe; (viii) an Event of Default under the Mortgage Indenture shall have occurred and be continuing and, as a result thereof, any remedy permitted pursuant to the Mortgage Indenture shall have been exercised; or (ix) any judgment or order for the payment of money in excess of $10,000,000 shall be rendered against Oglethorpe, and enforcement proceedings shall have been commenced and Oglethorpe shall not have bonded or otherwise set aside on its books adequate reserves therefor or there shall be any period of 120 days during which a stay of enforcement shall not be in effect. (Leases, Article 14.) The related Lessor has the right to cure any such default. (Leases, Article 17.) If an "Event of Default" under any Lease has occurred and is continuing, and the Lessor thereunder has declared such Lease to be in default, the Lessor may exercise one or more of the remedies provided in the Lease with respect to its undivided ownership interest in Scherer Unit No. 2. These remedies include the right to rescind or terminate the Lease, to demand that Oglethorpe redeliver such interest, to sell or relet such interest free and clear of the rights of Oglethorpe, and to retain the proceeds of such sale or lease and to require Oglethorpe to pay as liquidated damages any unpaid basic rent due under the Lease through the rent payment date specified in a written notice to Oglethorpe given not earlier than 30 days before such date, together with premium, if any, due on the Lessor Notes, plus, in the sole discretion of the Lessor any of the following amounts, with interest thereon at the Stipulated Interest Rate to the date of payment: (a) (i) an amount equal to the excess, if any, of (A) the applicable Stipulated Loss Value as of such payment date, over (B) the aggregate fair market rental value of the Lessor's undivided ownership interest in Scherer Unit No. 2 until the end of the basic term or the then current renewal term of the Lease, after discounting such rental value to present worth at the Stipulated Interest Rate; (ii) an amount equal to the excess, if any, of such Stipulated Loss Value over the fair market sales value of the Lessor's undivided ownership interest in Scherer Unit No. 2 as of such payment date; or (iii) an amount equal to such Stipulated Loss Value and, if such amount is demanded, upon full payment by Oglethorpe of all sums due under the Lease, the Lessor is required, at the option of Oglethorpe, either to (x) exercise commercially reasonable efforts to sell its undivided ownership interest in Scherer Unit No. 2 and pay over to Oglethorpe the net proceeds of such sale or (y) transfer its undivided ownership interest in Scherer Unit No. 2 and the Support Agreement to Oglethorpe, whereupon the Lease shall terminate; or (b) the amount of any deficiency between Stipulated Loss Value as of such payment date and the net proceeds of such sale, together with interest on such rent and such deficiency, calculated as provided in the Lease, from the date of such sale until the date of actual payment. For a period of 30 days before the exercise of any of the remedies described above, each Lessor is required to attempt to lease its interest in Scherer Unit No. 2 and assign Oglethorpe's related rights and obligations, on the same terms and conditions, to any other Co-Owner or a rural electric cooperative with a net worth of at least $25,000,000 or a public utility having a net worth of at least $200,000,000. (Leases, Section 15.1.) Any new lessee must cure all defaults of Oglethorpe and obtain all necessary governmental consents. (See "DESCRIPTION OF THE LEASE INDENTURES--Rights of the Lessors to Cure and Purchase Lessor Notes.") MERGER, CONSOLIDATION; MAINTENANCE OF CORPORATE EXISTENCE Pursuant to the Participation Agreements, Oglethorpe shall at all times maintain its existence as an electric membership corporation under Georgia law, provided that Oglethorpe may consolidate or merge with or into any other corporation or convey, transfer or lease all or substantially all of its assets to 117 any person if, among other things: (i) the resulting entity formed by such consolidation or merger or the resulting entity that acquires by conveyance, transfer or lease shall be a corporation organized under the laws of the District of Columbia or any State of the United States; (ii) in the case of a conveyance, transfer or lease, such entity agrees to assume the due and punctual performance of each covenant and condition to be performed or complied with by Oglethorpe in connection with each Lease; (iii) Oglethorpe shall have delivered to the Lessors, the Equity Investors and the Lease Indenture Trustees an opinion of independent counsel, to the effect that clause (i) has been complied with, and the assumption agreement, if required by clause (ii), is a legal, valid and binding agreement of, and enforceable against, the resulting entity; (iv) immediately after giving effect to such transaction, no default or "Event of Default" shall have occurred and be continuing under the Lease; (v) the debt of the resulting entity is rated at levels specified in the related Participation Agreement which are based on the credit ratings of Oglethorpe at such time or, in the alternative, the resulting entity shall have a consolidated net worth at least equal to that of Oglethorpe prior to the transaction; and (vi) the resulting entity has acquired all necessary consents, approvals and permits of governmental authorities, Oglethorpe's Members and the RUS. Oglethorpe also may not acquire all or substantially all the assets of any other person or permit any corporation to be merged into Oglethorpe unless the last two conditions are fulfilled. No such conveyance, transfer or lease of all or substantially all of the assets of Oglethorpe shall have the effect of releasing Oglethorpe or any resulting entity from its liability with respect to the undivided ownership interest in Scherer Unit No. 2 without the prior written consent of the Lessors, the Equity Investors and the Lease Indenture Trustees. (Participation Agreements, Section 5.5(t).) 118 CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES The following is a summary of the principal U.S. federal income tax consequences of the exchange of Private Facility Bonds for Exchange Facility Bonds and the ownership and disposition of Exchange Facility Bonds. This summary deals only with Exchange Facility Bonds held as capital assets by initial holders. This summary does not address all aspects of U.S. federal income taxation that may be relevant to a U.S. Holder (as defined below) based on such U.S. Holder's specific circumstances. In particular, the following summary does not address the tax treatment of persons who are not U.S. Holders or of U.S. Holders who are dealers in securities or currencies, banks, certain U.S. expatriates, tax-exempt organizations, life insurance companies, persons subject to the alternative minimum tax, persons that hold Exchange Facility Bonds that are a hedge or that are hedged against currency risks or that are part of a straddle or conversion transaction or persons whose functional currency is not the U.S. dollar. The summary is based on the Internal Revenue Code of 1986, as amended (the "Code"), its legislative history, existing and proposed Treasury Regulations promulgated thereunder, published rulings and court decisions, all as currently in effect and all subject to change at any time, perhaps with retroactive effect. For purposes of this discussion, "U.S. Holder" means a beneficial owner of Exchange Facility Bonds who or that is a citizen or resident of the United States, a corporation, partnership or other entity created or organized in or under the laws of the United States or of any political subdivision thereof, an estate the income of which is includable in gross income for U.S. federal income tax purposes regardless of its source or a trust if (i) a court within the United States is able to exercise primary supervision over the administration of the trust and (ii) one or more U.S. trustees have the authority to control all substantial decisions of the trust. This summary is of a general nature only and is not intended to be, and should not be construed to be, legal or tax advice to any prospective investor and no representation is made with respect to the tax consequences to any particular investor. This summary does not address any aspect of any state or local tax law or any estate or gift tax considerations, or the tax laws of jurisdictions outside the United States that may be applicable to the Exchange Facility Bonds or holders thereof, or the tax considerations applicable to non-U.S. Holders. There can be no assurance that the Internal Revenue Service (the "IRS") will take a similar view of the ownership or disposition of the Exchange Facility Bonds. Persons considering exchanging Private Facility Bonds for Exchange Facility Bonds should consult their own tax advisors concerning the consequences, in their particular circumstances, under the Code and the laws of any other state, local or non-U.S. taxing jurisdiction, of such exchange and the ownership and disposition of Exchange Facility Bonds. EXCHANGE OF PRIVATE FACILITY BONDS The exchange of the Private Facility Bonds for the Exchange Facility Bonds in the Exchange Offer should not constitute a taxable event to U.S. Holders. Consequently, no gain or loss should be recognized by a U.S. Holder upon receipt of an Exchange Facility Bond, the holding period of the Exchange Facility Bond should include the holding period of the Private Facility Bond, and the basis of the Exchange Facility Bond should be the same as the basis of the Private Facility Bond immediately before the exchange. (See "THE EXCHANGE OFFER.") REDEMPTION, SALE OR EXCHANGE OF EXCHANGE FACILITY BONDS A U.S. Holder generally will have an adjusted tax basis for an Exchange Facility Bond equal to the cost of the Private Facility Bond exchanged therefor (but excluding accrued interest at the time of purchase of the Private Facility Bond), reduced by prior payments of principal on the Private Facility Bond and payments of principal on the Exchange Facility Bond. Upon the redemption, sale, exchange or retirement of an Exchange Facility Bond, a U.S. Holder generally will recognize gain or loss equal to the 119 difference between the amount realized upon the redemption, sale, exchange or retirement and the adjusted tax basis of the Exchange Facility Bond. Gain or loss recognized by a U.S. Holder on the redemption, sale, exchange or retirement of the Exchange Facility Bond generally will be capital gain or loss. Any such capital gain or loss will be either long-term or short-term capital gain or loss depending on the U.S. Holder's holding period for the Exchange Facility Bond at the time of its redemption, sale, exchange or retirement. Capital losses are subject to limitations on deductibility for U.S. federal income tax purposes. INFORMATION REPORTING AND BACKUP WITHHOLDING In general, information reporting requirements will apply to payments of principal and interest on an Exchange Facility Bond, and the proceeds of the sale of an Exchange Facility Bond before maturity within the United States, to noncorporate U.S. Holders. If a non-corporation U.S. Holder fails to furnish a correct taxpayer identification number or a certification of exempt status, fails to report dividend and interest income in full, or fails to certify that such U.S. Holder has provided a correct taxpayer identification number and is not subject to backup withholding, a 31% federal backup withholding tax may be withheld on amounts paid to the U.S. Holder. The backup withholding tax is not an additional tax and may be credited against a U.S. Holder's regular U.S. federal income tax liability or refunded by the IRS where applicable. PLAN OF DISTRIBUTION This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of any Exchange Facility Bonds received in exchange for Private Facility Bonds acquired by such broker-dealer as a result of market making or other trading activities. Each such broker-dealer that receives Exchange Facility Bonds for its own account in exchange for such Private Facility Bonds pursuant to the Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Facility Bonds. Oglethorpe has agreed that for a period of up to 90 days after the Expiration Date, it will make this Prospectus, as amended or supplemented, available to any such broker-dealer that requests copies of this Prospectus in the Letter of Transmittal for use in connection with any such resale. Exchange Facility Bonds received by a broker-dealer for its own account pursuant to the Exchange Offer may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions or through the writing of options on the Exchange Facility Bonds, or a combination of such methods of resale, at market prices prevailing at the time of resale or negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer and/or the purchasers of any such Exchange Facility Bonds. Any broker-dealer that resells Exchange Facility Bonds that were received by it for its own account pursuant to the Exchange Offer in exchange for Private Facility Bonds acquired by such broker-dealer as a result of market making or other trading activities and any broker-dealer that participates in a distribution of such Exchange Facility Bonds may be deemed to be an "underwriter" within the meaning of the Securities Act and any profit on any such resale of Exchange Facility Bonds and any commissions or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The Letter of Transmittal states that by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. Neither Oglethorpe nor OPC Scherer 1997 Funding Corporation will receive any proceeds from any sale of Exchange Facility Bonds by broker-dealers or any other persons. The Lessors have agreed to pay all expenses incident to Oglethorpe's performance of, or compliance with, the Registration Rights Agreement. 120 By acceptance of this Exchange Offer, each broker-dealer that receives Exchange Facility Bonds for its own account pursuant to the Exchange Offer agrees that, upon receipt of notice from Oglethorpe of the happening of any event which makes any statement in the Prospectus untrue in any material respect or which requires the making of any changes in the Prospectus in order to make the statements therein not misleading (which notice Oglethorpe has agreed to deliver promptly to such broker-dealer), such broker-dealer will suspend use of the Prospectus until Oglethorpe has amended or supplemented the Prospectus to correct such misstatement or omission and has furnished copies of the amended or supplemental Prospectus to such broker-dealer. LEGAL OPINIONS The validity of the Exchange Facility Bonds offered hereby will be passed upon for OPC Scherer 1997 Funding Corporation and Oglethorpe by Sutherland, Asbill & Brennan LLP, Atlanta, Georgia. EXPERTS The financial statements of Oglethorpe as of December 31, 1996 and 1995 and for each of the years in the two-year period ended December 31, 1996, have been included herein in reliance upon the report of Coopers & Lybrand L.L.P., independent public accountants, appearing elsewhere herein, and upon the authority of such firm as experts in accounting and auditing. The financial statements of Oglethorpe for the year ended December 31, 1994, have been included herein in reliance upon the report of Arthur Andersen LLP, independent public accountants, appearing elsewhere herein, and upon the authority of such firm as experts in accounting and auditing. With respect to the unaudited interim financial statements as of and for the twelve months ended September 30, 1997, included herein, Coopers & Lybrand L.L.P. has reported that they applied limited procedures in accordance with professional standards for a review of such information. However, their separate report included herein states that they did not audit and they did not express an opinion on that interim financial information. Accordingly, the degree of reliance on their report on such information should be restricted in light of the limited nature of the review procedures applied. 121 OGLETHORPE POWER CORPORATION INDEX TO FINANCIAL STATEMENTS
PAGE ----- AUDITED ANNUAL FINANCIAL STATEMENTS: Reports of Independent Public Accountants............................................ F-2 Statements of Revenues and Expenses, For the Years Ended December 31, 1996, 1995 and 1994............................................................................... F-4 Statements of Patronage Capital, For the Years Ended December 31, 1996, 1995 and 1994............................................................................... F-4 Balance Sheets, As of December 31, 1996 and 1995..................................... F-5 Statements of Capitalization, As of December 31, 1996 and 1995....................... F-6 Statements of Cash Flows, For the Years Ended December 31, 1996, 1995 and 1994....... F-7 Notes to Financial Statements........................................................ F-8 UNAUDITED INTERIM FINANCIAL STATEMENTS: Accountants' Review Report........................................................... F-28 Condensed Statements of Revenues and Expenses, For the Twelve Months Ended September 30, 1997 and the Year Ended December 31, 1996...................................... F-29 Condensed Balance Sheets, As of September 30, 1997 and December 31, 1996............. F-30 Condensed Statements of Cash Flows, For the Twelve Months Ended September 30, 1997 and the Year Ended December 31, 1996............................................... F-31 Notes to Condensed Interim Financial Statements...................................... F-32
F-1 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Board of Directors of Oglethorpe Power Corporation: We have audited the accompanying balance sheets and statements of capitalization of Oglethorpe Power Corporation (a Georgia corporation) as of December 31, 1996 and 1995 and the related statements of revenues and expenses, patronage capital, and cash flows for the years then ended. These financial statements are the responsibility of Oglethorpe's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Oglethorpe Power Corporation as of December 31, 1996 and 1995 and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. Coopers & Lybrand L.L.P. Atlanta, Georgia, February 21, 1997, except for Note 11, as to which the date is March 11, 1997. F-2 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Board of Directors of Oglethorpe Power Corporation: We have audited the statements of revenues and expenses, patronage capital, and cash flows of Oglethorpe Power Corporation (a Georgia corporation) for the year ended December 31, 1994. These financial statements are the responsibility of Oglethorpe's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the results of operations, changes in patronage capital, and cash flows of Oglethorpe Power Corporation for the year ended December 31, 1994 in conformity with generally accepted accounting principles. As explained in Note 2 of notes to financial statements, effective January 1, 1994, Oglethorpe Power Corporation changed its method of accounting for certain investments in debt and equity securities. Arthur Andersen LLP Atlanta, Georgia, February 24, 1995. F-3 STATEMENTS OF REVENUES AND EXPENSES
FOR THE YEARS ENDED DECEMBER 31, ---------------------------------- 1996 1995 1994 ---------- ---------- ---------- (DOLLARS IN THOUSANDS) OPERATING REVENUES (NOTE 1): Sales to Members.......................................................... $1,023,094 $1,030,797 $ 930,875 Sales to non-Members...................................................... 78,343 118,764 125,207 ---------- ---------- ---------- TOTAL OPERATING REVENUES.................................................... 1,101,437 1,149,561 1,056,082 ---------- ---------- ---------- OPERATING EXPENSES: Fuel...................................................................... 206,524 219,062 203,444 Production................................................................ 129,178 133,858 132,723 Purchased power (Note 9).................................................. 229,089 264,844 227,477 Power delivery............................................................ 18,216 17,520 16,965 Sales, administrative and general......................................... 42,289 39,015 32,269 Depreciation and amortization............................................. 163,130 139,024 131,056 Taxes other than income taxes............................................. 30,262 27,561 24,741 Income taxes (Note 3)..................................................... -- -- -- ---------- ---------- ---------- TOTAL OPERATING EXPENSES.................................................... 818,688 840,884 768,675 ---------- ---------- ---------- OPERATING MARGIN............................................................ 282,749 308,677 287,407 ---------- ---------- ---------- OTHER INCOME (EXPENSE): Interest income........................................................... 23,485 18,031 10,518 Amortization of deferred gains (Notes 1 and 4)............................ 2,341 2,341 9,985 Amortization of net benefit of sale of income tax benefits (Note 1)....... 8,054 8,043 8,102 Amortization of deferred margins (Note 1)................................. 32,047 15,959 18,072 Deferred margins (Note 1)................................................. -- (14,282) (9,287) Allowance for equity funds used during construction (Note 1).............. 238 1,715 2,907 Other..................................................................... (831) 1,903 498 ---------- ---------- ---------- TOTAL OTHER INCOME.......................................................... 65,334 33,710 40,795 ---------- ---------- ---------- INTEREST CHARGES: Interest on long-term debt and capital leases............................. 308,013 317,968 329,738 Other interest............................................................ 10,006 12,979 3,856 Allowance for debt funds used during construction (Note 1)................ (2,576) (21,114) (36,113) Amortization of debt discount and expense................................. 10,888 10,296 7,639 ---------- ---------- ---------- NET INTEREST CHARGES........................................................ 326,331 320,129 305,120 ---------- ---------- ---------- NET MARGIN.................................................................. $ 21,752 $ 22,258 $ 23,082 ---------- ---------- ---------- ---------- ---------- ----------
STATEMENTS OF PATRONAGE CAPITAL
FOR THE YEARS ENDED DECEMBER 31, ---------------------------------- 1996 1995 1994 ---------- ---------- ---------- (DOLLARS IN THOUSANDS) Patronage capital and membership fees--beginning of year (Note 1)......... $ 338,891 $ 309,496 $ 289,982 Net margin................................................................ 21,752 22,258 23,082 Change in unrealized gain (loss) on available-for-sale securities, net of income taxes (Note 2)................................................... (4,414) 7,137 (3,568) ---------- ---------- ---------- Patronage capital and membership fees--end of year........................ $ 356,229 $ 338,891 $ 309,496 ---------- ---------- ---------- ---------- ---------- ----------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. F-4 BALANCE SHEETS
DECEMBER 31, ------------------------ 1996 1995 ----------- ----------- (DOLLARS IN THOUSANDS) ASSETS ELECTRIC PLANT (NOTES 1, 4 AND 6): In service........................................................................................ $ 5,742,597 $ 5,699,213 Less: Accumulated provision for depreciation...................................................... (1,488,272) (1,362,431) ----------- ----------- 4,254,325 4,336,782 Nuclear fuel, at amortized cost................................................................... 86,722 94,013 Plant acquisition adjustments, at amortized cost.................................................. 4,153 5,214 Construction work in progress..................................................................... 31,181 35,753 ----------- ----------- 4,376,381 4,471,762 ----------- ----------- INVESTMENTS AND FUNDS (NOTES 1 AND 2): Bond, reserve and construction funds, at market................................................... 53,955 56,511 Decommissioning fund, at market................................................................... 86,269 74,492 Investment in associated organizations, at cost................................................... 15,379 15,853 Deposit on Rocky Mountain transactions, at cost................................................... 41,685 -- ----------- ----------- 197,288 146,856 ----------- ----------- CURRENT ASSETS: Cash and temporary cash investments, at cost (Note 1)............................................. 132,783 201,151 Other short-term investments, at market........................................................... 91,499 79,165 Receivables....................................................................................... 113,289 99,559 Inventories, at average cost (Note 1)............................................................. 89,825 82,949 Prepayments and other current assets.............................................................. 14,625 14,325 ----------- ----------- 442,021 477,149 ----------- ----------- DEFERRED CHARGES: Premium and loss on reacquired debt, being amortized (Note 5)..................................... 201,007 200,794 Deferred amortization of Scherer leasehold (Note 4)............................................... 90,717 87,134 Deferred debt expense, being amortized............................................................ 21,703 21,135 Other (Note 1).................................................................................... 33,058 33,666 ----------- ----------- 346,485 342,729 ----------- ----------- $ 5,362,175 $ 5,438,496 ----------- ----------- ----------- ----------- EQUITY AND LIABILITIES CAPITALIZATION (SEE ACCOMPANYING STATEMENTS): Patronage capital and membership fees (Note 1).................................................... $ 356,229 $ 338,891 Long-term debt.................................................................................... 4,052,470 4,207,320 Obligation under capital leases (Note 4).......................................................... 293,682 296,478 Obligation under Rocky Mountain transactions (Note 1)............................................. 41,685 -- ----------- ----------- 4,744,066 4,842,689 ----------- ----------- CURRENT LIABILITIES: Long-term debt and capital leases due within one year............................................. 159,622 89,675 Deferred margins to be refunded within one year (Note 1).......................................... -- 32,047 Accounts payable.................................................................................. 42,891 48,855 Accrued interest.................................................................................. 15,931 91,096 Accrued and withheld taxes........................................................................ 4,940 1,785 Other current liabilities......................................................................... 9,540 18,007 ----------- ----------- 232,924 281,465 ----------- ----------- DEFERRED CREDITS AND OTHER LIABILITIES: Gain on sale of plant, being amortized (Note 4)................................................... 58,527 60,868 Net benefit of sale of income tax benefits, being amortized (Note 1).............................. 42,049 50,194 Net benefit of Rocky Mountain transactions, being amortized (Note 1).............................. 70,701 -- Accumulated deferred income taxes (Note 3)........................................................ 61,985 65,510 Decommissioning reserve (Note 1).................................................................. 124,468 114,049 Other............................................................................................. 27,455 23,721 ----------- ----------- 385,185 314,342 ----------- ----------- COMMITMENTS AND CONTINGENCIES (NOTES 4, 9 AND 11) $ 5,362,175 $ 5,438,496 ----------- ----------- ----------- -----------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE BALANCE SHEETS. F-5 STATEMENTS OF CAPITALIZATION
DECEMBER 31, ---------------------- 1996 1995 ---------- ---------- (DOLLARS IN THOUSANDS) LONG-TERM DEBT (NOTE 5): Mortgage notes payable to the Federal Financing Bank (FFB) at interest rates varying from 5.27% to 9.51% (average rate of 6.95% at December 31, 1996) due in quarterly installments through 2023............................................................ $3,172,851 $3,253,636 Mortgage notes payable to the Rural Utilities Service (RUS) at an interest rate of 5% due in monthly installments through 2021............................................. 22,475 22,983 Mortgage notes issued in conjunction with the sale by public authorities of pollution control revenue bonds (PCBs): - Series 1982 Serial bonds, 10.60%, due serially through 1997.................................. 6,675 6,675 - Series 1992 Term bonds, 7.50% to 8.00%, due 2003 to 2022..................................... 92,130 92,130 - Series 1992A Adjustable tender bonds, 3.40% to 3.70%, due 2025................................ 216,925 216,925 Serial bonds, 5.35% to 6.80%, due serially from 1998 to 2012..................... 124,690 129,760 - Series 1993 Serial bonds, 3.55% to 5.25%, due serially from 1997 through 2013................ 37,255 38,110 - Series 1993A Adjustable tender bonds, 4.00%, due 2016......................................... 199,690 199,690 - Series 1993B Serial bonds, 3.75% to 5.05%, due serially from 1998 through 2008................ 126,935 136,745 - Series 1994 Serial bonds, 4.20% to 7.125%, due serially from 1997 through 2015............... 10,365 10,690 Term bonds, 7.15% due 2021....................................................... 11,550 11,550 - Series 1994A Adjustable tender bonds, 4.00%, due 2019......................................... 122,740 122,740 - Series 1994B Serial bonds, 5.45% to 6.45%, due serially from 1998 through 2005................ 11,140 12,475 Unsecured notes issued in conjunction with the sale by public authorities of pollution control revenue bonds: - Series 1995 Adjustable rate bonds, 3.70% to June 1996, due in 2015........................... -- 21,670 - Series 1996 Adjustable rate bonds, 3.88% to April 1997, due in 2017.......................... 37,885 -- CoBank, ACB notes payable: - Headquarters note payable: fixed at 6.60% through April 1997, due in quarterly installments through January 1, 2009............................................. 4,672 5,159 - Mortgage note payable: fixed at 6.50% through September 1997, due in bimonthly installments through November 1, 2018............................................ 2,237 2,261 - Mortgage note payable: fixed at 6.50% through October 1997, due in bimonthly installments through September 1, 2019........................................... 8,556 8,637 ---------- ---------- 4,208,771 4,291,836 Less: Unamortized debt discount...................................................... (766) (832) ---------- ---------- Total long-term debt, net............................................................ 4,208,005 4,291,004 Less: Long-term debt due within one year............................................. (155,535) (83,684) ---------- ---------- TOTAL LONG-TERM DEBT, EXCLUDING AMOUNT DUE WITHIN ONE YEAR......................... 4,052,470 4,207,320 OTHER LONG-TERM LIABILITIES Obligation under capital leases, long-term (Note 4).................................... 293,682 296,478 Obligation under Rocky Mountain transactions, long-term (Note 1)....................... 41,685 -- EQUITIES Patronage capital and membership fees (Note 1)......................................... 356,229 338,891 ---------- ---------- TOTAL CAPITALIZATION............................................................... $4,744,066 $4,842,689 ---------- ---------- ---------- ----------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. F-6 STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, ------------------------------- 1996 1995 1994 --------- --------- --------- (DOLLARS IN THOUSANDS) CASH FLOWS FROM OPERATING ACTIVITIES: Net margin.............................................................................. $ 21,752 $ 22,258 $ 23,082 --------- --------- --------- Adjustments to reconcile net margin to net cash provided by operating activities: Depreciation and amortization....................................................... 196,593 196,920 193,351 Net benefit of Rocky Mountain transactions.......................................... 70,701 -- -- Interest on decommissioning reserve................................................. 7,167 9,951 1,291 Amortization of deferred gains...................................................... (2,341) (2,341) (9,985) Deferred margins and amortization of deferred margins............................... (32,047) (1,677) (8,785) Amortization of net benefit of sale of income tax benefits.......................... (8,145) (8,043) (8,102) Allowance for equity funds used during construction................................. (238) (1,715) (2,907) Deferred income taxes............................................................... (3,525) -- -- Option payment on power swap agreement.............................................. (3,750) -- -- Other............................................................................... (13) (13) (13) Change in net current assets, excluding long-term debt due within one year and deferred margins and Vogtle surcharge to be refunded within one year: Receivables......................................................................... (13,731) (10,686) (18,055) Inventories......................................................................... (6,875) 12,127 (8,608) Prepayments and other current assets................................................ (299) 532 (94) Accounts payable.................................................................... (5,964) (4,066) (10,569) Accrued interest.................................................................... (75,165) (8,914) (8,692) Accrued and withheld taxes.......................................................... 3,155 219 (7,835) Other current liabilities........................................................... (3,985) (169) (24,124) --------- --------- --------- Total adjustments....................................................................... 121,538 182,125 86,873 --------- --------- --------- NET CASH PROVIDED BY OPERATING ACTIVITIES................................................. 143,290 204,383 109,955 --------- --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Property additions...................................................................... (93,704) (138,921) (206,345) Activity in decommissioning fund -- Purchases........................................... (327,233) (410,597) (297,492) -- Proceeds............................................ 316,542 399,077 293,990 Activity in bond, reserve and construction funds -- Purchases.................................................................... (107,890) (27,762) (498,052) -- Proceeds..................................................................... 109,230 39,566 540,712 Activity in other short-term investments -- Purchases................................... (15,532) (76,180) -- Decrease in investment in associated organizations...................................... 474 1,518 1,752 --------- --------- --------- NET CASH USED IN INVESTING ACTIVITIES..................................................... (118,113) (213,299) (165,435) --------- --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Debt proceeds, net...................................................................... 2,243 132,874 523,518 Debt payments........................................................................... (95,367) (108,481) (517,530) Return of Vogtle surcharge.............................................................. -- (3,320) (2,031) Other................................................................................... (421) (1,648) (2,008) --------- --------- --------- NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES....................................... (93,545) 19,425 1,949 --------- --------- --------- NET INCREASE (DECREASE) IN CASH AND TEMPORARY CASH INVESTMENTS............................ (68,368) 10,509 (53,531) CASH AND TEMPORARY CASH INVESTMENTS AT BEGINNING OF YEAR.................................. 201,151 190,642 244,173 --------- --------- --------- CASH AND TEMPORARY CASH INVESTMENTS AT END OF YEAR........................................ $ 132,783 $ 201,151 $ 190,642 --------- --------- --------- --------- --------- --------- CASH PAID FOR: Interest (net of amounts capitalized)................................................... $ 383,440 $ 308,797 $ 304,882 Income taxes............................................................................ -- -- --
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. F-7 NOTES TO FINANCIAL STATEMENTS (AMOUNTS AND DISCLOSURES FOR THE YEARS ENDED TO DECEMBER 31, 1996, 1995 AND 1994) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: A. BUSINESS DESCRIPTION Oglethorpe Power Corporation ("Oglethorpe") is an electric generation and transmission ("G&T") cooperative incorporated in 1974 and headquartered in suburban Atlanta. Oglethorpe provides wholesale electric service, on a not-for-profit basis, to 39 of Georgia's 42 Electric Membership Corporations ("EMCs"). These 39 electric distribution cooperatives ("Members") in turn distribute energy on a retail basis to more than 2.6 million people across two-thirds of the State. Oglethorpe is the nation's largest G&T in terms of operating revenues, assets, kilowatt-hour ("kWh") sales and, through its Members, consumers served. Oglethorpe supplies energy to the Members from 3,335 megawatts ("MW") of owned or leased generating capacity and purchases the remainder from other power suppliers. Oglethorpe also has access to over 16,000 miles of transmission line through its ownership in the statewide Integrated Transmission System ("ITS"). Oglethorpe and the Members completed on March 11, 1997, a corporate restructuring ("Corporate Restructuring"). For a discussion of the Corporate Restructuring, see Note 11. B. BASIS OF ACCOUNTING Oglethorpe follows generally accepted accounting principles and the practices prescribed in the Uniform System of Accounts of the Federal Energy Regulatory Commission ("FERC") as modified and adopted by the Rural Utilities Service ("RUS"). The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of December 31, 1996 and 1995 and the reported amounts of revenues and expenses for each of the three years ending December 31, 1996. Actual results could differ from those estimates. C. PATRONAGE CAPITAL AND MEMBERSHIP FEES Oglethorpe is organized and operates as a cooperative. The Members paid a total of $195 in membership fees. Patronage capital is the retained net margin of Oglethorpe. As provided in the bylaws, any excess of revenue over expenditures from operations is treated as advances of capital by the Members and is allocated to each of them on the basis of their electricity purchases from Oglethorpe. Under Oglethorpe's patronage capital retirements policy, margins are to be returned to the Members 30 years after the year in which the margins are earned. Pursuant to such policy, no patronage capital would be returned to the Members until 2010, at which time the 1979 patronage capital would be returned. Since Oglethorpe replaced its Consolidated Mortgage and Security Agreement, dated as of September 1, 1994 (the "RUS Mortgage") with an Indenture, dated March 1, 1997, from Oglethorpe to SunTrust Bank, Atlanta, as trustee (the "Mortgage Indenture") in connection with Oglethorpe's Corporate Restructuring, patronage distributions also will be restricted by the terms of the Mortgage Indenture. D. MARGIN POLICY Under Oglethorpe's prior RUS Mortgage, Oglethorpe's margin policy was based on the provision of a Times Interest Earned Ratio ("TIER") established annually by the Oglethorpe Board of Directors. F-8 NOTES TO FINANCIAL STATEMENTS (CONTINUED) (AMOUNTS AND DISCLOSURES FOR THE YEARS ENDED TO DECEMBER 31, 1996, 1995 AND 1994) Pursuant to this policy, the annual net margin goal for 1996, 1995 and 1994 was the amount required to produce a TIER of 1.07. The RUS Mortgage was replaced with the Mortgage Indenture in connection with Oglethorpe's Corporate Restructuring. Under the Mortgage Indenture, Oglethorpe is required to produce a Margins for Interest ("MFI") Ratio of 1.10. The Oglethorpe Board of Directors adopted resolutions annually requiring that Oglethorpe's net margins for the years 1985 through 1995 in excess of its annual margin goals be deferred and used to mitigate rate increases associated with the Alvin W. Vogtle Plant ("Plant Vogtle") and the Rocky Mountain Pumped Storage Hydroelectric Facility ("Rocky Mountain"). In addition, during 1986 and 1987, Oglethorpe's wholesale electric rate to its Members provided for a one mill per kWh charge ("Vogtle Surcharge"), also to be used to mitigate the effect of Plant Vogtle on rates. Pursuant to rate actions by Oglethorpe's Board of Directors, specified amounts of deferred margins and Vogtle Surcharge were returned in 1989 through 1995 and all remaining amounts were returned in 1996. A summary of deferred margins and Vogtle Surcharge as of December 31, 1996 and 1995 is as follows:
1996 1995 --------- --------- (DOLLARS IN THOUSANDS) DEFERRED MARGINS 1985-92............................................................ $ 165,552 $ 165,552 1993............................................................... 5,083 5,083 1994............................................................... 9,287 9,287 1995............................................................... 14,282 14,282 --------- --------- 194,204 194,204 VOGTLE SURCHARGE 1986-87............................................................ 36,613 36,613 --------- --------- Subtotal........................................................... 230,817 230,817 LESS: AMOUNTS RETURNED IN: 1989-93............................................................ (159,388) (159,388) 1994............................................................... (20,103) (20,103) 1995............................................................... (19,279) (19,279) 1996............................................................... (32,047) -- --------- --------- -- 32,047 LESS: CURRENT PORTION................................................ -- (32,047) --------- --------- LONG-TERM BALANCE.................................................... $ -- $ -- --------- --------- --------- ---------
E. OPERATING REVENUES Operating revenues consist primarily of electricity sales pursuant to long-term wholesale power contracts which Oglethorpe maintains with each of its Members. These wholesale power contracts obligate each Member to pay Oglethorpe for capacity and energy furnished in accordance with rates established by Oglethorpe. Energy furnished is determined based on meter readings which are conducted at the end of each month. Actual energy costs are compared, on a monthly basis, to the billed energy costs, and an adjustment to revenues is made such that energy revenues are equal to actual energy costs. F-9 NOTES TO FINANCIAL STATEMENTS (CONTINUED) (AMOUNTS AND DISCLOSURES FOR THE YEARS ENDED TO DECEMBER 31, 1996, 1995 AND 1994) Revenues from Cobb EMC and Jackson EMC, two of Oglethorpe's Members, accounted for 12.5% and 11.2% in 1996, 11.3% and 10.4% in 1995, and 11.0% and 10.5% in 1994, respectively, of Oglethorpe's total operating revenues. F. NUCLEAR FUEL COST The cost of nuclear fuel, including a provision for the disposal of spent fuel, is being amortized to fuel expense based on usage. The total nuclear fuel expense for 1996, 1995 and 1994 amounted to $49,298,000, $54,588,000 and $55,229,000, respectively. Contracts with the U.S. Department of Energy ("DOE") have been executed to provide for the permanent disposal of spent nuclear fuel for the life of the Edwin I. Hatch Plant ("Plant Hatch") and Plant Vogtle. The services to be provided by DOE were scheduled to begin in 1998. However, the actual year that these services will begin is uncertain. The Plant Hatch spent fuel storage is expected to be sufficient into 2003. The Plant Vogtle spent fuel storage is expected to be sufficient into 2008. Activities for adding dry cast storage capacity at Plant Hatch by as early as 1999 are in progress. The Energy Policy Act of 1992 (the "Energy Policy Act") required that utilities with nuclear plants be assessed over a 15-year period an amount which will be used by DOE for the decontamination and decommissioning of its nuclear fuel enrichment facilities. The amount of each utility's assessment was based on its past purchases of nuclear fuel enrichment services from DOE. Based on its ownership in Plants Hatch and Vogtle, Oglethorpe has a remaining nuclear fuel asset of approximately $14,900,000, which is being amortized to nuclear fuel expenses over the next 11 years. Oglethorpe has also recorded an obligation to DOE which approximated $11,800,000 at December 31, 1996. G. NUCLEAR DECOMMISSIONING Oglethorpe's portion of the costs of decommissioning co-owned nuclear facilities is estimated as follows:
HATCH HATCH VOGTLE VOGTLE UNIT NO. 1 UNIT NO. 2 UNIT NO. 1 UNIT NO. 2 ----------- ----------- ----------- ----------- (DOLLARS IN THOUSANDS) Years of site study......................... 1994 1994 1994 1994 Expected start date of decommissioning...... 2014 2018 2027 2029 Decommissioning cost: Discounted................................ $ 92,000 $ 109,000 $ 82,000 $ 106,000 Undiscounted.............................. 157,000 207,000 198,000 271,000
The decommissioning cost estimates are based on prompt dismantlement and removal of the plant from service. The actual decommissioning costs may vary from the above estimates because of changes in the assumed date of decommissioning, changes in regulatory requirements, changes in technology, and changes in costs of labor, materials and equipment. The annual provision for decommissioning for 1996, 1995 and 1994 was $2,597,000, $4,156,000 and $5,948,000, respectively. In developing the amount of the annual provision for 1996 and 1997, the escalation rate was assumed to be 2.72% and return on trust assets was assumed to be 8%. Oglethorpe accounts for this provision for decommissioning as depreciation expense with an offsetting credit to a decommissioning reserve. Oglethorpe's management is of the opinion that any changes in cost estimates of decommissioning will be fully recovered in future rates. F-10 NOTES TO FINANCIAL STATEMENTS (CONTINUED) (AMOUNTS AND DISCLOSURES FOR THE YEARS ENDED TO DECEMBER 31, 1996, 1995 AND 1994) In compliance with a Nuclear Regulatory Commission ("NRC") regulation, Oglethorpe maintains an external trust fund to provide for a portion of the cost of decommissioning its nuclear facilities. The NRC regulation requires funding levels based on average expected cost to decommission only the radioactive portions of a typical nuclear facility. Oglethorpe's decommissioning reserve reflects its obligation to decommission both the radioactive and most of the non-radioactive portions of its nuclear facilities. Realized investment earnings from the external trust fund, while increasing the fund and interest income, also are applied to the decommissioning reserve and charged to interest expense. Interest income earned from the external trust fund is offset by the recognition of interest expense such that there is no effect on Oglethorpe's net margin. H. DEPRECIATION Depreciation is computed on additions when they are placed in service using the composite straight-line method. Annual depreciation rates in effect for 1996, 1995 and 1994 were as follows:
1996 1995 1994 ------------ ------------ ------------ Steam production................................... 2.13% 2.13% 2.47% Nuclear production................................. 2.73% 2.78% 2.84% Hydro production................................... 2.00% 2.00% 2.00% Other production................................... 3.75% 3.75% 2.42% Transmission....................................... 2.75% 2.75% 2.75% Distribution....................................... 2.88% 2.88% 2.88% General............................................ 2.00-20.00% 2.00-20.00% 2.00-20.00%
I. ELECTRIC PLANT Electric plant is stated at original cost, which is the cost of the plant when first dedicated to public service, plus the cost of any subsequent additions. Cost includes an allowance for the cost of equity and debt funds used during construction. The cost of equity and debt funds is calculated at the embedded cost of all such funds. The plant acquisition adjustments represent the excess of the cost of the plant to Oglethorpe over the original cost, less accumulated depreciation at the time of acquisition, and are being amortized over a ten-year period. Maintenance and repairs of property and replacements and renewals of items determined to be less than units of property are charged to expense. Replacements and renewals of items considered to be units of property are charged to the plant accounts. At the time properties are disposed of, the original cost, plus cost of removal, less salvage of such property, is charged to the accumulated provision for depreciation. J. BOND, RESERVE AND CONSTRUCTION FUNDS: Bond, reserve and construction funds for pollution control bonds are maintained as required by Oglethorpe's bond agreements. Bond funds serve as payment clearing accounts, reserve funds maintain amounts equal to the maximum annual debt service of each bond issued and construction funds hold bond proceeds for which construction expenditures have not yet been made. As of December 31, 1996 and 1995, substantially all of the funds were invested in U.S. Government securities. F-11 NOTES TO FINANCIAL STATEMENTS (CONTINUED) (AMOUNTS AND DISCLOSURES FOR THE YEARS ENDED TO DECEMBER 31, 1996, 1995 AND 1994) K. CASH AND TEMPORARY CASH INVESTMENTS Oglethorpe considers all temporary cash investments purchased with a maturity of three months or less to be cash equivalents. Temporary cash investments with maturities of more than three months are classified as other short-term investments. Of the amount reported as cash and temporary cash investments at December 31, 1996, approximately $65,600,000 is restricted by RUS for the purpose of prepaying certain Federal Financing Bank ("FFB") long-term debt on or before March 31, 1997. L. INVENTORIES Oglethorpe maintains inventories of fossil fuels for its generation plant and spare parts for certain of its generation and transmission plant. These inventories are stated at weighted average cost on the accompanying balance sheets. At December 31, 1996 and 1995, fossil fuels inventories were $23,062,000 and $12,296,000, respectively. Inventories for spare parts at December 31, 1996 and 1995 were $66,763,000 and $70,653,000, respectively. M. DEFERRED CHARGES Prior to 1996, Oglethorpe expensed nuclear refueling outage costs as incurred. In 1996, Oglethorpe began accounting for these costs on a normalized basis. Under this method of accounting, refueling outage costs are deferred and subsequently amortized to expense over the 18-month operating cycle of each unit. Deferred nuclear outage costs at December 31, 1996 were $12,961,000. As a result of the availability of long-term capacity purchases at similar costs but with reduced risks to Oglethorpe and its Members, Oglethorpe determined that the Smarr Combustion Turbine Project was not needed within the present planning horizon. Therefore, Oglethorpe is amortizing the accumulated project costs in excess of the current value of the land purchased. The remaining project costs of $6,445,000 are reflected as deferred charges on the accompanying balance sheets. In 1995, Oglethorpe's Board of Directors authorized that these project costs be amortized and fully recovered through future rates over a period of 15 years beginning in that year. N. DEFERRED CREDITS In October 1989, Oglethorpe sold to Georgia Power Company ("GPC") a 24.45% ownership interest in the Robert W. Scherer Plant ("Plant Scherer") common facilities as required under the Plant Scherer Purchase and Ownership Agreement to adjust its ownership in the Scherer units. Oglethorpe realized a gain on the sale of $50,600,000. RUS and Oglethorpe's Board of Directors approved a plan whereby this gain was deferred and was amortized over 60 months ending in September 1994. In April 1982, Oglethorpe sold to three purchasers certain of the income tax benefits associated with the Plant Robert W. Scherer Unit No. 1 ("Scherer Unit No. 1") and related common facilities pursuant to the safe harbor lease provisions of the Economic Recovery Tax Act of 1981. Oglethorpe received a total of approximately $110,000,000 from the safe harbor lease transactions. Oglethorpe accounts for the net benefits as a deferred credit and is amortizing the amount over the 20-year term of the leases. In December 1996, Oglethorpe entered into long-term lease transactions for a portion of its 74.61% undivided ownership interest in Rocky Mountain. The lease transactions are characterized as a sale and lease-back for income tax purposes, but not for financial reporting purposes. As a result of these leases, Oglethorpe recorded a net benefit of $70,701,000 which was deferred and will be amortized to income F-12 NOTES TO FINANCIAL STATEMENTS (CONTINUED) (AMOUNTS AND DISCLOSURES FOR THE YEARS ENDED TO DECEMBER 31, 1996, 1995 AND 1994) over the 30-year lease-back period. The lease transactions increased Oglethorpe's Capitalization and Investments and funds by $41,685,000, respectively (see Note 2 where discussed further). In January 1997, Oglethorpe completed long-term lease transactions for the remainder of its interest in Rocky Mountain resulting in a net benefit of $24,859,000. The net benefit will be deferred and amortized to income over the 30-year term of the leases. Oglethorpe will increase Capitalization and Investments and funds by $15,810,000, respectively. O. REGULATORY ASSETS AND LIABILITIES Oglethorpe is subject to the provisions of Statement of Financial Accounting Standards ("SFAS") No. 71, "Accounting for the Effects of Certain Types of Regulation." Regulatory assets represent probable future revenues to Oglethorpe associated with certain costs which will be recovered from Members through the rate-making process. Regulatory liabilities represent probable future reduction in revenues associated with amounts that are to be credited to Members through the rate-making process. The following regulatory assets and liabilities were reflected on the accompanying balance sheets as of December 31, 1996 and 1995:
1996 1995 --------- --------- (DOLLARS IN THOUSANDS) Premium and loss on reacquired debt................................... $ 201,007 $ 200,794 Deferred amortization of Scherer leasehold............................ 90,717 87,134 Other regulatory assets............................................... 29,308 33,666 Net benefit of sale of income tax benefits............................ (42,049) (50,194) Net benefit of Rocky Mountain transactions............................ (70,701) -- Deferred margins...................................................... -- (32,047) Energy costs.......................................................... -- 4,237 --------- --------- $ 208,282 $ 243,590 --------- --------- --------- ---------
In the event that Oglethorpe is no longer subject to the provisions of SFAS No. 71, Oglethorpe would be required to write off related regulatory assets and liabilities. In addition, Oglethorpe would be required to determine any impairment to other assets, including plant, and write down the assets, if impaired, to their fair value. P. PRESENTATION Certain prior year amounts have been reclassified to conform with current year presentation. F-13 NOTES TO FINANCIAL STATEMENTS (CONTINUED) (AMOUNTS AND DISCLOSURES FOR THE YEARS ENDED TO DECEMBER 31, 1996, 1995 AND 1994) 2. FAIR VALUE OF FINANCIAL INSTRUMENTS: A detail of the estimated fair values of Oglethorpe's financial instruments as of December 31, 1996 and 1995 is as follows:
DECEMBER 31, 1996 DECEMBER 31, 1995 ---------------------- ---------------------- FAIR FAIR COST VALUE COST VALUE ---------- ---------- ---------- ---------- (DOLLARS IN THOUSANDS) CASH AND TEMPORARY CASH INVESTMENTS: Commercial paper.............................................................. $ 52,700 $ 52,700 $ 179,055 $ 179,055 Certificates of deposit....................................................... 10,000 10,000 20,000 20,000 Cash and money market securities.............................................. 70,083 70,083 2,096 2,096 ---------- ---------- ---------- ---------- TOTAL........................................................................... $ 132,783 $ 132,783 $ 201,151 $ 201,151 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- OTHER SHORT TERM INVESTMENTS: Commingled investment fund.................................................... $ 91,712 $ 91,499 $ 76,180 $ 79,165 ---------- ---------- ---------- ---------- TOTAL........................................................................... $ 91,712 $ 91,499 $ 76,180 $ 79,165 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- BOND, RESERVE AND CONSTRUCTION FUNDS: U.S. Government securities.................................................... $ 36,505 $ 35,873 $ 49,348 $ 49,932 Repurchase agreements......................................................... 18,082 18,082 6,579 6,579 ---------- ---------- ---------- ---------- TOTAL........................................................................... $ 54,587 $ 53,955 $ 55,927 $ 56,511 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- DECOMMISSIONING FUND: U.S. Government securities.................................................... $ 24,034 $ 23,950 $ 23,087 $ 23,568 Foreign government securities................................................. 1,228 1,278 -- -- Commercial paper.............................................................. -- -- 4,036 4,036 Corporate bonds............................................................... 11,953 11,868 5,875 6,073 Equity securities............................................................. 30,339 34,073 19,514 21,271 Asset-backed securities....................................................... 3,103 3,125 12,484 12,614 Other bonds................................................................... 5,445 5,453 -- -- Cash and money market securities.............................................. 6,522 6,522 6,937 6,930 ---------- ---------- ---------- ---------- TOTAL........................................................................... $ 82,624 $ 86,269 $ 71,933 $ 74,492 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- LONG-TERM DEBT.................................................................. $4,118,117 $4,228,317 $4,207,320 $4,506,925 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- INTEREST RATE SWAP.............................................................. $ -- $ 33,938 $ -- $ 52,089 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
F-14 NOTES TO FINANCIAL STATEMENTS (CONTINUED) (AMOUNTS AND DISCLOSURES FOR THE YEARS ENDED TO DECEMBER 31, 1996, 1995 AND 1994) The contractual maturities of debt securities available for sale at December 31, 1996 and 1995, regardless of their balance sheet classification, are as follows:
DECEMBER 31, DECEMBER 31, 1996 1995 ---------------- ---------------- FAIR FAIR COST VALUE COST VALUE ------- ------- ------- ------- (DOLLARS IN THOUSANDS) Due within one year....................................................................... $33,944 $33,819 $21,050 $21,300 Due after one year through five years..................................................... 17,439 17,266 37,172 37,452 Due after five years through ten years.................................................... 27,912 27,302 27,628 27,966 Due after ten years....................................................................... 15,610 15,789 11,523 12,049 ------- ------- ------- ------- $94,905 $94,176 $97,373 $98,767 ------- ------- ------- ------- ------- ------- ------- -------
Oglethorpe used the methods and assumptions described below to estimate the fair value of each class of financial instruments. For cash and temporary cash investments, the carrying amount approximates fair value because of the short-term maturity of those instruments. The fair value of Oglethorpe's long-term debt and the swap arrangements is estimated based on the quoted market prices for the same or similar issues or on the current rates offered to Oglethorpe for debt of similar maturities. Under the interest rate swap arrangements, Oglethorpe makes payments to the counterparty based on the notional principal at a contractually fixed rate and the counterparty makes payments to Oglethorpe based on the notional principal at the existing variable rate of the refunding bonds. The differential to be paid or received is accrued as interest rates change and is recognized as an adjustment to interest expense. Oglethorpe entered into the swap arrangements for the purpose of securing a fixed rate lower than otherwise would have been available to Oglethorpe had it issued fixed rate bonds. For the Series 1993A notes, the notional principal was $199,690,000 and the fixed swap rate is 5.67% (the variable rate at December 31, 1996 and 1995 was 4.00% and 5.15%, respectively). With respect to the Series 1994A notes, the notional principal was $122,740,000 and the fixed swap rate is 6.01% (the variable rate at December 31, 1996 and 1995 was 4.00% and 5.05%, respectively). The notional principal amount is used to measure the amount of the swap payments and does not represent additional principal due to the counterparty. The swap arrangements extend for the life of the refunding bonds, with reductions in the outstanding principal amounts of the refunding bonds causing corresponding reductions in the notional amounts of the swap payments. The estimated fair value of Oglethorpe's liability under the swap arrangements at December 31, 1996 and 1995 was $33,938,000 and $52,089,000, respectively. This amount represents payment Oglethorpe would pay if the swap arrangements were terminated. Oglethorpe may be exposed to losses in the event of nonperformance of the counterparty, but does not anticipate such nonperformance. Oglethorpe adopted SFAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities," as of January 1, 1994. Under this SFAS, investment securities held by Oglethorpe are classified as either available-for-sale or held-to-maturity. Available-for-sale securities are carried at market value with unrealized gains and losses, net of any tax effect, added to or deducted from patronage capital. Unrealized gains and losses from investment securities held in the decommissioning fund, which are also classified as available-for-sale, are directly added to or deducted from the decommissioning reserve. Held-to-maturity securities are carried at cost. All realized and unrealized gains and losses are determined using the specific identification method. Gross unrealized gains and losses at December 31, 1996 were $7,785,000 and $4,985,000, respectively. Gross unrealized gains and losses at December 31, F-15 NOTES TO FINANCIAL STATEMENTS (CONTINUED) (AMOUNTS AND DISCLOSURES FOR THE YEARS ENDED TO DECEMBER 31, 1996, 1995 AND 1994) 1995 were $6,497,000 and $368,000, respectively. For 1996 and 1995, proceeds from sales of available-for-sale securities totaled $425,772,000 and $438,643,000, respectively. Gross realized gains and losses from the 1996 sales were $6,410,000 and $3,671,000 respectively. Gross realized gains and losses from the 1995 sales were $5,098,000 and $1,308,000, respectively. Investments in associated organizations were as follows at December 31, 1996 and 1995:
DECEMBER 31, DECEMBER 31, 1996 1995 ------------ ------------ (DOLLARS IN THOUSANDS) National Rural Utilities Cooperative Finance Corp. ("CFC").......................................... $13,476 $13,476 CoBank, ACB......................................................................................... 1,664 2,132 Other............................................................................................... 239 245 ------------ ------------ Total............................................................................................. $15,379 $15,853 ------------ ------------ ------------ ------------
The investments in these associated organizations are similar to compensating bank balances in that they are required in order to maintain current financing arrangements. Accordingly, there is no market for these investments. The $41,685,000 deposit on the Rocky Mountain transactions (see Note 1 where discussed) as of December 31, 1996 is invested in a guaranteed investment contract which will be held to maturity (the end of the 30-year lease-back period). At maturity, Oglethorpe fully intends to use the deposit to repurchase tax ownership and to retain all other rights of ownership with respect to the plant. The deposit is carried at cost. In addition, from the proceeds of the Rocky Mountain transactions, Oglethorpe paid $460,769,000 to a financial institution. In return, this financial institution undertook to pay a portion of Oglethorpe's lease obligations. Both Oglethorpe's interest in this payment undertaking agreement and the corresponding lease obligations have been extinguished for financial reporting purposes. 3. INCOME TAXES Oglethorpe is a not-for-profit membership corporation subject to Federal and state income taxes. As a taxable electric cooperative, Oglethorpe has annually allocated its income and deductions between Member and non-Member activities. Any Member taxable income has been offset with a patronage exclusion and member loss carryforwards. Oglethorpe accounts for its income taxes pursuant to SFAS No. 109. SFAS No. 109 requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. F-16 NOTES TO FINANCIAL STATEMENTS (CONTINUED) (AMOUNTS AND DISCLOSURES FOR THE YEARS ENDED TO DECEMBER 31, 1996, 1995 AND 1994) A detail of the provision for income taxes in 1996, 1995 and 1994 is shown as follows:
1996 1995 1994 ------- ----- ----- (DOLLARS IN THOUSANDS) Current Federal........................................................................................... $ 3,525 $-- $-- State............................................................................................. -- -- -- ------- ----- ----- 3,525 -- -- ------- ----- ----- Deferred Federal........................................................................................... (3,525) $-- $-- State............................................................................................. -- -- -- ------- ----- ----- (3,525) -- -- ------- ----- ----- Income taxes charged to operations.................................................................. $ -- $-- $-- ------- ----- ----- ------- ----- -----
The difference between the statutory federal income tax rate on income before income taxes and Oglethorpe's effective income tax rate is summarized as follows:
1996 1995 1994 ------ ------ ------ Statutory federal income tax rate................................................................... 35.0% 35.0% 35.0% Patronage exclusion................................................................................. (35.7)% (35.6)% (35.4)% Other............................................................................................... 0.7% 0.6% 0.4% ------ ------ ------ Effective income tax rate........................................................................... 0.0% 0.0% 0.0% ------ ------ ------ ------ ------ ------
F-17 NOTES TO FINANCIAL STATEMENTS (CONTINUED) (AMOUNTS AND DISCLOSURES FOR THE YEARS ENDED TO DECEMBER 31, 1996, 1995 AND 1994) The components of the net deferred tax liabilities as of December 31, 1996 and 1995 were as follows:
1996 1995 ----------- ----------- (DOLLARS IN THOUSANDS) DEFERRED TAX ASSETS Net operating losses.............................................................................. $ 473,114 $ 538,067 Member loss carryforwards......................................................................... 328,912 342,370 Tax credits (alternative minimum tax and other)................................................... 256,205 252,680 Accounting for Rocky Mountain transactions........................................................ 233,045 -- Accounting for sale of income tax benefits........................................................ 77,429 86,599 Accrued nuclear decommissioning expense........................................................... 49,127 45,042 Accounting for asset dispositions................................................................. 32,545 33,496 Other............................................................................................. 3,318 18,277 ----------- ----------- 1,453,695 1,316,531 Less: Valuation allowance......................................................................... (252,680) (252,680) ----------- ----------- 1,201,015 1,063,851 ----------- ----------- DEFERRED TAX LIABILITIES Depreciation...................................................................................... (1,008,714) (1,034,153) Accounting for Rocky Mountain transactions........................................................ (156,557) -- Accounting for debt extinguishment................................................................ (64,841) (64,006) Other............................................................................................. (32,888) (31,202) ----------- ----------- (1,263,000) (1,129,361) ----------- ----------- NET DEFERRED TAX LIABILITIES........................................................................ $ (61,985) $ (65,510) ----------- ----------- ----------- -----------
F-18 NOTES TO FINANCIAL STATEMENTS (CONTINUED) (AMOUNTS AND DISCLOSURES FOR THE YEARS ENDED TO DECEMBER 31, 1996, 1995 AND 1994) As of December 31, 1996, Oglethorpe has federal tax net operating loss carryforwards ("NOLs"), alternative minimum tax credits ("AMT") and unused general business credits (consisting primarily of investment tax credits) as follows:
ALTERNATIVE MINIMUM EXPIRATION DATE TAX CREDITS TAX CREDITS NOLS - ------------------------------------------------------------------------------------------ ----------- ----------- ---------- (DOLLARS IN THOUSANDS) 1997...................................................................................... $-- $ 11,197 $ -- 1998...................................................................................... -- 6,934 -- 1999...................................................................................... -- 37,206 -- 2000...................................................................................... -- 3,198 -- 2001...................................................................................... -- 7,264 -- 2002...................................................................................... -- 130,377 -- 2003...................................................................................... -- 652 242,187 2004...................................................................................... -- 55,663 114,285 2005...................................................................................... -- 189 213,080 2006...................................................................................... -- -- 209,009 2007...................................................................................... -- -- 86,779 2008...................................................................................... -- -- 94,927 2009...................................................................................... -- -- 96,394 2010...................................................................................... -- -- 77,970 None...................................................................................... 3,525 -- -- ----------- ----------- ---------- $3,525 $252,680 $1,134,631 ----------- ----------- ---------- ----------- ----------- ----------
Based on Oglethorpe's historical taxable transactions, the timing of the reversal of existing temporary differences, future income, and tax planning strategies, it is more likely than not that Oglethorpe's future taxable income will be sufficient to realize the benefit of NOLs before their respective expiration dates. The NOLs expiration dates start in the year 2003 and end in the year 2010. However, as reflected in the above valuation allowance, it is more likely than not that the tax credits will not be utilized before expiration. It is more likely than not that the AMT credit will be utilized. F-19 NOTES TO FINANCIAL STATEMENTS (CONTINUED) (AMOUNTS AND DISCLOSURES FOR THE YEARS ENDED TO DECEMBER 31, 1996, 1995 AND 1994) 4. CAPITAL LEASES: In December 1985, Oglethorpe sold and subsequently leased back from four purchasers its 60% undivided ownership interest in the Plant Robert W. Scherer Unit No. 2 ("Scherer Unit No. 2"). The gain from the sale is being amortized over the 36-year term of the leases. The minimum lease payments under the capital leases together with the present value of net minimum lease payments as of December 31, 1996 are as follows:
YEAR ENDING DECEMBER 31, (DOLLARS IN THOUSANDS) - -------------------------------------------------------------------- 1997.............................................................. $ 36,531 1998.............................................................. 37,302 1999.............................................................. 37,890 2000.............................................................. 37,755 2001.............................................................. 37,629 2002-2021......................................................... 569,179 ---------- Total minimum lease payments...................................... 756,286 Less: Amount representing interest................................ (458,517) ---------- Present value of net minimum lease payments....................... 297,769 Less: Current portion............................................. (4,087) ---------- Long-term balance................................................. $ 293,682 ---------- ----------
The capital leases provide that Oglethorpe's rental payments vary to the extent of interest rate changes associated with the debt used by the lessors to finance their purchase of undivided ownership shares in Scherer Unit No. 2. The debt of three of the lessors is financed at fixed interest rates averaging 9.70%. As of December 31, 1996, the variable interest rates of the debt of the remaining lessor ranged from 6.40% to 8.05% for an average rate of 6.83%. Oglethorpe's future rental payments under its leases will vary from amounts shown in the table above to the extent that the actual interest rates associated with the fixed and variable rate debt of the lessors varies from the 11.05% debt rate assumed in the table. The Scherer Unit No. 2 lease meets the definitional criteria to be reported on Oglethorpe's balance sheets as a capital lease. For rate-making purposes, however, Oglethorpe treats this lease as an operating lease; that is, Oglethorpe considers the actual rental payment on the leased asset in its cost of service. Oglethorpe's accounting treatment for this capital lease has been modified, therefore, to reflect its rate-making treatment. Interest expense is applied to the obligation under the capital lease; then, amortization of the leasehold is recognized, such that interest and amortization equal the actual rental payment. Through 1994, the level of actual rental payments was such that amortization of the Scherer Unit No. 2 leasehold calculated in this manner was less than zero. Thereafter, the scheduled cash rental payments increase such that positive amortization of the leasehold occurs and the entire cost of the leased asset is recovered through the rate-making process. The difference in the amortization recognized in this manner on the statements of revenues and expenses and the straight-line amortization of the leasehold is reflected on Oglethorpe's balance sheets as a deferred charge. In 1991 and 1992, all four of the lessors received Notices of Proposed Adjustments from the Internal Revenue Service ("IRS") proposing adjustments to the tax benefits claimed by these lessors in connection with their purchase and ownership of an undivided interest in Scherer Unit No. 2. In 1994, the IRS issued a revised Notice of Proposed Adjustments to one of the lessors which reduced the proposed adjustments. During 1995, this lessor advised Oglethorpe that it had settled this issue on the basis of the F-20 NOTES TO FINANCIAL STATEMENTS (CONTINUED) (AMOUNTS AND DISCLOSURES FOR THE YEARS ENDED TO DECEMBER 31, 1996, 1995 AND 1994) revised Notice of Proposed Adjustments. Oglethorpe subsequently made a lump sum indemnity payment of $362,000 to the lessor in order to compensate for the reduction in the lessor's tax benefits resulting from the sale and leaseback transaction. The IRS has indicated that it will take consistent positions with the other three lessors. If the IRS's current positions regarding the sale and leaseback transactions were ultimately upheld, Oglethorpe would be required to indemnify the other three lessors. Oglethorpe's indemnification liability to the three lessors is estimated to be approximately $1,290,000 as of December 31, 1996. This liability has been reflected on the accompanying balance sheet. 5. LONG-TERM DEBT: Long-term debt consists of mortgage notes payable to the United States of America acting through the FFB and the RUS, mortgage notes issued in conjunction with the sale by public authorities of pollution control revenue bonds, and notes payable to CoBank, ACB ("CoBank"). Oglethorpe's headquarters facility is pledged as collateral for the CoBank headquarters note; substantially all of the owned tangible and certain of the intangible assets of Oglethorpe are pledged as collateral for the FFB and RUS notes, the remaining CoBank notes and the notes issued in conjunction with the sale of pollution control revenue bonds. The detail of the notes is included in the statements of capitalization. Oglethorpe currently has ten RUS-guaranteed FFB notes of which $3,172,851,000 and $3,253,636,000 were outstanding at December 31, 1996 and 1995, respectively, with rates ranging from 5.27% to 9.51%. In January 1996, Oglethorpe completed note modifications pursuant to which it repriced $89,447,000 of FFB advances. In connection with such modification, Oglethorpe paid a premium of $9,332,000. These amounts are reported as deferred charges on the balance sheet, and will be amortized over 22 years, the longest remaining life of the subject advances. In October 1996, Oglethorpe completed a current refunding transaction whereby $37,885,000 of fixed rate pollution control revenue bonds were issued. The proceeds of this transaction were used to retire $37,885,000 of existing bonds. The unamortized transaction costs related to this transaction have been reported as a deferred charge on the balance sheet and are being amortized over the life of the related bonds. The annual interest requirement for 1997 is estimated to be $294,000,000. Maturities for the long-term debt through 2001 are as follows:
1997 1998 1999 2000 2001 --------- --------- --------- --------- --------- (DOLLARS IN THOUSANDS) FFB and RUS............................ $ 147,279 $ 86,894 $ 91,123 $ 98,867 $ 105,941 CoBank................................. 376 502 516 532 550 PCB Bonds.............................. 7,880 17,970 19,730 23,995 26,260 Capital Leases......................... 4,087 5,143 6,240 7,075 7,775 --------- --------- --------- --------- --------- Total.................................. $ 159,622 $ 110,509 $ 117,609 $ 130,469 $ 140,526 --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
The estimated annual interest expense and the long-term debt maturities described above do not take into account Oglethorpe's proposed Corporate Restructuring, discussed in Note 11. Oglethorpe has a commercial paper program under which it may issue commercial paper not to exceed a $250,000,000 balance outstanding at any time. The commercial paper may be used for F-21 NOTES TO FINANCIAL STATEMENTS (CONTINUED) (AMOUNTS AND DISCLOSURES FOR THE YEARS ENDED TO DECEMBER 31, 1996, 1995 AND 1994) working capital requirements and for general corporate purposes. Oglethorpe's commercial paper is backed 100% by committed lines of credit provided by a group of banks. As of December 31, 1996 and 1995, no commercial paper was outstanding. Oglethorpe has a $50,000,000 uncommitted short-term line of credit with CFC and a $30,000,000 committed line of credit with SunTrust Bank, Atlanta ("SunTrust"). The maximum combined amount that can be outstanding under these lines of credit and the commercial paper program at any one time totals $250,000,000 due to certain restrictions contained in the CFC and SunTrust line of credit agreements. No balance was outstanding on either of these two lines of credit at either December 31, 1996 or 1995. 6. ELECTRIC PLANT AND RELATED AGREEMENTS: Oglethorpe and GPC have entered into agreements providing for the purchase and subsequent joint operation of certain of GPC's electric generating plants and transmission facilities. A summary of Oglethorpe's plant investments and related accumulated depreciation as of December 31, 1996 is as follows:
ACCUMULATED PLANT INVESTMENT DEPRECIATION - ---------------------------------------------------------------- ----------- ------------- (DOLLARS IN THOUSANDS) In-service Owned property Vogtle Units No. 1 & No. 2 (NUCLEAR--30% OWNERSHIP).................................. $2,781,446 $ 665,953 Hatch Units No. 1 & No. 2 (NUCLEAR--30% OWNERSHIP).................................. 523,163 208,687 Wansley Units No. 1 & No. 2 (FOSSIL--30% OWNERSHIP)................................... 173,192 84,388 Scherer Unit No. 1 (FOSSIL--60% OWNERSHIP)................................... 429,299 193,129 Rocky Mountain Units No. 1, No. 2 & No. 3 (HYDRO--74.6% OWNERSHIP).................................. 556,470 17,401 Tallassee (Harrison Dam) (HYDRO--100% OWNERSHIP)................................... 9,270 1,797 Wansley (COMBUSTION TURBINE--30% OWNERSHIP)................. 3,718 1,319 Generation step-up substations.............................. 55,877 19,173 Transmission and distribution plant......................... 815,929 179,960 Other....................................................... 94,002 25,060 Property under capital lease Scherer Unit No. 2 (FOSSIL--60% LEASEHOLD)................................... 300,231 91,405 ----------- ------------- Total in-service................................................ $5,742,597 $ 1,488,272 ----------- ------------- ----------- ------------- Construction work in progress Generation improvements....................................... $ 11,963 Transmission and distribution plant........................... 18,715 Other......................................................... 503 ----------- Total construction work in progress............................. $ 31,181 ----------- -----------
F-22 NOTES TO FINANCIAL STATEMENTS (CONTINUED) (AMOUNTS AND DISCLOSURES FOR THE YEARS ENDED TO DECEMBER 31, 1996, 1995 AND 1994) In 1988, Oglethorpe acquired from GPC an undivided ownership interest in Rocky Mountain. Under the Rocky Mountain agreements, Oglethorpe assumed responsibility for construction of the facility, which was commenced by GPC. Under the agreements, GPC retained its current investment in Rocky Mountain with the ultimate ownership interests of Oglethorpe and GPC in the facility based on the ratio of each party's direct construction costs to total project direct construction costs with certain adjustments. On June 1, 1995, Unit 3 and the completed Unit Common facilities were declared to be in commercial operation by Oglethorpe. Unit 2 and Unit 1 were declared to be in commercial operation on June 19, 1995 and July 24, 1995, respectively. In accordance with the Rocky Mountain agreements, the final ownership interests of Oglethorpe and GPC in Rocky Mountain is 74.6% and 25.4%, respectively. The final ownership interests in the project will be applied to all future capital costs. Oglethorpe is engaged in a continuous construction program and, as of December 31, 1996, estimates property additions (including capitalized interest) to be approximately $108,000,000 in 1997, $98,000,000 in 1998 and $100,000,000 in 1999, primarily for replacements and additions to generation and transmission facilities. Oglethorpe's proportionate share of direct expenses of joint operation of the above plants is included in the corresponding operating expense captions (e.g., fuel, production or depreciation) on the accompanying statements of revenues and expenses. 7. EMPLOYEE BENEFIT PLANS: Oglethorpe has a noncontributory defined benefit pension plan covering substantially all employees. Oglethorpe's pension cost was approximately $1,388,000 in 1996, $1,954,000 in 1995 and $1,262,000 in 1994. For 1995, pension cost increased by $912,000 related to termination benefits. The termination benefits resulted from an early retirement program undertaken in the fourth quarter of 1995. Plan benefits are based on years of service and the employee's compensation during the last ten years of employment. Oglethorpe's funding policy is to contribute annually an amount not less than the minimum required by the Internal Revenue Code and not more than the maximum tax deductible amount. The plan's pension cost recognized in 1996, 1995 and 1994 was shown as follows:
1996 1995 1994 --------- --------- --------- (DOLLARS IN THOUSANDS) Pension cost was comprised of the following Service cost -- benefits earned during the year................. $ 1,149 $ 913 $ 1,084 Interest cost on projected benefit obligation................... 872 742 714 Actual return on plan assets.................................... (984) (1,889) 387 Net amortization and deferral................................... 351 1,288 (911) Net gain from a plan curtailment................................ -- (12) (12) --------- --------- --------- Net pension cost.................................................. $ 1,388 $ 1,042 $ 1,262 --------- --------- --------- --------- --------- ---------
F-23 NOTES TO FINANCIAL STATEMENTS (CONTINUED) (AMOUNTS AND DISCLOSURES FOR THE YEARS ENDED TO DECEMBER 31, 1996, 1995 AND 1994) The plan's funded status in Oglethorpe's financial statements as of December 31, 1996 and 1995 were as follows:
1996 1995 --------- --------- (DOLLARS IN THOUSANDS) Actuarial present value of accumulated plan benefits: Vested............................................................... $ 7,554 $ 6,868 Nonvested............................................................ 540 591 --------- --------- $ 8,094 $ 7,459 --------- --------- --------- --------- Projected benefit obligation........................................... $ (13,211) $ (12,326) Plan assets at fair value............................................ 9,218 7,760 --------- --------- Projected benefit obligation in excess of plan assets.................. (3,993) (4,566) Unrecognized net loss (gain) from past experience different from that assumed and effects of changes in assumptions........................ (880) 223 Prior service cost not yet recognized in net periodic pension cost..... 498 548 Unrecognized net asset at transition date being recognized over 19 years................................................................ (109) (121) --------- --------- Pension accrual........................................................ $ (4,484) $ (3,916) --------- --------- --------- ---------
The discount rate and rate of increase in future compensation levels used in determining the actuarial present value of the projected benefit obligations shown above were 7.50% and 5.0% in 1996, and 7.25% and 5.0% in 1995, respectively. The expected long-term rate of return on plan assets was 8.5% in 1996 and 1995, and 8% in 1994, and the discount rate used in determining the pension expense was 7.25% in 1996, 8.5% in 1995 and 7.5% in 1994. Oglethorpe has a contributory employee retirement savings plan covering substantially all employees. Employee contributions to the plan may be invested in one or more of nine funds. The employee may contribute, subject to IRS limitations, up to 16% of his annual compensation. Oglethorpe will match the employee's contribution up to one-half of the first 6% of the employee's annual compensation, as long as there is sufficient net margin to do so. Oglethorpe's contributions to the plan were approximately $561,000 in 1996, $589,000 in 1995 and $565,000 in 1994. 8. NUCLEAR INSURANCE: GPC, on behalf of all the co-owners of Plants Hatch and Vogtle, is a member of Nuclear Mutual Limited ("NML"), a mutual insurer established to provide property damage insurance coverage in an amount up to $500,000,000 for members' nuclear generating facilities. In the event that losses exceed accumulated reserve funds, the members are subject to retroactive assessments (in proportion to their participation in the mutual insurer). The portion of the current maximum annual assessment for GPC that would be payable by Oglethorpe, based on ownership share, is limited to approximately $6,351,000 for each nuclear incident. GPC, on behalf of all the co-owners of Plants Hatch and Vogtle, is also a member of Nuclear Electric Insurance Limited ("NEIL"), a mutual insurer, and Oglethorpe has coverage under NEIL II, which provides insurance to cover decontamination, debris removal and premature decommissioning as well as excess property damage to nuclear generating facilities for an additional $2,250,000,000 for losses in excess of the $500,000,000 NML coverage described above. Under the NEIL policies, members are F-24 NOTES TO FINANCIAL STATEMENTS (CONTINUED) (AMOUNTS AND DISCLOSURES FOR THE YEARS ENDED TO DECEMBER 31, 1996, 1995 AND 1994) subject to retroactive assessments in proportion to their participation if losses exceed the accumulated funds available to the insurer under the policy. The portion of the current maximum annual assessment for GPC that would be payable by Oglethorpe, based on ownership share, is limited to approximately $12,960,000. For all on-site property damage insurance policies for commercial nuclear power plants, the NRC requires that the proceeds of such policies issued or annually renewed on or after April 2, 1991 shall be dedicated first for the sole purpose of placing the reactor in a safe and stable condition after an accident. Any remaining proceeds are next to be applied toward the costs of decontamination and debris removal operations ordered by the NRC, and any further remaining proceeds are to be paid either to the company or to its bond trustees as may be appropriate under the policies and applicable trust indentures. The Price-Anderson Act, as amended in 1988, limits public liability claims that could arise from a single nuclear incident to $8,900,000,000, which amount is to be covered by private insurance and agreements of indemnity with the NRC. Such private insurance (in the amount of $200,000,000 for each plant, the maximum amount currently available) is carried by GPC for the benefit of all the co-owners of Plants Hatch and Vogtle. Agreements of indemnity have been entered into by and between each of the co-owners and the NRC. In the event of a nuclear incident involving any commercial nuclear facility in the country involving total public liability in excess of $200,000,000, a licensee of a nuclear power plant could be assessed a deferred premium of up to $79,275,000 per incident for each licensed reactor operated by it, but not more than $10,000,000 per reactor per incident to be paid in a calendar year. On the basis of its sell-back adjusted ownership interest in four nuclear reactors, Oglethorpe could be assessed a maximum of $95,130,000 per incident, but not more than $12,000,000 in any one year. Oglethorpe participates in an insurance program for nuclear workers that provides coverage for worker tort claims filed for bodily injury caused at commercial nuclear power plants. In the event that claims for this insurance exceed the accumulated reserve funds, Oglethorpe could be subject to a total maximum assessment of $3,365,000. All retrospective assessments, whether generated for liability or property, may be subject to applicable state premium taxes. 9. POWER PURCHASE AND SALE AGREEMENTS: Oglethorpe has entered into long-term power purchase agreements with GPC, Big Rivers Electric Corporation ("Big Rivers"), and Entergy Power, Inc. ("EPI"). Under the agreement with GPC, Oglethorpe purchased on a take-or-pay basis 1,250 MW of capacity through the period ending August 31, 1996. Effective September 1, 1996, Oglethorpe will purchase 1,000 MW of capacity through the period ending August 31, 1997. Effective September 1, 1997, Oglethorpe will purchase 750 MW of capacity through the period ending August 31, 1998. Effective September 1, 1998, Oglethorpe will purchase 500 MW of capacity through the period ending December 31, 2004, subject to reductions or extension with proper notice. The Big Rivers agreement commenced in August 1992 and is effective through July 2002. Oglethorpe is obligated under this agreement to purchase on a take-or-pay basis 100 MW of firm capacity and certain minimum energy amounts associated with that capacity. The EPI agreement commenced in July 1992, has a term of ten years and represents a take-or-pay commitment by Oglethorpe to purchase 100 MW of capacity. Oglethorpe has a contract with Hartwell Energy Limited Partnership for the purchase of approximately 300 MW of capacity for a 25-year period commencing in April 1994. F-25 NOTES TO FINANCIAL STATEMENTS (CONTINUED) (AMOUNTS AND DISCLOSURES FOR THE YEARS ENDED TO DECEMBER 31, 1996, 1995 AND 1994) Oglethorpe has entered into a short-term seasonal power purchase agreement with Florida Power Corporation. Under the agreement, Oglethorpe will purchase 50 MW of capacity on a take-or-pay basis for the period June 1, 1997 through September 30, 1997 and 275 MW for the period June 1, 1998 through September 30, 1998. As of December 31, 1996, Oglethorpe's minimum purchase commitments under the above agreements, without regard to capacity reductions or adjustments for changes in costs, for the next five years are as follows:
YEAR ENDING DECEMBER 31, (DOLLARS IN THOUSANDS) - ---------------------------------------------------- ---------------------- 1997........................................ $ 130,457 1998........................................ 111,539 1999........................................ 92,873 2000........................................ 94,917 2001........................................ 97,116
Oglethorpe's power purchases from these agreements amounted to approximately $190,760,000 in 1996, $206,641,000 in 1995 and $182,965,000 in 1994. Oglethorpe has entered into an agreement with Alabama Electric Cooperative to sell 100 MW of capacity for the period June 1998 through December 2005. As a means of reducing the cost of power provided to the Members, in 1996, Oglethorpe utilized short-term power supply agreements. The initial agreement was with Enron Power Marketing, Inc. and was in place from January 4, 1996 through August 31, 1996. From September 1, 1996 through December 31, 1996, Oglethorpe utilized a short-term power supply transaction with Duke/Louis Dreyfus L.L.C. Under both of the agreements, the power marketer was required to provide to Oglethorpe at a favorable fixed rate all the energy necessary to meet the Members' requirements and Oglethorpe was required to provide to the power marketer at cost, subject to certain limitations, upon request all energy available from Oglethorpe's total power resources. Under both agreements, Oglethorpe continued to operate the power supply system and continued to dispatch the generating resources to ensure system reliability. 10. QUARTERLY FINANCIAL DATA (UNAUDITED): Summarized quarterly financial information for 1996 and 1995 is as follows:
FIRST SECOND THIRD FOURTH QUARTER QUARTER QUARTER QUARTER -------- -------- -------- -------- (DOLLARS IN THOUSANDS) 1996 Operating revenues...................................................................... $270,689 $275,228 $286,648 $268,872 Operating margin........................................................................ 73,568 72,514 75,009 61,658 Net margin.............................................................................. 8,988 4,732 12,508 (4,476) 1995 Operating revenues...................................................................... $257,547 $281,228 $317,536 $293,250 Operating margin........................................................................ 68,682 82,048 82,949 74,998 Net margin.............................................................................. 8,462 20,292 10,656 (17,152)
F-26 NOTES TO FINANCIAL STATEMENTS (CONTINUED) (AMOUNTS AND DISCLOSURES FOR THE YEARS ENDED TO DECEMBER 31, 1996, 1995 AND 1994) Oglethorpe's business is influenced by seasonal weather conditions. Second quarter 1996 net margin was lower than the same period of 1995 primarily as a result of unbudgeted savings in 1995 from the continued capitalization of costs of Rocky Mountain due to delay in commercial operation of the initial unit from April 1995 to June 1995. The negative net margin for the fourth quarter of 1996 is consistent with expectations and reflects incurrence of certain nonrecurring expenses. The negative net margin for the fourth quarter of 1995 was primarily attributable to the deferral of excess margin. For a discussion of the amount of excess margin deferred, see Note 1. 11. SUBSEQUENT EVENTS: A. POWER SUPPLY ARRANGEMENTS Oglethorpe has entered into power supply agreements for approximately 50% of its Members' load requirements with LG&E Power Marketing Inc. These agreements commenced on January 1, 1997, initially on a short-term basis. These agreements converted to a long-term arrangement upon the closing of the corporate Restructuring discussed below. Oglethorpe is now working to complete a long-term contract for the remaining approximately 50% of its load. B. CORPORATE RESTRUCTURING Oglethorpe and the Members completed on March 11, 1997, the Corporate Restructuring, in which Oglethorpe was divided into three specialized operating companies to respond to increasing competition and regulatory changes in the electric industry. As part of the Corporate Restructuring, Oglethorpe's transmission business was sold to and is now owned and operated by Georgia Transmission Corporation (An Electric Membership Corporation) ("GTC"), a recently formed Georgia electric membership corporation. Oglethorpe's system operations business was sold to and is now owned and operated by Georgia System Operations Corporation ("GSOC"), a recently formed Georgia nonprofit corporation. Oglethorpe continues to own and operate its power supply business. F-27 INDEPENDENT ACCOUNTANTS' REVIEW REPORT To the Board of Directors of Oglethorpe Power Corporation: We have reviewed the accompanying condensed balance sheet of Oglethorpe Power Corporation (a Georgia Corporation) as of September 30, 1997, and the related unaudited condensed statements of revenues and expenses and cash flows for the twelve-month period then ended. These financial statements are the responsibility of the company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the condensed financial statements referred to above for them to be in conformity with generally accepted accounting principles. Coopers & Lybrand L.L.P. Atlanta, Georgia November 14, 1997. F-28 CONDENSED STATEMENTS OF REVENUES AND EXPENSES
TWELVE MONTHS ENDED FOR THE YEAR ENDED SEPTEMBER 30, DECEMBER 31, 1997 1996 --------------------- ------------------- (UNAUDITED) (DOLLARS IN THOUSANDS) OPERATING REVENUES: Sales to Members............................. $ 1,019,430 $ 1,023,094 Sales to non-Members......................... 50,383 78,343 ----------- ------------------- TOTAL OPERATING REVENUES................. 1,069,813 1,101,437 ----------- ------------------- OPERATING EXPENSES: Fuel......................................... 200,858 206,524 Production................................... 139,645 129,178 Purchased power (Note 6)..................... 254,996 229,089 Power delivery............................... 10,210 18,216 Depreciation and amortization................ 149,891 163,130 Taxes other than income taxes................ 27,309 30,262 Other operating expenses..................... 29,253 42,289 ----------- ------------------- TOTAL OPERATING EXPENSES................. 812,162 818,688 ----------- ------------------- OPERATING MARGIN............................... 257,651 282,749 ----------- ------------------- OTHER INCOME (EXPENSE): Interest income.............................. 27,049 23,485 Amortization of net benefit of sale of income tax benefits............................... 10,427 8,054 Amortization of deferred margins............. 7,927 32,047 Allowance for equity funds used during construction............................... 182 238 Other........................................ 3,753 1,510 ----------- ------------------- TOTAL OTHER INCOME............................. 49,338 65,334 ----------- ------------------- INTEREST CHARGES: Interest on long-term debt and other obligations................................ 299,353 328,907 Allowance for debt funds used during construction............................... (1,964) (2,576) ----------- ------------------- NET INTEREST CHARGES........................... 297,389 326,331 ----------- ------------------- NET MARGIN..................................... $ 9,600 $ 21,752 ----------- ------------------- ----------- -------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED FINANCIAL STATEMENTS. F-29 CONDENSED BALANCE SHEETS
SEPTEMBER 30, DECEMBER 31, 1997 1996 -------------- -------------- (UNAUDITED) (DOLLARS IN THOUSANDS) ASSETS ELECTRIC PLANT: In service..................................................................... $4,906,315 $ 5,742,597 Less: Accumulated provision for depreciation................................... (1,382,063) (1,488,272) -------------- -------------- 3,524,252 4,254,325 Nuclear fuel, at amortized cost................................................ 86,980 86,722 Plant acquisition adjustments, at amortized cost............................... -- 4,153 Construction work in progress.................................................. 13,059 31,181 -------------- -------------- 3,624,291 4,376,381 -------------- -------------- INVESTMENTS AND FUNDS: Bond, reserve and construction funds, at market................................ 32,328 53,955 Decommissioning fund, at market................................................ 101,821 86,269 Investment in associated organizations, at cost................................ 15,407 15,379 Deposit on Rocky Mountain transactions, at cost (Note 5)....................... 51,325 41,685 -------------- -------------- 200,881 197,288 -------------- -------------- CURRENT ASSETS: Cash and temporary cash investments, at cost................................... 59,981 132,783 Other short-term investments, at market........................................ 96,145 91,499 Receivables.................................................................... 117,580 113,289 Inventories, at average cost................................................... 70,872 89,825 Prepayments and other current assets........................................... 22,371 14,625 -------------- -------------- 366,949 442,021 -------------- -------------- DEFERRED CHARGES: Premium and loss on reacquired debt, being amortized........................... 189,692 201,007 Deferred amortization of Scherer leasehold..................................... 94,832 90,717 Deferred debt expense, being amortized......................................... 13,641 21,703 Other.......................................................................... 36,994 33,058 -------------- -------------- 335,159 346,485 -------------- -------------- $4,527,280 $ 5,362,175 -------------- -------------- -------------- -------------- EQUITY AND LIABILITIES CAPITALIZATION: Patronage capital and membership fees (including unrealized loss of ($515) at September 30, 1997 and ($844) at December 31, 1996 on available-for-sale securities).................................................................. $ 321,771 $ 356,229 Long-term debt (Note 3)........................................................ 3,171,511 4,052,470 Obligation under capital leases (Note 3)....................................... 289,825 293,682 Obligation under Rocky Mountain transactions (Note 5).......................... 51,325 41,685 -------------- -------------- 3,834,432 4,744,066 -------------- -------------- CURRENT LIABILITIES: Long-term debt and capital leases due within one year (Note 3)................. 87,847 159,622 Notes payable (Note 4)......................................................... 92,220 -- Accounts payable............................................................... 53,641 42,891 Accrued interest............................................................... 13,560 15,931 Accrued and withheld taxes..................................................... 19,800 4,940 Other current liabilities...................................................... 4,891 9,540 -------------- -------------- 271,959 232,924 -------------- -------------- DEFERRED CREDITS AND OTHER LIABILITIES: Gain on sale of plant, being amortized......................................... 61,375 58,527 Net benefit of sale of income tax benefits, being amortized.................... 36,042 42,049 Net benefit of Rocky Mountain transactions, being amortized (Note 5)........... 93,171 70,701 Accumulated deferred income taxes.............................................. 60,325 61,985 Decommissioning reserve........................................................ 141,399 124,468 Other.......................................................................... 28,577 27,455 -------------- -------------- 420,889 385,185 -------------- -------------- COMMITMENTS AND CONTINGENCIES $4,527,280 $ 5,362,175 -------------- -------------- -------------- --------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED BALANCE SHEETS. F-30 CONDENSED STATEMENTS OF CASH FLOWS
TWELVE MONTHS ENDED FOR THE YEAR ENDED SEPTEMBER 30, DECEMBER 31, 1997 1996 --------------------- ------------------- (UNAUDITED) (DOLLARS IN THOUSANDS) CASH FLOWS FROM OPERATING ACTIVITIES: Net margin......................................................... $ 9,600 $ 21,752 ---------- ---------- ADJUSTMENTS TO RECONCILE NET MARGIN TO NET CASH PROVIDED BY OPERATING ACTIVITIES: Depreciation and amortization.................................. 203,218 196,593 Net benefit of Rocky Mountain transactions..................... 93,171 70,701 Deferred gain from Corporate Restructuring..................... 4,670 -- Allowance for equity funds used during construction............ (182) (238) Amortization of deferred margins............................... (7,927) (32,047) Amortization of net benefit of sale of income tax benefits..... (10,518) (8,145) Deferred income taxes.......................................... (5,185) (3,525) Option payment on power swap agreement......................... (6,004) (3,750) Other.......................................................... 7,147 4,813 CHANGE IN NET CURRENT ASSETS, EXCLUDING LONG-TERM DEBT DUE WITHIN ONE YEAR AND DEFERRED MARGINS TO BE REFUNDED WITHIN ONE YEAR: Receivables.................................................... (10,008) (13,731) Inventories.................................................... 12,954 (6,875) Prepayments and other current assets........................... (8,154) (299) Accounts payable............................................... 10,268 (5,964) Accrued interest............................................... (7,125) (75,165) Accrued and withheld taxes..................................... (2,686) 3,155 Other current liabilities...................................... 2,730 (3,985) ---------- ---------- TOTAL ADJUSTMENTS.................................................. 276,369 121,538 ---------- ---------- NET CASH PROVIDED BY OPERATING ACTIVITIES............................ 285,969 143,290 ---------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES: Property additions................................................. (74,367) (93,704) Net proceeds from bond, reserve and construction funds............. 19,896 1,340 Decrease in investment in associated organizations................. 16 474 Increase in other short-term investments........................... (5,208) (15,532) Increase in decommissioning fund................................... (13,431) (10,691) Net cash received in Corporate Restructuring....................... 24,539 -- ---------- ---------- NET CASH USED IN INVESTING ACTIVITIES.......................... (48,555) (118,113) ---------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES: Debt proceeds, net................................................. 191,640 2,243 Debt payments...................................................... (414,395) (95,367) Retirement of patronage capital.................................... (48,863) -- Other.............................................................. (1,679) (421) ---------- ---------- NET CASH USED IN FINANCING ACTIVITIES.......................... (273,297) (93,545) ---------- ---------- NET DECREASE IN CASH AND TEMPORARY CASH INVESTMENTS.................. (35,883) (68,368) CASH AND TEMPORARY CASH INVESTMENTS AT BEGINNING OF PERIOD........... 95,864 201,151 ---------- ---------- CASH AND TEMPORARY CASH INVESTMENTS AT END OF PERIOD................. $ 59,981 $ 132,783 ---------- ---------- ---------- ---------- CASH PAID FOR: Interest (net of amounts capitalized).............................. $ 284,165 $ 383,440 Income taxes....................................................... $ 830 $ --
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED FINANCIAL STATEMENTS. F-31 NOTES TO INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED) 1. PRINCIPLES OF PREPARATION: The interim condensed financial statements included herein have been prepared by Oglethorpe Power Corporation (An Electric Membership Corporation) ("Oglethorpe"), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the "Commission"). In the opinion of management, the accompanying interim condensed financial statements reflect all adjustments (which include only normal recurring adjustments) necessary to present fairly, in all material respects, the results for the twelve months ended September 30, 1997. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such Commission rules and regulations, although Oglethorpe believes that the disclosures are adequate to make the information presented not misleading. These interim condensed financial statements should be read in conjunction with Oglethorpe's audited financial statements included in this Prospectus. Certain amounts for 1996 have been reclassified to conform with the current period presentation. 2. CORPORATE RESTRUCTURING: Oglethorpe and the Members completed on March 11, 1997 a corporate restructuring (the "Corporate Restructuring"), in which Oglethorpe was divided into three specialized operating companies to respond to increasing competition and regulatory changes in the electric industry. Oglethorpe's transmission business was sold to, and is now owned and operated by, Georgia Transmission Corporation (An Electric Membership Corporation) ("GTC"), a recently formed Georgia electric membership corporation. Oglethorpe's system operations business was sold to, and is now owned and operated by, Georgia System Operations Corporation ("GSOC"), a recently formed Georgia nonprofit corporation. Oglethorpe continues to own and operate its power supply business. (See "BUSINESS OF OGLETHORPE--Corporate Restructuring," "--Relationship with GTC" and "--Relationship with GSOC.") The total purchase price GTC and GSOC paid Oglethorpe for the transmission and system operations businesses was approximately $717 million. The following summarizes the assets and liabilities sold by Oglethorpe to GTC and GSOC as a result of the restructuring:
ASSETS EQUITY & LIABILITIES (DOLLARS IN THOUSANDS) Plant in service........................ $ 847,172 Long-term debt.......................... $ 686,054 Accumulated depreciation................ (195,944) Accounts payable........................ 585 Construction work in progress........... 13,313 Accrued interest........................ 121 Plant acquisition adjustments........... 3,887 Accrued pension cost.................... 1,047 Inventories............................. 8,980 Deferred revenues....................... 310 ---------- Prepayments............................. 71 TOTAL LIABILITIES EXTINGUISHED.... 688,117 Premium on reacquired debt.............. 33,410 Notes received from GSOC................ 4,823 Deferred debt expense................... 1,920 Net cash received....................... 24,539 ----------- ---------- TOTAL ASSETS SOLD..................... 712,809 TOTAL PURCHASE PRICE.................... $ 717,479 ---------- ---------- Deferred gain on sale................... 4,670 ----------- TOTAL PURCHASE PRICE.................. $ 717,479 ----------- -----------
F-32 NOTES TO INTERIM CONDENSED FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) On October 1, 1996, Oglethorpe transferred to GSOC its system operations assets, consisting of its system control center and related energy control and revenue metering systems equipment. The purchase price totaled approximately $9.4 million and was paid by (i) GSOC's assumption of Oglethorpe's obligations under an existing note held by RUS, (ii) delivery of a purchase money note payable to Oglethorpe, and (iii) the assumption of certain other liabilities of Oglethorpe. From October 1, 1996 to March 11, 1997, Oglethorpe was the sole member of GSOC; therefore, the assets transferred to GSOC remained in the balance sheet of Oglethorpe. The Members became members of GSOC on March 11, 1997; and thereafter the assets, liabilities and equity of GSOC were no longer part of Oglethorpe. Decreases in operating revenues, power delivery expenses, depreciation and amortization, taxes other than income taxes, operating margin, other operating income, and net interest charges from 1996 to 1997 are primarily attributable to the Corporate Restructuring. (See "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.") 3. DEBT OBLIGATIONS: As discussed in Note 2, GTC assumed approximately $686 million of Oglethorpe's long-term debt obligations. The following schedule reflects as of September 30, 1997 the annual maturities of Oglethorpe's debt remaining after the Corporate Restructuring:
1997 1998 1999 2000 2001 --------- --------- --------- --------- --------- (DOLLARS IN THOUSANDS) FFB & RUS................................ $ 133,404 $ 69,414 $ 72,740 $ 78,471 $ 84,471 CoBank................................... 365 483 495 508 523 PCB Bonds................................ 14,482 13,206 14,540 17,949 19,678 Capital Leases........................... 4,087 5,143 6,240 7,075 7,775 --------- --------- --------- --------- --------- Total.................................... $ 152,338 $ 88,246 $ 94,015 $ 104,003 $ 112,447 --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
4. NOTES PAYABLE: The $92 million classified as Notes Payable on the Balance Sheet relates to commercial paper outstanding which was issued to defease approximately $92 million in principal amount of Series 1992 pollution control revenue bonds ("PCBs"). It is Oglethorpe's intent to refinance this commercial paper on a long-term basis by issuing medium-term notes or PCBs. However, as no formal financing agreement is in place for this longer term refinancing, the $92 million has been classified as a current liability. 5. SALE AND LEASEBACK AGREEMENTS: In December 1996, Oglethorpe entered into long-term lease transactions for a portion of its 74.61% undivided ownership interest in the Rocky Mountain Pumped Storage Hydroelectric Facility ("Rocky Mountain"). The lease transactions are characterized as a sale and leaseback for income tax purposes, but not for financial reporting purposes. As a result of these leases, Oglethorpe recorded a net benefit of approximately $71 million, which was deferred and will be amortized to income over the 30-year leaseback period. The lease transactions increased Oglethorpe's Capitalization and Investments and funds in the December 31, 1996 balance sheet by approximately $41 million. In January 1997, Oglethorpe completed the long-term lease transactions for the remainder of its interest in Rocky Mountain resulting in a net benefit of approximately $25 million, which will also be F-33 NOTES TO INTERIM CONDENSED FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) deferred over the 30-year leaseback period. These additional lease transactions increased Oglethorpe's Capitalization and Investments and funds by approximately $16 million. 6. POWER MARKETER AGREEMENTS: Effective January 1, 1997, Oglethorpe entered into power marketer agreements with LG&E Energy Marketing, Inc. ("LEM") for 50% of the load requirements of the Members. Under the agreement, LEM is obligated to deliver, and Oglethorpe is obligated to take, approximately 50% of load requirements of the participating Members less the load requirements for certain customers who have the right to choose electric suppliers, plus 50% of the delivery obligations under Oglethorpe's existing firm power off-system sale contracts. The LEM agreement relating to 37 of the 39 Members has a term extending through 2011. Effective May 1, 1997, Oglethorpe entered into a power marketer agreement with Morgan Stanley Capital Group Inc. ("Morgan Stanley") with respect to 50% of the Members' forecasted load requirements. The agreement obligates Oglethorpe to purchase fixed quantities of energy at fixed prices. Each Member selected a term for its obligation, as well as the portion of its forecasted requirements to be purchased as a fixed quantity. Oglethorpe is obligated to sell and Morgan Stanley is obligated to buy 50% of the output, in contractually fixed amounts, of each Member's percentage capacity responsibility ("PCR") share (for the term and portion selected) of the "must run" units (primarily nuclear units). Oglethorpe is also obligated to make available the same share of all other resources, in contractually fixed amounts, which Morgan Stanley may schedule for each 24-hour day. This schedule is set the day prior based on availability limitations in the contract. Morgan Stanley pays a contractually fixed amount each month and an amount for the scheduled energy based on contractually fixed prices. The agreement has an initial term extending to March 31, 2000. The agreement has a term extending to March 31, 2005, but the purchases for certain Members decline to zero prior to that date. Oglethorpe plans to manage the system resources covered by the Morgan Stanley agreement through scheduling and dispatching such resources. Oglethorpe will also make purchases and sales to balance the fixed purchase obligation against the actual requirements and to optimize the use of the resources after receiving the daily schedule from Morgan Stanley. (See "MEMBER REQUIREMENTS AND POWER SUPPLY RESOURCES--Power Marketer Arrangements.") F-34 APPENDIX A MEMBER FINANCIAL AND STATISTICAL INFORMATION Oglethorpe's Members operate their systems on a not-for-profit basis. Accumulated margins derived after payment of operating expenses and provision for depreciation constitute patronage capital of the consumers of the Members. Refunds of accumulated patronage capital to the individual consumers may be made from time to time subject to limitations contained in mortgages between the Members and RUS or loan documents with other lenders. The RUS mortgages generally prohibit such distributions unless, after any such distribution the Member's total equity will equal at least 40% (30% in the case of Members, if any, that have the new form of RUS loan documents) of its total assets, except that distributions may be made of up to 25% of the margins and patronage capital received by the Member in the preceding year (provided that equity is at least 20% in the case of Members, if any, that have the new form of RUS loan documents). (See "THE MEMBERS OF OGLETHORPE--Members' Relationship with RUS.") Oglethorpe is a membership corporation, and the Members are not subsidiaries of Oglethorpe. Except with respect to the obligations of the Members under each Member's Wholesale Power Contract with Oglethorpe and Oglethorpe's rights under such contracts to receive payment for power and energy supplied, Oglethorpe has no legal interest in, or obligations in respect of, any of the assets, liabilities, equity, revenues or margins of the Members. The following selected information on the individual Members is intended to show, in the aggregate, the assets, liabilities, equity, revenues and margins of the Members; Member assets, liabilities, equity, revenues and margins should not, however, be attributed to Oglethorpe itself. In addition, the revenues of the Members are not pledged to Oglethorpe, but such revenues are received by the respective Members and are the source from which moneys are derived by the Members to pay for power and energy received from Oglethorpe. Revenues of the Members are, however, pledged under their respective RUS mortgages or loan documents with other lenders. The information contained in these Tables was taken from RUS Financial and Statistical Reports (RUS Form 7) or similar reports prepared for other lenders or provided directly by a Member. This information has not been independently verified by RUS, any lender or Oglethorpe. The "Total" columns for all these years were not supplied or compiled by RUS, any lender or the Members. The "Total" column in each table is for informational purposes only, inasmuch as each Member operates independently and is not responsible for the obligations of other Members. For the calendar years 1994, 1995 and 1996, the information on the individual Members is presented in the succeeding tables as follows: Table 1, selected statistics; Table 2, average number of consumers served; Table 3, annual MWh sales by consumer class; Table 4, annual revenues by consumer class; Table 5, summary of operating results; and Table 6, condensed balance sheet information. A-1 OGLETHORPE POWER CORPORATION MEMBER FINANCIAL AND STATISTICAL INFORMATION TABLE 1 SELECTED STATISTICS OF EACH MEMBER (AS OF DECEMBER 31)
CENTRAL ALTAMAHA AMICALOLA CANOOCHEE CARROLL GEORGIA COASTAL ----------- ------------- ------------- ----------- ----------- ----------- 1996 - ------------------------------------------ Avg. Monthly Residential Rev.($).......... 89.96 82.24 94.26 82.03 86.71 97.70 Avg. Monthly Residential kWh.............. 1,034 938 1,099 956 1,073 1,116 Avg. Residential Rev.(cents per kWh)...... 8.70 8.76 8.57 8.58 8.08 8.75 Times Interest Earned Ratio............... 2.81 1.72 2.85 2.66 2.75 1.57 Equity/Assets............................. 56.5% 30.6% 46.4% 41.6% 46.6% 29.5% Equity/Total Capitalization............... 61.7% 35.0% 50.4% 47.5% 50.2% 32.2% 1995 - ------------------------------------------ Avg. Monthly Residential Rev.($).......... 89.74 83.27 92.84 80.38 89.47 98.10 Avg. Monthly Residential kWh.............. 992 898 1,056 909 1,018 1,058 Avg. Residential Rev.(cents per kWh)...... 9.04 9.28 8.79 8.84 8.79 9.27 Times Interest Earned Ratio............... 3.88 1.83 2.36 2.02 2.06 1.87 Equity/Assets............................. 58.2% 30.2% 46.0% 41.8% 43.6% 31.7% Equity/Total Capitalization............... 63.1% 34.4% 50.0% 46.8% 47.4% 35.2% 1994 - ------------------------------------------ Avg. Monthly Residential Rev.($).......... 84.18 76.87 88.28 75.77 81.80 88.96 Avg. Monthly Residential kWh.............. 929 856 991 862 962 974 Avg. Residential Rev.(cents per kWh)...... 9.06 8.98 8.91 8.79 8.50 9.14 Times Interest Earned Ratio............... 3.42 1.54 2.97 2.97 2.06 1.54 Equity/Assets............................. 59.4% 29.8% 46.8% 42.0% 45.3% 31.7% Equity/Total Capitalization............... 63.7% 33.4% 50.8% 45.9% 51.0% 35.0% COWETA- COBB COLQUITT FAYETTE ----------- ----------- ----------- 1996 - ------------------------------------------ Avg. Monthly Residential Rev.($).......... 89.71 88.88 92.06 Avg. Monthly Residential kWh.............. 1,030 1,182 1,111 Avg. Residential Rev.(cents per kWh)...... 8.71 7.52 8.29 Times Interest Earned Ratio............... 1.57 3.36 1.92 Equity/Assets............................. 33.6% 52.5% 31.8% Equity/Total Capitalization............... 40.2% 56.8% 36.4% 1995 - ------------------------------------------ Avg. Monthly Residential Rev.($).......... 91.13 89.57 95.77 Avg. Monthly Residential kWh.............. 1,038 1,140 1,081 Avg. Residential Rev.(cents per kWh)...... 8.78 7.86 8.86 Times Interest Earned Ratio............... 1.82 2.86 1.78 Equity/Assets............................. 33.3% 50.0% 32.2% Equity/Total Capitalization............... 39.0% 54.0% 36.5% 1994 - ------------------------------------------ Avg. Monthly Residential Rev.($).......... 87.09 83.47 86.78 Avg. Monthly Residential kWh.............. 922 1,063 1,009 Avg. Residential Rev.(cents per kWh)...... 9.44 7.85 8.60 Times Interest Earned Ratio............... 2.28 2.36 1.66 Equity/Assets............................. 33.1% 51.1% 33.8% Equity/Total Capitalization............... 38.2% 55.2% 38.1%
MIDDLE OKEFE- GEORGIA MITCHELL OCMULGEE OCONEE NOKE(1) PATAULA ----------- ------------- ------------- ----------- ----------- ----------- 1996 - ------------------------------------------ Avg. Monthly Residential Rev.($).......... 93.56 98.47 79.03 90.26 94.92 66.45 Avg. Monthly Residential kWh.............. 1,169 1,220 902 1,000 1,172 775 Avg. Residential Rev.(cents per kWh)...... 8.00 8.07 8.76 9.02 8.10 8.58 Times Interest Earned Ratio............... 2.09 2.24 3.00 2.66 1.75 4.18 Equity/Assets............................. 42.2% 51.5% 46.6% 46.4% 33.7% 57.7% Equity/Total Capitalization............... 44.0% 59.1% 51.2% 51.9% 42.3% 60.8% 1995 - ------------------------------------------ Avg. Monthly Residential Rev.($).......... 99.58 98.29 82.25 90.72 98.29 67.12 Avg. Monthly Residential kWh.............. 1,096 1,164 861 977 1,134 737 Avg. Residential Rev.(cents per kWh)...... 9.08 8.44 9.56 9.29 8.66 9.10 Times Interest Earned Ratio............... 2.13 2.38 2.02 2.16 1.57 3.36 Equity/Assets............................. 40.7% 50.9% 46.8% 47.6% 33.4% 54.2% Equity/Total Capitalization............... 44.0% 62.0% 49.1% 53.2% 40.5% 57.3% 1994 - ------------------------------------------ Avg. Monthly Residential Rev.($).......... 91.65 89.97 76.00 82.98 89.03 62.85 Avg. Monthly Residential kWh.............. 1,018 1,088 804 905 1,059 692 Avg. Residential Rev.(cents per kWh)...... 9.01 8.27 9.45 9.17 8.41 9.08 Times Interest Earned Ratio............... 1.76 2.77 2.57 1.76 1.54 2.61 Equity/Assets............................. 40.0% 50.7% 48.7% 47.6% 34.6% 51.2% Equity/Total Capitalization............... 44.0% 60.8% 51.3% 52.3% 39.8% 54.2% PLANTERS RAYLE SATILLA ----------- ----------- ----------- 1996 - ------------------------------------------ Avg. Monthly Residential Rev.($).......... 84.45 80.01 83.09 Avg. Monthly Residential kWh.............. 1,104 914 1,145 Avg. Residential Rev.(cents per kWh)...... 7.65 8.76 7.26 Times Interest Earned Ratio............... 2.63 1.92 2.29 Equity/Assets............................. 48.1% 40.6% 55.8% Equity/Total Capitalization............... 53.8% 44.0% 60.3% 1995 - ------------------------------------------ Avg. Monthly Residential Rev.($).......... 85.19 82.64 87.69 Avg. Monthly Residential kWh.............. 1,061 876 1,093 Avg. Residential Rev.(cents per kWh)...... 8.03 9.43 8.03 Times Interest Earned Ratio............... 2.91 1.58 2.62 Equity/Assets............................. 48.6% 40.0% 55.0% Equity/Total Capitalization............... 54.4% 42.7% 59.9% 1994 - ------------------------------------------ Avg. Monthly Residential Rev.($).......... 82.70 75.97 79.78 Avg. Monthly Residential kWh.............. 993 827 1,038 Avg. Residential Rev.(cents per kWh)...... 8.33 9.18 7.69 Times Interest Earned Ratio............... 3.11 1.76 3.16 Equity/Assets............................. 49.2% 41.0% 56.7% Equity/Total Capitalization............... 54.8% 43.2% 61.1%
- ------------------------ (1) Includes information relating to Okefenoke Rural EMC's operations in both Georgia and Florida. Okefenoke Rural EMC purchases a portion of its power and energy from an electric supplier in Florida. In 1996, such energy amounted to approximately 26% of its total energy requirements. (2) Weighted Average. A-2 TABLE 1 (CONTINUED)
EXCELSIOR FLINT GRADY GREYSTONE HABERSHAM HART IRWIN JACKSON JEFFERSON - ----------- ----------- ------------- ------------- ------------- ----------- ----------- ----------- ------------- 81.86 89.06 88.98 86.19 73.72 81.69 85.77 82.67 89.77 1,140 1,238 1,067 1,122 943 984 1,067 1,112 1,069 7.18 7.20 8.34 7.68 7.82 8.31 8.04 7.43 8.40 1.97 2.55 1.97 3.66 1.93 3.52 1.77 2.04 2.07 42.3% 42.7% 48.7% 45.4% 44.8% 44.0% 39.2% 35.9% 40.2% 47.5% 51.3% 55.4% 49.4% 52.3% 50.8% 41.0% 41.2% 48.0% 82.28 91.35 88.92 90.22 73.14 76.84 83.89 86.69 92.95 1,077 1,209 1,026 1,087 895 951 1,027 1,072 1,042 7.64 7.55 8.67 8.30 8.18 8.08 8.16 8.08 8.92 1.88 2.27 1.55 3.00 1.88 2.00 1.67 1.97 1.82 46.5% 44.4% 48.2% 42.0% 44.9% 42.5% 40.3% 36.6% 39.7% 51.8% 51.5% 53.8% 44.9% 52.1% 49.8% 42.4% 42.3% 45.3% 78.01 85.79 82.71 81.24 69.47 71.31 81.34 83.38 86.10 1,005 1,140 915 1,030 871 908 947 1,021 989 7.76 7.53 9.04 7.89 7.97 7.85 8.59 8.17 8.70 1.89 3.25 2.42 2.20 -1.01 1.55 1.86 1.87 2.32 48.1% 45.9% 53.5% 41.0% 45.6% 44.5% 40.4% 37.6% 40.4% 53.6% 51.9% 58.0% 44.0% 52.8% 52.3% 42.4% 42.3% 46.6% LITTLE EXCELSIOR LAMAR OCMULGEE - ----------- --------------- ------------- 81.86 86.41 80.92 1,140 1,086 941 7.18 7.96 8.60 1.97 3.67 1.70 42.3% 50.1% 38.4% 47.5% 59.1% 40.7% 82.28 86.56 85.82 1,077 1,053 993 7.64 8.22 8.64 1.88 2.47 1.69 46.5% 50.1% 37.1% 51.8% 57.2% 38.9% 78.01 78.04 74.43 1,005 988 844 7.76 7.90 8.82 1.89 3.61 1.94 48.1% 50.3% 38.7% 53.6% 57.0% 40.7%
SLASH SNAPPING THREE TRI- UPSON SAWNEE PINE SHOALS SUMTER NOTCH COUNTY TROUP COUNTY WALTON - ----------- ----------- ------------- ------------- ------------- ----------- ----------- ----------- ------------- 93.08 90.29 91.51 101.33 79.21 87.50 93.42 73.92 92.04 1,089 1,119 1,185 1,319 1,047 1,026 1,222 900 1,202 8.55 8.07 7.72 7.69 7.57 8.52 7.64 8.21 7.66 2.07 2.53 1.76 1.95 2.46 2.55 2.97 4.70 3.34 32.0% 46.8% 40.6% 42.7% 54.4% 40.5% 49.8% 57.5% 49.1% 35.1% 51.8% 51.9% 47.3% 57.6% 44.1% 58.0% 63.9% 59.1% 95.59 91.85 94.02 99.84 89.45 85.05 97.93 71.01 96.26 1,060 1,078 1,143 1,258 1,056 971 1,148 868 1,166 9.02 8.52 8.23 7.94 8.47 8.76 8.53 8.18 8.26 1.59 2.25 2.13 2.03 2.57 1.71 3.52 2.49 3.12 33.0% 48.7% 41.8% 46.3% 53.1% 38.1% 49.3% 55.3% 48.0% 37.8% 55.1% 50.7% 50.4% 55.6% 40.5% 55.1% 61.3% 55.9% 84.27 83.52 87.46 93.72 79.84 77.45 91.63 67.16 88.35 979 1,004 1,069 1,193 951 915 1,091 815 1,080 8.61 8.32 8.18 7.86 8.39 8.46 8.40 8.24 8.18 1.53 2.50 2.88 2.26 2.06 1.58 2.02 3.19 2.20 34.9% 52.8% 42.0% 51.3% 54.4% 39.0% 42.8% 54.8% 46.0% 40.0% 59.3% 76.5% 55.1% 58.9% 42.4% 46.8% 60.1% 51.9% SAWNEE WASHINGTON TOTAL - ----------- --------------- ------------- 93.08 84.17 87.75 1,089 979 1,096 8.55 8.60 8.00 2.07 2.01 2.30(2) 32.0% 41.7% 41.3%(2) 35.1% 45.8% 47.1%(2) 95.59 82.39 89.80 1,060 932 1,062 9.02 8.84 8.45 1.59 2.28 2.13(2) 33.0% 41.3% 41.1%(2) 37.8% 44.6% 46.6%(2) 84.27 74.77 83.28 979 864 991 8.61 8.65 8.40 1.53 1.79 2.10(2) 34.9% 42.5% 41.7%(2) 40.0% 45.3% 47.2%(2)
A-3 OGLETHORPE POWER CORPORATION MEMBER FINANCIAL AND STATISTICAL INFORMATION TABLE 2 AVERAGE NUMBER OF CONSUMERS SERVED BY EACH MEMBER
CENTRAL ALTAMAHA AMICALOLA CANOOCHEE CARROLL GEORGIA COASTAL COBB ----------- ----------- ------------- ----------- ----------- ----------- ----------- 1996 Residential Service............ 14,264 25,770 14,773 31,088 26,795 9,387 120,037 Commercial & Industrial........ 1,246 1,053 251 1,695 1,476 1,036 7,555 Other.......................... 70 7 100 352 34 89 1,106 ----------- ----------- ------------- ----------- ----------- ----------- ----------- Total Consumers Served..... 15,580 26,831 15,123 33,135 28,305 10,513 128,698 ----------- ----------- ------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------- ----------- ----------- ----------- ----------- 1995 Residential Service............ 13,892 24,439 14,320 30,155 26,088 8,913 113,807 Commercial & Industrial........ 1,212 1,008 215 1,646 1,179 979 7,161 Other.......................... 65 7 103 349 34 89 1,411 ----------- ----------- ------------- ----------- ----------- ----------- ----------- Total Consumers Served..... 15,169 25,454 14,638 32,150 27,301 9,981 122,379 ----------- ----------- ------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------- ----------- ----------- ----------- ----------- 1994 Residential Service............ 13,493 23,165 13,835 29,169 25,177 8,495 109,251 Commercial & Industrial........ 1,159 978 209 1,605 1,108 884 6,655 Other.......................... 65 7 84 349 35 87 1,178 ----------- ----------- ------------- ----------- ----------- ----------- ----------- Total Consumers Served..... 14,717 24,150 14,128 31,123 26,320 9,466 117,084 ----------- ----------- ------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------- ----------- ----------- ----------- ----------- COWETA- COLQUITT FAYETTE ----------- ----------- 1996 Residential Service............ 40,934 43,056 Commercial & Industrial........ 1,864 2,307 Other.......................... 1,151 181 ----------- ----------- Total Consumers Served..... 43,949 45,545 ----------- ----------- ----------- ----------- 1995 Residential Service............ 39,273 40,714 Commercial & Industrial........ 1,728 2,104 Other.......................... 1,095 160 ----------- ----------- Total Consumers Served..... 42,095 42,978 ----------- ----------- ----------- ----------- 1994 Residential Service............ 38,042 38,195 Commercial & Industrial........ 1,643 1,941 Other.......................... 1,047 316 ----------- ----------- Total Consumers Served..... 40,732 40,452 ----------- ----------- ----------- -----------
MIDDLE OKEFE- GEORGIA MITCHELL OCMULGEE OCONEE NOKE(1) PATAULA PLANTERS ----------- ----------- ------------- ----------- ----------- ----------- ----------- 1996 Residential Service............ 4,173 18,167 9,040 9,738 22,144 4,031 12,750 Commercial & Industrial........ 1,487 819 435 362 1,321 238 529 Other.......................... 385 822 293 355 255 90 425 ----------- ----------- ------------- ----------- ----------- ----------- ----------- Total Consumers Served..... 6,045 19,808 9,768 10,454 23,719 4,360 13,704 ----------- ----------- ------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------- ----------- ----------- ----------- ----------- 1995 Residential Service............ 4,120 17,807 8,838 9,482 21,513 3,951 12,308 Commercial & Industrial........ 1,480 763 422 327 1,121 228 516 Other.......................... 342 761 286 359 239 92 415 ----------- ----------- ------------- ----------- ----------- ----------- ----------- Total Consumers Served..... 5,942 19,331 9,546 10,168 22,873 4,271 13,239 ----------- ----------- ------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------- ----------- ----------- ----------- ----------- 1994 Residential Service............ 4,032 17,341 8,703 9,275 21,391 3,845 11,972 Commercial & Industrial........ 1,423 786 327 300 1,079 220 516 Other.......................... 312 700 251 352 14 92 401 ----------- ----------- ------------- ----------- ----------- ----------- ----------- Total Consumers Served..... 5,767 18,827 9,281 9,927 22,484 4,157 12,889 ----------- ----------- ------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------- ----------- ----------- ----------- ----------- RAYLE SATILLA ----------- ----------- 1996 Residential Service............ 13,897 38,686 Commercial & Industrial........ 1,052 1,415 Other.......................... 0 888 ----------- ----------- Total Consumers Served..... 14,949 40,988 ----------- ----------- ----------- ----------- 1995 Residential Service............ 13,596 37,338 Commercial & Industrial........ 1,034 1,346 Other.......................... 0 855 ----------- ----------- Total Consumers Served..... 14,631 39,539 ----------- ----------- ----------- ----------- 1994 Residential Service............ 13,310 35,850 Commercial & Industrial........ 1,039 1,305 Other.......................... 0 843 ----------- ----------- Total Consumers Served..... 14,349 37,998 ----------- ----------- ----------- -----------
- ------------------------ (1) Includes information relating to Okefenoke Rural EMC's operations in both Georgia and Florida. Okefenoke Rural EMC purchases a portion of its power and energy from an electric supplier in Florida. In 1996, such energy amounted to approximately 26% of its total energy requirements. A-4 TABLE 2 (CONTINUED)
EXCELSIOR FLINT GRADY GREYSTONE HABERSHAM HART IRWIN JACKSON JEFFERSON LAMAR - ----------- --------- ----------- ------------- ------------- ----------- --------- ----------- ----------- ------------- 15,173 48,402 13,997 58,221 21,553 23,729 9,182 109,740 26,951 12,516 834 5,134 398 4,613 1,690 4,309 160 7,877 377 747 166 549 456 366 13 0 322 805 61 9 - ----------- --------- ----------- ------------- ------------- ----------- --------- ----------- ----------- ------------- 16,174 54,085 14,851 63,200 23,256 28,038 9,663 118,421 27,389 13,272 - ----------- --------- ----------- ------------- ------------- ----------- --------- ----------- ----------- ------------- - ----------- --------- ----------- ------------- ------------- ----------- --------- ----------- ----------- ------------- 14,371 46,588 13,549 55,889 20,648 23,154 8,933 103,418 26,331 12,031 772 4,936 373 4,319 1,610 4,179 169 7,610 360 728 112 532 433 337 12 0 287 516 58 7 - ----------- --------- ----------- ------------- ------------- ----------- --------- ----------- ----------- ------------- 15,255 52,056 14,355 60,545 22,270 27,333 9,388 111,544 26,750 12,766 - ----------- --------- ----------- ------------- ------------- ----------- --------- ----------- ----------- ------------- - ----------- --------- ----------- ------------- ------------- ----------- --------- ----------- ----------- ------------- 13,849 45,368 13,105 53,753 19,826 22,524 8,703 98,388 25,616 11,686 751 4,715 358 4,115 1,513 4,020 159 7,603 344 714 104 522 425 308 12 0 271 286 55 6 - ----------- --------- ----------- ------------- ------------- ----------- --------- ----------- ----------- ------------- 14,704 50,605 13,888 58,176 21,351 26,544 9,133 106,277 26,015 12,406 - ----------- --------- ----------- ------------- ------------- ----------- --------- ----------- ----------- ------------- - ----------- --------- ----------- ------------- ------------- ----------- --------- ----------- ----------- ------------- LITTLE EXCELSIOR OCMULGEE - ----------- ----------- 15,173 8,472 834 56 166 239 - ----------- ----------- 16,174 8,767 - ----------- ----------- - ----------- ----------- 14,371 7,577 772 56 112 227 - ----------- ----------- 15,255 7,861 - ----------- ----------- - ----------- ----------- 13,849 8,093 751 60 104 225 - ----------- ----------- 14,704 8,378 - ----------- ----------- - ----------- -----------
SLASH SNAPPING THREE TRI- UPSON SAWNEE PINE SHOALS SUMTER NOTCH COUNTY TROUP COUNTY WALTON WASHINGTON - ----------- --------- ----------- ------------- ------------- ----------- --------- ----------- ----------- ------------- 70,076 5,283 47,415 11,905 11,737 13,687 19,155 7,365 70,234 12,018 4,909 255 2,359 3,546 559 973 2,129 508 4,559 488 2,023 124 0 121 202 0 178 105 1,084 20 - ----------- --------- ----------- ------------- ------------- ----------- --------- ----------- ----------- ------------- 77,008 5,661 49,774 15,572 12,498 14,660 21,462 7,977 75,877 12,526 - ----------- --------- ----------- ------------- ------------- ----------- --------- ----------- ----------- ------------- - ----------- --------- ----------- ------------- ------------- ----------- --------- ----------- ----------- ------------- 64,402 5,071 45,177 11,584 11,891 13,283 18,657 7,240 67,484 11,849 4,366 247 2,219 3,462 247 952 2,090 450 4,305 388 1,429 116 0 120 20 0 187 102 1,035 18 - ----------- --------- ----------- ------------- ------------- ----------- --------- ----------- ----------- ------------- 70,197 5,434 47,396 15,167 12,158 14,235 20,934 7,792 72,824 12,255 - ----------- --------- ----------- ------------- ------------- ----------- --------- ----------- ----------- ------------- - ----------- --------- ----------- ------------- ------------- ----------- --------- ----------- ----------- ------------- 59,611 4,874 43,282 11,189 11,651 12,880 17,958 7,092 65,036 11,556 4,013 238 2,118 3,376 259 930 2,097 445 4,132 349 1,289 114 0 119 20 0 185 104 994 19 - ----------- --------- ----------- ------------- ------------- ----------- --------- ----------- ----------- ------------- 64,913 5,226 45,400 14,684 11,931 13,810 20,240 7,641 70,162 11,924 - ----------- --------- ----------- ------------- ------------- ----------- --------- ----------- ----------- ------------- - ----------- --------- ----------- ------------- ------------- ----------- --------- ----------- ----------- ------------- SAWNEE TOTAL - ----------- ----------- 70,076 1,075,539 4,909 72,618 2,023 13,446 - ----------- ----------- 77,008 1,161,603 - ----------- ----------- - ----------- ----------- 64,402 1,029,681 4,366 68,307 1,429 12,210 - ----------- ----------- 70,197 1,110,197 - ----------- ----------- - ----------- ----------- 59,611 990,581 4,013 65,487 1,289 11,191 - ----------- ----------- 64,913 1,067,258 - ----------- ----------- - ----------- -----------
A-5 OGLETHORPE POWER CORPORATION MEMBER FINANCIAL AND STATISTICAL INFORMATION TABLE 3 ANNUAL MWH SALES BY CONSUMER CLASS OF EACH MEMBER (1)
CENTRAL ALTAMAHA AMICALOLA CANOOCHEE CARROLL GEORGIA COASTAL COBB COLQUITT ----------- ----------- ----------- ----------- ----------- ----------- --------- ----------- 1996 - -------------------------- Residential Service....... 176,920 290,172 194,871 356,763 345,134 125,738 1,483,575 580,488 Commercial & Industrial... 162,148 40,898 70,042 234,058 109,657 53,053 689,253 129,086 Other..................... 1,821 104 2,220 3,920 437 970 89,332 84,060 ----------- ----------- ----------- ----------- ----------- ----------- --------- ----------- Total MWh Sales....... 340,889 331,175 267,133 594,740 455,228 179,761 2,262,159 793,634 ----------- ----------- ----------- ----------- ----------- ----------- --------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- --------- ----------- 1995 - -------------------------- Residential Service....... 165,438 263,230 181,483 328,968 318,566 113,174 1,417,804 537,199 Commercial & Industrial... 85,985 36,571 66,445 217,124 95,655 50,203 592,854 123,338 Other..................... 1,832 13,460 1,592 3,648 426 898 84,075 79,870 ----------- ----------- ----------- ----------- ----------- ----------- --------- ----------- Total MWh Sales....... 253,255 313,261 249,520 549,740 414,647 164,276 2,094,733 740,407 ----------- ----------- ----------- ----------- ----------- ----------- --------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- --------- ----------- 1994 - -------------------------- Residential Service....... 150,406 238,069 164,559 301,792 290,700 99,264 1,209,248 485,238 Commercial & Industrial... 89,863 36,265 60,195 210,236 85,210 39,328 551,355 107,423 Other..................... 1,425 103 912 3,294 501 791 71,446 69,338 ----------- ----------- ----------- ----------- ----------- ----------- --------- ----------- Total MWh Sales....... 241,695 274,437 225,666 515,322 376,411 139,383 1,832,050 661,999 ----------- ----------- ----------- ----------- ----------- ----------- --------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- --------- ----------- COWETA- FAYETTE ----------- 1996 - -------------------------- Residential Service....... 573,983 Commercial & Industrial... 175,672 Other..................... 4,138 ----------- Total MWh Sales....... 753,794 ----------- ----------- 1995 - -------------------------- Residential Service....... 528,120 Commercial & Industrial... 149,452 Other..................... 5,352 ----------- Total MWh Sales....... 682,924 ----------- ----------- 1994 - -------------------------- Residential Service....... 462,622 Commercial & Industrial... 124,478 Other..................... 5,537 ----------- Total MWh Sales....... 592,637 ----------- -----------
MIDDLE OKEFE- GEORGIA MITCHELL OCMULGEE OCONEE NOKE(2) PATAULA PLANTERS RAYLE ----------- ----------- ----------- ----------- ----------- ----------- --------- ----------- 1996 - -------------------------- Residential Service....... 58,553 266,122 97,850 116,898 311,556 37,485 168,855 152,365 Commercial & Industrial... 27,633 53,697 28,051 103,525 40,077 23,420 15,243 25,775 Other..................... 3,906 19,124 3,606 2,644 7,745 3,117 4,847 0 ----------- ----------- ----------- ----------- ----------- ----------- --------- ----------- Total MWh Sales....... 90,092 338,943 129,507 223,067 359,379 64,021 188,946 178,140 ----------- ----------- ----------- ----------- ----------- ----------- --------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- --------- ----------- 1995 - -------------------------- Residential Service....... 54,199 248,823 91,286 111,168 292,848 34,960 156,675 142,922 Commercial & Industrial... 27,105 50,918 25,465 95,436 36,158 18,947 15,777 25,811 Other..................... 4,208 18,983 3,381 2,373 5,342 3,453 4,432 0 ----------- ----------- ----------- ----------- ----------- ----------- --------- ----------- Total MWh Sales....... 85,512 318,724 120,132 208,977 334,348 57,360 176,884 168,733 ----------- ----------- ----------- ----------- ----------- ----------- --------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- --------- ----------- 1994 - -------------------------- Residential Service....... 49,237 226,507 83,997 100,725 271,766 31,942 142,640 132,144 Commercial & Industrial... 22,338 48,575 21,723 104,691 31,879 17,114 13,397 27,285 Other..................... 1,306 8,520 1,206 1,880 227 1,207 3,865 0 ----------- ----------- ----------- ----------- ----------- ----------- --------- ----------- Total MWh Sales....... 72,881 283,602 106,926 207,296 303,872 50,263 159,902 159,429 ----------- ----------- ----------- ----------- ----------- ----------- --------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- --------- ----------- SATILLA ----------- 1996 - -------------------------- Residential Service....... 531,633 Commercial & Industrial... 69,121 Other..................... 15,189 ----------- Total MWh Sales....... 615,943 ----------- ----------- 1995 - -------------------------- Residential Service....... 489,533 Commercial & Industrial... 59,406 Other..................... 13,457 ----------- Total MWh Sales....... 562,396 ----------- ----------- 1994 - -------------------------- Residential Service....... 446,328 Commercial & Industrial... 54,740 Other..................... 11,131 ----------- Total MWh Sales....... 512,199 ----------- -----------
- ------------------------ (1) Includes sales of energy purchased by the Members from both Oglethorpe and SEPA. In 1996, energy purchased by the Members from SEPA represented approximately 5.0% of the total energy purchased by the Members. (2) Includes information relating to Okefenoke Rural EMC's operations in both Georgia and Florida. Okefenoke Rural EMC purchases a portion of its power and energy from an electric supplier in Florida. In 1996, such energy amounted to approximately 26% of its total energy requirements. A-6 TABLE 3 (CONTINUED)
LITTLE EXCELSIOR FLINT GRADY GREYSTONE HABERSHAM HART IRWIN JACKSON JEFFERSON LAMAR OCMULGEE - --------- --------- ----------- ----------- ----------- --------- --------- --------- ----------- ------------- ---------- 207,525 718,814 179,242 784,105 243,935 280,069 117,556 1,464,762 345,569 163,100 95,701 42,567 319,770 17,884 344,505 60,156 101,377 20,330 896,564 45,175 35,898 18,317 2,165 19,133 9,958 3,444 99 5,447 94,769 4,224 3,295 3,770 - --------- --------- ----------- ----------- ----------- --------- --------- --------- ----------- ------------- ---------- 252,257 1,057,717 207,085 1,132,054 304,190 381,446 143,332 2,456,094 394,968 202,294 117,788 - --------- --------- ----------- ----------- ----------- --------- --------- --------- ----------- ------------- ---------- - --------- --------- ----------- ----------- ----------- --------- --------- --------- ----------- ------------- ---------- 185,727 676,027 166,736 729,033 221,655 264,332 110,135 1,330,839 329,364 152,072 90,285 39,563 310,118 16,251 304,269 55,827 99,248 22,576 802,756 42,619 30,684 18,231 1,500 19,157 9,867 3,163 94 0 4,788 80,453 4,177 2,397 2,907 - --------- --------- ----------- ----------- ----------- --------- --------- --------- ----------- ------------- ---------- 226,790 1,005,302 192,854 1,036,466 277,576 363,580 137,500 2,214,048 376,160 185,153 111,424 - --------- --------- ----------- ----------- ----------- --------- --------- --------- ----------- ------------- ---------- - --------- --------- ----------- ----------- ----------- --------- --------- --------- ----------- ------------- ---------- 167,028 620,475 143,819 664,358 207,302 245,378 98,893 1,205,178 304,098 138,575 81,932 32,048 284,780 13,469 274,003 50,142 88,825 16,455 748,375 39,218 26,261 17,396 1,311 16,634 8,548 2,928 92 0 2,797 36,043 3,485 1,332 1,711 - --------- --------- ----------- ----------- ----------- --------- --------- --------- ----------- ------------- ---------- 200,387 921,889 165,836 941,289 257,536 334,203 118,145 1,989,596 346,801 166,168 101,039 - --------- --------- ----------- ----------- ----------- --------- --------- --------- ----------- ------------- ---------- - --------- --------- ----------- ----------- ----------- --------- --------- --------- ----------- ------------- ----------
SLASH SNAPPING THREE TRI- UPSON SAWNEE PINE SHOALS SUMTER NOTCH COUNTY TROUP COUNTY WALTON WASHINGTON TOTAL - --------- --------- ----------- ----------- ----------- --------- --------- --------- ----------- ------------- ---------- 915,477 70,941 674,154 188,369 147,461 168,588 280,969 79,573 1,013,243 141,116 14,149,230 328,858 30,647 153,020 57,290 24,354 37,413 73,554 13,509 375,159 175,979 5,222,736 13,674 4,956 37 4,865 8,388 0 5,722 1,247 35,814 459 468,646 - --------- --------- ----------- ----------- ----------- --------- --------- --------- ----------- ------------- ---------- 1,258,009 106,544 827,211 250,525 180,202 206,001 360,244 94,330 1,424,217 317,555 19,840,612 - --------- --------- ----------- ----------- ----------- --------- --------- --------- ----------- ------------- ---------- - --------- --------- ----------- ----------- ----------- --------- --------- --------- ----------- ------------- ---------- 818,945 65,572 619,675 174,836 150,631 154,839 256,948 75,420 943,849 132,551 13,125,868 291,993 28,083 141,484 51,411 10,953 36,256 67,590 12,850 354,854 181,047 4,691,315 13,627 4,553 314 6,673 774 0 5,672 1,181 34,367 529 442,974 - --------- --------- ----------- ----------- ----------- --------- --------- --------- ----------- ------------- ---------- 1,124,565 98,208 761,473 232,920 162,358 191,094 330,211 89,451 1,333,069 314,128 18,260,157 - --------- --------- ----------- ----------- ----------- --------- --------- --------- ----------- ------------- ---------- - --------- --------- ----------- ----------- ----------- --------- --------- --------- ----------- ------------- ---------- 700,328 58,728 555,323 160,126 132,989 141,487 235,142 69,367 842,668 119,879 11,780,256 257,702 24,922 126,927 45,775 12,930 34,474 66,636 10,412 327,294 179,925 4,324,064 10,057 4,243 0 2,611 412 0 5,578 1,465 29,712 381 312,030 - --------- --------- ----------- ----------- ----------- --------- --------- --------- ----------- ------------- ---------- 968,087 87,893 682,250 208,511 146,331 175,961 307,356 81,244 1,199,674 300,185 16,416,349 - --------- --------- ----------- ----------- ----------- --------- --------- --------- ----------- ------------- ---------- - --------- --------- ----------- ----------- ----------- --------- --------- --------- ----------- ------------- ----------
A-7 OGLETHORPE POWER CORPORATION MEMBER FINANCIAL AND STATISTICAL INFORMATION TABLE 4 ANNUAL REVENUES BY CONSUMER CLASS OF EACH MEMBER (1)
CENTRAL ALTAMAHA AMICALOLA CANOOCHEE CARROLL GEORGIA COASTAL COBB ----------- ----------- ----------- ----------- ----------- ----------- ------------- 1996 - ----------------------------------- Residential Service................ $15,397,747 $25,431,363 $16,710,104 $30,602,655 $27,881,595 $11,005,687 $ 129,223,081 Commercial & Industrial............ 7,336,008 3,678,005 4,454,093 12,040,453 6,735,877 3,133,582 49,061,268 Other.............................. 129,822 12,029 188,310 385,925 44,193 104,082 9,977,181 ----------- ----------- ----------- ----------- ----------- ----------- ------------- Total Electric Sales............. $22,863,577 $29,121,397 $21,352,507 $43,029,033 $34,661,665 $14,243,351 $ 188,261,530 Other Operating Revenue............ 314,778 1,134,841 149,790 458,124 1,396,259 301,933 4,756,324 ----------- ----------- ----------- ----------- ----------- ----------- ------------- Total Operating Revenue.......... $23,178,355 $30,256,238 $21,502,297 $43,487,157 $36,057,924 $14,545,284 $ 193,017,854 ----------- ----------- ----------- ----------- ----------- ----------- ------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------- 1995 - ----------------------------------- Residential Service................ $14,960,330 $24,420,513 $15,954,042 $29,087,323 $28,008,567 $10,491,674 $ 124,448,118 Commercial & Industrial............ 6,426,889 3,325,420 4,303,301 11,880,051 6,049,246 3,250,333 45,107,329 Other.............................. 133,224 383,195 146,300 368,120 47,050 100,289 9,770,596 ----------- ----------- ----------- ----------- ----------- ----------- ------------- Total Electric Sales............. $21,520,443 $28,129,128 $20,403,643 $41,335,494 $34,104,863 $13,842,296 $ 179,326,043 Other Operating Revenue............ 306,744 977,329 134,478 465,360 781,238 301,003 4,453,285 ----------- ----------- ----------- ----------- ----------- ----------- ------------- Total Operating Revenue.......... $21,827,187 $29,106,457 $20,538,121 $41,800,854 $34,886,101 $14,143,299 $ 183,779,328 ----------- ----------- ----------- ----------- ----------- ----------- ------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------- 1994 - ----------------------------------- Residential Service................ $13,629,657 $21,368,018 $14,655,563 $26,520,188 $24,715,118 $ 9,068,768 $ 114,176,385 Commercial & Industrial............ 5,821,048 3,084,049 4,129,309 11,161,446 5,347,654 2,727,683 43,907,247 Other.............................. 106,505 9,695 91,048 335,622 42,916 88,758 9,157,976 ----------- ----------- ----------- ----------- ----------- ----------- ------------- Total Electric Sales............. $19,557,210 $24,461,762 $18,875,920 $38,017,256 $30,105,686 $11,885,209 $ 167,241,608 Other Operating Revenue............ 187,732 927,860 129,134 2,321,961 639,206 260,888 3,975,350 ----------- ----------- ----------- ----------- ----------- ----------- ------------- Total Operating Revenue.......... $19,744,942 $25,389,622 $19,005,054 $40,339,217 $30,744,892 $12,146,097 $ 171,216,958 ----------- ----------- ----------- ----------- ----------- ----------- ------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------- COWETA- COLQUITT FAYETTE ----------- ----------- 1996 - ----------------------------------- Residential Service................ $43,657,833 $47,564,622 Commercial & Industrial............ 8,259,766 12,783,191 Other.............................. 5,051,834 430,652 ----------- ----------- Total Electric Sales............. $56,969,433 $60,778,465 Other Operating Revenue............ 1,211,893 324,105 ----------- ----------- Total Operating Revenue.......... $58,181,326 $61,102,570 ----------- ----------- ----------- ----------- 1995 - ----------------------------------- Residential Service................ $42,213,494 $46,789,991 Commercial & Industrial............ 7,934,026 11,483,856 Other.............................. 4,788,308 435,297 ----------- ----------- Total Electric Sales............. $54,935,828 $58,709,144 Other Operating Revenue............ 1,092,680 947,967 ----------- ----------- Total Operating Revenue.......... $56,028,508 $59,657,111 ----------- ----------- ----------- ----------- 1994 - ----------------------------------- Residential Service................ $38,103,102 $39,772,144 Commercial & Industrial............ 7,145,892 9,964,317 Other.............................. 4,188,939 538,516 ----------- ----------- Total Electric Sales............. $49,437,933 $50,274,977 Other Operating Revenue............ 990,088 931,813 ----------- ----------- Total Operating Revenue.......... $50,428,021 $51,206,790 ----------- ----------- ----------- -----------
MIDDLE OKEFE- GEORGIA MITCHELL OCMULGEE OCONEE NOKE(2) PATAULA PLANTERS ----------- ----------- ----------- ----------- ----------- ----------- ------------- 1996 - ----------------------------------- Residential Service................ $ 4,685,286 NA $ 8,572,691 $10,546,690 $25,223,021 $ 3,214,404 $ 12,921,032 Commercial & Industrial............ 2,263,551 NA 1,822,642 5,254,167 2,958,376 1,154,810 1,026,554 Other.............................. 446,710 NA 354,769 234,466 591,847 233,056 440,864 ----------- ----------- ----------- ----------- ----------- ----------- ------------- Total Electric Sales............. $ 7,395,547 NA $10,750,102 $16,035,323 $28,773,244 $ 4,602,270 $ 14,388,450 Other Operating Revenue............ 121,779 NA 255,093 78,810 642,299 86,791 380,977 ----------- ----------- ----------- ----------- ----------- ----------- ------------- Total Operating Revenue.......... $ 7,517,326 NA $11,005,195 $16,114,133 $29,415,543 $ 4,689,061 $ 14,769,427 ----------- ----------- ----------- ----------- ----------- ----------- ------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------- 1995 - ----------------------------------- Residential Service................ $ 4,923,224 $21,003,355 $ 8,722,860 $10,322,787 $25,373,143 $ 3,182,397 $ 12,582,079 Commercial & Industrial............ 2,452,478 3,959,059 1,725,239 5,219,557 2,823,508 968,612 1,090,770 Other.............................. 477,322 1,634,981 350,680 222,134 454,583 267,994 420,313 ----------- ----------- ----------- ----------- ----------- ----------- ------------- Total Electric Sales............. $ 7,853,024 $26,597,395 $10,798,779 $15,764,478 $28,651,234 $ 4,419,003 $ 14,093,162 Other Operating Revenue............ 123,785 876,119 245,437 66,531 665,738 83,204 255,814 ----------- ----------- ----------- ----------- ----------- ----------- ------------- Total Operating Revenue.......... $ 7,976,809 $27,473,514 $11,044,216 $15,831,009 $29,316,972 $ 4,502,207 $ 14,348,976 ----------- ----------- ----------- ----------- ----------- ----------- ------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------- 1994 - ----------------------------------- Residential Service................ $ 4,434,279 $18,722,405 $ 7,936,975 $ 9,236,251 $22,853,508 $ 2,899,970 $ 11,880,724 Commercial & Industrial............ 2,046,137 3,614,615 1,474,142 5,402,277 2,473,957 816,103 999,634 Other.............................. 171,215 799,478 166,238 182,571 43,800 130,313 385,247 ----------- ----------- ----------- ----------- ----------- ----------- ------------- Total Electric Sales............. $ 6,651,631 $23,136,498 $ 9,577,355 $14,821,099 $25,371,265 $ 3,846,386 $ 13,265,605 Other Operating Revenue............ 113,030 715,755 218,116 24,341 596,084 77,221 172,095 ----------- ----------- ----------- ----------- ----------- ----------- ------------- Total Operating Revenue.......... $ 6,764,661 $23,852,253 $ 9,795,471 $14,845,440 $25,967,349 $ 3,923,607 $ 13,437,700 ----------- ----------- ----------- ----------- ----------- ----------- ------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------- RAYLE SATILLA ----------- ----------- 1996 - ----------------------------------- Residential Service................ $13,343,438 $38,574,185 Commercial & Industrial............ 2,011,881 4,589,701 Other.............................. 0 1,098,887 ----------- ----------- Total Electric Sales............. $15,355,319 $44,262,773 Other Operating Revenue............ -399,434 1,474,354 ----------- ----------- Total Operating Revenue.......... $14,955,885 $45,737,127 ----------- ----------- ----------- ----------- 1995 - ----------------------------------- Residential Service................ $13,483,920 $39,289,316 Commercial & Industrial............ 2,211,522 4,426,593 Other.............................. 0 1,078,912 ----------- ----------- Total Electric Sales............. $15,695,442 $44,794,821 Other Operating Revenue............ 81,784 1,442,918 ----------- ----------- Total Operating Revenue.......... $15,777,226 $46,237,739 ----------- ----------- ----------- ----------- 1994 - ----------------------------------- Residential Service................ $12,133,726 $34,319,251 Commercial & Industrial............ 2,131,273 3,918,707 Other.............................. 0 883,067 ----------- ----------- Total Electric Sales............. $14,264,999 $39,121,025 Other Operating Revenue............ 115,412 1,323,395 ----------- ----------- Total Operating Revenue.......... $14,380,411 $40,444,420 ----------- ----------- ----------- -----------
- ------------------------ (1) NA = Not Available (2) Includes information relating to Okefenoke Rural EMC's operations in both Georgia and Florida. Okefenoke Rural EMC purchases a portion of its power and energy from an electric supplier in Florida. In 1996, such energy amounted to approximately 26% of its total energy requirements. A-8 TABLE 4 (CONTINUED)
EXCELSIOR FLINT GRADY GREYSTONE HABERSHAM HART IRWIN JACKSON JEFFERSON - ------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------- ------------- $ 14,905,466 $51,726,415 $14,945,512 $60,214,615 $19,066,690 $23,261,436 $ 9,449,941 $ 108,864,367 $ 29,033,356 2,889,136 21,587,914 1,258,316 22,289,990 4,245,885 7,926,007 1,436,481 53,777,842 2,932,475 187,413 1,621,204 814,237 616,719 7,903 0 474,849 6,410,907 370,990 - ------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------- ------------- $ 17,982,015 $74,935,533 $17,018,065 $83,121,324 $23,320,478 $31,187,443 $11,361,271 $ 169,053,116 $ 32,336,821 281,708 1,705,721 611,478 2,006,141 440,380 975,657 198,335 5,211,161 1,006,931 - ------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------- ------------- $ 18,263,723 $76,641,254 $17,629,543 $85,127,465 $23,760,858 $32,163,100 $11,559,606 $ 174,264,277 $ 33,343,752 - ------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------- ------------- - ------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------- ------------- $ 14,189,915 $51,067,799 $14,456,906 $60,505,609 $18,121,940 $21,348,639 $ 8,992,473 $ 107,585,286 $ 29,368,534 2,596,239 22,072,374 1,176,342 21,318,543 4,141,890 7,284,568 1,598,910 51,878,517 2,927,924 141,698 1,652,835 828,460 565,154 8,170 0 427,259 5,621,245 365,715 - ------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------- ------------- $ 16,927,852 $74,793,008 $16,461,708 $82,389,306 $22,272,000 $28,633,207 $11,018,642 $ 165,085,048 $ 32,662,173 371,380 723,445 261,778 1,877,678 403,820 920,191 196,846 1,493,543 893,210 - ------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------- ------------- $ 17,299,232 $75,516,453 $16,723,486 $84,266,984 $22,675,820 $29,553,398 $11,215,488 $ 166,578,591 $ 33,555,383 - ------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------- ------------- - ------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------- ------------- $ 12,964,157 $46,704,011 $13,006,745 $52,401,607 $16,528,905 $19,273,810 $ 8,494,593 $ 98,437,728 $ 26,466,689 2,322,274 20,837,092 1,045,835 19,114,116 3,629,437 6,488,462 1,321,485 49,130,967 2,599,192 122,836 1,494,841 735,777 529,254 7,849 0 294,015 2,878,212 313,562 - ------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------- ------------- $ 15,409,267 $69,035,944 $14,788,357 $72,044,977 $20,166,191 $25,762,272 $10,110,093 $ 150,446,907 $ 29,379,443 -444,248 2,176,541 545,497 1,423,371 375,071 829,076 186,623 -333,627 899,155 - ------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------- ------------- $ 14,965,019 $71,212,485 $15,333,854 $73,468,348 $20,541,262 $26,591,348 $10,296,716 $ 150,113,280 $ 30,278,598 - ------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------- ------------- - ------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------- ------------- LITTLE EXCELSIOR LAMAR OCMULGEE - ------------- ------------ -------------- $ 14,905,466 $12,978,930 $ 8,226,645 2,889,136 2,213,667 1,241,715 187,413 203,302 316,048 - ------------- ------------ -------------- $ 17,982,015 $15,395,899 $ 9,784,408 281,708 466,364 128,045 - ------------- ------------ -------------- $ 18,263,723 $15,862,263 $ 9,912,453 - ------------- ------------ -------------- - ------------- ------------ -------------- $ 14,189,915 $12,496,940 $ 7,803,216 2,596,239 2,047,781 1,234,220 141,698 130,786 253,191 - ------------- ------------ -------------- $ 16,927,852 $14,675,507 $ 9,290,627 371,380 416,852 130,674 - ------------- ------------ -------------- $ 17,299,232 $15,092,359 $ 9,421,301 - ------------- ------------ -------------- - ------------- ------------ -------------- $ 12,964,157 $10,944,224 $ 7,228,977 2,322,274 1,796,518 1,192,873 122,836 77,671 194,999 - ------------- ------------ -------------- $ 15,409,267 $12,818,413 $ 8,616,849 -444,248 391,015 129,397 - ------------- ------------ -------------- $ 14,965,019 $13,209,428 $ 8,746,246 - ------------- ------------ -------------- - ------------- ------------ --------------
SLASH SNAPPING THREE TRI- UPSON SAWNEE PINE SHOALS SUMTER NOTCH COUNTY TROUP COUNTY WALTON - ------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------- ------------- $ 78,274,899 $ 5,724,048 $52,066,299 $14,476,505 $11,157,260 $14,371,233 $21,472,115 $ 6,532,561 $ 77,570,054 26,006,350 1,657,050 10,573,357 4,878,576 1,881,433 2,995,344 5,483,185 1,152,868 25,439,115 1,538,739 331,842 5,107 443,272 830,186 0 531,450 128,491 3,372,515 - ------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------- ------------- $ 105,819,988 $ 7,712,940 $62,644,763 $19,798,353 $13,868,879 $17,366,577 $27,486,750 $ 7,813,920 $ 106,381,684 379,618 44,123 1,410,751 -55,656 211,741 601,772 749,352 195,046 1,834,917 - ------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------- ------------- $ 106,199,606 $ 7,757,063 $64,055,514 $19,742,697 $14,080,620 $17,968,349 $28,236,102 $ 8,008,966 $ 108,216,601 - ------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------- ------------- - ------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------- ------------- $ 73,872,717 $ 5,589,263 $50,970,969 $13,878,776 $12,763,902 $13,556,426 $21,925,663 $ 6,168,920 $ 77,948,750 24,032,487 1,629,172 10,133,343 4,617,537 942,249 2,912,686 5,413,059 1,100,288 24,741,810 1,441,223 331,399 19,894 576,472 71,932 0 579,500 119,217 3,275,711 - ------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------- ------------- $ 99,346,427 $ 7,549,834 $61,124,206 $19,072,785 $13,778,083 $16,469,112 $27,918,222 $ 7,388,425 $ 105,966,271 391,440 44,992 1,263,673 20,930 211,673 523,094 372,950 167,938 1,718,444 - ------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------- ------------- $ 99,737,867 $ 7,594,826 $62,387,879 $19,093,715 $13,989,756 $16,992,206 $28,291,172 $ 7,556,363 $ 107,684,715 - ------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------- ------------- - ------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------- ------------- $ 60,277,551 $ 4,884,452 $45,424,799 $12,583,235 $11,163,332 $11,970,430 $19,744,397 $ 5,715,668 $ 68,947,331 20,700,491 1,357,506 9,429,852 4,180,289 1,056,507 2,658,639 5,317,891 970,141 23,067,545 1,119,710 302,258 0 336,998 44,804 0 577,540 139,831 2,894,135 - ------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------- ------------- $ 82,097,752 $ 6,544,216 $54,854,651 $17,100,522 $12,264,643 $14,629,069 $25,639,828 $ 6,825,640 $ 94,909,011 3,454,623 45,706 1,175,484 -11,308 196,721 377,095 342,878 183,153 2,279,854 - ------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------- ------------- $ 85,552,375 $ 6,589,922 $56,030,135 $17,089,214 $12,461,364 $15,006,164 $25,982,706 $ 7,008,793 $ 97,188,865 - ------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------- ------------- - ------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------- ------------- SAWNEE WASHINGTON TOTAL - ------------- ------------ -------------- $ 78,274,899 $12,138,346 $1,111,012,127 26,006,350 8,933,996 339,364,627 1,538,739 35,961 37,965,762 - ------------- ------------ -------------- $ 105,819,988 $21,108,303 $1,488,342,516 379,618 -141,523 30,950,778 - ------------- ------------ -------------- $ 106,199,606 $20,966,780 $1,519,293,294 - ------------- ------------ -------------- - ------------- ------------ -------------- $ 73,872,717 $11,715,735 $1,109,585,511 24,032,487 9,303,194 327,740,922 1,441,223 38,982 37,528,141 - ------------- ------------ -------------- $ 99,346,427 $21,057,911 $1,474,854,574 391,440 221,942 25,927,907 - ------------- ------------ -------------- $ 99,737,867 $21,279,853 $1,500,782,481 - ------------- ------------ -------------- - ------------- ------------ -------------- $ 60,277,551 $10,368,678 $ 989,957,351 20,700,491 9,151,258 303,533,860 1,119,710 32,779 29,418,975 - ------------- ------------ -------------- $ 82,097,752 $19,552,715 $1,322,910,186 3,454,623 236,757 28,178,315 - ------------- ------------ -------------- $ 85,552,375 $19,789,472 $1,351,088,501 - ------------- ------------ -------------- - ------------- ------------ --------------
A-9 OGLETHORPE POWER CORPORATION MEMBER FINANCIAL AND STATISTICAL INFORMATION TABLE 5 SUMMARY OF OPERATING RESULTS OF EACH MEMBER
CENTRAL ALTAMAHA AMICALOLA CANOOCHEE CARROLL GEORGIA COASTAL ----------- ----------- ----------- ----------- ----------- ----------- 1996 Operating Revenue and Patronage Capital.... $23,178,355 $30,256,238 2$1,502,297 $43,487,157 $36,057,924 $14,545,284 Depreciation and Amortization.............. 1,347,834 2,378,263 1,327,694 2,842,770 2,624,803 889,945 Other Operating Expenses................... 19,231,960 24,573,139 17,506,714 36,153,599 29,250,606 12,138,956 ----------- ----------- ----------- ----------- ----------- ----------- Electric Operating Margin................ $ 2,598,561 $ 3,304,836 $2,667,889 $ 4,490,788 $ 4,182,515 $ 1,516,383 Other Income............................... 694,842 621,649 467,212 934,572 814,198 217,395 ----------- ----------- ----------- ----------- ----------- ----------- Gross Operating Margin................... $ 3,293,403 $ 3,926,485 $3,135,101 $ 5,425,360 $ 4,996,713 $ 1,733,778 Interest on Long-term Debt................. 1,134,702 2,280,821 1,100,870 2,016,480 1,819,295 1,054,585 Other Deductions........................... 110,384 8,872 1,152 62,288 0 73,224 ----------- ----------- ----------- ----------- ----------- ----------- Net Margins............................ $ 2,048,317 $ 1,636,792 $2,033,079 $ 3,346,592 $ 3,177,418 $ 605,969 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- 1995 Operating Revenue and Patronage Capital.... $21,827,187 $29,106,457 2$0,538,121 $41,800,852 $34,886,101 $14,143,299 Depreciation and Amortization.............. 1,265,192 2,234,634 1,261,498 2,500,606 2,087,101 809,468 Other Operating Expenses................... 17,742,016 23,594,551 17,154,552 36,066,571 30,068,950 11,767,343 ----------- ----------- ----------- ----------- ----------- ----------- Electric Operating Margin................ $ 2,819,979 $ 3,277,272 $2,122,071 $ 3,233,675 $ 2,730,050 $ 1,566,488 Other Income............................... 584,960 727,666 410,040 933,691 888,651 265,151 ----------- ----------- ----------- ----------- ----------- ----------- Gross Operating Margin................... $ 3,404,939 $ 4,004,938 $2,532,111 $ 4,167,366 $ 3,618,701 $ 1,831,639 Interest on Long-term Debt................. 849,645 2,185,795 1,071,592 2,050,629 1,760,592 941,668 Other Deductions........................... 109,376 12,094 0 24,501 0 69,208 ----------- ----------- ----------- ----------- ----------- ----------- Net Margins............................ $ 2,445,918 $ 1,807,049 $1,460,519 $ 2,092,236 $ 1,858,109 $ 820,763 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- 1994 Operating Revenue and Patronage Capital.... $19,744,942 $25,389,622 1$9,005,054 $40,339,217 $30,744,892 $12,146,097 Depreciation and Amortization.............. 1,202,864 2,068,801 1,179,374 2,533,874 2,264,849 729,265 Other Operating Expenses................... 16,218,772 21,035,284 15,558,769 33,532,027 26,146,544 10,385,376 ----------- ----------- ----------- ----------- ----------- ----------- Electric Operating Margin................ $ 2,323,306 $ 2,285,537 $2,266,911 $ 4,273,316 $ 2,333,499 $ 1,031,456 Other Income............................... 384,560 650,681 431,381 951,413 720,311 271,268 ----------- ----------- ----------- ----------- ----------- ----------- Gross Operating Margin................... $ 2,707,866 $ 2,936,218 $2,698,292 $ 5,224,729 $ 3,053,810 $ 1,302,724 Interest on Long-term Debt................. 757,193 1,871,683 909,904 1,745,745 1,462,415 809,133 Other Deductions........................... 115,587 49,251 0 35,800 41,618 55,082 ----------- ----------- ----------- ----------- ----------- ----------- Net Margins............................ $ 1,835,086 $ 1,015,284 $1,788,388 $ 3,443,184 $ 1,549,777 $ 438,509 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- COWETA- COBB COLQUITT FAYETTE ------------- ----------- ----------- 1996 Operating Revenue and Patronage Capital.... $ 193,017,854 $58,181,326 $61,102,570 Depreciation and Amortization.............. 8,742,374 2,758,976 3,483,312 Other Operating Expenses................... 171,871,205 49,014,039 52,036,510 ------------- ----------- ----------- Electric Operating Margin................ $ 12,404,275 $ 6,408,311 $ 5,582,748 Other Income............................... 3,972,847 1,418,584 1,357,165 ------------- ----------- ----------- Gross Operating Margin................... $ 16,377,122 $ 7,826,895 $ 6,939,913 Interest on Long-term Debt................. 9,666,964 2,329,067 3,309,895 Other Deductions........................... 1,176,098 0 570,434 ------------- ----------- ----------- Net Margins............................ $ 5,534,060 $ 5,497,828 $ 3,059,584 ------------- ----------- ----------- ------------- ----------- ----------- 1995 Operating Revenue and Patronage Capital.... $ 183,779,328 $56,028,508 $59,657,111 Depreciation and Amortization.............. 8,101,420 2,586,462 3,126,469 Other Operating Expenses................... 162,026,092 48,373,726 51,750,356 ------------- ----------- ----------- Electric Operating Margin................ $ 13,651,816 $ 5,068,320 $ 4,780,286 Other Income............................... 4,148,093 1,279,399 1,193,269 ------------- ----------- ----------- Gross Operating Margin................... $ 17,799,909 $ 6,347,719 $ 5,973,555 Interest on Long-term Debt................. 9,205,880 2,223,045 3,246,890 Other Deductions........................... 1,062,512 0 190,735 ------------- ----------- ----------- Net Margins............................ $ 7,531,517 $ 4,124,674 $ 2,535,930 ------------- ----------- ----------- ------------- ----------- ----------- 1994 Operating Revenue and Patronage Capital.... $ 171,216,958 $50,428,021 $51,206,790 Depreciation and Amortization.............. 7,502,423 2,439,285 2,859,899 Other Operating Expenses................... 148,164,763 44,706,743 44,970,380 ------------- ----------- ----------- Electric Operating Margin................ $ 15,549,772 $ 3,281,993 $ 3,376,511 Other Income............................... 3,683,379 1,283,373 1,099,466 ------------- ----------- ----------- Gross Operating Margin................... $ 19,233,151 $ 4,565,366 $ 4,475,977 Interest on Long-term Debt................. 8,110,516 1,938,473 2,528,572 Other Deductions........................... 760,032 0 275,658 ------------- ----------- ----------- Net Margins............................ $ 10,362,603 $ 2,626,893 $ 1,671,747 ------------- ----------- ----------- ------------- ----------- -----------
MIDDLE OKEFE- GEORGIA MITCHELL OCMULGEE OCONEE NOKE(1) PATAULA ----------- ----------- ----------- ----------- ----------- ----------- 1996 Operating Revenue and Patronage Capital.... $ 7,517,326 $29,748,002 1$1,005,195 $16,114,133 $29,415,543 $ 4,689,061 Depreciation and Amortization.............. 582,465 1,726,985 629,201 808,910 2,122,450 277,524 Other Operating Expenses................... 5,926,887 24,742,724 8,802,333 13,716,304 25,334,554 3,791,843 ----------- ----------- ----------- ----------- ----------- ----------- Electric Operating Margin................ $ 1,007,974 $ 3,278,293 $1,573,661 $ 1,588,919 $ 1,958,539 $ 619,694 Other Income............................... 207,602 450,051 432,063 334,635 1,543,500 120,258 ----------- ----------- ----------- ----------- ----------- ----------- Gross Operating Margin................... $ 1,215,576 $ 3,728,344 $2,005,724 $ 1,923,554 $ 3,502,039 $ 739,952 Interest on Long-term Debt................. 562,952 1,485,702 664,861 717,588 1,856,403 177,141 Other Deductions........................... 37,222 402,847 14,018 14,865 248,776 0 ----------- ----------- ----------- ----------- ----------- ----------- Net Margins............................ $ 615,402 $ 1,839,795 $1,326,845 $ 1,191,101 $ 1,396,860 $ 562,811 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- 1995 Operating Revenue and Patronage Capital.... $ 7,976,809 $27,473,514 1$1,044,216 $15,831,009 $29,316,972 $ 4,502,207 Depreciation and Amortization.............. 559,308 1,404,032 603,215 754,565 2,001,800 251,543 Other Operating Expenses................... 6,423,046 24,443,833 9,554,730 13,802,171 24,845,555 3,750,941 ----------- ----------- ----------- ----------- ----------- ----------- Electric Operating Margin................ $ 994,455 $ 1,625,649 $ 886,271 $ 1,274,273 $ 2,469,617 $ 499,723 Other Income............................... 200,533 1,011,598 348,660 354,857 1,671,083 117,299 ----------- ----------- ----------- ----------- ----------- ----------- Gross Operating Margin................... $ 1,194,988 $ 2,637,247 $1,234,931 $ 1,629,130 $ 4,140,700 $ 617,022 Interest on Long-term Debt................. 534,709 1,485,458 606,560 749,090 2,129,783 183,304 Other Deductions........................... 58,323 -894,440 7,299 11,300 801,384 459 ----------- ----------- ----------- ----------- ----------- ----------- Net Margins............................ $ 601,956 $ 2,046,229 $ 621,072 $ 868,740 $ 1,209,533 $ 433,259 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- 1994 Operating Revenue and Patronage Capital.... $ 6,764,661 $23,851,984 $9,795,471 $14,845,440 $25,967,349 $ 3,923,607 Depreciation and Amortization.............. 524,669 1,307,917 575,314 709,922 1,802,521 239,882 Other Operating Expenses................... 5,538,469 22,876,882 8,078,819 13,300,270 23,166,991 3,328,521 ----------- ----------- ----------- ----------- ----------- ----------- Electric Operating Margin................ $ 701,523 ($ 332,815) $1,141,338 $ 835,248 $ 997,837 $ 355,204 Other Income............................... 203,924 556,380 335,955 330,625 2,310,696 107,859 ----------- ----------- ----------- ----------- ----------- ----------- Gross Operating Margin................... $ 905,447 $ 223,565 $1,477,293 $ 1,165,873 $ 3,308,533 $ 463,063 Interest on Long-term Debt................. 495,507 954,076 572,300 652,864 2,069,598 177,037 Other Deductions........................... 32,709 -2,423,513 5,238 15,060 116,285 400 ----------- ----------- ----------- ----------- ----------- ----------- Net Margins............................ $ 377,231 $ 1,693,002 $ 899,755 $ 497,949 $ 1,122,650 $ 285,626 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- PLANTERS RAYLE SATILLA ------------- ----------- ----------- 1996 Operating Revenue and Patronage Capital.... $ 14,769,428 $14,955,885 $45,737,127 Depreciation and Amortization.............. 1,049,412 1,172,314 2,284,764 Other Operating Expenses................... 12,462,804 12,184,879 40,564,468 ------------- ----------- ----------- Electric Operating Margin................ $ 1,257,212 $ 1,598,692 $ 2,887,895 Other Income............................... 507,871 433,295 1,000,461 ------------- ----------- ----------- Gross Operating Margin................... $ 1,765,083 $ 2,031,987 $ 3,888,356 Interest on Long-term Debt................. 667,577 1,051,195 1,591,911 Other Deductions........................... 6,944 16,935 245,181 ------------- ----------- ----------- Net Margins............................ $ 1,090,562 $ 963,857 $ 2,051,264 ------------- ----------- ----------- ------------- ----------- ----------- 1995 Operating Revenue and Patronage Capital.... $ 14,348,976 $15,777,226 $46,237,739 Depreciation and Amortization.............. 990,725 1,190,547 2,140,930 Other Operating Expenses................... 12,021,789 13,315,288 41,229,784 ------------- ----------- ----------- Electric Operating Margin................ $ 1,336,462 $ 1,271,391 $ 2,867,025 Other Income............................... 447,726 456,560 1,336,043 ------------- ----------- ----------- Gross Operating Margin................... $ 1,784,188 $ 1,727,951 $ 4,203,068 Interest on Long-term Debt................. 610,329 1,079,132 1,590,117 Other Deductions........................... 10,417 21,740 37,130 ------------- ----------- ----------- Net Margins............................ $ 1,163,442 $ 627,079 $ 2,575,821 ------------- ----------- ----------- ------------- ----------- ----------- 1994 Operating Revenue and Patronage Capital.... $ 13,437,700 $14,380,411 $40,444,421 Depreciation and Amortization.............. 931,195 1,203,794 2,001,050 Other Operating Expenses................... 11,228,129 11,991,995 35,342,538 ------------- ----------- ----------- Electric Operating Margin................ $ 1,278,376 $ 1,184,622 $ 3,100,833 Other Income............................... 415,305 301,695 1,096,472 ------------- ----------- ----------- Gross Operating Margin................... $ 1,693,681 $ 1,486,317 $ 4,197,305 Interest on Long-term Debt................. 535,518 816,664 1,315,655 Other Deductions........................... 28,110 47,831 37,130 ------------- ----------- ----------- Net Margins............................ $ 1,130,053 $ 621,822 $ 2,844,520 ------------- ----------- ----------- ------------- ----------- -----------
- ---------------------------------------- (1) Includes information relating to Okefenoke Rural EMC's operations in both Georgia and Florida. Okefenoke Rural EMC purchases a portion of its power and energy from an electric supplier in Florida. In 1996, such energy amounted to approximately 26% of its total energy requirements. A-10 TABLE 5 (CONTINUED)
EXCELSIOR FLINT GRADY GREYSTONE HABERSHAM HART IRWIN JACKSON JEFFERSON LAMAR - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ------------- ----------- ----------- $18,263,723 $76,641,254 $17,624,644 $85,127,465 $23,760,858 $32,163,100 $11,559,605 $ 174,264,277 $33,343,751 $15,862,263 1,032,872 4,324,380 1,118,247 3,413,536 1,640,028 1,867,995 841,357 7,860,818 1,793,192 707,715 15,898,636 66,334,944 15,206,854 71,523,808 20,468,567 25,863,543 9,764,114 151,813,967 28,875,794 13,885,071 - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ------------- ----------- ----------- $ 1,332,215 $ 5,981,930 $ 1,299,543 $10,190,121 $ 1,652,263 $ 4,431,562 $ 954,134 $ 14,589,492 $ 2,674,765 $ 1,269,477 603,438 1,669,733 354,017 1,915,361 553,525 702,082 264,136 3,868,904 609,917 473,252 - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ------------- ----------- ----------- $ 1,935,653 $ 7,651,663 $ 1,653,560 $12,105,482 $ 2,205,788 $ 5,133,644 $ 1,218,270 $ 18,458,396 $ 3,284,682 $ 1,742,729 976,266 2,974,578 793,735 3,250,972 1,105,836 1,449,963 673,442 8,701,681 1,542,645 474,877 12,815 55,746 88,577 209,091 73,038 25,813 25,930 731,906 85,052 0 - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ------------- ----------- ----------- $ 946,572 $ 4,621,339 $ 771,248 $ 8,645,419 $ 1,026,914 $ 3,657,868 $ 518,898 $ 9,024,809 $ 1,656,985 $ 1,267,852 - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ------------- ----------- ----------- - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ------------- ----------- ----------- $17,299,232 $75,516,453 $16,723,486 $84,266,984 $22,675,820 $29,553,398 $11,215,488 $ 166,578,591 $33,555,383 $15,092,358 942,853 4,055,184 1,075,274 3,193,929 1,503,095 1,682,576 772,638 7,222,083 1,678,790 602,036 15,306,379 67,187,225 14,763,736 72,612,625 19,622,026 25,761,686 9,555,777 145,748,027 29,641,714 13,766,945 - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ------------- ----------- ----------- $ 1,050,000 $ 4,274,044 $ 884,476 $ 8,460,430 $ 1,550,699 $ 2,109,136 $ 887,073 $ 13,608,481 $ 2,234,879 $ 723,377 585,825 1,648,980 313,630 1,879,789 572,846 752,445 226,149 4,138,725 636,246 450,973 - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ------------- ----------- ----------- $ 1,635,825 $ 5,923,024 $ 1,198,106 $10,340,219 $ 2,123,545 $ 2,861,581 $ 1,113,222 $ 17,747,206 $ 2,871,125 $ 1,174,350 862,653 2,592,128 701,072 3,403,739 1,120,964 1,426,046 664,103 8,983,845 1,546,223 476,350 14,256 44,255 108,589 145,506 15,627 4,685 3,610 43,216 64,560 0 - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ------------- ----------- ----------- $ 758,916 $ 3,286,641 $ 388,445 $ 6,790,974 $ 986,954 $ 1,430,850 $ 445,509 $ 8,720,145 $ 1,260,342 $ 698,000 - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ------------- ----------- ----------- - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ------------- ----------- ----------- $14,965,019 $71,212,485 $15,333,854 $73,468,348 $20,541,261 $26,591,348 $10,296,716 $ 150,113,280 $30,278,598 $13,209,428 856,090 3,672,952 1,056,910 2,922,381 1,339,183 1,546,706 725,265 6,664,339 1,555,099 551,293 13,182,530 62,099,637 13,227,167 65,863,142 20,550,336 24,003,135 8,807,691 133,565,037 26,301,438 11,855,600 - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ------------- ----------- ----------- $ 926,399 $ 5,439,896 $ 1,049,777 $ 4,682,825 ($1,348,258) $ 1,041,507 $ 763,760 $ 9,883,904 $ 2,422,061 $ 802,535 520,194 1,787,802 325,415 1,789,617 522,534 720,272 247,680 3,656,107 651,793 361,071 - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ------------- ----------- ----------- $ 1,446,593 $ 7,227,698 $ 1,375,192 $ 6,472,442 ($ 825,724) $ 1,761,779 $ 1,011,440 $ 13,540,011 $ 3,073,854 $ 1,163,606 756,827 2,216,451 568,087 2,762,351 866,785 1,126,406 536,597 7,207,812 1,306,044 322,218 15,793 28,496 2,064 395,407 48,515 10,500 12,138 69,477 45,732 0 - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ------------- ----------- ----------- $ 673,973 $ 4,982,751 $ 805,041 $ 3,314,684 ($1,741,024) $ 624,873 $ 462,705 $ 6,262,722 $ 1,722,078 $ 841,388 - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ------------- ----------- ----------- - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ------------- ----------- ----------- LITTLE EXCELSIOR OCMULGEE - ----------- -------------- $18,263,723 $ 9,912,451 1,032,872 678,796 15,898,636 8,256,043 - ----------- -------------- $ 1,332,215 $ 977,612 603,438 329,502 - ----------- -------------- $ 1,935,653 $ 1,307,114 976,266 748,873 12,815 31,978 - ----------- -------------- $ 946,572 $ 526,263 - ----------- -------------- - ----------- -------------- $17,299,232 $ 9,421,301 942,853 641,275 15,306,379 7,732,420 - ----------- -------------- $ 1,050,000 $ 1,047,606 585,825 279,390 - ----------- -------------- $ 1,635,825 $ 1,326,996 862,653 763,520 14,256 39,222 - ----------- -------------- $ 758,916 $ 524,254 - ----------- -------------- - ----------- -------------- $14,965,019 $ 8,746,246 856,090 623,101 13,182,530 7,082,538 - ----------- -------------- $ 926,399 $ 1,040,607 520,194 230,137 - ----------- -------------- $ 1,446,593 $ 1,270,744 756,827 622,699 15,793 63,661 - ----------- -------------- $ 673,973 $ 584,384 - ----------- -------------- - ----------- --------------
SLASH SNAPPING THREE TRI- UPSON SAWNEE PINE SHOALS SUMTER NOTCH COUNTY TROUP COUNTY WALTON WASHINGTON - ------------- ---------- ----------- ----------- ----------- ----------- ----------- ---------- ------------- ------------ $ 106,199,605 $7,757,063 $64,055,514 $19,742,697 $14,080,620 $17,968,349 $28,236,102 $8,008,966 $ 108,216,601 $20,966,780 5,461,439 347,392 3,149,513 1,364,107 724,564 1,087,677 1,689,778 345,917 4,784,938 1,120,202 90,138,664 6,645,532 58,638,522 17,044,494 12,215,197 14,375,621 23,148,170 6,841,940 95,041,808 18,147,494 - ------------- ---------- ----------- ----------- ----------- ----------- ----------- ---------- ------------- ------------ $ 10,599,502 $ 764,139 $ 2,267,479 $ 1,334,096 $ 1,140,859 $ 2,505,051 $ 3,398,154 $ 821,109 $ 8,389,855 $1,699,084 1,963,171 161,350 1,291,013 603,583 354,285 333,192 625,724 162,519 2,425,084 828,895 - ------------- ---------- ----------- ----------- ----------- ----------- ----------- ---------- ------------- ------------ $ 12,562,673 $ 925,489 $ 3,558,492 $ 1,937,679 $ 1,495,144 $ 2,838,243 $ 4,023,878 $ 983,628 $ 10,814,939 $2,527,979 5,767,038 363,039 1,687,796 990,057 599,282 1,096,312 1,317,856 209,258 3,209,510 1,246,947 631,716 6,909 583,546 8,498 18,791 46,005 112,967 1,001 98,925 19,163 - ------------- ---------- ----------- ----------- ----------- ----------- ----------- ---------- ------------- ------------ $ 6,163,919 $ 555,541 $ 1,287,150 $ 939,124 $ 877,071 $ 1,695,926 $ 2,593,055 $ 773,369 $ 7,506,504 $1,261,869 - ------------- ---------- ----------- ----------- ----------- ----------- ----------- ---------- ------------- ------------ - ------------- ---------- ----------- ----------- ----------- ----------- ----------- ---------- ------------- ------------ $ 99,737,867 $7,594,826 $62,387,879 $19,093,715 $13,989,755 $16,992,206 $28,291,170 $7,556,363 $ 107,684,715 $21,279,853 4,835,543 314,311 2,912,891 1,129,572 725,790 1,035,992 1,573,631 333,446 4,427,546 1,135,431 88,339,450 6,722,621 55,760,048 16,685,944 12,291,452 14,387,170 23,911,842 6,819,168 94,907,445 18,219,068 - ------------- ---------- ----------- ----------- ----------- ----------- ----------- ---------- ------------- ------------ $ 6,562,874 $ 557,894 $ 3,714,940 $ 1,278,199 $ 972,513 $ 1,569,044 $ 2,805,697 $ 403,749 $ 8,349,724 $1,925,354 1,925,480 175,202 1,273,842 488,791 381,017 357,182 1,860,207 153,975 2,321,595 616,521 - ------------- ---------- ----------- ----------- ----------- ----------- ----------- ---------- ------------- ------------ $ 8,488,354 $ 733,096 $ 4,988,782 $ 1,766,990 $ 1,353,530 $ 1,926,226 $ 4,665,904 $ 557,724 $ 10,671,319 $2,541,875 5,084,334 313,562 2,288,847 864,786 506,044 1,074,470 1,314,612 219,276 3,379,073 1,087,822 388,338 26,743 121,553 14,094 50,640 87,689 40,352 12,699 134,758 61,974 - ------------- ---------- ----------- ----------- ----------- ----------- ----------- ---------- ------------- ------------ $ 3,015,682 $ 392,791 $ 2,578,382 $ 888,110 $ 796,846 $ 764,067 $ 3,310,940 $ 325,749 $ 7,157,488 $1,392,079 - ------------- ---------- ----------- ----------- ----------- ----------- ----------- ---------- ------------- ------------ - ------------- ---------- ----------- ----------- ----------- ----------- ----------- ---------- ------------- ------------ $ 85,552,374 $6,589,923 $56,030,435 $17,089,214 $12,461,364 $15,006,164 $25,982,706 $7,008,793 $ 97,188,865 $19,789,472 4,295,517 276,763 2,658,720 1,057,058 629,248 987,137 2,121,162 314,327 4,123,354 1,061,073 74,696,589 5,896,828 50,383,831 14,865,526 11,037,210 12,815,226 21,893,313 6,240,264 88,880,042 17,421,168 - ------------- ---------- ----------- ----------- ----------- ----------- ----------- ---------- ------------- ------------ $ 6,560,268 $ 416,332 $ 2,987,884 $ 1,166,630 $ 794,906 $ 1,203,801 $ 1,968,231 $ 454,202 $ 4,185,469 $1,307,231 617,135 163,177 1,244,701 459,632 172,861 336,545 856,539 159,245 2,643,241 619,216 - ------------- ---------- ----------- ----------- ----------- ----------- ----------- ---------- ------------- ------------ $ 7,177,403 $ 579,509 $ 4,232,585 $ 1,626,262 $ 967,767 $ 1,540,346 $ 2,824,770 $ 613,447 $ 6,828,710 $1,926,447 4,549,544 226,892 1,247,393 714,263 452,243 912,598 1,354,308 186,556 3,049,546 1,043,587 219,766 12,022 639,899 13,059 34,320 101,303 92,920 18,212 108,074 62,469 - ------------- ---------- ----------- ----------- ----------- ----------- ----------- ---------- ------------- ------------ $ 2,408,093 $ 340,595 $ 2,345,293 $ 898,940 $ 481,204 $ 526,445 $ 1,377,542 $ 408,679 $ 3,671,090 $ 820,391 - ------------- ---------- ----------- ----------- ----------- ----------- ----------- ---------- ------------- ------------ - ------------- ---------- ----------- ----------- ----------- ----------- ----------- ---------- ------------- ------------ SAWNEE TOTAL - ------------- -------------- $ 106,199,605 $1,549,036,393 5,461,439 82,404,459 90,138,664 1,329,432,307 - ------------- -------------- $ 10,599,502 $ 137,199,627 1,963,171 35,620,883 - ------------- -------------- $ 12,562,673 $ 172,820,510 5,767,038 72,667,972 631,716 5,856,707 - ------------- -------------- $ 6,163,919 $ 94,295,831 - ------------- -------------- - ------------- -------------- $ 99,737,867 $1,500,782,475 4,835,543 75,663,401 88,339,450 1,307,674,062 - ------------- -------------- $ 6,562,874 $ 117,445,012 1,925,480 37,414,089 - ------------- -------------- $ 8,488,354 $ 154,859,101 5,084,334 71,177,687 388,338 2,944,404 - ------------- -------------- $ 3,015,682 $ 80,737,010 - ------------- -------------- - ------------- -------------- $ 85,552,374 $1,351,088,530 4,295,517 71,114,576 74,696,589 1,186,239,520 - ------------- -------------- $ 6,560,268 $ 93,734,434 617,135 33,219,657 - ------------- -------------- $ 7,177,403 $ 126,954,091 4,549,544 59,752,060 219,766 1,186,105 - ------------- -------------- $ 2,408,093 $ 66,015,926 - ------------- -------------- - ------------- --------------
A-11 OGLETHORPE POWER CORPORATION MEMBER FINANCIAL AND STATISTICAL INFORMATION TABLE 6 CONDENSED BALANCE SHEET INFORMATION OF EACH MEMBER (AS OF DECEMBER 31)
CENTRAL ALTAMAHA AMICALOLA CANOOCHEE CARROLL GEORGIA COASTAL COBB ----------- ----------- ----------- ----------- ----------- ----------- ------------- 1996 ASSETS Total Utility Plant(1)...... $46,494,020 $81,272,483 4$3,763,526 $82,833,008 $71,250,678 $30,069,767 $ 304,134,816 Depreciation................ 9,343,487 19,397,260 6,672,946 17,812,567 16,239,124 3,571,034 35,480,700 ----------- ----------- ----------- ----------- ----------- ----------- ------------- Net Plant................. 37,150,533 61,875,223 37,090,580 65,020,441 55,011,554 26,498,733 268,654,116 Other Assets................ 21,457,737 12,574,057 9,679,245 19,218,238 15,007,593 8,026,587 66,564,406 ----------- ----------- ----------- ----------- ----------- ----------- ------------- Total Assets............ $58,608,270 $74,449,280 4$6,769,825 $84,238,679 $70,019,147 $34,525,320 $ 335,218,522 ----------- ----------- ----------- ----------- ----------- ----------- ------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------- EQUITY & LIABILITIES Equity...................... 33,090,210 22,791,617 21,712,517 35,026,516 32,606,506 10,176,157 112,747,182 Long-term Debt.............. 20,501,442 42,344,102 21,363,427 38,677,371 32,282,981 21,384,292 167,637,801 Other Liabilities........... 5,016,618 9,313,561 3,693,881 10,534,792 5,129,660 2,964,871 54,833,539 ----------- ----------- ----------- ----------- ----------- ----------- ------------- Total Equity and Liabilities............. $58,608,270 $74,449,280 4$6,769,825 $84,238,679 $70,019,147 $34,525,320 $ 335,218,522 ----------- ----------- ----------- ----------- ----------- ----------- ------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------- 1995 ASSETS Total Utility Plant(1)...... $43,786,119 $75,454,488 4$0,193,128 $77,421,541 $66,696,238 $28,230,229 $ 284,580,456 Depreciation................ 8,524,043 17,543,466 6,105,253 16,497,094 15,025,968 3,254,410 32,429,192 ----------- ----------- ----------- ----------- ----------- ----------- ------------- Net Plant................. 35,262,076 57,911,022 34,087,875 60,924,447 51,670,270 24,975,819 252,151,264 Other Assets................ 18,415,270 12,792,350 9,079,764 19,277,185 16,598,343 6,014,398 69,253,378 ----------- ----------- ----------- ----------- ----------- ----------- ------------- Total Assets............ $53,677,346 $70,703,372 4$3,167,639 $80,201,632 $68,268,613 $30,990,217 $ 321,404,642 ----------- ----------- ----------- ----------- ----------- ----------- ------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------- EQUITY & LIABILITIES Equity...................... 31,219,629 21,324,070 19,845,902 33,558,414 29,777,471 9,819,863 107,123,904 Long-term Debt.............. 18,233,962 40,691,010 19,883,729 38,148,158 33,093,348 18,062,463 167,773,144 Other Liabilities........... 4,223,755 8,688,292 3,438,008 8,495,060 5,397,794 3,107,891 46,507,594 ----------- ----------- ----------- ----------- ----------- ----------- ------------- Total Equity and Liabilities............. $53,677,346 $70,703,372 4$3,167,639 $80,201,632 $68,268,613 $30,990,217 $ 321,404,642 ----------- ----------- ----------- ----------- ----------- ----------- ------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------- 1994 ASSETS Total Utility Plant(1)...... $41,507,015 $70,023,965 3$6,518,986 $73,410,250 $62,936,313 $25,422,827 $ 266,314,487 Depreciation................ 7,655,198 15,838,578 5,675,872 15,240,339 13,985,793 3,013,285 28,805,182 Net Plant................. 33,851,817 54,185,387 30,843,114 58,169,911 48,950,520 22,409,542 237,509,305 Other Assets................ 15,570,224 11,834,238 8,756,465 16,852,601 13,777,905 6,294,637 63,558,975 ----------- ----------- ----------- ----------- ----------- ----------- ------------- Total Assets.............. $49,422,041 $66,019,625 3$9,599,579 $75,022,512 $62,728,425 $28,704,179 $ 301,068,280 ----------- ----------- ----------- ----------- ----------- ----------- ------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------- EQUITY & LIABILITIES Equity...................... 29,339,499 19,702,374 18,518,560 31,522,750 28,445,939 9,104,239 99,540,332 Long-term Debt.............. 16,716,255 39,299,485 17,945,166 37,119,571 27,305,377 16,939,004 161,285,873 Other Liabilities........... 3,366,287 7,017,766 3,135,853 6,380,191 6,977,109 2,660,936 40,242,075 ----------- ----------- ----------- ----------- ----------- ----------- ------------- Total Equity and Liabilities............. $49,422,041 $66,019,625 3$9,599,579 $75,022,512 $62,728,425 $28,704,179 $ 301,068,280 ----------- ----------- ----------- ----------- ----------- ----------- ------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------- MIDDLE OKEFE- GEORGIA MITCHELL OCMULGEE OCONEE NOKE(2) PATAULA PLANTERS ----------- ----------- ----------- ----------- ----------- ----------- ------------- 1996 ASSETS Total Utility Plant(1)...... $20,295,664 $55,543,119 2$5,479,748 $29,227,736 $74,060,686 $ 9,573,988 $ 30,117,312 Depreciation................ 3,927,186 10,619,159 6,391,178 3,794,394 12,784,888 2,686,414 9,678,085 ----------- ----------- ----------- ----------- ----------- ----------- ------------- Net Plant................. 16,368,478 44,923,960 19,088,570 25,433,342 61,275,798 6,887,574 20,439,227 Other Assets................ 4,038,241 18,551,785 7,514,388 8,110,441 20,611,109 2,311,431 11,284,999 ----------- ----------- ----------- ----------- ----------- ----------- ------------- Total Assets............ $20,406,719 $63,475,745 2$6,602,958 $33,543,783 $81,886,907 $ 9,199,005 $ 31,724,226 ----------- ----------- ----------- ----------- ----------- ----------- ------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------- EQUITY & LIABILITIES Equity...................... 8,617,105 32,659,494 12,393,761 15,554,278 27,626,197 5,306,154 15,271,719 Long-term Debt.............. 10,982,858 22,592,992 11,796,526 14,425,612 37,731,213 3,415,815 13,093,374 Other Liabilities........... 806,756 8,223,259 2,412,671 3,563,893 16,529,497 477,036 3,359,133 ----------- ----------- ----------- ----------- ----------- ----------- ------------- Total Equity and Liabilities............. $20,406,719 $63,475,745 2$6,602,958 $33,543,783 $81,886,907 $ 9,199,005 $ 31,724,226 ----------- ----------- ----------- ----------- ----------- ----------- ------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------- 1995 ASSETS Total Utility Plant(1)...... $19,340,002 $52,713,498 2$3,803,300 $26,676,976 $69,397,160 $ 8,972,049 $ 28,678,584 Depreciation................ 3,528,789 10,069,745 5,993,494 3,887,355 11,493,558 2,531,224 9,094,482 ----------- ----------- ----------- ----------- ----------- ----------- ------------- Net Plant................. 15,811,213 42,643,753 17,809,806 22,789,621 57,903,602 6,440,825 19,584,102 Other Assets................ 3,811,691 15,178,664 6,620,492 7,998,537 20,895,200 2,299,118 10,219,327 ----------- ----------- ----------- ----------- ----------- ----------- ------------- Total Assets............ $19,622,904 $57,822,417 2$4,430,298 $30,788,158 $78,798,802 $ 8,739,943 $ 29,803,429 ----------- ----------- ----------- ----------- ----------- ----------- ------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------- EQUITY & LIABILITIES Equity...................... 7,989,770 29,434,088 11,428,344 14,667,424 26,332,076 4,741,224 14,492,906 Long-term Debt.............. 10,187,133 18,007,963 11,859,903 12,878,739 38,746,014 3,531,758 12,148,503 Other Liabilities........... 1,446,001 10,380,363 1,142,051 3,241,995 13,720,712 466,961 3,162,020 ----------- ----------- ----------- ----------- ----------- ----------- ------------- Total Equity and Liabilities............. $19,622,904 $57,822,414 2$4,430,298 $30,788,158 $78,798,802 $ 8,739,943 $ 29,803,429 ----------- ----------- ----------- ----------- ----------- ----------- ------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------- 1994 ASSETS Total Utility Plant(1)...... $18,496,530 $48,698,926 2$2,969,686 $24,830,254 $64,855,465 $ 8,584,360 $ 27,138,128 Depreciation................ 3,572,944 9,103,911 5,949,200 3,544,572 10,161,224 2,424,025 8,374,484 ----------- ----------- ----------- ----------- ----------- ----------- ------------- Net Plant................. 14,923,586 39,595,015 17,020,486 21,285,682 54,694,241 6,160,335 18,763,644 Other Assets................ 3,500,801 14,543,602 5,955,012 8,100,607 18,620,708 2,261,786 9,257,856 ----------- ----------- ----------- ----------- ----------- ----------- ------------- Total Assets............ $18,424,387 $54,138,617 2$2,975,498 $29,386,289 $73,314,949 $ 8,422,121 $ 28,021,500 ----------- ----------- ----------- ----------- ----------- ----------- ------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------- EQUITY & LIABILITIES Equity...................... 7,372,540 27,466,187 11,200,142 13,985,299 25,399,752 4,310,227 13,799,630 Long-term Debt.............. 9,402,152 17,707,541 10,642,337 12,776,655 38,477,769 3,644,288 11,391,343 Other Liabilities........... 1,649,695 8,964,889 1,133,019 2,624,335 9,437,428 467,606 2,830,527 ----------- ----------- ----------- ----------- ----------- ----------- ------------- Total Equity and Liabilities............. $18,424,387 $54,138,617 2$2,975,498 $29,386,289 $73,314,949 $ 8,422,121 $ 28,021,500 ----------- ----------- ----------- ----------- ----------- ----------- ------------- ----------- ----------- ----------- ----------- ----------- ----------- ------------- COWETA- COLQUITT FAYETTE ------------- ------------- 1996 ASSETS Total Utility Plant(1)...... $ 92,106,574 $ 118,289,765 Depreciation................ 16,732,337 20,809,809 ------------- ------------- Net Plant................. 75,374,237 97,479,956 Other Assets................ 28,710,559 22,567,210 ------------- ------------- Total Assets............ $ 104,084,796 $ 120,047,166 ------------- ------------- ------------- ------------- EQUITY & LIABILITIES Equity...................... 54,692,855 38,201,706 Long-term Debt.............. 41,654,063 66,604,679 Other Liabilities........... 7,737,878 15,240,781 ------------- ------------- Total Equity and Liabilities............. $ 104,084,796 $ 120,047,166 ------------- ------------- ------------- ------------- 1995 ASSETS Total Utility Plant(1)...... $ 85,979,491 $ 108,478,758 Depreciation................ 15,067,269 19,846,463 ------------- ------------- Net Plant................. 70,912,222 88,632,295 Other Assets................ 29,317,003 21,842,319 ------------- ------------- Total Assets............ $ 100,229,225 $ 110,474,614 ------------- ------------- ------------- ------------- EQUITY & LIABILITIES Equity...................... 50,134,302 35,554,520 Long-term Debt.............. 42,702,587 61,886,161 Other Liabilities........... 7,392,336 13,033,933 ------------- ------------- Total Equity and Liabilities............. $ 100,229,225 $ 110,474,614 ------------- ------------- ------------- ------------- 1994 ASSETS Total Utility Plant(1)...... $ 80,893,338 $ 97,989,837 Depreciation................ 13,483,922 18,089,216 Net Plant................. 67,409,416 79,900,621 Other Assets................ 23,922,755 18,969,676 ------------- ------------- Total Assets.............. $ 91,332,171 $ 98,870,297 ------------- ------------- ------------- ------------- EQUITY & LIABILITIES Equity...................... 46,675,638 33,423,307 Long-term Debt.............. 37,817,376 54,323,116 Other Liabilities........... 6,839,157 11,123,874 ------------- ------------- Total Equity and Liabilities............. $ 91,332,171 $ 98,870,297 ------------- ------------- ------------- ------------- RAYLE SATILLA ------------- ------------- 1996 ASSETS Total Utility Plant(1)...... $ 38,866,252 $ 77,878,807 Depreciation................ 9,095,995 14,750,974 ------------- ------------- Net Plant................. 29,770,257 63,127,833 Other Assets................ 8,152,412 21,353,873 ------------- ------------- Total Assets............ $ 37,922,669 $ 84,481,706 ------------- ------------- ------------- ------------- EQUITY & LIABILITIES Equity...................... 15,391,327 47,165,663 Long-term Debt.............. 19,574,998 31,066,252 Other Liabilities........... 2,956,344 6,249,791 ------------- ------------- Total Equity and Liabilities............. $ 37,922,669 $ 84,481,706 ------------- ------------- ------------- ------------- 1995 ASSETS Total Utility Plant(1)...... $ 36,902,764 $ 72,213,569 Depreciation................ 8,378,872 14,233,810 ------------- ------------- Net Plant................. 28,523,892 57,979,759 Other Assets................ 8,730,742 24,060,173 ------------- ------------- Total Assets............ $ 37,254,634 $ 82,039,932 ------------- ------------- ------------- ------------- EQUITY & LIABILITIES Equity...................... 14,891,335 45,156,620 Long-term Debt.............. 20,016,582 30,273,723 Other Liabilities........... 2,346,717 6,609,589 ------------- ------------- Total Equity and Liabilities............. $ 37,254,634 $ 82,039,932 ------------- ------------- ------------- ------------- 1994 ASSETS Total Utility Plant(1)...... $ 34,652,482 $ 67,833,765 Depreciation................ 7,565,129 13,919,259 ------------- ------------- Net Plant................. 27,087,353 53,914,506 Other Assets................ 7,928,216 20,955,681 ------------- ------------- Total Assets............ $ 35,015,569 $ 74,870,187 ------------- ------------- ------------- ------------- EQUITY & LIABILITIES Equity...................... 14,367,190 42,481,081 Long-term Debt.............. 18,861,706 27,080,759 Other Liabilities........... 1,786,673 5,308,347 ------------- ------------- Total Equity and Liabilities............. $ 35,015,569 $ 74,870,187 ------------- ------------- ------------- -------------
- ------------------------ (1) Including construction work in progress. (2) Includes information relating to Okefenoke Rural EMC's operations in both Georgia and Florida. Okefenoke Rural EMC purchases a portion of its power and energy from an electric supplier in Florida. In 1996, such energy amounted to approximately 26% of its total energy requirements. A-12 TABLE 6 (CONTINUED)
EXCELSIOR FLINT GRADY GREYSTONE HABERSHAM HART IRWIN JACKSON JEFFERSON - ------------- ------------- ----------- ------------- ----------- ----------- ----------- ------------- ------------- $ 36,751,265 $ 134,233,972 $37,267,979 $ 119,835,120 $54,370,174 $62,991,348 $26,240,440 $ 303,067,664 $ 61,213,183 8,236,346 34,181,519 7,618,851 17,154,327 13,539,289 16,475,736 7,512,796 38,248,857 9,745,502 - ------------- ------------- ----------- ------------- ----------- ----------- ----------- ------------- ------------- 28,514,919 100,052,453 29,649,128 102,680,793 40,830,885 46,515,612 18,727,644 264,818,807 51,467,681 12,069,745 35,885,347 7,777,084 35,184,355 12,003,105 17,048,933 4,808,042 67,670,782 12,793,252 - ------------- ------------- ----------- ------------- ----------- ----------- ----------- ------------- ------------- $ 40,584,664 $ 135,937,800 $37,426,212 $ 137,865,148 $52,833,990 $63,564,545 $23,535,686 $ 332,489,589 $ 64,260,933 - ------------- ------------- ----------- ------------- ----------- ----------- ----------- ------------- ------------- - ------------- ------------- ----------- ------------- ----------- ----------- ----------- ------------- ------------- 17,179,843 58,001,645 18,215,451 62,580,192 23,682,450 27,953,409 9,229,127 119,498,699 25,809,057 18,974,326 54,977,011 14,686,762 63,983,356 21,599,712 27,062,242 13,271,725 170,892,532 27,933,712 4,430,495 22,959,144 4,523,999 11,301,600 7,551,828 8,548,894 1,034,834 42,098,358 10,518,164 - ------------- ------------- ----------- ------------- ----------- ----------- ----------- ------------- ------------- $ 40,584,664 $ 135,937,800 $37,426,212 $ 137,865,148 $52,833,990 $63,564,545 $23,535,686 $ 332,489,589 $ 64,260,933 - ------------- ------------- ----------- ------------- ----------- ----------- ----------- ------------- ------------- - ------------- ------------- ----------- ------------- ----------- ----------- ----------- ------------- ------------- $ 32,711,813 $ 120,104,072 $35,415,422 $ 111,641,343 $51,078,773 $58,883,214 $24,405,784 $ 278,374,107 $ 57,969,886 7,545,520 31,775,167 7,709,204 14,958,722 12,605,884 14,997,338 7,057,769 36,994,995 9,490,587 - ------------- ------------- ----------- ------------- ----------- ----------- ----------- ------------- ------------- 25,166,293 88,328,905 27,706,218 96,682,621 38,472,889 43,885,876 17,348,015 241,379,112 48,479,299 9,697,688 35,018,903 8,517,819 36,369,445 12,510,269 13,419,913 4,490,238 67,648,547 13,130,128 $ 34,863,981 $ 123,347,808 $36,224,037 $ 133,052,066 $50,983,158 $57,305,789 $21,838,253 $ 309,027,659 $ 61,609,427 - ------------- ------------- ----------- ------------- ----------- ----------- ----------- ------------- ------------- - ------------- ------------- ----------- ------------- ----------- ----------- ----------- ------------- ------------- 16,219,525 54,757,464 17,442,545 55,901,190 22,900,174 24,351,543 8,811,175 113,186,857 24,470,203 15,093,798 51,515,923 14,997,658 68,618,413 21,095,826 24,522,191 11,955,805 154,132,967 29,551,950 3,550,658 17,074,421 3,783,834 8,532,463 6,987,158 8,432,055 1,071,273 41,707,835 7,587,274 - ------------- ------------- ----------- ------------- ----------- ----------- ----------- ------------- ------------- $ 34,863,981 $ 123,347,808 $36,224,037 $ 133,052,066 $50,983,158 $57,305,789 $21,838,253 $ 309,027,659 $ 61,609,427 - ------------- ------------- ----------- ------------- ----------- ----------- ----------- ------------- ------------- - ------------- ------------- ----------- ------------- ----------- ----------- ----------- ------------- ------------- $ 29,570,560 $ 111,337,009 $32,851,839 $ 103,695,947 $47,448,725 $54,722,141 $22,989,184 $ 249,775,644 $ 54,494,054 6,922,344 29,130,243 7,695,558 12,572,125 11,526,922 13,724,019 6,541,675 33,099,602 9,287,871 22,648,216 82,206,766 25,156,281 91,123,822 35,921,803 40,998,122 16,447,509 216,676,042 45,206,183 9,495,309 32,154,975 6,780,584 33,206,426 12,447,108 11,614,095 4,559,558 66,037,706 12,105,657 - ------------- ------------- ----------- ------------- ----------- ----------- ----------- ------------- ------------- $ 32,143,525 $ 114,361,741 $31,936,865 $ 124,330,248 $48,368,911 $52,612,217 $21,007,067 $ 282,713,748 $ 57,311,840 - ------------- ------------- ----------- ------------- ----------- ----------- ----------- ------------- ------------- - ------------- ------------- ----------- ------------- ----------- ----------- ----------- ------------- ------------- 15,452,269 52,448,924 17,096,996 51,000,389 22,070,249 23,424,151 8,483,633 106,384,851 23,167,856 13,369,595 48,614,023 12,379,604 64,951,029 19,726,545 21,362,833 11,538,226 145,266,700 26,500,713 3,321,661 13,298,794 2,460,265 8,378,830 6,572,117 7,825,233 985,208 31,062,197 7,643,271 - ------------- ------------- ----------- ------------- ----------- ----------- ----------- ------------- ------------- $ 32,143,525 $ 114,361,741 $31,936,865 $ 124,330,248 $48,368,911 $52,612,217 $21,007,067 $ 282,713,748 $ 57,311,840 - ------------- ------------- ----------- ------------- ----------- ----------- ----------- ------------- ------------- - ------------- ------------- ----------- ------------- ----------- ----------- ----------- ------------- ------------- SLASH SNAPPING THREE TRI- UPSON SAWNEE PINE SHOALS SUMTER NOTCH COUNTY TROUP COUNTY WALTON - ------------- ------------- ----------- ------------- ----------- ----------- ----------- ------------- ------------- $ 190,223,954 $ 15,032,197 $96,016,959 $ 41,057,632 $26,498,469 $38,324,663 $55,785,972 $ 11,445,222 $ 159,383,194 24,634,660 3,085,218 24,225,875 12,404,780 6,478,775 6,663,641 15,431,754 3,578,891 37,983,776 - ------------- ------------- ----------- ------------- ----------- ----------- ----------- ------------- ------------- 165,589,294 11,946,979 71,791,084 28,652,852 20,019,694 31,661,022 40,354,218 7,866,331 121,399,418 35,030,090 3,856,843 21,283,623 13,702,278 8,100,089 6,757,400 12,827,041 4,046,568 42,462,101 - ------------- ------------- ----------- ------------- ----------- ----------- ----------- ------------- ------------- $ 200,619,384 $ 15,803,822 $93,074,707 $ 42,355,130 $28,119,783 $38,418,422 $53,181,259 $ 11,912,899 $ 163,861,519 - ------------- ------------- ----------- ------------- ----------- ----------- ----------- ------------- ------------- - ------------- ------------- ----------- ------------- ----------- ----------- ----------- ------------- ------------- 64,131,637 7,393,295 37,789,149 18,098,421 15,287,446 15,549,783 26,505,715 6,845,184 80,514,126 118,646,087 6,878,087 35,010,446 20,133,602 11,241,955 19,735,077 19,214,254 3,860,521 55,751,578 17,841,660 1,532,440 20,275,112 4,123,107 1,590,382 3,133,562 7,461,291 1,207,194 27,595,815 - ------------- ------------- ----------- ------------- ----------- ----------- ----------- ------------- ------------- $ 200,619,384 $ 15,803,822 $93,074,707 $ 42,355,130 $28,119,783 $38,418,422 $53,181,260 $ 11,912,899 $ 163,861,519 - ------------- ------------- ----------- ------------- ----------- ----------- ----------- ------------- ------------- - ------------- ------------- ----------- ------------- ----------- ----------- ----------- ------------- ------------- $ 167,665,873 $ 13,717,804 $89,637,685 $ 38,981,283 $24,404,523 $35,893,237 $49,282,334 $ 11,061,992 $ 146,222,125 22,562,091 2,823,174 22,308,766 11,547,493 6,129,931 6,336,897 14,069,228 3,319,880 34,933,018 - ------------- ------------- ----------- ------------- ----------- ----------- ----------- ------------- ------------- 145,103,782 10,894,630 67,328,919 27,433,790 18,274,592 29,556,340 35,213,106 7,742,112 111,289,107 32,550,920 3,385,152 23,116,844 10,783,460 9,182,271 7,379,609 13,298,693 3,555,441 43,540,974 - ------------- ------------- ----------- ------------- ----------- ----------- ----------- ------------- ------------- - ------------- ------------- ----------- ------------- ----------- ----------- ----------- ------------- ------------- $ 177,654,702 $ 14,279,782 $90,445,763 $ 38,217,250 $27,456,863 $36,935,949 $48,511,799 $ 11,297,553 $ 154,830,081 - ------------- ------------- ----------- ------------- ----------- ----------- ----------- ------------- ------------- - ------------- ------------- ----------- ------------- ----------- ----------- ----------- ------------- ------------- 58,620,800 6,955,485 37,783,822 17,677,856 14,578,591 14,087,964 23,934,593 6,242,146 74,285,978 96,363,156 5,675,193 36,716,227 17,370,136 11,619,620 20,732,265 19,504,362 3,939,838 58,539,679 22,670,746 1,649,104 15,945,714 3,169,258 1,258,652 2,115,720 5,072,844 1,115,569 22,004,424 - ------------- ------------- ----------- ------------- ----------- ----------- ----------- ------------- ------------- $ 177,654,702 $ 14,279,782 $90,445,763 $ 38,217,250 $27,456,863 $36,935,949 $48,511,799 $ 11,297,553 $ 154,830,081 - ------------- ------------- ----------- ------------- ----------- ----------- ----------- ------------- ------------- - ------------- ------------- ----------- ------------- ----------- ----------- ----------- ------------- ------------- $ 150,637,053 $ 12,528,671 $84,805,720 $ 36,598,084 $23,053,955 $34,056,497 $46,825,167 $ 10,658,782 $ 138,148,022 21,869,170 2,707,500 20,261,007 10,753,657 5,651,536 5,950,400 12,886,268 3,093,078 31,847,856 - ------------- ------------- ----------- ------------- ----------- ----------- ----------- ------------- ------------- 128,767,883 9,821,171 64,544,713 25,844,427 17,402,419 28,106,097 33,938,899 7,565,704 106,300,166 32,365,398 2,952,753 21,211,398 7,893,536 8,228,260 6,540,434 14,702,192 3,445,875 42,824,210 - ------------- ------------- ----------- ------------- ----------- ----------- ----------- ------------- ------------- $ 161,133,281 $ 12,773,924 $85,756,111 $ 33,737,963 $25,630,679 $34,646,531 $48,641,091 $ 11,011,579 $ 149,124,376 - ------------- ------------- ----------- ------------- ----------- ----------- ----------- ------------- ------------- - ------------- ------------- ----------- ------------- ----------- ----------- ----------- ------------- ------------- 56,172,065 6,741,764 35,993,345 17,297,039 13,954,046 13,501,556 20,818,486 6,030,366 68,530,699 84,263,435 4,635,580 11,035,522 14,118,651 9,749,917 18,319,832 23,628,914 4,004,397 63,446,325 20,697,781 1,396,581 38,727,244 2,322,273 1,926,716 2,825,143 4,193,691 976,816 17,147,352 - ------------- ------------- ----------- ------------- ----------- ----------- ----------- ------------- ------------- $ 161,133,281 $ 12,773,925 $85,756,111 $ 33,737,963 $25,630,679 $34,646,531 $48,641,091 $ 11,011,579 $ 149,124,376 - ------------- ------------- ----------- ------------- ----------- ----------- ----------- ------------- ------------- - ------------- ------------- ----------- ------------- ----------- ----------- ----------- ------------- ------------- LITTLE EXCELSIOR LAMAR OCMULGEE - ------------- ------------ -------------- $ 36,751,265 $21,315,838 $ 24,673,510 8,236,346 6,482,106 5,350,136 - ------------- ------------ -------------- 28,514,919 14,833,732 19,323,374 12,069,745 9,473,378 5,099,850 - ------------- ------------ -------------- $ 40,584,664 $24,307,110 $ 24,423,224 - ------------- ------------ -------------- - ------------- ------------ -------------- 17,179,843 12,181,243 9,388,397 18,974,326 8,433,787 13,695,328 4,430,495 3,692,080 1,339,499 - ------------- ------------ -------------- $ 40,584,664 $24,307,110 $ 24,423,224 - ------------- ------------ -------------- - ------------- ------------ -------------- $ 32,711,813 $19,997,597 $ 23,129,054 7,545,520 5,872,317 4,922,284 - ------------- ------------ -------------- 25,166,293 14,125,280 18,206,770 9,697,688 8,432,910 5,885,168 $ 34,863,981 $22,558,190 $ 24,091,938 - ------------- ------------ -------------- - ------------- ------------ -------------- 16,219,525 11,305,328 8,931,607 15,093,798 8,463,921 14,029,833 3,550,658 2,788,941 1,130,498 - ------------- ------------ -------------- $ 34,863,981 $22,558,190 $ 24,091,938 - ------------- ------------ -------------- - ------------- ------------ -------------- $ 29,570,560 $18,774,807 $ 21,692,853 6,922,344 5,369,286 4,360,934 22,648,216 13,405,521 17,331,919 9,495,309 8,039,257 4,576,084 - ------------- ------------ -------------- $ 32,143,525 $21,444,778 $ 21,908,003 - ------------- ------------ -------------- - ------------- ------------ -------------- 15,452,269 10,782,831 8,484,297 13,369,595 8,150,561 12,386,968 3,321,661 2,511,386 1,036,738 - ------------- ------------ -------------- $ 32,143,525 $21,444,778 $ 21,908,003 - ------------- ------------ -------------- - ------------- ------------ -------------- SAWNEE WASHINGTON TOTAL - ------------- ------------ -------------- $ 190,223,954 $39,600,256 $2,786,586,960 24,634,660 10,862,597 529,682,969 - ------------- ------------ -------------- 165,589,294 28,737,659 2,256,903,991 35,030,090 17,267,811 690,882,028 - ------------- ------------ -------------- $ 200,619,384 $46,005,470 $2,947,786,019 - ------------- ------------ -------------- - ------------- ------------ -------------- 64,131,637 19,182,976 1,216,048,209 118,646,087 22,679,570 1,365,791,468 17,841,660 4,142,924 365,946,343 - ------------- ------------ -------------- $ 200,619,384 $46,005,470 $2,947,786,020 - ------------- ------------ -------------- - ------------- ------------ -------------- $ 167,665,873 $38,124,440 $2,578,220,711 22,562,091 10,767,129 492,231,881 - ------------- ------------ -------------- 145,103,782 27,357,311 2,085,988,830 32,550,920 16,873,377 681,191,723 - ------------- ------------ -------------- - ------------- ------------ -------------- $ 177,654,702 $44,230,688 $2,767,180,553 - ------------- ------------ -------------- - ------------- ------------ -------------- 58,620,800 18,248,187 1,138,184,895 96,363,156 22,634,941 1,305,198,582 22,670,746 3,347,560 323,797,073 - ------------- ------------ -------------- $ 177,654,702 $44,230,688 $2,767,180,550 - ------------- ------------ -------------- - ------------- ------------ -------------- $ 150,637,053 $35,472,864 $2,393,214,192 21,869,170 9,934,272 451,587,456 - ------------- ------------ -------------- 128,767,883 25,538,592 1,941,626,736 32,365,398 14,914,320 626,756,880 - ------------- ------------ -------------- $ 161,133,281 $40,452,912 $2,568,383,616 - ------------- ------------ -------------- - ------------- ------------ -------------- 56,172,065 17,203,364 1,071,693,862 84,263,435 20,772,440 1,196,957,583 20,697,781 2,477,108 299,732,172 - ------------- ------------ -------------- $ 161,133,281 $40,452,912 $2,568,383,617 - ------------- ------------ -------------- - ------------- ------------ --------------
A-13 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- NO DEALER, SALES PERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH THE OFFERING CONTAINED HEREIN, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY OGLETHORPE. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF ANY SECURITIES OTHER THAN THOSE TO WHICH IT RELATES OR AN OFFER TO SELL, OR A SOLICITATION TO BUY, THOSE TO WHICH IT RELATES IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS NOT LAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION. THE DELIVERY OF THIS PROSPECTUS AT ANY TIME DOES NOT IMPLY THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE. ------------------------ TABLE OF CONTENTS
PAGE ----------- Available Information................ i Notice to Investors.................. ii Summary Information Relating to the Exchange Offer..................... 1 Summary Information Relating to the Facility Bonds..................... 4 Summary Information Relating to Oglethorpe and the Members......... 8 Summary Financial Data............... 13 Selected Definitions................. 14 Introduction......................... 15 Absence of Cash Proceeds............. 16 Security and Source of Payment for the Facility Bonds................. 16 OPC Scherer 1997 Funding Corporation........................ 18 Flow of Funds for Debt Service Payments on the Facility Bonds..... 19 Business of Oglethorpe............... 20 Unaudited Pro Forma Condensed Financial Data..................... 29 Selected Financial Data.............. 33 Capitalization....................... 35 Management's Discussion and Analysis of Financial Condition and Results of Operations...................... 36 The Members of Oglethorpe............ 51 Member Requirements and Power Supply Resources.......................... 55 Co-Owners of the Plants and the Plant Agreements......................... 62 Certain Factors Affecting the Electric Utility Industry.......... 68 Management........................... 72 Certain Relationships and Related Transactions....................... 78 The Exchange Offer................... 79 Description of the Facility Bonds.... 87 Description of the Lease Indentures......................... 103 Description of the Leases............ 111 Certain United States Federal Income Tax Consequences................... 119 Plan of Distribution................. 120 Legal Opinions....................... 121 Experts.............................. 121 Index to Financial Statements........ F-1 Appendix A--Member Financial and Statistical Information............ A-1
OFFER TO EXCHANGE 6.974% SERIAL FACILITY BONDS DUE JUNE 30, 2011 FOR ALL OUTSTANDING 6.974% SERIAL FACILITY BONDS DUE JUNE 30, 2011 ------------------------ THE FACILITY BONDS WILL BE PAYABLE FROM AND SECURED, AS DESCRIBED HEREIN, BY RENTALS TO BE PAID UNDER SEVERAL LEASES RELATING TO SCHERER UNIT NO. 2 BY ------------------------ [LOGO] OGLETHORPE POWER CORPORATION (AN ELECTRIC MEMBERSHIP CORPORATION) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS GEORGIA STATUTE Section 46-3-306 of the Official Code of Georgia Annotated which governs indemnification of officers and directors of Oglethorpe provides as follows: 46-3-306. Indemnification of officers, directors, employees, and agents; purchase and maintenance of liability insurance; notice to members of payment of indemnification. (a) As used in this Code section, the term "the electric membership corporation" shall include, in addition to the surviving or new electric membership corporation, any merging or consolidating electric membership corporation, including any merging or consolidating electric membership corporation of a merging or consolidating electric membership corporation, absorbed in a merger or consolidation so that any person who is or was a director, officer, employee, or agent of such merging or consolidating electric membership corporation, or is or was serving at the request of such merging or consolidating electric membership corporation as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise, shall stand in the same position under this Code section with respect to the resulting or surviving electric membership corporation as he would if he had served the resulting or surviving electric membership corporation in the same capacity, provided that no indemnification under subsections (b) and (c) of this Code section which are permitted by this subsection shall be mandatory under this subsection or any bylaw of the surviving or new electric membership corporation without the approval of such indemnification by the board of directors or members of the surviving or new electric membership corporation, in the manner provided in paragraphs (1) and (3) of subsection (e) of this Code section. (b) An electric membership corporation shall have power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending, or completed action or proceeding, whether civil, criminal, administrative, or investigative (other than an action by or in the right of the electric membership corporation), by reason of the fact that he is or was a director, officer, employee, or agent of the electric membership corporation, or is or was serving at the request of the electric membership corporation as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise, against expenses, including attorney's fees, judgments, fines, and amounts paid in settlement actually and reasonably incurred by him in connection with such action or proceeding if he acted in a manner he reasonably believed to be in or not opposed to the best interests of the electric membership corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action or proceeding by judgment, order, settlement, or conviction, or upon a plea of nolo contendere or its equivalent, shall not of itself create a presumption that the person did not act in a manner which he reasonably believed to be in or not opposed to the best interests of the electric membership corporation and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. (c) An electric membership corporation shall have the power to indemnify any person who was or is a party or who is threatened to be made a party to any threatened, pending, or completed action or suit by, or in the right of, the electric membership corporation to procure a judgment in its favor, by reason of the fact he is or was a director, officer, employee, or agent of the electric membership corporation or is or was serving at the request of the electric membership corporation as a director, employee or agent of another corporation, partnership, joint venture, trust, or other II-1 enterprise, against expenses, including attorney s fees, actually and reasonably incurred by him in connection with the defense or settlement of such action or suit, if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the electric membership corporation; except that no indemnification shall be made in respect to any claim, issue, or matter as to which such person shall have been adjudged to be liable to the electric membership corporation, unless and only to the extent that the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the court shall deem proper. (d) To the extent that a director, officer, employee, or agent of an electric membership corporation has been successful, on the merits or otherwise, in defense of any action, suit, or proceeding referred to in subsections (b) and (c) of this Code section or in defense of any claim, issue, or matter therein, he shall be indemnified against expenses, including attorney s fees, actually and reasonably incurred by him in connection therewith. (e) Any indemnification under subsections (b) and (c) of this Code section, unless ordered by a court, shall be made by the electric membership corporation only as authorized in the specific case, upon a determination that indemnification of the director, officer, employee, or agent is proper in the circumstances because he has met the applicable standard of conduct set forth in subsections (b) and (c) of this Code section. Such determination shall be made: (1) By the board of directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit, or proceeding; (2) If such a quorum is not obtainable or, even if obtainable, if a quorum of disinterested directors so directs, by independent legal counsel in a written opinion; or (3) By the affirmative vote of the members present and voting at the meeting at which such determination is made. (f) Expenses incurred in defending a civil or criminal action, suit, or proceeding may be paid by the electric membership corporation in advance of the final disposition of such action, suit, or proceeding upon receipt of an undertaking by or on behalf of the director, officer, employee, or agent to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the electric membership corporation as authorized in this Code section. (g) The indemnification and advancement of expenses provided by or granted pursuant to this Code section shall not be deemed exclusive of any other rights, in respect to indemnification or otherwise, to which those seeking indemnification or advancement of expenses may be entitled under any bylaw, resolution, or agreement, either specifically or in general terms approved by the affirmative vote of a majority of the members entitled to vote thereon, taken at a meeting, the notice of which specified that such bylaw, resolution, or agreement would be placed before the members, both as to action by a director, officer, employee, or agent in his official capacity and as to action in another capacity while holding such office or position, except that no such other rights, in respect to indemnification or otherwise, may be provided or granted to a director, officer, employee, or agent pursuant to this subsection by an electric membership corporation with respect to the liabilities described in divisions (b)(3)(A)(i) through (b)(3)(A)(iii) of Code Section 46-3-321. (h) An electric membership corporation shall have the power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee, or agent of the electric membership corporation or who is or was serving at the request of the electric membership corporation as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise, against any liability asserted against him and incurred by him in II-2 any such capacity, or arising out of his status as such, whether or not the electric membership corporation would have the power to indemnify him against such liability under this Code section. (i) If any expenses or other amounts are paid by way of indemnification, otherwise than by court order or action by the members or by an insurance carrier pursuant to insurance maintained by the electric membership corporation, the electric membership corporation, not later than the next annual meeting of members, unless such meeting is held within three months from the date of such payment, and in any event, within 15 months from the date of such payment, shall send to its members who are entitled to vote for the election of directors a statement specifying the persons paid, the amounts paid, and the nature and status at the time of such payment of the litigation or threatened litigation. Such statement shall be provided to the members in the manner provided in subsection (a) of Code Section 46-3-263 for giving notice of members meetings. (j) The indemnification and advancement of expenses provided by or granted pursuant to this Code section shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director, officer, employee, or agent and shall inure to the benefit of the heirs, executors, and administrators of such a person. (Code 1933, Section 34C-617, enacted by Ga. L. 1981, p. 1587, Section 1; Ga. L. 1988, p. 1451, Section 2; Ga. L. 1989, p. 14, Section 46.) ARTICLES OF INCORPORATION Oglethorpe's Restated Articles of Incorporation contain the following provision: "Article VII. A director of the Corporation shall not be personally liable to the Corporation or its members for monetary damages for breach of duty of care or other duty as a director, except for liability: (i) For any appropriation, in violation of his duties, of any business opportunity of the Corporation; (ii) For acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; or (iii) For any transaction from which the director derives an improper personal benefit. The liability of directors shall be deemed further limited or eliminated to the fullest extent permitted by changes in the law governing the Corporation. Any repeal or modification of the provisions of this Article VII shall not adversely affect the duty, liability, rights or protection of a director existing at the time of such repeal or modification." BYLAWS Oglethorpe's Bylaws contain the following provisions relating to indemnification and insurance: "Article VIII Indemnification and Insurance Section 1. Indemnification. The Corporation shall indemnify each person who is or was a Director, officer, employee or agent of the Corporation (including the heirs, executors, administrators or estate of such person) or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise to the full extent permitted under Sections 46-3-306(b), (c) and (d) of the Georgia Electric Membership Corporation Act or any successor provisions of the laws of the State of Georgia. If any such indemnification is requested pursuant to Sections 46-3-306(b) or (c) of said Act or laws, the Board of Directors shall cause a determination to be made II-3 (unless a court has ordered the indemnification) in one of the manners prescribed in Section 46-3-306(e) of said Act or laws as to whether indemnification of the party requesting indemnification is proper in the circumstances because he has met the applicable standard of conduct set forth in Sections 46-3-306(b) or (c) of said Act or laws. Upon any such determination that such indemnification is proper, the Corporation shall make indemnification payments of liability, cost, payment or expense asserted against, or paid or incurred by, him in his capacity as such a director, officer, employee or agent to the maximum extent permitted by said Sections of said Act or laws. The indemnification obligation of the Corporation set forth herein shall not be deemed exclusive of any other rights, in respect of indemnification or otherwise, to which any party may be entitled under any other bylaw provision or resolution approved by the Members pursuant to Section 46-3-306(g) of said Act or laws. Section 2. Insurance. The Corporation may purchase and maintain insurance at its expense, to protect itself and any Director, officer, employee or agent of the Corporation (including the heirs, executors, administrators or estate of any such person) against any liability, cost, payment or expense described in Section 1 of this Article VII, whether or not the Corporation would have the power to indemnify such person against such liability." INSURANCE Oglethorpe maintains director and officer insurance policies which insure the present and former directors and officers of Oglethorpe against certain claims and liabilities asserted against them in their capacities or arising out of their status as directors and officers of Oglethorpe. ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (A) EXHIBITS: An index of exhibits appears at pages II-7 through II-21. (B) FINANCIAL STATEMENT SCHEDULES: None. ITEM 22. UNDERTAKINGS The undersigned Registrant hereby undertakes that: Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. II-4 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the County of DeKalb, State of Georgia, on the 18th day of December, 1997. OGLETHORPE POWER CORPORATION (AN ELECTRIC MEMBERSHIP CORPORATION) By: /s/ J. CALVIN EARWOOD, ----------------------------------------- J. CALVIN EARWOOD, Chairman of the Board POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints J. Calvin Earwood and T. D. Kilgore and each of them (with full power to each of them to act alone), his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and on his behalf and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and any subsequent Registration Statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission (or any other governmental or regulatory authority), granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or their substitute or substitutes or any of them, may lawfully do or cause to be done by virtue thereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE - --------------------------------------------------- --------------------------------- ----------------------- /s/ J. CALVIN EARWOOD Chairman of the Board, Director ---------------------------------------- (Principal Executive Officer) December 18, 1997 J. CALVIN EARWOOD /s/ T.D. KILGORE President and Chief Executive ---------------------------------------- Officer (Principal Executive December 18, 1997 T.D. KILGORE Officer) /s/ MAC F. OGLESBY Treasurer, Director (Principal ---------------------------------------- Financial Officer) December 18, 1997 MAC F. OGLESBY /s/ THOMAS A. SMITH Senior Financial Officer ---------------------------------------- (Principal Financial Officer) December 18, 1997 THOMAS A. SMITH /s/ ROBERT D. STEELE Controller ---------------------------------------- December 18, 1997 ROBERT D. STEELE /s/ ASHLEY C. BROWN Director ---------------------------------------- December 18, 1997 ASHLEY C. BROWN
II-5
SIGNATURE TITLE DATE - --------------------------------------------------- --------------------------------- ----------------------- /s/ NEWTON A. CAMPBELL Director ---------------------------------------- December 18, 1997 NEWTON A. CAMPBELL /s/ LARRY N. CHADWICK Director ---------------------------------------- December 18, 1997 LARRY N. CHADWICK /s/ BENNY W. DENHAM Director ---------------------------------------- December 18, 1997 BENNY W. DENHAM /s/ WM. RONALD DUFFEY Director ---------------------------------------- December 18, 1997 WM. RONALD DUFFEY /s/ SAMMY M. JENKINS Director ---------------------------------------- December 18, 1997 SAMMY M. JENKINS /s/ J. SAM L. RABUN Director ---------------------------------------- December 18, 1997 J. SAM L. RABUN /s/ JOHN S. RANSON Director ---------------------------------------- December 18, 1997 JOHN S. RANSON
II-6 EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a) Exhibits
NUMBER DESCRIPTION - ---------------- ---------------------------------------------------------------------------------------- *2.1 -- Second Amended and Restated Restructuring Agreement, dated February 24, 1997, by and among Oglethorpe, Georgia Transmission Corporation (An Electric Membership Corporation) and Georgia System Operations Corporation. (Filed as Exhibit 2.1 to the Registrant's Form 10-K for the fiscal year ended December 31, 1996, File No. 33-7591.) *2.2 -- Member Agreement, dated August 1, 1996, by and among Oglethorpe, Georgia Transmission Corporation (An Electric Membership Corporation), Georgia System Operations Corporation and the Members of Oglethorpe. (Filed as Exhibit 2.2 to the Registrant's Form 10-K for the fiscal year ended December 31, 1996, File No. 33-7591.) *3.1(a) -- Restated Articles of Incorporation of Oglethorpe, dated as of July 26, 1988. (Filed as Exhibit 3.1 to the Registrant's Form 10-K for the fiscal year ended December 31, 1988, File No. 33-7591.) *3.1(b) -- Amendment to Articles of Incorporation of Oglethorpe, dated as of March 11, 1997. (Filed as Exhibit 3(i)(b) to the Registrant's Form 10-K for the fiscal year ended December 31, 1996, File No. 33-7591.) *3.2 -- Bylaws of Oglethorpe, as amended on February 24, 1997, and effective as of March 11, 1997. (Filed as Exhibit 3(ii) to the Registrant's Form 10-K for the fiscal year ended December 31, 1996, File No. 33-7591.) 4.1 -- Form of Serial Facility Bond (included in form of Collateral Trust Indenture filed as Exhibit 4.2). 4.2 -- Collateral Trust Indenture, dated as of December 1, 1997, between OPC Scherer 1997 Funding Corporation A, Oglethorpe and SunTrust Bank, Atlanta, as Trustee. ++4.3 -- Refunding Lessor Note, with a Schedule identifying three other substantially identical Refunding Lessor Notes and any material differences. ++4.4 -- Amended and Restated Indenture of Trust, Deed to Secure Debt and Security Agreement No. 2, dated December 1, 1997, between Wilmington Trust Company and NationsBank, N.A. collectively as Owner Trustee, under Trust Agreement No. 2, dated December 30, 1985, with DFO Partnership, as assignee of Ford Motor Credit Company, and The Bank of New York Trust Company of Florida, N.A., with a Schedule identifying three other subtantially identical Amended and Restated Indentures of Trust, Deeds to Secure Debt and Security Agreements and any material differences. *4.5(a) -- Lease Agreement No. 2 dated December 30, 1985, between Wilmington Trust Company and William J. Wade, as Owner Trustees under Trust Agreement No. 2, dated December 30, 1985, with Ford Motor Credit Company, Lessor, and Oglethorpe, Lessee, with a Schedule identifying three other substantially identical Lease Agreements. (Filed as Exhibit 4.5(b) to the Registrant's Form S-1 Registration Statement, File No. 33-7591, filed on October 9, 1986.)
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NUMBER DESCRIPTION - ---------------- ---------------------------------------------------------------------------------------- *4.5(b) -- First Supplement to Lease Agreement No. 2 (included as Exhibit B to the Supplemental Participation Agreement No. 2 listed as 10.1.1(b)). *4.5(c) -- First Supplement to Lease Agreement No. 1, dated as of June 30, 1987, between The Citizens and Southern National Bank as Owner Trustee under Trust Agreement No. 1 with IBM Credit Financing Corporation, as Lessor, and Oglethorpe, as Lessee. (Filed as Exhibit 4.5(c) to the Registrant's Form 10-K for the fiscal year ended December 31, 1987, File No. 33-7591.) ++4.5(d) -- Second Supplement to Lease Agreement No. 2, dated as of December 17, 1997, between NationsBank, N.A., as an Owner Trustee under the Trust Agreement No. 2, dated December 30, 1985, with DFO Partnership, as assignee of Ford Motor Credit Company, as Lessor, and Oglethorpe, as Lessee, with a Schedule identifying three other substantially identical Second Supplement to Lease Agreements and any material differences. *4.6 -- Amended and Consolidated Loan Contract, dated as of March 1, 1997, between Oglethorpe and the United States of America, together with four notes executed and delivered pursuant thereto. (Filed as Exhibit 4.7 to the Registrant's Form 10-K for the fiscal year ended December 31, 1996, File No. 33-7591.) *4.7.1(a) -- Indenture, dated as of March 1, 1997, made by Oglethorpe to SunTrust Bank, Atlanta, as trustee. (Filed as Exhibit 4.8.1 to the Registrant's Form 10-K for the fiscal year ended December 31, 1996, File No. 33-7591.) *4.7.1(b) -- First Supplemental Indenture, dated as of October 1, 1997, made by Oglethorpe to SunTrust Bank, Atlanta, as trustee, relating to the Series 1997B (Burke) Note. (Filed as Exhibit 4.8.1(b) to the Registrant's Form 10-Q for the quarterly period ended September 30, 1997, File No. 33-7591). *4.7.2 -- Security Agreement, dated as of March 1, 1997, made by Oglethorpe to SunTrust Bank, Atlanta, as trustee. (Filed as Exhibit 4.8.2 to the Registrant's Form 10-K for the fiscal year ended December 31, 1996, File No. 33-7591.) 4.8.1(2) -- Loan Agreement, dated as of October 1, 1992, between Development Authority of Monroe County and Oglethorpe relating to Development Authority of Monroe County Pollution Control Revenue Bonds (Oglethorpe Power Corporation Scherer Project), Series 1992A. 4.8.2(2) -- Note, dated October 1, 1992, from Oglethorpe to Trust Company Bank, as trustee acting pursuant to a Trust Indenture, dated as of October 1, 1992, between Development Authority of Monroe County and Trust Company Bank. 4.8.3(2) -- Trust Indenture, dated as of October 1, 1992, between Development Authority of Monroe County and Trust Company Bank, Trustee, relating to Development Authority of Monroe County Pollution Control Revenue Bonds (Oglethorpe Power Corporation Scherer Project), Series 1992A. 4.9.1(3) -- Loan Agreement, dated as of December 1, 1992, between Development Authority of Burke County and Oglethorpe relating to Development Authority of Burke County Adjustable Tender Pollution Control Revenue Bonds (Oglethorpe Power Corporation Vogtle Project), Series 1993A.
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NUMBER DESCRIPTION - ---------------- ---------------------------------------------------------------------------------------- 4.9.2(3) -- Note, dated December 1, 1992, from Oglethorpe to Trust Company Bank, as trustee acting pursuant to a Trust Indenture, dated as of December 1, 1992, between Development Authority of Burke County and Trust Company Bank. 4.9.3(3) -- Trust Indenture, dated as of December 1, 1992, from Development Authority of Burke County to Trust Company Bank, as trustee, relating to Development Authority of Burke County Adjustable Tender Pollution Control Revenue Bonds (Oglethorpe Power Corporation Vogtle Project), Series 1993A. 4.9.4(3) -- Interest Rate Swap Agreement, dated as of December 1, 1992, by and between Oglethorpe and AIG Financial Products Corp. relating to Development Authority of Burke County Adjustable Tender Pollution Control Revenue Bonds (Oglethorpe Power Corporation Vogtle Project), Series 1993A. 4.9.5(3) -- Liquidity Guaranty Agreement, dated as of December 1, 1992, by and between Oglethorpe and AIG Financial Products Corp. relating to Development Authority of Burke County Adjustable Tender Pollution Control Revenue Bonds (Oglethorpe Power Corporation Vogtle Project), Series 1993A. 4.9.6(1) -- Standby Bond Purchase Agreement, dated as of December 14, 1995, between Oglethorpe and Canadian Imperial Bank of Commerce, New York Agency, relating to Development Authority of Burke County Adjustable Tender Pollution Control Revenue Bonds (Oglethorpe Power Corporation Vogtle Project), Series 1993A. 4.9.7(1) -- Standby Bond Purchase Agreement, dated as of November 30, 1994, between Oglethorpe and Credit Local de France, Acting through its New York Agency, relating to the Development Authority of Burke County Adjustable Tender Pollution Control Revenue Bonds (Oglethorpe Power Corporation Vogtle Project), Series 1994A. 4.10.1(4) -- Loan Agreement, dated as of October 1, 1996, between Development Authority of Burke County and Oglethorpe relating to Development Authority of Burke County Pollution Control Revenue Bonds (Oglethorpe Power Corporation Vogtle Project), Series 1996. 4.10.2(4) -- Note, dated October 1, 1996, from Oglethorpe to SunTrust Bank, Atlanta, as trustee pursuant to an Indenture of Trust, dated as of October 1, 1996, between Development Authority of Burke County and SunTrust Bank, Atlanta. 4.10.3(4) -- Indenture of Trust, dated as of October 1, 1996, between Development Authority of Burke County and SunTrust Bank, Atlanta, as trustee, relating to Development Authority of Burke County Pollution Control Revenue Bonds (Oglethorpe Power Corporation Vogtle Project), Series 1996. *4.12.1 -- Indemnity Agreement, dated as of March 1, 1997, by and between Oglethorpe and Georgia Transmission Corporation (An Electric Membership Corporation). (Filed as Exhibit 4.13.1 to the Registrant's Form 10-K for the fiscal year ended December 31, 1996, File No. 33-7591.) *4.12.2 -- Indemnification Agreement, dated as of March 11, 1997, by Oglethorpe and Georgia Transmission Corporation (An Electric Membership Corporation) for the benefit of the United States of America. (Filed as Exhibit 4.13.2 to the Registrant's Form 10-K for the fiscal year ended December 31, 1996, File No. 33-7591.)
II-9
NUMBER DESCRIPTION - ---------------- ---------------------------------------------------------------------------------------- 4.13.1(1) -- Master Loan Agreement, dated as of March 1, 1997, between Oglethorpe and CoBank, ACB, MLA No. 0459. 4.13.2(1) -- Consolidating Supplement, dated as of March 1, 1997, between Oglethorpe and CoBank, ACB, relating to Loan No. ML0459T1. 4.13.3(1) -- Promissory Note, dated March 1, 1997, in the original principal amount of $7,102,740.26, from Oglethorpe to CoBank, ACB, relating to Loan No. ML0459T1. 4.13.4(1) -- Consolidating Supplement, dated as of March 1, 1997, between Oglethorpe and CoBank, ACB, relating to Loan No. ML0459T2. 4.13.5(1) -- Promissory Note, dated March 1, 1997, in the original principal amount of $1,856,475.12, made by Oglethorpe to CoBank, ACB, relating to Loan No. ML0459T2. *4.14.1 -- Loan Agreement, Loan No. T-830404, between Oglethorpe and Columbia Bank for Cooperatives, dated as of April 29, 1983. (Filed as Exhibit 4.18.1 to the Registrant's Form S-1 Registration Statement, File No. 33-7591, filed on October 9, 1986.) *4.14.2 -- Promissory Note, Loan No. T-830404-1, in the original principal amount of $9,935,000, from Oglethorpe to Columbia Bank for Cooperatives, dated as of April 29, 1983. (Filed as Exhibit 4.18.2 to the Registrant's Form S-1 Registration Statement, File No. 33-7591, filed on October 9, 1986.) *4.14.3 -- Security Deed and Security Agreement, dated April 29, 1983, between Oglethorpe and Columbia Bank for Cooperatives. (Filed as Exhibit 4.18.3 to the Registrant's Form S-1 Registration Statement, File No. 33-7591, filed on October 9, 1986.) 4.15 -- Exchange and Registration Rights Agreement, dated December 17, 1997, by and among Oglethorpe, OPC Scherer 1997 Funding Corporation A, and Goldman, Sachs & Co. as representative of the purchasers identified therein. ++5 -- Opinion of Sutherland, Asbill & Brennan LLP *10.1.1(a) -- Participation Agreement No. 2 among Oglethorpe as Lessee, Wilmington Trust Company as Owner Trustee, The First National Bank of Atlanta as Indenture Trustee, Columbia Bank for Cooperatives as Loan Participant and Ford Motor Credit Company as Owner Participant, dated December 30, 1985, together with a Schedule identifying three other substantially identical Participation Agreements. (Filed as Exhibit 10.1.1(b) to the Registrant's Form S-1 Registration Statement, File No. 33-7591, filed on October 9, 1986.) *10.1.1(b) -- Supplemental Participation Agreement No. 2. (Filed as Exhibit 10.1.1(a) to the Registrant's Form S-1 Registration Statement, File No. 33-7591, filed on October 9, 1986.) *10.1.1(c) -- Supplemental Participation Agreement No. 1, dated as of June 30, 1987, among Oglethorpe as Lessee, IBM Credit Financing Corporation as Owner Participant, Wilmington Trust Company and The Citizens and Southern National Bank as Owner Trustee, The First National Bank of Atlanta, as Indenture Trustee, and Columbia Bank for Cooperatives, as Loan Participant. (Filed as Exhibit 10.1.1(c)
II-10
NUMBER DESCRIPTION - ---------------- ---------------------------------------------------------------------------------------- to the Registrant's Form 10-K for the fiscal year ended December 31, 1987, File No. 33-7591.) ++10.1.1(d) -- Second Supplemental Participation Agreement No. 2, dated as of December 17, 1997, among Oglethorpe as Lessee, DFO Partnership, as assigne of Ford Motor Credit Company, as Owner Participant, Wilmington Trust Company and NationsBank, N.A. as Owner Trustee, The Bank of New York Trust Company of Florida, N.A. as Indenture Trustee, CoBank, ACB as Loan Participant, OPC Scherer Funding Corporation, as Original Funding Corporation, OPC Scherer 1997 Funding Corporation A, a Funding Corporation, and SunTrust Bank, Atlanta, as Original Collateral Trust Trustee and Collateral Trust Trustee, with a Schedule identifying three substantially identical Second Supplemental Participation Agreements and any material differences. *10.1.2 -- General Warranty Deed and Bill of Sale No. 2 between Oglethorpe, Grantor, and Wilmington Trust Company and William J. Wade, as Owner Trustees under Trust Agreement No. 2, dated December 30, 1985, with Ford Motor Credit Company, Grantee, together with a Schedule identifying three substantially identical General Warranty Deeds and Bills of Sale. (Filed as Exhibit 10.1.2 to the Registrant's Form S-1 Registration Statement, File No. 33-7591, filed on October 9, 1986.) *10.1.3(a) -- Supporting Assets Lease No. 2, dated December 30, 1985, between Oglethorpe, Lessor, and Wilmington Trust Company and William J. Wade, as Owner Trustees, under Trust Agreement No. 2, dated December 30, 1985, with Ford Motor Credit Company, Lessee, together with a Schedule identifying three substantially identical Supporting Assets Leases. (Filed as Exhibit 10.1.3 to the Registrant's Form S-1 Registration Statement, File No. 33-7591, filed on October 9, 1986.) *10.1.3(b) -- First Amendment to Supporting Assets Lease No. 2, dated as of November 19, 1987, together with a Schedule identifying three substantially identical First Amendments to Supporting Assets Leases. (Filed as Exhibit 10.1.3(a) to the Registrant's Form 10-K for the fiscal year ended December 31, 1987, File No. 33-7591.) *10.1.4(a) -- Supporting Assets Sublease No. 2, dated December 30, 1985, between Wilmington Trust Company and William J. Wade, as Owner Trustees under Trust Agreement No. 2 dated December 30, 1985, with Ford Motor Credit Company, Sublessor, and Oglethorpe, Sublessee, together with a Schedule identifying three substantially identical Supporting Assets Subleases. (Filed as Exhibit 10.1.4 to the Registrant's Form S-1 Registration Statement, File No. 33-7591, filed on October 9, 1986.) *10.1.4(b) -- First Amendment to Supporting Assets Sublease No. 2, dated as of November 19, 1987, together with a Schedule identifying three substantially identical First Amendments to Supporting Assets Subleases. (Filed as Exhibit 10.1.4(a) to the Registrant's Form 10-K for the fiscal year ended December 31, 1987, File No. 33-7591.) *10.1.5(a) -- Tax Indemnification Agreement No. 2, dated December 30, 1985, between Ford Motor Credit Company, Owner Participant, and Oglethorpe, Lessee, together with a Schedule identifying three substantially identical Tax Indemnification
II-11
NUMBER DESCRIPTION - ---------------- ---------------------------------------------------------------------------------------- Agreements. (Filed as Exhibit 10.1.5 to the Registrant's Form S-1 Registration Statement, File No. 33-7591, filed on October 9, 1986.) ++10.1.5(b) -- Amendment No. 1 to the Tax Indemnification Agreement, dated December 12, 1997, between DFO Partnership, as assignee of Ford Motor Credit Company, as Owner Participant, and Oglethorpe, as Lessee, with a Schedule identifying three substantially identical Amendment No. 1 to the Tax Indemnification Agreements and any material differences. *10.1.6 -- Assignment of Interest in Ownership Agreement and Operating Agreement No. 2, dated December 30, 1985, between Oglethorpe, Assignor, and Wilmington Trust Company and William J. Wade, as Owner Trustees under Trust Agreement No. 2, dated December 30, 1985, with Ford Motor Credit Company, Assignee, together with Schedule identifying three substantially identical Assignments of Interest in Ownership Agreement and Operating Agreement. (Filed as Exhibit 10.1.6 to the Registrant's Form S-1 Registration Statement, File No. 33-7591, filed on October 9, 1986.) *10.1.7 -- Consent, Amendment and Assumption No. 2 dated December 30, 1985, among Georgia Power Company and Oglethorpe and Municipal Electric Authority of Georgia and City of Dalton, Georgia and Gulf Power Company and Wilmington Trust Company and William J. Wade, as Owner Trustees under Trust Agreement No. 2, dated December 30, 1985, with Ford Motor Credit Company, together with a Schedule identifying three substantially identical Consents, Amendments and Assumptions. (Filed as Exhibit 10.1.9 to the Registrant's Form S-1 Registration Statement, File No. 33-7591, filed on October 9, 1986.) *10.1.7(a) -- Amendment to Consent, Amendment and Assumption No. 2, dated as of August 16, 1993, among Oglethorpe, Georgia Power Company, Municipal Electric Authority of Georgia, City of Dalton, Georgia, Gulf Power Company, Jacksonville Electric Authority, Florida Power & Light Company and Wilmington Trust Company and NationsBank of Georgia, N.A., as Owner Trustees under Trust Agreement No. 2, dated December 30, 1985, with Ford Motor Credit Company, together with a Schedule identifying three substantially identical Amendments to Consents, Amendments and Assumptions. (Filed as Exhibit 10.1.9(a) to the Registrant's Form 10-Q for the quarterly period ended September 30, 1993, File No. 33-7591.) *10.2.1 -- Section 168 Agreement and Election dated as of April 7, 1982, between Continental Telephone Corporation and Oglethorpe. (Filed as Exhibit 10.2 to the Registrant's Form S-1 Registration Statement, File No. 33-7591, filed on October 9, 1986.) *10.2.2 -- Section 168 Agreement and Election dated as of April 9, 1982, between National Service Industries, Inc. and Oglethorpe. (Filed as Exhibit 10.3 to the Registrant's Form S-1 Registration Statement, File No. 33-7591, filed on October 9, 1986.) *10.2.3 -- Section 168 Agreement and Election dated as of April 9, 1982, between Rollins, Inc. and Oglethorpe. (Filed as Exhibit 10.4 to the Registrant's Form S-1 Registration Statement, File No. 33-7591, filed on October 9, 1986.) *10.2.4 -- Section 168 Agreement and Election dated as of December 13, 1982, between Selig Enterprises, Inc. and Oglethorpe. (Filed as Exhibit 10.5 to the Registrant's Form S-1 Registration Statement, File No. 33-7591, filed on October 9, 1986.)
II-12
NUMBER DESCRIPTION - ---------------- ---------------------------------------------------------------------------------------- *10.3.1(a) -- Plant Robert W. Scherer Units Numbers One and Two Purchase and Ownership Participation Agreement among Georgia Power Company, Oglethorpe, Municipal Electric Authority of Georgia and City of Dalton, Georgia, dated as of May 15, 1980. (Filed as Exhibit 10.6.1 to the Registrant's Form S-1 Registration Statement, File No. 33-7591, filed on October 9, 1986.) *10.3.1(b) -- Amendment to Plant Robert W. Scherer Units Numbers One and Two Purchase and Ownership Participation Agreement among Georgia Power Company, Oglethorpe, Municipal Electric Authority of Georgia and City of Dalton, Georgia, dated as of December 30, 1985. (Filed as Exhibit 10.1.8 to the Registrant's Form S-1 Registration Statement, File No. 33-7591, filed on October 9, 1986.) *10.3.1(c) -- Amendment Number Two to the Plant Robert W. Scherer Units Numbers One and Two Purchase and Ownership Participation Agreement among Georgia Power Company, Oglethorpe, Municipal Electric Authority of Georgia and City of Dalton, Georgia, dated as of July 1, 1986. (Filed as Exhibit 10.6.1(a) to the Registrant's Form 10-K for the fiscal year ended December 31, 1987, File No. 33-7591.) *10.3.1(d) -- Amendment Number Three to the Plant Robert W. Scherer Units Numbers One and Two Purchase and Ownership Participation Agreement among Georgia Power Company, Oglethorpe, Municipal Electric Authority of Georgia and City of Dalton, Georgia, dated as of August 1, 1988. (Filed as Exhibit 10.6.1(b) to the Registrant's Form 10-Q for the quarterly period ended September 30, 1993, File No. 33-7591.) *10.3.1(e) -- Amendment Number Four to the Plant Robert W. Scherer Units Number One and Two Purchase and Ownership Participation Agreement among Georgia Power Company, Oglethorpe, Municipal Electric Authority of Georgia and City of Dalton, Georgia, dated as of December 31, 1990. (Filed as Exhibit 10.6.1(c) to the Registrant's Form 10-Q for the quarterly period ended September 30, 1993, File No. 33-7591.) *10.3.2(a) -- Plant Robert W. Scherer Units Numbers One and Two Operating Agreement among Georgia Power Company, Oglethorpe, Municipal Electric Authority of Georgia and City of Dalton, Georgia, dated as of May 15, 1980. (Filed as Exhibit 10.6.2 to the Registrant's Form S-1 Registration Statement, File No. 33-7591, filed on October 9, 1986.) *10.3.2(b) -- Amendment to Plant Robert W. Scherer Units Numbers One and Two Operating Agreement among Georgia Power Company, Oglethorpe, Municipal Electric Authority of Georgia and City of Dalton, Georgia, dated as of December 30, 1985. (Filed as Exhibit 10.1.7 to the Registrant's Form S-1 Registration Statement, File No. 33-7591, filed on October 9, 1986.) *10.3.2(c) -- Amendment Number Two to the Plant Robert W. Scherer Units Numbers One and Two Operating Agreement among Georgia Power Company, Oglethorpe, Municipal Electric Authority of Georgia and City of Dalton, Georgia, dated as of December 31, 1990. (Filed as Exhibit 10.6.2(a) to the Registrant's Form 10-Q for the quarterly period ended September 30, 1993, File No. 33-7591.) *10.3.3 -- Plant Scherer Managing Board Agreement among Georgia Power Company, Oglethorpe, Municipal Electric Authority of Georgia, City of Dalton, Georgia, Gulf Power Company, Florida Power & Light Company and Jacksonville Electric
II-13
NUMBER DESCRIPTION - ---------------- ---------------------------------------------------------------------------------------- Authority, dated as of December 31, 1990. (Filed as Exhibit 10.6.3 to the Registrant's Form 10-Q for the quarterly period ended September 30, 1993, File No. 33-7591.) *10.4.1(a) -- Alvin W. Vogtle Nuclear Units Numbers One and Two Purchase and Ownership Participation Agreement among Georgia Power Company, Oglethorpe, Municipal Electric Authority of Georgia and City of Dalton, Georgia, dated as of August 27, 1976. (Filed as Exhibit 10.7.1 to the Registrant's Form S-1 Registration Statement, File No. 33-7591, filed on October 9, 1986.) *10.4.1(b) -- Amendment Number One, dated January 18, 1977, to the Alvin W. Vogtle Nuclear Units Numbers One and Two Purchase and Ownership Participation Agreement among Georgia Power Company, Oglethorpe, Municipal Electric Authority of Georgia and City of Dalton, Georgia. (Filed as Exhibit 10.7.3 to the Registrant's Form 10-K for the fiscal year ended December 31, 1986, File No. 33-7591.) *10.4.1(c) -- Amendment Number Two, dated February 24, 1977, to the Alvin W. Vogtle Nuclear Units Numbers One and Two Purchase and Ownership Participation Agreement among Georgia Power Company, Oglethorpe, Municipal Electric Authority of Georgia and City of Dalton, Georgia. (Filed as Exhibit 10.7.4 to the Registrant's Form 10-K for the fiscal year ended December 31, 1986, File No. 33-7591.) *10.4.2 -- Alvin W. Vogtle Nuclear Units Numbers One and Two Operating Agreement among Georgia Power Company, Oglethorpe, Municipal Electric Authority of Georgia and City of Dalton, Georgia, dated as of August 27, 1976. (Filed as Exhibit 10.7.2 to the Registrant's Form S-1 Registration Statement, File No. 33-7591, filed on October 9, 1986.) *10.5.1 -- Plant Hal Wansley Purchase and Ownership Participation Agreement between Georgia Power Company and Oglethorpe, dated as of March 26, 1976. (Filed as Exhibit 10.8.1 to the Registrant's Form S-1 Registration Statement, File No. 33-7591, filed on October 9, 1986.) *10.5.2(a) -- Plant Hal Wansley Operating Agreement between Georgia Power Company and Oglethorpe, dated as of March 26, 1976. (Filed as Exhibit 10.8.2 to the Registrant's Form S-1 Registration Statement, File No. 33-7591, filed on October 9, 1986.) *10.5.2(b) -- Amendment, dated as of January 15, 1995, to the Plant Hal Wansley Operating Agreements by and among Georgia Power Company, Oglethorpe, Municipal Electric Authority of Georgia and City of Dalton, Georgia. (Filed as Exhibit 10.5.2(a) to the Registrant's Form 10-Q for the quarterly period ended September 30, 1996, File No. 33-7591.) *10.5.3 -- Plant Hal Wansley Combustion Turbine Agreement between Georgia Power Company and Oglethorpe, dated as of August 2, 1982 and Amendment No. 1, dated October 20, 1982. (Filed as Exhibit 10.18 to the Registrant's Form S-1 Registration Statement, File No. 33-7591, filed on October 9, 1986.) *10.6.1 -- Edwin I. Hatch Nuclear Plant Purchase and Ownership Participation Agreement between Georgia Power Company and Oglethorpe, dated as of January 6,
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NUMBER DESCRIPTION - ---------------- ---------------------------------------------------------------------------------------- 1975. (Filed as Exhibit 10.9.1 to the Registrant's Form S-1 Registration Statement, File No. 33-7591, filed on October 9, 1986.) *10.6.2 -- Edwin I. Hatch Nuclear Plant Operating Agreement between Georgia Power Company and Oglethorpe, dated as of January 6, 1975. (Filed as Exhibit 10.9.2 to the Registrant's Form S-1 Registration Statement, File No. 33-7591, filed on October 9, 1986.) *10.7.1 -- Rocky Mountain Pumped Storage Hydroelectric Project Ownership Participation Agreement, dated as of November 18, 1988, by and between Oglethorpe and Georgia Power Company. (Filed as Exhibit 10.22.1 to the Registrant's Form 10-K for the fiscal year ended December 31, 1988, File No. 33-7591.) *10.7.2 -- Rocky Mountain Pumped Storage Hydroelectric Project Operating Agreement, dated as of November 18, 1988, by and between Oglethorpe and Georgia Power Company. (Filed as Exhibit 10.22.2 to the Registrant's Form 10-K for the fiscal year ended December 31, 1988, File No. 33-7591.) *10.8.1 -- Amended and Restated Wholesale Power Contract, dated as of August 1, 1996, between Oglethorpe and Altamaha Electric Membership Corporation and all schedules thereto, together with a Schedule identifying 37 other substantially identical Amended and Restated Wholesale Power Contracts, and an additional Amended and Restated Wholesale Power Contract that is not substantially identical. (Filed as Exhibit 10.8.1 to the Registrant's Form 10-K for the fiscal year ended December 31, 1996, File No. 33-7591.) *10.8.2 -- Amended and Restated Supplemental Agreement, dated as of August 1, 1996, by and between Oglethorpe, Altamaha Electric Membership Corporation and the United States of America, together with a Schedule identifying 38 other substantially identical Amended and Restated Supplemental Agreements. (Filed as Exhibit 10.8.2 to the Registrant's Form 10-K for the fiscal year ended December 31, 1996, File No. 33-7591.) *10.8.3 -- Supplemental Agreement to the Amended and Restated Wholesale Power Contract, dated as of January 1, 1997, by and among Georgia Power Company, Oglethorpe and Altamaha Electric Membership Corporation, together with a Schedule identifying 38 other substantially identical Supplemental Agreements. (Filed as Exhibit 10.8.3 to the Registrant's Form 10-K for the fiscal year ended December 31, 1996, File No. 33-7591.) *10.8.4 -- Supplemental Agreement to the Amended and Restated Wholesale Power Contract, dated as of March 1, 1997, by and between Oglethorpe and Altamaha Electric Membership Corporation, together with a Schedule identifying 36 other substantially identical Supplemental Agreements, and an additional Supplemental Agreement that is not substantially identical. (Filed as Exhibit 10.8.4 to the Registrant's Form 10-K for the fiscal year ended December 31, 1996, File No. 33-7591.) *10.8.5 -- Supplemental Agreement to the Amended and Restated Wholesale Power Contract, dated as of March 1, 1997, by and between Oglethorpe and Coweta-Fayette Electric Membership Corporation, together with a Schedule identifying 1 other substantially identical Supplemental Agreement. (Filed as Exhibit 10.8.5 to the Registrant's Form 10-K for the fiscal year ended December 31, 1996, File No. 33-7591.)
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NUMBER DESCRIPTION - ---------------- ---------------------------------------------------------------------------------------- *10.8.6 -- Supplemental Agreement to the Amended and Restated Wholesale Power Contract, dated as of May 1, 1997 by and between Oglethorpe and Altamaha Electric Membership Corporation, together with a Schedule identifying 38 other substantially identical Supplemental Agreements. (Filed as Exhibit 10.8.6 to the Registrant's Form 10-Q for the quarterly period ended June 30, 1997, File No. 33-7591.) *10.9 -- Transmission Facilities Operation and Maintenance Contract between Georgia Power Company and Oglethorpe dated as of June 9, 1986. (Filed as Exhibit 10.13 to the Registrant's Form S-1 Registration Statement, File No. 33-7591, filed on October 9, 1986.) *10.10(a) -- Joint Committee Agreement among Georgia Power Company, Oglethorpe, Municipal Electric Authority of Georgia and the City of Dalton, Georgia, dated as of August 27, 1976. (Filed as Exhibit 10.14(b) to the Registrant's Form S-1 Registration Statement, File No. 33-7591, filed on October 9, 1986.) *10.10(b) -- First Amendment to Joint Committee Agreement among Georgia Power Company, Oglethorpe, Municipal Electric Authority of Georgia and the City of Dalton, Georgia, dated as of June 19, 1978. (Filed as Exhibit 10.14(a) to the Registrant's Form S-1 Registration Statement, File No. 33-7591, filed on October 9, 1986.) *10.11 -- Interconnection Agreement between Oglethorpe and Alabama Electric Cooperative, Inc., dated as of November 12, 1990. (Filed as Exhibit 10.16(a) to the Registrant's Form 10-K for the fiscal year ended December 31, 1990, File No. 33-7591.) *10.11(a) -- Amendment No. 1 to Interconnection Agreement between Alabama Electric Cooperative, Inc. and Oglethorpe, dated as of April 22, 1994. (Filed as Exhibit 10.11(a) to the Registrant's Form 10-Q for the quarter ended June 30, 1994, File No. 33-7591.) *10.11(b) -- Letter of Commitment (Firm Power Sale) Under Service Schedule J-- Negotiated Interchange Service between Alabama Electric Cooperative, Inc. and Oglethorpe, dated March 31, 1994. (Filed as Exhibit 10.11(b) to the Registrant's Form 10-Q for the quarter ended June 30, 1994, File No. 33-7591.) *10.12 -- Oglethorpe Deferred Compensation Plan for Key Employees, as Amended and Restated January, 1987. (Filed as Exhibit 10.19 to the Registrant's Form 10-K for the fiscal year ended December 31, 1986, File No. 33-7591.) *10.13.1 -- Assignment of Power System Agreement and Settlement Agreement, dated January 8, 1975, by Georgia Electric Membership Corporation to Oglethorpe. (Filed as Exhibit 10.20.1 to the Registrant's Form S-1 Registration Statement, File No. 33-7591, filed on October 9, 1986.) *10.13.2 -- Power System Agreement, dated April 24, 1974, by and between Georgia Electric Membership Corporation and Georgia Power Company. (Filed as Exhibit 10.20.2 to the Registrant's Form S-1 Registration Statement, File No. 33-7591, filed on October 9, 1986.) *10.13.3 -- Settlement Agreement, dated April 24, 1974, by and between Georgia Power Company, Georgia Municipal Association, Inc., City of Dalton, Georgia Electric Membership Corporation and Crisp County Power Commission. (Filed as
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NUMBER DESCRIPTION - ---------------- ---------------------------------------------------------------------------------------- Exhibit 10.20.3 to the Registrant's Form S-1 Registration Statement, File No. 33-7591, filed on October 9, 1986.) *10.14 -- Distribution Facilities Joint Use Agreement between Oglethorpe and Georgia Power Company, dated as of May 12, 1986. (Filed as Exhibit 10.21 to the Registrant's Form 10-K for the fiscal year ended December 31, 1986, File No. 33-7591.) *10.15.1 -- Long-Term Firm Power Purchase Agreement, dated as of July 19, 1989, by and between Oglethorpe and Big Rivers Electric Corporation. (Filed as Exhibit 10.24.1 to the Registrant's Form 10-K for the fiscal year ended December 31, 1989, File No. 33-7591.) *10.15.2 -- Coordination Services Agreement, dated as of August 21, 1989, by and between Oglethorpe and Georgia Power Company. (Filed as Exhibit 10.24.2 to the Registrant's Form 10-K for the fiscal year ended December 31, 1989, File No. 33-7591.) *10.15.3 -- Long-Term Firm Power Purchase Agreement between Big Rivers Electric Corporation and Oglethorpe, dated as of December 17, 1990. (Filed as Exhibit 10.24.3 to the Registrant's Form 10-K for the fiscal year ended December 31, 1990, File No. 33-7591.) *10.15.4 -- Interchange Agreement between Oglethorpe and Big Rivers Electric Corporation, dated as of November 12, 1990. (Filed as Exhibit 10.24.4 to the Registrant's Form 10-K for the fiscal year ended December 31, 1990, File No. 33-7591.) *10.16 -- Block Power Sale Agreement between Georgia Power Company and Oglethorpe, dated as of November 12, 1990. (Filed as Exhibit 10.25 to the Registrant's Form 8-K, filed January 4, 1991, File No. 33-7591.) *10.17 -- Coordination Services Agreement between Georgia Power Company and Oglethorpe, dated as of November 12, 1990. (Filed as Exhibit 10.26 to the Registrant's Form 8-K, filed January 4, 1991, File No. 33-7591.) *10.18 -- Revised and Restated Integrated Transmission System Agreement between Oglethorpe and Georgia Power Company, dated as of November 12, 1990. (Filed as Exhibit 10.27 to the Registrant's Form 8-K, filed January 4, 1991, File No. 33-7591.) *10.19 -- ITSA, Power Sale and Coordination Umbrella Agreement between Oglethorpe and Georgia Power Company, dated as of November 12, 1990. (Filed as Exhibit 10.28 to the Registrant's Form 8-K, filed January 4, 1991, File No. 33-7591.) *10.20 -- Amended and Restated Nuclear Managing Board Agreement among Georgia Power Company, Oglethorpe Power Corporation, Municipal Electric Authority of Georgia and City of Dalton, Georgia dated as of July 1, 1993. (Filed as Exhibit 10.36 to the Registrant's 10-Q for the quarterly period ended September 30, 1993, File No. 33-7591.) *10.21 -- Supplemental Agreement by and among Oglethorpe, Tri-County Electric Membership Cooperation and Georgia Power Company, dated as of November 12, 1990, together with a Schedule identifying 38 other substantially identical
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NUMBER DESCRIPTION - ---------------- ---------------------------------------------------------------------------------------- Supplemental Agreements. (Filed as Exhibit 10.30 to the Registrant's Form 8-K, filed January 4, 1991, File No. 33-7591.) *10.22 -- Unit Capacity and Energy Purchase Agreement between Oglethorpe and Entergy Power Incorporated, dated as of October 11, 1990. (Filed as Exhibit 10.31 to the Registrant's Form 10-K for the fiscal year ended December 31, 1990, File No. 33-7591.) *10.23 -- Interchange Agreement between Oglethorpe and Arkansas Power & Light Company, Louisiana Power & Light Company, Mississippi Power & Light Company, New Orleans Public Service, Inc., Energy Services, Inc., dated as of November 12, 1990. (Filed as Exhibit 10.32 to the Registrant's Form 10-K for the fiscal year ended December 31, 1990, File No. 33-7591.) *10.24 -- Interchange Agreement between Oglethorpe and Seminole Electric Cooperative, Inc., dated as of November 12, 1990. (Filed as Exhibit 10.33 to the Registrant's Form 10-K for the fiscal year ended December 31, 1990, File No. 33-7591.) *10.25.1 -- Excess Energy and Short-term Power Agreement between Oglethorpe and Tennessee Valley Authority, effective as of January 23, 1991. (Filed as Exhibit 10.34.1 to the Registrant's Form 10-K for the fiscal year ended December 31, 1990, File No. 33-7591.) *10.25.2 -- Transmission Service Agreement between Oglethorpe and Tennessee Valley Authority, effective as of January 23, 1991. (Filed as Exhibit 10.34.2 to the Registrant's Form 10-K for the fiscal year ended December 31, 1990, File No. 33-7591.) *10.26 -- Power Purchase Agreement between Oglethorpe and Hartwell Energy Limited Partnership, dated as of June 12, 1992. (Filed as Exhibit 10.35 to the Registrant's Form 10-K for the fiscal year ended December 31, 1992, File No. 33-7591). *10.27(5) -- Master Power Purchase and Sale Agreement between Enron Power Marketing, Inc. and Oglethorpe, dated as of January 3, 1996. (Filed as Exhibit 10.27 to the Registrant's Form 10-K for the fiscal year ended December 31, 1995, File No. 33-7591.) *10.27(a)(5) -- Extension and Modification Agreement between Enron Power Marketing, Inc. and Oglethorpe, dated as of April 30, 1996. (Filed as Exhibit 10.27(a) to the Registrant's Form 10-Q for the quarterly period ended March 31, 1996, File No. 33-7591.) *10.28 -- Employment Agreement between Oglethorpe and T. D. Kilgore, dated as of December 20, 1995. (Filed as Exhibit 10.28 to the Registrant's Form 10-K for the fiscal year ended December 31, 1995, File No. 33-7591.) *10.29(5) -- Master Power Purchase and Sale Agreement between Duke/Louis Dreyfus L.L.C. and Oglethorpe, dated as of August 31, 1996. (Filed as Exhibit 10.29 to the Registrant's Form 10-Q for the quarterly period ended September 30, 1996, File No. 33-7591.) *10.30(5) -- Power Purchase and Sale Agreement among LG&E Power Marketing Inc., LG&E Energy Corp. and Oglethorpe, dated as of November 19, 1996. (Filed as
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NUMBER DESCRIPTION - ---------------- ---------------------------------------------------------------------------------------- Exhibit 10.30 to the Registrant's Form 10-K for the fiscal year ended December 31, 1996, File No. 33-7591.) *10.31(5) -- Power Purchase and Sale Agreement among LG&E Power Marketing Inc., LG&E Power Inc. and Oglethorpe, dated as of January 1, 1997. (Filed as Exhibit 10.31 to the Registrant's Form 10-K for the fiscal year ended December 31, 1996, File No. 33-7591.) *10.32.1 -- Participation Agreement (P1), dated as of December 30, 1996, among Oglethorpe, Rocky Mountain Leasing Corporation, Fleet National Bank, as Owner Trustee, SunTrust Bank, Atlanta, as Co-Trustee, the Owner Participant named therein and Utrecht-America Finance Co., as Lender, together with a Schedule identifying five other substantially identical Participation Agreements. (Filed as Exhibit 10.32.1 to the Registrant's Form 10-K for the fiscal year ended December 31, 1996, File No. 33-7591.) *10.32.2 -- Rocky Mountain Head Lease Agreement (P1), dated as of December 30, 1996, between Oglethorpe and SunTrust Bank, Atlanta, as Co-Trustee, together with a Schedule identifying five other substantially identical Rocky Mountain Head Lease Agreements. (Filed as Exhibit 10.32.2 to the Registrant's Form 10-K for the fiscal year ended December 31, 1996, File No. 33-7591.) *10.32.3 -- Ground Lease Agreement (P1), dated as of December 30, 1996, between Oglethorpe and SunTrust Bank, Atlanta, as Co-Trustee, together with a Schedule identifying five other substantially identical Ground Lease Agreements. (Filed as Exhibit 10.32.3 to the Registrant's Form 10-K for the fiscal year ended December 31, 1996, File No. 33-7591.) *10.32.4 -- Rocky Mountain Agreements Assignment and Assumption Agreement (P1), dated as of December 30, 1996, between Oglethorpe and SunTrust Bank, Atlanta, as Co-Trustee, together with a Schedule identifying five other substantially identical Rocky Mountain Agreements Assignment and Assumption Agreements. (Filed as Exhibit 10.32.4 to the Registrant's Form 10-K for the fiscal year ended December 31, 1996, File No. 33-7591.) *10.32.5 -- Facility Lease Agreement (P1), dated as of December 30, 1996, between SunTrust Bank, Atlanta, as Co-Trustee and Rocky Mountain Leasing Corporation, together with a Schedule identifying five other substantially identical Facility Lease Agreements. (Filed as Exhibit 10.32.5 to the Registrant's Form 10-K for the fiscal year ended December 31, 1996, File No. 33-7591.) *10.32.6 -- Ground Sublease Agreement (P1), dated as of December 30, 1996, between SunTrust Bank, Atlanta, as Co-Trustee and Rocky Mountain Leasing Corporation, together with a Schedule identifying five other substantially identical Ground Sublease Agreements. (Filed as Exhibit 10.32.6 to the Registrant's Form 10-K for the fiscal year ended December 31, 1996, File No. 33-7591.) *10.32.7 -- Rocky Mountain Agreements Re-assignment and Assumption Agreement (P1), dated as of December 30, 1996, between SunTrust Bank, Atlanta, as Co-Trustee and Rocky Mountain Leasing Corporation, together with a Schedule identifying five other substantially identical Rocky Mountain Agreements Re-assignment and Assumption Agreements. (Filed as Exhibit 10.32.7 to the Registrant's Form 10-K for the fiscal year ended December 31, 1996, File No. 33-7591.)
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NUMBER DESCRIPTION - ---------------- ---------------------------------------------------------------------------------------- *10.32.8 -- Facility Sublease Agreement (P1), dated as of December 30, 1996, between Oglethorpe and Rocky Mountain Leasing Corporation, together with a Schedule identifying five other substantially identical Facility Sublease Agreements. (Filed as Exhibit 10.32.8 to the Registrant's Form 10-K for the fiscal year ended December 31, 1996, File No. 33-7591.) *10.32.9 -- Ground Sub-sublease Agreement (P1), dated as of December 30, 1996, between Rocky Mountain Leasing Corporation and Oglethorpe, together with a Schedule identifying five other substantially identical Ground Sub-sublease Agreements. (Filed as Exhibit 10.32.9 to the Registrant's Form 10-K for the fiscal year ended December 31, 1996, File No. 33-7591.) *10.32.10 -- Rocky Mountain Agreements Second Re-assignment and Assumption Agreement (P1), dated as of December 30, 1996, between Rocky Mountain Leasing Corporation and Oglethorpe, together with a Schedule identifying five other substantially identical Rocky Mountain Agreements Second Re-assignment and Assumption Agreements. (Filed as Exhibit 10.32.10 to the Registrant's Form 10-K for the fiscal year ended December 31, 1996, File No. 33-7591.) *10.32.11 -- Payment Undertaking Agreement (P1), dated as of December 30, 1996, between Rocky Mountain Leasing Corporation and Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A., New York Branch, as the Bank, together with a Schedule identifying five other substantially identical Payment Undertaking Agreements. (Filed as Exhibit 10.32.11 to the Registrant's Form 10-K for the fiscal year ended December 31, 1996, File No. 33-7591.) *10.32.12 -- Payment Undertaking Pledge Agreement (P1), dated as of December 30, 1996, between Rocky Mountain Leasing Corporation, Fleet National Bank, as Owner Trustee, and SunTrust Bank, Atlanta, as Co-Trustee, together with a Schedule identifying five other substantially identical Payment Undertaking Pledge Agreements. (Filed as Exhibit 10.32.12 to the Registrant's Form 10-K for the fiscal year ended December 31, 1996, File No. 33-7591.) *10.32.13 -- Equity Funding Agreement (P1), dated as of December 30, 1996, between Rocky Mountain Leasing Corporation, AIG Match Funding Corp., the Owner Participant named therein, Fleet National Bank, as Owner Trustee, and SunTrust Bank, Atlanta, as Co-Trustee, together with a Schedule identifying five other substantially identical Equity Funding Agreements. (Filed as Exhibit 10.32.13 to the Registrant's Form 10-K for the fiscal year ended December 31, 1996, File No. 33-7591.) *10.32.14 -- Equity Funding Pledge Agreement (P1), dated as of December 30, 1996, between Rocky Mountain Leasing Corporation and SunTrust Bank, Atlanta, as Co-Trustee, together with a Schedule identifying five other substantially identical Equity Funding Pledge Agreements. (Filed as Exhibit 10.32.14 to the Registrant's Form 10-K for the fiscal year ended December 31, 1996, File No. 33-7591.) *10.32.15 -- Deed to Secure Debt, Assignment of Surety Bond and Security Agreement (P1), dated as of December 30, 1996, between Rocky Mountain Leasing Corporation, SunTrust Bank, Atlanta, as Co-Trustee, together with a Schedule identifying five other substantially identical Collateral Assignment, Assignment of Surety Bond
II-20
NUMBER DESCRIPTION - ---------------- ---------------------------------------------------------------------------------------- and Security Agreements. (Filed as Exhibit 10.32.15 to the Registrant's Form 10-K for the fiscal year ended December 31, 1996, File No. 33-7591.) *10.32.16 -- Subordinated Deed to Secure Debt and Security Agreement (P1), dated as of December 30, 1996, among Oglethorpe, AMBAC Indemnity Corporation and SunTrust Bank, Atlanta, as Co-Trustee, together with a Schedule identifying five other substantially identical Subordinated Deed to Secure Debt and Security Agreements. (Filed as Exhibit 10.32.16 to the Registrant's Form 10-K for the fiscal year ended December 31, 1996, File No. 33-7591.) *10.32.17 -- Tax Indemnification Agreement (P1), dated as of December 30, 1996, between Oglethorpe and the Owner Participant named therein, together with a Schedule identifying five other substantially identical Tax Indemnification Agreements. (Filed as Exhibit 10.32.17 to the Registrant's Form 10-K for the fiscal year ended December 31, 1996, File No. 33-7591.) *10.32.18 -- Consent No. 1, dated as of December 30, 1996, among Georgia Power Company, Oglethorpe, SunTrust Bank, Atlanta, as Co-Trustee, and Fleet National Bank, as Owner Trustee, together with a Schedule identifying five other substantially identical Consents. (Filed as Exhibit 10.32.18 to the Registrant's Form 10-K for the fiscal year ended December 31, 1996, File No. 33-7591.) *10.32.19(a) -- OPC Intercreditor and Security Agreement No. 1, dated as of December 30, 1996, among the United States of America, acting through the Administrator of the Rural Utilities Service, SunTrust Bank, Atlanta, Oglethorpe, Rocky Mountain Leasing Corporation, SunTrust Bank, Atlanta, as Co-Trustee, Fleet National Bank, as Owner Trustee, Utrecht-America Finance Co., as Lender and AMBAC Indemnity Corporation, together with a Schedule identifying five other substantially identical Intercreditor and Security Agreements. (Filed as Exhibit 10.32.19 to the Registrant's Form 10-K for the fiscal year ended December 31, 1996, File No. 33-7591.) 10.32.19(b) -- Supplement to OPC Intercreditor and Security Agreement No. 1, dated as of March 1, 1997, among the United States of America, acting through the Administrator of the Rural Utilities Service, SunTrust Bank, Atlanta, Oglethorpe, Rocky Mountain Leasing Corporation, SunTrust Bank, Atlanta, as Co-Trustee, Fleet National Bank, as Owner Trustee, Utrecht-America Finance Co., as Lender and AMBAC Indemnity Corporation, together with a Schedule identifying five other substantially identical Supplements to OPC Intercreditor and Security Agreements. *10.33.1 -- Member Transmission Service Agreement, dated as of March 1, 1997, by and between Oglethorpe and Georgia Transmission Corporation (An Electric Membership Corporation). (Filed as Exhibit 10.33.1 to the Registrant's Form 10-K for the fiscal year ended December 31, 1996, File No. 33-7591.) *10.33.2 -- Generation Services Agreement, dated as of March 1, 1997, by and between Oglethorpe and Georgia System Operations Corporation. (Filed as Exhibit 10.33.2 to the Registrant's Form 10-K for the fiscal year ended December 31, 1996, File No. 33-7591.) *10.33.3 -- Operation Services Agreement, dated as of March 1, 1997, by and between Oglethorpe and Georgia System Operations Corporation. (Filed as Exhibit
II-21
NUMBER DESCRIPTION - ---------------- ---------------------------------------------------------------------------------------- 10.33.3 to the Registrant's Form 10-K for the fiscal year ended December 31, 1996, File No. 33-7591.) *10.34 -- Power Purchase and Sale Agreement between Morgan Stanley Capital Group Inc. and Oglethorpe, dated as of April 7, 1997. (Filed as Exhibit 10.34 to the Registrant's Form 10-Q for the quarterly period ended March 30, 1997, File No. 33-7591.) ++10.35 -- Purchase Contract, dated December 11, 1997, by and among Oglethorpe, OPC Scherer 1997 Funding Corporation A and Goldman, Sachs & Co., as representative of the purchasers named therein. 12 -- Statement regarding computation of ratio of earnings to fixed charges. 15 -- Letter from Coopers & Lybrand L.L.P. regarding unaudited interim financial information. 21.1 -- Rocky Mountain Leasing Corporation, a Delaware corporation. ++23.1 -- Consent of Sutherland, Asbill & Brennan LLP (included in their opinion filed as Exhibit 5). 23.2 -- Consent of Coopers & Lybrand L.L.P. 23.3 -- Consent of Arthur Andersen LLP. 24 -- Power of Attorney (included in Part II of the Registration Statement). 25 -- Form T-1, Statement of Eligibility and Qualification under the Trust Indenture Act of 1939 of SunTrust Bank, Atlanta, as Indenture Trustee. 27.1 -- Financial Data Schedule (for SEC use only). ++99.1 -- Form of Letter of Transmittal.
- ------------------------ * Incorporated by reference to exhibits previously filed by the Registrant as indicated in parentheses following the description of the exhibit. ++ To be filed by amendment. (1) Pursuant to 17 C.F.R. 229.601(b)(4)(iii), this document is not filed herewith; however the registrant hereby agrees that such document will be provided to the Commission upon request. (2) For the reason stated in footnote (1), this document and six other substantially identical documents are not filed as exhibits to this Registration Statement. (3) For the reason stated in footnote (1), this document and another substantially identical document are not filed as exhibits to this Registration Statement. (4) For the reason stated in footnote (1), this document and three other substantially identical documents are not filed as exhibits to this Registration Statement. (5) Certain portions of this document have been omitted as confidential and filed separately with the Commission. II-22 EX-4.2 2 EXHIBIT 4.2 Exhibit 4.2 ----------------------------------------------------- Collateral Trust Indenture Dated as of December 1, 1997 Among OPC SCHERER 1997 FUNDING CORPORATION A OGLETHORPE POWER CORPORATION (AN ELECTRIC MEMBERSHIP CORPORATION) and SUNTRUST BANK, ATLANTA Trustee. ----------------------- Providing for the Issuance from Time to Time of Serial Facility Bonds to be Issued in One or More Series ----------------------------------------------------- Robert W. Scherer Unit No. 2 OPC SCHERER 1997 FUNDING CORPORATION A OGLETHORPE POWER CORPORATION Reconciliation and tie between Indenture dated as of December 1, 1997 and Trust Indenture Act of 1939, as Amended Section of Act Section of Indenture -------------- -------------------- 310(a)(1) 9.09 (2) 9.09 (3) Inapplicable (4) Inapplicable (5) 9.09 (b) 9.08, 9.10(a), 9.10(d), 9.10(e), 9.11 (c) Inapplicable 311(a)(b) 9.13 (c) Inapplicable 312(a) 10.01 10.02(a) (b) 10.02(b) (c) 10.02(c) 313(a) 10.03(a) 313(b)(1) 10.03(b)(1) (2) 10.03(b) (c) 10.03(a) & (b) (d) 10.03(c) 314(a) 10.04 (b) 5.06, 5.09(a) Section of Act Section of Indenture -------------- -------------------- (c)(1) 1.02, 2.11, 4.01, 4.02, 13.01 and Exhibit A (2) 1.02, 2.11, 4.01, 4.02, 13.01 and Exhibit A (3) 2.11 and 12.01 (d)(1) 2.11 (2) Inapplicable (3) 2.11 (e) 1.02 315(a)(1) 9.01(a)(1) (2) 9.01(a)(2) 315(a)(last clause) 9.01(a)(2) (b) 9.02 (c) 9.01(b) (d)(1) 9.01(c)(1) (2) 9.01(c)(2) (3) 9.01(c)(3) (e) 8.10 3.16(a)(1)(A) 8.07 (B) 8.08 (2) Inapplicable (a)(last sentence) 1.01 ("Outstanding") (b) 8.11 316(c) Inapplicable 317(a)(1) 8.05(a) (2) 8.05(d) (b) 9.14(c) 318(a) 1.07 NOTE: This reconciliation and tie shall not, for any purpose, be deemed to be part of the Indenture. TABLE OF CONTENTS PAGE Parties....................................................................... 1 Recitals (including form of Bond)............................................. 1 Granting Clauses.............................................................. 9 ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION SECTION 1.01. Definitions.....................................................11 "Act"......................................................................11 "Additional Interest"......................................................11 "Affiliate"................................................................11 "Allocable Period".........................................................11 "Amount Recovered".........................................................12 "Authenticating Agent".....................................................12 "Authorized Agent".........................................................12 "Beneficial Owner".........................................................12 "Board of Directors".......................................................12 "Board Resolution".........................................................12 "Bond Register"............................................................12 "Bond Registrar"...........................................................12 "Bonds"....................................................................12 "Book Entry Form" or "Book Entry System"...................................12 "Business Day".............................................................12 "Capital Improvements".....................................................12 "Commission"...............................................................13 "Company"..................................................................13 "Company Request" and "Company Order"......................................13 "Completed Exchange Offer".................................................13 "Corporate Trust Office"...................................................13 "Default"..................................................................13 "Defaulted Interest".......................................................13 "Depository"...............................................................13 "Designated Installments"..................................................13 "Equity Investors".........................................................13 "Event of Default".........................................................14 "Event of Loss"............................................................14 "Excepted Payments"........................................................14 "Exchange Issue of Bonds"..................................................14 "Exchange Offer" ..........................................................14 "Exchange Offer Registration Statement"....................................14 "Facility".................................................................14 "Federal Power Act"........................................................14 "Global Security"..........................................................14 "Handy-Whitman Index"......................................................14 "Holder" or "Bondholder....................................................14 "Holding Company Act"......................................................15 "Indenture"................................................................15 "Initial Series of Bonds"..................................................15 "Interest Payment Date"....................................................15 "Lease"....................................................................15 "Lease Indenture"..........................................................15 "Lease Indenture Trustee"..................................................15 "Lessor"...................................................................15 "Lessor Note"..............................................................15 "Lessor Note Installment Date".............................................15 "Lessor Request" and "Lessor Order"........................................15 "Lessor's Cost"............................................................16 "Lien of this Indenture" or "lien hereof"..................................16 "Maturity".................................................................16 "Officers' Certificate"....................................................16 "Oglethorpe"...............................................................16 "Opinion of Counsel".......................................................16 "Outstanding"..............................................................16 "Ownership Agreement" .....................................................17 "Participant"..............................................................17 "Participation Agreement"..................................................17 "Paying Agent".............................................................17 "Permitted Investments"....................................................17 "Person"...................................................................18 "Place of Payment".........................................................18 "Pledged Lessor Note"......................................................18 "Pledged Property".........................................................18 "Predecessor Bonds"........................................................18 "Principal Instruments"....................................................18 "Recovery Payment Date"....................................................19 "Redemption Date"..........................................................19 "Redemption Price".........................................................19 "Registration Default".....................................................19 "Registration Rights Agreement"............................................19 "Regular Record Date"......................................................19 "Rent".....................................................................19 "Responsible Officer"......................................................19 "Scherer Common Facilities"................................................19 "Scherer Unit 1"...........................................................19 ii "Scherer Unit 2"...........................................................20 "Scherer Unit 2 Capital Budget"............................................20 "Scherer Unit 2 Site"......................................................20 "Second Anniversary".......................................................20 "Series Supplemental Indenture"............................................20 "Sinking Fund".............................................................20 "Six-Month Anniversary"....................................................20 "Special Record Date"......................................................20 "Stated Maturity"..........................................................20 "Stipulated Loss Value"....................................................20 "Supplemental Participation Agreement".....................................21 "Tax Indemnification Agreement"............................................21 "Trust Agreements".........................................................21 "TIA"......................................................................21 "Trustee"..................................................................21 "Trustee's New York Office"................................................21 "U.S. Government Obligations"..............................................21 SECTION 1.02. Compliance Certificates and Opinions...........................22 SECTION 1.03. Form of Documents Delivered to Trustee.........................22 SECTION 1.04. Acts of Holders................................................23 SECTION 1.05. Notices, etc., to Trustee, Oglethorpe and Company..............24 SECTION 1.06. Notices to Holders; Waiver.....................................24 SECTION 1.07. Conflict with Trust Indenture Act..............................25 SECTION 1.08. Effect of Heading and Table of Contents........................25 SECTION 1.09. Successors and Assigns.........................................25 SECTION 1.10. Separability Clause............................................25 SECTION 1.11. Benefits of Indenture..........................................25 SECTION 1.12. Governing Law..................................................25 SECTION 1.13. Legal Holidays.................................................25 SECTION 1.14. Indenture to Constitute Security Agreement.....................26 ARTICLE TWO THE BONDS SECTION 2.01. General Terms..................................................26 SECTION 2.02. Form of Bonds; Form of Trustee's Authentication................29 SECTION 2.03. Execution of Bonds.............................................30 SECTION 2.04. Temporary Bonds................................................30 SECTION 2.05. Registration, Transfer and Exchange............................30 SECTION 2.06. Mutilated, Destroyed, Lost and Stolen Bonds....................32 SECTION 2.07. Payment of Interest; Interest Rights Preserved.................32 SECTION 2.08. Persons Deemed 0wners..........................................34 SECTION 2.09. Cancellation...................................................34 iii SECTION 2.10. Dating of Bonds................................................34 SECTION 2.11. Authentication and Delivery of Bonds...........................34 SECTION 2.12. Sale of Bonds; and Application of Proceeds from the Sale of Bonds.........................................36 SECTION 2.13. The Depository.................................................37 ARTICLE THREE PROVISIONS AS TO PLEDGED PROPERTY SECTION 3.01. Holding of Pledged Securities..................................38 SECTION 3.02. Disposition of Payments on Pledged Property....................38 SECTION 3.03. Exercise of Rights and Powers Under Pledged Lessor Notes and Lease Indentures...........................................38 SECTION 3.04. Certain Actions in Case of Judicial Proceedings................39 SECTION 3.05. Cash Held by Trustee Treated as a Deposit......................39 ARTICLE FOUR WITHDRAWAL OF COLLATERAL SECTION 4.01. Withdrawal of Collateral.......................................40 SECTION 4.02. Reassignment of Pledged Lessor Notes upon Payment..............40 ARTICLE FIVE COVENANTS SECTION 5.01. Payment of Principal, Premium and Interest.....................40 SECTION 5.02. Maintenance of Office or Agency................................41 SECTION 5.03. Money for Bond Payments to be Held in Trust....................41 SECTION 5.04. Maintenance of Corporate Existence.............................42 SECTION 5.05. Protection of Pledged Property.................................42 SECTION 5.06. Opinions as to Pledged Property................................42 SECTION 5.07. Performance of Obligations.....................................43 SECTION 5.08. Negative Covenants.............................................43 SECTION 5.09. Annual Statement as to Compliance..............................44 ARTICLE SIX REDEMPTION OF BONDS SECTION 6.01. Redemption.....................................................45 SECTION 6.02. Applicability of Article.......................................49 SECTION 6.03. Notice to Trustee of Redemption................................49 SECTION 6.04. Selection by Trustee of Bonds to be Redeemed...................49 SECTION 6.05. Notice of Redemption...........................................51 SECTION 6.06. Deposit of Redemption Price....................................51 iv SECTION 6.07. Bonds Payable on Redemption Date...............................52 SECTION 6.08. Bonds Redeemed in Part.........................................52 ARTICLE SEVEN SINKING FUNDS SECTION 7.01. Sinking Funds for Bonds........................................52 SECTION 7.02. Selection by Trustee of Bonds to be Redeemed Through Operation of Sinking Fund......................................54 ARTICLE EIGHT EVENTS OF DEFAULT; REMEDIES SECTION 8.01. Events of Default..............................................55 SECTION 8.02. Acceleration of Maturity; Rescission and Annulment.............56 SECTION 8.03. Trustee's Power of Sale of Pledged Property; Notice Required; Power to Bring Suit............................................58 SECTION 8.04. Incidents of Sale of Pledged Property..........................58 SECTION 8.05. Judicial Proceedings Instituted by Trustee.....................60 SECTION 8.06. Bondholders May Demand Enforcement of Rights by Trustee........62 SECTION 8.07. Control by Bondholders.........................................62 SECTION 8.08. Waiver of Past Defaults........................................62 SECTION 8.09. Bondholder May Not Bring Suit Except under Certain Conditions.......................................63 SECTION 8.10. Undertaking To Pay Court Costs.................................63 SECTION 8.11. Right of Bondholders To Receive Payment Not To Be Impaired.....64 SECTION 8.12. Application of Moneys Collected by Trustee.....................64 SECTION 8.13. Bonds Held by Certain Persons Not To Share in Distribution.....65 SECTION 8.14. Waiver of Appraisement, Valuation, Stay, Right to Marshaling...65 SECTION 8.15. Remedies Cumulative; Delay or Omission, Not a Waiver...........66 ARTICLE NINE THE TRUSTEE SECTION 9.01. Certain Duties and Responsibilities............................66 SECTION 9.02. Notice of Defaults.............................................67 SECTION 9.03. Certain Rights of Trustee......................................68 SECTION 9.04. Not Responsible for Recitals or Issuance of Bonds..............69 SECTION 9.05. May Hold Bonds.................................................69 SECTION 9.06. Funds May Be Held by Trustee or Paying Agent; Investments......69 SECTION 9.07. Compensation and Reimbursement.................................70 SECTION 9.08. Disqualification; Conflicting Interests........................70 SECTION 9.09. Corporate Trustee Required; Eligibility........................76 SECTION 9.10. Resignation and Removal; Appointment of Successor..............76 v SECTION 9.11. Acceptance of Appointment by Successor.........................78 SECTION 9.12. Merger, Conversion, Consolidation or Succession to Business....78 SECTION 9.13. Preferential Collection of Claims against any Obligor..........78 SECTION 9.14. Maintenance of Agencies........................................82 ARTICLE TEN BONDHOLDERS' LISTS AND REPORTS BY TRUSTEE AND OGLETHORPE SECTION 10.01. Oglethorpe to Furnish Trustee Names and Addresses of Bondholders......................................84 SECTION 10.02. Preservation of Information; Communications to Bondholders....84 SECTION 10.03. Reports by Trustee............................................85 SECTION 10.04. Reports by Oglethorpe.........................................87 ARTICLE ELEVEN SUPPLEMENTAL INDENTURES SECTION 11.01. Supplemental Indentures Without Consent of Bondholders........88 SECTION 11.02. Supplemental Indentures with Consent of Bondholders...........89 SECTION 11.03. Documents Affecting Immunity or Indemnity.....................91 SECTION 11.04. Execution of Supplemental Indentures..........................91 SECTION 11.05. Effect of Supplemental Indentures.............................91 SECTION 11.06. Conformity with Trust Indenture Act...........................91 SECTION 11.07. Reference in Bonds to Supplemental Indentures.................91 ARTICLE TWELVE SATISFACTION AND DISCHARGE SECTION 12.01. Satisfaction and Discharge of Indenture.......................92 SECTION 12.02. Defeasance Upon Deposit of Funds or U.S. Government Obligations...................................................92 SECTION 12.03. Covenant and Lien Defeasance..................................93 SECTION 12.04. Application by Trustee of Deposited Funds and U.S. Government Obligations...............................94 SECTION 12.05. Repayment of Moneys Held by Paying Agent......................94 ARTICLE THIRTEEN RELEASE OF FUNDS BY THE TRUSTEE FOR PAYMENT OF THE PLEDGED LESSOR NOTES SECTION 13.01. Conditions Precedent to Release of Funds by the Trustee for Payment of the Pledged Lessor Notes.......................95 vi ARTICLE FOURTEEN SUNDRY PROVISIONS SECTION 14.01 Execution Counterparts.........................................96 SIGNATURES AND SEALS.......................................................97 TESTIMONIUM................................................................98 SCHEDULE A EXHIBIT A EXHIBIT B vii COLLATERAL TRUST INDENTURE, dated as of December 1, 1997, among OPC SCHERER 1997 FUNDING CORPORATION A, a Delaware corporation having its principal office and mailing address at c/o JH Management Corporation, One International Plaza, Room 520, Boston, Massachusetts 02110-2624 (hereinafter called the "Company"), OGLETHORPE POWER CORPORATION (AN ELECTRIC MEMBERSHIP CORPORATION), a Georgia corporation having its principal office and mailing address at 2100 East Exchange Place, Tucker, Georgia 30085 (hereinafter called "Oglethorpe"), and SUNTRUST BANK, ATLANTA, a banking corporation organized and existing under the laws of the State of Georgia having its corporate trust office at 58 Edgewood Avenue, Room 400, Atlanta, Georgia 30303 (hereinafter called the "Trustee"). RECITALS WHEREAS, the Company has duly authorized the creation of an issue of its bonds of substantially the tenor hereinafter provided and may, from time to time, authorize the creation of additional series of bonds as hereinafter provided (all such bonds being hereinafter called the "Bonds"); and, to secure the Bonds and to provide for the authentication and delivery thereof by the Trustee, the Company has duly authorized the execution and delivery of this Indenture; and WHEREAS, the initial and related exchange series of Bonds are to be known as Serial Facility Bonds Due June 30, 2011 and the form of such Bonds and the certificate of authentication of the Trustee for such Bonds are to be substantially in the following forms, respectively, with such variations as are in this Indenture permitted: THIS SECURITY IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE OF A DEPOSITARY. THIS SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (HEREINAFTER CALLED "DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. [If a Bond of the Initial Series of Bonds, then insert -- THE FACILITY BONDS EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (HEREINAFTER CALLED THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS OR ANY OTHER APPLICABLE SECURITIES LAW, AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (1) TO A PERSON WHOM THE TRANSFEROR REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT ACQUIRING FOR ITS OWN ACCOUNT OR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (2) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), (3) TO AN INSTITUTION THAT IS AN ACCREDITED INVESTOR WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (IF AVAILABLE) OR (4) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND, IN EACH CASE OF CLAUSES (1) THROUGH (4), IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND OTHER JURISDICTIONS, SUBJECT TO THE RIGHT OF OGLETHORPE POWER CORPORATION (AN ELECTRIC MEMBERSHIP CORPORATION) IN THE CASE OF CLAUSE (3) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS AND/OR OTHER INFORMATION SATISFACTORY TO IT.] No. R- $ OPC SCHERER 1997 FUNDING CORPORATION A SERIAL FACILITY BOND DUE JUNE 30, 2011 OPC SCHERER 1997 FUNDING CORPORATION A, a Delaware corporation (hereinafter called the "Company," which term includes any successor corporation under the Collateral Trust Indenture, dated as of December 1, 1997 (herein called the "Indenture"), among the Company, Oglethorpe Power Corporation (An Electric Membership Corporation), a Georgia corporation (herein called "Oglethorpe"), and SunTrust Bank, Atlanta, a banking corporation organized and existing under the laws of the State of Georgia, as Trustee (herein called the "Trustee," which term includes any successor Trustee under the Indenture)), for value received, hereby promises to pay to , or registered assigns, the principal sum of Dollars on June 30, 2011, and to pay interest thereon from the date hereof, or from the most recent interest payment date to which interest has been paid or duly provided for, on June 30, 1998 and semiannually on December 31 and June 30 in each year thereafter, at the rate of 6.974% per annum, until the principal hereof is paid or made available for payment [If a Bond of the Initial Series of Bonds, insert -- ; 2 provided, however, that if (i) the Exchange Offer Registration Statement (as defined in the Indenture) registering the Exchange Series of Bonds (as defined in the Indenture) pursuant to the Exchange Offer (as defined in the Indenture) has not become or been declared effective on or before the Six-Month Anniversary (as defined in the Indenture), or (ii) the Completed Exchange Offer (as defined in the Indenture) has not occurred within 90 days after the initial date on which the Exchange Registration Statement has become or has been declared effective, or (iii) the Exchange Offer Registration Statement is filed and declared effective but shall thereafter, prior to the 90th day after the occurrence of a Completed Exchange Offer, either be withdrawn by Oglethorpe or shall become subject to an effective stop order issued pursuant to Section 8(d) of the Securities Act suspending the effectiveness of the Exchange Offer Registration Statement without being succeeded immediately by an additional registration statement filed and declared effective, in each case subject to the terms, conditions and exceptions set forth in the Registration Rights Agreement (as defined in the Indenture)(each event referred to in clauses (i) through (iii), a "Registration Default"), then (subject to certain exceptions set forth in the Registration Rights Agreement) interest on this Bond will accrue (in addition to the stated interest on this Bond) at a rate of 0.25% per annum (hereinafter called "Additional Interest") on the principal amount of this Bond, from the date of the occurrence of any Registration Default until the earlier of (a) the date such Registration Default is cured and (b) the Second Anniversary (as defined in the Indenture). Accrued Additional Interest, if any, shall be paid semi-annually on June 30 and December 31 in each year; and the amount of accrued Additional Interest shall be determined on the basis of the number of days actually elpased and a 365 or 366 day year, as the case may be. Any accrued and unpaid interest (including Additional Interest) on this Bond, upon the issuance of a Bond of the Exchange Series of Bonds in exchange for this Bond, shall cease to be payable to the Holder of this Bond, but such accrued and unpaid interest shall be payable on the next Interest Payment Date for such Bond of the Exchange Series of Bonds to the Holder thereof on the related Regular Record Date.] The interest so payable, and punctually paid or duly provided for, on any interest payment date will, as provided in such Indenture, be paid to the person in whose name this Bond (or one or more Predecessor Bonds, as defined in such Indenture) is registered at the close of business on the Regular Record Date for such interest, which shall be the December 15 or June 15, as the case may be (whether or not a Business Day, as defined in the Indenture), next preceding such interest payment date. Any such interest not so punctually paid or duly provided for shall forthwith cease to be payable to the registered holder on such Regular Record Date, and may be paid to the person in whose name this Bond (or one or more Predecessor Bonds) is registered at the close of business on a Special Record Date for the payment of such defaulted interest to be fixed by the Trustee, notice whereof shall be given to Bondholders not less than 10 days prior to such Special Record Date, or may be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Bonds may be listed, and upon such notice as may be required by such exchange, all as more fully provided in such Indenture. [If a Bond of the Initial Series of Bonds, insert - - Except as provided above with respect to Additional Interest,] The amount of interest payable for any period shall be computed on the basis of twelve 30-day months and a 360-day year and the amount of interest payable on any partial period shall be computed on the number of days elapsed in a 360-day year of twelve 30-day months. Payment of the principal 3 of (and premium, if any) and interest on this Bond will be made at the Trustee's New York Office (as defined in the Indenture) (or if the Trustee does not maintain an office in the Borough of Manhattan, The City of New York, at the office of any other Paying Agent maintained in such Borough as required by the Indenture), in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts, except that payment of interest shall be made by check mailed to the address of the Holder entitled thereto as such address shall appear on the Bond Register. Unless the certificate of authentication hereon has been executed by the Trustee or any other Authenticating Agent by manual signature, this Bond shall not be entitled to any benefit under such Indenture, or be valid or obligatory for any purpose. This Bond is one of an authorized series of Bonds of the Company [If a Bond of the Initial Series, insert--issued in the aggregate principal amount of $224,702,000, designated by the Company as the Initial Series of Bonds (as defined in the Indenture and] known as its "Serial Facility Bonds Due June 30, 2011" issued under, and all equally and ratably secured by the Indenture, to which Indenture and all indentures supplemental thereto reference is hereby made for a description of the nature and extent of the securities and other property assigned, pledged, transferred and mortgaged thereunder, the respective rights of the holders of said Bonds and of the Trustee and the Company in respect of such security, and the terms upon which said Bonds are and are to be authenticated and delivered. The principal of, and premium, if any, and interest on, this Bond are payable from, and secured by, among other things, one or more nonrecourse promissory notes (each, a "Pledged Lessor Note," and, collectively, the "Pledged Lessor Notes") issued by Wilmington Trust Company and NationsBank, N.A., formerly known as NationsBank of Georgia, N.A., successor by merger to The Citizens and Southern National Bank, acting through its agent The Bank of New York, as owner trustees under four separate Trust Agreements, each dated as of December 30, 1985, as amended and supplemented by a Supplement No. 1 to Trust Agreement dated as of December 30, 1985, a Supplement No. 2 to Trust Agreement dated as of October 7, 1986, with the respective institutional investors named in such Trust Agreements (Wilmington Trust Company and NationsBank, N.A. in each of such capacities as owner trustees being herein called a "Lessor," which term shall be deemed to refer to any other co-trustee appointed pursuant to any such Trust Agreement and each permitted successor or assign thereunder, and each such institutional investor being herein called an "Equity Investor"). Such Pledged Lessor Notes have been issued under four separate Amended and Restated Indentures of Trust, Deeds to Secure Debt and Security Agreements, each dated as of December 1, 1997, between the respective Lessors, on the one hand, and The Bank of New York Trust Company of Florida, N.A., as successor trustee to Wachovia Bank of Georgia, N.A., successor by merger to The First National Bank of Atlanta (in such capacity under each such Indenture of Trust, a "Lease Indenture Trustee"), on the other hand (each of such Indentures of Trust, as hereafter amended or supplemented in accordance with its terms, being herein called a "Lease Indenture"). Reference is made to each Lease Indenture and all indentures supplemental thereto for a description of the nature and extent of the property assigned, pledged, transferred and mortgaged thereunder and the rights 4 of the holders of notes issued thereunder, including the Pledged Lessor Notes. Except as expressly provided in a Lease Indenture, all payments of principal, premium, if any, and interest to be made on a Pledged Lessor Note and under such Lease Indenture will be made only from the assets subject to the lien of such Lease Indenture or the income and proceeds received by the related Lease Indenture Trustee therefrom, including, in the case of each Lease Indenture, the rights of the Lessor which is a party thereto under a Lease with Oglethorpe, including the unconditional obligation of Oglethorpe under each such Lease to make basic rental and certain other payments which will be at least sufficient to provide for the payment of the principal of, and premium, if any, and interest on, the Pledged Lessor Note or Notes issued under such Lease Indenture. As provided in the Indenture, Bonds may be issued in one or more series in an unlimited aggregate principal amount. Bonds of the series of which this Bond is a part are limited in aggregate principal amount to $224,702,000. The aggregate principal amount and terms of subsequent series of Bonds, if any, will be established in the supplemental indenture creating such series as provided in the Indenture. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of Oglethorpe and the Company and the rights of the Holders of the Bonds of all series under the Indenture at any time by Oglethorpe and the Company with the consent of the Holders of not less than a majority in aggregate principal amount of the Bonds of all series at the time Outstanding (as defined in the Indenture). The Indenture also contains provisions permitting the Holders of specified percentages in aggregate principal amount of the Bonds of all series at the time Outstanding, on behalf of the Holders of all such Bonds, to waive compliance by Oglethorpe and the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Bond shall be conclusive and binding upon such Holder and upon all future Holders of this Bond and of any Bond issued upon the transfer hereof or in exchange herefor or in lieu hereof whether or not notation of such consent or waiver is made upon this Bond. The Bonds of this series are not subject to redemption at the option of the Company. The Bonds of this series are subject to mandatory redemption in whole or in part, at any time, on not less than 20 nor more than 60 days' prior notice given as provided in the Indenture at a redemption price equal to the principal amount of the Bonds to be redeemed plus accrued interest to the redemption date, on the same date on which, and to the same extent that, the Pledged Lessor Notes are subject to prepayment as provided in their respective Lease Indentures, but only if such prepayment is made under one of the circumstances described in Section 6.01(b) of the Indenture, as certified to the Trustee by Oglethorpe and the Lessors which are the issuers of each of the Pledged Lessor Notes. The Bonds of this series are also subject to mandatory redemption pursuant to sinking fund installments, as more fully provided in the Indenture, on a pro rata basis for Bonds of this series, at the principal amount thereof, together with interest accrued to the redemption date, on the dates and 5 in the respective principal amounts (before taking into account any applicable credit indicated below) set forth in the table below: set forth in the table below: December 31, 1998. . . . . . . . . . . . . . . . . . . . . . . . . . $6,555,000 June 30, 1999. . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 December 31, 1999. . . . . . . . . . . . . . . . . . . . . . . . . . 11,112,000 June 30, 2000. . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 December 31, 2000. . . . . . . . . . . . . . . . . . . . . . . . . . 11,719,000 June 30, 2001. . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 December 31, 2001. . . . . . . . . . . . . . . . . . . . . . . . . . 12,064,000 June 30, 2002. . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 December 31, 2002. . . . . . . . . . . . . . . . . . . . . . . . . . 14,067,000 June 30, 2003. . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 December 31, 2003. . . . . . . . . . . . . . . . . . . . . . . . . . 16,117,000 June 30, 2004. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,513,000 December 31, 2004. . . . . . . . . . . . . . . . . . . . . . . . . . 13,719,000 June 30, 2005. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,651,000 December 31, 2005. . . . . . . . . . . . . . . . . . . . . . . . . . 14,564,000 June 30, 2006. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,485,000 December 31, 2006. . . . . . . . . . . . . . . . . . . . . . . . . . 15,371,000 June 30, 2007. . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,883,000 December 31, 2007. . . . . . . . . . . . . . . . . . . . . . . . . . 0 June 30, 2008. . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,453,000 December 31, 2008. . . . . . . . . . . . . . . . . . . . . . . . . . 0 June 30, 2009. . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,383,000 December 31, 2009. . . . . . . . . . . . . . . . . . . . . . . . . . 0 June 30, 2010. . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,724,000 December 31, 2010. . . . . . . . . . . . . . . . . . . . . . . . . . 0 June 30, 2011 (1). . . . . . . . . . . . . . . . . . . . . . . . . . 9,322,000 In the event of any partial redemption of Bonds of this series (other than pursuant to the aforementioned sinking fund), the principal amount of Bonds to be redeemed pursuant to the sinking fund schedule indicated above shall be adjusted in a manner which will preserve the relationship between the amortization schedules for the Pledged Lessor Notes and the sinking fund schedule for the Bonds of this series which remain outstanding. - ------------- (1) Final payment date. 6 Bonds of this series will also be subject to special mandatory redemption in whole or in part from time to time at a redemption price equal to that which would be payable on such redemption date in respect of Bonds as provided below, plus accrued interest to such redemption date, at the times, with the notice, in the amounts and under the circumstances described in Section 6.01(a) of the Indenture: Twelve month Redemption Period beginning Price ---------------- ---------- December 17, 1997 through December 31, 1997 (2) 106.974% January 1, 1998 106.974 January 1, 1999 106.438 January 1, 2000 105.901 January 1, 2001 105.365 January 1, 2002 104.828 January 1, 2003 104.292 January 1, 2004 103.755 January 1, 2005 103.219 January 1, 2006 102.682 January 1, 2007 102.146 January 1, 2008 101.609 January 1, 2009 101.073 January 1, 2010 100.536 January 1, 2011 100.000 In the case of any redemption of Bonds, unpaid interest installments whose Stated Maturity ( as defined in the Indenture) is on or prior to the redemption date will be payable to the Holders of record of such Bonds or one or more Predecessor Bonds at the close of business on the relevant Regular or Special Record Date referred to on the face hereof. It is provided in the Indenture that Bonds of a denomination larger than $1,000 may be redeemed in part ($1,000 or an integral multiple thereof) and that upon any partial redemption of any such Bond the same shall be surrendered at the corporate trust office of the Bond Registrar in exchange for one or more new Bonds for the unredeemed portion thereof. Bonds (or portions thereof as aforesaid) for whose redemption and payment provision is made in accordance with the Indenture shall thereupon cease to be entitled to the lien of the Indenture and shall cease to bear interest from and after the date fixed for redemption. In addition, Bonds of this series shall be deemed to have been paid and discharged, and the Indenture shall be deemed to have been satisfied with respect to such Bonds (except in respect of the rights of holders of such Bonds to receive payment of the principal of and interest on such Bonds from the trust fund hereinafter - --------------------- (2) Partial period. 7 referred to, certain obligations of the Company in respect of the registration for transfer and exchange of Bonds and the rights, powers, trusts, duties and immunities of the Trustee under the Indenture) upon compliance with the conditions to such discharge set forth in the Indenture, including the deposit by the Company with the Trustee of money in an amount, or U.S. Government Obligations (as defined in the Indenture) which through the payment of principal and interest in respect thereof in accordance with their terms, will provide, not later than the due date of any payment, money in an amount sufficient to pay and discharge each installment of principal of, and interest on, the outstanding Bonds of this series on the dates such installments of principal and interest are due. If an Event of Default (as defined in the Indenture) shall occur, the principal of this Bond may become or be declared due and payable, in the manner and with the effect provided in the Indenture, except that no such declaration can be made in cases in which (i) the Event of Default resulted from a failure on the part of Oglethorpe to pay rent under any Lease until such time as the Lessor under such Lease has been given an opportunity to cure such default in accordance with its Lease Indenture or (ii) the Event of Default resulted from a default under any Lease Indenture at a time when less than all the Lease Indentures were in default. This Bond is transferable by the registered owner hereof in person or by attorney authorized in writing, at the Trustee's New York Office (or if the Trustee does not maintain an office in the Borough of Manhattan, The City of New York, at the office of any other Bond Registrar maintained in such Borough) upon surrender of this Bond, and upon any such transfer a new Bond of this series, for the same aggregate principal amount, will be issued to the transferee in exchange herefor. The Bonds are issuable only as registered Bonds without coupons in denominations of $1,000 and any integral multiple of $1,000 in excess thereof as provided in, and subject to the provisions of, the Indenture. Bonds of this series are exchangeable for other Bonds of this series, but of a different authorized denomination or denominations, as requested by the holder surrendering the same. No service charge will be made of any holder of Bonds for any such transfer or exchange, but the Bond Registrar may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. Prior to due presentment for transfer, the person in whose name this Bond is registered shall be deemed to be the owner hereof for the purpose of receiving payment as herein provided and for all other purposes whether or not this Bond be overdue, regardless of any notice to anyone to the contrary. As provided in the Indenture, the Indenture and the Bonds shall be construed in accordance with and governed by the law of the State of Georgia. 8 IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed under its corporate seal. Dated: ______________, 19__ OPC SCHERER 1997 FUNDING CORPORATION A [SEAL] By_________________________________________ Vice President Attest: ___________________________ Secretary [FORM OF CERTIFICATE OF AUTHENTICATION] This is one of the Bonds described in the within-mentioned Indenture. SUNTRUST BANK, ATLANTA, Trustee By:_____________________________________________ Authorized Officer WHEREAS, all acts necessary to make the Initial Series of Bonds, when executed by the Company, authenticated and delivered by the Trustee or the Authenticating Agent and issued, the valid obligations of the Company, and to constitute this Indenture a valid instrument for the security of the Bonds, in accordance with its and their terms, have been done: NOW, THEREFORE, THIS INDENTURE WITNESSETH, that, to secure the payment of the principal of and interest and premium (if any) on all the Bonds authenticated and delivered hereunder and issued by the Company and outstanding, and the performance of the covenants therein and herein contained, and in consideration of the premises and of the covenants herein contained and of the purchase of the Bonds by the holders thereof, and of the sum of $1 paid to the Company by the Trustee at or before the delivery hereof, the receipt whereof is hereby acknowledged, the 9 Company by these presents does grant, bargain, sell, release, convey, assign, pledge, transfer, mortgage, hypothecate, and confirm unto the Trustee and grant to the Trustee a security interest in all and singular the following (which collectively are hereinafter called the "Pledged Property"), to wit: CLAUSE FIRST All Lessor Notes (as hereinafter defined) identified on Schedule A hereto and all other Lessor Notes as shall be actually pledged and assigned by the Company to the Trustee pursuant hereto or pursuant to a supplemental indenture as provided herein, together with the interest of the Company (if any) in the Lease Indentures (as hereinafter defined) securing said Lessor Notes. CLAUSE SECOND All the proceeds received by the Company from the sale of the Bonds until applied in the manner herein provided, all the tolls, rents, issues, profits, products, revenues and other income of the property subjected or required to be subjected to the lien of this Indenture, and all the estate, right, title and interest of every nature whatsoever of the Company in and to the same and every part thereof. CLAUSE THIRD Also any property, including cash, that may, from time to time hereafter, be subjected to the lien and/or pledge hereof by the Company or which pursuant to any provision of this Indenture or any Series Supplemental Indenture or any other supplemental indenture to be executed and delivered as provided in this Indenture may become subject to the lien and/or pledge hereof; and the Trustee is hereby authorized to receive the same at any time as additional security hereunder. Such subjection to the lien hereof of any such property as additional security may be made subject to any reservations, limitations or conditions which shall be set forth in a written instrument executed by the Company and/or by the Trustee respecting the scope or priority of such lien and/or pledge or the use and disposition of such property or the proceeds thereof. TO HAVE AND TO HOLD the Pledged Property unto the Trustee and its successors and assigns forever subject to the terms of this Indenture including, without limitation, Section 13.01. BUT IN TRUST, NEVERTHELESS, for the equal and proportionate benefit and security of the holders from time to time of all the Bonds authenticated and delivered hereunder and issued by the Company and outstanding, without any priority of any one Bond over any other. AND UPON THE TRUSTS and subject to the covenants and conditions hereinafter set forth. 10 ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION. SECTION 1.01. Definitions. For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires: (1) the terms defined in this Article have the meanings assigned to them in this Article, and include the plural as well as the singular; (2) all other terms used herein which are defined in the Trust Indenture Act (as hereinafter defined), either directly or by reference therein, have the meanings assigned to them therein; (3) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles; (4) all reference in this Indenture to designated "Articles," "Sections" and other subdivisions are to the designated Articles, Sections and other subdivisions of this Indenture; (5) the words "herein," "hereof'" and "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision. Certain terms, used principally in Article Nine, are defined in that Article. "Act" when used with respect to any Holder has the meaning specified in Section 1.04. "Additional Interest" has the meaning specified in Section 2.01(b). "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Allocable Period" shall have the meaning set forth in Section 6.04. 11 "Amount Recovered" means any amount in excess of $5,000,000 recovered by the Trustee in respect of a series of Bonds (and not previously applied toward the redemption of Bonds of such series pursuant to Section 6.01(a)(iii) or any comparable provision of any Series Supplemental Indenture) as the result of the exercise of remedies by the Trustee in respect of a defaulted Pledged Lessor Note pursuant to, and in accordance with, the last paragraph of Section 8.02. "Authenticating Agent" means the Trustee and any other Person acting as Authenticating Agent hereunder pursuant to Section 9.14. "Authorized Agent" means any Authenticating Agent, Paying Agent or Bond Registrar. "Beneficial Owner" shall mean, when any series of Bonds are in Book Entry Form, any person who acquires a beneficial ownership interest in such Bonds held by the Depository. "Board of Directors" means the board of directors of the Company, when used with respect to the Company, and either the board of directors, or any duly authorized committee of that board, when used with respect to Oglethorpe. "Board Resolution" means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company or Oglethorpe, as the case may be, to have been duly adopted by the Board of Directors of such entity and to be in full force and effect on the date of such certification, and delivered to the Trustee. "Bond Register" has the meaning specified in Section 2.05. "Bond Registrar" means the Trustee and any other Person acting as Bond Registrar hereunder pursuant to Section 9.14. "Bonds" means all Bonds issued under this Indenture, including the Initial Series of Bonds and the Exchange Series of Bonds and Bonds issued pursuant to any Series Supplemental Indenture. "Book Entry Form" or "Book Entry System" shall mean a form or system, as applicable, under which physical Bond certificates in fully registered form are registered only in the name of the Depository or its nominee, with the physical Bond certificates "immobilized" in the custody of the Depository. "Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in The City of New York, New York or the City of Atlanta, Georgia are authorized by law to close. "Capital Improvements" means all alterations, modifications, additions or improvements to Scherer Unit 2 or any replacements of any appliances, parts, instruments, appurtenances, accessories, equipment and other property of whatever nature that may from time to time be incorporated in Scherer Unit 2 or 12 any part thereof and which may be capitalized, but not charged to maintenance or repairs, in accordance with the method of accounting being used by Oglethorpe. "Commission" means the Securities and Exchange Commission, as from time to time constituted, created under the Securities Exchange Act of 1934, or if at any time after the execution of this instrument such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties on such date. "Company" means the Person named as the "Company" in the first paragraph of this instrument until a successor corporation shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Company" shall mean such successor corporation. "Company Request" and "Company Order" mean, respectively, a written request or order signed in the name of the Company by its President or one of its Vice Presidents, and by its Treasurer, Secretary, or one of its Assistant Treasurers or Assistant Secretaries, and delivered to the Trustee. "Completed Exchange Offer" means the earlier to occur of (i) the Company having exchanged Bonds of the Exchange Series of Bonds for all Bonds of the Initial Series of Bonds constituting "Registerable Securities" (as defined in the Registration Rights Agreement) pursuant to an Exchange Offer and (ii) the Company having exchanged, pursuant to an Exchange Offer, Bonds of the Exchange Series of Bonds for all Bonds of the Initial Series of Bonds constituting "Registerable Securities" (as defined in the Registration Rights Agreement) that have been properly tendered and not withdrawn before the expiration of the Exchange Offer, which expiration shall be on a date that is at least 30 days following the commencement of the Exchange Offer. "Corporate Trust Office" means the principal office of the Trustee at which at any particular time corporate trust business of the Trustee shall be administered. "Default" means any event which is, or after notice or lapse of time or both would become, an Event of Default. "Defaulted Interest" has the meaning set forth in Section 2.07. "Depository" shall mean The Depository Trust Company (a limited purpose trust company), New York, New York until a successor Depository shall have become such pursuant to the applicable provisions of this Indenture and, thereafter, "Depository" shall mean the successor Depository. Any Depository shall be a securities depository that is a clearing agency under federal law operating and maintaining, with its participants or otherwise, a Book Entry System to record ownership of beneficial interest in Bonds, and to effect transfers of Bonds, in a Book Entry Form. "Designated Installments" shall have the meaning set forth in Section 6.04 hereof. "Equity Investors" means IBM Credit Financing Corporation, DFO Partnership, 13 Chrysler Financial Corporation and HEI Investment Corp., as beneficiaries under the several Trust Agreements, and their respective permitted successors and assigns. "Event of Default" has the meaning specified in Section 8.01. "Event of Loss" when used in respect of any Lease, has the meaning specified in such Lease. "Excepted Payments" means (i) any indemnity or other amounts payable to any Lessor or Equity Investor by the terms of Article 6 of the Participation Agreement to which such Lessor or Equity Investor are parties or by the Tax Indemnification Agreement to which such Equity Investor is a party, (ii) any insurance proceeds (or payments with respect to risks self-insured) payable to any Lessor or Equity Investor under liability policies maintained by or for the benefit of such Person or under policies, if any, maintained by such Person pursuant to Article 12 of the Lease to which such Lessor is a party, (iii) any amounts payable under any Operative Document (as defined in each Participation Agreement) to reimburse any Lessor or Equity Investor in performing or complying with any of the obligations of Oglethorpe under and as permitted by any Operative Documents and (iv) any payments in respect of interest to the extent attributable to payments referred to in clauses (i) through (iii) above which constitute Excepted Payments. "Exchange Issue of Bonds" means the Serial Facility Bonds Due June 30, 2011 issued under this Indenture and substantially identical in terms to the Initial Series of Bonds (except that the Initial Series of Bonds shall contain provisions for Additional Interest and be subject to certain restrictions on transfer). "Exchange Offer" has the meaning specified in Section 2.01(b). "Exchange Offer Registration Statement" has the meaning specified in Section 2.01(b). "Facility" means Scherer Unit 2, the Scherer Station Site and the Common Facilities described in each Participation Agreement. "Federal Power Act" means the Federal Power Act, as amended. "Global Security" has the meaning specified in Section 2.01(b). "Handy-Whitman Index" shall mean the Handy-Whitman Index of Public Utility Construction Costs published semi-annually on January 1 and July 1 of each year by Whitman, Requardt and Associates for the region which includes the area in which Scherer Unit 2 is located, or any successor to such publication, or any similar publication as shall be agreed to from time to time by each Lessor and Oglethorpe as an appropriate index of construction costs of the electric utility industry. "Holder" or "Bondholder" means a Person in whose name a Bond is registered in the Bond Register. 14 "Holding Company Act" means the Public Utility Holding Company Act of 1935, as amended. "Indenture" means this instrument as originally executed or as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof. "Initial Series of Bonds" means the Serial Facility Bonds Due June 30, 2011 initially issued under this Indenture. "Interest Payment Date" means, in respect of each series of Bonds, the Stated Maturity of an installment of interest on such Bonds. "Lease" means each of the Lease Agreements dated December 30, 1985, as heretofore amended and supplemented by a First Supplement thereto dated as of October 15, 1986, in the case of three of the Leases, and as of June 30, 1987, in the case of the fourth Lease, and a Second Supplement thereto dated as of December 17, 1997, and as the same may hereafter be further amended or supplemented in accordance with its terms, pursuant to which a Lessor is leasing its undivided ownership interest in Scherer Unit 2 to Oglethorpe, and "Leases" means all of such Leases. "Lease Indenture" means each of the Amended and Restated Indentures of Trust, Deeds to Secure Debt and Security Agreements dated December 1, 1997 between a Lessor and the related Lease Indenture Trustee, as the same may hereafter be amended or supplemented in accordance with its terms, and "Lease Indentures" means all of such Lease Indentures. "Lease Indenture Trustee" means The Bank of New York Trust Company of Florida, N.A., as successor trustee to Wachovia Bank of Georgia, N.A., successor by merger to The First National Bank of Atlanta, as trustee under a Lease Indenture, and its successor as such trustee thereunder, and "Lease Indenture Trustees" means all of such Lease Indenture Trustees. "Lessor" means Wilmington Trust Company and NationsBank, N.A., formerly known as NationsBank of Georgia, N.A., successor by merger to The Citizens and Southern National Bank, acting through its agent The Bank of New York, as owner trustees under each of the four separate Trust Agreements, together with any other co-trustees appointed pursuant to Section 10.2 of such Trust Agreements, and each successor or assign thereunder, and "Lessors" means all of such Lessors. "Lessor Note" means any non-recourse promissory note of a Lessor issued under its respective Lease Indenture. "Lessor Note Installment Date" shall have the meaning set forth in Section 6.04. "Lessor Request" and "Lessor Order" mean, respectively, a written request 15 or order signed in the name of each Lessor by its President or one of its Vice Presidents or Assistant Vice Presidents and by its Treasurer or Secretary or one of its Assistant Treasurers or Assistant Secretaries, or by any authorized agent of a Lessor (which authorized agent shall include Oglethorpe pursuant to the agency granted to Oglethorpe in the Supplemental Participation Agreement unless and until the Trustee has been notified of the revocation of such agency), and delivered to the Trustee. "Lessor's Cost" means, with respect to each Lessor, the cost of acquisition of its undivided interest in Scherer Unit 2. "Lien of this Indenture" or "lien hereof" means the lien created by these presents, or created by any concurrent or subsequent conveyance to the Trustee (whether made by the Company or any other Person), or otherwise created, constituting any property a part of the Pledged Property held by the Trustee for the benefit of the Bonds Outstanding hereunder. "Maturity" when used with respect to any Bond means the date on which the principal of such Bond becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption or otherwise. "Officers' Certificate" means a certificate signed by the President or a Vice President, and by the Treasurer, the Secretary, or one of the Assistant Treasurers or Assistant Secretaries, of Oglethorpe or the Company, as the case may be, and delivered to the Trustee. "Oglethorpe" means Oglethorpe Power Corporation (An Electric Membership Corporation), formerly known as Oglethorpe Power Corporation (An Electric Membership Generation & Transmission Corporation), a corporation organized and operating under the laws of the State of Georgia, and, subject to the provisions hereof, its successors and assigns. "Opinion of Counsel" means a written opinion of counsel for any Person either expressly referred to herein or otherwise satisfactory to the Trustee which may include, without limitation, counsel to the Company, any Lessor, the Lease Indenture Trustee, any Equity Investor or Oglethorpe, whether or not such counsel is an employee of any of them. "Outstanding" when used with respect to Bonds means, as of the date of determination, all Bonds theretofore authenticated and delivered under this Indenture, except: (i) Bonds theretofore canceled by the Trustee or the Bond Registrar or delivered to the Trustee or the Bond Registrar for cancellation; (ii) Bonds for whose payment or redemption money in the necessary amount has been theretofore deposited with the Trustee in trust for the Holders of such Bonds as provided in Article Twelve, provided that, if such Bonds are to be redeemed (otherwise than through the operation of the Sinking Fund), notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made; and 16 (iii) Bonds in exchange for or in lieu of which other Bonds have been authenticated and delivered pursuant to this Indenture; provided, however, that in determining whether the Holders of the requisite principal amount of Bonds Outstanding have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Bonds owned by the Company or owned by Oglethorpe, any Lessor or any Equity Investor, or any Affiliate of the Company, Oglethorpe, any Lessor or any Equity Investor, shall be disregarded and deemed not to be Outstanding, unless such Persons own 100% of the Bonds owned by all Persons, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Bonds which the Trustee knows to be so owned shall be so disregarded. Bonds so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Bonds and that the pledgee is not the Company or Oglethorpe, any Lessor or any Equity Investor or any Affiliate of the Company, Oglethorpe, any Lessor or any Equity Investor. "Ownership Agreement" means the Purchase and Ownership Participation Agreement dated as of May 15, 1980, among Oglethorpe, Georgia Power Company, Municipal Electric Authority of Georgia and the City of Dalton, as amended by the Amendment to the Ownership Agreement, dated December 30, 1985, among such parties, the four Consents, Amendments and Assumptions, dated December 30, 1985, among such parties, Gulf Power Company and the respective Lessors and further Amendments to the Ownership Agreement, dated as of July 1, 1986, August 1, 1988 and December 30, 1990, and as the Ownership Agreement may be amended, modified or supplemented from time to time. "Participant" shall mean one of the entities which is a member of the Depository and deposits securities, directly or indirectly, in the Book Entry System. "Participation Agreement" means each of the Participation Agreements dated as of December 30, 1985, among Oglethorpe, the Equity Investor named therein, its related Lessor, the Lease Indenture Trustee, CoBank, ACB, as successor to Columbia Bank for Cooperatives, the Company and SunTrust Bank, Atlanta, formerly known as Trust Company Bank, as trustee under a Collateral Trust Indenture dated as of October 15, 1986, as the same has heretofore been amended by the related Supplemental Participation Agreement, and as the same may hereafter be amended or supplemented in accordance with its terms, and "Participation Agreements" means all of such Participation Agreements. "Paying Agent" means the Trustee and any other Person acting as Paying Agent hereunder pursuant to Section 9.14. "Permitted Investments" means (i) direct obligations of the United States of America, or (ii) obligations fully guaranteed by the United States of America, or (iii) certificates of deposit issued by, or bankers' acceptances of, or time deposits with, any bank, trust company or national banking association 17 incorporated or doing business under the laws of the United States of America or one of the States thereof (but not exceeding $15,000,000 in principal amount of all certificates of deposit and time deposits at any given time for any one bank, trust company or national banking association) having a combined capital and surplus of at least $300,000,000 (including the Trustee, any Lease Indenture Trustee, any Lessor and any Paying Agent if such conditions are met), or (iv) commercial paper of companies incorporated or doing business under the laws of the United States of America or one of the States thereof (but not exceeding $15,000,000 in principal amount at any given time for any one company) and in each case having a rating assigned to such commercial paper by Standard & Poor's Rating Service, A Division of The McGraw-Hill Companies, Inc. or Moody's Investors Service, Inc. (or, if neither such organization shall rate such commercial paper at any time, by any nationally recognized rating organization in the United States of America) equal to the highest rating assigned by such organization, or (v) repurchase agreements fully collateralized by an obligation of the type described in clause (i) through (iv) above, pursuant to which a bank, trust company or national banking association referred to in clause (iii) above or another financial institution having a net worth of at least $200,000,000 is obligated to repurchase any such obligation not later than 90 days after the purchase of any such obligation. "Person" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. "Place of Payment" when used with respect to the Initial Series of Bonds and the Exchange Series of Bonds, means the Borough of Manhattan, City and State of New York and, when used with respect to the Bonds of any other series, means the corporate trust office of the Trustee and such other place or places, if any, where the principal of (and premium, if any) and interest on the Bonds of that series are payable as specified in the Series Supplemental Indenture setting forth the terms of the Bonds of such series. "Pledged Lessor Note" means any Lessor Note identified in Schedule A to this Indenture or in a Schedule to a Series Supplemental Indenture as being subjected to the Lien of this Indenture, as such Lessor Note may be amended or supplemented from time to time pursuant to the applicable provisions thereof, of the related Lease Indenture and of this Indenture; and "Pledged Lessor Notes" means each and every Pledged Lessor Note. "Pledged Property" has the meaning set forth in the Granting Clauses. "Predecessor Bonds" of any particular Bond means every previous Bond evidencing all or a portion of the same debt as that evidenced by such particular Bond; and, for the purposes of this definition, any Bond authenticated and delivered under Section 2.06 in lieu of a lost, destroyed or stolen Bond shall be deemed to evidence the same debt as the lost, destroyed or stolen Bond. "Principal Instruments" means the Pledged Lessor Notes, the Lease Indentures, the Participation Agreements and the Leases. 18 "Recovery Payment Date" means the third Business Day following receipt by the Trustee of any Amount Recovered. "Redemption Date" when used with respect to any Bond to be redeemed means the date fixed for such redemption by or pursuant to this Indenture. "Redemption Price" when used with respect to any Bond to be redeemed means the price (inclusive of accrued interest) at which it is to be redeemed pursuant to this Indenture and the terms of such Bond. "Registration Default" has the meaning specified in Section 2.01(b). "Registration Rights Agreement" means the Exchange and Registration Rights Agreement, dated December 17, 1997, among Oglethorpe, the Company and the Purchasers (as defined therein), and approved by the Lessors. "Regular Record Date" for the interest payable on any Interest Payment Date means the 15th day of June or December, as the case may be (whether or not a Business Day), next preceding such Interest Payment Date. "Rent" means, with respect to any Lease, the rent payable pursuant to Section 3.2 of such Lease and any and all other amounts, liabilities and obligations that Oglethorpe assumes or agrees to pay to or on behalf of the Lessor under such Lease, the related Equity Investor, any Loan Participant (as defined in the related Participation Agreement and which, as so defined, includes the Company) and each Indemnitee (as defined in such Participation Agreement and which, as so defined, includes the Company) under the Operative Documents (as defined in such Participation Agreement). "Responsible Officer" when used with respect to the Trustee means the chairman or vice-chairman of the board of directors or trustees, the chairman or vice-chairman of the executive or standing committee of the board of directors or trustees, the president, the chairman of the committee on trust matters, any vice-president, the secretary, any assistant secretary, the treasurer, any assistant treasurer, the cashier, any assistant cashier, any trust officer or assistant trust officer, the comptroller and any assistant comptroller or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject. "Scherer Common Facilities" means all property, real and personal, now existing or hereafter acquired, constructed or installed for use in common by two or more of the coal-fired electric generating units located at Plant Robert W. Scherer in Monroe County, Georgia, as more particularly described in each of the Participation Agreements. "Scherer Unit 1" means the 818 MW (nameplate capacity) coal-fired, steam 19 electric generating unit designated as Unit No. 1 of Plant Robert W. Scherer located in Monroe County, Georgia. "Scherer Unit 2" means the 818 MW (nameplate capacity) coal-fired, steam electric generating unit designated as Unit No. 2 of Plant Robert W. Scherer located in Monroe County, Georgia. "Scherer Unit 2 Capital Budget" means the capital budget for Scherer Unit 2 proposed by Georgia Power Company, or its successor as operator, pursuant to Section 5(e) of the Ownership Agreement. "Scherer Unit 2 Site" means the land on which Scherer Unit 2 is located as of the date hereof, as more particularly described in each of the Participation Agreements. "Second Anniversary" means the date which is the second anniversary of the original issuance of the Initial Series of Bonds. "Series Supplemental Indenture" means an indenture supplemental to this Indenture, for the purpose of specifying, in accordance with Article Two, the form of the Bonds of any series (other than the Initial Series of Bonds and the Exchange of Series of Bonds), and/or for the purpose of subjecting to the Lien of this Indenture the Pledged Lessor Notes related to such series, and "Series Supplemental Indentures" means each and every Series Supplemental Indenture. "Sinking Fund" has the meaning specified in Section 7.01. "Six-Month Anniversary" has the meaning specified in Section 2.01(b). "Special Record Date" for the payment of any Defaulted Interest means a date fixed by the Trustee pursuant to Section 2.07. "Stated Maturity" when used with respect to any Bond or any installment of interest thereon means the date specified in such Bond as the fixed date on which the principal of such Bond or such installment of interest is due and payable, except that when used with reference to a series of Bonds which have maturities from their respective dates of issuance of one year or less, the Series Supplemental Indenture creating such series may provide that the Stated Maturity of all Bonds of such series shall be a stated date beyond such individual maturity dates. "Stipulated Loss Value" means the amount designated as such in each Lease which Oglethorpe must pay to the Lessor of such Lease under the circumstances stated in such Lease, which amount, under the terms of such Lease, will be an amount at least sufficient to pay in full the aggregate unpaid principal amount of and premium, if any, and interest on, the then outstanding Lessor Notes. 20 "Supplemental Participation Agreement" means each Supplemental Participation Agreement dated October 9, 1986 in the case of three of such Supplemental Participation Agreements and June 30, 1987 in the case of the fourth of such Supplemental Participation Agreements, among Oglethorpe, an Equity Investor, its related Lessor, CoBank, ACB, as successor to Columbia Bank for Cooperatives, the related Lease Indenture Trustee and, with respect to three of the Supplemental Participation Agreements, OPC Scherer Funding Corporation and SunTrust Bank, Atlanta, formerly known as Trust Company Bank, as trustee under a Collateral Trust Indenture dated as of October 15, 1986 (the "Original Collateral Trust Trustee"), and each Second Supplemental Participation Agreement dated as of December 17, 1997 among Oglethorpe, the Company, an Equity Investor, its related Lessor, the related Lease Indenture Trustee, CoBank, ACB, the Trustee, and, with respect to three of the Second Supplemental Participation Agreements, OPC Scherer Funding Corporation and the Original Collateral Trust Trustee, and "Supplemental Participation Agreements" means all of such Supplemental Participation Agreements. "Tax Indemnification Agreement" means each Tax Indemnification Agreement dated as of December 30, 1985 between an Equity Investor and Oglethorpe, as amended by an Amendment No. 1 thereto dated as of December 17, 1997, and as the same may hereafter be further amended and supplemented in accordance with its terms, and "Tax Indemnification Agreements" means all of such Tax Indemnification Agreements. "Trust Agreements" means the four Trust Agreements, each dated December 30, 1985, between Wilmington Trust Company and the respective Equity Investors, each as amended and supplemented by a Supplement No. 1 to Trust Agreement, dated December 30, 1985, and a Supplement No. 2 to Trust Agreement dated October 7, 1986, and as the same may hereafter be amended or supplemented in accordance with its terms. "Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939, as amended, as in force on the date as of which this instrument was executed. "Trustee" means the Person named as the "Trustee" in the first paragraph of this instrument until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Trustee" shall mean such successor Trustee. "Trustee's New York Office" means the corporate trust office of the Trustee maintained in the Borough of Manhattan, The City of New York, which, as of the date hereof, is located at c/o First Chicago Trust Company, 14 Wall Street, 8th Floor, New York, New York 10005. "U.S. Government Obligations" means securities that are (i) direct obligations of the United States of America for the payment of which its full faith and credit is pledged or (ii) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America the payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America, which, in either case under clauses (i) or (ii) are not callable or redeemable at the option of the issuer thereof, and shall also include a depository receipt issued by a bank or trust 21 company as custodian with respect to any such U.S. Government Obligation or a specific payment of interest on or principal of any such U.S. Government Obligation held by such custodian for the account of the holder of a depository receipt, provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the U.S. Government Obligation or the specific payment of interest on or principal of the U.S. Government Obligation evidenced by such depository receipt. SECTION 1.02. Compliance Certificates and Opinions. Upon any application or request by the Company, any Lessor or Oglethorpe to the Trustee to take any action under any provision of this Indenture, the Company, such Lessor or Oglethorpe, as the case may be, shall furnish to the Trustee an Officers' Certificate stating that all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent, if any, have been complied with, except that in the case of any such application or request as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular application or request, no additional certificate or opinion need be furnished; provided that any action which may be taken under any provision of this Indenture by a Lessor may be taken by Oglethorpe on behalf of such Lessor pursuant to the agency granted to Oglethorpe in the Supplemental Participation Agreement to which such Lessor is a party unless and until the Trustee has been notified of the revocation of such agency. Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include: (1) a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of each such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with. SECTION 1.03. Form of Documents Delivered to Trustee. In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such 22 Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents. Any certificate or opinion of an officer of the Company, any Lessor or Oglethorpe may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any such certificate or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company, any Lessor or Oglethorpe, as the case may be, stating that the information with respect to such factual matters is in the possession of the Company, such Lessor or Oglethorpe, respectively, unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous. Any Opinion of Counsel stated to be based on the opinion of other counsel shall be accompanied by a copy of such other opinion. Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument. SECTION 1.04. Acts of Holders. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required, to the Company and Oglethorpe. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Section 9.01) conclusive in favor of the Trustee, the Company and Oglethorpe, if made in the manner provided in this Section. (b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the certificate of any notary public or other officer of any jurisdiction authorized to take acknowledgments of deeds or administer oaths that the Person executing such instrument acknowledged to him the execution thereof, or by an affidavit of a witness to such execution sworn to before any such notary or other such officer and where such execution is by an officer of a corporation or association or a member of a partnership, on behalf of such corporation, association or partnership, such certificate or 23 affidavit shall also constitute sufficient proof of his authority. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner which the Trustee deems sufficient. (c) The ownership of Bonds shall be proved by the Bond Register. (d) Any request, demand, authorization, direction, notice, consent, waiver or other action by the Holder of any Bond shall bind the Holder of every Bond issued upon the transfer thereof or in exchange therefor, or in lieu thereof, whether or not notation of such action is made upon such Bond. SECTION 1.05. Notices, etc., to Trustee, Oglethorpe and Company. Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with: (1) the Trustee by any Holder, by the Company, by Oglethorpe or by an Authorized Agent shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to or with the Trustee at its Corporate Trust Office, or (2) the Company by the Trustee, by any Holder, by Oglethorpe or by an Authorized Agent shall be sufficient for every purpose hereunder if in writing and mailed, first-class postage prepaid, to the Company addressed to it at the address of its principal office specified in the first paragraph of this instrument or at any other address previously furnished in writing to the Trustee and Oglethorpe by the Company for such purpose, or (3) Oglethorpe by the Trustee, by any Holder, by the Company or by an Authorized Agent shall be sufficient for every purpose hereunder if in writing and mailed, first-class postage prepaid, to Oglethorpe addressed to it at the address of its principal office specified in the first paragraph of this instrument or at any other address previously furnished in writing to the Trustee and the Company by Oglethorpe for such purpose. SECTION 1.06. Notices to Holders; Waiver. Where this Indenture provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to each Holder, at his address as it appears in the Bond Register, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a precedent to the validity of any action taken in reliance upon such waiver. In any case where notice to Holders is given by mail, neither the 24 failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders, and any notice which is mailed in the manner herein provided shall be conclusively presumed to have been duly given. SECTION 1.07. Conflict with Trust Indenture Act. If any provision hereof limits, qualifies or conflicts with another provision hereof which is or may be required to be included in this Indenture by any of the provisions of TIA, such required provision shall control. SECTION 1.08. Effect of Heading and Table of Contents. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. SECTION 1.09. Successors and Assigns. All covenants, agreements, representations and warranties in this Indenture by the Trustee, Oglethorpe and the Company shall bind and, to the extent permitted hereby, shall inure to the benefit of and be enforceable by their respective successors and assigns, whether so expressed or not. SECTION 1.10. Separability Clause. In case any provision in this Indenture or in the Bonds shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 1.11. Benefits of Indenture. Nothing in this Indenture or in the Bonds, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder, and the Holders of Bonds, any benefit or any legal or equitable right, remedy or claim under this Indenture. SECTION 1.12. Governing Law. This Indenture shall be construed in accordance with and governed by the law of the State of Georgia. SECTION 1.13. Legal Holidays. In any case where any Interest Payment Date or Redemption Date or the Stated Maturity of any Bond, or any date on which any Defaulted Interest is proposed to be paid, shall not be a Business Day, then (notwithstanding any 25 other provision of this Indenture) payment of interest or principal (and premium, if any) need not be made on such date, but may be made on the next succeeding, Business Day with the same force and effect as if made on the Interest Payment Date or Redemption Date or at the Stated Maturity, or on the date on which the Defaulted Interest is proposed to be paid, and no interest shall accrue for the period from and after such Interest Payment Date, Redemption Date or Stated Maturity, or date for the payment of Defaulted Interest, as the case may be. SECTION 1.14. Indenture to Constitute Security Agreement. This Indenture is hereby made and declared to be a security agreement, creating a security interest in and encumbering each and every item of Pledged Property, in compliance with the provisions of the Uniform Commercial Code as in effect in the State of Georgia. A financing statement or statements reciting this Indenture to be a Security Agreement, affecting all of the Pledged Property, shall be executed and appropriately filed by or on behalf of the Company. ARTICLE TWO THE BONDS SECTION 2.01. General Terms. (a) Bonds Generally--Amount Unlimited; Issuable in Series; Limitations on Issuance. The aggregate principal amount of Bonds which may be authenticated and delivered under this Indenture is unlimited. Bonds may be issued hereunder up to the aggregate principal amount which may be authorized from time to time by the Board of Directors of the Company. The terms of any series of Bonds relative to payment of principal thereof, and premium (if any) and interest thereon, need not correspond exactly to the schedule for such payments under the related Pledged Lessor Notes. The Bonds may be issued in one or more series. There shall be established in one or more Series Supplemental Indentures, prior to the issuance of Bonds of any series, other than the Initial Series of Bonds and the Exchange Series of Bonds (both of which shall be governed by the provisions of paragraph (b) of this Section), (1) the title of the Bonds of such series (which shall distinguish the Bonds of such series from all other Bonds) and the form or forms of Bonds of such series; (2) any limit upon the aggregate principal amount of the Bonds of such series that may be authenticated and delivered under this Indenture (except for Bonds authenticated and delivered upon registration of, transfer of, or in exchange for, or in lieu of, other Bonds of such series pursuant to Section 2.07, 2.08, 2.09, 6.06 or 11.07); 26 (3) the date or dates on which the principal of the Bonds of such series is payable; (4) the rate or rates at which the Bonds of such series shall bear interest, or the method by which such rate shall be determined, the date or dates from which such interest shall accrue, the interest payment dates on which such interest shall be payable and the record dates for the determination of Holders to whom interest is payable; (5) the place or places where the principal of, and premium, if any, and interest on, Bonds of such series shall be payable (if other than as provided in Section 5.02); (6) the price or prices at which, the period or periods within which and the terms and conditions upon which Bonds of such series may be redeemed, in whole or in part, at the option of the Company, pursuant to any sinking fund or otherwise; (7) the obligation, if any, of the Company to redeem, purchase or repay Bonds of such series pursuant to any sinking fund or analogous provisions or at the option of a Holder thereof and the price or prices at which and the period or periods within which and the terms and conditions upon which Bonds of the series shall be redeemed, purchased or repaid, in whole or in part, pursuant to such obligation; (8) if other than denominations of $1,000 and any integral multiple thereof, the denominations in which Bonds of such series shall be issuable; (9) any other terms of such series (which terms shall not be inconsistent with the provisions of this Indenture); and (10) any trustees, authenticating or paying agents, warrant agents, transfer agents or registrars with respect to the Bonds of such series; provided, however, that, after giving effect to the issuance of any series of Bonds and the subjection to the Lien of this Indenture of the related Pledged Lessor Notes, the average of the daily balance of Excess Funds for each fiscal year of the Company shall not exceed 10% of the average of the aggregate principal amount of Bonds Outstanding on each day in such fiscal year. For purposes of the foregoing proviso, "Excess Funds" shall mean, for any day, amounts actually paid to the Trustee under the Pledged Lessor Notes in excess of amounts then due and payable in respect of Bonds. (b) Initial Series of Bonds and Exchange Series of Bonds--Authorized Amount; Interest Rates; Place of Payment. The aggregate principal amount of the Initial Series of Bonds and the Exchange Series of Bonds which may be authenticated and delivered and Outstanding under this Indenture is limited to $224,702,000 exclusive of Bonds authenticated and delivered under Section 2.06. The Initial Series of Bonds and the Exchange Series of Bonds shall bear simple interest at the rate of 6.974% per annum; and all such interest shall be payable from and including the date of the Bonds or from the most recent Interest Payment Date to which interest has been paid or duly provided for semiannually 27 on June 30 and December 31 in each year, commencing June 30, 1998, until but excluding the date the principal thereof is paid or made available for payment in accordance with the terms hereof; provided, however, that if (i) a registration statement (the "Exchange Offer Registration Statement") under the Securities Act of 1933, as amended, registering the Exchange Series of Bonds in connection with an offer to exchange Bonds of the Initial Series of Bonds for Bonds of the Exchange Series of Bonds exchange offer (the "Exchange Offer") has not become or been declared effective on or before the date which is 180 days from the date of original issuance of the Initial Series of Bonds (the "Six-Month Anniversary"), or (ii) a Completed Exchange Offer has not occurred within 90 days after the initial date on which the Exchange Offer Registration Statement has become or has been declared effective, or (iii) the Exchange Offer Registration Statement is filed and declared effective but shall thereafter, prior to the 90th day after the occurrence of the Completed Exchange Offer, either be withdrawn by Oglethorpe or shall become subject to an effective stop order issued pursuant to Section 8(d) of the Securities Act of 1933, as amended, suspending the effectiveness of the Exchange Offer Registration Statement without being succeeded immediately by an additional registration statement filed and declared effective, in each case subject to the terms, conditions and exceptions set forth in the Registration Rights Agreement (each event referred to in clauses (i), through (iii), a "Registration Default") then (subject to certain exceptions set forth in the Registration Rights Agreement) interest on the Initial Series of Bonds will accrue (in addition to the stated interest on such Bonds) at a rate of 0.25% per annum ("Additional Interest") on the principal amount of the Initial Series of Bonds, from the date of the occurrence of any Registration Default until the earlier of (a) the date such Registration Default is cured and (b) the Second Anniversary. Accrued Additional Interest, if any, shall be paid semi-annually on June 30 and December 31 in each year; and the amount of accrued Additional Interest shall be determined on the basis of the number of days actually elapsed and a 365 or 366 day year, as the case may be. Any accrued and unpaid interest (including Additional Interest) on any Bond of the Initial Series of Bonds, upon the issuance of a Bond of the Exchange Series of Bonds in exchange for such Bond of the Initial Series of Bonds, shall cease to be payable to the Holder of such Bond of the Initial Series of Bonds, but such accrued and unpaid interest shall be payable on the next Interest Payment Date for such Bond of the Exchange Series of Bonds to the Holder thereof on the related Regular Record Date. Except as provided above with respect to Additional Interest, the amount of interest payable for any period shall be computed on the basis of twelve 30-day months and a 360-day year and the amount of interest payable on any partial period shall be computed on the number of days elapsed in a 360-day year of twelve 30-day months. Both the principal of (and premium, if any) and interest on the Initial Series of Bonds and the Exchange Series of Bonds shall be paid at the corporate trust office of any Paying Agent appointed for the Initial Series of Bonds and the Exchange Series of Bonds in accordance with this Indenture, in such coin or currency of the United States as at the time of payment is legal tender for payment of public and private debts. Interest on any overdue principal and premium, if any, and (to the extent permitted by applicable law) any overdue interest on the Initial Series of Bonds and the Exchange Series of Bonds shall be paid, on demand, from the due date thereof at the lesser of (i) 2% above the greater of (A) the published base rate of Citibank, N.A., in New York, New York, in effect from time to time and (B) 6.974% or (ii) the highest rate permitted by applicable law. 28 The Initial Series of Bonds and the Exchange Series of Bonds (including the Trustee's certificate of authentication) shall be issued initially in the form of one or more permanent global securities substantially in the form set forth in the Recitals (each being herein called "Global Security") deposited with the Trustee, as custodian for the Depository, duly executed by the Company and authenticated by the Trustee hereinafter provided. Subject to the limitation set forth in this Subsection (b), the principal amounts of the Global Securities may be increased or decreased from time to time by adjustments made on the records of the Trustee, as custodian for the Depository, as hereinafter provided. For all purposes under this Indenture, the Initial Series of Bonds and the Exchange Series of Bonds shall be treated as a single series of Bonds. The Initial Series of Bonds and the Exchange Series of Bonds shall be issuable in denominations of $1,000 and any integral multiple thereof. SECTION 2.02. Form of Bonds; Form of Trustee's Authentication. Provisions relating to the Initial Series of Bonds and the Exchange Series of Bonds, and to Global Securities generally, are set forth in Exhibit B, which is hereby incorporated in and expressly made part of this Indenture. The Bonds of each series shall be in registered form and substantially in the form hereinbefore recited or as established in the Series Supplemental Indenture creating the series of which such Bonds are a part, in each case with such omissions, variations and insertions as are permitted by this Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements printed, lithographed or engraved thereon, as may be required to comply with the rules of any securities exchange or to conform to any usage in respect thereof, or as may, consistently herewith, be prescribed by the Board of Directors of the Company or by the officers executing such Bonds, such determination by said officers to be evidenced by their signing the Bonds. The Trustee's certificate of authentication on all Bonds shall be in the form hereinbefore recited for the Initial Series of Bonds and the Exchange Series of Bonds. The definitive Bonds of each series may be produced in any manner permitted by the rules of any applicable securities exchange or in any other manner, all as determined by the officers executing such Bonds, as evidenced by their execution of such Bonds. All Bonds of any one series shall be substantially identical except as to denomination and Stated Maturity and except as may otherwise be provided herein or in the Series Supplemental Indenture setting forth the terms of the Bonds of such series. 29 SECTION 2.03. Execution of Bonds. The Bonds shall be executed on behalf of the Company by its President or one of its Vice Presidents under its corporate seal reproduced thereon and attested by its Secretary or one of its Assistant Secretaries. The signature of any such officers on the Bonds may be manual or facsimile. Bonds bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Bonds or did not hold such offices at the date of such Bonds. SECTION 2.04. Temporary Bonds. Pending the preparation of definitive Bonds of any series, the Company may execute, and upon Company Order the Trustee or any other Authenticating Agent shall authenticate and deliver, temporary Bonds of such series which are printed, lithographed, typewritten, mimeographed or otherwise produced, in any denomination, substantially of the tenor of the definitive Bonds in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Bonds may determine, as evidenced by their execution of such Bonds. If temporary Bonds are issued of any series, the Company will cause definitive Bonds of such series to be prepared without unreasonable delay. After the preparation of definitive Bonds of any series, the temporary Bonds of such series shall be exchangeable for definitive Bonds of such series upon surrender of the temporary Bonds of such series at the office or agency of the Company in the Place of Payment, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Bonds of any series the Company shall execute and the Trustee or any other authenticating agent shall authenticate and deliver in exchange therefor a like aggregate principal amount of definitive Bonds of such series of authorized denominations. Until so exchanged such temporary Bonds of any Series shall in all respects be entitled to the same benefits under this Indenture as definitive Bonds of such series. SECTION 2.05. Registration, Transfer and Exchange. The Trustee shall cause to be kept at the corporate trust office of the Bond Registrar a register in which, subject to such reasonable regulations as the Company may prescribe, the Company shall provide for the registration of Bonds and of transfers and exchanges of Bonds. This register and, if there shall be more than one Bond Registrar, the combined registers maintained by all such Bond Registrars, are herein sometimes referred to as the "Bond Register." 30 Upon surrender for transfer of any Bond of any series at the corporate trust office of the Bond Registrar, or at any office or agency maintained for such purpose pursuant to Section 9.14(a) hereof, the Company shall execute, and the Trustee or any other Authenticating Agent shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Bonds of the same series, of an authorized denomination and of the same Stated Maturity for principal and of a like aggregate principal amount. At the option of the Holders, Bonds of any series may be exchanged for an equal aggregate principal amount of other Bonds of the same series and of the same Stated Maturity for principal and of any authorized denominations, upon surrender of the Bonds to be exchanged at such corporate trust office or at any office or agency maintained for such purpose pursuant to Section 9.14(a) hereof. Whenever any Bonds are so surrendered for exchange, the Company shall execute, and the Trustee or any other Authenticating Agent shall authenticate and deliver, the Bonds which the Bondholder making the exchange is entitled to receive. The Initial Series of Bonds may not be transferred except in accordance with the legend thereon regarding restrictions on transfers. The Initial Series of Bonds may be exchanged for Exchange Series of Bonds pursuant to the terms of the Exchange Offer. All Bonds issued upon any transfer or exchange of Bonds shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same security and benefits under this Indenture, as the Bonds surrendered upon such transfer or exchange. Every Bond presented or surrendered for transfer or exchange shall be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Bond Registrar duly executed, by the Holder thereof or his attorney duly authorized in writing. No service charge shall be required of any Bondholders participating in any transfer or exchange of Bonds in respect of such transfer or exchange, but the Bond Registrar may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any transfer or exchange of Bonds, other than exchanges pursuant to Section 2.04 or 11.07 not involving any transfer. The Bond Registrar shall not be required (i) to issue, transfer or exchange any Bond of any series during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption of Bonds selected for redemption under Section 6.04 and ending at the close of business on the date of such mailing, or (ii) to transfer or exchange any Bond so selected for redemption in whole or in part except the unredeemed portion of any Bond selected for redemption in part. 31 SECTION 2.06. Mutilated, Destroyed, Lost and Stolen Bonds. If (i) any mutilated Bond is surrendered to the Bond Registrar, or the Company, Oglethorpe, the Bond Registrar and the Trustee receive evidence to their satisfaction of the destruction, loss or theft of any Bond, and (ii) there is delivered to the Company, Oglethorpe, the Bond Registrar and the Trustee evidence to their satisfaction of the ownership and authenticity thereof, and such security or indemnity as may be required by them to save each of them harmless, then, in the absence of notice to the Company, Oglethorpe, the Bond Registrar or the Trustee that such Bond has been acquired by a bona fide purchaser, the Company shall execute and upon its request the Trustee or any other Authenticating Agent shall authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Bond, a new Bond of like tenor and principal amount, bearing a number not contemporaneously outstanding. In case any such mutilated, destroyed, lost or stolen Bond has become or is about to become due and payable, the Company may, upon satisfaction of the conditions set forth in clauses (i) and (ii) of the preceding paragraph, instead of issuing a new Bond, pay such Bond. Upon the issuance of any new Bond under this Section, the Bond Registrar may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses connected therewith. Every new Bond issued pursuant to this Section in lieu of any destroyed, lost or stolen Bond shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Bond shall be at any time enforceable by anyone, and shall be entitled to all the security and benefits of this Indenture equally and proportionately with any and all other Bonds duly issued hereunder. The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Bonds. SECTION 2.07. Payment of Interest; Interest Rights Preserved. Interest on any Bond which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that Bond (or one or more Predecessor Bonds) is registered at the close of business on the Regular Record Date for such interest. At the option of the Company, payment of interest on any Bond may be made by check mailed to the address of the Person entitled thereto as such address shall appear in the Bond Resister or in such other manner as shall be established in a Series Supplemental Indenture creating the series of which such Bond is a part. Any interest on any Bond of any series which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date (herein called "Defaulted Interest" ) shall forthwith cease to be payable to the Holder 32 on the relevant Regular Record Date by virtue of having been such Holder; and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in paragraph (1) or paragraph (2) below: (1) The Company may elect, which election shall be at the direction of any Lessor whose Pledged Lessor Note is in default in respect of the payment of interest and who is proposing to make payment of all or part of such defaulted interest, to make payment of any Defaulted Interest to the Persons in whose names the Bonds of such series in respect of which interest is in default (or their respective Predecessor Bonds) are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner. Such Lessor shall notify the Trustee and the Paying Agent in writing of the amount of Defaulted Interest proposed to be paid on each Bond and the date of the proposed payment, and at the same time there shall be deposited with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or there shall be made arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this paragraph provided. Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 nor less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company, Oglethorpe and the Bond Registrar of such Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first class postage prepaid, to each Holder of a Bond of such series at the address of such Holder as it appears in the Bond Register, not less than 10 days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been mailed as aforesaid, such Defaulted Interest shall be paid to the Persons in whose names the Bonds of such series (or their respective Predecessor Bonds) are registered on such Special Record Date and shall no longer be payable pursuant to the following paragraph (2). (2) The Company may make, or cause to be made, payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Bonds in respect of which interest is in default may be listed, and upon such notice as may, be required by such exchange, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this paragraph, such payment shall be deemed practicable by the Trustee. Subject to the foregoing provisions of this Section, each Bond delivered under this Indenture upon transfer of or in exchange for or in lieu of any other Bond shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Bond, and each such Bond shall bear interest from whatever date shall be necessary so that neither gain nor loss in interest shall result from such transfer, exchange or replacement. 33 SECTION 2.08. Persons Deemed 0wners. Prior to due presentment for transfer, the Person in whose name any Bond is registered shall be deemed to be the owner of such Bond for the purpose of receiving payment of principal of (and premium, if any), and (subject to Section 2.07) interest on, such Bond and for all other purposes whatsoever, whether or not such Bond be overdue, regardless of any notice to anyone to the contrary. SECTION 2.09. Cancellation. All Bonds surrendered for payment, redemption, credit against any Sinking Fund payment or redemption payment, transfer or exchange shall, if surrendered to any Person other than the Bond Registrar, be delivered to the Bond Registrar for cancellation. The Company may at any time deliver to the Bond Registrar for cancellation any Bonds previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever, and all Bonds so delivered shall be promptly canceled by the Bond Registrar. No Bonds shall be authenticated in lieu of or in exchange for any Bonds canceled as provided in this Section, except as expressly permitted by this Indenture. All canceled Bonds held by the Bond Registrar shall be destroyed and certification of their destruction delivered to the Company unless, by Lessor Order, each Lessor or, by Company Request, the Company otherwise directs. SECTION 2.10. Dating of Bonds. Except as otherwise provided in the Series Supplemental Indenture creating a series of Bonds, each Bond of any series shall be dated the date of the original issuance of the Bonds of such series by the Company, which date shall be specified by the Company in the Company Order delivered to the Trustee pursuant to Section 2.11 in connection with the original authentication and delivery of the Bonds of such series. SECTION 2.11. Authentication and Delivery of Bonds. Subject to the provisions set forth in Exhibit B, which is hereby incorporated in and expressly made a part of this Indenture, with respect to the Initial Series of Bonds and the Exchange Series of Bonds, at any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Bonds of any series executed by the Company to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Bonds, and the Trustee shall thereupon authenticate and deliver such Bonds in accordance with such Company Order, without any further action by the Company. No Bond shall be secured by or entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Bond a certificate of authentication, in the form provided for herein, executed by an Authenticating Agent by the manual signature of one of its Responsible Officers, and such certificate upon any Bond shall be conclusive evidence, and 34 the only evidence, that such Bond has been duly authenticated and delivered hereunder. In authenticating such Bonds and accepting the additional responsibilities under this Indenture in relation to such Bonds the Trustee shall be entitled to receive, and (subject to Section 9.01) shall be fully protected in relying upon: (1) this Indenture, in the case of the Initial Series of Bonds and the Exchange of Series of Bonds, and an executed Series Supplemental Indenture, in the case of all other series of Bonds; (2) an Officers' Certificate of the Company (a) certifying as to resolutions of the Board of Directors of the Company by or pursuant to which the terms of the Bonds of such series were established, (b) certifying that all conditions precedent under this Indenture to the Trustee's authentication and delivery of such Bonds have been complied with and (c) certifying that (x) the terms of the documents referred to in clauses (3) and (4) below are not inconsistent with the terms of this Indenture as then and theretofore supplemented and (y) such documents comply with Exhibit A hereto (if applicable); (3) fully executed counterparts (but not the original thereof) of (a) the Lease Indentures under which were issued the Pledged Lessor Notes relating to such series of Bonds and (b) the Leases relating to such Pledged Lessor Notes; (4) the originals of the Pledged Lessor Notes relating to such series of Bonds in an aggregate principal amount equal to not less than the aggregate principal amount of such series of Bonds proposed to be authenticated and delivered (in the case of the Exchange Series of Bonds, the same Pledged Lessor Notes that relate to the Initial Series of Bonds also relate to the Exchange Series of Bonds); and (5) signed copies, either addressed to the Trustee or accompanied by statements that the Trustee may rely on such documents, of all certificates and opinions of counsel delivered (i) to the Company in connection with its purchase pursuant to the applicable Participation Agreements of the Pledged Lessor Notes relating to such series of Bonds, (ii) to the Lease Indenture Trustee in connection with the issuance of such Pledged Lessor Notes and (iii) to the Lessor under the Lease or the Participation Agreement in connection with any Refinancing under Article 7 of the Participation Agreement, any releveraging pursuant to Section 8.1(c) of the Participation Agreement or any Supplemental Financing under Section 10.2 of the Lease and, to the extent not covered by such opinions, Opinions of Counsel (x) to the effect that: (a) the form or forms and the terms of such Bonds have been established by this Indenture in the case of the Initial Series of Bonds and the Exchange Series of Bonds, or a Series Supplemental Indenture as permitted by Section 2.01 in conformity with the provisions of this Indenture, in the case of all other series of Bonds; (b) such Bonds, when authenticated and delivered by the Trustee and issued by the Company in the manner and subject to any conditions specified in such Opinion of Counsel, will constitute valid and binding obligations of the Company, except to the extent that the enforcement thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and other similar laws now or hereafter in effect relating to creditors' rights 36 generally; (c) with respect to the Exchange Series of Bonds, such Bonds have been issued and sold in compliance with all federal and state securities law and the Indenture has been so qualified under the TIA; and (d) all laws and requirements in respect of the execution and delivery by the Company of the Bonds have been complied with; and (y) covering such other matters as the Trustee may reasonably request; provided, however, that if a series of Bonds is to be authenticated by the Trustee in advance of the actual delivery to the Trustee of the Pledged Lessor Notes relating thereto, (X) the documents described in the foregoing clauses (2)(c), (3), (4) and (5) (other than the opinion described in subclauses (x) and (y)) need not be delivered in connection with such authentication, but shall be delivered in connection with the release of the proceeds of the sale of such series of Bonds in accordance with Sections 2.12 and 13.01 and (Y) the form of the Series Supplemental Indenture shall be appropriately modified to reflect the later delivery and pledge of the related Pledged Lessor Notes. Receipt by the Trustee of the Officers' Certificate referred to in clause (2) above shall be conclusively presumed for all purposes of this Indenture to establish that the Lease Indentures, the Leases and the Pledged Lessor Notes referred to in such certification comply with the requirements of Exhibit A hereto. The Trustee shall have the right to decline to authenticate and deliver any Bonds under this Section if the Trustee, being advised by counsel, determines that such action may not lawfully be taken by the Company or if the Trustee in good faith by its board of directors or board of trustees, executive committee, or a trust committee of directors or trustees and/or responsible officers shall determine that such action would expose the Trustee to personal liability. SECTION 2.12. Sale of Bonds; and Application of Proceeds from the Sale of Bonds. (a) Promptly upon receipt by the Company of the proceeds from any sale of a series of the Bonds, the Company shall deposit such proceeds with the Trustee. The funds so deposited shall be held by the Trustee in a separate account as part of the Pledged Property and shall be invested, applied and distributed by the Trustee as provided herein. (b) Subject to the provisions of Section 13.01, upon the issuance of the Pledged Lessor Notes related to any series of Bonds and the delivery thereof to the Trustee to be subjected to the Lien of this Indenture pursuant hereto or to a Series Supplemental Indenture, the Trustee shall pay to the Lessor obligated in respect of any such Pledged Lessor Note, out of funds held by the Trustee in such separate account as Pledged Property, an amount equal to the principal amount of such Pledged Lessor Note in respect of which such Lessor is obligated. All payments to be made by the Trustee to any Lessor shall be made in immediately available funds at the respective offices designated by such Lessor. 36 SECTION 2.13. The Depository. (a) The Company, upon 30 days' notice to the Depository and the Trustee, may remove or replace the Depository. The Beneficial Owners have no right to either a Book Entry System or a Depository for the Bonds. Notwithstanding any other provision of this Indenture or the Bonds, so long as the Bonds of any series are in a Book Entry System and the Depository is the registered owner of such Bonds: (i) The Depository may present notices, approvals, waivers, votes or other communications required or permitted to be made by Holders under this Indenture on a fractionalized basis on behalf of some or all of those persons entitled to exercise ownership rights in such Bonds through the Depository or its Participants. (ii) Such Bonds purchased by the Company or Oglethorpe shall not be registered in the name of the Company or Oglethorpe, as the case may be, on the register maintained by the Trustee and shall not be physically held by any party other than the Depository. (iii) So long as the Book Entry System is in effect, such Bonds or any portion thereof shall not be registered as transferred or be exchanged except: (A) to any successor to the Depository; (B) to any new Depository not objected to by the Trustee, upon (1) the resignation of then current Depository or its successor from its functions as Depository or (2) termination by the Company of the use of the Depository; or (C) to any Persons who are the assigns of the Depository or its nominee, upon (1) the resignation of the Depository from its functions as Depository hereunder or (2) termination by the company of the use of the Depository. (b) If at any time a Book Entry System is no longer in effect with respect to the Bonds of any series, the registration of transfer and exchange of such Bonds shall be made and effected in accordance with the provisions of Section 2.05. 37 ARTICLE THREE PROVISIONS AS TO PLEDGED PROPERTY SECTION 3.01. Holding of Pledged Securities. The Trustee is authorized in its discretion to cause to be registered in its name, as Trustee, or in the name of its nominee, any and all coupon bonds which it may receive as part of the Pledged Property, or it may cause the same to be exchanged for registered bonds without coupons of any denomination. The Trustee may cause to be transferred into its name, as Trustee, or into the name of its nominee, any and all registered bonds which it may receive as part of the Pledged Property, or may cause such registered bonds to be exchanged for coupon bonds. All Pledged Lessor Notes assigned to and pledged with the Trustee pursuant to any provision of this Indenture or any Series Supplemental Indenture shall be endorsed in blank for transfer or be accompanied by proper instruments of assignment satisfactory to the Trustee, duly executed by the Company. The Company will deliver promptly to the Trustee such documents, certificates and opinions as the Trustee may reasonably request in connection with subjection of any securities to the lien of this Indenture to the extent contemplated hereby. SECTION 3.02. Disposition of Payments on Pledged Property. Unless and until all Outstanding Bonds have been paid in full or provision for the payment of such Bonds has been made in accordance with this Indenture, the Trustee shall be entitled to receive all principal (premium, if any) and interest paid in respect of any Pledged Lessor Notes and interest paid on bonds or other obligations or indebtedness which may be subject to the lien of this Indenture and shall apply the same to the payment of the principal of, and premium (if any) and interest on, the Bonds when and as they become due and payable pursuant to, and in accordance with, this Indenture. The Trustee shall duly note on the Schedule attached to the Pledged Lessor Notes or by other appropriate means all payments of principal, premium and interest made on the Pledged Lessor Notes. SECTION 3.03. Exercise of Rights and Powers Under Pledged Lessor Notes and Lease Indentures. The Trustee shall not take any action as the holder of the Pledged Lessor Notes to direct any Lease Indenture Trustee in any respect or to vote any Pledged Lessor Note or any portion thereof except in a case in which an event of default has occurred and is continuing under less than all Lease Indentures at the same time as contemplated by the last paragraph of Section 8.02 or as specified in this Section. The Trustee shall give notice to the Bondholders of the occurrence of any event of default or default under any Lease Indenture, and of every Event of Loss occurring under a Lease, but only to the extent the Trustee is deemed to have notice thereof. The Trustee may, at any time, and shall, upon the request of any Lease Indenture Trustee made to the Trustee to give any direction or to vote its interest in the Pledged Lessor Notes, request from Bondholders directions as to (i) 38 whether or not to direct such Lease Indenture Trustee to take or refrain from taking any action which holders of a Lessor Note have the option to direct and (ii) how to vote any Pledged Lessor Note or portion thereof if a vote has been called for with respect thereto. In addition, any Bondholder may at any time request the Trustee to direct, or to participate in the direction of any action under any Lease Indenture to the extent that the Trustee may do so under such Lease Indenture. Upon receiving from the Bondholders any directions as to the taking, or the refraining from taking, of any such action, or the voting of any Pledged Lessor Note, the Trustee shall give such directions to the Lease Indenture Trustee and the Trustee shall specify to the Lease Indenture Trustee the principal amount of the Pledged Lessor Note which is in favor of the action or vote, the principal amount of the Pledged Lessor Note which is opposed to the action or vote, and the principal amount of the Pledged Lessor Note which is not taking any position for the action or vote. Such principal amounts shall be determined by allocating to the total principal amount of the Pledged Lessor Notes with respect to which direction is to be given the proportionate principal amount of Bonds taking corresponding positions or not taking any position, based on the aggregate principal amount of Bonds then Outstanding. In addition, the Trustee shall certify to the Lease Indenture Trustee that the principal amounts of Bonds taking such corresponding positions or not taking any position was determined in accordance with the provisions of this Indenture. SECTION 3.04. Certain Actions in Case of Judicial Proceedings. In case all or any part of the property of any Lessor or Equity Investor or any Person which may be deemed an obligor in respect of the Pledged Lessor Notes shall be sold at any judicial or other involuntary sale, the Trustee shall receive any portion of the proceeds of such sale accruing on the Pledged Property held hereunder, and such proceeds shall be held and disposed of as provided in Section 3.05. SECTION 3.05. Cash Held by Trustee Treated as a Deposit. Any and all cash held by the Trustee under any provision of this Indenture may be treated by the Trustee, until required to be paid out conformably herewith, as a deposit, in trust, without any liability for interest. 39 ARTICLE FOUR WITHDRAWAL OF COLLATERAL SECTION 4.01. Withdrawal of Collateral. Except as provided in Section 4.02 and Article Thirteen, none of the Pledged Property shall be subject to withdrawal unless and until all Outstanding Bonds have been paid in full or provision for such payment has been made in accordance with the terms of this Indenture and the Trustee shall have received the documents and opinions required by Section 4.02 or Article Thirteen. SECTION 4.02. Reassignment of Pledged Lessor Notes upon Payment. Upon receipt of payment in full of the principal of, and premium (if any) and interest on, any Pledged Lessor Note held by the Trustee, the Trustee shall deliver to the Company said Pledged Lessor Note and any instrument of transfer or assignment necessary to reassign to the Company said Pledged Lessor Note and the interest of the Company in the Lease Indenture relating thereto; provided that nothing herein contained shall prevent the Trustee from presenting any Pledged Lessor Note to a Lease Indenture Trustee for final payment in accordance with Section 2.6 of its Lease Indenture. In addition, to the extent that any series of Bonds has been Paid as provided in Section 12.02, the Trustee shall deliver to the Company the Pledged Lessor Note or Notes which relate to such series of Bonds and any instrument of transfer or assignment necessary to reassign to the Company said Pledged Lessor Note or Notes and the interest of the Company in the Lease Indenture relating thereto; provided that no such delivery shall be made unless and until the Trustee has been presented with evidence satisfactory to establish that the Pledged Lessor Notes which will be subject to the lien of this Indenture following such delivery will provide for the payment in full of the principal of, and premium, if any, and interest on the Bonds of all series which remain Outstanding. ARTICLE FIVE COVENANTS SECTION 5.01. Payment of Principal, Premium and Interest. The Company will duly and punctually pay, or cause to be paid, the principal of, and premium, if any, and interest on, the Bonds in accordance with the terms of the Bonds and this Indenture. 40 SECTION 5.02. Maintenance of Office or Agency. The Company will maintain in the Borough of Manhattan, The City of New York, an office or agency where Bonds may be presented or surrendered for payment of principal, premium, if any, and interest, where Bonds may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Company in respect of Bonds and this Indenture may be served. The Company will give prompt written notice to the Trustee of the location, and of any change in the location, of each such office or agency and prompt notice to the Holders in the manner specified in Section 1.06. If at any time the Company shall fail to maintain any such office or agency or the Company shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee, and the Company hereby appoints the Trustee its agent to receive all such presentations, surrenders, notices and demands. SECTION 5.03. Money for Bond Payments to be Held in Trust. All moneys deposited with the Trustee or with any Paying Agent for the purpose of paying the principal of or premium or interest on Bonds shall be deposited and held in trust for the benefit of the Holders of the Bonds entitled to such principal, premium or interest, subject to the provisions of this Indenture. Moneys so deposited and held in trust shall not be a part of the Pledged Property but shall constitute a separate trust fund for the benefit of the Holders of the relevant Bonds. The Company may at any time direct any Paying Agent to pay to the Trustee all sums held in trust by such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by such Paying Agent, and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money. Any money deposited with the Trustee or any Paying Agent in trust for the payment of the principal of (and premium, if any) or interest on any Bond and remaining unclaimed for two years and eleven months (or such lesser period as may be required by law to give effect to this provision) after such principal (and premium, if any) or interest has become due and payable shall be paid to the Company on Company Request (to the extent such monies shall have been deposited by the Company) or to any other Person on its request (to the extent such monies shall have been deposited by such other Person), and the Holder of such Bond shall thereafter, as an unsecured general creditor, look only to the Company or such other Person, to the extent such monies shall have been paid to the Company or such other Person, as the case may be, for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company or, to the extent such monies are to be paid to another Person, such other Person cause to be mailed to each such Holder notice that such money remains unclaimed and that, after a date specified therein, which shall not be 41 less than 30 days from the date of such mailing, any unclaimed balance of such money then remaining will be repaid to the Company or such other Person. SECTION 5.04. Maintenance of Corporate Existence. The Company, at its own cost and expense, will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence, rights and franchises, except as otherwise specifically permitted in this Indenture; provided, however, that the Company shall not be required to preserve any right or franchise if the Board of Directors of the Company shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and that the loss thereof will not have a material adverse effect on the Bondholders. SECTION 5.05. Protection of Pledged Property. The Company and Oglethorpe will from time to time execute and deliver all such supplements and amendments hereto and all such financing statements, continuation statements, instruments of further assurance and other instruments, and will take such other action as the Trustee deems necessary or advisable to: (i) grant more effectively all or any portion of the Pledged Property, (ii) maintain or preserve the lien of this Indenture or carry out more effectively the purposes hereof, (iii) perfect, publish notice of, or protect the validity of, any grant made or to be made by this Indenture, (iv) enforce any of the Bonds, or (v) preserve and defend title to any Bonds or other instrument included in the Pledged Property and the rights of the Trustee, and of the Bondholders, in such Bonds or other instrument against the claims of all persons and parties. The Company hereby designates the Trustee its agent and attorney-in-fact to execute any financing statement, continuation statement or other instrument required pursuant to this Section. SECTION 5.06. Opinions as to Pledged Property. Promptly after the execution and delivery of this Indenture and of each Series Supplemental Indenture or other supplemental indenture or other instrument of further assurance, Oglethorpe shall furnish to the Trustee such Opinion or Opinions of Counsel stating that, in the opinion of such Counsel, this Indenture and all such Series Supplemental Indentures, other supplemental indentures and other instruments of further assurance have been properly recorded, registered, filed, re-recorded and re-filed to the extent 42 necessary to make effective the lien intended to be created by this Indenture as a lien of first priority, and reciting the details of such action or referring to prior Opinions of Counsel in which such details are given, and stating that all financing statements and continuation statements have been executed and filed that are necessary fully to preserve and protect the rights of the Bondholders and the Trustee, or stating that, in the opinion of such Counsel, no such action is necessary to make such lien effective as a lien of first priority. On or before May 1 in each calendar year, beginning with the first calendar year commencing more than three months after the date of authentication and delivery of any Bonds, Oglethorpe shall furnish to the Trustee such Opinion or Opinions of Counsel either stating that, in the opinion of such Counsel, such action has been taken with respect to the recording, filing, re-recording and re-filing of this Indenture, any Series Supplemental Indenture and any other requisite documents and with respect to the execution and filing of any financing statements and continuation statements as is necessary to maintain the lien and security interest created by this Indenture with respect to the Pledged Property as a lien of first priority and reciting the details of such action or referring to prior Opinions of Counsel in which such details are given or stating that, in the opinion of such Counsel no such action is necessary to maintain such lien and security interest as a lien of first priority. Such Opinion or Opinions of Counsel shall also describe the recording, filing, re-recording and re-filing of this Indenture, any indentures supplemental hereto and any other requisite documents and the execution and filing of any financing statements and continuation statements that will, in the opinion of such counsel, be required to maintain the Lien of this Indenture with respect to the Pledged Property as a lien of first priority until May 1 in the following calendar year. All references in this Section to a lien of first priority shall be deemed to refer to a lien which is prior to any lien which can be created and perfected under the Uniform Commercial Code as in effect in the State or States governing the perfection of such lien. SECTION 5.07. Performance of Obligations. Neither the Company nor Oglethorpe will take any action or permit any action to be taken by others which would release any Person from any of such Person's covenants or obligations under any instrument included in the Pledged Property, or which would result in the amendment, hypothecation, subordination, termination or discharge of, or impair the validity or effectiveness of, any such instrument, except as expressly provided in this Indenture. SECTION 5.08. Negative Covenants. During such time as any Bond issued hereunder is Outstanding, the Company will not: (i) sell, transfer, exchange or otherwise dispose of any portion of the Pledged Property except as expressly permitted by this Indenture; 43 (ii) engage in any business or activity other than in connection with, or relating to, the issuance of Bonds pursuant to this Indenture and application of the proceeds thereof as herein provided, or amend Article Third, Fourth or Sixth of its Certificate of Incorporation, as in effect on the date of execution and delivery of this Indenture, without, in each case, the consent of the Holders of not less than 66 2/3% of the aggregate principal amount of the Bonds then Outstanding; notwithstanding the foregoing, however, the Company may, with respect to one or more series of Bonds (or one or more Stated Maturities within any series), enter into credit or liquidity support facilities (including, without limitation, bank letters of credit, bank lines of credit, surety bonds and bonds of insurance); (iii) issue bonds, notes or other evidence of, or incur, indebtedness other than (A) Bonds issued hereunder or (B) bonds, notes or other evidences of indebtedness permitted by clause (ii) above; (iv) assume or guarantee any indebtedness of any Person; (v) dissolve or liquidate in whole or in part; (vi) take any action which would (A) permit the validity or effectiveness of this Indenture or any grant of any of the Pledged Property to be impaired, or permit the Lien of this Indenture to be amended, hypothecated, subordinated, terminated or discharged, or permit any Person to be released from any covenants or obligations under this Indenture, (B) permit any lien, charge, security, mortgage or other encumbrance (other than the Lien of this Indenture) to be created on or extend to or otherwise arise upon or burden the Pledged Property or any part thereof or any interest therein or the proceeds thereof, or (C) permit the Lien of this Indenture not to constitute a valid first priority security interest in the Pledged Property; or (vii) institute any proceedings to be adjudicated a bankrupt or insolvent, or consent to the institution of bankruptcy or insolvency proceedings against it, or file a petition or answer or consent seeking reorganization or relief under the Federal Bankruptcy Code or any other applicable Federal or State law or law of the District of Columbia, or consent to the filing of any such petition or to the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the Company or any substantial part of its property, or make an assignment for the benefit of its creditors, or admit in writing its inability to pay its debts generally as they become due, or take any corporate action in furtherance of the foregoing. SECTION 5.09. Annual Statement as to Compliance. (a) Oglethorpe and the Company each will deliver to the Trustee, on or before 120 days after the end of each of its fiscal years, a written statement signed by its principal executive officer, principal finance officer or principal accounting officer, stating that: 44 (1) a review of the activities of Oglethorpe or the Company, as the case may be, required during such year of Oglethorpe or the Company, as the case may be, under this Indenture has been made under his or her supervision; and (2) to the best of his or her knowledge, based on such review, Oglethorpe or the Company, as the case may be, has fulfilled all its obligations under this Indenture throughout such year, or, if there has been a default in the fulfillment of any such obligation, specifying each such default known to such officer and the nature and status thereof. (b) Oglethorpe will deliver to the Trustee, promptly after having obtained knowledge thereof, written notice of any event which with the giving of notice or lapse of time, or both, would become an Event of Default under Section 8.01. ARTICLE SIX REDEMPTION OF BONDS SECTION 6.01. Redemption. (a) Mandatory Redemption of Initial Series of Bonds and Exchange Series of Bonds with Premium. The Initial Series of Bonds and the Exchange Series of Bonds shall be subject to mandatory redemption, in whole or in part as provided below, at a redemption price equal to the redemption price set forth below together with interest accrued to such Redemption Date (exclusive of installments of interest maturing on or prior to such Date, payment of which shall have been made or duly provided for to the Holders of Bonds on relevant Record Dates or otherwise as provided in Section 2.07), as follows: the Indenture: Twelve month Redemption Period beginning Price ---------------- ----------- December 17, 1997 through December 31, 1997 (1) 106.974% January 1, 1998 106.974 January 1, 1999 106.438 January 1, 2000 105.901 January 1, 2001 105.365 January 1, 2002 104.828 January 1, 2003 104.292 January 1, 2004 103.755 - ----------------------------- (1) Partial period. 45 January 1, 2005 103.219 January 1, 2006 102.682 January 1, 2007 102.146 January 1, 2008 101.609 January 1, 2009 101.073 January 1, 2010 100.536 January 1, 2011 100.000 (i) The Initial Series of Bonds and the Exchange Series of Bonds shall be redeemed in a principal amount equal to the principal amount of each Pledged Lessor Note prepaid in connection with the exercise by Oglethorpe of its option under any Lease to purchase the undivided ownership interest of the Lessor thereunder, which option may be exercised by Oglethorpe on any of the following dates independently under each Lease: (A) December 31, 2000; (B) December 31, 2005; and (C) December 31, 2010. (ii) The Initial Series of Bonds and the Exchange Issue of Bonds shall be redeemed in whole in connection with a prepayment of Pledged Lessor Notes with the proceeds of the payment by Oglethorpe of Stipulated Loss Values under the Leases upon the occurrence of the permanent decommissioning and retiring from commercial service of Scherer Unit 2. (iii)The Initial Series of Bonds and the Exchange Issue of Bonds shall be redeemed on each Recovery Payment Date in a principal amount equal to (A) all Amounts Recovered on or prior to the third Business Day immediately preceding such Recovery Payment Date and not theretofore applied toward the redemption of the Initial Series of Bonds or the Exchange Issue of Bonds, reduced by (B) any premium payable, and the interest accrued and to accrue, on the Initial Series of Bonds and the Exchange Series of Bonds to be redeemed on such Recovery Payment Date. (iv) The Initial Series of Bonds and the Exchange Issue of Bonds shall be redeemed in a principal amount equal to the principal amount of each Pledged Lessor Note prepaid in connection with an election by Oglethorpe to exercise its right of early termination under Article 6 of less than all the Leases on or after the date hereof as a result of a Board Resolution of Oglethorpe determining that the undivided ownership interest subject to such Lease is surplus to the requirements of Oglethorpe. (b) Mandatory Redemption of Bonds of Each Series without Premium. (i) The Bonds of each series shall be subject to mandatory redemption, in whole, but not in part, on the same date on which and to the same extent that the Pledged Lessor Notes are to be prepaid in accordance with their terms and the terms of their respective Lease Indentures, at 100% of the principal amount thereof, together with accrued interest to the Redemption Date (exclusive of installments 46 of interest maturing on or prior to such date payment of which shall have been made or duly provided for to the Holders of Bonds on relevant Record Dates, or otherwise as provided in Section 2.07), but only if such prepayment of the Pledged Lessor Notes is made under one of the following circumstances, as certified to the Trustee by Oglethorpe and the Lessors of each of the Pledged Lessor Notes: (A) Scherer Unit 2 shall have been destroyed in its entirety or substantially in its entirety, or, in the good faith and reasonable opinion of Oglethorpe (evidenced by a Board Resolution), such Unit shall have suffered damage beyond economic repair; (B) insurance proceeds shall have been received based upon an actual or constructive total loss with respect to Scherer Unit 2; (C) Scherer Unit 2, the Scherer Unit 2 Site or the Scherer Common Facilities (in their entirety or a substantial portion of any thereof such that the then remaining portion cannot practically be utilized for the purposes intended) shall have been condemned or otherwise permanently rendered unfit for normal use, confiscated or seized, or title thereto or use thereof shall have been requisitioned by any governmental authority and, in the case of any such requisition, Oglethorpe shall have lost the use or possession of substantially all of Scherer Unit 2 or the Scherer Unit 2 Site for a period exceeding 48 months; or (D) an election shall have been made by Oglethorpe to exercise its rights of early termination under Article 6 of each of the Leases on or after the date hereof as a result of a Board Resolution of Oglethorpe determining that (1) Oglethorpe's interest in Scherer Unit 2 is surplus to the requirements of Oglethorpe or (2) Scherer Unit 2 is economically obsolete. (ii) The Bonds of each series shall be subject to mandatory redemption in a principal amount equal to the principal amount of each Pledged Lessor Note which is prepaid as a result of (A) the payment by Oglethorpe of amounts required or permitted under any Lease in the event that solely by reason of the execution, delivery and performance of the related Participation Agreement and the agreements and documents contemplated thereby or the ownership of its interest in Scherer Unit 2 and without regard to any other activities or transactions, the Lessor under such Lease, its related Equity Investor or one of their Affiliates (1) becomes subject to regulation pursuant to the Holding Company Act or the Federal Power Act or (2) becomes subject to regulation under any other provisions of state or federal laws pertaining to the regulation of public utilities as such (other than regulation under which the obligations of such Lessor, Equity Investor or Affiliate may be discharged by Oglethorpe pursuant to the applicable Lease and which Oglethorpe has not failed 47 timely to discharge) unless (w) in the case of regulation under the Holding Company Act or the Federal Power Act such regulation shall not be materially adverse with respect to such Lessor in the reasonable judgment of such Lessor; (x) in either case such regulation results from an ownership or leasehold interest in any other electric generation facility or transmission facility acquired on or after December 30, 1985, or any such person was subject to such regulation prior to such date or prior to becoming a Lessor or Equity Investor, (y) in either case such person has waived in writing the treatment of such regulation as an event requiring Oglethorpe to make any payments, or (z) in either case Oglethorpe, at its sole cost and expense, is contesting such regulation, subject to certain conditions; (B) the payment by Oglethorpe of amounts required or permitted under any Lease in the event that the Lessor under such Lease or its related Equity Investor shall become subject to regulation pursuant to the Holding Company Act or the Federal Power Act, and as a result thereof, (i) the Lease is deemed to be a contract for the sale by such Lessor of electric energy to Oglethorpe under Section 205 or 206 of the Federal Power Act, (ii) Oglethorpe shall become subject to regulation which is contrary to the terms of any agreement to which Oglethorpe is a party or applicable law to which Oglethorpe is subject relating to the generation, transmission, production or sale of electric power or steam energy, or (iii) Oglethorpe shall become subject to regulation which would not otherwise be applicable to Oglethorpe, which Oglethorpe, in its reasonable judgment, determines to be materially adverse to it and action shall not have been taken within 60 days to eliminate such regulation; (C) the exercise by Oglethorpe of its option under any Lease to purchase the undivided ownership interest of a Lessor in Scherer Unit 2 in the event that a tax indemnity becomes payable to such Lessor's related Equity Investor under the Tax Indemnification Agreement between Oglethorpe and such Equity Investor as a result of a change in tax law enacted by the 99th Congress or a final determination that such undivided interest constitutes "public utility property" within the meaning of the Internal Revenue Code of 1954, as amended, but, in the case of a change in tax law, only if the aggregate of the present value of all increases in basic rent resulting from such indemnity payment would exceed 4% of Lessor's Cost; or (D) the exercise by Oglethorpe of its option under any Lease to purchase the undivided ownership interest of a Lessor in Scherer Unit 2, which option may be exercised on any December 31 between the date hereof and December 31, 2010, if any of the following events having occurred: (1) a "scrubber" or any similar Capital Improvement, the function of which is to remove pollutants from the effluent discharged from the boiler of Scherer Unit 2 is required to be installed in Scherer Unit 2 by any applicable law; (2) Capital Improvements consisting of a single project are included in the Scherer Unit 2 Capital Budget, 60% of the value of which (expressed in December 30, 1985, dollars determined by reference to the Handy-Whitman Index) 48 equals or exceeds $100,000,000, or (3) Capital Improvements are included in the Scherer Unit 2 Capital Budget in any two-year period, 60% of the value of which (expressed in December 30, 1985 dollars determined by reference to the HandyWhitman Index) equals or exceeds $50,000,000, and the related Equity Investor does not participate in the financing of such Capital Improvements by an equity investment. Mandatory redemption under clause (A), (B), (C) or (D) above shall be made on the date on which such Pledged Lessor Notes are prepaid at a redemption price of 100% of the principal amount of the Bonds to be redeemed, together with accrued interest to the Redemption Date (exclusive of installments of interest maturing on or prior to such Date payment of which shall have been made or duly provided for to the Holders of the Bonds on relevant Record Dates or as provided in Section 2.07). SECTION 6.02. Applicability of Article. The provisions of this Article Six which relate to Bonds generally shall be applicable to the Bonds of all series except as otherwise provided in such Bonds or the Series Supplemental Indenture with respect thereto as contemplated by Section 2.11. Redemption of Bonds at the election of the Company or otherwise, as permitted or required by any provision of this Indenture, or any Series Supplemental Indenture, shall be made in accordance with such provision and this Article. SECTION 6.03. Notice to Trustee of Redemption. In case of any redemption of any Bonds of any series otherwise than through the operation of an applicable Sinking Fund or as provided in Section 6.01(a)(iii) (or any comparable provision of any Series Supplemental Indenture), Oglethorpe shall, at least 45 days prior to the scheduled Redemption Date (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee in writing of such Redemption Date and of the principal amount of Bonds of such series to be redeemed. SECTION 6.04. Selection by Trustee of Bonds to be Redeemed. If less than all the Bonds of any series are to be redeemed, other than through the operation of an applicable Sinking Fund or as provided in Section 6.01(a)(iii) (or any comparable provision of any Series Supplemental Indenture), the particular Bonds of such series to be redeemed shall be selected by the Trustee following receipt by the Trustee of the notice required by Section 6.03, but not more than 60 days prior to the Redemption Date, from the Outstanding Bonds of such series not previously called for redemption, as follows: To the extent any Pledged Lessor Note is being prepaid in connection with such redemption, the Trustee shall first identify the Bonds having Stated Maturities which correspond to the dates for the payment of one or more installments of principal ("Lessor Note Installment Dates") of such Pledged Lessor Note which have been specifically designated in such Lessor Note as "maturity installments" (the "Designated Installments"), and shall then identify the amounts which, in the case of each Designated Installment, have been prepaid in respect of Lessor 49 Note Installment Dates ending with such Designated Installment and beginning with the first Lessor Note Installment Date following the immediately preceding Designated Installment or, in the case of the earliest Designated Installment in respect of a Refunding Lessor Note, beginning with the first Lessor Note Installment Date (such period, in the case of each Designated Installment, being herein called an "Allocable Period"). Following such identification, the Trustee shall select for redemption an aggregate principal amount of Bonds of each Stated Maturity of principal equal to the aggregate principal amount of the installments of principal which are due within the Allocable Period for a corresponding Designated Installment and which are being prepaid, such selection to be made pro rata as among all Bonds having such Stated Maturity of principal. If Bonds are to be redeemed pursuant to Section 6.01(a)(iii) (or any comparable provision of any Series Supplemental Indenture), the particular Bonds to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Trustee, from the Outstanding Bonds of the applicable series which have the same Stated Maturity of principal as the Designated Installment of the defaulted Pledged Lessor Notes for which payment in full for such Designated Installment's Allocable Period, including payments in respect of liquidated damages, has not yet been received. Amounts Recovered as a result of the exercise of remedies under a defaulted Lease Indenture shall be deemed recovered in respect of the Allocable Period within the defaulted Pledged Lessor Note issued under such Lease Indenture having the latest Designated Installment until an amount has been recovered which is sufficient to pay in full the principal of, and premium, if any, and interest on such defaulted Pledged Lessor Note for such Allocable Period, and the Trustee shall select Bonds for redemption from Outstanding Bonds not previously redeemed having a Stated Maturity of principal which corresponds to the Designated Installment in respect of whose Allocable Period such amount shall have been deemed recovered. Bonds having such Stated Maturity of principal shall be selected for redemption pro rata as among all Bonds having such Stated Maturity. In any proration pursuant to this Section, the Trustee shall make such adjustments, reallocations and eliminations as it shall deem proper so that the principal amount of Bonds so prorated shall be $1,000 or an integral multiple thereof, by increasing or decreasing or eliminating the amount which would be allocable to any Holder on the basis of exact proportion by an amount not exceeding $1,000. The Trustee in its discretion may determine the particular Bonds of a Stated Maturity of principal registered in the name of any Holder which are to be redeemed, in whole or in part. The Trustee shall promptly notify the Company, Oglethorpe, the Bond Registrar and the Paying Agent in writing of the Bonds selected for redemption and, in the case of any Bond selected for partial redemption, the principal amount thereof to be redeemed. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Bonds shall relate, in the case of any Bond redeemed or to be redeemed only in part, to the portion of the principal of such Bond which has been or is to be redeemed. 50 SECTION 6.05. Notice of Redemption. Notice of redemption (including redemption through the operation of any applicable Sinking Fund but excluding any redemption of Bonds pursuant to Section 6.01(a)(iii) (or any comparable provision of any Series Supplemental Indenture)) shall be given by first-class mail, postage prepaid, mailed not less than 20 nor more than 60 days prior to the Redemption Date, to each Holder of Bonds to be redeemed, at his address appearing in the Bond Resister. Notice of redemption pursuant to Section 6.01(a)(iii) (or any comparable provision of any Series Supplemental Indenture) shall be given by telephone, telex, telecopier or other electronic or wire transmission as promptly as practicable after receipt of Amounts Recovered, and confirmed by written notice given by first-class mail, postage prepaid, mailed to each Holder of Bonds to be redeemed, at his address appearing in the Bond Register. All notices of redemption shall state: (1) the Redemption Date, (2) the Redemption Price, (3) if less than all Outstanding Bonds of any series are to be redeemed, the identification (and, in the case of partial redemption, the respective principal amounts) of the particular Bonds, including the series and the Stated Maturity of principal of such Bonds, to be redeemed, (4) that on the Redemption Date the Redemption Price will become due and payable upon each such Bond, and that interest thereon shall cease to accrue from and after said date, (5) the place where such Bonds are to be surrendered for payment of the Redemption Price, and (6) that the redemption is through the operation of the Sinking Fund, if such is the case. Notice of redemption of Bonds to be redeemed shall be given by the Trustee in the name of the Company. SECTION 6.06. Deposit of Redemption Price. Subject to the last paragraph of Section 6.07, on or prior to any Redemption Date, the Company shall deposit, or cause to be deposited, with the Paying Agent an amount of money sufficient to pay the Redemption Price of all the Bonds which are to be redeemed on that date. 51 SECTION 6.07. Bonds Payable on Redemption Date. Notice of redemption having been given as aforesaid, the Bonds so to be redeemed shall, on the Redemption Date, become due and payable at the corporate trust office of the Paying Agent (or, if such office is not in the Borough of Manhattan, The City of New York, at either such office or an office to be maintained in such Borough) at the Redemption Price therein specified and from and after such date (unless there shall be a default in the payment of the Redemption Price) such Bonds shall cease to bear interest. Upon surrender of such Bonds for redemption in accordance with said notice, such Bonds shall be paid at the Redemption Price, exclusive, however, of installments of interest maturing on or prior to the Redemption Date payment of which shall have been made or duly provided for to the Holders of such Bonds registered as such on the relevant Record Dates, or otherwise, according to their terms and the provisions of Section 2.07. If any Bond called for redemption shall not be so paid upon surrender thereof for redemption, the principal (and premium, if any) shall, until paid, continue to bear interest from the Redemption Date at the rate borne by the Bond in respect of overdue payments. SECTION 6.08. Bonds Redeemed in Part. Any Bond which is to be redeemed only in part shall be surrendered at the corporate trust office of the Paying Agent (or, if such office is not in the Borough of Manhattan, The City of New York, at either such office or an office to be maintained in such Borough) (with due endorsement by, or a written instrument of transfer in form satisfactory to the Bond Registrar duly executed by, the Holder thereof or his attorney duly authorized in writing) and the Company, shall execute and the Trustee or any other Authenticating Agent shall authenticate and deliver to the Paying Agent for delivery to the Holder of such Bond a new Bond or Bonds of the same series and the same Stated Maturity of principal, of any authorized denomination as requested by such Holder in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Bonds so surrendered. ARTICLE SEVEN SINKING FUNDS SECTION 7.01. Sinking Funds for Bonds. (a) Sinking Funds for Bonds Generally. The amount of any sinking fund payment provided for by the terms of the Bonds of any series (and any Stated Maturity of principal within a series) is herein referred to as a "Sinking Fund," and the date on which a Sinking Fund payment is to be made is herein referred to as a "Sinking Fund Date." Each such Sinking Fund payment shall be 52 applied to the redemption of Bonds of the appropriate series and the appropriate Stated Maturity of principal on the appropriate Sinking Fund Date. (b) Sinking Fund for Initial Series of Bonds and Exchange Series of Bonds. As and for a sinking fund for the retirement of the Initial Series of Bonds and the Exchange Series of Bonds, until all the Initial Series of Bonds and the Exchange Series of Bonds are paid or payment thereof is provided for, on or before each June 30 and December 31, beginning December 31, 1998, and continuing to and including June 30, 2011, an amount in immediately available funds will be deposited by the Company with the Trustee or the Paying Agent sufficient to redeem on each such date, the principal amount of the Initial Series of Bonds and the Exchange Series of Bonds required to be redeemed on such date as set forth below, at 100% of the principal amount thereof together with accrued interest to the Redemption Date (exclusive of installments of interest maturing on or prior to such date payment of which shall have been made or duly provided for to the Holders of the Initial Series of Bonds and the Exchange Series of Bonds on relevant Record Dates, or otherwise as provided in Section 2.07): December 31, 1998. . . . . . . . . . . . . . . . . . . . . . . . . . $6,555,000 June 30, 1999. . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 December 31, 1999. . . . . . . . . . . . . . . . . . . . . . . . . . 11,112,000 June 30, 2000. . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 December 31, 2000. . . . . . . . . . . . . . . . . . . . . . . . . . 11,719,000 June 30, 2001. . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 December 31, 2001. . . . . . . . . . . . . . . . . . . . . . . . . . 12,064,000 June 30, 2002. . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 December 31, 2002. . . . . . . . . . . . . . . . . . . . . . . . . . 14,067,000 June 30, 2003. . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 December 31, 2003. . . . . . . . . . . . . . . . . . . . . . . . . . 16,117,000 June 30, 2004. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,513,000 December 31, 2004. . . . . . . . . . . . . . . . . . . . . . . . . . 13,719,000 June 30, 2005. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,651,000 December 31, 2005. . . . . . . . . . . . . . . . . . . . . . . . . . 14,564,000 June 30, 2006. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,485,000 December 31, 2006. . . . . . . . . . . . . . . . . . . . . . . . . . 15,371,000 June 30, 2007. . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,883,000 December 31, 2007. . . . . . . . . . . . . . . . . . . . . . . . . . 0 June 30, 2008. . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,453,000 December 31, 2008. . . . . . . . . . . . . . . . . . . . . . . . . . 0 June 30, 2009. . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,383,000 December 31, 2009. . . . . . . . . . . . . . . . . . . . . . . . . . 0 June 30, 2010. . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,724,000 December 31, 2010. . . . . . . . . . . . . . . . . . . . . . . . . . 0 June 30, 2011 (2). . . . . . . . . . . . . . . . . . . . . . . . . . 9,322,000 - -------------------------- (2) Final payment date. 53 (c) Readjustment of Sinking Fund Payment in Connection with Redemption. In the event that there shall have been any partial redemption of a series of Bonds, the Sinking Fund payments with respect to such series shall be adjusted as follows: The Trustee shall first identify the Allocable Period within a Pledged Lessor Note or Notes, if any, in respect of which a prepayment shall have been made or, if such redemption shall have been effected pursuant to Section 6.01(a)(iii) (or any comparable provision of any Series Supplemental Indenture), the Allocable Period within the defaulted Pledged Lessor Note or Notes in respect of which the Amounts Recovered and paid out to redeem Bonds were deemed to apply pursuant to Section 6.04 and, having so identified any such Allocable Periods and, in the case of a redemption pursuant to Section 6.01(a)(iii) (or any comparable provision of any Series Supplemental Indenture), the Amounts Recovered and paid out in respect thereof, shall determine the dates on which the principal of such Pledged Lessor Notes were scheduled to be amortized within such Allocable Periods (the "Scheduled Amortization Dates"). The aggregate amount of Sinking Fund payments scheduled to be made on a Sinking Fund Date shall then be adjusted to equal the aggregate principal amount of all Pledged Lessor Notes scheduled to be amortized on the Scheduled Amortization Date corresponding to such Sinking Fund Date, after taking into account the prepayment or deemed payment of Pledged Lessor Notes, and the amount of each Sinking Fund payment shall be proportionately adjusted. All such adjustments in respect of a Sinking Fund Date shall be rounded to the nearest $1,000, and shall be subject to necessary further adjustment so that the total amount of such reduction is equal to the total principal amount of Bonds redeemed pursuant to such partial redemption, such adjustment to be made by the Trustee in such manner as the Trustee in its sole discretion deems appropriate. SECTION 7.02. Selection by Trustee of Bonds to be Redeemed Through Operation of Sinking Fund. In the case of Bonds to be redeemed through operation of an applicable Sinking Fund, the particular Bonds to be redeemed shall be selected by the Trustee from the outstanding Bonds of the same series and of the same Stated Maturity of principal not previously called for redemption by prorating, as nearly as may be, the principal amount of Bonds to be redeemed among the Holders of Bonds of the same series and Stated Maturity registered in their respective names. In any proration pursuant to this Section, the Trustee shall make such adjustments, reallocations and eliminations as it shall deem proper so that the principal amount of Bonds so prorated shall be $1,000 or an integral multiple thereof, by increasing or decreasing or eliminating the amount which would be allocable to any Holder on the basis of exact proportion by an amount not exceeding $1,000. The Trustee in its discretion may determine the particular Bonds of a Stated Maturity of principal registered in the name of any Holder which are to be redeemed, in whole or in part. The Trustee shall give written notice to each Lease Indenture Trustee of the adjustments, reallocations and eliminations made pursuant to this Section. 54 ARTICLE EIGHT EVENTS OF DEFAULT; REMEDIES SECTION 8.01. Events of Default. "Events of Default," wherever used herein, means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law pursuant to a judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): (1) default in the payment of any interest upon any Bond when it becomes due and payable, and continuance of such default for a period of three Business Days; or (2) default in the payment of the principal of (or premium, if any, on) any Bond at its Maturity, and continuance of such default for a period of three Business Days; or (3) default in the making of any Sinking Fund payment and continuance of such default for a period of three Business Days; or (4) default in the performance, or breach, of any covenant of Oglethorpe or the Company contained herein and continuance of such default or breach for a period of 30 days after there has been given, by registered or certified mail, to Oglethorpe and the Company by the Trustee, or to Oglethorpe, the Company and the Trustee by the Holders of at least 25% in principal amount of Outstanding Bonds, a written notice specifying such failure and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder; provided, however, that the continuation of such failure for a period of 30 days or more after such notice has been so given (but in no event for a period which is greater than one year after such notice has been given) shall not constitute an Event of Default if (i) such failure can be remedied but cannot be remedied within such 30 days, (ii) the Company or Oglethorpe, as the case may be, is diligent in pursuing a remedy of such failure and (iii) such failure does not impair in any respect the lien and security interest created hereby; or (5) the occurrence of an "event of default" under any Lease Indenture; or (6) the entry of a decree or order by a court having jurisdiction in the premises adjudging the Company a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Company under the Federal Bankruptcy Code or any other applicable federal or state law or law of the District of Columbia, or appointing a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the Company or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order unstayed and in effect for a period of 60 consecutive days; or 55 (7) the institution by the Company of proceedings to be adjudicated a bankrupt or insolvent, or the consent by it to the institution of bankruptcy or insolvency proceedings against it, or the filing by it of a petition or answer or consent seeking reorganization or relief under the Federal Bankruptcy Code or any other applicable federal or state law or law of the District of Columbia, or the consent by it to the filing of any such petition or to the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the Company or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the admission by it in writing of its inability to pay its debts generally as they become due, or the taking of corporate action by the Company in furtherance of any such action. SECTION 8.02. Acceleration of Maturity; Rescission and Annulment. Upon the occurrence of an Event of Default, (i) if such Event of Default is one referred to in clause (1), (2), (3), (4), (6) or (7) of Section 8.01, the Trustee may, and upon the direction of the Holders of not less than a majority in principal amount of the Bonds Outstanding shall, and (ii) if such Event of Default is the one referred to in clause (5) of Section 8.01 (including without limitation an event of default under each of the Leases which has resulted in an Event of Default referred to in clause (1), (2) or (3) of Section 8.01) under circumstances in which the Pledged Lessor Notes have been declared immediately due and payable, the Trustee shall, declare the principal of all the Bonds to be due and payable immediately, by a notice in writing to Oglethorpe and the Company (and to the Trustee if given by Bondholders), and upon any such declaration such principal shall become immediately due and payable; provided that no such declaration shall be made (and no action under Sections 8.03 or 8.05 shall be taken) in cases in which the Event of Default is one referred to in clause (1), (2), or (3) of Section 8.01 which resulted directly from a failure of Oglethorpe to make any payment of Rent under any Lease until such time as the Lessor under such Lease has been given the opportunity to exercise its rights, if any, under Section 4.3 of the related Lease Indenture; and provided further that no such declaration shall be made in cases in which the Event of Default is the one referred to in clause (5) of Section 8.01 (including without limitation an event of default under less than all the Leases which has resulted in an Event of Default referred to in clause (1), (2), or (3) of Section 8.01) unless an "event of default" has occurred under all the Lease Indentures. At any time after such a declaration of acceleration has been made and before any sale of the Pledged Property, or any part thereof, shall have been made pursuant to any power of sale as hereinafter in this Article provided, the Holders of a majority in principal amount of the Bonds Outstanding, by written notice to the Company and the Trustee, may rescind and annul such declaration and its consequences if: (1) there shall have been paid to or deposited with the Trustee a sum sufficient to pay (A) all overdue installments of interest on all Bonds, 56 (B) the principal of (and premium, if any, on) any Bonds which have become due otherwise than by such declaration of acceleration and interest thereon at the respective rates provided in the Bonds for late payments of principal or premium, (C) to the extent that payment of such interest is lawful, interest upon overdue installments of interest at the respective rates provided in the Bonds for late payments of interest, and (D) all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel; and (2) all Events of Default, other than the non-payment of the principal of Bonds which have become due solely by such acceleration, have been cured or waived as provided in Section 8.08. No such rescission shall affect any subsequent default or impair any right consequent thereon and no such annulment shall take place unless all declarations of acceleration of all Pledged Lessor Notes theretofore given have also been annulled in accordance with the terms of the applicable Lease Indentures. Notwithstanding anything in this Section to the contrary, the Trustee shall rescind any declaration of maturity of the principal of and interest on the Bonds as a consequence of an Event of Default which resulted from an event of default under any Lease and which resulted in a declaration of acceleration of the Lessor Notes issued under the related Lease Indenture, if the declaration of acceleration of such Lessor Notes has been rescinded in accordance with the terms of such Lease Indenture and the conditions set forth in paragraphs (1) and (2) of this Section have been met. To the extent that an Event of Default has occurred under clause (5) of Section 8.01 under circumstances in which the principal of the Bonds cannot be declared to be due and payable immediately pursuant to the second proviso to the first paragraph of this Section, the Trustee shall promptly take such action in respect of any Pledged Lessor Note which is then in default, including without limitation by making demand upon, or giving direction to, the Lease Indenture Trustee for such defaulted Pledged Lessor Note, (i) to cause the principal of such defaulted Pledged Lessor Note to be declared due and payable immediately, (ii) to terminate any Lease which is then in default and demand redelivery of the related undivided ownership interest in Scherer Unit 2, (iii) to demand payment from Oglethorpe of all unpaid Rent and the amount of Stipulated Loss Value in respect of any Lease 57 which is then in default, all in accordance with the provisions of such Lease and (iv) to commence appropriate legal proceedings against Oglethorpe for the recovery of the amounts demanded pursuant to clause (iii); provided that no such action shall be taken in respect of any Lease which is in default until such time as the Lessor under such Lease has been given the opportunity to exercise its rights, if any, under Section 4.3(f) of the related Lease Indenture. SECTION 8.03. Trustee's Power of Sale of Pledged Property; Notice Required; Power to Bring Suit. If an Event of Default shall have occurred and be continuing, subject to the provisions of Sections 8.06 and 8.07 and the provisos to the first paragraph of Section 8.02, the Trustee, by such officer or agent as it may appoint, may do either of the following: (1) sell, to the extent permitted by law, without recourse, for cash, or credit or for other property, for immediate or future delivery, and for such price or prices and on such terms as the Trustee in its discretion may determine, the Pledged Property as an entirety, or in any such portions as the Holders of a majority in aggregate principal amount of the Bonds then Outstanding shall request by an Act of Bondholders, or, in the absence of such request, as the Trustee in its discretion shall deem expedient in the interest of the Bondholders, at public or private sale; and (2) proceed by one or more suits, actions or proceedings at law or in equity or otherwise or by any other appropriate remedy, to enforce payment of the Bonds or Pledged Lessor Notes, or to foreclose this Indenture or to sell the Pledged Property under a judgment or decree of a court or courts of competent jurisdiction, or by the enforcement of any such other appropriate legal or equitable remedy, as the Trustee, being advised by counsel, shall deem most effectual to protect and enforce any of its rights or powers or any of the rights or powers of the Bondholders. In the event that the Trustee shall deem it advisable to sell any of or all the Pledged Property in accordance with the provisions of this Section, Oglethorpe and the Company agree that if registration of any such Pledged Property shall be required, in the opinion of counsel for the Trustee, under the Securities Act of 1933, as amended, or other applicable law, and regulations promulgated thereunder, and if Oglethorpe shall not effect, or cause to be effected, such registration promptly, the Trustee may sell any such Pledged Property at a private sale, and no Person shall attempt to maintain that the prices at which such Pledged Property is to be sold are inadequate by reason of the failure to sell at public sale, or hold the Trustee liable therefor. SECTION 8.04. Incidents of Sale of Pledged Property. Upon any sale of all or any part of the Pledged Property made either under the power of sale given under this Indenture or under judgment or decree in any judicial proceedings for foreclosure or otherwise for the enforcement of this Indenture, the following shall be applicable: (1) Bonds Due and Payable. Except under the circumstances described in the last paragraph of Section 8.02, the principal of, and premium, if any, and accrued interest on, the Bonds, if not previously due, shall immediately become and be due and payable. 58 (2) Trustee Appointed Attorney of Company to Make Conveyances. The Trustee is hereby irrevocably appointed the true and lawful attorney of the Company, in its name and stead, to make all necessary deeds, bills of sale and instruments of assignment, transfer or conveyance of the property thus sold; and for that purpose the Trustee may execute all such documents and instruments and may substitute one or more persons with like power; and the Company hereby ratifies and confirms all that its said attorneys, or such substitute or substitutes, shall lawfully do by virtue hereof. (3) Company to Confirm Sales and Conveyances. If so requested by the Trustee or by any purchaser, the Company shall ratify and confirm any such sale or transfer by executing and delivering to the Trustee or to such purchaser or purchasers all proper deeds, bills of sale, instruments of assignment, conveyance or transfer and releases as may be designated in any such request. (4) Bondholders and Trustee May Purchase Pledged Property. To the extent permitted by applicable law, any Bondholder or the Trustee may bid for and purchase any of the Pledged Property, and upon compliance with the terms of sale, may hold, retain, possess and dispose of such Pledged Property in their or its or his own absolute right without further accountability. (5) Purchaser at Sale May Apply Bonds to Purchase Price. Any purchaser at any such sale may, in paying the purchase price, deliver any of the Bonds then Outstanding in lieu of cash and apply to the purchase price the amount which shall, upon distribution of the net proceeds of such sale, after application to the costs of the action and any other sums which the Trustee is authorized to deduct under this Indenture, be payable on such Bonds so delivered in respect of principal, premium, if any, and interest. In case the amount so payable on such Bonds shall be less than the amount due thereon, duly executed and authenticated Bonds shall be delivered in exchange therefor to the Holder thereof for the balance of the amount due on such Bonds so delivered by such Holder. (6) Receipt of Trustee Shall Discharge Purchaser. The receipt of the Trustee or of the officer making such sale under judicial proceedings shall be a sufficient discharge to any purchaser for his purchase money, and, after paying such purchase money and receiving such receipt, such purchaser or his personal representative or assigns shall not be obliged to see to the application of such purchase money, or be in any way answerable for any loss, misapplication or non-application thereof. (7) Sale To Divest Rights of Company in Property Sold. Any such sale shall operate to divest the Company of all right, title, interest, claim and demand whatsoever, either at law, or in equity or otherwise, in and to the Pledged Property so sold, and shall be a perpetual bar both at law and in equity or otherwise against the Company, and its successors and assigns, and any and all persons claiming or who may claim the Pledged Property sold or any part thereof from, through or under the Company, or its successors and assigns. 59 (8) Application of Moneys Received upon Sale. Any moneys collected by the Trustee upon any sale made either under the power of sale given by this Indenture or under judgment or decree in any judicial proceedings for foreclosure or otherwise for the enforcement of this Indenture, shall be applied as provided in Section 8.12. SECTION 8.05. Judicial Proceedings Instituted by Trustee. (a) Trustee May Bring Suit. If there shall be a failure to make payment of the principal of any Bond at its Maturity, or of any Sinking Fund payment when due and payable by the terms hereof or of such Bond, or if there shall be a failure to pay the premium, if any, on any Bond when the same becomes due and payable, or interest on any Bond for a period of 15 days after the same becomes due and payable, then the Trustee, in its own name, and as trustee of an express trust, shall be entitled and empowered to institute any suits, actions or proceedings at law, in equity or otherwise, for the collection of the sums so due and unpaid on the Bonds, and may prosecute any such claim or proceeding to judgment or final decree, and may enforce any such judgment or final decree and collect the moneys adjudged or decreed to be payable in any manner provided by law, whether before or after or during the pendency of any proceedings for the enforcement of the lien of this Indenture, or of any of the Trustee's rights or the rights of the Bondholders under this Indenture, and such power of the Trustee shall not be affected by any sale hereunder or by the exercise of any other right, power or remedy for the enforcement of the provisions of this Indenture or for the foreclosure of the lien hereof. (b) Trustee May Recover Unpaid Indebtedness after Sale of Pledged Property. In the case of a sale of the Pledged Property and of the application of the proceeds of such sale to the payment of the indebtedness secured by this Indenture, the Trustee in its own name, and as trustee of an express trust, shall be entitled and empowered, by any appropriate means, legal, equitable or otherwise, to enforce payment of, and to receive all amounts then remaining due and unpaid upon, all or any of the Bonds, for the benefit of the Holders thereof, and upon any other portion of the indebtedness remaining unpaid, with interest at the rates specified in the respective Bonds for interest on the overdue principal and premium, if any, and (to the extent that payment of such interest is legally enforceable) on the overdue installments of interest. (c) Recovery of Judgment Does Not Affect Lien of this Indenture or Other Rights. No recovery of any such judgment or final decree by the Trustee and no levy of any execution under any such judgment upon any of the Pledged Property, or upon any other property, shall in any manner or to any extent affect the lien of this Indenture upon any of the Pledged Property, or any rights, powers or remedies of the Trustee, or any liens, rights, powers or remedies of the Bondholders, but all such liens, rights, powers and remedies shall continue unimpaired as before. (d) Trustee May File Proofs of Claim; Appointment of Trustee as Attorney-in-Fact in Judicial Proceedings. The Trustee in its own name, or as trustee of an express trust, or as attorney-in-fact for the Bondholders, or in any one or more of such capacities (irrespective of whether the principal of the Bonds shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand for the payment of 60 overdue principal, premium (if any) or interest), shall be entitled and empowered to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee and of the Bondholders (whether such claims be based upon the provisions of the Bonds or of this Indenture) allowed in any equity receivership, insolvency, bankruptcy, liquidation, readjustment, reorganization or any other judicial proceedings relative to the Company or any obligor on the Bonds (within the meaning of TIA), the creditors of the Company or any such obligor, the Pledged Property or any other property of the Company or any such obligor and any receiver, assignee, trustee, liquidator, sequestrator (or other similar official) in any such judicial proceeding is hereby authorized by each Bondholder to make such payments to the Trustee and in the event that the Trustee shall consent to the making of such payments directly to the Bondholders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel. The Trustee is hereby irrevocably appointed (and the successive respective Holders of the Bonds, by taking and holding the same, shall be conclusively deemed to have so appointed the Trustee) the true and lawful attorney-in-fact of the respective Bondholders, with authority to (i) make and file in the respective names of the Bondholders (subject to deduction from any such claims of the amounts of any claims filed by any of the Bondholders themselves), any claim, proof of claim or amendment thereof, debt, proof of debt or amendment thereof, petition or other document in any such proceedings and to receive payment of any amounts distributable on account thereof, (ii) execute any such other papers and documents and to do and perform any and all such acts and things for and on behalf of such Bondholders, as may be necessary or advisable in order to have the respective claims of the Trustee and of the Bondholders against the Company or any such obligor, the Pledged Property or any other property of the Company or any such obligor allowed in any such proceeding and (iii) receive payment of or on account of such claims and debt; provided, however, that nothing contained in this Indenture shall be deemed to give to the Trustee any right to accept or consent to any plan of reorganization or otherwise by action of any character in any such proceeding to waive or change in any way any right of any Bondholder. Any moneys collected by the Trustee under this Section shall be applied as provided in Section 8.12. (e) Trustee Need Not Have Possession of Bonds. All rights of action and of asserting claims under this Indenture or under any of the Bonds enforceable by the Trustee may be enforced by the Trustee without possession of any of such Bonds or the production thereof on the trial or other proceedings relative thereto. (f) Suit To Be Brought for Ratable Benefit of Bondholders. Any suit, action or other proceeding at law, in equity or otherwise which shall be instituted by the Trustee under any of the provisions of this Indenture shall be for the equal, ratable and common benefit of all the Bondholders, subject to the provisions of this Indenture. (g) Trustee May Be Restored to Former Position and Rights in Certain Circumstances. In case the Trustee shall have proceeded to enforce any right under this Indenture by suit, foreclosure or otherwise and such proceedings shall have been discontinued or abandoned for any reason, or shall have been determined adversely to the Trustee, then in every such case, Oglethorpe, the Company and the Trustee shall be restored without further act to their respective former positions and rights 61 hereunder, and all rights, remedies and powers of the Trustee shall continue as though no such proceedings had been taken. SECTION 8.06. Bondholders May Demand Enforcement of Rights by Trustee. Without in any way affecting the duties and obligations of the Trustee as provided in the last paragraph of Section 8.02, if an Event of Default shall have occurred and shall be continuing, the Trustee shall, upon the written request of the holders of a majority in aggregate principal amount of the Bonds then Outstanding and upon the offering of indemnity as provided in Section 9.03(e), but subject in all cases to the provisions of Section 3.03 and the first proviso to the first paragraph of Section 8.02, proceed to institute one or more suits, actions or proceedings at law, in equity or otherwise, or take any other appropriate remedy, to enforce payment of the principal of, or premium, if any, or interest on, the Bonds or Pledged Lessor Notes or to foreclose this Indenture or to sell the Pledged Property under a judgment or decree of a court or courts of competent jurisdiction or under the power of sale herein granted, or take such other appropriate legal, equitable or other remedy, as the Trustee, being advised by counsel, shall deem most effectual to protect and enforce any of the rights or powers of the Trustee or the Bondholders, or, in case such Bondholders shall have requested a specific method of enforcement permitted hereunder, in the manner requested, provided that such action shall not be otherwise than in accordance with law and the provisions of this Indenture, and the Trustee, subject to such indemnity provisions, shall have the right to decline to follow any such request if the Trustee in good faith shall determine that the suit, proceeding or exercise of other remedy so requested would involve the Trustee in personal liability or expense. SECTION 8.07. Control by Bondholders. The Holders of a majority in principal amount of the Outstanding Bonds shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee, provided that: (1) such direction shall not be in conflict with any rule of law or with this Indenture, and (2) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction. SECTION 8.08. Waiver of Past Defaults. The Holders of not less than a majority in principal amount of the Outstanding Bonds may on behalf of the Holders of all the Bonds waive any past default hereunder and its consequences, except that only the Holders of all Bonds affected thereby may waive a default (1) in the payment of the principal of (or premium, if any) or interest on such Bonds, or 62 (2) in respect of a covenant or provision hereof which under Article Eleven cannot be modified or amended without the consent of the Holders of each Outstanding Bond affected. Upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon. SECTION 8.09. Bondholder May Not Bring Suit Except under Certain Conditions. A Bondholder shall not have the right to institute any suit, action or proceeding at law or in equity or otherwise for the foreclosure of this Indenture, for the appointment of a receiver or for the enforcement of any other remedy under or upon this Indenture, unless: (1) such Bondholder previously shall have given written notice to the Trustee of a continuing Event of Default; (2) the Holders of at least 25% in aggregate principal amount of the Bonds then Outstanding shall have requested the Trustee in writing to institute such action, suit or proceeding and shall have offered to the Trustee indemnity as provided in Section 9.03(e); (3) the Trustee shall have refused or neglected to institute any such action, suit or proceeding for 60 days after receipt of such notice, request and offer of indemnity; and (4) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in principal amount of outstanding Bonds. It is understood and intended that no one or more of the Bondholders shall have any right in any manner whatever hereunder or under the Bonds to (i) surrender, impair, waive, affect, disturb or prejudice the Lien of this Indenture on any property subject thereto or the rights of the Holders of any other Bonds, (ii) obtain or seek to obtain priority over or preference to any other such Holder or (iii) enforce any right under this Indenture, except in the manner herein provided and for the equal, ratable and common benefit of all the Bondholders subject to the provisions of this Indenture. SECTION 8.10. Undertaking To Pay Court Costs. All parties to this Indenture, and each Bondholder by his acceptance of a Bond, shall be deemed to have agreed that any court may in its discretion require, in any suit, action or proceeding for the enforcement of any right or remedy under this Indenture, or in any suit, action or proceeding against the Trustee for any action taken or omitted by it as Trustee hereunder, the filing by any party litigant in such suit, action or proceedings of an undertaking to pay the costs of such suit, action or proceeding, and that such court may, in its discretion, assess reasonable costs, including, reasonable attorneys' fees, against any party litigant in such suit, action or proceeding, having due regard to the 63 merits and good faith of the claims or defenses made by such party litigant; provided, however, that the provisions of this Section shall not apply to (a) any suit, action or proceeding instituted by the Trustee, (b) any suit, action or proceeding instituted by any Bondholder or group of Bondholders holding in the aggregate more than 10% in aggregate principal amount of the Bonds then Outstanding or (c) any suit, action or proceeding instituted by any Bondholder for the enforcement of the payment of the principal of, or premium, if any, or interest on, any of the Bonds, on or after the respective due dates expressed therein. SECTION 8.11. Right of Bondholders To Receive Payment Not To Be Impaired. Anything in this Indenture to the contrary notwithstanding, the right of any Holder of any Bond to receive payment of the principal of, and premium, if any, and interest on, such Bond, on or after the respective due dates expressed in such Bond (or, in case of redemption, on the Redemption Date fixed for such Bond), or to institute suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder. SECTION 8.12. Application of Moneys Collected by Trustee. Any moneys collected or to be applied by the Trustee pursuant to this Article, together with any other moneys which may then be held by the Trustee under any of the provisions of this Indenture as security for the Bonds (other than moneys at the time required to be held for the payment of specific Bonds at Maturity or at a time fixed for the redemption thereof) shall be applied in the following order from time to time, on the date or dates fixed by the Trustee and, in the case of a distribution of such moneys on account of principal, premium, if any, or interest, upon presentation of the several Outstanding Bonds, and stamping thereon of payment, if only partially paid, and upon surrender thereof, if fully paid: FIRST: to the payment of all taxes, assessments or liens prior to the Lien of this Indenture, except those subject to which any sale shall have been made, all reasonable costs and expenses of collection, including the reasonable costs and expenses of handling the Pledged Property and of any sale thereof pursuant to the provisions of this Article and of the enforcement of any remedies hereunder or under any Lease Indenture, and to the payment of reasonable compensation to the Trustee, its agents, attorneys and counsel, and all reasonable expenses, liabilities and advances incurred or made by the Trustee, or through the Trustee by any Bondholder or Bondholders; SECOND: in case the principal of the Bonds or any of them shall not have become due, to the payment of any interest in default, in the order of the maturity of the installments of such interest, with interest at the rates specified in the respective Bonds in respect of overdue payments (to the extent that payment of such interest shall be legally enforceable) on the overdue installments thereof; THIRD: in case the principal of any of but not all the Bonds shall have become due at their Stated Maturities, upon redemption or otherwise, first to the payment of accrued 64 interest in the order of the maturity of the installments thereof with interest at the respective rates specified in the Bonds in respect of overdue payments on overdue principal, premium, if any, and (to the extent that payment of such interest shall be legally enforceable) on overdue installments of interest, and next to the payment of the principal of all Bonds then due; FOURTH: in case the principal of all the Bonds shall have become due at their Stated Maturities, by declaration, upon redemption or otherwise, to the payment of the whole amount then due and unpaid upon the Bonds then Outstanding for principal, premium, if any, and interest, together with interest at the rate specified in the respective Bonds in respect of overdue payments on overdue principal, premium, if any, and (to the extent that payment of such interest shall be legally enforceable) on overdue installments of interest, and, in case such proceeds shall be insufficient to pay in full the whole amount so due and unpaid, first to the payment of interest, then to the payment of such principal and premium, if any, in each such case ratably, without discrimination or preference; and FIFTH: in case the principal of all the Bonds shall have become due at their Stated Maturities, by declaration, upon redemption or otherwise, and all of such Bonds shall have been fully paid, together with all interest (including any interest on overdue payments) and premium, if any, thereon, any surplus then remaining shall be paid to the Company, its successors or assigns, or to whomsoever may be lawfully entitled to receive the same, or as a court of competent jurisdiction may direct; provided, however, that all payments to be made pursuant to this Section shall be made ratably to the persons entitled thereto, without discrimination or preference. SECTION 8.13. Bonds Held by Certain Persons Not To Share in Distribution. Any Bonds owned or held by, or for the account or benefit of, Oglethorpe, the Company or any Affiliate of any thereof shall not be entitled to share in any payment or distribution provided for in this Article until all Bonds held by other persons have been paid in full. SECTION 8.14. Waiver of Appraisement, Valuation, Stay, Right to Marshaling. To the extent it may lawfully do so, each of Oglethorpe and the Company, for itself and for any Person who may claim through or under it, hereby: (1) agrees that neither it nor any such Person will set up, plead, claim or in any manner whatsoever take advantage of, any appraisement, valuation, stay, extension or redemption laws, now or hereafter in force in any jurisdiction, which may delay, prevent or otherwise hinder (i) the performance or enforcement or foreclosure of this Indenture (ii) the sale of any of the Pledged Property, or (iii) the putting of the purchaser or purchasers thereof into possession of such property immediately after the sale thereof; (2) waives all benefit or advantage of any such laws; 65 (3) waives and releases all right to have the Pledged Property marshaled upon any foreclosure, sale or other enforcement of this Indenture; and (4) consents and agrees that all the Pledged Property may at any such sale be sold by the Trustee as an entirety. SECTION 8.15. Remedies Cumulative; Delay or Omission, Not a Waiver. Every remedy given hereunder to the Trustee or to any of the Bondholders shall not be exclusive of any other remedy or remedies, and every such remedy shall be cumulative and in addition to every other remedy given hereunder or now or hereafter given by statute, law, equity or otherwise. The Trustee may exercise all or any of the powers, rights or remedies given to it hereunder or which may be now or hereafter given by statute, law or equity or otherwise, in its absolute discretion. No course of dealing between Oglethorpe or the Company and the Trustee or the Bondholders or any delay or omission of the Trustee or of any Bondholder to exercise any right, remedy or power accruing upon any Event of Default shall impair any right, remedy or power or shall be construed to be a waiver of any such Event of Default or of any right of the Trustee or of the Bondholders or acquiescence therein, and, subject to the provisions of Section 8.07, every right, remedy and power given by this Article to the Trustee or to the Bondholders may be exercised from time to time and as often as may be deemed expedient by the Trustee or by the Bondholders. ARTICLE NINE THE TRUSTEE SECTION 9.01. Certain Duties and Responsibilities. (a) Except during the continuance of an Event of Default, (1) the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (2) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture. 66 (b) In case an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. (c) No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that: (1) this Subsection shall not be construed to limit the effect of Subsection (a) of this Section; (2) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer of the Trustee, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; (3) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of a majority in principal amount of the Outstanding Bonds relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture; and (4) no provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. (d) Whether or not herein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section. SECTION 9.02. Notice of Defaults. In addition to its obligation to give notice to Bondholders as provided in Section 3.03, as promptly as practicable after, and in any event within 90 days after, the occurrence of any Default hereunder, the Trustee shall transmit by mail to all Bondholders, as their names and addresses appear in the Bond Register, notice of such Default hereunder known to the Trustee, unless such Default shall have been cured or waived; provided, however, that, except in the case of a Default in the payment of the principal of (or premium, if any) or interest on any Bond or in the payment of any Sinking Fund installment, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee or a trust committee of directors and/or Responsible Officers of the Trustee in good faith determine that the withholding of such notice is in the interests of the Bondholders; and provided, further, that in the case of any Default of the character specified 67 in Section 8.01(4) no such notice to Bondholders shall be given until at least 30 days after the occurrence thereof. SECTION 9.03. Certain Rights of Trustee. Except as otherwise provided in Section 9.01: (a) the Trustee may rely and shall be protected in acting or refraining from acting in reliance upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request or direction of any Lessor or the Company mentioned herein shall be sufficiently evidenced by a Lessor Request or Order, in the case of a request or direction of any Lessor, or by a Company Request or Order, in the case of a request or direction of the Company, and any resolution of the Board of Directors of Oglethorpe or the Company may be sufficiently evidenced by a Board Resolution of Oglethorpe or the Company, as the case may be; (c) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate of Oglethorpe or the Company; (d) the Trustee may consult with counsel and the written advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon; (e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Bondholders pursuant to this Indenture, unless such Bondholders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; (f) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of Oglethorpe or the Company, personally or by agent or attorney; and 68 (g) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder. SECTION 9.04. Not Responsible for Recitals or Issuance of Bonds. The recitals contained herein and in the Bonds, except the certificates of authentication, shall not be taken as the statements of the Trustee, and the Trustee assumes no responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture, the Pledged Property or the Bonds, except that the Trustee hereby represents and warrants that this Indenture has been executed and delivered by one of its officers who is duly authorized to execute and deliver such document on its behalf. The Trustee shall not be accountable for the use or application by the Company of Bonds or the proceeds thereof. SECTION 9.05. May Hold Bonds. The Trustee, any Paying Agent, Bond Registrar or any other agent of Oglethorpe or the Company, in its individual or any other capacity, may become the owner or pledgee of Bonds and, subject to Sections 9.08 and 9.13, may otherwise deal with Oglethorpe and the Company with the same rights it would have if it were not Trustee, Paying Agent, Bond Registrar or such other agent. SECTION 9.06. Funds May Be Held by Trustee or Paying Agent; Investments. (a) Subject to Subsection (b) of this Section, any monies held by the Trustee or the Paying Agent hereunder as part of the Pledged Property may, until paid out by the Trustee or the Paying Agent as herein provided, be carried by the Trustee or the Paying Agent on deposit with itself, and neither the Trustee nor the Paying Agent shall have any liability for interest upon any such monies. (b) At any time and from time to time (i) prior to payment in full of any amounts to be paid by the Trustee pursuant to Section 2.12(b) in respect of any series of Bonds, (ii) prior to payment in full of any amount required to be paid by the Trustee in respect of such series of Bonds pursuant to Section 6.07 or (iii) otherwise as provided in a Series Supplemental Indenture creating a series of Bonds, if at the time no Event of Default has occurred and is continuing, the Trustee shall, on Company Request, invest and reinvest in Permitted Investments as specified in such Company Request any monies from the sale of the Bonds of such series at the time on deposit with the Trustee as part of the Pledged Property, together with any income and gains from the investment and reinvestment thereof, and sell any Permitted Investments, in either case, at such prices, including accrued interest, as are set forth in such Company Request, and such Permitted Investments shall be held by the Trustee until so sold in trust as part of the Pledged Property. The Trustee shall, on Company Request, sell such Permitted Investments as may be specified therein, and the Trustee shall, without Company Request, in the event monies are required for payment of any amounts to be paid by the Trustee pursuant to Section 2.12(b) in respect of any series of Bonds and for any installment of principal or interest on any series of Bonds becoming due and payable for which funds are not 69 otherwise available for payment, sell such Permitted Investments as are required to restore to cash as part of the Pledged Property such amounts as are needed for any such payment. The Trustee shall not be responsible for any losses on any investments or sales of Permitted Investments made pursuant to the procedure specified in this Subsection (b). SECTION 9.07. Compensation and Reimbursement. The Company agrees: (1) to pay, or cause to be paid, to the Trustee from time to time reasonable compensation for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); (2) except as otherwise expressly provided herein, to reimburse, or cause to be reimbursed, the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its gross negligence or willful misconduct; and (3) to indemnify, or cause to be indemnified, the Trustee for, and to hold it harmless against, any loss, liability or expense incurred without gross negligence or willful misconduct on its part, arising out of or in connection with the acceptance or administration of this trust, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. As security for the performance of the obligations of the Company under this Section the Trustee shall have a lien prior to the Bonds upon all property and funds held or collected by the Trustee as such, except funds held in trust for the payment of principal of (and premium, if any) or interest on particular Bonds. The Trustee agrees that the provisions of the Supplemental Participation Agreements pursuant to which Oglethorpe has agreed to compensate the Trustee for its services, reimburse it for its expenses and indemnify it against any losses, liabilities or expenses suffered by it shall be deemed compliance by the Company of its obligations under this Section. SECTION 9.08. Disqualification; Conflicting Interests. (a) If the Trustee has or shall acquire any conflicting interest, as defined in this Section, within 90 days after ascertaining that it has such conflicting interest, and if the Default (exclusive of any period of grace or requirement of notice) to which such conflicting interest relates has not been cured, duly waived or otherwise eliminated before the end of such 90-day period, it shall either eliminate such conflicting interest or resign in the manner and with the effect hereinafter specified in this Article. 70 (b) In the event that the Trustee shall fail to comply with the provisions of Subsection (a) of this Section the Trustee shall, within 10 days after the expiration of such 90-day period, transmit by mail to all Bondholders, as their names and addresses appear in the Bond Register, notice of such failure. (c) For the purposes of this Section, the Trustee shall be deemed to have a conflicting interest if a Default (exclusive of any period of grace or requirement of notice) has occurred and is continuing) and: (1) the Trustee is trustee under another indenture under which any other securities, or certificates of interest or participation in any other securities, of any obligor on the Bonds are outstanding, or is trustee for more than one outstanding series under a single indenture of an obligor on the Bonds, unless (A) the Bonds are collateral trust bonds under which the only collateral consists of securities issued under such other indenture, or (B) such other indenture is a collateral trust indenture under which the only collateral consists of Bonds issued under this Indenture, provided that there shall be excluded from the operation of this paragraph any indenture or indentures under which other securities, or certificates of interest or participation in other securities, of such obligor are outstanding, if (i) as to such obligor, this Indenture and such other indenture or indentures (and all series of securities issuable thereunder) are wholly unsecured and rank equally, and such other indenture or indentures (and such series) are hereafter qualified under the TIA, unless the Commission shall have found and declared by order pursuant to subsection (b) of section 305 or subsection (c) of section 307 of the TIA that differences exist between the provisions of such other indenture or indentures (or such series) which are so likely to involve a material conflict of interest as to make it necessary in the public interest or for the protection of investors to disqualify the Trustee from acting as such under one of such indentures, or (ii) such obligor shall have sustained the burden of proving, on application to the Commission and after the opportunity for hearing thereon, that trusteeship under this Indenture and such other indenture or indentures or under more than one outstanding series under a single indenture is not so likely to involve a material conflict of interest as to make it necessary in the public interest or for the protection of investors to disqualify the Trustee from acting as such under one of such indentures or with respect to such series; (2) the Trustee or any of its directors or executive officers is an underwriter for any obligor on the Bonds; (3) the Trustee directly or indirectly controls or is directly or indirectly controlled by or is under direct or indirect common control with an underwriter for any obligor on the Bonds; (4) the Trustee or any of its directors or executive officers is a director, officer, partner, employee, appointee or representative of any obligor on the Bonds, or of an underwriter (other than the Trustee itself) for such obligor who is currently engaged in the business of underwriting, except that (i) one individual may be a director or an executive 71 officer, or both, of the Trustee and a director or an executive officer, or both, of an obligor on the Bonds but may not be at the same time an executive officer of both the Trustee and such obligor; (ii) if and so long as the number of directors of the Trustee in office is more than nine, one additional individual may be director or an executive officer, or both, of the Trustee and a director of an obligor on the Bonds; and (iii) the Trustee may be designated by an obligor on the Bonds or by any underwriter for such obligor to act in the capacity of transfer agent, registrar, custodian, paying agent, fiscal agent, escrow agent, or depositary, or in any other similar capacity, or, subject to the provisions of paragraph (1) of this Subsection, to act as trustee, whether under an indenture or otherwise; (5) 10% or more of the voting securities of the Trustee is beneficially owned either by any obligor on the Bonds or by any director, partner, or executive officer thereof, or 20% or more of such voting securities is beneficially owned, collectively, by any two or more of such persons; or 10% or more of the voting securities of the Trustee is beneficially owned either by an underwriter for any obligor on the Bonds or by any director, partner or executive officer thereof, or is beneficially owned, collectively, by any two or more such persons; (6) the Trustee is the beneficial owner of, or holds as collateral security for an obligation which is in default (as hereinafter in this Subsection defined), (i) 5% or more of the voting securities, or 10% or more of any other class of security, of any obligor on the Bonds not including the Bonds issued under this Indenture and securities issued under any other indenture under which the Trustee is also trustee, or (ii) 10% or more of any class of security of an underwriter for any obligor on the Bonds; (7) the Trustee is the beneficial owner of, or holds as collateral security for an obligation which is in default (as hereinafter in this Subsection defined), 5% or more of the voting securities of any person who, to the knowledge of the Trustee, owns 10% or more of the voting securities of, or controls directly or indirectly or is under direct or indirect common control with, any obligor on the Bonds; (8) the Trustee is the beneficial owner of, or holds as collateral security for an obligation which is in default (as hereinafter in this Subsection defined), 10% or more of any class of security of any person who, to the knowledge of the Trustee, owns 50% or more of the voting securities of any obligor on the Bonds; (9) the Trustee owns, on the date of a Default (exclusive of any period of grace or requirement of notice) or any anniversary of such Default while such Default remains outstanding, in the capacity of executor, administrator, testamentary or inter vivos trustee, guardian, committee or conservator, or in any other similar capacity, an aggregate of 25% or more of the voting securities, or of any class of security, of any person, the beneficial ownership of a specified percentage of which would have constituted a conflicting interest under paragraphs (6), (7) or (8) of this Subsection. As to any such securities of which the Trustee acquired ownership through becoming executor, administrator, or testamentary trustee of an estate which included them, the provisions of the preceding sentence shall not 72 apply, for a period of two years from the date of such acquisition, to the extent that such securities included in such estate do not exceed 25% of such voting securities or 25% of any such class of security. Promptly after the dates of any such Default upon the Bonds and annually in each succeeding year that the Bonds remain in default, in each calendar year, the Trustee shall make a check of its holdings of such securities in any of the above-mentioned capacities as of such date. If any obligor upon the Bonds fails to make payment in full of the principal of, or the premium, if any, or interest on, any of the Bonds when and as the same becomes due and payable, and such failure continues for 30 days thereafter, the Trustee shall make a prompt check of its holdings of such securities in any of the above-mentioned capacities as of the date of the expiration of such 30-day period, and after such date, notwithstanding the foregoing provisions of this paragraph, all such securities so held by the Trustee, with sole or joint control over such securities vested in it, shall, but only so long as such failure shall continue, be considered as though beneficially owned by the Trustee for the purposes of paragraphs (6), (7) and (8) of this Subsection; or (10) except under the circumstances described in paragraph (1), (3), (4), (5) or (6) of section 311(b) of the TIA, the Trustee shall be or shall become a creditor of any obligor on the Bonds. For purposes of paragraph (1) of this Subsection, the term "series of securities" or "series" means a series, class or group of securities issuable under an indenture pursuant to whose terms holders of one such series may vote to direct the indenture trustee, or otherwise take action pursuant to a vote of such holders, separately from holders of another such series; provided that "series of securities" or "series" shall not include any series of securities issuable under an indenture if all such series rank equally and are wholly unsecured. The specification of percentages in paragraphs (5) to (9) inclusive, of this Subsection, shall not be construed as indicating that the ownership of such percentages of the securities of a person is or is not necessary or sufficient to constitute direct or indirect control for the purposes of paragraph (3) or (7) of this Subsection. For the purposes of paragraphs (6), (7), (8) and (9) of this Subsection only, (i) the terms "security" and "securities" shall include only such securities as are generally known as corporate securities, but shall not include any note or other evidence of indebtedness issued to evidence an obligation to repay moneys loaned to a person by one or more banks, trust companies or banking firms, or any certificate of interest or participation in any such note or evidence of indebtedness; (ii) an obligation shall be deemed to be "in default" when a default in payment of principal shall have continued for 30 days or more and shall not have been cured; and (iii) the Trustee shall not be deemed to be the owner or holder of (A) any security which it holds as collateral security, as trustee or otherwise, for an obligation which is not in default as defined in clause (ii) above, or (B) any security which it holds as collateral security under this Indenture, irrespective of any default hereunder, or (C) any security which it holds as agent for collection, or as custodian, escrow agent, or depositary, or in any similar representative capacity. 73 Except as provided in the next preceding paragraph, the word "security" or "securities" as used in this Indenture shall mean any note, stock, treasury stock, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, collateral trust certificate, preorganization certificate or subscription, transferable share, investment contract, voting trust certificate, certificate of deposit for a security, fractional undivided interest in oil, gas, or other mineral rights, or, in general, any interest or instrument commonly known as a "security," or any certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase, any of the foregoing. (d) For the purposes of this Section: (1) The term "underwriter" when used with reference to any obligor on the Bonds means every person who, within one year prior to the time as of which the determination is made, has purchased from such obligor with a view to, or has offered or sold for such obligor in connection with, the distribution of any security of such obligor outstanding at such time, or has participated or has had a direct or indirect participation in any such undertaking, or has participated or has had a participation in the direct or indirect underwriting of any such undertaking, but such term shall not include a person whose interest was limited to a commission from an underwriter or dealer not in excess of the usual and customary distributors' or sellers' commission. (2) The term "director" means any director of a corporation, or any individual performing similar functions with respect to any organization whether incorporated or unincorporated. (3) The term "person" means an individual, a corporation, a partnership, an association, a joint-stock company, a trust, an unincorporated organization, or a government or political subdivision thereof. As used in this paragraph, the term "trust" shall include only a trust where the interest or interests of the beneficiary or beneficiaries are evidenced by a security. (4) The term "voting security" means any security presently entitling the owner or holder thereof to vote in the direction or management of the affairs of a person, or any security issued under or pursuant to any trust, agreement or arrangement whereby a trustee or trustees or agent or agents for the owner or holder of such security are presently entitled to vote in the direction or management of the affairs of a person. (5) The term "obligor" means any obligor upon the Bonds within the meaning of TIA. (6) The term "executive officer" means the president, every vice president, every trust officer, the cashier, the secretary, and the treasurer of a corporation, and any individual customarily performing similar functions with respect to any organization whether incorporated or unincorporated, but shall not include the chairman of the board of directors. 74 (e) The percentages of the voting securities and other securities specified in this Section shall be calculated in accordance with the following provisions: (1) A specified percentage of the voting securities of the Trustee, any obligor or any other person referred to in this Section (each of whom is referred to as a "person" in this paragraph) means such amount of the outstanding voting securities of such person as entitles the holder or holders thereof to cast such specified percentage of the aggregate votes which the holders of all the outstanding voting securities of such person are entitled to cast in the direction or management of the affairs of such person. (2) A specified percentage of a class of securities of a person means such percentage of the aggregate amount of securities of the class outstanding. (3) The term "amount," when used in regard to securities, means the principal amount if relating to evidences of indebtedness, the number of shares if relating to capital shares, and the number of units if relating to any other kind of security. (4) The term "outstanding" means issued and not held by or for the account of the issuer. The following securities shall not be deemed outstanding within the meaning of this definition: (i) securities of an issuer held in a sinking fund relating to securities of the issuer of the same class; (ii) securities of an issuer held in a sinking fund relating to another class of securities of the issuer, if the obligation evidenced by such other class of securities is not in default as to principal or interest or otherwise; (iii) securities pledged by the issuer thereof as security for an obligation of the issuer not in default as to principal or interest or otherwise; and (iv) securities held in escrow if placed in escrow by the issuer thereof; provided, however, that any voting securities of an issuer shall be deemed outstanding if any person other than the issuer is entitled to exercise the voting rights thereof. (5) A security shall be deemed to be of the same class as another security if both securities confer upon the holder or holders thereof substantially the same rights and privileges; provided, however, that, in the case of secured evidences of indebtedness, all of which are issued under a single indenture, differences in the interest rates or maturity dates of various series thereof shall not be deemed sufficient to constitute such series different classes and provided, further, that, in the case of unsecured evidences of indebtedness, differences in the interest rates or maturity dates thereof shall not be deemed sufficient to constitute them securities of different classes, whether or not they are issued under a single indenture. 75 SECTION 9.09. Corporate Trustee Required; Eligibility. There shall at all times be a Trustee hereunder which shall be a corporation organized and doing business under the laws of the United States of America or of any State, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least $50,000,000, and subject to supervision or examination by Federal or State authority. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article. Neither the Company, Oglethorpe nor any other obligor on the Bonds, or any person directly or indirectly controlling, controlled by or under common control with the Company, Oglethorpe or any other obligor on the Bonds, shall be eligible to serve as Trustee. SECTION 9.10. Resignation and Removal; Appointment of Successor. (a) Except in the case of a default in the payment of the principal of, or premium, if any, or interest on any Bond, or in the payment of any sinking or purchase fund installment, the Trustee shall not be required to resign as provided by Section 9.08(a) if such Trustee shall have sustained the burden of proving, on application to the Commission and after opportunity for hearing thereon, that: (1) the default under this Indenture may be cured or waived during a reasonable period and under the procedures described in such application; and (2) a stay of the Trustee's duty to resign will not be inconsistent with the interests of Bondholders. The filing of such an application shall automatically stay the performance of the Trustee's duty to resign until the Commission orders otherwise. (b) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee under Section 9.11. (c) The Trustee may resign at any time by giving written notice thereof to Oglethorpe and the Company. If an instrument of acceptance by a successor Trustee shall not have been delivered to Oglethorpe, the Company and the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee. 76 (d) The Trustee may be removed at any time by Act of the Holders of a majority in principal amount of the Outstanding Bonds, delivered to the Trustee, Oglethorpe and to the Company. (e) If at any time: (1) the Trustee shall fail to comply with Section 9.08(a) after written request therefor by any Lessor or by any Bondholder who has been a bona fide Holder of a Bond for at least 6 months, or (2) the Trustee shall cease to be eligible under Section 9.09 and shall fail to resign after written request therefor by any Lessor or by any such Bondholder, or (3) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then, in any such case, (i) Oglethorpe, acting after consultation with the Company, may remove the Trustee by Board Resolution or (ii) subject to Section 8.10, unless such Trustee's duty to resign is stayed as provided in Subsection (a) above, any Bondholder who has been a bona fide Holder of a Bond for at least 6 months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. (f) If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause, Oglethorpe, acting after consultation with the Company, shall promptly appoint by Board Resolution a successor Trustee. If, within 1 year after such resignation, removal or incapability, or the occurrence of such vacancy, a successor Trustee shall be appointed by Act of the Holders of a majority in principal amount of the Outstanding Bonds delivered to Oglethorpe, the Company and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment, become the successor Trustee and supersede the successor Trustee appointed by Oglethorpe. If no successor Trustee shall have been so appointed by Oglethorpe, acting after consultation with the Company, or the Bondholders and accepted appointment in the manner hereinafter provided, any Bondholder who has been a bona fide Holder of a Bond for at least 6 months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee. (g) The Company shall give notice of each resignation and each removal of the Trustee and each appointment of a successor Trustee by mailing written notice of such event by first-class mail, postage prepaid, to the Holders of Bonds as their names and addresses appear in the Bond Register. Each notice shall include the name of the successor Trustee and the address of its Corporate Trust Office. 77 SECTION 9.11. Acceptance of Appointment by Successor. Every successor Trustee appointed hereunder shall execute, acknowledge and deliver to Oglethorpe, the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on request of any Lessor, the Company or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee, and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder, subject nevertheless to its lien, if any, provided for in Section 9.07. Upon request of any such successor Trustee, Oglethorpe and the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts. No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article. SECTION 9.12. Merger, Conversion, Consolidation or Succession to Business. Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such corporation shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Bonds shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Bonds so authenticated with the same effect as if such successor Trustee had itself authenticated such Bonds. SECTION 9.13. Preferential Collection of Claims against any Obligor. (a) Subject to Subsection (b) of this Section, if the Trustee shall be or shall become a creditor, directly or indirectly, secured or unsecured, of any obligor on the Bonds (as defined in Subsection (c) of this Section) within 3 months prior to a default, as defined in Subsection (c) of this Section, or subsequent to such a default, then, unless and until such default shall be cured, the Trustee shall set apart and hold in a special account for the benefit of the Trustee individually, the Holders of the Bonds and the holders of other indenture securities (as defined in Subsection (c) of this Section): (1) an amount equal to any and all reductions in the amount due and owing upon any claim as such creditor in respect of principal or interest, effected after the beginning of such 3 month period and valid as against any obligor on the Bonds and its other creditors, 78 except any such reduction resulting from the receipt or disposition of any property described in paragraph (2) of this Subsection, or from the exercise of any right of set-off which the Trustee could have exercised if a petition in bankruptcy had been filed by or against any such obligor upon the date of such default; and (2) all property received by the Trustee in respect of any claim as such creditor, either as security therefor, or in satisfaction or composition thereof, or otherwise, after the beginning of such 3 month period, or an amount equal to the proceeds of any such property, if disposed of, subject, however, to the rights, if any, of any obligor on the Bonds and its other creditors in such property or such proceeds. Nothing herein contained, however, shall affect the right of the Trustee: (A) to retain for its own account (i) payments made on account of any such claim by any Person (other than an obligor on the Bonds) who is liable thereon, and (ii) the proceeds of the bona fide sale of any such claim by the Trustee to a third person, and (iii) distributions made in cash, securities or other property in respect of claims filed against such obligor in bankruptcy or receivership or in proceedings for reorganization pursuant to the Federal Bankruptcy Code or applicable State law; (B) to realize, for its own account, upon any property held by it as security for any such claim, if such property was so held prior to the beginning of such 3 month period; (C) to realize, for its own account, but only to the extent of the claim hereinafter mentioned, upon any property held by it as security for any such claim, if such claim was created after the beginning of such 3 month period and such property was received as security therefor simultaneously with the creation thereof, and if the Trustee shall sustain the burden of proving that at the time such property was so received the Trustee had no reasonable cause to believe that a default as defined in Subsection (c) of this Section would occur within 3 months; or (D) to receive payment on any claim referred to in paragraph (B) or (C), against the release of any property held as security for such claim as provided in paragraph (B) or (C), as the case may be, to the extent of the fair value of such property. For the purposes of paragraphs (B), (C) and (D), property substituted after the beginning of such 3 month period for property held as security at the time of such substitution shall, to the extent of the fair value of the property released, have the same status as the property released, and, to the extent that any claim referred to in any of such paragraphs is created in renewal of or in substitution for or for the purpose of repaying or refunding any preexisting claim of the Trustee as such creditor, such claim shall have the same status as such pre-existing claim. If the Trustee shall be required to account, the funds and property held in such special account and the proceeds thereof shall be apportioned between the Trustee, the Bondholders and the holders 79 of other indenture securities in such manner that the Trustee, the Bondholders and the holders of other indenture securities realize, as a result of payments from such special account and payments of dividends on claims filed against the obligor on the Bonds in bankruptcy or receivership or in proceedings for reorganization pursuant to the Federal Bankruptcy Code or applicable State law, the same percentage of their respective claims, figured before crediting to the claim of the Trustee anything on account of the receipt by it from such obligor of the funds and property in such special account and before crediting to the respective claims of the Trustee and the Bondholders and the holders of other indenture securities dividends on claims filed against such obligor in bankruptcy or receivership or in proceedings for reorganization pursuant to the Federal Bankruptcy Code or applicable State law, but after crediting thereon receipts on account of the indebtedness represented by their respective claims from all sources other than from such dividends and from the funds and property so held in such special account. As used in this paragraph, with respect to any claim, the term "dividends" shall include any distribution with respect to such claim, in bankruptcy or receivership or proceedings for reorganization pursuant to the Federal Bankruptcy Code or applicable State law, whether such distribution is made in cash, securities, or other property, but shall not include any such distribution with respect to the secured portion, if any, of such claim. The court in which such bankruptcy, receivership or proceedings for reorganization is pending shall have jurisdiction (i) to apportion between the Trustee and the Bondholders and the holders of other indenture securities, in accordance with the provisions of this paragraph, the funds and property held in such special account and proceeds thereof, or (ii) in lieu of such apportionment, in whole or in part, to give to the provisions of this paragraph due consideration in determining the fairness of the distributions to be made to the Trustee and the Bondholders and the holders of other indenture securities with respect to their respective claims, in which event it shall not be necessary to liquidate or to appraise the value of any securities or other property held in such special account or as security for any such claim, or to make a specific allocation of such distributions as between the secured and unsecured portions of such claims, or otherwise to apply the provisions of this paragraph as a mathematical formula. Any Trustee which has resigned or been removed after the beginning of such 3 month period shall be subject to the provisions of this Subsection as though such resignation or removal had not occurred. If any Trustee has resigned or been removed prior to the beginning of such 3 month period, it shall be subject to the provisions of this Subsection if and only if the following conditions exist: (i) the receipt of property or reduction of claim, which would have given rise to the obligation to account if such Trustee had continued as Trustee, occurred after the beginning of such 3 month period; and (ii) such receipt of property or reduction of claim occurred within 3 months after such resignation or removal. (b) There shall be excluded from the operation of Subsection (a) of this Section a creditor relationship arising from: 80 (1) the ownership or acquisition of securities issued under any indenture, or any security or securities having a maturity of one year or more at the time of acquisition by the Trustee; (2) advances authorized by a receivership or bankruptcy court of competent jurisdiction, or by this Indenture, for the purpose of preserving any property which shall at any time be subject to the lien of this Indenture or of discharging tax liens or other prior liens or encumbrances thereon, if notice of such advances and of the circumstances surrounding the making thereof is given to the Bondholders at the time and in the manner provided in this Indenture; (3) disbursements made in the ordinary course of business in the capacity of trustee under an indenture, transfer agent, registrar, custodian, paying agent, fiscal agent or depositary, or other similar capacity; (4) an indebtedness created as a result of services rendered or premises rented; or an indebtedness created as a result of goods or securities sold in a cash transaction as defined in Subsection (c) of this Section; (5) the ownership of stock or of other securities of a corporation organized under the provisions of Section 25(a) of the Federal Reserve Act, as amended, which is directly or indirectly a creditor of any obligor of the Bonds; or (6) the acquisition, ownership, acceptance or negotiation of any drafts, bills of exchange, acceptances or obligations which fall within the classification of self-liquidating paper as defined in Subsection (c) of this Section. (c) For the purposes of this Section only: (1) the term "default" means any failure to make payment in full of the principal of or interest on any of the Bonds or upon the other indenture securities when and as such principal or interest becomes due and payable. (2) The term "other indenture securities" means securities upon which the Person obligated thereunder is an obligor (as defined in the TIA) outstanding under any other indenture (i) under which the Trustee is also trustee, (ii) which has been qualified under the TIA, and (iii) under which a default exists at the time of the apportionment of the funds and property held in a special account as provided in Subsection (a) of this Section. (3) The term "cash transaction" means any transaction in which full payment for goods or securities sold is made within 7 days after delivery of the goods or securities in currency or in checks or other orders drawn upon banks or bankers and payable upon demand. 81 (4) the term "self-liquidating paper" means any draft, bill of exchange, acceptance or obligation which is made, drawn, negotiated or incurred by any obligor on the Bonds for the purpose of financing the purchase, processing, manufacturing, shipment, storage or sale of goods, wares or merchandise and which is secured by documents evidencing title to, possession of, or a lien upon, the goods, wares or merchandise or the receivables or proceeds arising from the sale of the goods, wares or merchandise previously constituting the security, provided the security is received by the Trustee simultaneously with the creation of the creditor relationship with such obligor arising from the making, drawing, negotiating or incurring of the draft, bill of exchange, acceptance or obligation. (5) the term "obligor" means any obligor upon the Bonds within the meaning of TIA. SECTION 9.14. Maintenance of Agencies. (a) There shall at all times be maintained in the Borough of Manhattan, The City of New York, an office or agency where Bonds may be presented or surrendered for registration of transfer or exchange or for the registration thereof, and for payment of principal, premium (if any) and interest and where notices and demands to or upon the Trustee in respect of the Bonds or of this Indenture may be served. Such office or agency shall be initially at the Trustee's New York Office. Written notice of the location of each such other office or agency and of any change of location thereof shall be given by the Trustee to the Company, Oglethorpe and the Holders of the Bonds as their names and addresses appear on the Bond Register. In the event that no such office or agency shall be maintained or no such notice of location or of change of location shall be given, presentations and demands may be made and notices may be served at the Corporate Trust Office. (b) There shall at all times be a Bond Registrar and a Paying Agent hereunder. Each such Authorized Agent shall be a bank or trust company, shall be a corporation organized and doing business under the laws of the United States or any State, with a combined capital and surplus of at least $50,000,000, and shall be authorized under such laws to exercise corporate trust powers, subject to supervision by Federal or State authorities. Each Bond Registrar other than the Trustee shall furnish to the Trustee, at stated intervals of not more than 6 months, and at such other times as the Trustee may request in writing, a copy of the Bond Register. (c) Any Paying Agent (other than the Trustee) from time to time appointed hereunder shall execute and deliver to the Trustee an instrument in which said Paying Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying Agent will: (1) hold all sums held by it for the payment of principal of, premium (if any) and interest on Bonds in trust for the benefit of the persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided; 82 (2) give the Trustee within five days thereafter notice of any default by any obligor upon the Bonds in the making of any such payment of principal, premium (if any) or interest; and (3) at any time during the continuance of any such default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent. Notwithstanding any other provision of this Indenture, any payment required to be made to or received or held by the Trustee may, to the extent authorized by written instructions of the Trustee, be made to or received or held by a Paying Agent in the Borough of Manhattan, The City of New York, for the account of the Trustee. (d) There shall at all times be an Authenticating Agent hereunder. Each Authenticating Agent shall be a bank or trust company organized under the laws of any state of the United States or a national banking association having capital and surplus aggregating at least $25,000,000 and which shall be authorized to exercise corporate trust powers and be subject to supervision or examination by Federal or State authorities. (e) Any corporation into which any Authorized Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, consolidation or conversion to which any Authorized Agent shall be a party, or any corporation succeeding to the corporate trust business of any Authorized Agent, shall be the successor of such Authorized Agent hereunder, if such successor corporation is otherwise eligible under this Section, without the execution or filing of any paper or any further act on the part of the parties hereto or such Authorized Agent or such successor corporation. (f) Any Authorized Agent may at any time resign by giving written notice of resignation to the Trustee, Oglethorpe and the Company. The Company, may, and at the request of the Trustee or any Lessor shall, at any time terminate the agency of any Authorized Agent other than an Authenticating Agent by giving written notice of termination to such Authorized Agent and to the Trustee. Upon the resignation or termination of an Authorized Agent other than an Authenticating Agent or in case at any time any such Authorized Agent shall cease to be eligible under this Section (when, in either case, no other Authorized Agent performing the functions of such Authorized Agent shall have been appointed), the Company shall promptly appoint one or more qualified successor Authorized Agents approved by the Trustee and each Lessor to perform the functions of the Authorized Agent which has resigned or whose agency has been terminated or who shall have ceased to be eligible under this Section. The Company shall give written notice of any such appointment made by it to the Trustee and the Trustee shall mail notice of such appointment to all Holders as their names and addresses appear on the Bond Register. The Trustee may at any time terminate the agency of any Authenticating Agent appointed pursuant to paragraph (d) of this Section by giving written notice of such termination to such Authenticating Agent, Oglethorpe and the Company. 83 (g) The Company agrees to pay, or cause to be paid, from time to time to each Authorized Agent reasonable compensation for its services and to reimburse it for its reasonable expenses. ARTICLE TEN BONDHOLDERS' LISTS AND REPORTS BY TRUSTEE AND OGLETHORPE SECTION 10.01. Oglethorpe to Furnish Trustee Names and Addresses of Bondholders. Oglethorpe will furnish or cause to be furnished to the Trustee semiannually, between January 15 and January 30, inclusive, and between July 15 and July 30, inclusive, in each year, and at such other times as the Trustee may request in writing, within 30 days after receipt by Oglethorpe of any such request, a list, in such form as the Trustee may reasonably require, of the names and addresses of the Holders of Bonds, in each case as of a date not more than 15 days prior to the time such list is furnished; provided, however, that so long as the Trustee is the sole Bond Registrar, no such list need be furnished; and provided further, however, that no such list need be furnished for so long as a copy of the Bond Register is being furnished to the Trustee pursuant to Section 9.14(b). SECTION 10.02. Preservation of Information; Communications to Bondholders. (a) The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders of Bonds contained in the most recent list furnished to the Trustee as provided in Section 9.14(b) or Section 10.01, as the case may be, and the names and addresses of Holders of Bonds received by the Trustee in its capacity as Bond Registrar, if so acting. The Trustee may destroy any list furnished to it as provided in Section 9.14(b) or Section 10.01, as the case may be, upon receipt of a new list so furnished. (b) If 3 or more Holders of Bonds (hereinafter referred to as "applicants") apply to the Trustee, and furnish to the Trustee reasonable proof each such applicant has owned a Bond for a period of at least 6 months preceding the date of such application, and such application states that the applicants desire to communicate with other Holders of Bonds with respect to their rights under this Indenture or under the Bonds and is accompanied by a copy of the form of proxy or other communication which such applicants propose to transmit, then the Trustee shall, within 5 Business Days after the receipt of such application, at its election, either: (i) afford such applicants access to the information preserved at the time by the Trustee in accordance with Section 10.02(a), or (ii) inform such applicants as to the approximate number of Holders of Bonds whose names and addresses appear in the information preserved at the time by the Trustee in accordance with Section 10.02(a), and as to the approximate cost of mailing, to such Bondholders the form of proxy or other communication, if any, specified in such application. 84 If the Trustee shall elect not to afford such applicants access to such information, the Trustee shall, upon the written request of such applicants, mail to each Bondholder whose name and address appears in the information preserved at the time by the Trustee in accordance with Section 10.02(a), a copy of the form of proxy or other communication which is specified in such request, with reasonable promptness after a tender to the Trustee of the material to be mailed and of payment, or provision for the payment, of the reasonable expenses of mailing, unless within 5 days after such tender, the Trustee shall mail to such applicants and file with the Commission, together with a copy of the material to be mailed, a written statement to the effect that, in the opinion of the Trustee, such mailing would be contrary to the best interests of the Holders of Bonds or would be in violation of applicable law. Such written statement shall specify the basis of such opinion. If the Commission, after opportunity for a hearing upon the objections specified in the written statement so filed, shall enter an order refusing to sustain any of such objections or if, after the entry of an order sustaining one or more of such objections, the Commission shall find, after notice and opportunity for hearing, that all the objections so sustained have been met and shall enter an order so declaring, the Trustee shall mail copies of such material to all such Bondholders with reasonable promptness after the entry of such order and the renewal of such tender; otherwise the Trustee shall be relieved of any obligation or duty to such applicants respecting their application. (c) Every Holder of Bonds, by receiving and holding the same, agrees with Oglethorpe and the Trustee that neither Oglethorpe nor the Trustee shall be held accountable by reason of the disclosure of any such information as to the names and addresses of the Holders of Bonds in accordance with Section 10.02(b), regardless of the source from which such information was derived, and that the Trustee shall not be held accountable by reason of mailing any material pursuant to a request made under Section 10.02(b). SECTION 10.03. Reports by Trustee. (a) Within 60 days after May 15 in each year, commencing with 1998, the Trustee shall transmit by mail to all Bondholders, in accordance with Subsection (d) of this Section, a brief report dated as of such May 15 with respect to: (1) any change to its eligibility under Section 9.09 and its qualifications under Section 9.08; (2) the creation of or any material change to a relationship specified in paragraphs (1) through (10), inclusive, of Section 9.08(c); (3) the character and amount of any advances (and if the Trustee elects so to state, the circumstances surrounding the making thereof) made by the Trustee (as such) which remain unpaid on the date of such report, and for the reimbursement of which it claims or may claim a lien or charge, prior to that of the Bonds, on any property or funds held or collected by it as Trustee, except that the Trustee shall not be required (but may elect) to report such advances of such advances so remaining unpaid aggregate not more than 1/2 of 1% of the principal amount of the Bonds Outstanding on the date of such report; 85 (4) the amount, interest rate and maturity date of all other indebtedness owing by any obligor on the Bonds within the meaning of the TIA to the Trustee in its individual capacity, on the date of such report, with a brief description of any property held as collateral security therefor, except an indebtedness based upon a creditor relationship arising in any manner described in Section 9.13(b)(2), (3), (4) or (6); (5) any change to the property and funds, if any, physically in the possession of the Trustee as such on the date of such report; (6) any change to any release, or release and substitution, of property subject to the lien of this Indenture (and the consideration therefor, if any) which the Trustee has not previously reported; (7) any additional issue of Bonds which the Trustee has not previously reported; and (8) any action taken by the Trustee in the performance of its duties hereunder which it has not previously reported and which in its opinion materially affects the Bonds, except action in respect of a default, notice of which has been or is to be withheld by the Trustee in accordance with Section 9.02. (b) The Trustee shall transmit by mail to all Bondholders, in accordance with Subsection (d), a brief report with respect to: (1) the release, or release and substitution, of property subject to the lien of this Indenture (and the consideration therefor, if any), such report to be transmitted within 90 days of such time; (2) the character and amount of any advances (and if the Trustee elects so to state, the circumstances surrounding the making thereof) made by the Trustee (as such) since the date of the last report transmitted pursuant to Subsection (a) of this Section (or if no such report has yet been so transmitted, since the date of execution of this instrument) for the reimbursement of which it claims or may claim a lien or charge, prior to that of the Bonds, on property or funds held or collected by it as Trustee, and which it has not previously reported pursuant to this Subsection, except that the Trustee shall not be required (but may elect) to report such advances if such advances remaining unpaid at any time aggregate 10% or less of the principal amount of the Bonds Outstanding at such time, such report to be transmitted within 90 days after such time. (c) A copy of each such report shall, at the time of such transmission to Bondholders, be filed by the Trustee with each stock exchange upon which the Bonds are listed, and also with the Commission. Oglethorpe will notify the Trustee when the Bonds are listed on any stock exchange. (d) Reports pursuant to this Section shall be transmitted: 86 (1) to all Bondholders, as their names and addresses appear in the Bond Register; (2) to such Bondholders as have, within the 2 years preceding such transmission, filed their names and addresses with the Trustee for that purpose; and (3) except in the case of reports pursuant to Subsection (b) of this Section, to each Bondholder whose name and address is preserved at the time by the Trustee, as provided in Section 10.02(a). SECTION 10.04. Reports by Oglethorpe. Oglethorpe will: (1) file with the Trustee, within 15 days after Oglethorpe is required to file the same with the Commission, copies of the annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the Commission may from time to time by rules and regulations prescribe) which Oglethorpe may be required to file with the Commission pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934; or, if Oglethorpe is not required to file information, documents or reports pursuant to either of said Sections, then it will file with the Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission, such of the supplementary and periodic information, documents and reports which may be required pursuant to Section 13 of the Securities Exchange Act of 1934 in respect of a security listed and registered on a national securities exchange as may be prescribed from time to time in such rules and regulations; (2) file with the Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission, such additional information, documents and reports with respect to compliance by Oglethorpe with the conditions and covenants of this Indenture as may be required from time to time by such rules and regulations; and (3) transmit by mail to all Bondholders, as their names and addresses appear in the Bond Register, within 30 days after the filing thereof with the Trustee, such summaries of any information, documents and reports required to be filed by Oglethorpe pursuant to paragraphs (1) and (2) of this Section as may be required by rules and regulations prescribed from time to time by the Commission. 87 ARTICLE ELEVEN SUPPLEMENTAL INDENTURES SECTION 11.01. Supplemental Indentures Without Consent of Bondholders. Without the consent of the Holders of any Bonds, Oglethorpe, when authorized by a Board Resolution, the Company and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto, in form satisfactory to the Trustee, for any of the following purposes: (1) to evidence the succession of another corporation to Oglethorpe, and the assumption by any such successor of the covenants of Oglethorpe herein contained, or to evidence the succession of another corporation to the Company and the assumption by any such successor of the covenants of the Company herein and in the Bonds contained; or (2) to add to the covenants of Oglethorpe or the Company, for the benefit of the Holders of the Bonds, or to evidence the surrender of any right or power herein conferred upon Oglethorpe or the Company; or (3) to convey, transfer and assign to the Trustee, and to subject to the Lien of this Indenture, with the same force and effect as though included in the Granting Clauses hereof, additional properties or assets, and to correct or amplify the description of any property at any time subject to the Lien of this Indenture or better to assure, convey and confirm unto the Trustee any property subject or required to be subject to the Lien of this Indenture; or (4) to cure any ambiguity, to correct or supplement any provision herein which may be defective or inconsistent with any other provision herein, or to make any other provisions with respect to matters or questions arising under this Indenture, provided such action shall not in the opinion of Oglethorpe, as evidenced by an Officers' Certificate delivered to the Trustee, adversely affect the interest of the Holders of the Bonds in any material respect; or (5) to evidence the succession of a new trustee hereunder; or (6) to establish the form and terms of Bonds of any series permitted by Section 2.01(a); or (7) to permit or facilitate the issuance of Bonds in uncertificated form; or (8) to change or eliminate any provision of this Indenture; provided, however, that if such change or elimination shall materially adversely affect the interests of the Holders of 88 Bonds of any series, such change or elimination shall become effective with respect to such series only when no bond of such series remains Outstanding; or (9) if required by applicable law, to qualify this Indenture under the TIA. Without limiting the generality of the foregoing, if the TIA as in effect at the date of the execution and delivery of this Indenture or at any time thereafter shall be amended and: (x) if any such amendment shall require one or more changes to any provisions hereof or the inclusion herein of any additional provisions, or shall by operation of law be deemed to effect such changes or incorporate such provisions by reference or otherwise, this Indenture shall be deemed to have been amended so as to conform to such amendment to the TIA, and the Company, Oglethorpe and the Trustee may, without the consent of or notice to any Holders, enter into any indenture supplemental hereto to evidence such amendment hereof; or (y) if any such amendment shall permit one or more changes to, or the elimination of, any provisions hereof which, at the date of the execution and delivery hereof or at any time thereafter, are required by the TIA to be contained herein or are contained herein to reflect any provisions of the TIA as in effect at such date, this Indenture shall be deemed to have been amended to effect such changes or elimination, and the Company, Oglethorpe and the Trustee may, without the consent of or notice to any Holders, enter into an indenture supplemental hereto to evidence such amendment hereof. The Trustee may rely on the written evidence of any nationally recognized statistical rating organization then rating the Bonds or of an independent investment banking institution with respect to credit matters relating to the Company or Lessee to the extent it deems such reliance to be appropriate. SECTION 11.02. Supplemental Indentures with Consent of Bondholders. With the consent of the Holders of not less than a majority in principal amount of the Outstanding Bonds, by Act of said Holders delivered to the Company and the Trustee, Oglethorpe, and the Company may and the Trustee, subject to Section 11.03 shall, enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to, or changing in any manner or eliminating any of the provisions of, this Indenture or of modifying in any manner the rights and obligations of the Holders of the Bonds and of Oglethorpe and the Company under this Indenture; provided, however, that if there shall be Bonds of more than one series Outstanding hereunder and if a proposed supplemental indenture shall directly affect the rights of the Holders of Bonds of one or more, but less than all, of such series, then the consent only of the Holders of a majority in aggregate principal amount of the Outstanding Bonds of all series so directly affected, considered as one class, shall be required; provided, however, that no such supplemental indenture shall, without the consent of the Holder of each Outstanding Bond affected thereby, 89 (1) change the Stated Maturity of the principal of, or any installment of interest on, or the dates or circumstances of payment of premium (if any) on, any Bond, or reduce the principal amount thereof or the interest thereon or any premium payable upon the redemption thereof, or change the place of payment where, or the coin or currency in which, any Bond or the premium (if any) or the interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment of principal or interest on or after the Stated Maturity thereof (or, in the case of redemption, on or after the Redemption Date) or such payment of premium (if any) on or after the date such premium becomes due and payable, or change the dates or the amounts of payments to be made through the operation of a Sinking Fund in respect of such Bonds, or (2) permit the creation of any lien prior to or, except with respect to additional series of Bonds issued in accordance with the terms of this Indenture, pari passu with the Lien of this Indenture with respect to any of the Pledged Property, or terminate the Lien of this Indenture on any Pledged Property (except in each case as permitted by, and pursuant to, Article Four) or deprive any Bondholder of the security afforded by the Lien of this Indenture, or (3) reduce the percentage in principal amount of the Outstanding Bonds, the consent of whose Holders is required for any such supplemental indenture, or the consent of whose Holders is required for any waiver (of compliance with certain provisions of this Indenture or certain defaults hereunder and their consequences) provided for in this Indenture, or (4) modify any of the provisions of this Section or Section 8.09, except to increase any such percentage or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Bond affected thereby. A supplemental indenture which changes or eliminates any covenant or other provision of this Indenture which has expressly been included solely for the benefit of one or more particular series of Securities, or which modifies the rights of the Holders of Bonds of such series with respect to such covenant or other provision, shall be deemed not to affect the rights under this Indenture of the Holders of Bonds of any other series. Upon receipt by the Trustee of Board Resolutions of Oglethorpe and the Company and such other documentation as the Trustee may reasonably require and upon the filing with the Trustee of evidence of the Act of said Holders, the Trustee shall join in the execution of such supplemental indenture or other instrument, as the case may be, subject to the provisions of Section 11.04. It shall not be necessary for any Act of Bondholders under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof. 90 SECTION 11.03. Documents Affecting Immunity or Indemnity. If in the opinion of the Company or the Trustee any document required to be executed by it pursuant to the terms of Section 11.02 affects any interest, right, duty, immunity or indemnity in favor of the Company or the Trustee under this Indenture or any of the Supplemental Participation Agreements, the Company or the Trustee, as the case may be, may in its discretion decline to execute such document. SECTION 11.04. Execution of Supplemental Indentures. In executing, or accepting the additional trusts created by, any supplemental indenture permitted by this Article or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and (subject to Section 9.01) shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture. SECTION 11.05. Effect of Supplemental Indentures. Upon the execution of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Bonds theretofore or thereafter authenticated and delivered hereunder shall be bound thereby. SECTION 11.06. Conformity with Trust Indenture Act. Every supplemental indenture executed pursuant to this Article shall conform to the requirements of TIA as then in effect. SECTION 11.07. Reference in Bonds to Supplemental Indentures. Bonds authenticated and delivered after the execution of any supplemental indenture pursuant to this Article may, and shall if required by any Lessor, the Company or Oglethorpe, bear a notation in form approved by such Lessor, the Company, Oglethorpe and the Trustee as to any matter provided for in such supplemental indenture; and, in such case, suitable notation may be made upon Outstanding Bonds after proper presentation and demand. If any Lessor, the Company or Oglethorpe shall so determine, new Bonds so modified as to conform, in the opinion of such Lessor, the Company, Oglethorpe and the Trustee, to any such supplemental indenture may be prepared and executed by the Company and authenticated and delivered by the Trustee or other Authenticating Agent in exchange for Outstanding Bonds. 91 ARTICLE TWELVE SATISFACTION AND DISCHARGE SECTION 12.01. Satisfaction and Discharge of Indenture. If at any time (a) the Company shall have delivered to the Trustee for cancellation all Bonds theretofore authenticated and delivered (other than any Bonds which shall have been destroyed, lost or stolen and which shall have been replaced or paid as provided in Section 2.06 or Bonds for whose payment money has theretofore been deposited in trust and thereafter repaid to the Company as provided in Section 5.03), or (b) all such Bonds, not theretofore delivered to the Trustee for cancellation, shall be deemed to have been "Paid" in accordance with Section 12.02 under arrangements satisfactory to the Trustee, and if in either case the Company shall also pay or cause to be paid all other sums payable hereunder by the Company, then this Indenture shall cease to be of further effect and the Trustee, on demand of the Company accompanied by an Officers' Certificate and an Opinion of Counsel as required by Section 1.02 and at the cost and expense of the Company, shall execute proper instruments acknowledging satisfaction of and discharging this Indenture. The Company agrees to reimburse the Trustee for any costs or expenses thereafter reasonably and properly incurred by the Trustee in connection with this Indenture or the Bonds. Notwithstanding the satisfaction and discharge of this Indenture as aforesaid, the Obligations of the Company, Oglethorpe and the Trustee under Sections 2.05, 2.06, 5.02 and 9.14 and this Article Twelve shall survive. Upon satisfaction and discharge of this Indenture as provided in this Article, the Trustee shall assign, transfer and turnover to or upon the order of the Company, any and all money, securities and other properties held by the Trustee for the benefit of the Holders of the Bonds other than money held by the Trustee pursuant to Section 12.04. SECTION 12.02. Defeasance Upon Deposit of Funds or U.S. Government Obligations. At the Company's option, the Company shall be deemed to have Paid (as defined below) its obligations with respect to any series of Bonds, and be released from its obligations under this Indenture to or for the benefit of the Holders of such Bonds, if: (1) the Company shall have deposited or caused to be deposited irrevocably with the Trustee as trust funds in trust, specifically pledged as security for, and dedicated solely to the benefit of the Holders of, the Bonds of such series (i) money in an amount, or (ii) U.S. Government Obligations which through the payment of interest and principal in respect thereof in accordance with their terms will provide, not later than one day before the due date of any payment, money in an amount, or (iii) a combination of (i) and (ii), sufficient, in the opinion (with respect to (ii) and (iii)) of a nationally recognized firm of independent public accountants expressed in written certification thereof delivered to the Trustee, to pay and discharge each installment of principal (including mandatory sinking fund payments) of, and interest on, the Outstanding Bonds of such series on the dates such installments of interest or 92 principal are due or, if applicable, the Redemption Price of, and interest due or to become due on such Bonds on or prior to the Redemption Date thereof; provided, however, that the Trustee shall have been irrevocably instructed to apply such money or proceeds of such U.S. Government Obligations to the payment of such principal or Redemption Price and interest on such Stated Maturity or Redemption Date; (2) no Event of Default or event (including such deposit) which with notice or lapse of time would become an Event of Default with respect to the Bonds of such series shall have occurred and be continuing on the date of such deposit; and (3) the Company shall have delivered to the Trustee an Opinion of Counsel nationally recognized as expert in matters of Federal income tax law to the effect that Holders of the Bonds of such series will not recognize income, gain or loss for Federal income tax purposes as a result of the Company's exercise of its option under this Section and will be subject to Federal income tax on the same amount and in the same manner and at the same times as would have been the case if such option had not been exercised. "Paid" means that the Company shall be deemed to have paid the entire indebtedness represented by, and obligations under, the Bonds of such series and to have satisfied all the obligations under this Indenture relating to the Bonds of such series (and the Trustee, at the expense of the Company, shall execute proper instruments acknowledging the same), except (A) the rights of Holders of Bonds of such series to receive, from the trust fund described in clause (1) above, payment of the principal of and the interest on such Bonds when such payments are due; (B) the Company's obligations with respect to such Bonds under Sections 2.05, 2.06, 5.02 and 9.14; and (C) the rights, power, trusts, duties and immunities of the Trustee hereunder. SECTION 12.03. Covenant and Lien Defeasance. At the Company's option, the Company shall be released from its obligations under its covenants contained herein as to any series of Bonds, and the Trustee shall release the Lien of this Indenture on and as to any and all Pledged Lessor Notes subjected to the Lien of this Indenture and issued for the purpose of paying and securing such series of Bonds (a "Covenant and Lien Defeasance"), if: (1) the Company shall have deposited or caused to be deposited irrevocably with the Trustee as trust funds in trust, specifically pledged as security for, and dedicated solely to the benefit of the Holders of, the Bonds of such series (i) money in an amount, or (ii) U.S. Government Obligations which through the payment of interest and principal in respect thereof in accordance with their terms will provide, not later than one day before the due date of any payment, money in an amount, or (iii) a combination of (i) and (ii), sufficient, in the opinion (with respect to (ii) and (iii)) of a nationally recognized firm of independent public accountants expressed in written certification thereof delivered to the Trustee, to pay and discharge each installment of principal (including mandatory sinking fund payments) of, and interest on, the Outstanding Bonds of such series on the dates such installments of interest or 93 principal are due or, if applicable, the Redemption Price of, and interest due or to become due on such Bonds on or prior to the Redemption Date thereof; provided, however, that the Trustee shall have been irrevocably instructed to apply such money or proceeds of such U.S. Government Obligations to the payment of such principal or Redemption Price and interest on such Stated Maturity or Redemption Date; and (2) no Event of Default or event (including such deposit) which with notice or lapse of time would become an Event of Default with respect to the Bonds of such series shall have occurred and be continuing on the date of such deposit. Upon the occurrence of a Covenant and Lien Defeasance with respect to any series of Bonds, such Bonds shall thereafter be deemed to be not "Outstanding" for the purposes of any direction, waiver, consent or declaration or Act of Holders (and the consequences of any thereof) in connection with the released covenants, but shall continue to be deemed "Outstanding" for all other purposes hereunder. For this purpose, such Covenant and Lien Defeasance means that, with respect to such Bonds, the Company may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of reference in any such covenant to any other provision herein or in any other document and such omission to comply shall not constitute a Default or an Event of Default, but, except as specified above, the remainder of this Indenture and such Bonds shall be unaffected thereby. SECTION 12.04. Application by Trustee of Deposited Funds and U.S. Government Obligations. Subject to the provisions of Section 5.03, all moneys deposited with the Trustee pursuant to Section 12.02 or 12.03 shall be held in trust and applied by it in accordance with the provisions of the Bonds and this Indenture to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent), to the Holders of the particular Bonds for the payment or redemption of which such moneys have been deposited with the Trustee, of all sums due and to become due thereon for principal (and premium, if any) and interest. SECTION 12.05. Repayment of Moneys Held by Paying Agent. In connection with the satisfaction and discharge of this Indenture, all moneys then held by any Paying Agent (other than the Trustee, if the Trustee is a Paying Agent) under the provisions of this Indenture shall, upon demand of the Company, be repaid to it or paid to the Trustee and thereupon such Paying Agent shall be released from all further liability with respect to such moneys. 94 ARTICLE THIRTEEN RELEASE OF FUNDS BY THE TRUSTEE FOR PAYMENT OF THE PLEDGED LESSOR NOTES SECTION 13.01. Conditions Precedent to Release of Funds by the Trustee for Payment of the Pledged Lessor Notes. The obligation of the Trustee to make payments to the Lessors pursuant to Section 2.12(b) is subject to the receipt by the Trustee of the following: (a) an executed counterpart of a supplemental indenture appropriate to subject to the Lien of this Indenture the related Pledged Lessor Notes; (b) the documents, opinions and certificates specified in the proviso to Section 2.11; (c) a written notice of the Company, dated as of the closing date under the applicable Participation Agreements or Supplemental Participation Agreements (the "Closing Date"), of the Closing Date; (d) a certificate of each Lessor dated as of the Closing Date under the related Participation Agreement or Supplemental Participation Agreement (i) specifying the principal amount of the Pledged Lessor Note or Notes to be issued thereby and (ii) stating that (A) such Lessor has received the amount of the Equity Investor's investment pursuant to applicable provisions of such Participation Agreement or Supplemental Participation Agreement and that such amount is available for use by such Lessor pursuant to applicable provisions of such Participation Agreement or Supplemental Participation Agreement upon receipt of the amount to be paid by the Trustee with respect to such Pledged Lessor Note or Notes pursuant to Section 2.12(b); (B) to the best knowledge of such Lessor no event has occurred and is continuing which constitutes an event of default, or event which, after notice or lapse of time or both, would constitute an event of default under the related Lease Indenture and (C) the Pledged Lessor Note or Notes of such Lessor has been duly authorized, executed and delivered by such Lessor and is a valid and binding obligation of such Lessor; and (e) such other documents and evidence with respect to the Lessors, Oglethorpe and the Company as the Trustee may reasonably request. 95 ARTICLE FOURTEEN SUNDRY PROVISIONS SECTION 14.01 Execution Counterparts. This instrument may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. 96 IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first above written. OPC SCHERER 1997 FUNDING CORPORATION A By: /s/ Dolores A. Bitar -------------------------------------- Name: Dolores A. Bitar --------------------------------- Title: Vice President -------------------------------- (CORPORATE SEAL) Attest: By: /s/ Anne B. Brennan ------------------------------------------ Name: Anne B. Brennan ------------------------------------- Title: Secretary ------------------------------------ (Signatures continued on next page) 97 (Signatures continued from previous page) OGLETHORPE POWER CORPORATION (AN ELECTRIC MEMBERSHIP CORPORATION) By: /s/ T. D. Kilgore ------------------------------------------ T. D. Kilgore President and Chief Executive Officer (CORPORATE SEAL) Attest: By: /s/ Patricia N. Nash ------------------------------------------ Patricia N. Nash Secretary (Signatures continued on next page) 98 (Signatures continued from previous page) SUNTRUST BANK, ATLANTA, as trustee By: /s/ Antonio Portuondo ------------------------------------------ Name: Antonio Portuondo Title: Vice President By: /s/ Phillip D. DeMouey ------------------------------------------ Name: Phillip D. DeMouey Title: Assistant Vice President [SEAL] 99 STATE OF MASSACHUSETTS ) ss: COUNTY OF SUFFOLK ) On this 12th day of December, 1997, before me personally came Dolores A. Bitar, to me known, who being by me duly sworn, did depose and say that he resides at 25 Reservoir Rd., Penbroke, MA 02359; that he is the Vice President of OPC SCHERER 1997 FUNDING CORPORATION A, one of the corporations described in and which executed the foregoing instrument; that he knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation, and that he signed his name thereto by like authority. [NOTARIAL SEAL] /s/ Vivian M. Liv ----------------------------------------------- Notary Public, State of Massachusetts My Commission Expires October 13, 2000 100 STATE OF GEORGIA ) ss: COUNTY OF DEKALB ) On this 17 day of December, 1997 before me personally came T. D. Kilgore, to me known, who, being by me duly sworn, did depose and say that he is the President and Chief Executive Officer of OGLETHORPE POWER CORPORATION (AN ELECTRIC MEMBERSHIP CORPORATION), one of the corporations described in and which executed the foregoing instrument; that he knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation, and that he signed his name thereto by like authority. [NOTARIAL SEAL] /s/ Thomas J. Brendiar ------------------------------------------------ Notary Public, State of Georgia My Commission Expires November 14, 2000 101 STATE OF GEORGIA ) ss: COUNTY OF FULTON ) On the 15th day of December, 1997, before me personally came Antonio Portuondo and Phillip D. DeMouey, to me known, who, being by me duly sworn, did depose and say that they are Vice President and Assistant Vice President, respectively, of SUNTRUST BANK, ATLANTA, one of the corporations described in and which executed the foregoing instrument and that they signed their names thereto by order of the Board of Directors of said corporation. [NOTARIAL SEAL] /s/ Teresa R. Turner ------------------------------------------------ Notary Public, State of Georgia My Commission Expires April 3, 2001 102 SCHEDULE A TO COLLATERAL TRUST INDENTURE DESCRIPTION OF PLEDGED LESSOR NOTES A. Nonrecourse Promissory Lessor Note No. 1, issued by Wilmington Trust Company and NationsBank, N.A., as successor to The Citizens and Southern National Bank, acting through its agent The Bank of New York, as Owner Trustee under Trust Agreement No. 1 dated December 30, 1985, as amended and supplemented, with IBM Credit Financing Corporation, dated December 17, 1997. B. Nonrecourse Promissory Lessor Note No. 2, issued by Wilmington Trust Company and NationsBank, N.A., as successor to The Citizens and Southern National Bank, acting through its agent The Bank of New York, as Owner Trustee under Trust Agreement No. 2 dated December 30, 1985, as amended and supplemented, with DFO Partnership, as assignee of Ford Motor Credit Corporation, dated December 17, 1997. C. Nonrecourse Promissory Lessor Note No. 3, issued by Wilmington Trust Company and NationsBank, N.A., as successor to The Citizens and Southern National Bank, acting through its agent The Bank of New York, as Owner Trustee under Trust Agreement No. 3 dated December 30, 1985, as amended and supplemented, with Chrysler Financial Corporation, dated December 17, 1997. D. Nonrecourse Promissory Lessor Note No. 4, issued by Wilmington Trust Company and NationsBank, N.A., as successor to The Citizens and Southern National Bank, acting through its agent The Bank of New York, as Owner Trustee under Trust Agreement No. 4 dated December 30, 1985, as amended and supplemented, with HEI Investment Corp., dated December 17, 1997. EXHIBIT A TO COLLATERAL TRUST INDENTURE REQUIREMENTS FOR PLEDGED LESSOR NOTES AND LEASE INDENTURES The Pledged Lessor Notes and the Lease Indentures relating to any series of Bonds shall contain the provisions summarized below or other provisions substantially as protective or more protective of the interests of Holders of Outstanding Bonds. Notwithstanding the foregoing, (i) the Principal Instruments in connection with the Initial Series of Bonds and the Exchange Series of Bonds issued under this Indenture shall be deemed to satisfy all criteria set forth in this Exhibit A and (ii) the Principal Instruments in connection with any subsequent series of Bonds, if substantially similar in form and substance to the Principal Instruments in connection with such Initial Series of Bonds and the Exchange Series of Bonds, shall also be deemed to satisfy all criteria set forth in this Exhibit A. I. Each Pledged Lessor Note will: (1) be duly issued pursuant to, and be secured by, the related Lease Indenture; (ii) provide for the payment to the registered holder thereof, not later than when due, of amounts at least equal to that portion of all principal of and premium, if any, and interest on the series of Bonds issued in connection with and relating to the pledge thereof under the Indenture, such payment to be without defenses or set-offs and otherwise unconditional; (iii) (A) if such Pledged Lessor Note is the initial series issued under the related Lease Indenture (or any issued in exchange therefor), the principal amount thereof shall not exceed an amount equal to 80% of sum of the aggregate purchase price of the property being purchased with the proceeds of the issuance and sale of such Lessor Note; and (B) if such Pledged Lessor Note is of an additional series issued under the related Lease Indenture, the sum of the principal amount thereof and the principal amount of Pledged Lessor Notes theretofore issued under such Lease Indenture shall not exceed an amount equal to 80% of the sum of (1) the aggregate purchase price of property being purchased with the proceeds of the issuance and sale of such Lessor Note and (2) the aggregate purchase price of the property purchased with the proceeds of the issuance and sale of each Pledged Lessor Note theretofore issued; and (iv) provide that no change to the Pledged Lessor Note may be made without the consent of the holder thereof. II. Each Lease Indenture will: (i) assign to the Lease Indenture Trustee obligations under the related Lease to which the Owner Trustee then or thereafter is entitled at least sufficient to pay the principal of, premium, if any, and interest on the related Pledged Lessor Note when due; and (ii) contain provisions no less protective of the interests of Holders of Bonds than the following provisions of the Lease Indentures in connection with the Initial Series of Bonds: the Conveyance Clause, Sections 2.6, 2.7, 2.11 and 2.13, Article 3, Article 4 and Article 5. EXHIBIT B TO COLLATERAL TRUST INDENTURE FOR OFFERINGS TO QUALIFIED INSTITUTIONAL BUYERS PURSUANT TO RULE 144A PROVISIONS RELATING TO INITIAL SERIES OF BONDS AND EXCHANGE SERIES OF BONDS 1. Definitions. 1.1. Definitions. For purposes of this Exhibit B the following terms shall have the meanings indicated below: "Purchase Agreement" means the Purchase Contract dated as of December 11, 1997, between the Company, Oglethorpe and the Purchaser identified therein. "QIB" means a "qualified institutional buyer" as defined in Rule 144A promulgated under the Securities Act of 1933, as amended. "Securities Custodian" means the custodian with respect to a Global Security (as appointed by the Depository), or any successor person thereto and shall initially be the Trustee. 1.2. Other Definitions. Terms used herein without definition have the meanings ascribed to them in the Indenture. 2. The Bonds. 2.1. Form and Dating. (a) Global Securities. Initial Series of Bonds offered and sold to a QIB in reliance on Rule 144A under the Securities Act ("Rule 144A") as provided in the Purchase Agreement, shall be issued initially in the form of one or more permanent Global Securities in definitive, fully registered form without interest coupons with the global securities legend and restricted securities set forth in the Indenture, which shall be deposited with SunTrust Bank, Atlanta, as custodian for the Depository (or with such other custodian as the Depository may direct), and registered in the name of the Depository or a nominee of the Depository, duly executed by the Company and authenticated by the Trustee as provided in the Indenture. 106 (b) Book-Entry Provisions. This Subsection (b) shall apply only to a Global Security deposited with or on behalf of the Depository. The Company shall execute and the Trustee shall, in accordance with this Subsection (b) and pursuant to a Company Order, authenticate and deliver initially one or more Global Securities that (a) shall be registered in the name of the Depository for such Global Security or Global Securities or the nominee of such Depository and (b) shall be delivered by the Trustee to such Depository or pursuant to such Depository's instructions or held by SunTrust Bank, Atlanta as custodian for the Depository. Members of, or participants, in the Depository ("Agent Members") shall have no rights under the Indenture with respect to any Global Security held on their behalf by the Depository or the custodian of the Depository or by the Trustee, and the Depository may be treated by the Company, the Trustee and any agent of the Company or the Trustee as the absolute owner of such Global Security for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depository or impair, as between the Depository and its Agent Members, the operation of customary practices of such Depository governing the exercise of the rights of a holder of a beneficial interest in any Global Security. (c) Physical Securities. Except as provided in the Indenture and Section 2.4 of this Exhibit B, owners of beneficial interest in Global Securities will not be entitled to receive physical delivery of certificated Bonds. 2.2. Authentication. The Trustee shall authenticate and deliver: (1) Initial Series of Bonds for original issue in an aggregate principal amount of $224,702,000 and (2) Exchange Series of Bonds for issue only in an Exchange Offer pursuant to the Registration Rights Agreement, for a like principal amount, in each case, upon a Company Order. Such Company Order shall specify the amount of the Bonds to be authenticated and the date on which the original issue of Bonds is to be authenticated and whether the Bonds are to be Initial Series of Bonds or Exchange Series of Bonds. 2.3. Transfer and Exchange of Global Securities. (a) Global Securities. (i) The transfer and exchange of Global Securities or beneficial interests therein shall be effected through the Depository, in accordance with the Indenture (including applicable restrictions on transfer set forth therein, if any) and the procedures of the Depository therefor. (ii) Notwithstanding any other provisions of this Exhibit B (other than the provisions set forth in Section 2.4 of this Exhibit B), a Global Security may not be transferred as a whole except by the Depository to a nominee of the Depository or by a nominee of the Depository to the Depository or another nominee of the Depository or by the Depository or 107 any such nominee to a successor Depository or a nominee of such successor Depository. (iii) In the event that a Global Security is exchanged for Bonds in definitive registered form pursuant to Section 2.4 of this Exhibit B prior to the consummation of an Exchange Offer or the effectiveness of the Exchange Offer Registration Statement, such Bonds may be exchanged only in accordance with such procedures as may from time to time be adopted by the Company. (b) Legend. Each Bond certificate evidencing the Global Securities (and all Bonds issued in exchange therefor or in substitution thereof) shall bear the legends set forth in the Indenture. Upon the consummation of an Exchange Offer, all Holders of such Initial Series of Bonds that do not exchange their Initial Series of Bonds will continue to own their Initial Series of Bonds in global form from and after the completion of the Exchange Offer. In connection with the consummation of the Exchange Offer the Company will deliver a Company Order instructing the Trustee to issue Exchange Series of Bonds. (c) Cancellation or Adjustment of Global Security. At such time as all beneficial interests in a Global Security have either been exchanged for certificated Bonds, redeemed, repurchased or canceled, such Global Security shall be returned to the Depository for cancellation or retained and canceled by the Trustee. At any time prior to such cancellation, if any beneficial interest in a Global Security is exchanged for certificated Bonds, redeemed, repurchased or canceled, the principal amount of Bonds represented by such Global Security shall be reduced and an adjustment shall be made on the books and records of the Trustee (if it is then the Securities Custodian for such Global Security) with respect to such Global Security, by the Trustee or the Securities Custodian, to reflect such reduction. (d) Obligations with Respect to Transfers and Exchanges of Bonds. To permit registrations of transfers and exchanges, the Company shall execute and, upon Company Order, the Trustee shall authenticate certificated Bonds and Global Securities. (e) No Obligation of the Trustee. (i) The Trustee shall have no responsibility or obligation to any beneficial owner of a Global Security, an Agent Member, or a participant in the Depository or other Person with respect to the accuracy of the records of the Depository or its nominee or of any participant or an Agent Member, with respect to any ownership interest in the Bonds or with respect to the delivery to any participant, member, beneficial owner or other Person (other than the Depository) of any notice (including any notice of redemption) or the payment of any amount, under or with respect to such Bonds. All notices and communications to be given to the Holder and all payments to be made to Holders under the Bonds shall be given or made only to or upon the order of the registered Holders (which shall be the Depository or its nominee in the case of a Global Security). The rights of beneficial owners in any Global 108 Security shall be exercised only through the Depository subject to the applicable rules and procedures of the Depository. The Trustee may rely and shall be fully protected in relying upon information furnished by the Depository with respect to its members, participants and any beneficial owners. (ii) The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any security (including any transfers between or among Depository participants, members or beneficial owners in any Global Security) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by, the terms of the Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof. 2.4 Certificated Bonds. (a) A Global Security deposited with the Depository or with the Trustee as custodian for the Depository pursuant to Section 2.1 of this Exhibit B shall be transferred to the beneficial owners thereof in the form of certificated Bonds in an aggregate principal amount equal to the principal amount of such Global Security, in exchange for such Global Security, only if (i) the Depository notifies the Company that it is unwilling or unable to continue as Depository for such Global Security or if at any time such Depository ceases to be a "clearing agency" registered under the Exchange Act and a successor depository is not appointed by the Company within 90 days of such notice, or (ii) the Company, in its sole discretion, notifies the Trustee in writing that it elects to cause the issuance of certificated Bonds under this Indenture. (b) Any Global Security that is transferable to the beneficial owners thereof pursuant to this Section shall be surrendered by the Depository to the Trustee to be so transferred, in whole or from time to time in part, without charge, and, upon Company Order, the Trustee shall authenticate and deliver, upon such transfer of each portion of such Global Security, an equal aggregate principal amount of certificated Bonds of authorized denominations. Any portion of a Global Security transferred pursuant to this Section shall be executed, authenticated and delivered only in denominations of $1,000 and any integral multiple thereof and registered in such cases as the Depository shall direct. Any certificated Bonds delivered in exchange for an interest in the Global Security shall bear the restricted securities legend set forth in the Indenture. (c) In the event of the occurrence of any of the events specified in Section 2.4(a)(i) or (ii) of this Exhibit B, the Company will promptly make available to the Trustee a reasonable supply of certificated Bonds in definitive, fully registered form without interest coupons. 109 EX-4.15 3 EX-4.15 EXHIBIT 4.15 EXCHANGE AND REGISTRATION RIGHTS AGREEMENT EXCHANGE AND REGISTRATION RIGHTS AGREEMENT, dated as of December 17, 1997, among Oglethorpe Power Corporation (An Electric Membership Corporation), an electric membership corporation organized under the laws of the state of Georgia ("Oglethorpe"), OPC Scherer 1997 Funding Corporation A, a Delaware corporation (the "Funding Corporation"), and Goldman, Sachs & Co, as representative of the purchasers (the "Purchasers"), identified on Schedule I to the Purchase Contract (as defined herein), of the Serial Facility Bonds Due June 30, 2011 of the Funding Corporation. The Funding Corporation proposes to issue and sell to the Purchasers upon the terms set forth in the Purchase Contract the Securities (as defined herein). The proceeds of the Securities will be loaned to Wilmington Trust Company and NationsBank, N.A., as Owner Trustees under four separate Trust Agreements, each dated as of December 30, 1985, as supplemented and amended (in such capacity, the "Lessors"). As an inducement to the Purchasers to enter into the Purchase Contract and in satisfaction of a condition to the obligations of the Purchasers thereunder, Oglethorpe and the Funding Corporation agree with the Purchasers for the benefit of holders (as defined herein) from time to time of the Registrable Securities (as defined herein) as follows: 1. Certain Definitions. For purposes of this Exchange and Registration Rights Agreement, the following terms shall have the following respective meanings: "Base Interest" shall mean the interest, if any, that would otherwise accrue on the Securities under the terms thereof and the Collateral Trust Indenture, without giving effect to the provisions of this Agreement. The term "broker-dealer" shall mean any broker or dealer registered with the Commission under the Exchange Act. "Collateral Trust Indenture" shall mean the Collateral Trust Indenture, dated as of January 1, 1998, among Oglethorpe, the Funding Corporation and SunTrust Bank, Atlanta, a Georgia banking corporation, as trustee, as the same may be amended from time to time. "Closing" shall mean the date of the closing of the issuance and sale of the Securities pursuant to the Purchase Contract. "Commission" shall mean the United States Securities and Exchange Commission, or any other federal agency at the time administering the Exchange Act or the Securities Act, whichever is the relevant statute for the particular purpose. "Effective Time" shall mean the time and date as of which the Commission declares the Exchange Registration Statement effective or as of which the Exchange Registration Statement otherwise becomes effective. "Exchange Act" shall mean the Securities Exchange Act of 1934, or any successor thereto, as the same shall be amended from time to time. "Exchange Offer" shall have the meaning assigned thereto in Section 2(a) hereof. "Exchange Registration" shall have the meaning assigned thereto in Section 3(c) hereof. "Exchange Registration Statement" shall have the meaning assigned thereto in Section 2(a) hereof. "Exchange Securities" shall have the meaning assigned thereto in Section 2(a) hereof. The term "holder" shall mean each of the Purchasers and other persons who acquire Registrable Securities from time to time (including any successors or assigns), in each case for so long as such person owns any Registrable Securities. "NASD" shall mean the National Association of Securities Dealers, Inc. The term "person" shall mean a corporation, association, partnership, organization, business, individual, government or political subdivision thereof or governmental agency. "Purchase Contract" shall mean the Purchase Contract, dated as of December 11, 1997, between Oglethorpe, the Funding Corporation and the Purchasers relating to the Securities. "Registrable Securities" shall mean the Securities; provided, however, that a Security shall cease to be a Registrable Security when (i) in the circumstances contemplated by Section 2(a) hereof, the Security has been exchanged for an Exchange Security in an Exchange Offer as contemplated in Section 2(a) hereof (provided that any Exchange Security received by a broker-dealer in an Exchange Offer in exchange for a Registrable Security that was not acquired by the broker-dealer directly from the Funding Corporation will also be a Registrable Security through and including the earlier of the 90th day after the Exchange Offer is completed or such time as such broker-dealer no longer owns such Security); (ii) such Security is sold pursuant to Rule 144 under circumstances in which any legend borne by such Security relating to restrictions on transferability thereof, under the Securities Act or otherwise, is removed by the Funding Corporation or pursuant to the Collateral Trust Indenture; (iii) such Security is eligible to be sold pursuant to paragraph (k) of Rule 144; or (iv) such Security shall cease to be outstanding. "Registration Default" shall have the meaning assigned thereto in Section 2(b) hereof. "Registration Expenses" shall have the meaning assigned thereto in Section 4 hereof. "Resale Period" shall have the meaning assigned thereto in Section 2(a) hereof. 2 "Restricted Holder" shall mean (i) a holder that is an affiliate of Oglethorpe or the Funding Corporation, within the meaning of Rule 405, (ii) a holder who acquires Exchange Securities outside the ordinary course of such holder's business, (iii) a holder who has arrangements or understandings with any person to participate in the Exchange Offer for the purpose of distributing Exchange Securities and (iv) a holder that is a broker-dealer, but only with respect to Exchange Securities received by such broker-dealer pursuant to an Exchange Offer in exchange for Registrable Securities acquired by the broker-dealer directly from the Funding Corporation. "Rule 144" and "Rule 405" shall mean, in each case, such rule promulgated under the Securities Act (or any successor provision), as the same shall be amended from time to time. "Securities Act" shall mean the Securities Act of 1933, or any successor thereto, as the same shall be amended from time to time. "Securities" shall mean the Serial Facility Bonds Due June 30, 2011 of the Funding Corporation to be issued and sold to the Purchasers and securities issued in exchange therefor or in lieu thereof pursuant to the Collateral Trust Indenture, other than the Exchange Securities. "Special Interest" shall have the meaning assigned thereto in Section 2(b) hereof. "Trust Indenture Act" shall mean the Trust Indenture Act of 1939, or any successor thereto, and the rules, regulations and forms promulgated thereunder, all as the same shall be amended from time to time. Unless the context otherwise requires, any reference herein to a "Section" or "clause" refers to a Section or clause, as the case may be, of this Exchange and Registration Rights Agreement, and the words "herein," "hereof" and "hereunder" and other words of similar import refer to this Exchange and Registration Rights Agreement as a whole and not to any particular Section or other subdivision. 2. Registration Under the Securities Act. (a) Oglethorpe agrees to file under the Securities Act, as soon as practicable, a registration statement relating to an offer to exchange (such registration statement, the "Exchange Registration Statement", and such offer, the "Exchange Offer") any and all of the Securities for a like aggregate principal amount at maturity of debt securities issued by the Funding Corporation, which debt securities are substantially identical to the Securities, respectively (and are entitled to the benefits of the Collateral Trust Indenture, which has been qualified under the Trust Indenture Act), except that they have been registered pursuant to an effective registration statement under the Securities Act and do not contain provisions for the additional interest contemplated in Section 2(b) below (such new debt securities hereinafter called "Exchange Securities"). Oglethorpe agrees to use its best efforts to cause the Exchange Registration Statement to become effective under the Securities Act as soon as practicable, but no later than 180 days after the Closing. The Exchange Offer will be registered under the Securities Act on the appropriate form and will comply with all applicable tender offer rules and regulations under the Exchange Act. Oglethorpe further agrees to use its best efforts to commence and complete the Exchange Offer promptly, but no later than 90 days after such 3 registration statement has become effective, hold the Exchange Offer open for at least 30 days and issue Exchange Securities for all Registrable Securities that have been properly tendered and not withdrawn on or prior to the expiration of the Exchange Offer. The Exchange Offer will be deemed to have been "completed" only if the debt securities received by holders other than Restricted Holders in the Exchange Offer for Registrable Securities are, upon receipt, transferable by each such holder without need for further compliance with Section 5 of the Securities Act and the Exchange Act (except for the requirement to deliver a prospectus included in the Exchange Registration Statement applicable to resales by any broker-dealer of Exchange Securities received by such broker-dealer pursuant to an Exchange Offer in exchange for Registrable Securities other than those acquired by the broker-dealer directly from the Funding Corporation), and without material restrictions under the blue sky or securities laws of a substantial majority of the states of the United States of America. The Exchange Offer shall be deemed to have been completed upon the earlier to occur of (i) the Funding Corporation having exchanged the Exchange Securities for all outstanding Registrable Securities pursuant to the Exchange Offer and (ii) the Funding Corporation having exchanged, pursuant to the Exchange Offer, Exchange Securities for all Registrable Securities that have been properly tendered and not withdrawn before the expiration of the Exchange Offer, which shall be on a date that is at least 30 days following the commencement of the Exchange Offer. Oglethorpe agrees (x) to include in the Exchange Registration Statement a prospectus for use in connection with any resales of Exchange Securities by a broker-dealer, other than resales of Exchange Securities received by a broker-dealer pursuant to an Exchange Offer in exchange for Registrable Securities acquired by the broker-dealer directly from the Funding Corporation, and (y) to keep such Exchange Registration Statement effective for a period (the "Resale Period") beginning when Exchange Securities are first issued in the Exchange Offer and ending upon the earlier of the expiration of the 90th day after the Exchange Offer has been completed or such time as such broker-dealers no longer own any Registrable Securities. With respect to such Exchange Registration Statement, each broker-dealer that holds Exchange Securities received in an Exchange Offer in exchange for Registrable Securities not acquired by it directly from either of the Funding Corporation shall have the benefit of the rights of indemnification and contribution set forth in Sections 7(a), (c), (d) and (e) hereof. (b) In the event that (i) the Exchange Registration Statement has not become effective or been declared effective by the Commission on or before the date on which such registration statement is required to become or be declared effective pursuant to Section 2(a), (ii) the Exchange Offer has not been completed within 90 days after the initial effective date of the Exchange Registration Statement relating to the Exchange Offer or (iii) any Exchange Registration Statement required by Section 2(a) hereof is filed and declared effective but shall thereafter, prior to the 90th day after the Exchange Offer has been completed, either be withdrawn by Oglethorpe or shall become subject to an effective stop order issued pursuant to Section 8(d) of the Securities Act suspending the effectiveness of such registration statement (except as specifically permitted herein) without being succeeded immediately by an additional registration statement filed and declared effective (each such event referred to in clauses (i) through (iii), a "Registration Default" and each period during which a Registration Default has occurred and is continuing, a "Registration Default Period"), then, as liquidated damages for such Registration Default, subject to the provisions of Section 9(b), special cash interest ("Special Interest"), in addition to Base Interest, shall accrue and be payable at a per annum rate of 0.25% for any such Registration Default Period; provided, however, such Registration Default 4 Period shall not continue beyond the second anniversary of the Closing. The amount of Special Interest shall not increase because more than one Registration Default has occurred and is continuing. A holder of securities constituting an unsold allotment from the sale of securities from the Funding Corporation to the Purchasers shall not be entitled to Special Interest. (c) Oglethorpe shall take all reasonable actions necessary or advisable to be taken by it to ensure that the transactions contemplated herein are effected as so contemplated. (d) Any reference herein to a registration statement as of any time shall be deemed to include any document incorporated, or deemed to be incorporated, therein by reference as of such time and any reference herein to any post-effective amendment to a registration statement as of any time shall be deemed to include any document incorporated, or deemed to be incorporated, therein by reference as of such time. 3. Registration Procedures. If Oglethorpe files a registration statement pursuant to Section 2(a), the following provisions shall apply: (a) At or before the Effective Time of the Exchange Offer, Oglethorpe shall qualify the Collateral Trust Indenture under the Trust Indenture Act of 1939. (b) In the event that such qualification would require the appointment of a new trustee under the Collateral Trust Indenture, Oglethorpe shall appoint a new trustee thereunder pursuant to the applicable provisions of the Collateral Trust Indenture. (c) In connection with Oglethorpe's obligations with respect to the registration of Exchange Securities as contemplated by Section 2(a) (the "Exchange Registration"), if applicable, Oglethorpe shall, as soon as practicable (or as otherwise specified): (i) prepare and file with the Commission, as soon as practicable after the Closing, an Exchange Registration Statement on any form which may be utilized by Oglethorpe and which shall permit the Exchange Offer and resales of Exchange Securities by broker-dealers during the Resale Period to be effected as contemplated by Section 2(a), and use its best efforts to cause such Exchange Registration Statement to become effective as soon as practicable thereafter, but no later than 180 days after the Closing; (ii) as soon as practicable prepare and file with the Commission such amendments and supplements to such Exchange Registration Statement and the prospectus included therein as may be necessary to effect and maintain the effectiveness of such Exchange Registration Statement for the periods and purposes contemplated in Section 2(a) hereof and as may be required by the applicable rules and regulations of the Commission and the instructions applicable to the form of such Exchange Registration Statement, and promptly provide each broker-dealer holding Exchange Securities that is not a Restricted Holder with such number of copies of the prospectus included therein (as then amended or supplemented), in conformity in all material respects with the requirements of the Securities Act and 5 the Trust Indenture Act and the rules and regulations of the Commission thereunder, as such broker-dealer reasonably may request prior to the expiration of the Resale Period, for use in connection with resales of Exchange Securities; (iii) promptly notify each broker-dealer that is not a Restricted Holder that has requested or received copies of the prospectus included in such registration statement, and confirm such advice in writing, (A) when such Exchange Registration Statement or the prospectus included therein or any prospectus amendment or supplement or post-effective amendment has been filed, and, with respect to such Exchange Registration Statement or any post-effective amendment, when the same has become effective, (B) after the effectiveness of the Exchange Registration Statement, of any comments by the Commission and by the blue sky or securities commissioner or regulator of any state with respect thereto or any request by the Commission for amendments or supplements to such Exchange Registration Statement or prospectus or for additional information, (C) of the issuance by the Commission of any stop order suspending the effectiveness of such Exchange Registration Statement or the initiation or threatening of any proceedings for that purpose, (D) if at any time the representations and warranties of Oglethorpe contemplated by Section 5 cease to be true and correct in all material respects, (E) of the receipt by Oglethorpe of any notification with respect to the suspension of the qualification of the Exchange Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose or (F) at any time during the Resale Period when a prospectus is required to be delivered under the Securities Act, that such Exchange Registration Statement, prospectus, prospectus amendment or supplement or post-effective amendment does not conform in all material respects to the applicable requirements of the Securities Act and the Trust Indenture Act and the rules and regulations of the Commission thereunder or contains an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing; (iv) in the event that Oglethorpe would be required, pursuant to Section 3(c)(iii)(F) above, to notify any broker-dealers holding Exchange Securities, without unreasonable delay prepare and furnish to each such holder a reasonable number of copies of a prospectus supplemented or amended so that, as thereafter delivered to purchasers of such Exchange Securities during the Resale Period, such prospectus shall conform in all material respects to the applicable requirements of the Securities Act and the Trust Indenture Act and the rules and regulations of the Commission thereunder and shall not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing; (v) use its reasonable best efforts to obtain the withdrawal of any order suspending the effectiveness of such Exchange Registration Statement or any post-effective amendment thereto at the earliest practicable date; 6 (vi) use its reasonable best efforts to (A) register or qualify the Exchange Securities under the securities laws or blue sky laws of such jurisdictions as are contemplated by Section 2(a), if such registration or qualification is required by such laws, no later than the commencement of the Exchange Offer, (B) keep such registrations or qualifications in effect and comply with such laws so as to permit the continuance of offers, sales and dealings therein in such jurisdictions until the expiration of the Resale Period and (C) take any and all other actions as may be reasonably necessary or advisable to enable each broker-dealer holding Exchange Securities to consummate the disposition thereof in such jurisdictions; provided, however, that Oglethorpe shall not be required for any such purpose to (1) qualify as a foreign corporation in any jurisdiction wherein it would not otherwise be required to qualify but for the requirements of this Section 3(c)(vi), (2) consent to general service of process in any such jurisdiction or (3) make any changes to its articles of incorporation or by-laws or any agreement between it and its members; (vii) use its reasonable best efforts to obtain the consent or approval of each governmental agency or authority, whether federal, state or local, which may be required to effect the Exchange Registration, the Exchange Offer and the offering and sale of Exchange Securities by broker-dealers during the Resale Period; (viii) provide a CUSIP number for all Exchange Securities, not later than the applicable Effective Time; and (ix) comply with all applicable rules and regulations of the Commission, and make generally available to the holders of the Exchange Securities as soon as practicable but no later than eighteen months after the effective date of such Exchange Registration Statement, an earning statement of Oglethorpe and its subsidiaries complying with Section 11(a) of the Securities Act (including, at the option of Oglethorpe, Rule 158 thereunder). (d) Until the expiration of two years after the Closing, Oglethorpe will not, and will not permit any of its "affiliates" (as defined in Rule 144), the Funding Corporation or the Funding Corporation's "affiliates" to, resell any of the Securities that have been reacquired by any of them except pursuant to an effective registration statement under the Securities Act. 4. Registration Expenses. The Lessors will pay or cause to be paid all expenses incident to Oglethorpe's and the Funding Corporation's performance of or compliance with this Exchange and Registration Rights Agreement, including (a) all Commission and any NASD registration, filing and review fees and expenses including fees and disbursements of counsel for the placement or sales agent or underwriters in connection with such registration, filing and review, (b) all expenses relating to the preparation, printing, production, distribution and reproduction of each registration statement required to be filed hereunder, each prospectus included therein or prepared for distribution pursuant hereto, each amendment or supplement to the foregoing, the expenses of preparing the Securities for delivery and the expenses of printing or producing any underwriting agreements, agreements among underwriters, selling agreements and blue sky or legal 7 investment memoranda and all other documents in connection with the offering, sale or delivery of Securities to be disposed of (including certificates representing the Securities), (c) messenger, telephone and delivery expenses relating to the offering, sale or delivery of Securities and the preparation of documents referred in clause (b) above, (d) fees and expenses of the Collateral Trust Trustee under the Collateral Trust Indenture, any agent of the Collateral Trust Trustee and any counsel for the Collateral Trust Trustee and of any collateral agent or custodian, (e) fees, disbursements and expenses of counsel and independent certified public accountants of Oglethorpe (including the expenses of any opinions or "cold comfort" letters required by or incident to such performance and compliance), (f) any fees charged by securities rating services for rating the Securities, and (g) fees, expenses and disbursements of any other persons, including special experts, retained by Oglethorpe in connection with such registration (collectively, the "Registration Expenses"). To the extent that any Registration Expenses are incurred, assumed or paid by any holder of Registrable Securities or any placement or sales agent therefor or underwriter thereof, the Lessors will reimburse such person for the full amount of the Registration Expenses so incurred, assumed or paid promptly after receipt of a request therefor. Notwithstanding the foregoing, the holders of the Registrable Securities being registered shall pay all agency fees and commissions and underwriting discounts and commissions attributable to the sale of such Registrable Securities and the fees and disbursements of any counsel or other advisors or experts retained by such holders (severally or jointly), other than the counsel and experts specifically referred to above. 5. Representations and Warranties of Oglethorpe. Oglethorpe represents and warrants to, and agrees with, each Purchaser and each of the holders from time to time of Registrable Securities that: (a) Each registration statement covering Exchange Securities and each prospectus (including any preliminary or summary prospectus) contained therein or furnished pursuant to Section 3(c) hereof and any further amendments or supplements to any such registration statement or prospectus, when it becomes effective or is filed with the Commission, as the case may be, will conform in all material respects to the applicable requirements of the Securities Act and the Trust Indenture Act and the rules and regulations of the Commission thereunder and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; and at all times during the Exchange Offer and the Resale Period, other than from (i) such time as a notice has been given to holders of Registrable Securities pursuant to Section 3(c)(iii)(F) hereof until (ii) such time as Oglethorpe furnishes an amended or supplemented prospectus pursuant to Section 3(c)(iv) hereof, each such registration statement, and each prospectus (including any summary prospectus) contained therein or furnished pursuant to Section 3(c) hereof, as then amended or supplemented, will conform in all material respects to the applicable requirements of the Securities Act and the Trust Indenture Act and the rules and regulations of the Commission thereunder and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to Oglethorpe by a Purchaser, a broker-dealer or a holder of Registrable Securities through Goldman, Sachs & Co., expressly for use therein. 8 (b) The compliance by Oglethorpe with all of the provisions of this Exchange and Registration Rights Agreement and the consummation of the transactions herein contemplated will not conflict with or result in a breach of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which Oglethorpe or any subsidiary of Oglethorpe is a party or by which Oglethorpe or any subsidiary of Oglethorpe is bound or to which any of the property or assets of Oglethorpe or any subsidiary of Oglethorpe is subject, nor will such action result in any violation of the provisions of the articles of incorporation, as amended, or the bylaws of Oglethorpe or any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over Oglethorpe or any subsidiary of Oglethorpe or any of their properties; and no consent, approval, authorization, order, registration or qualification of or with any such court or governmental agency or body is required for the consummation by Oglethorpe of the transactions contemplated by this Exchange and Registration Rights Agreement, except the registration under the Securities Act of the Securities, qualification of the Indentures under the Trust Indenture Act and such consents, approvals, authorizations, registrations or qualifications, if any, as may be required under State securities or blue sky laws in connection with the offering and distribution of the Securities. (c) This Exchange and Registration Rights Agreement has been duly authorized, executed and delivered by Oglethorpe. 6. Representations and Warranties of the Funding Corporation. The Funding Corporation represents and warrants to, and agrees with, each Purchaser and each of the holders from time to time of Registrable Securities that: (a) The compliance by the Funding Corporation with all of the provisions of this Exchange and Registration Rights Agreement and the consummation of the transactions herein contemplated will not conflict with or result in a breach of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Funding Corporation is a party or by which the Funding Corporation is bound or to which any of the property or assets of the Funding Corporation is subject, nor will such action result in any violation of the provisions of the articles of incorporation, as amended, or the bylaws of the Funding Corporation or any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over the Funding Corporation or any of its properties; and no consent, approval, authorization, order, registration or qualification of or with any such court or governmental agency or body is required for the consummation by the Funding Corporation of the transactions contemplated by this Exchange and Registration Rights Agreement, except the registration under the Securities Act of the Securities, qualification of the Indentures under the Trust Indenture Act and such consents, approvals, authorizations, registrations or qualifications, if any, as may be required under State securities or blue sky laws in connection with the offering and distribution of the Securities. (b) This Exchange and Registration Rights Agreement has been duly authorized, executed and delivered by the Funding Corporation. 7. Indemnification. 9 (a) Indemnification by Oglethorpe. Oglethorpe shall indemnify and hold harmless each person who participates as a placement or sales agent or as an underwriter in any offering or sale of Exchange Securities against any losses, claims, damages or liabilities, joint or several, to which such agent or underwriter may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in any Exchange Registration Statement, or any preliminary, final or summary prospectus contained therein or furnished by Oglethorpe to any such agent or underwriter, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and Oglethorpe shall, and it hereby agrees to, reimburse such holder, such agent and such underwriter for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such action or claim as such expenses are incurred; provided, however, that Oglethorpe shall not be liable to any such person in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in such registration statement, or preliminary, final or summary prospectus, or amendment or supplement thereto, in reliance upon and in conformity with written information furnished to Oglethorpe by such person expressly for use therein. (b) Indemnification by any Agents and Underwriters. Each person who participates as a placement or sales agent or as an underwriter in any offering or sale of Exchange Securities shall, severally and not jointly, (i) indemnify and hold harmless Oglethorpe against any losses, claims, damages or liabilities to which Oglethorpe may become subject, under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in such registration statement, or any preliminary, final or summary prospectus contained therein or furnished by Oglethorpe to any such agent or underwriter, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to Oglethorpe by such agent or underwriter through Goldman, Sachs & Co. expressly for use therein, and (ii) reimburse Oglethorpe for any legal or other expenses reasonably incurred by Oglethorpe in connection with investigating or defending any such action or claim as such expenses are incurred. (c) Notices of Claims, Etc. Promptly after receipt by an indemnified party under subsection (a) or (b) above of written notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against an indemnifying party pursuant to the indemnification provisions of or contemplated by this Section 7, notify such indemnifying party in writing of the commencement of such action; but the omission so to notify the indemnifying party shall not relieve it from any liability which it may have to any indemnified party other than under the indemnification provisions of or contemplated by Section 7(a) or (b) hereof. In case any such action shall be brought against any indemnified party and it shall notify an indemnifying party of the commencement thereof, such indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other 10 indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and, after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, such indemnifying party shall not be liable to such indemnified party for any legal expenses of other counsel or any other expenses, in each case subsequently incurred by such indemnified party, in connection with the defense thereof other than reasonable costs of investigation. No indemnifying party shall, without the written consent of the indemnified party, effect the settlement or compromise of, or consent to the entry of any judgment with respect to, any pending or threatened action or claim in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified party is an actual or potential party to such action or claim) unless such settlement, compromise or judgment (i) includes an unconditional release of the indemnified party from all liability arising out of such action or claim and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party. (d) Contribution. If for any reason the indemnification provisions contemplated by Section 7(a) or (b) are unavailable to or insufficient to hold harmless an indemnified party in respect of any losses, claims, damages or liabilities (or actions in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative fault of the indemnifying party and the indemnified party in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions in respect thereof), as well as any other relevant equitable considerations. The relative fault of such indemnifying party and indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by such indemnifying party or by such indemnified party, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The parties hereto agree that it would not be just and equitable if contributions pursuant to this Section 7(d) were determined by pro rata allocation (even if any agents or underwriters or all of them were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in this Section 7(d). The amount paid or payable by an indemnified party as a result of the losses, claims, damages, or liabilities (or actions in respect thereof) referred to above shall be deemed to include any legal or other fees or expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 7(d), no underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Exchange Securities underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages which such underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. Any agents' or underwriters' obligations in this Section 7(d) to contribute shall be several in proportion to the principal amount at maturity of Registrable Securities registered or underwritten, as the case may be, by them and not joint. 11 (e) The obligations of Oglethorpe under this Section 7 shall be in addition to any liability which Oglethorpe may otherwise have and shall extend, upon the same terms and conditions, to each officer, director and partner of each agent and underwriter and each person, if any, who controls any agent or underwriter within the meaning of the Securities Act; and the obligations of any agents or underwriters contemplated by this Section 7 shall be in addition to any liability which the respective agent or underwriter may otherwise have and shall extend, upon the same terms and conditions, to each officer and director of Oglethorpe and to each person, if any, who controls Oglethorpe within the meaning of the Securities Act. 8. Rule 144. Oglethorpe covenants to the holders of Registrable Securities that it shall timely file reports pursuant to the Exchange Act or the Securities Act (including the reports under Section 13 and 15(d) of the Exchange Act referred to in subparagraph (c)(1) of Rule 144 adopted by the Commission under the Securities Act) and the rules and regulations adopted by the Commission thereunder to the extent permitted by the Commission, and, if at any time Oglethorpe is not filing such reports, shall take such further action as any holder of Registrable Securities may reasonably request, all to the extent required from time to time to enable such holder to sell Registrable Securities without registration under the Securities Act within the limitations of the exemption provided by Rule 144 under the Securities Act, as such Rule may be amended from time to time, or any similar or successor rule or regulation hereafter adopted by the Commission. Upon the request of any holder of Registrable Securities in connection with that holder's sale pursuant to Rule 144, Oglethorpe shall deliver to such holder a written statement as to whether it has complied with such requirements. 9. Miscellaneous. (a) No Inconsistent Agreements. Oglethorpe represents, warrants, covenants and agrees that it has not granted, and shall not grant, registration rights with respect to Registrable Securities or any other securities which would be inconsistent with the terms contained in this Exchange and Registration Rights Agreement. (b) Specific Performance. The parties hereto acknowledge that there would be no adequate remedy at law if Oglethorpe or the Funding Corporation fail to perform any of its obligations hereunder and that the Purchasers and the holders from time to time of the Registrable Securities may be irreparably harmed by any such failure, and accordingly agree that the Purchasers and such holders, in addition to any other remedy to which they may be entitled at law or in equity, shall be entitled to compel specific performance of the obligations of Oglethorpe or the Funding Corporation under this Exchange and Registration Rights Agreement in accordance with the terms and conditions of this Exchange and Registration Rights Agreement, in any court of the United States or any state thereof having jurisdiction. (c) Notices. All notices, requests, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been duly given when delivered by hand, if delivered personally or by courier, or three days after being deposited in the mail (registered or certified mail, postage prepaid, return receipt requested) as follows: If to Oglethorpe, to it at 2100 East Exchange Place, Tucker, Georgia 30084, Attention: Senior 12 Financial Officer, with a copy to Sutherland, Asbill & Brennan LLP, 999 Peachtree Street, N.E., Atlanta, Georgia 30309-3996, Attention: Herbert J. Short, Jr., Esq., and if to a holder, to the address of such holder set forth in the security register or other records of Oglethorpe, or to such other address as Oglethorpe or any such holder may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt. (d) Parties in Interest. All the terms and provisions of this Exchange and Registration Rights Agreement shall be binding upon, shall inure to the benefit of and shall be enforceable by the parties hereto and the holders from time to time of the Registrable Securities and the respective successors and assigns of the parties hereto and such holders. In the event that any transferee of any holder of Registrable Securities shall acquire Registrable Securities, in any manner, whether by gift, bequest, purchase, operation of law or otherwise, such transferee shall, without any further writing or action of any kind, be deemed a beneficiary hereof for all purposes and such Registrable Securities shall be held subject to all of the terms of this Exchange and Registration Rights Agreement, and by taking and holding such Registrable Securities such transferee shall be entitled to receive the benefits of, and be conclusively deemed to have agreed to be bound by all of the applicable terms and provisions of this Exchange and Registration Rights Agreement. If Oglethorpe shall so request, any such successor, assign or transferee shall agree in writing to acquire and hold the Registrable Securities subject to all of the applicable terms hereof. (e) Survival. The respective indemnities, agreements, representations, warranties and each other provision set forth in this Exchange and Registration Rights Agreement or made pursuant hereto shall remain in full force and effect regardless of any investigation (or statement as to the results thereof) made by or on behalf of any holder of Registrable Securities, any director, officer or partner of such holder, any agent or underwriter or any director, officer or partner thereof, or any controlling person of any of the foregoing, and shall survive delivery of and payment for the Registrable Securities pursuant to the Purchase Contract and the transfer and registration of Registrable Securities by such holder and the consummation of an Exchange Offer. (f) LAW GOVERNING. THIS EXCHANGE AND REGISTRATION RIGHTS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. (g) Headings. The descriptive headings of the several Sections and paragraphs of this Exchange and Registration Rights Agreement are inserted for convenience only, do not constitute a part of this Exchange and Registration Rights Agreement and shall not affect in any way the meaning or interpretation of this Exchange and Registration Rights Agreement. (h) Entire Agreement; Amendments. This Exchange and Registration Rights Agreement and the other writings referred to herein (including the Indenture and the form of Securities) or delivered pursuant hereto which form a part hereof contain the entire understanding of the parties with respect to its subject matter. This Exchange and Registration Rights Agreement supersedes all prior agreements and understandings between the parties with respect to its subject matter. This Exchange and Registration Rights Agreement may be amended 13 and the observance of any term of this Exchange and Registration Rights Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively) only by a written instrument duly executed by Oglethorpe, the Funding Corporation and the holders of at least a majority in aggregate principal amount at maturity of the Registrable Securities at the time outstanding. Each holder of any Registrable Securities at the time or thereafter outstanding shall be bound by any amendment or waiver effected pursuant to this Section 10(h), whether or not any notice, writing or marking indicating such amendment or waiver appears on such Registrable Securities or is delivered to such holder. (i) Inspection. For so long as this Exchange and Registration Rights Agreement shall be in effect, this Exchange and Registration Rights Agreement and a complete list of the names and addresses of all the holders of Registrable Securities shall be made available upon 5 days request for inspection and copying on any business day by any holder of Registrable Securities for proper purposes only (which shall include any purpose related to the rights of the holders of Registrable Securities under the Securities, the Collateral Trust Indenture and this Agreement) at the offices of Oglethorpe, at the address thereof set forth in Section 10(c) above and at the office of the trustee under the Collateral Trust Indenture. (j) Counterparts. This agreement may be executed by the parties in counterparts, each of which shall be deemed to be an original, but all such respective counterparts shall together constitute one and the same instrument. 14 Agreed to and accepted as of the date referred to above. OGLETHORPE POWER CORPORATION (AN ELECTRIC MEMBERSHIP CORPORATION) By: /s/ T. D. Kilgore -------------------------------------------- Name: T. D. Kilgore Title: President and Chief Executive Officer OPC SCHERER 1997 FUNDING CORPORATION A By: /s/ Dolores A. Bitar -------------------------------------------- Name: Dolores A. Biter Title: Vice President GOLDMAN, SACHS & CO. As Representative of the Purchasers By: /s/ Goldman, Sachs & Co. -------------------------------------------- (Goldman, Sachs & Co.) On behalf of each of the Purchasers EX-10.32-19(B) 4 EXHIBIT 10.32.19(B) This document corrects the signature pages of the document filed at Deed Book 1428, page 404. Upon Recording return to: Cross Reference: Mr. Robert N. Farrar Deed Book 1274, page 264 Suite 141, The Carnegie Building Deed Book 1378, page 615 607 Broad Street Deed Book 1391, page 1 Rome, Georgia 30161-3059 Deed Book 1409, page 766 SUPPLEMENT TO OPC INTERCREDITOR AND SECURITY AGREEMENT NO. 1 This Supplement to OPC Intercreditor and Security Agreement No. 1, dated as of March 1, 1997 (hereinafter referred to as the "Agreement") is entered into among the UNITED STATES OF AMERICA (hereinafter referred to as the "Government"), acting through the Administrator of the Rural Utilities Service, SUNTRUST BANK, ATLANTA, as trustee under that certain OPC Indenture, as hereinafter defined (hereinafter referred to as the "New Mortgagee"), a banking corporation organized and existing under the laws of the State of Georgia, OGLETHORPE POWER CORPORATION (AN ELECTRIC MEMBERSHIP GENERATION & TRANSMISSION CORPORATION), an electric membership corporation organized under the laws of the State of Georgia, (hereinafter referred to as "OPC"), ROCKY MOUNTAIN LEASING CORPORATION, a Delaware corporation (hereinafter referred to as "RMLC"), SUNTRUST BANK, ATLANTA, a banking corporation organized under the laws of Georgia, not in its individual capacity, but solely as Co-Trustee under the Trust Agreement (hereinafter referred to as the "Co-Trustee"), FLEET NATIONAL BANK, a national banking association, not in its individual capacity, but solely as Owner Trustee under the Trust Agreement (hereinafter referred to as the "Owner Trustee"), UTRECHT-AMERICA FINANCE CO., a Delaware corporation (hereinafter referred to as the "Lender"), and AMBAC INDEMNITY CORPORATION, a Wisconsin domiciled stock insurance corporation (hereinafter referred to as "AMBAC") (each of OPC, RMLC, Co-Trustee, Owner Trustee, Lender and AMBAC, together with their respective successors and assigns, collectively hereinafter referred to as the "Transaction Parties"); capitalized terms used herein and not defined in this Agreement are used with the meaning set forth in the Intercreditor Agreement, as hereinafter defined. RECITALS: A. The Government, the New Mortgagee and each of the Transaction Parties entered into that certain OPC Intercreditor and Security Agreement No. 1, dated as of December 30, 1996 (hereinafter referred to as the "Intercreditor Agreement"), wherein the Transaction Parties acknowledged and agreed, among other matters, that the security titles and security interests of the Original Mortgagees in and to the Rocky Mountain Interests (as hereinafter defined and herein so called) created by the OPC Mortgage constitute a first and prior security title and security interest that was not released by the Original Mortgagees and that the rights and interests of the Transaction Parties in and to the Rocky Mountain Interests are and will remain subject and subordinate in all respects to the security title and security interest of the Senior Mortgage and Security Agreement. B. OPC and the New Mortgagee have entered into that certain Indenture, dated as of March 1, 1997 (as the same from time to time may be amended, supplemented or modified, hereinafter referred to as the "OPC Indenture"), pursuant to which OPC has granted to the New Mortgagee a perfected security interest in and security title to substantially all of OPC's property, including, without limitation, the Undivided Interest, the Ground Interest and the Rocky Mountain Agreements (collectively the "Rocky Mountain Interests"). The parties hereto desire to supplement the Intercreditor Agreement as hereinafter provided. C. Pursuant to the OPC Indenture, and in order to fully preserve and protect the Trustee's interest in the Trust Estate under the OPC Indenture, OPC and the New Mortgagee have also entered into that certain Security Agreement, dated as of March 1, 1997 (as the same from time to time may be amended, supplemented or modified, herein referred to as the "Security Agreement") separately granting to the Trustee under the OPC Indenture a security interest in certain personal property in which the Indenture also grants a security interest (for purposes of this Agreement, the Security Agreement shall be considered a part of, and is included in the definition of, the OPC Indenture). STATEMENT OF AGREEMENT NOW, THEREFORE, the Government, the New Mortgagee and each of the Transaction Parties do hereby acknowledge, agree and affirm that: (1) together with the OPC Mortgage, the OPC Indenture constitutes, for all purposes under the Intercreditor Agreement, the Senior Mortgage and Security Agreement; (2) the interest (if any) of each Transaction Party in and to the Rocky Mountain Interests is subject and subordinate in all respects to the Senior Mortgage and Security Agreement; (3) the rights and obligations of the Government, the New Mortgagee and the Transaction Parties under or by virtue of the Intercreditor Agreement, as supplemented by this Agreement, remain in full force and effect; and (4) neither the provisions hereof nor of the Intercreditor Agreement shall be affected in any manner by the release of any collateral or security by the Government or the New Mortgagee, including, without limitation the release from time to time of the OPC Mortgage or any property encumbered thereby. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the date hereof. [SIGNATURES BEGIN ON FOLLOWING PAGE] UNITED STATES OF AMERICA acting by and through the Administrator of the Rural Utilities Service By: /s/ Thomas L. Eddy ------------------------------------- Title: Director, Power Supply Division Signed and delivered in the presence of /s/ Steven Slovikosky - ----------------------------------- Unofficial Witness /s/ James F. Mothershed - ----------------------------------- Notary Public My Commission Expires: April 30, 1999 [NOTARIAL SEAL] [SIGNATURES CONTINUED ON FOLLOWING PAGE] SUNTRUST BANK, ATLANTA, not in its individual capacity but solely as the New Mortgagee By: /s/ Philip D. DeMouey ----------------------------------------- Name: Philip D. DeMouey --------------------------------------- Title: Assistant Vice President -------------------------------------- Signed and delivered in the By: /s/ Antonio I. Portuondo presence of ----------------------------------------- Name: Antonio I. Portuondo --------------------------------------- Title: Assistant Vice President -------------------------------------- /s/ David McMahon - --------------------------------- Unofficial Witness /s/ Teresa R. Turner - --------------------------------- Notary Public My Commission Expires: April 3, 2001 [NOTARIAL SEAL] [SIGNATURES CONTINUED ON FOLLOWING PAGE] OGLETHORPE POWER CORPORATION (AN ELECTRIC MEMBERSHIP GENERATION & TRANSMISSION CORPORATION) By: /s/ T. D. Kilgore ----------------------------------------- Name: T. D. Kilgore Title: President & CEO Signed and delivered in the By: /s/ Patricia N. Nash presence of ------------------------------------------ Name: Patricia N. Nash Title: Secretary /s/ Jo Ann Smith - --------------------------------- Unofficial Witness /s/ Thomas J. Brendiar - --------------------------------- Notary Public My Commission Expires: November 14, 2000 [NOTARIAL SEAL] [SIGNATURES CONTINUED ON FOLLOWING PAGE] ROCKY MOUNTAIN LEASING CORPORATION By: /s/ Clarence Mitchell ----------------------------------------- Name: Clarence Mitchell Title: President Signed and delivered in the By: /s/ James E. Kofron presence of ------------------------------------------ Name: James E. Kofron Title: Secretary-Treasurer /s/ Denise S. Kemp - --------------------------------- Unofficial Witness /s/ Thomas J. Brendiar - --------------------------------- Notary Public My Commission Expires: November 14, 2000 [NOTARIAL SEAL] [SIGNATURES CONTINUED ON FOLLOWING PAGE] SUNTRUST BANK, ATLANTA, not in its individual capacity but solely as Co-Trustee under the Trust Agreement By: /s/ Philip D. DeMouey ----------------------------------------- Name: Philip D. DeMouey --------------------------------------- Title: Assistant Vice President -------------------------------------- Signed and delivered in the By: /s/ Antonio I. Portuondo presence of ----------------------------------------- Name: Antonio I. Portuondo --------------------------------------- Title: Assistant Vice President -------------------------------------- /s/ David McMahon - --------------------------------- Unofficial Witness /s/ Teresa R. Turner - --------------------------------- Notary Public My Commission Expires: April 3, 2001 [NOTARIAL SEAL] [SIGNATURES CONTINUED ON FOLLOWING PAGE] FLEET NATIONAL BANK, not in its individual capacity, but solely as Owner Trustee under the Trust Agreement By: /s/ Mark A. Forgetta ----------------------------------------- Name: Mark A. Forgetta --------------------------------------- Title: Attorney-In-Fact -------------------------------------- Signed and delivered in the presence of /s/ Debra A. Colon - ---------------------------------- Unofficial Witness /s/ Dawn P. Heintz - ---------------------------------- Notary Public My Commission Expires: May 31, 2002 [NOTARIAL SEAL] [SIGNATURES CONTINUED ON FOLLOWING PAGE] UTRECHT-AMERICA FINANCE CO. By: /s/ David I. Dietz ----------------------------------------- Name: David I. Dietz --------------------------------------- Title: Assistant Treasurer -------------------------------------- Signed and delivered in the By: /s/ J. W. den Baas presence of ----------------------------------------- Name: J. W. den Baas --------------------------------------- Title: Vice President -------------------------------------- /s/ Kimberly A. Werderm - ---------------------------------- Unofficial Witness /s/ Stacie A. Clark - ---------------------------------- Notary Public My Commission Expires: August 12, 1998 [NOTARIAL SEAL] [SIGNATURES CONTINUED ON FOLLOWING PAGE] AMBAC INDEMNITY CORPORATION By: /s/ T. S. Travers ----------------------------------------- Name: T. S. Travers --------------------------------------- Title: First Vice President -------------------------------------- Signed and delivered in the presence of /s/ Doug Chery - -------------------------------- Unofficial Witness /s/ Kevin P. Dolan - -------------------------------- Notary Public My Commission Expires: January 31, 1998 [NOTARIAL SEAL] Schedule to Exhibit 10.32.19(b) Supplment to OPC Intercreditor and Security Agreement The following table indicates for each transaction the name of the corresponding Owner Participant: Agreement Owner Participant ------------------ ---------------------------------- 1 Philip Morris Capital Corporation 2 Philip Morris Capital Corporation 3 First Chicago Leasing Corporation 4 First Chicago Leasing Corporation 5 NationsBanc Leasing & R.E. Corporation 6 NationsBanc Leasing & R.E. Corporation EX-12 5 EXHIBIT 12 EXHIBIT 12 OGLETHORPE POWER CORPORATION CALCULATION OF RATIOS OF EARNINGS TO FIXED CHARGES
TWELVE MONTHS YEAR ENDED DECEMBER 31, ENDED --------------------------------------------------------------- SEPTEMBER 30, 1997 1996 1995 1994 1993 1992 -------------------- ----------- ----------- ----------- ----------- ----------- (DOLLARS IN THOUSANDS) Net margin before cumulative effect of change in accounting principle........................ $ 9,600 $ 21,752 $ 22,258 $ 23,082 $ 12,381 $ 27,472 Add: Income taxes.................. 0 0 0 0 1,820 3,966 Cumulative effect of change in accounting for income taxes.... 0 0 0 0 13,340 0 ---------- ----------- ----------- ----------- ----------- ----------- Net margin before income taxes..... 9,600 21,752 22,258 23,082 27,541 31,438 Add: Fixed charges................. 299,353 328,907 341,307 341,388 380,857 413,673 Deduct: Patronage allocation from associated organizations......... (288) 1 (50) (364) (506) (56) ---------- ----------- ----------- ----------- ----------- ----------- Total.......................... $ 308,665 $ 350,660 $ 363,515 $ 364,106 $ 407,892 $ 445,055 ---------- ----------- ----------- ----------- ----------- ----------- ---------- ----------- ----------- ----------- ----------- ----------- Earnings plus fixed charges........ $ 308,665 $ 350,660 $ 363,515 $ 364,106 $ 407,892 $ 445,055 ---------- ----------- ----------- ----------- ----------- ----------- Fixed charges...................... 299,353 328,907 341,307 341,388 380,857 413,673 Ratio of earnings to fixed charges.......................... 1.03 1.07 1.07 1.07 1.07 1.08
EX-15 6 EXHIBIT 15 EXHIBIT 15 LETTER RE UNAUDITED FINANCIAL INFORMATION Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549 Re: Oglethorpe Power Corporation Registration on Form S-4 We are aware that our report dated November 14, 1997, on our review of the condensed interim financial statements of Oglethorpe Power Corporation for the twelve-month period ended September 30, 1997 is included in this Registration Statement. Pursuant to Rule 436(c) under the Securities Act of 1933, this report should not be considered a part of the Registration Statement prepared or certified by us within the meaning of Sections 7 and 11 of that Act. COOPERS & LYBRAND L.L.P. Atlanta, Georgia, December 16, 1997. EX-23.2 7 EXHIBIT 23.2 EXHIBIT 23.2 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS We consent to the inclusion in this registration statement of our report, dated February 21, 1997, except for Note 11, as to which the date is March 11, 1997, on our audits of the December 31, 1996 and 1995 financial statements of Oglethorpe Power Corporation. We also consent to the references to our firm under captions "EXPERTS" and "SELECTED FINANCIAL DATA." COOPERS & LYBRAND L.L.P. Atlanta, Georgia, December 16, 1997. EX-23.3 8 EXHIBIT 23.3 EXHIBIT 23.3 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the use in this registration statement of our report included herein and to all references to our Firm included in this registration statement. ARTHUR ANDERSEN LLP Atlanta, Georgia, December 16, 1997. EX-25.1 9 EXHIBIT 25.1 Exhibit 25.1 - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE Check if an Application to Determine Eligibility of a Trustee Pursuant to Section 305(b)(2) [ ] SUNTRUST BANK, ATLANTA (Exact name of trustee as specified in its charter) Georgia Banking Corporation 58-0466330 (Jurisdiction of incorporation or (I.R.S. Employer Identification No.) organization if not a U.S. national bank) 25 Park Place, N.E. Atlanta, Georgia 30303 (Address of principal executive offices) (Zip code) Philip DeMouey SunTrust Bank, Atlanta 58 Edgewood Ave. Room 400 Atlanta, Georgia 30303 (404) 588-7583 (Name, address and telephone number of agent for service) -------------- Oglethorpe Power Corporation (An Electric Membership Corporation) (Exact name of obligor as specified in its charter) Georgia 58-1211925 (State or other jurisdiction (I.R.S. Employee Identification No.) of incorporation organization) Post Office Box 1349 2100 East Exchange Place Tucker, Georgia 30385-1349 (Address of principal executive offices) (Zip Code) -------------- 6.974% Serial Facility Bonds Due June 30, 2011 (Title of the indenture securities) - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ ITEM 1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE-- (a) Name and address of each examining or supervising authority to which it is subject. Department of Banking and Finance, State of Georgia, Atlanta, Georgia Federal Reserve Bank of Atlanta 104 Marietta Street, N.W. Atlanta, Georgia Federal Deposit Insurance Corporation Washington, D.C. (b) Whether it is authorized to exercise corporate trust powers. Yes. ITEM 2. AFFILIATIONS WITH THE OBLIGOR. If the obligor is an affiliate of the trustee, describe each such affiliation. The obligor is not an affiliate of the trustee. No responses are included for Items 3 through 12. Responses to those Items are not required because, as provided in Item 13, the obligor is not in default on any securities issued under indentures under which SunTrust Bank, Atlanta is a trustee. ITEM 13. DEFAULTS BY THE OBLIGOR. (a) State whether there is or has been a default with respect to the securities under this indenture. Explain the nature of any such default. There is not and has not been any such default. -1- (b) If the trustee is a trustee under another indenture under which any other securities, or certificates of interest or participation in any other securities, of the obligor are outstanding, or is trustee for more than one outstanding series of securities under the indenture, state whether there has been a default under any such indenture or series, identify the indenture or series affected, and explain the nature of any such default. There has not been any such default. No responses are included for Items 14 and 15. Responses to those Items are not required because, as provided in Item 13, the obligor is not in default on any securities issued under indentures under which SunTrust Bank, Atlanta is a trustee. -2- ITEM 16. LIST OF EXHIBITS. The additional exhibits listed below are filed herewith. Exhibits, if any, identified in parentheses are on file with the Commission and are incorporated herein by reference as exhibits hereto pursuant to Rule 7a-29 under the Trust Indenture Act of 1939 and Rule 24 of the Commission's Rules of Practice. Exhibit Number 1--A copy of the Articles of Amendment and Restated Articles of Incorporation of the trustee as now in effect. (Exhibit 1 to Form T-1, Registration No. 33-63523). 2--A copy of the certificate of authority of the trustee to commence business. (Included in Exhibit 1 to Form T-1, Registration No. 33-63523). 3--A copy of the authorization of the trustee to exercise trust powers. (Included in Exhibit 1 to Form T-1, Registration No. 33-63523). 4--A copy of the existing bylaws of the Trustee. (Exhibit 4 to Form T-1, Registration No. 33-49283). 5--Not applicable. 6 -Consent of the trustee required by Section 321(b) of the Trust Indenture Act of 1939, as amended. 7--A copy of the latest report of condition of the trustee published pursuant to law or the requirements of its supervising or examining authority. (Exhibit 7 to Form T-1, Registration No. 333-40933). 8--Not applicable. 9--Not applicable. NOTE In answering any item in this Statement of Eligibility which relates to matters peculiarly within the knowledge of the obligor or any underwriter for the obligor, the trustee has relied upon information furnished to it by the obligor or the underwriters and the trustee disclaims responsibility for the accuracy and completeness of such information. -3- SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939, the trustee, SunTrust Bank, Atlanta, a corporation organized and existing under the laws of the State of Georgia, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Atlanta, and State of Georgia, on the 19th day of December, 1997. SUNTRUST BANK, ATLANTA BY /s/David Kaye -------------------------------- David Kaye Group Vice President By: /s/Philip DeMouey ------------------------------- Philip DeMouey Assistant Vice President -4- Sequentially Exhibit Numbered Number Description Page - ------- ----------- ------------ 1--A copy of the Articles of Amendment and Restated Articles of Incorporation of the trustee as now in effect. (Exhibit 1 to Form T-1, Registration No. 33-63523). 2--A copy of the certificate of authority of the trustee to commence business. (Included in Exhibit 1 to Form T-1, Registration No. 33-63523). 3--A copy of the authorization of the trustee to exercise trust powers. (Included in Exhibit 1 to Form T-1, Registration No. 33-63523). 4--A copy of the existing bylaws of the Trustee. (Included in Exhibit 4 to Form T-1, Registration No. 33-49283). 5--Not applicable. 6--Consent of the Trustee required by Section 321(b) of the Trust Indenture Act of 1939, as amended. 7--A copy of the latest report of condition of the trustee published pursuant to law or the requirements of its supervising or examining authority. (Exhibit 7 to Form T-1, Registration No. 333-40933). 8--Not applicable. 9--Not applicable. -5- EXHIBIT 6 CONSENT OF TRUSTEE Pursuant to the requirements of Section 321(b) of the Trust Indenture Act of 1939, as amended, in connection with the proposed issue of 6.974% Serial Facility Bonds Due June 30, 2011, we hereby consent that reports of examination by Federal, State, Territorial or District authorities may be furnished by such authorities to the Securities and Exchange Commission upon request therefor. SUNTRUST BANK, ATLANTA By: /s/David Kaye ------------------------- David Kaye Group Vice President By: /s/Philip DeMouey ------------------------- Philip DeMouey Assistant Vice President Dated: December 19, 1997 EX-27.1 10 EXHIBIT 27.1
UT THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM OGLETHORPE POWER CORPORATION'S CONDENSED BALANCE SHEET AS OF SEPTEMBER 30, 1997 AND RELATED STATEMENTS OF REVENUES AND EXPENSES AND CASH FLOWS FOR THE TWELVE MONTHS ENDED SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 U.S. 12-MOS DEC-31-1997 OCT-01-1996 SEP-30-1997 1 PER-BOOK 3,624,291 200,881 366,949 335,159 0 4,527,280 0 0 321,771 0 0 0 3,171,511 0 0 92,220 81,999 0 289,825 5,848 564,106 4,527,280 1,069,813 0 812,162 812,162 257,651 49,338 306,989 297,389 9,600 0 0 0 44,759 285,969 0 0 $321,771 REPRESENTS TOTAL RETAINED PATRONAGE CAPITAL. THE REGISTRANT IS A MEMBERSHIP CORPORATION AND HAS NO AUTHORIZED OR OUTSTANDING EQUITY SECURITIES.
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