EXHIBIT 10.12

 

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CITY OF OSCEOLA, ARKANSAS

and

PLUM POINT ENERGY ASSOCIATES, LLC

 

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LOAN AGREEMENT

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Dated as of April 1, 2006

 

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LOAN AGREEMENT

TABLE OF CONTENTS

(This Table of Contents is not a part of the Loan Agreement and is only for
convenience of reference.)

 

Parties

      1

Recitals

      1

ARTICLE I

DEFINITIONS

Section 1.1

   Definitions    2

Section 1.2

   Use of Words and Phrases    7

ARTICLE II

REPRESENTATIONS

Section 2.1

   Representations and Warranties of the Issuer    8

Section 2.2

   Representations and Warranties of the Company    8

ARTICLE III

THE PROJECT

Section 3.1

   Acquiring, Constructing and Equipping of the Project    10

Section 3.2

   Company Required to Pay in Event Proceeds of Bonds Insufficient    10

Section 3.3

   Revision of Scope, Plans, Schedule and Specifications    10

Section 3.4

   Certification of Completion Date    10

ARTICLE IV

ISSUANCE OF THE BONDS

Section 4.1

   Issuance of the Bonds    12

Section 4.2

   Disposition of Bond Proceeds    12

ARTICLE V

LOAN PROVISIONS

Section 5.1

   Loan of Bond Proceeds    13

Section 5.2

   Loan Payments and Payment of Other Amounts Payable    13

Section 5.3

   No Defense or Set-Off — Unconditional Obligation    14

Section 5.4

   Credit Enhancement and Liquidity Facility    15

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ARTICLE VI

SPECIAL COVENANTS AND AGREEMENTS

Section 6.1

   Maintenance of Corporate Existence    16

Section 6.2

   Release and Indemnification Covenants    16

Section 6.3

   Qualification of Company in Arkansas    17

Section 6.4

   Permits or Licenses    17

Section 6.5

   Access to Project    17

Section 6.6

   Recordation and Filing    17

Section 6.7

   Tax Exempt Status of Bonds    17

Section 6.8

   Arbitrage Covenant    18

Section 6.9

   Usury Covenant    20

Section 6.10

   Continuing Disclosure    20

ARTICLE VII

ASSIGNMENT, LEASING AND SELLING

Section 7.1

   Conditions    21

Section 7.2

   Instrument Furnished to Trustee    21

Section 7.3

   Limitation    21

Section 7.4

   Assignment of Issuer’s Rights    21

ARTICLE VIII

TRUST INDENTURE

Section 8.1

   Company’s Performance Under Indenture    22

Section 8.2

   Company Credit Facility    22

ARTICLE IX

EVENTS OF DEFAULT AND REMEDIES

Section 9.1

   Events of Default    23

Section 9.2

   Force Majeure    23

Section 9.3

   Remedies on Default    24

Section 9.4

   No Remedy Exclusive    24

Section 9.5

   Company to Pay Attorneys’ Fees and Expenses    25

Section 9.6

   Waiver of Breach    25

Section 9.7

   Rights of Credit Provider    25

ARTICLE X

REDEMPTION OF BONDS

Section 10.1

   Optional Redemption of Bonds    26

Section 10.2

   Extraordinary Optional Redemption of Bonds    26

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Section 10.3

   Mandatory Redemption of Bonds    26

Section 10.4

   Amounts Payable by Company    26

Section 10.5

   Procedure for Exercise of Options    27

ARTICLE XI

MISCELLANEOUS

Section 11.1

   Notices    28

Section 11.2

   Severability    29

Section 11.3

   Execution of Counterparts    29

Section 11.4

   Amounts Remaining in Bond Fund    29

Section 11.5

   Amendments, Changes and Modifications    29

Section 11.6

   Governing Law    29

Section 11.7

   Company Representatives    29

Section 11.8

   No Personal Liability    29

Section 11.9

   Parties in Interest    30

Signatures and Seals

   31

Exhibit A - Description of Project

   32

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LOAN AGREEMENT

This LOAN AGREEMENT, dated as of April 1, 2006, by and between CITY OF OSCEOLA,
ARKANSAS, a municipality organized and existing under the laws of the State of
Arkansas (the “Issuer”), and PLUM POINT ENERGY ASSOCIATES, LLC, a limited
liability company organized and existing under and by virtue of the laws of the
State of Delaware (the “Company”).

W I T N E S S E T H:

WHEREAS, the Issuer is authorized and empowered under the laws of the State of
Arkansas, including particularly Title 14, Chapter 267 of the Arkansas Code of
1987 Annotated (the “Act”), to issue revenue bonds and to expend the proceeds
thereof to finance the acquisition, construction, reconstruction, extension,
equipment or improvement of pollution control facilities for the disposal or
control of sewage, solid waste, water pollution, air pollution, or any
combination thereof; and

WHEREAS, the Company’s undivided interest in certain sewage and solid waste
disposal facilities (the “Project”) are being acquired, constructed and equipped
by or on behalf of the Company at the Plum Point Energy Station (the “Plant”) of
the Company and others to be located within or near the Issuer; and

WHEREAS, at the request of the Company and in furtherance of the purposes of the
Act, the Issuer proposes to issue its revenue bonds under the Act in the
aggregate principal amount of $100,000,000 (identified in Article I hereof and
referred to herein as the “Bonds”), and to loan the proceeds thereof to the
Company upon the terms and conditions set forth herein, for the purpose of
financing the cost of acquiring, constructing and equipping the Project;

NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants herein made, and subject to the conditions herein set forth, the
parties hereto agree as follows:

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ARTICLE I

DEFINITIONS

Section 1.1. Definitions. In addition to the words and terms elsewhere defined
in this Loan Agreement, the following words and terms as used in this Loan
Agreement shall have the following meanings unless the context or use indicates
another or different meaning:

“Act” — Title 14, Chapter 267 of the Arkansas Code of 1987 Annotated, as enacted
and amended from time to time.

“Alternate Credit Enhancement” or “Alternate Liquidity Facility” — A letter of
credit, insurance policy, line of credit, surety bond, standby purchase
agreement or other security or liquidity instrument, as the case may be, issued
in accordance with the terms of the Indenture as a replacement or substitute for
any Credit Enhancement or Liquidity Facility, as applicable, then in effect.

“Bond Counsel” — Any firm of nationally recognized municipal bond attorneys
selected by the Company, acceptable to the Issuer and the Trustee, and
experienced in the issuance of municipal bonds and matters relating to the
exclusion of the interest thereon from gross income for Federal income tax
purposes.

“Bonds” — City of Osceola, Arkansas Solid Waste Disposal Revenue Bonds (Plum
Point Energy Associates, LLC Project), Series 2006, in the aggregate principal
amount of $100,000,000, issued under and secured by the Indenture.

“Bond Fund” — The fund by that name created and established in Section 6.1 of
the Indenture.

“Business Day” — Any business day other than (i) a Saturday or Sunday, or (ii) a
day on which the Trustee, the Paying Agent, or the Remarketing Agent is required
or authorized to be closed, or (iii) a day on which the office of the Credit
Provider or Liquidity Provider at which certificates and demands for payment are
required to be presented under the Credit Enhancement or Liquidity Facility is
required or authorized to be closed, or (iv) a day on which the New York Stock
Exchange, Inc. is closed.

“Clearing Fund” — The fund by that name created and established in Section 7.1
of the Indenture.

“Clerk” — The person holding the office and performing the duties of City Clerk
of the Issuer.

 

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“Collateral Agent” — (i) Credit Suisse, Cayman Islands Branch, in its capacity
as collateral agent for the secured parties under the Company Credit Facility,
or (ii) any other Person so designated in writing by the Company to the Trustee
and the Credit Provider, confirmed in writing by the then-existing Collateral
Agent known as such to the Trustee and the Credit Provider.

“Company” — Plum Point Energy Associates, LLC, a limited liability company
organized and existing under the laws of the State of Delaware, and its
permitted successors and assigns hereunder.

“Company Credit Facility” — (i) The Credit Agreement dated as of March 14, 2006,
among the Lenders from time to time party thereto, Credit Suisse, Cayman Islands
Branch, as administrative agent, as collateral agent, and as issuing bank,
Credit Suisse Securities (USA) LLC, Goldman Sachs Credit Partners L.P., Merrill
Lynch & Co. and Morgan Stanley & Co. Incorporated, as joint lead arrangers and
joint lead bookrunners, the party named therein as syndication agent, the party
named therein as documentation agent, and the Company, and any amendments and
supplements thereto, or (ii) any other credit agreement, loan agreement,
indenture, or similar agreement entered into by the Company for the purpose of
borrowing money or securing indebtedness of the Company which refunds or
replaces the initial Company Credit Facility described in clause (i) of this
definition.

“Company Credit Facility Construction Account” — (i) The account of the Company
entitled “Plum Point Construction Account” and numbered 10226008.1 maintained
with JPMorgan Chase Bank, N.A., in its capacity as depositary agent, bank and
securities intermediary for the secured parties under the initial Company Credit
Facility, or (ii) any other account so designated in writing by the Company to
the Trustee and the Credit Provider, confirmed in writing by the then-existing
Collateral Agent known as such to the Trustee and the Credit Provider.

“Company Credit Facility Revenue Account” — (i) The account of the Company
entitled “Plum Point Revenue Account” and numbered 10226008.2 maintained with
JPMorgan Chase Bank, N.A., in its capacity as depositary agent, bank and
securities intermediary for the secured parties under the initial Company Credit
Facility, or (ii) any other account so designated in writing by the Company to
the Trustee and the Credit Provider, confirmed in writing by the then-existing
Collateral Agent known as such to the Trustee and the Credit Provider.

“Company Representative” — A person at the time designated to act on behalf of
the Company for purposes of the Indenture by a written instrument furnished to
the Trustee containing the specimen signature of such person and signed on
behalf of Company by any of its officers. The certificate may designate an
alternate or alternates.

 

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“Completion Date” — The date of completion of the acquisition, construction and
equipping of the Project, as that date shall be determined by the Company and
certified as provided in Section 3.4 hereof.

“Construction Fund” — The fund by that name created and established in
Section 7.1 of the Indenture.

“Credit Enhancement” — A letter of credit, insurance policy, surety bond, line
of credit or other instrument then in effect which secures or guarantees the
payment of principal of and interest on the Bonds.

“Credit Provider” — Any bank, insurance company, pension fund or other financial
institution which provides a Credit Enhancement or Alternate Credit Enhancement
for the Bonds. A Credit Provider also may be the Liquidity Provider. For any
period during which the Company Credit Facility is in effect, the term “Credit
Provider” as used herein shall refer to and mean the Issuing Bank. The initial
Credit Provider shall be Credit Suisse, New York Branch.

“Credit Provider Failure” or “Liquidity Provider Failure” — A failure of the
Credit Provider or Liquidity Provider, as applicable, to pay a properly
presented and conforming draw or request for advance under the Credit
Enhancement or Liquidity Facility, as applicable, or the filing or commencement
of any bankruptcy or insolvency proceedings by or against the Credit Provider or
Liquidity Provider, as applicable, or the Credit Provider or Liquidity Provider,
as applicable, shall declare a moratorium on the payment of its unsecured debt
obligations or shall repudiate the Credit Enhancement or Liquidity Facility, as
applicable.

“Event of Default” — Any event of default specified in Section 9.1 hereof.

“Indenture” — The Trust Indenture dated as of April 1, 2006, by and between
Issuer and Trustee, securing the Bonds, and any amendments and supplements
thereto.

“Issuer” — City of Osceola, Arkansas, a municipality organized and existing
under the laws of the State of Arkansas, and its successors and assigns.

“Issuing Bank” — (i) Credit Suisse, New York Branch, as issuing bank under the
Company Credit Facility, or (ii) any other Person so designated in writing by
the Company to the Trustee and the Credit Provider, confirmed in writing by the
then-existing Issuing Bank known as such to the Trustee.

“Liquidity Facility” — Any letter of credit, line of credit, standby purchase
agreement or other instrument then in effect which provides for the payment of
the purchase price of Bonds upon the tender thereof in the event remarketing
proceeds are insufficient therefor.

 

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“Liquidity Provider” — Any bank, insurance company, pension fund or other
financial institution which provides a Liquidity Facility or Alternate Liquidity
Facility for the Bonds. A Liquidity Provider also may be the Credit Provider.

“Loan Agreement” — This Loan Agreement and any amendments and supplements
hereto.

“Loan Payments” — All amounts required to be paid by the Company to the Issuer
(and the Trustee as the assignee of the Issuer) pursuant to Section 5.2 of this
Loan Agreement.

“Mayor” — The person holding the office and performing the duties of the Mayor
of the Issuer.

“Maximum Rate” — The lesser of (i) the rate of ten and three-quarters percent
(10 3/4%) per annum or such higher rate of interest as the Trustee may accept,
based upon an opinion of Bond Counsel, to the effect that such higher rate is
not greater than the maximum rate permitted by applicable law, or (ii) the
maximum rate per annum, specified therein, upon which there has been calculated
the amount available to be drawn on the Credit Facility to pay interest on the
Bonds.

“Outstanding” — When used with reference to the Bonds, as of any particular
date, the aggregate of all Bonds authenticated and delivered under the
Indenture, except:

(a) Bonds canceled at or prior to such date or delivered to or acquired by the
Trustee prior to such date for cancellation;

(b) Bonds deemed to be paid in accordance with Article X of the Indenture;

(c) Bonds in lieu of or in exchange or substitution for which other Bonds shall
have been authenticated and delivered pursuant to the Indenture; and

(d) On or after any Purchase Date, Bonds tendered or deemed tendered provided
moneys sufficient to pay the Purchase Price thereof on such Purchase Date shall
be available in the Purchase Fund for such purpose.

“Paying Agent” — The commercial bank, trust company or other entity which may
from time to time be appointed to serve as Paying Agent as provided in
Section 12.12 of the Indenture. Until such time as an alternate Paying Agent is
appointed, the Paying Agent shall be the Trustee.

“Plant” — The approximately 665 megawatt coal-fired electric generation plant
jointly leased by the Company and others from the Issuer in connection with
industrial development revenue bonds issued by the Issuer to be located on a
site adjacent to the Mississippi River within or near the Issuer and known as
the Plum Point Energy Station.

 

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“Project” — The Company’s undivided interest (which may be a leasehold interest)
in the land, the buildings, structures and other improvements, and those items
of fixtures, machinery, equipment and other tangible personal property acquired,
constructed and equipped, in whole or in part, with the proceeds of the Bonds
(including any changes in, additions to, substitutions for or deletions of
facilities or portions thereof made under Section 3.3 hereof). As presently
contemplated by the existing plans and specifications prepared by or on behalf
of the Company, the Project is generally described in Exhibit A hereto.

“Project Costs” — All costs and expenses incurred with respect to the
development, financing, design, engineering, acquisition, equipping,
construction, assembly, inspection, testing, completion and start-up of the
Project, including, without limitation:

(a) obligations of the Company incurred for labor and materials (including
obligations payable to the Company) in connection with the acquisition,
construction or equipping of the Project, including reimbursement to the Company
or its affiliates for all advances and payments (including interest) made prior
to or after delivery of the Bonds;

(b) the cost of performance or other bonds and any and all types of insurance
that may be necessary or appropriate to have in effect during the course of
construction of the Project;

(c) all costs of engineering and architectural services, including the costs of
the Company for test borings, surveys, estimates, plans and specifications and
preliminary investigations therefor, and for supervising construction, as well
as for the performance of all other duties required by or consequent to the
proper construction of the Project;

(d) all expenses incurred in connection with the issuance of the Bonds,
including, without limitation, compensation and expenses of the Trustee,
compensation to any financial consultants or underwriters, legal fees and
expenses, costs of printing, and recording and filing fees;

(e) all fees for examination of title or title insurance, and for recording this
Loan Agreement and the Indenture or filing any financing statements;

(f) any sums required to reimburse the Company for advances (including interest)
made by either of them or any of the Company’s affiliates for any of the above
items or for any other costs incurred and for work done by either of them or any
of the Company’s affiliates which are properly chargeable to the Project;

 

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(g) all costs which the Company shall be required to pay, under the terms of any
contract or contracts, for the acquisition, construction, installation or
equipping of the Project; and

(h) interest on the Bonds prior to the Completion Date.

“Reimbursement Agreement” — Any reimbursement agreement, credit agreement, line
of credit agreement, standby purchase agreement or other agreement, by and
between the Credit Provider or Liquidity Provider, as applicable, and the
Company, pursuant to which the Credit Enhancement, Liquidity Facility, Alternate
Credit Enhancement, or Alternate Liquidity Facility is issued or provided. The
Company Credit Facility shall be the initial Reimbursement Agreement.

“Remarketing Agent” — Goldman Sachs & Co., or any other investment banking firm
which may be substituted in its place as provided in Section 13.1 of the
Indenture.

“Trustee” — The commercial bank, trust company or other entity which may from
time to time be appointed to serve as Trustee under the provisions of the
Indenture or by operation of law. The initial Trustee shall be Regions Bank,
Little Rock, Arkansas.

Capitalized terms used but not defined in this Loan Agreement shall have the
meanings given to them in the Indenture or, if such terms are not defined in the
Indenture, the meanings given to them in the Company Credit Facility.

Section 1.2. Use of Words and Phrases. “Herein”, “hereby”, “hereunder”,
“hereof”, “hereinabove”, “hereinafter”, and other equivalent words and phrases
refer to this Loan Agreement and not solely to the particular portion thereof in
which any such word is used. The definitions set forth in Section 1.1 hereof
include both singular and plural. Whenever used herein, any pronoun shall be
deemed to include both singular and plural and to cover all genders. The term
“including” shall mean “including without limitation.”

 

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ARTICLE II

REPRESENTATIONS

Section 2.1. Representations and Warranties of the Issuer. The Issuer makes the
following representations and warranties as the basis for the undertakings
herein contained:

(a) The Issuer is a municipality duly organized and existing under the laws of
the State of Arkansas.

(b) The Issuer has the power to enter into the transactions contemplated by this
Loan Agreement and to carry out its obligations hereunder. By proper action of
the governing body of the Issuer, the Issuer has been duly authorized to execute
and deliver this Loan Agreement.

(c) The Issuer has not and will not except as otherwise required by mandatory
provisions of law, assign its interest in this Loan Agreement other than to
secure the Bonds.

(d) The acquiring, constructing and equipping of the Project will promote the
securing and developing of industry and will thereby further the public purposes
of the Act.

Section 2.2. Representations and Warranties of the Company. The Company makes
the following representations and warranties as the basis for the undertakings
herein contained:

(a) The Company is a limited liability company duly organized under the laws of
the State of Delaware and is in good standing under the laws of such state, is
duly authorized to do business in the State of Arkansas and is in good standing
under the laws of such state, has all requisite limited liability company power
and authority, and has, or will when required have, the legal right, to own and
operate its property and assets, to lease the property it operates as lessee and
to carry on its business as now conducted and as proposed to be conducted in
respect of the Project, has the power under its Operating Agreement to enter
into this Loan Agreement and perform its obligations hereunder, and has duly
authorized the execution and delivery of this Loan Agreement by proper corporate
action.

(b) The Project is of the type authorized and permitted by the Act, and the
Company intends to operate the Project to the expiration or earlier termination
of this Loan Agreement for solid waste disposal purposes.

(c) Estimated Project Costs have been determined in accordance with sound
engineering and accounting principles, and the Company estimates that all of the
proceeds of the Bonds will be expended to pay such Project Costs.

(d) Neither the execution and delivery of this Loan Agreement, the consummation
of the transactions contemplated hereby, nor the compliance with the terms and
conditions of this

 

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Loan Agreement conflicts with or results in a breach of the terms, conditions or
provisions of any agreement or instrument to which Company is now a party or by
which Company is bound, or constitutes a default under any of the foregoing, or
results in the creation or imposition of any lien, charge or encumbrance
whatsoever (other than Permitted Liens) upon any of the property or assets of
the Company.

(e) All representations and warranties of the Company contained in any
certificate required to be given in connection with the issuance of the Bonds
will be true and correct in all material respects as of the date of such
certificate.

(f) This Loan Agreement has been duly executed and delivered by the Company and
constitutes a legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other laws affecting
creditors’ rights generally and subject to general principles of equity,
regardless of whether considered in a proceeding in equity or at law.

(g) No action, consent or approval of, registration or filing with, Permit from,
notice to, or any other action by, any Governmental Authority is or will be
required in connection with (i) the due execution, delivery and performance by
the Company of this Loan Agreement, or (ii) the construction and operation of
the Project as contemplated by this Loan Agreement (other than any such action,
consent, approval, registration, filing, Permit or notice which is not material)
except (A) such as have been made or obtained and are in full force and effect,
(B) any Permits referred to in Section 3.12(b) of the Company Credit Facility,
and (C) as provided in Section 5.17 of the Company Credit Facility.

(h) There are no pending, or, to the knowledge of the Company, threatened
actions or proceedings of any kind, including actions or proceedings of or
before any Governmental Authority, to which the Company or, to the knowledge of
the Company, the Project or the Site is a party or is subject, or by which any
of them or any of their properties or the Project are bound, which would
reasonably be expected to have a material adverse effect on the Company’s
ability to perform its obligations hereunder.

 

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ARTICLE III

THE PROJECT

Section 3.1. Acquiring, Constructing and Equipping of the Project. The Company
shall cause the Project to be acquired, constructed and equipped with all
reasonable dispatch in order to effectuate the purposes of the Act. The Company
shall have the sole responsibility under this Loan Agreement for the acquiring,
constructing and equipping of the Project and may perform the same itself or
through its agents, and may make or issue such contracts, orders, receipts and
instructions, and in general do or cause to be done all such other things as it
may in its sole discretion consider requisite or advisable for the acquiring,
construction and equipping of the Project and for fulfilling its obligations
under this Article III. The Company shall have full authority and the sole right
under this Loan Agreement to supervise and control, directly or indirectly, all
aspects of the acquiring, constructing and equipping of the Project.

Section 3.2. Company Required to Pay in Event Proceeds of Bonds Insufficient. In
the event the proceeds of the issuance and sale of the Bonds available for
payment of Project Costs should not be sufficient to pay the Project Costs in
full, the Company agrees to complete the Project and to pay that portion of the
Project Costs in excess of the moneys available therefor from the proceeds of
the Bonds. The Issuer does not make any warranty, either expressed or implied,
that the proceeds of the issuance and sale of the Bonds available for payment of
Project Costs will be sufficient to pay all of the Project Costs. The Company
agrees that if after exhaustion of Bond proceeds the Company should pay any
portion of the Project Costs pursuant to the provisions of this Section, the
Company shall not be entitled to reimbursement therefor from the Issuer or from
the Trustee or from the owners of any of the Bonds, nor shall the Company be
entitled to any diminution of the amounts payable under Section 5.2 hereof.

Section 3.3. Revision of Scope, Plans, Schedule and Specifications. Subject to
the Company Credit Facilities, the Company may revise the scope, plans, schedule
and specifications for the Project at any time and from time to time in any
respect, including, without limitation, any changes therein, additions thereto,
substitutions therefor and deletions therefrom; provided, however, that no such
revision shall materially impair the effective use of the Project contemplated
by this Loan Agreement, shall render inaccurate any of the representations
contained in Section 2.2 hereof, or shall result in a violation of any of the
covenants contained in Section 6.7 hereof; and provided, further, that no such
revision shall result in a change in the description of the Project in Exhibit A
hereto, unless the Company shall have theretofore delivered to the Trustee a
Favorable Opinion of Bond Counsel.

Section 3.4. Certification of Completion Date. Promptly after the Completion
Date, the Company shall submit to the Issuer and the Trustee a certificate,
executed by a Company Representative, which shall (a) specify the Completion
Date, (b) state that acquisition, construction and equipment of the Project has
been completed and the Project Costs have been paid or set aside for payment,
except for any Project Costs which have been incurred but are not

 

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then due and payable or the liability for the payment of which is being
contested or disputed by the Company, and (c) state that not less than 95% of
the net proceeds of the Bonds (within the meaning of Section 142(a) of the Code)
have been expended (i) for proper costs of land or property of a character
subject to the allowance for depreciation under Section 167 of the Code, or
which are, for federal income tax purposes, chargeable to capital account or
would have been so chargeable either with a proper election by the Company or
but for a proper election by the Company to deduct such amounts, and (ii) to
provide sewage and solid waste disposal facilities within the meaning of
Section 142(a)(5) and (6) of the Code and regulations thereunder.
Notwithstanding the foregoing, such certificate may state that it is given
without prejudice to any rights against third parties which exist at the date
thereof or which may subsequently come into being.

 

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ARTICLE IV

ISSUANCE OF THE BONDS

Section 4.1. Issuance of the Bonds. The Issuer shall issue the Bonds under and
in accordance with the Indenture. The Company hereby approves the issuance of
the Bonds and all terms and conditions thereof.

Section 4.2. Disposition of Bond Proceeds. (a) The net proceeds from the
issuance and sale of the Bonds shall be deposited into the Clearing Fund and the
Construction Fund in accordance with the provisions of Section 7.2 of the
Indenture.

(b) Moneys in the Clearing Fund shall be disbursed for payment of the fee and
expenses of Goldman, Sachs & Co. in connection with the issuance of the Bonds.

(c) Moneys in the Construction Fund shall be disbursed from time to time for
direct payment of Project Costs, for reimbursement of Project Costs paid by the
Company or its affiliates, or for payment to the Company Credit Facility
Construction Account, all in accordance with and pursuant to requisitions as
provided in Section 7.2 of the Indenture. The Company hereby covenants and
agrees that all payments from the Construction Fund to the Company Credit
Facility Construction Account shall be promptly expended for the payment of
Project Costs.

 

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ARTICLE V

LOAN PROVISIONS

Section 5.1. Loan of Bond Proceeds. Concurrently with the sale and delivery of
the Bonds, the Issuer covenants and agrees that it will, upon the terms and
conditions in this Loan Agreement, lend to the Company an amount equal to the
aggregate principal amount of the Bonds to finance Project Costs for the
Company. Pursuant to said covenant and agreement, the Issuer will issue the
Bonds upon the terms and conditions contained in this Loan Agreement and the
Indenture and will cause the Bond proceeds to be applied as provided in Article
IV hereof. The Bonds may be sold by the Issuer, with the consent of the Company,
at a discount from their principal amount. If the Issuer does sell Bonds at a
discount, the amount of such discount shall be deemed to have been loaned to the
Company pursuant to the terms and conditions hereof.

Section 5.2. Loan Payments and Payment of Other Amounts Payable. (a) On or
before any date that principal of or interest on the Bonds is due as set forth
in the Indenture and the date of final payment of the principal of and interest
on the Bonds or any date fixed for the redemption of any or all of the Bonds
pursuant to the Indenture, the Company covenants and agrees to pay or to cause
to be paid in lawful money of the United States of America to the Trustee, as
Loan Payments, a sum equal to the amount payable on such payment date as
principal (whether at maturity, upon redemption or otherwise) of and interest on
the Bonds as provided in the Indenture. Each payment made pursuant to this
Section shall be made in immediately available funds at the principal corporate
trust office of the Trustee during normal banking hours.

In the event that the payment of the principal of and accrued interest on the
Bonds is accelerated under Section 11.2 of the Indenture, the Company covenants
and agrees to pay, or cause to be paid, to the Trustee as provided above a sum
equal to all the principal of and interest on the Bonds then outstanding.

Each payment pursuant to this Section shall at all times be sufficient to pay
the amount of principal (whether at maturity, upon redemption or otherwise) or
Purchase Price of and interest payable on the Bonds on the date that such
payment is due. Upon and after the payment in full of (i) the Bonds (or the
provision for payment thereof having been made in accordance with the provisions
of the Indenture), (ii) the fees, charges and expenses of the Trustee and Paying
Agents (if any) in accordance with the Indenture, and (iii) all other amounts
required to be paid under this Loan Agreement and the Indenture, the Company
shall not be obligated to make any further payments under the provisions of this
Section.

The Company shall receive as a credit against its obligations to make the
payments described in this Section 5.2(a) all payments made by the Credit
Provider under the Credit Enhancement or any Alternate Credit Enhancement, as
applicable, and the Company may make any payment in respect of which it receives
such a credit to the Credit Provider in respect of its reimbursement obligations
under such Credit Enhancement or Alternate Credit Enhancement, as applicable.

 

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(b) The Company agrees to pay the fees, charges and reasonable and necessary
expenses, including reasonable attorneys’ fees, of the Trustee, the Remarketing
Agent, the Tender Agent, and any Paying Agent incurred in connection with this
Loan Agreement, the Indenture, and any transaction or event contemplated by this
Loan Agreement or the Indenture.

(c) The Company agrees to pay or cause to be paid, promptly upon receipt of an
invoice therefor (with reasonable supporting documentation) from the Issuer, the
reasonable and necessary expenses incurred by the Issuer with respect to this
Loan Agreement, the Indenture, and any transaction or event contemplated by this
Loan Agreement or the Indenture, which are not otherwise required to be paid by
the Company under the terms of this Loan Agreement.

(d) The Company agrees to pay to the Tender Agent amounts equal to the amounts
to be paid by the Tender Agent with respect to the Purchase Price of Bonds
pursuant to Section 4.4 of the Indenture, such amounts to be paid by the Company
to the Trustee on the dates such payments pursuant to Section 4.4 of the
Indenture are to be made; provided, however, that the obligation of the Company
to make any such payment hereunder shall be reduced by the amount of moneys
available for such payment under clause (a) or (b) of Section 4.4 of the
Indenture, and the Company may make any such payment to the Liquidity Provider
in respect of its reimbursement obligations under the applicable Liquidity
Facility or Alternate Liquidity Facility drawn to make any such payment under
clause (b) of Section 4.4 of the Indenture.

(e) In the event the Company should fail to make, or cause to be made, any of
the payments required in this Section, the item or installment so in default
shall continue as an obligation of the Company until the amount in default shall
have been fully paid.

Section 5.3. No Defense or Set-off — Unconditional Obligation. The obligations
of the Company to make the payments required in Section 5.2 hereof and to
perform and observe the other agreements on its part contained herein shall be
absolute and unconditional, irrespective of any defense or any right of set-off,
recoupment or counterclaim it might otherwise have against the Issuer or the
Trustee (other than due to the prior payment of any amounts by a draw on the
Credit Enhancement by the Trustee), and the Company shall pay absolutely net
during the term of this Loan Agreement the payments to be made as prescribed in
Section 5.2 and all other payments required hereunder free of any deductions and
without abatement, diminution or set-off; and until such time as the principal
of and interest on the Bonds shall have been fully paid, or provision for the
payment thereof shall have been made in accordance with the Indenture, the
Company: (i) will not suspend or discontinue any payments provided for in
Section 5.2 hereof; (ii) will perform and observe all of its other agreements
contained in this Loan Agreement; and (iii) except as provided in Article IX
hereof, will not terminate this Loan Agreement for any cause, including, without
limiting the generality of the foregoing, failure to complete the Project, the
occurrence of any act or circumstances that may constitute failure of
consideration, destruction of or damage to the Project, commercial frustration
of purpose, any

 

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change in the tax laws of the United States of America or the State of Arkansas
or any political subdivision of such state, or any failure of the Issuer or the
Trustee to perform or observe any agreement, whether express or implied, or any
duty, liability or obligation arising out of or connected with this Loan
Agreement or the Indenture.

Section 5.4. Credit Enhancement and Liquidity Facility. Simultaneously with the
original issuance and delivery of the Bonds, the Company shall provide for the
issuance and delivery of the Credit Enhancement and the Liquidity Facility
conforming with the requirements of the Indenture to the Trustee. Except for any
period during which the Bonds are in the Fixed Rate Mode, the Company shall
(i) cause the Credit Provider to provide one or more extensions of the Credit
Enhancement, (ii) cause the Liquidity Provider to provide one or more extensions
of the Liquidity Facility, or (iii) provide at any time for the delivery to the
Trustee of an Alternate Credit Enhancement or Alternate Liquidity Facility, in
each case in accordance with the provisions of Section 4.8 of the Indenture.
Except for any period during which the Bonds are in the Fixed Rate Mode, failure
to provide an Alternate Credit Enhancement or Alternate Liquidity Facility or to
secure an extension of the Credit Enhancement or Liquidity Facility then in
effect, shall result in mandatory purchase of the Bonds as provided in
Section 4.2 of the Indenture. The Company hereby authorizes and directs the
Trustee to draw moneys under the Credit Enhancement and the Liquidity Facility
and any Alternate Credit Enhancement and Alternate Liquidity Facility, as
applicable, in accordance with the provisions thereof and of the Indenture.

 

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ARTICLE VI

SPECIAL COVENANTS AND AGREEMENTS

Section 6.1. Maintenance of Corporate Existence. The Company agrees that it will
do all things necessary to preserve and keep in full force and effect and in
good standing its existence, material rights and material franchises under the
laws of the state of its organization and will not dissolve or otherwise dispose
of all or substantially all of its assets and will not consolidate with or merge
into any other entity or permit one or more other entities to consolidate with
or merge into it, except the Company may, without violating the foregoing,
consolidate with or merge into another entity or permit one or more other
entities to consolidate with or merge into it, or transfer (other than by way of
an assignment as security for obligations of the Company) all or substantially
all of its assets to another entity (thereafter dissolving or not dissolving as
it may elect), subject, however, to the conditions that (a) the entity surviving
such merger or resulting from such consolidation, or the entity to which all or
substantially all of the assets of the Company are transferred, as the case may
be, shall (i) qualify to do business in the State of Arkansas under the laws
thereof and (ii) assume in writing all of the obligations of the Company
hereunder, (b) the Company shall have theretofore obtained the written consent
of the Credit Provider, and (c) the Company shall have theretofore delivered to
the Issuer and the Trustee a Favorable Opinion of Bond Counsel. Upon and after
such consolidation, merger or transfer meeting the foregoing conditions, the
Company shall be relieved from liability for its obligations hereunder.

Section 6.2. Release and Indemnification Covenants. (a) The Company shall and
hereby agrees to indemnify and save the Issuer and the Trustee harmless against
and from all claims by or on behalf of any person, firm, corporation or other
legal entity arising from the conduct or management of, or from any work or
thing done on, the Project during the term of this Loan Agreement from (i) any
condition of the Project, (ii) any breach or default on the part of the Company
in the performance of any of its obligations under this Loan Agreement,
(iii) any act or negligence of the Company or any of its agents, contractors,
servants, employees or licensees or (iv) any act or negligence of any assignee
or sublessee of the Company, or of any agents, contractors, servants, employees
or licensees of any assignee or sublessee of the Company. The Company shall
indemnify and save the Issuer and the Trustee harmless from any such claim
arising as aforesaid from (i), (ii), (iii) or (iv) above, or in connection with
any action or proceeding brought thereon, and upon notice from the Issuer or the
Trustee, the Company shall defend them or any of them in any such action or
proceeding. Notwithstanding the foregoing, neither the Issuer nor the Trustee
shall be entitled to indemnification for any claim arising out of its own gross
negligence or willful misconduct.

(b) Notwithstanding the fact that it is the intention of the parties that the
Issuer shall not incur pecuniary liability by reason of the terms of this Loan
Agreement, or the undertakings required of the Issuer hereunder by reason of the
issuance of the Bonds, the execution of the Indenture, the performance of any
act required of the Issuer by this Loan Agreement, or the

 

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performance of any act requested of the Issuer by the Company, including all
claims, liabilities or losses arising in connection with the violation of any
statutes or regulations pertaining to the foregoing; nevertheless, if the Issuer
should incur any such pecuniary liability, then in such event the Company shall
indemnify and hold the Issuer harmless against all claims by or on behalf of any
person, firm or corporation or other legal entity arising out of the same, and
all reasonable costs and expenses incurred in connection with any such claim or
in connection with any action or proceeding brought thereon, and upon written
notice from the Issuer, the Company shall defend the Issuer in any such action
or proceeding. Notwithstanding the foregoing, neither the Issuer nor the Trustee
shall be entitled to indemnification for any claim arising out of its own gross
negligence or willful misconduct.

Section 6.3. Qualification of Company in Arkansas. The Company agrees that
throughout the term of this Loan Agreement it will be qualified to do business
in the State of Arkansas.

Section 6.4. Permits or Licenses. In the event that it may be necessary for the
proper performance of this Loan Agreement on the part of the Company or the
Issuer that any application or applications for any permit or license to do or
to perform certain things be made to any governmental or other agency by the
Company or the Issuer, the Company and the Issuer each shall, upon the request
of either, execute such application or applications.

Section 6.5. Access to Project. The Issuer and the Trustee shall have the right,
upon reasonable advance notice to the Company, to have reasonable access to the
Project and the books and records of the Company with respect to the Project
during normal business hours for the purpose of ascertaining the Company’s
compliance with the terms and conditions hereof. In making such inspections, the
Issuer and the Trustee will observe the Company’s prevailing security and safety
arrangements. Nothing contained in this Section 6.5 or in any other provision of
this Loan Agreement shall be construed to entitle the Issuer or the Trustee to
any information or inspection involving the confidential know-how or other
proprietary information of the Company, and prior to any such inspection the
Company may require the Issuer and the Trustee to enter into a confidentiality
agreement in form and substance satisfactory to the Company with respect to any
information involving the confidential know-how or other proprietary information
of the Company.

Section 6.6. Recordation and Filing. The Company covenants that it will cause
the Indenture and this Loan Agreement, such security agreements, financing
statements and all supplements thereto and other instruments as may be required
from time to time to be kept, to be recorded and filed in such manner and in
such places as may be required by law in order to fully preserve and protect the
security of the owners of the Bonds and the rights of Trustee under such
instruments, and to perfect the security interest created by the Indenture.

Section 6.7. Tax Exempt Status of Bonds. The Company covenants and agrees that
it will not take or authorize or permit any action to be taken and has not taken
or authorized or

 

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permitted any action to be taken which results in interest paid on the Bonds
being included in gross income for purposes of federal income taxes. Without
limiting the generality of the foregoing, the Company further covenants and
agrees as follows:

(a) No portion of the proceeds of the Bonds will be used to reimburse the
Company for expenditures made earlier than sixty (60) days prior to November 21,
2005, except for the following: (i) costs of issuance of the Bonds;
(ii) preliminary expenditures up to an amount not in excess of 20% of the
aggregate issue price of the Bonds consisting of architectural, engineering,
surveying, soil testing, reimbursement bond issuance, and similar costs that are
incurred prior to commencement of acquisition, construction, or rehabilitation
of a project, other than land acquisition, site preparation, and similar costs
incident to commencement of construction; and (iii) an additional amount not in
excess of the lesser of $100,000 and 5% of the proceeds of the Bonds.

(b) No portion of the proceeds of the Bonds will be used to reimburse the
Company for expenditures made with respect to any portion of the Project
(i) more than 18 months prior to such reimbursement, or (ii) more than 18 months
after such portion of the Project has been placed in service or abandoned,
whichever is later, but in no event more than 3 years after the original
expenditure was paid.

(c) Not less than 95% of the net proceeds of the Bonds (within the meaning of
Section 142(a) of the Code) have been expended or are anticipated to be expended
(i) for Project Costs which constitute proper costs of land or property of a
character subject to the allowance for depreciation under Section 167 of the
Code, or which will be, for federal income tax purposes, chargeable to capital
account or would have been so chargeable either with a proper election by the
Company or but for a proper election by the Company to deduct such amounts, and
(ii) to provide sewage and solid waste disposal facilities within the meaning of
Section 142(a)(5) and (6) of the Code and regulations thereunder.

(d) The average maturity of the Bonds (within the meaning of Section 147(b) of
the Code and regulations thereunder) will not exceed 120% of the average
reasonably expected economic life of the facilities being financed with the
proceeds of the Bonds (within the meaning of Section 147(b) of the Code and
regulations thereunder), determined with respect to any facility as of the later
of the date on which the Bonds are issued or the date on which the facility was
placed in service.

(e) No changes shall be made in the Project which in any way impairs the
exemption of interest on any of the Bonds from federal income taxation.

(f) Within fifteen (15) days of the date of issuance of the Bonds, there neither
have been nor will be any “private activity bonds” (within the meaning of
Section 141(a) of the Code) sold to finance or refinance facilities of the
Company or any “related person” (within the meaning of Section 147(a)(2) of the
Code) under a common plan of marketing, at substantially the same rate of
interest, and for which a common or pooled security will be used or available to
pay debt service.

 

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(g) No portion of the proceeds of the Bonds will be used to provide or acquire
any airplane, skybox or other private luxury box, health club facility, facility
primarily used for gambling, store the principal business of which is the sale
of alcoholic beverages for consumption off premises.

(h) With respect to any portion of the Project being acquired by the Company the
first use of which was not solely with the Company within the meaning of
Section 147(d) of the Code (“Existing Property”), the Company shall make
expenditures to rehabilitate such Existing Property equaling or exceeding 15%
(in the case of the building or buildings comprising the Existing Property) or
100% (in the case of facilities other than a building) of the cost of acquiring
such Existing Property. Such rehabilitation expenditures shall consist solely of
amounts properly chargeable to capital account which are incurred by the
Company. The term “rehabilitation expenditures” does not include any expenditure
attributable to the enlargement of the Existing Property or any other
expenditure described in Section 47(c)(2)(B) of the Code. All such
rehabilitation expenditures shall be incurred by the Company within two years
after the later of (i) the date on which the Existing Property was acquired, or
(ii) the date of issuance of the Bonds.

(i) Less than 25% of the net proceeds of the Bonds shall be used (directly or
indirectly) for the acquisition of land (or an interest therein), and no portion
of the proceeds of the Bonds shall be used (directly or indirectly) for the
acquisition of land (or an interest therein) to be used for farming purposes.

(j) No action shall be taken that will cause the Bonds to be “federally
guaranteed” as defined in Section 149(b) of the Code.

(k) No portion of the Bond proceeds, including any underwriting discount, in
excess of the 2% of the proceeds thereof (within the meaning of Section 147(g)
of the Code and regulations thereunder) will be used to finance costs of
issuance of the Bonds.

(l) The Company shall comply with all covenants contained in any certificate
required to be given by the Company in connection with the issuance of the Bonds
pertaining to the tax exempt status of the interest paid on the Bonds.

The covenants and agreements contained in this Section 6.7 shall survive any
termination of this Loan Agreement.

Section 6.8. Arbitrage Covenant. The Issuer and the Company covenant that no use
of the proceeds of the Bonds or the earnings thereon will be made or directed,
and no other action will be taken, which would cause the Bonds to be “arbitrage
bonds” within the meaning of Section 148 of the Code. The Company further
covenants that (a) all actions with respect to the

 

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Bonds required by Section 148(f) of the Code shall be taken, (b) it shall make
the determinations required by subsection (a) of Section 8.3 of the Indenture
and promptly notify the Trustee of the same, together with supporting
calculations, and (c) it shall within forty (40) days after (i) each anniversary
of the date of initial authentication and delivery of the Bonds, unless the
final payment, whether upon redemption in whole or at maturity, of the Bonds
shall have occurred prior to such anniversary, and (ii) such final payment, file
with the Trustee a statement signed by the Company to the effect that the
Company is then in compliance with its covenants contained in clauses (a) and
(b) of this sentence, together with supporting calculations and directing the
Trustee to pay to the United States the amount or amounts subject to rebate
under Section 148(f) of the Code; provided, however, that if the Company shall
furnish an opinion of Bond Counsel to the Trustee to the effect that no further
action by the Company is required for such compliance with respect to the Bonds,
the Company shall not thereafter be required to deliver any such statements or
calculations.

Section 6.9. Usury Covenant. The Company covenants and agrees that it will not
take or authorize or permit any action to be taken and has not taken or
authorized or permitted any action to be taken which results in interest paid on
the outstanding principal amount of the Bonds, together with all other payments
to the owners of the Bonds which are required to be included as interest on the
Bonds under applicable usury law, at a rate per annum greater than the Maximum
Rate. This covenant shall survive the termination of this Loan Agreement.

Section 6.10. Continuing Disclosure. In the event the Bonds are converted to a
Mode which will make the Bonds subject to Rule 15c2-12 promulgated under the
Securities Act of 1934, as amended, the Company covenants and agrees that it
will execute a continuing disclosure undertaking satisfying the requirements of
such Rule and shall cooperate with the Remarketing Agent and any Underwriter (as
defined in such Rule) in satisfying the requirements of such Rule, as the same
may from time to time be amended and supplemented.

 

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ARTICLE VII

ASSIGNMENT, LEASING AND SELLING

Section 7.1. Conditions. The Company’s interest in this Loan Agreement may be
assigned in whole or in part, and the Project may be leased, subleased, or sold
as a whole or in part (whether a specific element or unit or an undivided
interest), by the Company, subject, however, to the conditions that (a) no
assignment, lease, sublease, or sale shall relieve the Company from liability
for its obligations hereunder, other than (i) those obligations relating to the
utilization of the Premises which obligations, to the extent of the interest
assigned, leased, subleased, or sold, shall be deemed to be satisfied and
discharged, and (ii) as described in Section 6.1 hereof, and (b) the Company
shall have theretofore obtained the written consent of the Credit Provider or
shall have certified to the Issuer that no such consent is required, and (c) the
Company shall have theretofore delivered to the Issuer and the Trustee a
Favorable Opinion of Bond Counsel.

Section 7.2. Instrument Furnished to Trustee. The Company shall, within fifteen
(15) days after the delivery thereof, furnish to the Issuer and the Trustee a
true and complete copy of the agreements or other documents effectuating any
such assignment, lease, sublease, or sale.

Section 7.3. Limitation. This Loan Agreement shall not be assigned nor shall the
Project be leased, subleased or sold, in whole or in part, except as provided in
this Article VII or in Section 5.4 or 6.1 hereof.

Section 7.4. Assignment of Issuer’s Rights. As security for the payment of the
Bonds, the Issuer will assign to the Trustee the Issuer’s rights under this Loan
Agreement (except for the Issuer’s rights under Sections 5.2(c), 6.2, 6.5 and
9.5 hereof and any rights of the Issuer to receive notices, certificates, or
other communications hereunder), including the right to receive payments
hereunder and the proceeds thereof, and hereby directs the Company to make said
payments, or to cause said payments to be made, directly to the Trustee. The
Company herewith consents to such assignment and will make payments, or cause
payments to be made, directly to the Trustee without defense or set-off by
reason of any dispute between the Company and the Issuer or the Trustee.

 

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ARTICLE VIII

TRUST INDENTURE; COMPANY CREDIT FACILITY

Section 8.1. Company’s Performance Under Indenture. The Company acknowledges
receipt of the Indenture and approves of the terms thereof. The Company agrees,
for the benefit of the owners from time to time of the Bonds, to do and perform
all acts and things contemplated in the Indenture to be done or performed by it.

Section 8.2. Company Credit Facility. The Company hereby covenants and agrees
that it will deliver to the Trustee a true and correct copy of the Company
Credit Facility, as the same may from time to time be modified, supplemented,
amended, or amended and restated.

 

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ARTICLE IX

EVENTS OF DEFAULT AND REMEDIES

Section 9.1. Events of Default. Each of the following events shall constitute
and is referred to in this Loan Agreement as an “Event of Default”:

(a) Failure by the Company to pay when due any payment required to be made under
Section 5.2(a) or 5.2(d) hereof.

(b) Failure by the Company to observe and perform any material covenant,
condition or agreement on its part to be observed or performed, other than as
referred to in Section 9.1(a), which failure shall continue for a period of
sixty (60) days after written notice, specifying such failure and requesting
that it be remedied, is given to the Company by the Issuer or the Trustee,
provided that if the Company is proceeding with reasonable diligence to remedy
the same, then such sixty-day period shall be extended to such date as may be
reasonably necessary to remedy such default. The Company shall not be deemed in
breach or default of this Loan Agreement during such initial sixty-day cure
period, nor (as long as the Company is proceeding with reasonable diligence as
set forth above) during such extended cure period.

(c) The dissolution or liquidation of the Company or the filing by the Company
of a voluntary petition in bankruptcy, or failure by the Company promptly to
lift any execution, garnishment or attachment of such consequence as will impair
its ability to carry out its obligations under this Loan Agreement, or filing of
any involuntary bankruptcy proceedings against the Company which is not timely
contested by the Company, or a general assignment by the Company for the benefit
of its creditors, or the entry by the Company into an agreement of composition
with its creditors of such consequence as will impair its ability to carry out
its obligations under this Loan Agreement, or the approval by a court of
competent jurisdiction of a petition applicable to the Company in any proceeding
for its reorganization instituted under the provisions of any bankruptcy act, or
under any similar act which may hereafter be enacted. The term “dissolution or
liquidation of the Company”, as used in this subsection, shall not be construed
to include the cessation of the corporate existence of the Company resulting
either from a merger or consolidation of the Company into or with another
corporation or a dissolution or liquidation of the Company following a transfer
of all or substantially all of its assets as an entirety, under the conditions
permitting such actions contained in Section 6.1 hereof.

(d) The principal of all Bonds then outstanding and the interest accrued thereon
shall be declared immediately due and payable pursuant to Section 11.2 of the
Indenture.

Section 9.2. Force Majeure. The provisions of Section 9.1(b) hereof are subject
to the following limitation: if by reason of acts of God; strikes, lockouts or
other industrial disturbances; acts of public enemies; orders or other acts of
any kind of the Government of the United States or of the State of Arkansas, or
any other sovereign entity or body politic, or any

 

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department, agency, political subdivision, court or official of any of them, or
any civil or military authority; insurrections; riots; epidemics; landslides;
lightning; earthquakes, volcanoes; fires; hurricanes; tornadoes; storms; floods;
washouts; droughts; arrests; restrain of government and people; civil
disturbances; explosions, breakage or accident to machinery; partial or entire
failure of utilities; or any cause or event not reasonably within the control of
the Company, the Company is unable in whole or in part to carry out any one or
more of its agreements or obligations contained herein, other than its
obligations under Sections 5.2(a), 5.2(d), 6.1 and 6.2 hereof, the Company shall
not be deemed in default by reason of not carrying out said agreement or
agreements or performing said obligation or obligations during the continuance
of such inability. The Company agrees, however, to use all reasonable efforts to
remedy with all reasonable dispatch the cause or causes preventing it from
carrying out its agreements; provided, that the settlement of strikes, lockouts
and other industrial disturbances shall be entirely within the discretion of the
Company, and the Company shall not be required to make settlement of strikes,
lockouts and other industrial disturbances by acceding to the demands of the
opposing party or parties when such course is in the sole discretion of the
Company unfavorable to the Company.

Section 9.3. Remedies on Default. Whenever any Event of Default hereunder shall
have happened and be continuing, any one or more of the following remedial steps
may be taken:

(a) The Issuer with the prior consent of the Trustee, or the Trustee, may at its
option, and shall, if acceleration occurs or is declared pursuant to
Section 1002 of the Indenture, declare all unpaid amounts payable under this
Loan Agreement, together with interest, then due thereon, to be immediately due
and payable, whereupon the same shall become due and payable.

(b) The Issuer with the prior consent of the Trustee, or the Trustee, may take
any action at law or in equity to collect the payments then due and thereafter
to come due hereunder, or to enforce performance and observance of any
obligation, agreement or covenant of the Company under this Loan Agreement.

Any amounts collected pursuant to action taken under this Section shall be
applied in accordance with the Indenture.

In case any proceeding taken by the Issuer or the Trustee on account of any
Event of Default shall have been discontinued or abandoned for any reason, or
shall have been determined adversely to the Issuer or the Trustee, then and in
every case the Issuer, the Company and the Trustee shall be restored to their
former positions and rights hereunder, respectively, and all rights, remedies
and powers of the Issuer, the Company and the Trustee shall continue as though
no such proceeding has been taken.

Section 9.4. No Remedy Exclusive. No remedy conferred upon or reserved to the
Issuer or the Trustee by this Loan Agreement is intended to be exclusive of any
other available remedy or remedies, but each and every such remedy shall be
cumulative and shall be in addition to every other remedy given under this Loan
Agreement or now or hereafter existing at law or in

 

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equity or by statute. No delay or omission to exercise any right or power
accruing upon any Event of Default shall impair any such right or power or shall
be construed to be a waiver thereof, but any such right or power may be
exercised from time to time and as often as may be deemed expedient. In order to
entitle the Issuer or the Trustee to exercise any remedy reserved to it in this
Article, it shall not be necessary to give any notice other than such notice as
may be required in this Article. Nothing in this Loan Agreement contained shall
affect or impair the right of the Purchaser (so long as the Purchaser is owner
of not less than 100% in aggregate principal amount of the Bonds) to institute
in its own name any suit, action or proceeding in equity or at law for the
enforcement of this Loan Agreement for any other remedy hereunder.

Section 9.5. Company to Pay Attorneys’ Fees and Expenses. In the event the
Company should default under any of the provisions of this Loan Agreement and
the Issuer or the Trustee should employ attorneys or incur other expenses for
the collection of payments due hereunder or for the enforcement of performance
or observance of any obligation or agreement on the part of the Company
contained herein, the Company agrees that it will on demand therefor pay to the
Issuer or the Trustee, as the case may be, the reasonable fees of such attorneys
and such other expenses so incurred.

Section 9.6. Waiver of Breach. In the event that any agreement contained herein
shall be breached by either the Company or the Issuer and such breach shall
thereafter be waived by the other party, such waiver shall be limited to the
particular breach so waived and shall not be deemed to waive any other breach
hereunder. In view of the assignment of the Issuer’s rights in and under this
Loan Agreement to the Trustee under the Indenture, the Issuer shall have no
power to waive any default hereunder by the Company without the consent of the
Trustee, and the Trustee may exercise any of the rights of the Issuer hereunder
(other than the rights retained by the Issuer as set forth in Section 7.4).

Section 9.7. Rights of Credit Provider. Anything herein to the contrary
notwithstanding, the Credit Provider shall, so long as the Credit Enhancement
shall be in effect and there shall have been no Credit Provider Failure, have
the right to direct the taking of actions and enforcement of remedies permitted
by this Article IX, including, without limitation, the declaration of all unpaid
amounts payable under this Loan Agreement to be immediately due and payable and
the waiver of Events of Default.

 

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ARTICLE X

REDEMPTION OF BONDS

Section 10.1. Optional Redemption of Bonds. The Company shall have and is hereby
granted the option to prepay installments payable hereunder for the purpose of
redeeming prior to maturity the Bonds, in whole or in part, pursuant to Sections
3.1, 3.2 and 3.3 of the Indenture.

Section 10.2. Extraordinary Optional Redemption of Bonds. The Company shall have
and is hereby granted the option to prepay installments payable hereunder for
the purpose of redeeming prior to maturity the Bonds, in whole or in part,
pursuant to Section 3.4 of the Indenture.

Section 10.3. Mandatory Redemption of Bonds. The Company shall prepay
installments payable hereunder for the purpose of redeeming prior to maturity
the Bonds pursuant to Sections 3.5 and 3.6 of the Indenture.

Section 10.4. Amounts Payable by Company. (a) In the case of a prepayment for
the redemption of the Bonds in whole pursuant to Sections 10.1, 10.2 or 10.3
hereof, the amount to be prepaid by the Company hereunder (which shall fully
discharge the obligation of the Company to make Loan Payments hereunder) will be
a sum sufficient, together with other funds deposited with Trustee and available
for such purpose, to pay (i) the principal of all Bonds then outstanding, plus
interest accrued and to accrue to the date upon which the Bonds will be
redeemed, pursuant to the Indenture (or to reimburse the Credit Provider for the
payment of such amounts), (ii) all reasonable and necessary fees and expenses of
the Trustee and any paying agent accrued and to accrue through final payment of
the Bonds, and (iii) all other liabilities of the Company accrued and to accrue
under this Loan Agreement through final payment of the Bonds (or, in each case,
to reimburse the Credit Provider for the payment of such amounts).

(b) In case of a prepayment for the redemption of the Bonds in part pursuant to
Sections 10.1 or 10.3 hereof, the amount to be prepaid by the Company hereunder
will be a sum sufficient, together with other funds deposited with Trustee and
available for such purpose, to pay (i) the principal of all Bonds then being
redeemed, plus interest accrued and to accrue to the date upon which the Bonds
will be redeemed, pursuant to the Indenture (or to reimburse the Credit Provider
for the payment of such amounts), (ii) all reasonable and necessary fees and
expenses of the Trustee and any paying agent accrued and to accrue in connection
with said redemption, and (iii) all other liabilities of the Company accrued and
to accrue under this Loan Agreement in connection with said redemption (or, in
each case, to reimburse the Credit Provider for the payment of such amounts).

(c) The Company agrees to and shall pay to the Trustee any amount required to be
paid by it under this Section 10.4, and the Trustee shall be directed to use the
moneys so paid to it to redeem the Bonds pursuant to the provisions of the
Indenture (or to reimburse the Credit

 

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Provider for the payment of such amounts). Any amount required to be paid under
this Section 10.4, shall not be deemed to be paid until immediately available
funds are received by the Trustee.

Section 10.5. Procedure for Exercise of Option. To exercise the option granted
in this Article X, the Company shall give written notice to the Issuer and the
Trustee which shall specify therein the date upon which redemption of the Bonds
will be made. Such notice shall be given not less than five (5) Business Days
prior to the date the Trustee shall be required to give notice of the call for
any redemption to the registered owners of the Bonds under Section 3.7 of the
Indenture. Upon receipt of such notice, the Issuer shall forthwith take all
steps (other than the payment of the money required for such redemption)
necessary under the applicable provisions of the Indenture to effect redemption
of all or part, as the case may be, of the Bonds on the earliest practicable
date thereafter on which such redemption may be made under the applicable
provisions of the Indenture.

 

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ARTICLE XI

MISCELLANEOUS

Section 11.1. Notices. Except as otherwise provided in this Loan Agreement, all
notices, certificates or other communications shall be sufficiently given and
shall be deemed given when delivered by hand delivery or when the same has been
mailed by registered or certified mail, postage prepaid, to the Issuer, the
Company, the Trustee, the Credit Provider, or the Remarketing Agent. Copies of
each notice, certificate or other communication given hereunder by or to the
Company shall be mailed by registered or certified mail, postage prepaid, to the
Trustee and the Credit Provider; provided, however, that the effectiveness of
any such notice shall not be affected by the failure to send any such copies.
Notices, certificates or other communications shall be sent to the following
addresses:

 

Issuer:

   City of Osceola, Arkansas    City Hall    316 West Hale Avenue    Osceola,
Arkansas 72370    Attention: Mayor

Company:

   Plum Point Energy Associates, LLC    c/o LS Power Development, LLC    Two
Tower Center, 11th Floor    East Brunswick, New Jersey 08816    Attention:
Treasurer

Trustee:

   Regions Bank    400 West Capitol Avenue    Little Rock, Arkansas 72201   
Attention: Corporate Trust Department

Credit Provider:

   Credit Suisse, New York Branch    1 Madison Avenue    2nd Floor    New York,
New York 10010    Attention: Finance Services Department

Remarketing Agent:

   Goldman, Sachs & Co.    85 Broad Street, 24th Floor    New York, New York
10004    Attention: Municipal Money Markets Desk

 

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Any of the foregoing may, by notice given hereunder, designate any further or
different addresses to which subsequent notices, certificates or other
communications shall be sent.

Section 11.2. Severability. If any provision of this Loan Agreement shall be
held or deemed to be or shall, in fact, be illegal, inoperative or
unenforceable, the same shall not affect any other provision or provisions
herein contained or render the same invalid, inoperative, or unenforceable to
any extent whatever.

Section 11.3. Execution of Counterparts. This Loan Agreement may be
simultaneously executed in several counterparts, each of which shall be an
original and all of which shall constitute but one and the same instrument.

Section 11.4. Amounts Remaining in Bond Fund. It is agreed by the parties hereto
that after payment in full of (i) the Bonds (or the provision for payment
thereof having been made in accordance with the provisions of the Indenture),
(ii) the fees, charges and expenses of the Trustee and Paying Agents (if any) in
accordance with the Indenture, and (iii) all other amounts required to be paid
under this Loan Agreement and the Indenture, any amounts remaining in the Bond
Fund shall belong to and be paid by the Trustee to the Company or, if the
Company Credit Facility is in effect, to the Company Credit Facility Revenue
Account.

Section 11.5. Amendments, Changes and Modifications. Except as otherwise
provided in this Loan Agreement or the Indenture, subsequent to the initial
issuance of Bonds and prior to payment in full of the Bonds (or the provision
for payment thereof having been made in accordance with the provisions of the
Indenture), this Loan Agreement may not be effectively amended, changed,
modified, altered or terminated nor any provision waived, without the written
consent of the Trustee and, if any of the foregoing purports to affect the
rights or obligations of the Credit Provider, the Credit Provider.

Section 11.6. Governing Law. This Loan Agreement shall be governed exclusively
by and construed in accordance with the applicable laws of the State of
Arkansas.

Section 11.7. Company Representatives. A Company Representative shall act on
behalf of the Company whenever the approval of the Company is required or the
Company requests the Issuer to take some action, and the Issuer and the Trustee
shall be authorized to act on any such approval or request and neither party
hereto shall have any complaint against the other or against the Trustee as a
result of any such action taken.

Section 11.8. No Personal Liability. No covenant or agreement contained in this
Loan Agreement shall be deemed to be the covenant or agreement of any official,
officer, agent, or employee of the Issuer in his individual capacity, and no
such person shall be subject to any personal liability or accountability by
reason of the issuance thereof.

 

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Section 11.9. Parties in Interest. This Loan Agreement shall inure to the
benefit of and shall be binding upon the Issuer, the Company and their
respective successors and assigns, and no other person, firm or corporation
shall have any right, remedy or claim under or by reason of this Loan Agreement;
provided, however, that any obligation of the Issuer created by or arising out
of this Loan Agreement shall be payable solely out of the revenues derived from
this Loan Agreement or the sale of the Bonds or income earned on invested funds
as provided in the Indenture and shall not constitute, and no breach of this
Loan Agreement by the Issuer shall impose, a pecuniary liability upon the Issuer
or a charge upon the Issuer’s general credit. This Loan Agreement shall also
inure to the benefit of the Credit Provider and the Liquidity Provider to the
extent the Credit Provider and the Liquidity Provider are specifically given
rights of approval, notice and consent hereunder and to such extent this Loan
Agreement shall be enforceable by the Credit Provider and the Liquidity Provider
so long as the Credit Enhancement and the Liquidity Facility, respectively,
shall remain outstanding or the Company shall be indebted to the Credit Provider
or the Liquidity Provider under the Reimbursement Agreement; provided, however,
that anything herein to the contrary notwithstanding the Credit Provider’s
rights hereunder shall be void upon the occurrence and continuance of a Credit
Provider Failure, and the Liquidity Provider’s rights hereunder shall be void
upon the occurrence and continuance of a Liquidity Provider Failure.

 

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IN WITNESS WHEREOF, the Issuer and the Company have caused this Loan Agreement
to be executed in their respective names, and the Issuer has caused its seal to
be hereunto affixed and attested by its duly authorized officer, all as of the
date first above written.

 

  CITY OF OSCEOLA, ARKANSAS   By:  

/s/ Illegible

ATTEST:

    Mayor

/s/ Illegible

City Clerk

(SEAL)

 

   

PLUM POINT ENERGY ASSOCIATES, LLC

           

By:

 

/s/ Illegible

     

President

      Title

 

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EXHIBIT A

Description of Project

The Project consists of the Company’s undivided interest in various solid waste
disposal facilities at an approximately 665 megawatt coal-fired electric
generation plant to be known as the Plum Point Energy Station and located on a
site adjacent to the Mississippi River approximately 2 miles south of Osceola,
Arkansas, near the intersection of State Highway 198 and S. County Road 623
(former State Highway 239), and north of State Highway 198. As presently
contemplated by the existing plans and specifications prepared by or on behalf
of the Company, the Project generally will consist of the following facilities:

1. Solid Waste Collection and Disposal Facilities

(a) Bottom Ash, Economizer Ash, and Pyrites Handling Systems

(i) Bottom Ash Handling System

(ii) Economizer Ash Handling System

(iii) Pyrites Handling System

(b) Fly Ash Handling and Disposal System

(c) Spent Resin Recycling System

(i) Condensate Polisher Spent Resin Recycling System

(ii) Demineralized Water Spent Resin Recycling System

(d) Sludge Treatment System

(e) Wastewater Collection System

(f) Landfill

2. Sanitary Sewage System

 

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