LOAN AGREEMENT

E XHIBIT 10.12

 

CITY OF OSCEOLA, ARKANSAS

and

PLUM POINT ENERGY ASSOCIATES, LLC

 

LOAN AGREEMENT

Dated as of April 1, 2006

 

LOAN AGREEMENT

TABLE OF CONTENTS

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

 

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:

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 iss