**Exhibit10.4**

 

***NOTE PURCHASEAGREEMENT****made as of August 6,2010, by and among the **FEDERAL FINANCING BANK**(“FFB”), a body corporate and instrumentality of the UnitedStates of America, **STEPHENTOWN REGULATIONSERVICES, LLC**(the “Borrower”), a limited liability companyorganized and existing under the laws of the State of Delaware, and the **SECRETARY OF ENERGY, acting through the Department ofEnergy**(the “Secretary”).*

 

WHEREAS,****the Secretaryis authorized, pursuant to the Guarantee Act (as hereinafter defined), toguarantee loans that meet the requirements of the Guarantee Act; and

 

WHEREAS,FFB is authorized, under section 6(a) of the FFB Act (as hereinafterdefined), to make commitments to purchase, and to purchase on terms andconditions determined by FFB, any obligation that is issued, sold, orguaranteed by an agency of the United States of America; and

 

WHEREAS,pursuant to the FFB Act, FFB has entered into the Program Financing Agreement(as hereinafter defined) with the Secretary setting forth the commitment of FFBto enter into agreements to purchase notes issued by entities designated by theSecretary when those notes have been guaranteed by the Secretary, and thecommitment of the Secretary to guarantee those notes; and

 

WHEREAS,pursuant to the Program Financing Agreement, the Secretary has delivered to FFBand the Borrower a Designation Notice (as hereinafter defined) designating theBorrower to be a “Borrower” for purposes of the Program Financing Agreement;and

 

WHEREAS,FFB is entering into this Note Purchase Agreement, as authorized by section 6(a) ofthe FFB Act and in fulfillment of its commitment under the Program FinancingAgreement, setting out, among other things, FFB’s agreement to purchase,pursuant to the FFB Act, the Note (as hereinafter defined) to be issued by theBorrower, when the terms and conditions specified herein have been satisfied,as hereinafter provided.

 

NOW,THEREFORE, for and in consideration of the mutual agreements herein containedand for other good and valuable consideration, the receipt and sufficiency ofwhich is hereby acknowledged, FFB, the Secretary, and the Borrower agree asfollows:

 

**ARTICLE 1**

 

**DEFINITIONS AND RULES****OF INTERPRETATION**

 

Section 1.1                                      Definitions.

 

Asused in this Agreement, the following terms shall have the respective meaningsspecified in this section 1.1, unless the context clearly requires otherwise.

 

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“Advance”shall mean an advance of funds made by FFB under the Note in accordance withthe provisions of article 7 of this Agreement.

 

“AdvanceIdentifier” shall mean, for each Advance, the particular sequence ofletters and numbers constituting the Note Identifier plus the particularsequence of additional numbers assigned by FFB to the respective Advance in theinterest rate confirmation notice relating to such Advance delivered by FFB inaccordance with section 7.7 of this Agreement.

 

*“*Advance Request” shall mean a letter from aBorrower requesting an Advance under a Note, in the form of letter attached as Exhibit Ato this Agreement.

 

“AdvanceRequest Approval Notice” shall mean the written notice from the Departmentlocated at the end of an Advance Request advising FFB that such Advance Requesthas been approved on behalf of the Secretary.

 

“BorrowerInstruments” shall have the meaning specified in section 3.2.1 of thisAgreement.

 

“BorrowerState” shall have the meaning specified in Schedule I to this Agreement.

 

“BusinessDay” shall mean any day on which FFB and the Federal Reserve Bank of New Yorkare both open for business.

 

“CertificateSpecifying Authorized Borrower Signatories” shall mean a certificate of theBorrower specifying the names and titles of those individuals who areauthorized to execute and deliver from time to time Advance Requests on behalfof the Borrower, and containing the original signature of each of thoseindividuals, substantially in the form of the Certificate Specifying AuthorizedBorrower Signatories attached as Exhibit B to this Agreement.

 

“CertificateSpecifying Authorized Department Officials” shall mean a certificatespecifying the names and titles of those officials of the Department who areauthorized to execute and deliver Advance Request Approval Notices from time totime on behalf of the Secretary and setting out the original signature of eachof those authorized officials, and specifying the name and title of thoseofficials of the Department who are authorized to confirm telephonically theauthenticity of the Advance Request Approval Notices from time to time onbehalf of the Secretary and setting out the telephone number of each of thoseauthorized officials, in the form of the Certificate Specifying AuthorizedDepartment Officials attached as Annex 1 to the Program FinancingAgreement.

 

“CommonAgreement” shall have the meaning specified in Schedule I to thisAgreement.

 

“Department”shall mean the Department of Energy.

 

“DesignationNotice” shall mean, generally, a notice from the Secretary to FFB and theparticular entity identified therein as the respective “Borrower,” designatingthat entity to 

 

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bea “Borrower” for purposes of the Program Financing Agreement, in the form ofnotice that is attached as Annex 2 to the Program Financing Agreement; and “*the*Designation Notice” shallmean the particular Designation Notice delivered by the Secretary to FFB andthe Borrower designating the Borrower to be a “Borrower” for purposes of theProgram Financing Agreement.

 

“FFBAct” shall mean the Federal Financing Bank Act of 1973 (Pub.  L.  No. 93-224, 87 Stat.  937, codified at 12U.S.C. § 2281 etseq.), as amended.

 

“GovernmentalApproval” shall mean any approval, consent, authorization, license, permit,order, certificate, qualification, waiver, exemption, or variance, or any otheraction of a similar nature, of or by a Governmental Authority havingjurisdiction over the Borrower or any of its properties.

 

“GovernmentalAuthority” shall mean any federal, state, county, municipal, or regionalauthority, or any other entity of a similar nature, exercising any executive,legislative, judicial, regulatory, or administrative function of government.

 

“GovernmentalJudgment” shall mean any judgment, order, decision, or decree, or anyaction of a similar nature, of or by a Governmental Authority havingjurisdiction over the Borrower or any of its properties.

 

“GovernmentalRegistration” shall mean any registration, filing, declaration, or notice,or any other action of a similar nature, with or to a Governmental Authorityhaving jurisdiction over the Borrower or any of its properties.

 

“GovernmentalRule” shall mean any statute, law, rule, regulation, code, or ordinance ofa Governmental Authority having jurisdiction over the Borrower or any of itsproperties.

 

“GuaranteeAct” shall mean Title XVII of the Energy Policy Act of 2005 (Pub.  L.  No. 109-58, 119 Stat. 594, 1117, codified at 42 U.S.C. § 16511 etseq.),as amended.

 

“Holder”shall mean FFB, for so long as it shall be the holder of the Note, and anysuccessor or assignee of FFB, for so long as such successor or assignee shallbe the holder of the Note.

 

“LoanCommitment Amount” shall have the meaning specified in Schedule I to thisAgreement.

 

“LoanServicer” shall mean the Department, acting through the Loan Guarantee ProgramOffice.

 

“MaterialAdverse Effect on the Borrower” shall mean any material adverse effect onthe financial condition, operations, business or prospects of the Borrower orthe ability of the Borrower to perform its obligations under this Agreement orany of the other Borrower Instruments.

 

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“Note”shall mean a future advance promissory note payable to FFB, in the form of notethat is attached as Exhibit C to this Agreement, as such Note maybe amended, supplemented, and restated from time to time in accordance with itsterms.

 

“NoteIdentifier” shall mean the particular sequence of letters and numbersassigned by FFB to the Note in the Principal Instruments acceptance noticerelating to the Note delivered by FFB in accordance with section 5.1 of thisAgreement.

 

“Opinionof Borrower’s Counsel re: Borrower Instruments” shall mean an opinion ofcounsel from counsel to the Borrower, substantially in the form of opinion thatis attached as Exhibit D to this Agreement.

 

“Opinionof Secretary’s Counsel re: Secretary’s Instruments” shall mean an opinionof counsel from counsel to the Secretary, substantially in the form of opinionthat is attached as Exhibit E to this Agreement.

 

“OtherDebt Obligation” shall mean any note or Note, or any other evidence of anobligation for borrowed money of a similar nature, made or issued by theBorrower (other than the Note purchased by FFB under this Agreement), or anymortgage, indenture, deed of trust or loan agreement with respect thereto towhich the Borrower is a party or by which the Borrower or any of its propertiesis bound (other than this Agreement).

 

“PaymentBorrowing” shall have the meaning specified in paragraph 7(b) of theNote purchased under this Agreement.

 

“Person”shall mean any individual, corporation, partnership, joint venture,association, joint-stock company, trust, trust company, unincorporatedorganization or Governmental Authority.

 

“PrincipalInstruments” shall have the meaning specified in section 4.2 of thisAgreement.

 

“ProgramFinancing Commitment Amount” shall have the meaning specified in section1.1 of the Program Financing Agreement.

 

“ProgramFinancing Agreement” shall mean the Program Financing Agreement dated as ofSeptember 2, 2009, between FFB and the Secretary, as such agreement may beamended, supplemented, and restated from time to time in accordance with itsterms.

 

“ProjectState” shall have the meaning specified in Schedule I to this Agreement.

 

“RequestedAdvance Amount” shall have the meaning specified in section 7.3.1(a)(2) ofthis Agreement.

 

“RequestedAdvance Date” shall have the meaning specified in section 7.3.1(a)(3) ofthis Agreement.

 

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“Secretary’sCertificate” shall mean a certificate relating to the Secretary’s Guaranteeand other matters, in the form of certificate that is attached as Exhibit Fto this Agreement.

 

“Secretary’sGuarantee” shall mean a guarantee of the Note issued by the Secretary, inthe form of guarantee that is attached as Exhibit G to thisAgreement.

 

“Secretary’sInstruments” shall have the meaning specified in section 3.3.1 thisAgreement.

 

“SecurityInstruments” shall have the meaning specified in Schedule I to thisAgreement.

 

“thisAgreement” shall mean this Note Purchase Agreement between FFB, theSecretary, and the Borrower.

 

“UncontrollableCause” shall mean an unforeseeable cause beyond the control and without thefault of FFB, being: act of God, fire, flood, severe weather, epidemic,quarantine restriction, explosion, sabotage, act of war, act of terrorism,riot, civil commotion, lapse of the statutory authority of the United StatesDepartment of the Treasury to raise cash through the issuance of Treasury debtinstruments, disruption or failure of the Treasury Financial CommunicationsSystem, closure of the Federal Government, or an unforeseen or unscheduledclosure or evacuation of the FFB offices.

 

Section 1.2                                      Rules ofInterpretation.

 

Unlessthe context shall otherwise indicate, the terms defined in section 1.1 of thisAgreement shall include the plural as well as the singular and the singular aswell as the plural.  The words “herein,” “hereof,”and “hereto,” and words of similar import, refer to this Agreement as awhole.  All references to “the Secretary”herein shall mean the Secretary in his or her official, and not individual,capacity, and shall include designates thereof that may be duly authorized fromtime to time.

 

**ARTICLE 2**

 

**FFB COMMITMENT TO PURCHASETHE NOTE**

 

Subjectto the terms and conditions of this Agreement, FFB agrees to purchase the Notethat is offered by the Borrower to FFB for purchase under this Agreement.

 

**ARTICLE 3**

 

**COMMITMENT CONDITIONS**

 

FFBshall be under no obligation to purchase the Note under this Agreement, and theSecretary shall be under no obligation to issue the Secretary’s Guaranteeguaranteeing such Note, unless and until each of the conditions specified inthis article 3 has been satisfied.

 

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Section 3.1                                      CommitmentAmount Limits.

 

3.1.1                        Loan CommitmentAmount.  The maximum principal amountof the Note that is offered for purchase shall not exceed the Loan CommitmentAmount.

 

3.1.2                        ProgramFinancing Commitment Amount.  At the time that the Note is offered to FFBfor purchase under this Agreement, the maximum principal amount of the Note,when added to the aggregate maximum principal amount of all other notes thathave been issued by entities that have been designated by the Secretary inDesignation Notices to be “Borrowers” for purposes of the Program FinancingAgreement and which notes have been guaranteed by the Secretary pursuant to theGuarantee Act, shall not exceed the Program Financing Commitment Amount.

 

Section 3.2                                      BorrowerInstruments.

 

3.2.1                        Borrower Instruments.  FFB shall have received the followinginstruments (such instruments being, collectively, the “Borrower Instruments”):

 

(a)                                  an originalcounterpart of this Agreement, duly executed by the Borrower; and

 

(b)                                 the originalNote, with all of the blanks on page 1 of the Note filled in withinformation consistent with the information set out in the Designation Notice,and duly executed by the Borrower.

 

3.2.2                        Opinion ofBorrower’s Counsel re: Borrower Instruments.  FFB shall have received an Opinion ofBorrower’s Counsel re: Borrower Instruments.

 

3.2.3                        CertificateSpecifying Authorized Borrower Signatories.  FFB shall have received a completed andsigned Certificate Specifying Authorized Borrower Signatories.

 

Section 3.3                                      Secretary’sInstruments.

 

3.3.1                        Secretary’sInstruments.  FFB shallhave received the following instruments (such instruments being, collectively,the “Secretary’s Instruments”):

 

(a)                                  an originalcounterpart of this Agreement, duly executed by or on behalf of the Secretary;

 

(b)                                 the originalSecretary’s Guarantee relating to the Note, duly executed by or on behalf ofthe Secretary; and

 

(c)                                  an originalSecretary’s Certificate relating to the Secretary’s Guarantee and othermatters, duly executed by or on behalf of the Secretary.

 

3.3.2                        Opinion ofSecretary’s Counsel re: Secretary’s Instruments.  FFB shall have received an Opinion ofSecretary’s Counsel re: Secretary’s Instruments.

 

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Section 3.4                                      ConditionsSpecified in Other Agreements.

 

Eachof the conditions specified in the Program Financing Agreement as beingconditions to purchasing the Note shall have been satisfied, or waived by FFBor the Secretary, as the case may be.

 

**ARTICLE 4**

 

**OFFER OF THE NOTE FORPURCHASE**

 

TheNote that is to be offered to FFB for purchase under this Agreement shall beoffered in accordance with the procedures described in this article 4.

 

Section 4.1                                      Delivery ofBorrower Instruments to the Secretary.

 

TheBorrower shall deliver to the Secretary, for redelivery to FFB, the following:

 

(a)                                  all of theBorrower Instruments, each duly executed by the Borrower;

 

(b)                                 an Opinion ofBorrower’s Counsel re: Borrower Instruments; and

 

(c)                                  a completed andsigned Certificate Specifying Authorized Borrower Signatories.

 

Section 4.2                                      Delivery ofPrincipal Instruments by the Secretary to FFB.

 

TheSecretary shall deliver to FFB all of the following instruments (collectivelybeing the “Principal Instruments”:

 

(a)                                  all of theinstruments described in section 4.1;

 

(b)                                 all of the Secretary’sInstruments, each duly executed by the Secretary; and

 

(c)                                  an Opinion ofSecretary’s Counsel re: Secretary’s Instruments.

 

**ARTICLE 5**

 

**PURCHASE OF THE NOTE BYFFB**

 

Section 5.1                                      Acceptance orRejection of Principal Instruments.

 

Within5 Business Days after delivery to FFB of the Principal Instruments relating tothe Note that is offered for purchase under this Agreement, FFB shall deliverby facsimile transmission (fax) to the Department one of the following:

 

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(a)                                  an acceptancenotice, which notice shall:

 

(1)                                  state that thePrincipal Instruments meet the terms and conditions detailed in article 3 ofthis Agreement, or are otherwise acceptable to FFB; and

 

(2)                                  assign a NoteIdentifier to such Note for use by the Borrower and the Department in allcommunications to FFB making reference to such Note; or

 

(b)                                 a rejectionnotice, which notice shall state that one or more of the Principal Instrumentsdoes not meet the terms and conditions of this Agreement and specify how suchinstrument or instruments does not meet the terms and conditions of thisAgreement.

 

Section 5.2                                      Purchase.

 

FFBshall not be deemed to have accepted the Note offered for purchase under thisAgreement until such time as FFB shall have delivered an acceptance noticeaccepting the Principal Instruments relating to the Note; provided, however,that in the event that FFB shall make an Advance under the Note, then FFB shallbe deemed to have accepted the Note offered for purchase.

 

Section 5.3                                      Return of Noteand Secretary’s Guarantee Under Certain Circumstances.

 

Inthe event that all of the following shall have occurred:

 

(a)                                  the Borrowershall have issued the Note to FFB;

 

(b)                                 the Secretaryshall have issued to FFB the Secretary’s Guarantee relating to the Note;

 

(c)                                  FFB shall havepurchased the Note from the Borrower under this Agreement;

 

(d)                                 there have beenno Advances made by FFB to the Borrower under the Note;

 

(e)                                  on or before September 30,2011, the Secretary shall have delivered written notice to FFB that theSecretary has not received a written certification from a responsible officerof the Borrower stating, to the best of such officer’s knowledge after dueinquiry, that “Commencement of Construction” (as that term is defined in theCommon Agreement) has occurred, and that the Secretary will not be approvingAdvances under the Note,

 

thenFFB will return the Note to the Borrower and the Secretary’s Guarantee to theSecretary and FFB’s obligations and commitments under this Agreement willterminate.

 

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**ARTICLE 6**

 

**CUSTODY OF NOTE; LOSS OFNOTE, ETC.**

 

Section 6.1                                      Custody.

 

FFBshall have custody of the Note purchased under this Agreement until all amountsowed under the Note have been paid in full.

 

Section 6.2                                      Lost, Stolen,Destroyed, or Mutilated Note.

 

Inthe event that the Note purchased under this Agreement shall become lost,stolen, destroyed, or mutilated, the Borrower shall, upon a written requestmade by FFB to the Borrower, with a copy to the Secretary, execute and deliverto FFB, in replacement thereof, a new Note of like tenor, dated and bearinginterest from the date to which interest has been paid on such lost, stolen,destroyed, or mutilated Note or, if no interest has been paid thereon, datedthe same date as such lost, stolen, destroyed, or mutilated Note.  Upon delivery of such replacement Note toFFB, the Borrower shall be released and discharged from any further liabilityon account of the lost, stolen, or destroyed Note.  If the Note being replaced has beenmutilated, such mutilated Note shall be surrendered to the Borrower forcancellation.  The Secretary shalldeliver to FFB a confirmation that the Secretary’s Guarantee related to thelost, stolen, destroyed, or mutilated Note remains in full force and effectwith respect to the replacement Note.

 

**ARTICLE 7**

 

**ADVANCES**

 

Section 7.1                                      Commitment.

 

Subjectto the terms and conditions of this Agreement, FFB agrees to make Advancesunder the Note for the account of the Borrower.

 

Section 7.2                                      TreasuryPolicies Applicable to Advances.

 

Eachof the Borrower and the Secretary understands and consents to the followingTreasury financial management policies generally applicable to all advances offunds:

 

(a)                                  each Advancewill be requested by the Borrower, and each Advance Request will be approved bythe Secretary, only at such time and in such amount as shall be necessary tomeet the immediate payment or disbursing need of the Borrower;

 

(b)                                 except forAdvances to reimburse the Borrower for expenditures that it has made from itsown working capital, generally each Advance will be requested to be disburseddirectly to the Person(s) to whom the Borrower is obligated to makepayments;

 

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(c)                                  Advances forinvestment purposes will not be requested by the Borrower or approved by theSecretary; and

 

(d)                                 all interestearned on any lawful and permitted investment of Advances in excess of theinterest accrued on such Advances will be remitted to FFB.

 

Section 7.3                                      Conditions toMaking Advances.

 

FFBshall be under no obligation to make any Advance under the Note unless anduntil each of the conditions specified in this section 7.3 is satisfied.

 

7.3.1                        AdvanceRequests.  For eachAdvance, the Borrower shall have delivered to the Secretary, for review andapproval before being forwarded to FFB, an Advance Request, which AdvanceRequest:

 

(a)                                  shall specify,among other things:

 

(1)                                  the particular “NoteIdentifier” that FFB assigned to this Note (as provided in section 5.1 of thisAgreement;

 

(2)                                  the particularamount of funds that the Borrower requests to be advanced (such amount beingthe “Requested Advance Amount” for the respective Advance);

 

(3)                                  the particularcalendar date that the Borrower requests to be the date on which the respectiveAdvance is to be made (such date being the “Requested Advance Date” forsuch Advance), which date:

 

(A)                              must be aBusiness Day; and

 

(B)                                shall not beearlier than the third Business Day to occur after the date on which FFB shallhave received the respective Advance Request;

 

(4)                                  the particularbank account or accounts to which the Borrower requests that the respectiveAdvance be made; and

 

(b)                                 shall have beenduly executed by an individual whose name and signature appear on theCertificate Specifying Authorized Borrower Signatories delivered by theBorrower to FFB pursuant to section 3.2.3 of this Agreement; and

 

(c)                                  shall have beenreceived by FFB not later than the third Business Day before the RequestedAdvance Date specified in such Advance Request.

 

7.3.2                        Advance RequestApproval Notice.  For eachAdvance, the Secretary shall have delivered to FFB the Borrower’s executedAdvance Request, together with the 

 

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Department’s executedAdvance Request Approval Notice, which Advance Request Approval Notice:

 

(a)                                  shall have beenduly executed on behalf of the Secretary by an official of the Department whosename and signature appear on the Certificate Specifying Authorized DepartmentOfficials delivered to FFB pursuant to section 3.1.3 or section 6.1 of theProgram Financing Agreement; and

 

(b)                                 shall have beenreceived by FFB not later than the third Business Day before the RequestedAdvance Date specified in such Advance Request.

 

7.3.3                        TelephonicConfirmation of Authenticity of  AdvanceRequest Approval Notices.  Foreach Advance, FFB shall have obtained telephonic confirmation of theauthenticity of the related Advance Request Approval Notice from an official ofthe Department (a) whose name, title, and telephone number appear on theCertificate Specifying Authorized Department Officials that has been deliveredby the Secretary to FFB pursuant to section 3.1.3 or section 6.1 of the ProgramFinancing Agreement; and (b) who is not the same official of theDepartment who executed the Advance Request Approval Notice on behalf of theSecretary.

 

7.3.4                        Note MaximumPrincipal Amount Limit.  Atthe time of making any Advance under the Note, the amount of such Advance, whenadded to the aggregate amount of all Advances previously made under the Note,shall not exceed the maximum principal amount of the Note.

 

7.3.5                        ConditionsSpecified in Other Agreements.  Each of the conditions specified in theProgram Financing Agreement as being conditions to making Advances under theNote, shall have been satisfied, or waived by FFB or the Secretary, as the casemay be.

 

Section 7.4                                      Amount andTiming of Advances.

 

FFBshall make each Advance in the Requested Advance Amount specified in the respectiveAdvance Request and on the Requested Advance Date specified in the respectiveAdvance Request, subject to satisfaction of the conditions specified in section7.3 of this Agreement and subject to the following additional limitations:

 

(a)                                  in the eventthat the Requested Advance Date specified in the respective Advance Request isnot a Business Day, FFB shall make the respective Advance on the first daythereafter that is a Business Day;

 

(b)                                 in the eventthat FFB receives the respective Advance Request and the related AdvanceRequest Approval Notice later than the third Business Day before the RequestedAdvance Date specified in such Advance Request, FFB shall make the respectiveAdvance as soon as practicable thereafter, but in any event not later than thethird Business Day after FFB receives such Advance Request, unless the Borrower

 

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delivers to FFB and theSecretary a written cancellation of such Advance Request or a replacementAdvance Request specifying a later Requested Advance Date;

 

(c)                                  in the eventthat an Uncontrollable Cause prevents FFB from making the respective Advance onthe Requested Advance Date specified in the respective Advance Request, FFBshall make such Advance as soon as such Uncontrollable Cause ceases to preventFFB from making such Advance, unless the Borrower delivers to FFB and theSecretary a written cancellation of such Advance Request or a replacementAdvance Request specifying a later Requested Advance Date; and

 

(d)                                 in the eventthat FFB receives, not later than 3:30 p.m.  (Washington, DC, time) on the Business Dayimmediately before the Requested Advance Date specified in an Advance Request,a written notice delivered by facsimile transmission of withdrawal or cancellationof the Advance Request Approval Notice, and telephonic confirmation of thewithdrawal or cancellation, from an official of the Department whose name,title, and telephone number appear on the Certificate Specifying AuthorizedDepartment Officials that has been delivered by the Secretary to FFB pursuantto section 3.1.3 or section 6.1 of the Program Financing Agreement, FFB shallnot make the respective Advance.

 

Section 7.5                                      Type of Fundsand Means of Advance.

 

7.5.1                        General.  Except as provided in section 7.5.2 of thisAgreement, each Advance shall be made in immediately available funds byelectronic funds transfer to such bank account(s) as shall have beenspecified in the respective Advance Request.

 

7.5.2                        PaymentBorrowings.  An Advancefor purposes of a Payment Borrowing under the Note shall be made by internaltransfer of funds on the books of the United States Department of the Treasuryin accordance with the terms of the Note.

 

Section 7.6                                      Interest RateApplicable to Advances.

 

Therate of interest applicable to each Advance made under the Note shall beestablished as provided in paragraph 6 of the Note.

 

Section 7.7                                      Interest RateConfirmation Notices.

 

Aftermaking each Advance, FFB shall deliver, by facsimile transmission, to theBorrower, the Department, and the Loan Servicer written confirmation of themaking of the respective Advance, which confirmation shall:

 

(a)                                  state the dateon which such Advance was made;

 

(b)                                 state theinterest rate applicable to such Advance; and

 

(c)                                  assign an AdvanceIdentifier to such Advance for use by the Borrower, the Department, and LoanServicer in all communications to FFB making reference to such Advance.

 

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**ARTICLE 8**

 

**REPRESENTATIONS ANDWARRANTIES BY THE BORROWER**

 

TheBorrower makes the representations and warranties provided in this article 8 toFFB.

 

Section 8.1                                      Organization.

 

TheBorrower is a limited liability company duly organized, validly existing and ingood standing under the laws of the Borrower State and is qualified to dobusiness in the Project State.

 

Section 8.2                                      Authority.

 

TheBorrower has all requisite limited liability company power and authority tocarry on its business as presently conducted, to execute and deliver thisAgreement and each of the other Borrower Instruments, to consummate thetransactions contemplated hereby and thereby, and to perform its obligationshereunder and thereunder.

 

Section 8.3                                      Due Authorization.

 

Theexecution and delivery by the Borrower of this Agreement and each of the otherBorrower Instruments, the consummation by the Borrower of the transactionscontemplated hereby and thereby, and the performance by the Borrower of itsobligations hereunder and thereunder have been duly authorized by all necessarylimited liability company action.

 

Section 8.4                                      Due Execution.

 

ThisAgreement has been, and each of the other Borrower Instruments will have beenat the respective time of delivery of each thereof, duly executed and deliveredby individuals who are duly authorized to execute and deliver such documents onbehalf of the Borrower.

 

Section 8.5                                      Validity and Enforceability.

 

ThisAgreement constitutes, and each of the other Borrower Instruments willconstitute at the respective time of delivery of each thereof, the legal,valid, and binding agreement of the Borrower, enforceable against the Borrowerin accordance with their respective terms.

 

Section 8.6                                      No Governmental Actions Required.

 

NoGovernmental Approvals or Governmental Registrations are now, or under existingGovernmental Rules will in the future be, required to be obtained or made,as the case may be, by the Borrower to authorize the execution and delivery bythe Borrower of this Agreement or any of the other Borrower Instruments, theconsummation by the Borrower of the transactions contemplated hereby orthereby, or the performance by the Borrower of its obligations hereunder orthereunder.

 

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Section 8.7                                      No Conflicts or Violations.

 

Theexecution and delivery by the Borrower of this Agreement or any of the otherBorrower Instruments, the consummation by the Borrower of the transactionscontemplated hereby or thereby, and the performance by the Borrower of itsobligations hereunder or thereunder do not and will not conflict with orviolate, result in a breach of, or constitute a default under (a) any termor provision of the certificate of formation or operating agreement of theBorrower; (b) any of the covenants, conditions or agreements contained inany Other Debt Obligation of the Borrower; (c) any Governmental Approvalor Governmental Registration obtained or made, as the case may be, by theBorrower; or (d) any Governmental Judgment or Governmental Rule currentlyapplicable to the Borrower.

 

Section 8.8                                      All NecessaryGovernmental Actions.

 

TheBorrower has not failed to obtain any material Governmental Approval or makeany material Governmental Registration required or necessary to carry on thebusiness of the Borrower as presently conducted, and the Borrower reasonablybelieves that it will not be prevented by any Governmental Authority havingjurisdiction over the Borrower from so carrying on its business as presentlyconducted.

 

Section 8.9                                      No MaterialLitigation.

 

Thereare no lawsuits or judicial or administrative actions, proceedings orinvestigations pending or, to the best knowledge of the Borrower, threatenedagainst the Borrower which, in the reasonable opinion of the Borrower, islikely to have a Material Adverse Effect on the Borrower.

 

**ARTICLE 9**

 

**BILLING BY FFB**

 

Section 9.1                                      BillingStatements to the Borrower, the Department, and the Loan Servicer.

 

FFBshall prepare a billing statement for the amounts owed to FFB on each Advancethat is made under the Note purchased under this Agreement, and shall delivereach such billing statement to the Borrower, the Department, and the LoanServicer.

 

Section 9.2                                      Failure toDeliver or Receive Billing Statements No Release.

 

Failureon the part of FFB to deliver any billing statement or failure on the part ofthe Borrower to receive any billing statement shall not, however, relieve theBorrower of any of its payment obligations under the Note or this Agreement.

 

Section 9.3                                      FFB BillingDeterminations Conclusive.

 

9.3.1                        Acknowledgmentand Consent.  TheBorrower acknowledges that FFB has described to it:

 

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(a)                                  the roundingmethodology employed by FFB in calculating the amount of accrued interest owedat any time on the Note; and

 

(b)                                 the methodologyemployed by FFB in calculating the equal principal installment payment schedulefor amounts due and payable on the Note;

 

and the Borrower consents to these methodologies.

 

9.3.2                        Agreement.  The Borrower agrees that any and alldeterminations made by FFB shall be conclusive and binding upon the Borrowerwith respect to:

 

(a)                                  the amount ofaccrued interest owed on the Note determined using this rounding methodology;and

 

(b)                                 the amount ofany equal principal installment payment due and payable on the Note determinedusing this methodology.

 

**ARTICLE 10**

 

**PAYMENTS TO FFB**

 

Eachamount that becomes due and owing on the Note purchased under this Agreementshall be paid when and as due, as provided in the Note.

 

**ARTICLE 11**

 

**RIGHTS AND AGREEMENTS OFTHE SECRETARY AND FFB**

 

Section 11.1                                Rights andAgreements related to Enforcement.

 

11.1.1                  Secretary’s Authority.  In consideration of the Secretary’s Guaranteerelating to the Note that has been purchased by FFB under this Agreement, theSecretary shall have the sole authority (vis-a-vis FFB), in the case of adefault by the Borrower under such Note or the occurrence of an Event ofDefault under the Security Instruments, in respect of acceleration of suchNote, the exercise of other available remedies, and the disposition of sums orproperty recovered.

 

11.1.2                  Acknowledgment of SecurityInterest.  FFBacknowledges that the Borrower has, through the execution of the SecurityInstruments, pledged and granted a security interest to the “Collateral Agent,”for the benefit of the “Secured Parties”(as those terms are defined in theCommon Agreement) in certain property of the Borrower to secure the payment andperformance of certain obligations owed to the Secretary under,*inter alia,*the Security Instruments.

 

11.1.3                  FFB Cooperation.  FFB shall cooperate with the Secretary toenable the Secretary to exercise and enforce the Secretary’s rights andremedies under this Agreement, the Program Financing Agreement, the Note, andthe Security Instruments, 

 

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including, when reasonablyrequested by the Secretary, executing and delivering to the Secretaryinstruments, agreements, and other documents prepared by or for the Departmentfor FFB’s execution.

 

Section 11.2                                Secretary’sRight to Purchase Advances or the Note.

 

Notwithstandingthe provisions of the Note, the Borrower acknowledges that, under the terms ofthe Program Financing Agreement, the Secretary may purchase from FFB all or anyportion of any Advance that has been made under the Note, or may purchase fromFFB the Note in its entirety, in the same manner, at the same price, andsubject to the same limitations as shall be applicable, under the terms of theNote, to a prepayment by the Borrower of all or any portion of any Advance madeunder the Note, or a prepayment by the Borrower of the Note in its entirety, asthe case may be.

 

Section 11.3                                Secretary’sConfirmation Relating to the Secretary’s Guarantee.

 

TheSecretary confirms to FFB that the obligation of the United States of Americato pay amounts due and payable under the Secretary’s Guarantee when suchamounts become due and payable in accordance with its terms, constitutes theabsolute obligation of the United States of America, against which no offsetmay be made by the United States of America in discharge of its obligation tomake these payments and for which, in accordance with section 1702(j) ofthe Guarantee Act, the full faith and credit of the United States of Americaare pledged, provided, however, that the United States will beentitled to offset payments under the Secretary’s Guarantee against anyfinancial asset or obligation of any Holder of the Secretary’s Guarantee otherthan FFB.

 

**ARTICLE 12**

 

**EFFECTIVE DATE, TERM,SURVIVAL**

 

Section 12.1                                Effective Date.

 

ThisAgreement shall be effective as of the date first above written.

 

Section 12.2                                Term ofCommitment to Make Advances.

 

Theobligation of FFB under this Agreement to make Advances under the Note issuedby the Borrower shall expire on the “Last Day for an Advance” specified in theNote.

 

Section 12.3                                Survival.

 

12.3.1                  Representations, Warranties,and Certifications.  Allrepresentations, warranties, and certifications made by the Borrower in thisAgreement, or in any agreement, instrument, or certificate delivered pursuanthereto, shall survive the execution and delivery of this Agreement, thepurchasing of the Note hereunder, and the making of Advances thereunder.

 

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12.3.2                  Remainder of Agreement.  Notwithstanding the occurrence and passage ofthe Last Day for an Advance, the remainder of this Agreement shall remain infull force and effect until all amounts owed under this Agreement and the Notepurchased by FFB under this Agreement have been paid in full.

 

**ARTICLE 13**

 

**MISCELLANEOUS**

 

Section 13.1                                Notices.

 

13.1.1                  Addresses of the Parties.  All notices and other communicationshereunder and under the Note to be made to any party shall be in writing andshall be addressed as follows:

 

ToFFB:

 

FederalFinancing Bank

MainTreasury Building

1500Pennsylvania Avenue, NW

Washington,DC 20220

 

Attention:Chief Financial Officer

 

TelephoneNo. (202) 622-2470

FacsimileNo.   (202) 622-0707

 

Tothe Borrower:

 

StephentownRegulation Services LLC

c/oBeacon Power Corporation

65Middlesex Road

Tyngsboro,Massachusetts 01879

 

Attention:James M.  Spiezio

 

TelephoneNo.  (978) 694-9121

FacsimileNo.  (978) 694-9127

EmailAddress  spiezio@beaconpower.com

 

*With a copy (which copy shall not be required toeffect notice) to:*

 

StephentownRegulation Services LLC

c/oBeacon Power Corporation

65Middlesex Road

Tyngsboro,Massachusetts 01879

 

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Attention:         Judith Judson

 

Telephone No. (978) 694-9121

Facsimile No.   (978) 694-9127

EmailAddress  judson@beaconpower.com

 

Tothe Secretary (or the Department):

 

UnitedStates Department of Energy Loan Guarantee Program

1000Independence Avenue, SW

Washington,DC 20585

 

Attention:Portfolio Manager

 

TelephoneNo.  (202) 287-6738

FacsimileNo.  (202) 287-5816

EmailAddress  lpo.portfolio@hq.doe.gov

 

*With a copy (which copy shall not be required toeffect notice) to:*

 

NixonPeabody LLP

437Madison Avenue

NewYork, NY 10022

 

Attention:Scott Singer

 

Telephone No. (212) 940-3182

Facsimile No.  (866) 947-2466

EmailAddress  ssinger@nixonpeabody.com

 

Tothe Loan Servicer:

 

UnitedStates Department of Energy Loan Guarantee Program

1000Independence Avenue, SW

Washington,DC 20585

 

TelephoneNo.  (202) 287-6738

FacsimileNo.  (202) 287-5816

Attention:Portfolio Manager

 

EmailAddress  lpo.portfolio@hq.doe.gov

 

*With a copy (which copy shall not be required toeffect notice) to:*

 

NixonPeabody LLP

437Madison Avenue

NewYork, NY 10022

 

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Attention:Scott Singer

 

Telephone No.  (212) 940-3182

Facsimile No.    (866) 947-2466

EmailAddress  ssinger@nixonpeabody.com

 

Theaddress, telephone number, or facsimile number for any party or the LoanServicer may be changed at any time and from time to time upon written noticegiven by such changing party to the each other party hereto.

 

13.1.2                  Permitted Means of Delivery.  Advance Requests, notices, and othercommunications to FFB under this Agreement may be delivered by facsimile (fax)transmission of the executed instrument.

 

13.1.3                  Effective Date of Delivery.  A properly addressed notice or othercommunication shall be deemed to have been “delivered” for purposes of thisAgreement:

 

(a)                                  if made bypersonal delivery, on the date of such personal delivery;

 

(b)                                 if mailed byfirst class mail, registered or certified mail, express mail, or by anycommercial overnight courier service, on the date that such mailing isreceived;

 

(c)                                  if sent byfacsimile (fax) transmission:

 

(1)                                  if thetransmission is received and receipt confirmed before 4:00 p.m.(Washington, DC, time) on any Business Day, on the date of such transmission;and

 

(2)                                  if thetransmission is received and receipt confirmed after 4:00 p.m.(Washington, DC, time) on any Business Day or any day that is not a BusinessDay, on the next Business Day.

 

13.1.4                  Notices to FFB to ContainFFB Identification References.  All notices to FFB making any reference toeither the Note or any Advance made thereunder shall identify the Note or suchAdvance by the Note Identifier or the respective Advance Identifier, as thecase may be, assigned by FFB to the Note or such Advance.

 

Section 13.2                                Amendments.

 

Noprovision of this Agreement may be amended, modified, supplemented, waived,discharged, or terminated orally but only by an instrument in writing dulyexecuted by each of the parties hereto and consented to in writing by theSecretary.

 

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Section 13.3                                Successors andAssigns.

 

ThisAgreement shall be binding upon and inure to the benefit of each of FFB, theBorrower, and the Secretary, and each of their respective successors andassigns.

 

Section 13.4                                Sale orAssignment of Note.

 

13.4.1                  Sale or Assignment Permitted.  Subject to the requirements of 10 C.F.R.§ 609.10(g)(1) and Office of Management and Budget Circular A-129revised (November 2000), FFB may sell, assign, or otherwise transfer allor any part of the Note or any participation share thereof.

 

13.4.2                  Notice of Sale, Etc.  FFB will deliver to the Borrower, theDepartment, and the Loan Servicer written notice of any sale, assignment, orother transfer of any Note promptly after any such sale, assignment, or othertransfer.

 

13.4.3                  Manner of Payment after Sale.  Any sale, assignment, or other transfer ofall or any part of any Note may provide that, following such sale, assignment,or other transfer, payments on such Note shall be made in the manner specifiedby the respective purchaser, assignee, or transferee, as the case may be.

 

13.4.4                  Replacement Notes.  The Borrower agrees:

 

(a)                                  to issue areplacement Note or Notes with the same aggregate principal amount, interestrate, maturity, and other terms as each respective Note or Notes sold,assigned, or transferred pursuant to subsection 13.4.1 of this Agreement; provided,however, that, when requested by the respective purchaser, assignee, ortransferee, such replacement Note or Notes shall provide that paymentsthereunder shall be made in the manner specified by such purchaser, assignee,or transferee; and

 

(b)                                 to effect thechange in ownership on its records and on the face of each such replacementNote issued, upon receipt of each Note or Notes so sold, assigned, ortransferred.

 

Section 13.5                                Forbearance Nota Waiver.

 

Anyforbearance on the part of FFB from enforcing any term or condition of thisAgreement shall not be construed to be a waiver of such term or condition oracquiescence by FFB in any failure on the part of Borrower to comply with orsatisfy such term or condition.

 

Section 13.6                                Rights Confinedto Parties.

 

Nothingexpressed or implied herein is intended or shall be construed to confer upon,or to give to, any Person other than FFB, the Borrower, and the Secretary, andtheir respective successors and permitted assigns, any right, remedy or claimunder or by reason of this Agreement or of any term, covenant or conditionhereof, and all of the terms, covenants, conditions, promises, and agreementscontained herein shall be for the sole and exclusive benefit of FFB, theBorrower, and the Secretary, and their respective successors and permittedassigns.

 

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Section 13.7                                Governing Law.

 

ThisAgreement and the rights and obligations of the parties hereunder shall begoverned by, and construed and interpreted in accordance with, Federal law andnot the law of any state or locality.  Tothe extent that a court looks to the laws of any state to determine or definethe Federal law, it is the intention of the parties hereto that such courtshall look only to the laws of the State of New York without regard to the rules ofconflicts of laws.

 

Section 13.8                                Severability.

 

Anyprovision of this Agreement that is prohibited or unenforceable in anyjurisdiction shall, as to such jurisdiction, be ineffective to the extent ofsuch prohibition or unenforceability without invalidating the remainingprovisions hereof, and any such prohibition or unenforceability in anyjurisdiction shall not of itself invalidate or render unenforceable suchprovision in any other jurisdiction.

 

Section 13.9                                Headings.

 

Thedescriptive headings of the various articles, sections, and subsections of thisAgreement were formulated and inserted for convenience only and shall not bedeemed to affect the meaning or construction of the provisions hereof.

 

Section 13.10                          Counterparts.

 

ThisAgreement may be executed in separate counterparts, each of which when soexecuted and delivered shall be an original, but all of which together shallconstitute but one and the same instrument.

 

[The remainder of this page is intentionally left blank.]

 

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**IN WITNESS WHEREOF,**FFB, the Borrower, and theSecretary have each caused this Agreement to be executed as of the day and yearfirst above mentioned.

 
|   | **FEDERAL  FINANCING BANK**              |
|--------|------------------------------------------|
|   | (“FFB”)                        |
|   |                                     |   |
|   |                                     |   |
|   | Signature:                               | /s/  Mary J. Miller |
|   | Name:                                    | Mary  J. Miller |
|   | Title:                                   | Vice  President |
|   | ** **                               |
|   | ** **                               |
|   | **STEPHENTOWN  REGULATION SERVICES LLC** |
|   | (the  “Borrower”)              |
|   |                                     |
|   |                                     |
|   | Signature:                               | /s/  James M. Spiezio |
|   | Name:                                    | James  M. Spiezio |
|   | Title:                                   | Treasurer  and Secretary |
|   |                                     |   |
|   |                                     |   |
|   | THE  SECRETARY OF ENERGY                 |
|   | (the  “Secretary”)             |
|   |                                     |   |
|   |                                     |   |
|   | Signature:                               | /s/  David G. Frantz |
|   | Name:                                    | David  G. Frantz |
|   | Title:                                   | Director |
|   |                                     | Loan  Guarantee Program |
|   |                                     | Office  of Loan Programs |

 

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**SCHEDULE ItoNOTE PURCHASE AGREEMENTby and amongthe Federal Financing Bank,Stephentown Regulation Services LLC,and the Secretary of Energy**

 

1.                                       **“BorrowerState”** means the State of Delaware.

 

2.                                       **“CommonAgreement”** means the Common Agreement dated as of August 6,2010, among Stephentown Regulation Services LLC, as Borrower, the U.S.  Department of Energy, as Credit Party andLoan Servicer, and Midland Loan Services, Inc., as Administrative Agent inits capacity as Collateral Agent, as such agreement may be amended,supplemented, and restated from time to time in accordance with its terms.

 

3.                                       **“LoanCommitment Amount”** means $43,137,019.

 

4.                                       **“ProjectState”** means the State of New York.

 

5.                                       **“SecurityInstruments”** means, collectively, (i) the Common Agreement,and (ii) the “Security Documents” (as that term is defined in the CommonAgreement), as such agreements and documents may be amended, supplemented, andrestated from time to time in accordance with their respective terms.

 

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