Exhibit
10.4


 


NOTE PURCHASE
AGREEMENT made as of August 6,
2010, by and among the FEDERAL FINANCING BANK
(“FFB”), a body corporate and instrumentality of the United
States of America, STEPHENTOWN REGULATION
SERVICES, LLC (the “Borrower”), a limited liability company
organized and existing under the laws of the State of Delaware, and the SECRETARY OF ENERGY, acting through the Department of
Energy (the “Secretary”).


 


WHEREAS,  the Secretary
is authorized, pursuant to the Guarantee Act (as hereinafter defined), to
guarantee loans that meet the requirements of the Guarantee Act; and


 


WHEREAS,
FFB is authorized, under section 6(a) of the FFB Act (as hereinafter
defined), to make commitments to purchase, and to purchase on terms and
conditions determined by FFB, any obligation that is issued, sold, or
guaranteed 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 FFB
to enter into agreements to purchase notes issued by entities designated by the
Secretary when those notes have been guaranteed by the Secretary, and the
commitment of the Secretary to guarantee those notes; and


 


WHEREAS,
pursuant to the Program Financing Agreement, the Secretary has delivered to FFB
and the Borrower a Designation Notice (as hereinafter defined) designating the
Borrower 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) of
the FFB Act and in fulfillment of its commitment under the Program Financing
Agreement, setting out, among other things, FFB’s agreement to purchase,
pursuant to the FFB Act, the Note (as hereinafter defined) to be issued by the
Borrower, when the terms and conditions specified herein have been satisfied,
as hereinafter provided.


 


NOW,
THEREFORE, for and in consideration of the mutual agreements herein contained
and for other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, FFB, the Secretary, and the Borrower agree as
follows:


 


ARTICLE 1


 


DEFINITIONS AND RULES OF INTERPRETATION


 


Section 1.1                                      Definitions.


 


As
used in this Agreement, the following terms shall have the respective meanings
specified 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 with
the provisions of article 7 of this Agreement.


 


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


 


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


 


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


 


“Borrower
Instruments” shall have the meaning specified in section 3.2.1 of this
Agreement.


 


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


 


“Business
Day” shall mean any day on which FFB and the Federal Reserve Bank of New York
are both open for business.


 


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


 


“Certificate
Specifying Authorized Department Officials” shall mean a certificate
specifying the names and titles of those officials of the Department who are
authorized to execute and deliver Advance Request Approval Notices from time to
time on behalf of the Secretary and setting out the original signature of each
of those authorized officials, and specifying the name and title of those
officials of the Department who are authorized to confirm telephonically the
authenticity of the Advance Request Approval Notices from time to time on
behalf of the Secretary and setting out the telephone number of each of those
authorized officials, in the form of the Certificate Specifying Authorized
Department Officials attached as Annex 1 to the Program Financing
Agreement.


 


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


 


“Department”
shall mean the Department of Energy.


 


“Designation
Notice” shall mean, generally, a notice from the Secretary to FFB and the
particular entity identified therein as the respective “Borrower,” designating
that entity to 


 


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be
a “Borrower” for purposes of the Program Financing Agreement, in the form of
notice that is attached as Annex 2 to the Program Financing Agreement; and “the  Designation Notice” shall
mean the particular Designation Notice delivered by the Secretary to FFB and
the Borrower designating the Borrower to be a “Borrower” for purposes of the
Program Financing Agreement.


 


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


 


“Governmental
Approval” shall mean any approval, consent, authorization, license, permit,
order, certificate, qualification, waiver, exemption, or variance, or any other
action of a similar nature, of or by a Governmental Authority having
jurisdiction over the Borrower or any of its properties.


 


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


 


“Governmental
Judgment” shall mean any judgment, order, decision, or decree, or any
action of a similar nature, of or by a Governmental Authority having
jurisdiction over the Borrower or any of its properties.


 


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


 


“Governmental
Rule” shall mean any statute, law, rule, regulation, code, or ordinance of
a Governmental Authority having jurisdiction over the Borrower or any of its
properties.


 


“Guarantee
Act” 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 et  seq.),
as amended.


 


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


 


“Loan
Commitment Amount” shall have the meaning specified in Schedule I to this
Agreement.


 


“Loan
Servicer” shall mean the Department, acting through the Loan Guarantee Program
Office.


 


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


 


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


 


“Note
Identifier” shall mean the particular sequence of letters and numbers
assigned by FFB to the Note in the Principal Instruments acceptance notice
relating to the Note delivered by FFB in accordance with section 5.1 of this
Agreement.


 


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


 


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


 


“Other
Debt Obligation” shall mean any note or Note, or any other evidence of an
obligation for borrowed money of a similar nature, made or issued by the
Borrower (other than the Note purchased by FFB under this Agreement), or any
mortgage, indenture, deed of trust or loan agreement with respect thereto to
which the Borrower is a party or by which the Borrower or any of its properties
is bound (other than this Agreement).


 


“Payment
Borrowing” shall have the meaning specified in paragraph 7(b) of the
Note purchased under this Agreement.


 


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


 


“Principal
Instruments” shall have the meaning specified in section 4.2 of this
Agreement.


 


“Program
Financing Commitment Amount” shall have the meaning specified in section
1.1 of the Program Financing Agreement.


 


“Program
Financing Agreement” shall mean the Program Financing Agreement dated as of
September 2, 2009, between FFB and the Secretary, as such agreement may be
amended, supplemented, and restated from time to time in accordance with its
terms.


 


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


 


“Requested
Advance Amount” shall have the meaning specified in section 7.3.1(a)(2) of
this Agreement.


 


“Requested
Advance Date” shall have the meaning specified in section 7.3.1(a)(3) of
this Agreement.


 


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“Secretary’s
Certificate” shall mean a certificate relating to the Secretary’s Guarantee
and other matters, in the form of certificate that is attached as Exhibit F
to this Agreement.


 


“Secretary’s
Guarantee” shall mean a guarantee of the Note issued by the Secretary, in
the form of guarantee that is attached as Exhibit G to this
Agreement.


 


“Secretary’s
Instruments” shall have the meaning specified in section 3.3.1 this
Agreement.


 


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


 


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


 


“Uncontrollable
Cause” shall mean an unforeseeable cause beyond the control and without the
fault 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 States
Department of the Treasury to raise cash through the issuance of Treasury debt
instruments, disruption or failure of the Treasury Financial Communications
System, closure of the Federal Government, or an unforeseen or unscheduled
closure or evacuation of the FFB offices.


 


Section 1.2                                      Rules of
Interpretation.


 


Unless
the context shall otherwise indicate, the terms defined in section 1.1 of this
Agreement shall include the plural as well as the singular and the singular as
well as the plural.  The words “herein,” “hereof,”
and “hereto,” and words of similar import, refer to this Agreement as a
whole.  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 from
time to time.


 


ARTICLE 2


 


FFB COMMITMENT TO PURCHASE
THE NOTE


 


Subject
to the terms and conditions of this Agreement, FFB agrees to purchase the Note
that is offered by the Borrower to FFB for purchase under this Agreement.


 


ARTICLE 3


 


COMMITMENT CONDITIONS


 


FFB
shall be under no obligation to purchase the Note under this Agreement, and the
Secretary shall be under no obligation to issue the Secretary’s Guarantee
guaranteeing such Note, unless and until each of the conditions specified in
this article 3 has been satisfied.


 


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Section 3.1                                      Commitment
Amount Limits.


 


3.1.1                        Loan Commitment
Amount.  The maximum principal amount
of the Note that is offered for purchase shall not exceed the Loan Commitment
Amount.


 


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


 


Section 3.2                                      Borrower
Instruments.


 


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


 


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


 


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


 


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


 


3.2.3                        Certificate
Specifying Authorized Borrower Signatories.  FFB shall have received a completed and
signed Certificate Specifying Authorized Borrower Signatories.


 


Section 3.3                                      Secretary’s
Instruments.


 


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


 


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


 


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


 


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


 


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


 


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Section 3.4                                      Conditions
Specified in Other Agreements.


 


Each
of the conditions specified in the Program Financing Agreement as being
conditions to purchasing the Note shall have been satisfied, or waived by FFB
or the Secretary, as the case may be.


 


ARTICLE 4


 


OFFER OF THE NOTE FOR
PURCHASE


 


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


 


Section 4.1                                      Delivery of
Borrower Instruments to the Secretary.


 


The
Borrower shall deliver to the Secretary, for redelivery to FFB, the following:


 


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


 


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


 


(c)                                  a completed and
signed Certificate Specifying Authorized Borrower Signatories.


 


Section 4.2                                      Delivery of
Principal Instruments by the Secretary to FFB.


 


The
Secretary shall deliver to FFB all of the following instruments (collectively
being the “Principal Instruments”:


 


(a)                                  all of the
instruments described in section 4.1;


 


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


 


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


 


ARTICLE 5


 


PURCHASE OF THE NOTE BY
FFB


 


Section 5.1                                      Acceptance or
Rejection of Principal Instruments.


 


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


 


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(a)                                  an acceptance
notice, which notice shall:


 


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


 


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


 


(b)                                 a rejection
notice, which notice shall state that one or more of the Principal Instruments
does not meet the terms and conditions of this Agreement and specify how such
instrument or instruments does not meet the terms and conditions of this
Agreement.


 


Section 5.2                                      Purchase.


 


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


 


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


 


In
the event that all of the following shall have occurred:


 


(a)                                  the Borrower
shall have issued the Note to FFB;


 


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


 


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


 


(d)                                 there have been
no 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 the
Secretary has not received a written certification from a responsible officer
of the Borrower stating, to the best of such officer’s knowledge after due
inquiry, that “Commencement of Construction” (as that term is defined in the
Common Agreement) has occurred, and that the Secretary will not be approving
Advances under the Note,


 


then
FFB will return the Note to the Borrower and the Secretary’s Guarantee to the
Secretary and FFB’s obligations and commitments under this Agreement will
terminate.


 


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ARTICLE 6


 


CUSTODY OF NOTE; LOSS OF
NOTE, ETC.


 


Section 6.1                                      Custody.


 


FFB
shall have custody of the Note purchased under this Agreement until all amounts
owed under the Note have been paid in full.


 


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


 


In
the event that the Note purchased under this Agreement shall become lost,
stolen, destroyed, or mutilated, the Borrower shall, upon a written request
made by FFB to the Borrower, with a copy to the Secretary, execute and deliver
to FFB, in replacement thereof, a new Note of like tenor, dated and bearing
interest 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, dated
the same date as such lost, stolen, destroyed, or mutilated Note.  Upon delivery of such replacement Note to
FFB, the Borrower shall be released and discharged from any further liability
on account of the lost, stolen, or destroyed Note.  If the Note being replaced has been
mutilated, such mutilated Note shall be surrendered to the Borrower for
cancellation.  The Secretary shall
deliver to FFB a confirmation that the Secretary’s Guarantee related to the
lost, stolen, destroyed, or mutilated Note remains in full force and effect
with respect to the replacement Note.


 


ARTICLE 7


 


ADVANCES


 


Section 7.1                                      Commitment.


 


Subject
to the terms and conditions of this Agreement, FFB agrees to make Advances
under the Note for the account of the Borrower.


 


Section 7.2                                      Treasury
Policies Applicable to Advances.


 


Each
of the Borrower and the Secretary understands and consents to the following
Treasury financial management policies generally applicable to all advances of
funds:


 


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


 


(b)                                 except for
Advances to reimburse the Borrower for expenditures that it has made from its
own working capital, generally each Advance will be requested to be disbursed
directly to the Person(s) to whom the Borrower is obligated to make
payments;


 


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(c)                                  Advances for
investment purposes will not be requested by the Borrower or approved by the
Secretary; and


 


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


 


Section 7.3                                      Conditions to
Making Advances.


 


FFB
shall be under no obligation to make any Advance under the Note unless and
until each of the conditions specified in this section 7.3 is satisfied.


 


7.3.1                        Advance
Requests.  For each
Advance, the Borrower shall have delivered to the Secretary, for review and
approval before being forwarded to FFB, an Advance Request, which Advance
Request:


 


(a)                                  shall specify,
among other things:


 


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


 


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


 


(3)                                  the particular
calendar date that the Borrower requests to be the date on which the respective
Advance is to be made (such date being the “Requested Advance Date” for
such Advance), which date:


 


(A)                              must be a
Business Day; and


 


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


 


(4)                                  the particular
bank account or accounts to which the Borrower requests that the respective
Advance be made; and


 


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


 


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


 


7.3.2                        Advance Request
Approval Notice.  For each
Advance, the Secretary shall have delivered to FFB the Borrower’s executed
Advance Request, together with the 


 


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


 


(a)                                  shall have been
duly executed on behalf of the Secretary by an official of the Department whose
name and signature appear on the Certificate Specifying Authorized Department
Officials delivered to FFB pursuant to section 3.1.3 or section 6.1 of the
Program Financing Agreement; and


 


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


 


7.3.3                        Telephonic
Confirmation of Authenticity of  Advance
Request Approval Notices.  For
each Advance, FFB shall have obtained telephonic confirmation of the
authenticity of the related Advance Request Approval Notice from an official of
the Department (a) whose name, title, and telephone number appear on the
Certificate Specifying Authorized Department Officials that has been delivered
by the Secretary to FFB pursuant to section 3.1.3 or section 6.1 of the Program
Financing Agreement; and (b) who is not the same official of the
Department who executed the Advance Request Approval Notice on behalf of the
Secretary.


 


7.3.4                        Note Maximum
Principal Amount Limit.  At
the time of making any Advance under the Note, the amount of such Advance, when
added 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                        Conditions
Specified in Other Agreements.  Each of the conditions specified in the
Program Financing Agreement as being conditions to making Advances under the
Note, shall have been satisfied, or waived by FFB or the Secretary, as the case
may be.


 


Section 7.4                                      Amount and
Timing of Advances.


 


FFB
shall make each Advance in the Requested Advance Amount specified in the respective
Advance Request and on the Requested Advance Date specified in the respective
Advance Request, subject to satisfaction of the conditions specified in section
7.3 of this Agreement and subject to the following additional limitations:


 


(a)                                  in the event
that the Requested Advance Date specified in the respective Advance Request is
not a Business Day, FFB shall make the respective Advance on the first day
thereafter that is a Business Day;


 


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



 


11

















 


delivers to FFB and the
Secretary a written cancellation of such Advance Request or a replacement
Advance Request specifying a later Requested Advance Date;


 


(c)                                  in the event
that an Uncontrollable Cause prevents FFB from making the respective Advance on
the Requested Advance Date specified in the respective Advance Request, FFB
shall make such Advance as soon as such Uncontrollable Cause ceases to prevent
FFB from making such Advance, unless the Borrower delivers to FFB and the
Secretary a written cancellation of such Advance Request or a replacement
Advance Request specifying a later Requested Advance Date; and


 


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


 


Section 7.5                                      Type of Funds
and Means of Advance.


 


7.5.1                        General.  Except as provided in section 7.5.2 of this
Agreement, each Advance shall be made in immediately available funds by
electronic funds transfer to such bank account(s) as shall have been
specified in the respective Advance Request.


 


7.5.2                        Payment
Borrowings.  An Advance
for purposes of a Payment Borrowing under the Note shall be made by internal
transfer of funds on the books of the United States Department of the Treasury
in accordance with the terms of the Note.


 


Section 7.6                                      Interest Rate
Applicable to Advances.


 


The
rate of interest applicable to each Advance made under the Note shall be
established as provided in paragraph 6 of the Note.


 


Section 7.7                                      Interest Rate
Confirmation Notices.


 


After
making each Advance, FFB shall deliver, by facsimile transmission, to the
Borrower, the Department, and the Loan Servicer written confirmation of the
making of the respective Advance, which confirmation shall:


 


(a)                                  state the date
on which such Advance was made;


 


(b)                                 state the
interest rate applicable to such Advance; and


 


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


 


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ARTICLE 8


 


REPRESENTATIONS AND
WARRANTIES BY THE BORROWER


 


The
Borrower makes the representations and warranties provided in this article 8 to
FFB.


 


Section 8.1                                      Organization.


 


The
Borrower is a limited liability company duly organized, validly existing and in
good standing under the laws of the Borrower State and is qualified to do
business in the Project State.


 


Section 8.2                                      Authority.


 


The
Borrower has all requisite limited liability company power and authority to
carry on its business as presently conducted, to execute and deliver this
Agreement and each of the other Borrower Instruments, to consummate the
transactions contemplated hereby and thereby, and to perform its obligations
hereunder and thereunder.


 


Section 8.3                                      Due Authorization.


 


The
execution and delivery by the Borrower of this Agreement and each of the other
Borrower Instruments, the consummation by the Borrower of the transactions
contemplated hereby and thereby, and the performance by the Borrower of its
obligations hereunder and thereunder have been duly authorized by all necessary
limited liability company action.


 


Section 8.4                                      Due Execution.


 


This
Agreement has been, and each of the other Borrower Instruments will have been
at the respective time of delivery of each thereof, duly executed and delivered
by individuals who are duly authorized to execute and deliver such documents on
behalf of the Borrower.


 


Section 8.5                                      Validity and Enforceability.


 


This
Agreement constitutes, and each of the other Borrower Instruments will
constitute at the respective time of delivery of each thereof, the legal,
valid, and binding agreement of the Borrower, enforceable against the Borrower
in accordance with their respective terms.


 


Section 8.6                                      No Governmental Actions Required.


 


No
Governmental Approvals or Governmental Registrations are now, or under existing
Governmental 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 by
the Borrower of this Agreement or any of the other Borrower Instruments, the
consummation by the Borrower of the transactions contemplated hereby or
thereby, or the performance by the Borrower of its obligations hereunder or
thereunder.


 


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Section 8.7                                      No Conflicts or Violations.


 


The
execution and delivery by the Borrower of this Agreement or any of the other
Borrower Instruments, the consummation by the Borrower of the transactions
contemplated hereby or thereby, and the performance by the Borrower of its
obligations hereunder or thereunder do not and will not conflict with or
violate, result in a breach of, or constitute a default under (a) any term
or provision of the certificate of formation or operating agreement of the
Borrower; (b) any of the covenants, conditions or agreements contained in
any Other Debt Obligation of the Borrower; (c) any Governmental Approval
or Governmental Registration obtained or made, as the case may be, by the
Borrower; or (d) any Governmental Judgment or Governmental Rule currently
applicable to the Borrower.


 


Section 8.8                                      All Necessary
Governmental Actions.


 


The
Borrower has not failed to obtain any material Governmental Approval or make
any material Governmental Registration required or necessary to carry on the
business of the Borrower as presently conducted, and the Borrower reasonably
believes that it will not be prevented by any Governmental Authority having
jurisdiction over the Borrower from so carrying on its business as presently
conducted.


 


Section 8.9                                      No Material
Litigation.


 


There
are no lawsuits or judicial or administrative actions, proceedings or
investigations pending or, to the best knowledge of the Borrower, threatened
against the Borrower which, in the reasonable opinion of the Borrower, is
likely to have a Material Adverse Effect on the Borrower.


 


ARTICLE 9


 


BILLING BY FFB


 


Section 9.1                                      Billing
Statements to the Borrower, the Department, and the Loan Servicer.


 


FFB
shall prepare a billing statement for the amounts owed to FFB on each Advance
that is made under the Note purchased under this Agreement, and shall deliver
each such billing statement to the Borrower, the Department, and the Loan
Servicer.


 


Section 9.2                                      Failure to
Deliver or Receive Billing Statements No Release.


 


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


 


Section 9.3                                      FFB Billing
Determinations Conclusive.


 


9.3.1                        Acknowledgment
and Consent.  The
Borrower acknowledges that FFB has described to it:


 


14

















 


(a)                                  the rounding
methodology employed by FFB in calculating the amount of accrued interest owed
at any time on the Note; and


 


(b)                                 the methodology
employed by FFB in calculating the equal principal installment payment schedule
for amounts due and payable on the Note;


 


and the Borrower consents to these methodologies.


 


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


 


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


 


(b)                                 the amount of
any equal principal installment payment due and payable on the Note determined
using this methodology.


 


ARTICLE 10


 


PAYMENTS TO FFB


 


Each
amount that becomes due and owing on the Note purchased under this Agreement
shall be paid when and as due, as provided in the Note.


 


ARTICLE 11


 


RIGHTS AND AGREEMENTS OF
THE SECRETARY AND FFB


 


Section 11.1                                Rights and
Agreements related to Enforcement.


 


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


 


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


 


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


 


15

















 


including, when reasonably
requested by the Secretary, executing and delivering to the Secretary
instruments, agreements, and other documents prepared by or for the Department
for FFB’s execution.


 


Section 11.2                                Secretary’s
Right to Purchase Advances or the Note.


 


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


 


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


 


The
Secretary confirms to FFB that the obligation of the United States of America
to pay amounts due and payable under the Secretary’s Guarantee when such
amounts become due and payable in accordance with its terms, constitutes the
absolute obligation of the United States of America, against which no offset
may be made by the United States of America in discharge of its obligation to
make these payments and for which, in accordance with section 1702(j) of
the Guarantee Act, the full faith and credit of the United States of America
are pledged, provided, however, that the United States will be
entitled to offset payments under the Secretary’s Guarantee against any
financial asset or obligation of any Holder of the Secretary’s Guarantee other
than FFB.


 


ARTICLE 12


 


EFFECTIVE DATE, TERM,
SURVIVAL


 


Section 12.1                                Effective Date.


 


This
Agreement shall be effective as of the date first above written.


 


Section 12.2                                Term of
Commitment to Make Advances.


 


The
obligation of FFB under this Agreement to make Advances under the Note issued
by the Borrower shall expire on the “Last Day for an Advance” specified in the
Note.


 


Section 12.3                                Survival.


 


12.3.1                  Representations, Warranties,
and Certifications.  All
representations, warranties, and certifications made by the Borrower in this
Agreement, or in any agreement, instrument, or certificate delivered pursuant
hereto, shall survive the execution and delivery of this Agreement, the
purchasing of the Note hereunder, and the making of Advances thereunder.


 


16

















 


12.3.2                  Remainder of Agreement.  Notwithstanding the occurrence and passage of
the Last Day for an Advance, the remainder of this Agreement shall remain in
full force and effect until all amounts owed under this Agreement and the Note
purchased 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 communications
hereunder and under the Note to be made to any party shall be in writing and
shall be addressed as follows:


 


To
FFB:


 


Federal
Financing Bank


Main
Treasury Building


1500
Pennsylvania Avenue, NW


Washington,
DC 20220


 


Attention:
Chief Financial Officer


 


Telephone
No. (202) 622-2470


Facsimile
No.   (202) 622-0707


 


To
the Borrower:


 


Stephentown
Regulation Services LLC


c/o
Beacon Power Corporation


65
Middlesex Road


Tyngsboro,
Massachusetts 01879


 


Attention:
James M.  Spiezio


 


Telephone
No.  (978) 694-9121


Facsimile
No.  (978) 694-9127


Email
Address  spiezio@beaconpower.com


 


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


 


Stephentown
Regulation Services LLC


c/o
Beacon Power Corporation


65
Middlesex Road


Tyngsboro,
Massachusetts 01879


 


17

















 


Attention:         Judith Judson


 


Telephone No. (978) 694-9121


Facsimile No.   (978) 694-9127


Email
Address  judson@beaconpower.com


 


To
the Secretary (or the Department):


 


United
States Department of Energy Loan Guarantee Program


1000
Independence Avenue, SW


Washington,
DC 20585


 


Attention:
Portfolio Manager


 


Telephone
No.  (202) 287-6738


Facsimile
No.  (202) 287-5816


Email
Address  lpo.portfolio@hq.doe.gov


 


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


 


Nixon
Peabody LLP


437
Madison Avenue


New
York, NY 10022


 


Attention:
Scott Singer


 


Telephone No. (212) 940-3182


Facsimile No.  (866) 947-2466


Email
Address  ssinger@nixonpeabody.com


 


To
the Loan Servicer:


 


United
States Department of Energy Loan Guarantee Program


1000
Independence Avenue, SW


Washington,
DC 20585


 


Telephone
No.  (202) 287-6738


Facsimile
No.  (202) 287-5816


Attention:
Portfolio Manager


 


Email
Address  lpo.portfolio@hq.doe.gov


 


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


 


Nixon
Peabody LLP


437
Madison Avenue


New
York, NY 10022


 


18

















 


Attention:
Scott Singer


 


Telephone No.  (212) 940-3182


Facsimile No.    (866) 947-2466


Email
Address  ssinger@nixonpeabody.com


 


The
address, telephone number, or facsimile number for any party or the Loan
Servicer may be changed at any time and from time to time upon written notice
given by such changing party to the each other party hereto.


 


13.1.2                  Permitted Means of Delivery.  Advance Requests, notices, and other
communications 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 other
communication shall be deemed to have been “delivered” for purposes of this
Agreement:


 


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


 


(b)                                 if mailed by
first class mail, registered or certified mail, express mail, or by any
commercial overnight courier service, on the date that such mailing is
received;


 


(c)                                  if sent by
facsimile (fax) transmission:


 


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


 


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


 


Section 13.2                                Amendments.


 


No
provision of this Agreement may be amended, modified, supplemented, waived,
discharged, or terminated orally but only by an instrument in writing duly
executed by each of the parties hereto and consented to in writing by the
Secretary.


 


19
















 


Section 13.3                                Successors and
Assigns.


 


This
Agreement shall be binding upon and inure to the benefit of each of FFB, the
Borrower, and the Secretary, and each of their respective successors and
assigns.


 


Section 13.4                                Sale or
Assignment 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-129
revised (November 2000), FFB may sell, assign, or otherwise transfer all
or any part of the Note or any participation share thereof.


 


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


 


13.4.3                  Manner of Payment after Sale.  Any sale, assignment, or other transfer of
all 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 specified
by the respective purchaser, assignee, or transferee, as the case may be.


 


13.4.4                  Replacement Notes.  The Borrower agrees:


 


(a)                                  to issue a
replacement Note or Notes with the same aggregate principal amount, interest
rate, 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, or
transferee, such replacement Note or Notes shall provide that payments
thereunder shall be made in the manner specified by such purchaser, assignee,
or transferee; and


 


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


 


Section 13.5                                Forbearance Not
a Waiver.


 


Any
forbearance on the part of FFB from enforcing any term or condition of this
Agreement shall not be construed to be a waiver of such term or condition or
acquiescence by FFB in any failure on the part of Borrower to comply with or
satisfy such term or condition.


 


Section 13.6                                Rights Confined
to Parties.


 


Nothing
expressed 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, and
their respective successors and permitted assigns, any right, remedy or claim
under or by reason of this Agreement or of any term, covenant or condition
hereof, and all of the terms, covenants, conditions, promises, and agreements
contained herein shall be for the sole and exclusive benefit of FFB, the
Borrower, and the Secretary, and their respective successors and permitted
assigns.


 


20

















 


Section 13.7                                Governing Law.


 


This
Agreement and the rights and obligations of the parties hereunder shall be
governed by, and construed and interpreted in accordance with, Federal law and
not the law of any state or locality.  To
the extent that a court looks to the laws of any state to determine or define
the Federal law, it is the intention of the parties hereto that such court
shall look only to the laws of the State of New York without regard to the rules of
conflicts of laws.


 


Section 13.8                                Severability.


 


Any
provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not of itself invalidate or render unenforceable such
provision in any other jurisdiction.


 


Section 13.9                                Headings.


 


The
descriptive headings of the various articles, sections, and subsections of this
Agreement were formulated and inserted for convenience only and shall not be
deemed to affect the meaning or construction of the provisions hereof.


 


Section 13.10                          Counterparts.


 


This
Agreement may be executed in separate counterparts, each of which when so
executed and delivered shall be an original, but all of which together shall
constitute but one and the same instrument.


 


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


 


21

















 


IN WITNESS WHEREOF, FFB, the Borrower, and the
Secretary have each caused this Agreement to be executed as of the day and year
first 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

  



 


22

















 


SCHEDULE I

to

NOTE PURCHASE AGREEMENT

by and among

the Federal Financing Bank,

Stephentown Regulation Services LLC,

and the Secretary of Energy


 


1.                                       “Borrower
State” means the State of Delaware.


 


2.                                       “Common
Agreement” 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 and
Loan Servicer, and Midland Loan Services, Inc., as Administrative Agent in
its capacity as Collateral Agent, as such agreement may be amended,
supplemented, and restated from time to time in accordance with its terms.


 


3.                                       “Loan
Commitment Amount” means $43,137,019.


 


4.                                       “Project
State” means the State of New York.


 


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


 


23