**Exhibit 10.3**

 
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**COMPLETION GUARANTY**

 

 

From

 

**BEACON POWER CORPORATION,**

as Guarantor

 

to

 

**The U.S. DEPARTMENT OF ENERGY**

 

and

 

**MIDLAND LOAN SERVICES, INC**.**,**

as Administrative Agent in its capacity as the Collateral Agent

 

 

Dated as of August 6, 2010

 

 
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**COMPLETION GUARANTY**

 

This**COMPLETION****GUARANTY**madeand entered into as of August 6, 2010 (the “Guaranty Agreement”),from **BEACON POWER CORPORATION**, a corporationduly organized and validly existing under and by virtue of the laws of theState of Delaware, having an office at 65 Middlesex Road, Tyngsboro, MA 01879(the “Guarantor”), to the **U.S. DEPARTMENT OFENERGY**, an agency of the United States of America (“DOE” or a “SecuredParty”), and **MIDLAND LOAN SERVICES, INC**., acorporation duly organized and validly existing under and by virtue of the lawsof the State of Delaware having its principal corporate trust office at 10851Mastin, Suite 700 Overland Park, KS 66210, as administrative agent in itscapacity as the collateral agent (the “Collateral Agent” or a “Secured Party”),together with any successor collateral agent at the time serving as such underthe Common Agreement dated as of August 6, 2010, among StephentownRegulation Services LLC (the “Borrower”), DOE and the Collateral Agent(the “Common Agreement”) (capitalized terms not otherwise defined herein shallhave the meanings ascribed to them in the Common Agreement):

 

WI T N E S S E T H:

 

WHEREAS,the Borrower intends to develop, design, construct, own and operate aflywheel-based frequency regulation plant designed to enhance gridstabilization and optimization, to be located in Stephentown, New York (the “Project”).

 

WHEREAS,the Equity Interests of the Borrower are currently held by Holdings, as soleEquity Owner of the Borrower, and the Equity Interests of Holdings arecurrently held by the Guarantor as the sole Equity Owner of Holdings.

 

WHEREAS,the Borrower, in furtherance of its obligations with respect to the Project hasrequested that:

 

(a)           FFB make the DOE-Guaranteed Loanpursuant to the FFB Funding Documents in the aggregate principal amount notexceeding $43,137,019, and

 

(b)           DOE guarantee the repayment of theDOE-Guaranteed Loan pursuant to the DOE Guarantee.

 

WHEREAS,the Guarantor, in exchange for benefits the Guarantor will receive from theBorrower, has agreed to guarantee the performance of certain obligations of theBorrower under the Common Agreement as provided herein.

 

WHEREAS,the execution of this Guaranty Agreement is a condition precedent to theexecution by the Secured Parties of the Common Agreement.

 

**NOW, THEREFORE**, in consideration of the premises, and forother good and valuable consideration received, the Guarantor does herebyrepresent, warrant, covenant and agree with each Secured Party as follows:

 

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**1.             Guarantor Representationsand Warranties.**  TheGuarantor makes the following representations and warranties:

 

(a)           TheGuarantor (i) is a corporation duly organized, validly existing and in goodstanding under the laws of the State of Delaware; and (ii) has all requisitepower and authority to execute, deliver and perform and, by all necessaryaction, has duly authorized the execution, delivery and performance by theGuarantor of this Guaranty Agreement and no actions to be taken by theGuarantor hereunder will conflict with or violate any provision of theGuarantor’s certificate of incorporation or bylaws, or constitute (with duenotice and/or lapse of time) a breach of or default under any agreement,instrument or indenture to which the Guarantor is a party except to the extentthat such contravention does not and will not have a material adverse effect onthe Guarantor or its ability to perform its obligations under this GuarantyAgreement.

 

(b)           ThisGuaranty Agreement constitutes the legal, valid and binding obligation of theGuarantor enforceable against the Guarantor in accordance with its terms,except as enforcement hereof may be limited by bankruptcy, insolvency,reorganization, moratorium or other laws relating to or affecting theenforcement of creditor’s rights generally or by equitable principles relatingto enforceability whether the proceeding is in equity or at law.

 

(c)           Allrepresentations and warranties set forth in the Common Agreement with respectto the Guarantor are true and correct, including, without limitation, therepresentations set forth in Sections 5.33 and 5.34.

 

**2.             ObligationsGuaranteed.**

 

(a)           TheGuarantor hereby irrevocably, absolutely and unconditionally guarantees to eachSecured Party all of the obligations (including all payment and performanceobligations) of the Borrower pursuant to and in accordance with the terms andconditions of the Common Agreement that were or are hereafter required to beperformed by the Borrower through the Project Completion Date, including, butnot limited to, (i) causing the Project Completion Date to occur on the datespecified in the Loan Documents, (ii) complying with the Overrun EquityCommitment, and (iii) all obligations to correct any deficiencies in theProject that arise prior to the Project Completion Date (the “GuaranteedObligations”).  The Guarantor furtherhereby irrevocably, absolutely and unconditionally agrees that upon any defaultin the payment of any of the Guaranteed Obligations by the Borrower, including,without limitation, regularly scheduled payments or accelerated payments duewith respect to the DOE-Guaranteed Loan, the Guarantor will promptly pay thesame.  All payments by the Guarantorshall be paid in lawful money of the United States of America.  Each and every default in the payment orperformance of any of the Guaranteed Obligations shall give rise to a separatecause of action hereunder, and separate suits may be brought hereunder as eachcause of action arises.

 

(b)           TheGuarantor further agrees that this Guaranty Agreement constitutes an absolute,unconditional, present and continuing guarantee of payment and not ofcollection, and waives any right to require that any resort be had by anySecured Party to (1) any security held by or for the benefit of any SecuredParty for any of the Guaranteed Obligations, (2) the Secured Parties rightsagainst any other Person, or (3) any other right or remedy available to theSecured Parties by contract, applicable law or otherwise.  The obligations of the Guarantor under this 

 

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Guaranty Agreement are direct, unconditional andcompletely independent of the obligations of any other Person, and a separatecause of action or separate causes of action may be brought and prosecutedagainst the Guarantor without the necessity of joining any other party orpreviously proceeding with or exhausting any other remedy against any otherPerson who might have become liable for any of the Guaranteed Obligations or ofrealizing upon any security held by or for the benefit of the Secured Parties.

 

**3.             ObligationsUnconditional.**  Theobligations of the Guarantor under this Guaranty Agreement shall be absoluteand unconditional and shall remain in full force and effect until theGuaranteed Obligations shall have been paid or performed in full, and allcosts, fees and expenses, if any, referred to in Section 6 hereof shall havebeen paid in full, and, to the extent permitted by law, such obligations shallnot be affected, modified, released, relieved, discharged, or impaired, inwhole or in part, by any state of facts or the happening from time to time ofany event, including, without limitation, any of the following, whether or notwith notice to, or the consent of the Guarantor:

 

(a)           theinvalidity, irregularity, illegality or unenforceability of, or any defect in,all or a portion of the Common Agreement or any of the Loan Documents, or anyother agreement or instrument related thereto to which the Borrower is a party,or any collateral security related thereto;

 

(b)           thefailure to create, preserve, validate, perfect or protect any security interestgranted to, or in favor of, any Secured Party;

 

(c)           thecompromise, settlement, release, extension, indulgence, change, modification ortermination of any of the obligations, covenants or agreements of the Borrowerunder the Common Agreement or any of the Loan Documents;

 

(d)           thecompromise, settlement, release, extension, indulgence, change, modification ortermination of any of the collateral, security for or guarantee of any of theobligations, covenants or agreements of the Borrower under the Common Agreementor any of the Loan Documents, or the failure to apply such collateral orsecurity or enforce such guarantee;

 

(e)           thefailure of the Borrower to perform or comply with any term of the CommonAgreement or any Loan Document;

 

(f)            anychange in the ownership of any equity interest in the Guarantor or theBorrower;

 

(g)           theactual or purported sale, transfer or other conveyance of the Project or anyinterest therein or collateral related thereto to any party, whether now orhereafter having or acquiring an interest in the Project, including, withoutlimitation, any sale, transfer or conveyance of the Project or any interesttherein through foreclosure or delivery of a deed in lieu of foreclosure;

 

(h)           theactual or purported assignment or transfer of this Guaranty Agreement, theCommon Agreement or any Loan Document or any of the obligations, covenants andagreements contained therein;

 

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(i)            thewaiver of the payment, performance or observance by any Secured Party or theBorrower under the Common Agreement or any of the Loan Documents of any of theobligations, conditions, covenants or agreements of any or all of them containedin any such Loan Document;

 

(j)            theextension of the time for payment of any amounts that are due or may become dueunder the Common Agreement or any of the Loan Documents, or of the time forperformance of any other obligations, covenants or agreements under or arisingout of the Common Agreement or any of the Loan Documents or any extension orrenewal thereof;

 

(k)           thesupplementing, modification or amendment (whether material or otherwise) of theCommon Agreement or any of the Loan Documents;

 

(l)            thetaking of or the omission to take any action referred to in the CommonAgreement or in any of the Loan Documents;

 

(m)          anyfailure, omission, delay or lack on the part of any Secured Party or any otherPerson to enforce, assert or exercise any right, power or remedy conferred on aSecured Party or such other Person in this Guaranty Agreement, the CommonAgreement, or in any of the Loan Documents;

 

(n)           thevoluntary or involuntary liquidation, dissolution, merger, consolidation, saleor other disposition of all or substantially all the assets, marshalling ofassets and liabilities, receivership, insolvency, bankruptcy, assignment forthe benefit of creditors, reorganization, arrangement, composition withcreditors or readjustment of debts, or other similar application or proceedingaffecting the Borrower or any or all of the assets of the Borrower, or anyallegation or contest of the validity of this Guaranty Agreement, the CommonAgreement, or any other Loan Document in any such proceeding; it is specificallyunderstood, consented and agreed to that this Guaranty Agreement shall remainand continue in full force and effect and shall be enforceable against theGuarantor to the same extent and with the same force and effect as if suchproceedings had not been instituted; and it is the intent and purpose of thisGuaranty Agreement that the Guarantor shall and does hereby waive all rightsand benefits which might accrue to the Guarantor by reason of any suchproceedings;

 

(o)           anyrelease, modification, impairment, substitution, or replacement of any aspectof the collateral or security pledged or rights granted under the CommonAgreement or under any of the Loan Documents;

 

(p)           anyfailure of any Secured Party to mitigate damages resulting from any default bythe Borrower under the Common Agreement or any of the Loan Documents;

 

(q)           themerger or consolidation of Borrower into or with any other Person, or any sale,lease or transfer of any or all of the assets of Borrower, or Borrower’s lossof its separate corporate identity; or

 

(r)            anyother occurrence whatsoever which might otherwise constitute a legal orequitable discharge or defense of a surety or a guarantor, whether similar ordissimilar to the foregoing.

 

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**4.             Waiver of Rights.**  Except to the extent any of the following isrequired in order for a Guaranteed Obligation to arise or accrue under theCommon Agreement, Guarantor hereby unconditionally waives (a) all presentments,demand for performance, notices of nonperformance, protests, notice of any ofthe matters referred to in Section 3, notice of protest, notices of dishonor,notice of any waivers or indulgences or extensions, and notice of acceptance ofthis Guaranty; and (b) diligence, presentment and demand of payment, filing ofclaims with a court in connection with any legal proceeding in respect of anypayment hereunder, protest or notice with respect to the Guaranteed Obligationsand all demands whatsoever.  Guarantorwaives any right of set off or counterclaim it may have under this Guaranty.

 

**5.             Remedies.**  Upon a breach of the Common Agreement, eachSecured Party shall have the right to proceed first and directly against theGuarantor under this Guaranty Agreement without proceeding against the Borroweror any other person or exhausting any other remedies which it may have andwithout resorting to any other security held by the Secured Parties.  No remedy herein conferred upon or reservedto the Secured Parties is intended to be exclusive of any other availableremedy or remedies, but each and every such remedy shall be cumulative andshall be in addition to every other remedy given under this Guaranty Agreementor now or hereafter existing at law or in equity.  It is expressly understood and agreed by Guarantorthat to the extent Guarantor’s obligations hereunder relate to Obligationswhich require performance other than the payment of money, a Secured Party mayproceed against Guarantor to effect specific performance thereof.  No single or partial exercise by a SecuredParty of any right or remedy shall preclude any further exercise thereof.  No delay or omission to exercise any right orpower accruing upon any default, omission or failure of performance hereunder shallimpair any such right or power or shall be construed to be a waiver thereof,but any such right and power may be exercised from time to time and as often asmay be deemed expedient.

 

**6.             Expenses. **The Guarantor agrees to payall costs, fees and expenses (including all court costs and reasonableattorneys’ fees and expenses) which may be incurred by a Secured Party inenforcing or attempting to enforce this Guaranty Agreement, whether the sameshall be enforced by suit or otherwise.

 

**7.             Assignment.**  This Guaranty is a continuing guaranty, shallapply to all Guaranteed Obligations whenever arising, shall be binding uponGuarantor and its successors, transferees and assigns and shall inure to thebenefit of and be enforceable by the Secured Parties and their successors andassigns.  Guarantor may not delegate,assign or transfer this Guaranty Agreement or any of its obligations hereunderwithout the prior written consent of the Secured Parties.

 

**8.             Guarantor toMaintain its Existence; Sales of Assets or Mergers.**  The Guarantor shall do all things necessaryto preserve and keep in full force and effect its existence, rights andfranchises, except as otherwise permitted by this Section 8.  The Guarantor shall not enter into or permitany transaction, including any merger, consolidation, acquisition, sale, ortransfer of Guarantor stock, if such transaction is not in compliance with allapplicable FERC regulations.  Inaddition, the Guarantor shall not (a) sell, transfer or otherwise dispose ofall, or substantially all, of its assets; (b) consolidate with or merge intoany other entity; or (c) permit one or more other entities to consolidate withor merge into it; provided that the preceding restrictions shall not apply to atransaction if all of the following conditions are met:

 

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(a)           thetransferee or the surviving or resulting entity has a credit rating on itslong-term indebtedness from any Rating Agency of at least investment grade, andif not investment grade, then the same credit rating from each Rating Agencywhich credit rating shall also be at least equal to that of the Guarantorimmediately prior to such consolidation, merger, sale, transfer or disposition;and

 

(b)           thetransferee or the surviving or resulting entity is currently in compliance withthe representations set forth in Section 1 herein; provided that with respectto the representations in subsection 1(a), such representations shall be deemedto reflect the nature of the entity and the State in which such entity isorganized and existing; and

 

(c)           thetransferee or the surviving or resulting entity, if other than the Guarantor ora subsidiary of the Guarantor, by properly written instrument satisfactory tothe Secured Parties, irrevocably and unconditionally assumes the obligation toperform and observe the agreements and obligations of the Guarantor under thisGuaranty Agreement; and

 

(d)           theparties to the transaction have obtained all governmental approvals, compliedwith all FERC regulations, and the transferee is in compliance with allgovernmental approvals and FERC regulations.

 

Inaddition to the requirements set forth above, the Guarantor shall furnish tothe Secured Parties a copy of any notice required to be given by the Guarantorto FERC of a change in control under Section 203(a) of the Federal PowerAct and such copy shall be accompanied by a cover note stating that the noticeis a change in control notice required under Section 203(a) of the FederalPower Act.  Such documentation shall beprovided to the Secured Parties simultaneously with the filing of such noticewith FERC.

 

**9.             Further Assurances.**  The Guarantor covenants and agrees that solong as any Guaranteed Obligations remain outstanding, the Guarantor will,promptly after obtaining actual knowledge thereof, notify the Secured Partiesin writing of the occurrence of any breach, Potential Default, or Event ofDefault under the Common Agreement.  Forpurposes of this Section 9, “actual knowledge” shall be deemed to be the actualknowledge of any officer or director of the Guarantor, or any key employee ofthe Guarantor with management or supervisory responsibilities with respect tothe Borrower, the Operator, or the Project, or any knowledge which should havebeen obtained by any of such Persons upon reasonable investigation andinquiry.  The Guarantor agrees that itwill from time to time, at the request of a Secured Party, do all such thingsand execute all such documents as the Secured Party may reasonably considernecessary or desirable to give full effect to this Guaranty Agreement and toperfect and preserve the rights and powers of the Secured Parties hereunder.

 

**10.          Survival of GuaranteeObligation.**  If a SecuredParty receives any payment on account of the Guaranteed Obligations, whichpayment or any part thereof is subsequently invalidated, declared to befraudulent or preferential, set aside and/or required to be transferred orrepaid to a trustee, receiver, assignee for the benefit of creditors or anyother party under any bankruptcy act or code, state or federal law or commonlaw or equitable doctrine or for any other reason whatsoever, then to theextent of any sum not finally retained by a Secured Party, this GuarantyAgreement shall remain in full force and effect until the Guarantor shall havemade payment to the Secured Party of such sum, which payment shall be due ondemand.  If the 

 

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Guarantorchooses to contest any such matter, the Guarantor agrees to indemnify and holdharmless the Secured Party with respect to all costs (including court costs andreasonable attorneys’ fees and expenses) of such litigation.

 

**11.          Waiver of Rights ofSecured Parties.**  No paymenthereunder by the Guarantor shall entitle the Guarantor by subrogation to therights of the Secured Parties to any payment by any other obligor or out of theproperty of any other obligor.  TheGuarantor waives any benefit of, or any right to participation in, any securitywhatsoever now or hereafter held by the Secured Parties.

 

**12.          Notices.**  Unless otherwise stated herein, all notices,certificates and other communications under this Guaranty Agreement shall be inwriting and shall be deemed given when delivered personally with confirmationof receipt or when sent by registered or certified mail, return receiptrequested, postage prepaid, and addressed as follows or to such other addressas any party may specify in writing to the others:

 

Tothe Guarantor:

 

BeaconPower Corporation

65Middlesex Road

Tyngsboro,MA  01879767

Attention:  Matt Polimeno

 

Witha copy to:

 

EdwardsAngell Palmer & Dodge LLP

Attn: Albert L. Sokol, Esq.

111Huntington Avenue

Boston,MA  02199

 

Tothe U.S. Department of Energy:

 

U.S.Department of Energy

1000Independence Ave., SW

WashingtonDC  20585

Attention:  Portfolio Manager

TelephoneNo.:  (202) 287-6738

FacsimileNo.:  (202) 287-5816

EmailAddress:  lpo.portfolio@hq.doe.gov

 

witha copy to:

 

U.S.Department of Energy

1000Independence Ave., SW

WashingtonDC  20585

Attention:  Ruth Ku, Attorney Advisor

TelephoneNo.:  (202) 586-3399

FacsimileNo.:  (202) 586-0971

EmailAddress:  Ruth.Ku@hq.doe.gov

 

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with a copy to:

 

U.S. Department of Energy

1000 Independence Ave., SW

Washington DC  20585

Attention:  Ove Westerheim,Director, Project and Portfolio Management

Telephone No.:  (202) 586-6826

Facsimile No.:  (202) 586-4052

Email Address: Ove.Westerheim@hq.doe.gov

 

with a copy to:

 

Nixon Peabody LLP

437 Madison Avenue

New York, NY  10022

Attention:  Scott Singer

Telephone No.:  (212) 940-3182

Facsimile No.:  (212) 940-3111

EmailAddress:  SSinger@nixonpeabody.com

 

Tothe Collateral Agent:

 

Midland Loan Services, Inc.

10851 Mastin, Suite 700

Overland Park, KS  66210

Attn:  Brad Hauger

Telephone No.:  (913) 253-9000

Facsimile No.:  (913) 253-9709

EmailAddress: governmentservices@midlandls.com

 

with a copy to:

 

Midland Loan Services, Inc.

10851 Mastin, Suite 700

Overland Park, KS  66210

Attn:  General Counsel

Telephone No.:  (913) 253-9000

Facsimile No.:  (913) 253-9709

EmailAddress:  midlandlegal@midlandls.com

 

**13.          Governing Law;Consent to Jurisdiction.**  ThisGuaranty Agreement and the rights and obligations of the parties hereundershall be governed by, and construed and interpreted in accordance with, theFederal law of the United States.  To theextent that Federal law does not specify a rule of decision for a particularmatter at issue, it is the intention and agreement of the parties hereto thatthe substantive law of the State of New York shall be adopted as the governingFederal rule of decision.

 

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**14.          Amendments.**  No amendment of any provision of thisGuaranty Agreement shall be effective unless the same shall be in writing andsigned by each party hereto.

 

**15.          Entire Agreement;Counterparts.**  ThisGuaranty Agreement constitutes the entire agreement, and supersedes all prioragreements and understandings, both written and oral, between the parties withrespect to the subject matter hereof and may be executed simultaneously inseveral counterparts, each of which shall be deemed an original and all ofwhich together shall constitute one and the same instrument.

 

**16.          Severability.**  The invalidity or unenforceability of any oneor more phrases, sentences, clauses or Sections in this Guaranty Agreementcontained, shall not affect the validity or enforceability of the remainingportions of this Guaranty Agreement, or any part thereof.

 

**17.          Termination.**  This Guaranty Agreement shall terminate onthe Project Completion Date.

 

[*Remainder of page intentionally left blank;signatures follow.*]

 

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**IN WITNESS WHEREOF**, the Guarantor has dulyauthorized the execution of this Guaranty Agreement as of the date firstwritten above.

 
|   | **BEACON  POWER CORPORATION** |
|--------|-------------------------------|
|   |                          |
|   |                          |
|   | By:                           | /s/  F. William Capp |
|   | Name:                         | F.  William Capp |
|   | Title:                        | President  and Chief Executive Officer |

 

 
| Accepted  as of the date first written above. |                   |
|-----------------------------------------------|------------------------|
|                                          |                   |
| **U.S. DEPARTMENT OF ENERGY**                 |                   |
|                                          |                   |
|                                          |                   |
| By:                                           | /s/  David G. Frantz   |   |
| Name:                                         | David  G. Frantz       |   |
| Title:                                        | Director               |   |
|                                          |                   |
|                                          |                   |
| **MIDLAND LOAN SERVICES, INC**.,              |                   |
|   as Collateral Agent               |                   |
|                                          |                   |
|                                          |                   |
| By:                                           | /s/  Bradley J. Hauger |   |
| Name:                                         | Bradley  J. Hauger     |   |
| Title:                                        | Senior  Vice President |   |
|                                          | Servicing  Officer     |   |

 

*Completion Guaranty*

 

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