Exhibit 10.3


 


	
   

  



 


 


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


 


 


	
   

  



 

















 


COMPLETION GUARANTY


 


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


 


W
I T N E S S E T H:


 


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


 


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


 


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


 


(a)           FFB make the DOE-Guaranteed Loan
pursuant to the FFB Funding Documents in the aggregate principal amount not
exceeding $43,137,019, and


 


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


 


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


 


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


 


NOW, THEREFORE, in consideration of the premises, and for
other good and valuable consideration received, the Guarantor does hereby
represent, warrant, covenant and agree with each Secured Party as follows:


 

















 


1.             Guarantor Representations
and Warranties.  The
Guarantor makes the following representations and warranties:


 


(a)           The
Guarantor (i) is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware; and (ii) has all requisite
power and authority to execute, deliver and perform and, by all necessary
action, has duly authorized the execution, delivery and performance by the
Guarantor of this Guaranty Agreement and no actions to be taken by the
Guarantor hereunder will conflict with or violate any provision of the
Guarantor’s certificate of incorporation or bylaws, or constitute (with due
notice 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 extent
that such contravention does not and will not have a material adverse effect on
the Guarantor or its ability to perform its obligations under this Guaranty
Agreement.


 


(b)           This
Guaranty Agreement constitutes the legal, valid and binding obligation of the
Guarantor 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 the
enforcement of creditor’s rights generally or by equitable principles relating
to enforceability whether the proceeding is in equity or at law.


 


(c)           All
representations and warranties set forth in the Common Agreement with respect
to the Guarantor are true and correct, including, without limitation, the
representations set forth in Sections 5.33 and 5.34.


 


2.             Obligations
Guaranteed.


 


(a)           The
Guarantor hereby irrevocably, absolutely and unconditionally guarantees to each
Secured Party all of the obligations (including all payment and performance
obligations) of the Borrower pursuant to and in accordance with the terms and
conditions of the Common Agreement that were or are hereafter required to be
performed by the Borrower through the Project Completion Date, including, but
not limited to, (i) causing the Project Completion Date to occur on the date
specified in the Loan Documents, (ii) complying with the Overrun Equity
Commitment, and (iii) all obligations to correct any deficiencies in the
Project that arise prior to the Project Completion Date (the “Guaranteed
Obligations”).  The Guarantor further
hereby irrevocably, absolutely and unconditionally agrees that upon any default
in the payment of any of the Guaranteed Obligations by the Borrower, including,
without limitation, regularly scheduled payments or accelerated payments due
with respect to the DOE-Guaranteed Loan, the Guarantor will promptly pay the
same.  All payments by the Guarantor
shall be paid in lawful money of the United States of America.  Each and every default in the payment or
performance of any of the Guaranteed Obligations shall give rise to a separate
cause of action hereunder, and separate suits may be brought hereunder as each
cause of action arises.


 


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


 


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


 


3.             Obligations
Unconditional.  The
obligations of the Guarantor under this Guaranty Agreement shall be absolute
and unconditional and shall remain in full force and effect until the
Guaranteed Obligations shall have been paid or performed in full, and all
costs, fees and expenses, if any, referred to in Section 6 hereof shall have
been paid in full, and, to the extent permitted by law, such obligations shall
not be affected, modified, released, relieved, discharged, or impaired, in
whole or in part, by any state of facts or the happening from time to time of
any event, including, without limitation, any of the following, whether or not
with notice to, or the consent of the Guarantor:


 


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


 


(b)           the
failure to create, preserve, validate, perfect or protect any security interest
granted to, or in favor of, any Secured Party;


 


(c)           the
compromise, settlement, release, extension, indulgence, change, modification or
termination of any of the obligations, covenants or agreements of the Borrower
under the Common Agreement or any of the Loan Documents;


 


(d)           the
compromise, settlement, release, extension, indulgence, change, modification or
termination of any of the collateral, security for or guarantee of any of the
obligations, covenants or agreements of the Borrower under the Common Agreement
or any of the Loan Documents, or the failure to apply such collateral or
security or enforce such guarantee;


 


(e)           the
failure of the Borrower to perform or comply with any term of the Common
Agreement or any Loan Document;


 


(f)            any
change in the ownership of any equity interest in the Guarantor or the
Borrower;


 


(g)           the
actual or purported sale, transfer or other conveyance of the Project or any
interest therein or collateral related thereto to any party, whether now or
hereafter having or acquiring an interest in the Project, including, without
limitation, any sale, transfer or conveyance of the Project or any interest
therein through foreclosure or delivery of a deed in lieu of foreclosure;


 


(h)           the
actual or purported assignment or transfer of this Guaranty Agreement, the
Common Agreement or any Loan Document or any of the obligations, covenants and
agreements contained therein;


 


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(i)            the
waiver of the payment, performance or observance by any Secured Party or the
Borrower under the Common Agreement or any of the Loan Documents of any of the
obligations, conditions, covenants or agreements of any or all of them contained
in any such Loan Document;


 


(j)            the
extension of the time for payment of any amounts that are due or may become due
under the Common Agreement or any of the Loan Documents, or of the time for
performance of any other obligations, covenants or agreements under or arising
out of the Common Agreement or any of the Loan Documents or any extension or
renewal thereof;


 


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


 


(l)            the
taking of or the omission to take any action referred to in the Common
Agreement or in any of the Loan Documents;


 


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


 


(n)           the
voluntary or involuntary liquidation, dissolution, merger, consolidation, sale
or other disposition of all or substantially all the assets, marshalling of
assets and liabilities, receivership, insolvency, bankruptcy, assignment for
the benefit of creditors, reorganization, arrangement, composition with
creditors or readjustment of debts, or other similar application or proceeding
affecting the Borrower or any or all of the assets of the Borrower, or any
allegation or contest of the validity of this Guaranty Agreement, the Common
Agreement, or any other Loan Document in any such proceeding; it is specifically
understood, consented and agreed to that this Guaranty Agreement shall remain
and continue in full force and effect and shall be enforceable against the
Guarantor to the same extent and with the same force and effect as if such
proceedings had not been instituted; and it is the intent and purpose of this
Guaranty Agreement that the Guarantor shall and does hereby waive all rights
and benefits which might accrue to the Guarantor by reason of any such
proceedings;


 


(o)           any
release, modification, impairment, substitution, or replacement of any aspect
of the collateral or security pledged or rights granted under the Common
Agreement or under any of the Loan Documents;


 


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


 


(q)           the
merger 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 loss
of its separate corporate identity; or


 


(r)            any
other occurrence whatsoever which might otherwise constitute a legal or
equitable discharge or defense of a surety or a guarantor, whether similar or
dissimilar to the foregoing.


 


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


 


5.             Remedies.  Upon a breach of the Common Agreement, each
Secured Party shall have the right to proceed first and directly against the
Guarantor under this Guaranty Agreement without proceeding against the Borrower
or any other person or exhausting any other remedies which it may have and
without resorting to any other security held by the Secured Parties.  No remedy herein conferred upon or reserved
to the Secured Parties is intended to be exclusive of any other available
remedy or remedies, but each and every such remedy shall be cumulative and
shall be in addition to every other remedy given under this Guaranty Agreement
or now or hereafter existing at law or in equity.  It is expressly understood and agreed by Guarantor
that to the extent Guarantor’s obligations hereunder relate to Obligations
which require performance other than the payment of money, a Secured Party may
proceed against Guarantor to effect specific performance thereof.  No single or partial exercise by a Secured
Party of any right or remedy shall preclude any further exercise thereof.  No delay or omission to exercise any right or
power accruing upon any default, omission or failure of performance hereunder shall
impair 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 as
may be deemed expedient.


 


6.             Expenses.  The Guarantor agrees to pay
all costs, fees and expenses (including all court costs and reasonable
attorneys’ fees and expenses) which may be incurred by a Secured Party in
enforcing or attempting to enforce this Guaranty Agreement, whether the same
shall be enforced by suit or otherwise.


 


7.             Assignment.  This Guaranty is a continuing guaranty, shall
apply to all Guaranteed Obligations whenever arising, shall be binding upon
Guarantor and its successors, transferees and assigns and shall inure to the
benefit of and be enforceable by the Secured Parties and their successors and
assigns.  Guarantor may not delegate,
assign or transfer this Guaranty Agreement or any of its obligations hereunder
without the prior written consent of the Secured Parties.


 


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


 


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(a)           the
transferee or the surviving or resulting entity has a credit rating on its
long-term indebtedness from any Rating Agency of at least investment grade, and
if not investment grade, then the same credit rating from each Rating Agency
which credit rating shall also be at least equal to that of the Guarantor
immediately prior to such consolidation, merger, sale, transfer or disposition;
and


 


(b)           the
transferee or the surviving or resulting entity is currently in compliance with
the representations set forth in Section 1 herein; provided that with respect
to the representations in subsection 1(a), such representations shall be deemed
to reflect the nature of the entity and the State in which such entity is
organized and existing; and


 


(c)           the
transferee or the surviving or resulting entity, if other than the Guarantor or
a subsidiary of the Guarantor, by properly written instrument satisfactory to
the Secured Parties, irrevocably and unconditionally assumes the obligation to
perform and observe the agreements and obligations of the Guarantor under this
Guaranty Agreement; and


 


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


 


In
addition to the requirements set forth above, the Guarantor shall furnish to
the Secured Parties a copy of any notice required to be given by the Guarantor
to FERC of a change in control under Section 203(a) of the Federal Power
Act and such copy shall be accompanied by a cover note stating that the notice
is a change in control notice required under Section 203(a) of the Federal
Power Act.  Such documentation shall be
provided to the Secured Parties simultaneously with the filing of such notice
with FERC.


 


9.             Further Assurances.  The Guarantor covenants and agrees that so
long as any Guaranteed Obligations remain outstanding, the Guarantor will,
promptly after obtaining actual knowledge thereof, notify the Secured Parties
in writing of the occurrence of any breach, Potential Default, or Event of
Default under the Common Agreement.  For
purposes of this Section 9, “actual knowledge” shall be deemed to be the actual
knowledge of any officer or director of the Guarantor, or any key employee of
the Guarantor with management or supervisory responsibilities with respect to
the Borrower, the Operator, or the Project, or any knowledge which should have
been obtained by any of such Persons upon reasonable investigation and
inquiry.  The Guarantor agrees that it
will from time to time, at the request of a Secured Party, do all such things
and execute all such documents as the Secured Party may reasonably consider
necessary or desirable to give full effect to this Guaranty Agreement and to
perfect and preserve the rights and powers of the Secured Parties hereunder.


 


10.          Survival of Guarantee
Obligation.  If a Secured
Party receives any payment on account of the Guaranteed Obligations, which
payment or any part thereof is subsequently invalidated, declared to be
fraudulent or preferential, set aside and/or required to be transferred or
repaid to a trustee, receiver, assignee for the benefit of creditors or any
other party under any bankruptcy act or code, state or federal law or common
law or equitable doctrine or for any other reason whatsoever, then to the
extent of any sum not finally retained by a Secured Party, this Guaranty
Agreement shall remain in full force and effect until the Guarantor shall have
made payment to the Secured Party of such sum, which payment shall be due on
demand.  If the 


 


6

















 


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


 


11.          Waiver of Rights of
Secured Parties.  No payment
hereunder by the Guarantor shall entitle the Guarantor by subrogation to the
rights of the Secured Parties to any payment by any other obligor or out of the
property of any other obligor.  The
Guarantor waives any benefit of, or any right to participation in, any security
whatsoever 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 in
writing and shall be deemed given when delivered personally with confirmation
of receipt or when sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed as follows or to such other address
as any party may specify in writing to the others:


 


To
the Guarantor:


 


Beacon
Power Corporation


65
Middlesex Road


Tyngsboro,
MA  01879767


Attention:  Matt Polimeno


 


With
a copy to:


 


Edwards
Angell Palmer & Dodge LLP


Attn: 
Albert L. Sokol, Esq.


111
Huntington Avenue


Boston,
MA  02199


 


To
the U.S. Department of Energy:


 


U.S.
Department of Energy


1000
Independence Ave., 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 to:


 


U.S.
Department of Energy


1000
Independence Ave., SW


Washington
DC  20585


Attention:  Ruth Ku, Attorney Advisor


Telephone
No.:  (202) 586-3399


Facsimile
No.:  (202) 586-0971


Email
Address:  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


Email
Address:  SSinger@nixonpeabody.com


 


To
the 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


Email
Address: 
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


Email
Address:  midlandlegal@midlandls.com


 


13.          Governing Law;
Consent to Jurisdiction.  This
Guaranty Agreement and the rights and obligations of the parties hereunder
shall be governed by, and construed and interpreted in accordance with, the
Federal law of the United States.  To the
extent that Federal law does not specify a rule of decision for a particular
matter at issue, it is the intention and agreement of the parties hereto that
the substantive law of the State of New York shall be adopted as the governing
Federal rule of decision.


 


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14.          Amendments.  No amendment of any provision of this
Guaranty Agreement shall be effective unless the same shall be in writing and
signed by each party hereto.


 


15.          Entire Agreement;
Counterparts.  This
Guaranty Agreement constitutes the entire agreement, and supersedes all prior
agreements and understandings, both written and oral, between the parties with
respect to the subject matter hereof and may be executed simultaneously in
several counterparts, each of which shall be deemed an original and all of
which together shall constitute one and the same instrument.


 


16.          Severability.  The invalidity or unenforceability of any one
or more phrases, sentences, clauses or Sections in this Guaranty Agreement
contained, shall not affect the validity or enforceability of the remaining
portions of this Guaranty Agreement, or any part thereof.


 


17.          Termination.  This Guaranty Agreement shall terminate on
the Project Completion Date.


 


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


 


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IN WITNESS WHEREOF, the Guarantor has duly
authorized the execution of this Guaranty Agreement as of the date first
written 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