Exhibit
        10.3


      COLLATERAL
        ASSIGNMENT OF LEASE AGREEMENT


      


      THIS
        COLLATERAL ASSIGNMENT OF LEASE AGREEMENT (hereinafter referred to as this
        “Agreement”) is dated as of this 30th day of June, 2008, by and between Beacon
        Power Corporation (the “Assignor”) and Massachusetts Development Finance Agency
        (the “Lender”).

      


      WITNESSETH,
        THAT WHEREAS, Assignor is indebted to the Lender in the principal amount
        not to
        exceed $5,000,000.00(the “Loan”); and

      


      WHEREAS,
        in order to evidence the Loan, Assignor has executed that certain Promissory
        Note (the “Note”) of even date herewith, in the aggregate principal amount of
        the Loan, which Note is secured by this Agreement and that certain Security
        Agreement of even date herewith between Assignor and the Lender (the “Security
        Agreement”); and

      


      WHEREAS,
        Assignor is the owner of a certain leasehold interest in certain premises
        and
        all improvements thereon located at 65 Middlesex Road, Tyngsboro, Massachusetts
        (collectively, the “Premises”), which Premises are more particularly described
        on Exhibit A hereto, as more fully described in that certain Lease Agreement
        by
        and between GFI Tyngsboro, LLC, as lessor, and Assignor, as lessee, dated
        July
        23, 2007 (the “Lease”); and

       

      WHEREAS,
        Lender is unwilling to make the Loan on the date hereof unless Assignor,
        in the
        manner hereinafter set forth, assigns to Lender as additional security for
        the
        repayment of the Loan and the observance and performance by Assignor of the
        terms, covenants and conditions of all of the loan documents evidencing and
        securing the Loan (collectively, the “Loan Documents”) on the part of Assignor
        to be observed and performed, all of Assignor’s right, title and interest in and
        to the Lease.

      


      NOW,
        THEREFORE, in order to secure the prompt payment and performance of any and
        all
        amounts and obligations (collectively the “Obligations”) due under the Note and
        under any Loan Documents and for other good and valuable consideration, the
        receipt and adequacy of which are hereby acknowledged, the parties hereto
        agree
        as follows:

      


      1. Pledge,
        Assignment and Grant of Lease.
        The
        Assignor hereby makes a present assignment and pledge to the Lender of all
        of
        the Assignor’s right, title and interest in the Lease, together with all rights,
        powers and privileges incident to the Lease as additional security and
        collateral for the prompt payment of the Note, and the observance and
        performance by Assignor of the Obligations. In addition, and subject to all
        applicable laws, Assignor grants Lender a security interest in the Lease.
        Assignor does hereby authorize and empower Lender, and its successors and
        assigns, to fully and freely exercise and enjoy all rights and enforce the
        Lease
        and does hereby direct each and all of the parties thereto to perform all
        of
        their obligations under the Lease for the benefit of Lender, its successors
        and
        assigns, upon demand for payment or performance thereof by Lender, its
        successors and assigns, such directive to take effect upon the occurrence
        and
        during the continuance of an Event of Default (as hereinafter defined) under
        the
        Loan Documents.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      


      2. Assignor’s
        Exercise of Rights.
        Until
        the occurrence of an Event of Default hereunder, the Assignor shall be entitled
        to exercise all of the rights held under the provisions of the subject Lease
        as
        if this Agreement had not been made.

      


      3. Lender
        Rights on Default.
        Upon
        and at any time after a default in the Assignor’s performance of any of its
        Obligations hereunder or under the provisions of the Note, or any other Loan
        Documents, after notice and beyond applicable grace and cure periods and
        until
        such default has been cured (an “Event of Default”), the Assignor’s entire
        right, title and interest in and to the Lease shall, at Lender’s option, vest
        absolutely in the Lender.

      


      4. Construction.
        If,
        after the date hereof, the Assignor undertakes any tenant improvement or
        other
        construction work within or about the building located at the Premises, which
        improvement or construction work involves changes to, or replacement of,
        any of
        the Collateral (as defined in the Security Agreement) (any such improvement
        or
        work as described in this paragraph being hereinafter referred to as the
        “Work”), the Assignor hereby covenants and agrees to the following conditions of
        the Agreement:

      


      4.1 The
        Assignor proposes and agrees to diligently complete any such Work in accordance
        with (i) a construction budget to be delivered to the Lender, (ii) plans
        and
        specifications, as certified by the architect for the Work (the "Plans"),
        to be
        delivered to the Lender, and (iii) such building permits and all other
        governmental permits, licenses or approvals necessary or required for the
        Work.
        The Assignor agrees that any materials to be used in the Work shall be of
        good
        quality and as called for by the Plans and that the Work shall be completed
        in a
        good and workmanlike manner and that both shall be reasonably satisfactory
        to
        the Lender and its Work inspectors.

      


      4.2 The
        Assignor agrees not to use in the Work any materials which are purchased
        upon
        lease or conditional bill of sale, nor any to which Assignor does not have
        an
        absolute title.

      


      4.3 From
        time
        to time, the Lender shall have the right to cause a so-called title rundown
        of
        the Premises to be performed at the Assignor's expense. The Lender shall
        not be
        required to advance any sums under the Note if at any time the Assignor shall
        fail to discharge any encumbrances of record (affecting the Assignor’s leasehold
        interest in the Premises or the interests granted to the Lender hereby)
        disclosed by such title rundown as required by the Lender or its attorneys,
        nor
        if at any time the Assignor shall fail to pay or bond over sums due for labor
        or
        materials furnished, nor if at any time there shall be any recorded statements
        of mechanics' liens or any other liens or attachments by any contractor or
        subcontractor or materialman on the Premises, or any part thereof, which
        liens
        or attachments have not been bonded over by the Assignor, nor if any
        restrictions on the Premises shall be violated, nor if the applicable building
        laws shall not be complied with, nor if any attachment shall be made by trustee
        process or otherwise of the funds in the hands of the Lender, nor if any
        materials shall be used in the Work which shall be purchased on conditional
        sale
        or lease, whether the same be recorded or not, nor if there shall be a
        substantial, partial, or total loss or damage by fire to the building(s)
        on the
        Premises (except as may be otherwise provided in the Note or other Loan
        Documents), nor if an Event of Default has occurred or is continuing, nor
        if
        there are any legal actions or other legal or administrative proceedings
        pending
        or threatened which could materially adversely affect the Assignor, the
        Premises, or the Work, nor if representations or warranties made by the Assignor
        prior to any advance are determined by the Lender to be untrue or incorrect
        in
        any material respect at the time made, but in all other events, the Lender
        shall
        advance the payments within thirty (30) days after receipt of invoices
        evidencing construction of the Work.

       

      
        
           

        

        
          -2-

          
            

          

        

        
           

        

      


      4.4 The
        Assignor authorizes the Lender to pay and cause to be discharged any mechanics'
        liens that may at any time affect the Premises and which the Assignor has
        not
        caused to be bonded over or otherwise provided security for, and also to
        pay and
        cause to be discharged any encumbrances of record which in the reasonable
        opinion of the attorneys for the Lender may take priority over the security
        interest of Lender provided by this Agreement, and charge the same against
        such
        payment or payments as said Lender may deem appropriate; in each case only
        after
        twenty (20) days’ prior written notice by Lender to Assignor of such lien or
        encumbrance, plus an additional ten (10) days’ written notice prior to Lender
        paying or causing such lien or encumbrance to be discharged.

      


      4.5 The
        Work
        shall fully comply with all laws, ordinances and regulations of state, municipal
        or other governmental agencies or authorities as may apply and shall not
        violate
        any restrictions on the Premises.

      


      4.6 No
        payment under this Agreement shall be conclusive evidence of the performance
        of
        its terms in whole or in part, and no advance made hereunder shall be construed
        as an acceptance of improper work or material.

      


      4.7 The
        fact
        that any of the payments herein mentioned shall have been suspended shall
        not
        qualify or affect the right of any of the conditions herein set
        forth.

      


      4.8 The
        Lender shall not be required to make any advances under this Agreement except
        as
        set forth herein, but may, at its option, declare any advances heretofore
        made
        or sums due under the terms of this Agreement immediately due and payable
        if the
        Assignor shall fail to perform and comply with the terms and conditions set
        out
        in this Agreement or the Note after the expiration of all applicable grace
        and
        cure periods.

      


      4.9 At
        the
        request of the Lender, the Assignor shall collaterally assign to the Lender
        its
        contracts with the architect and the general contractor for the Work and
        shall
        require its architect and general contractor, respectively, to consent to
        such
        assignments.

      


      5. Indemnification.
        This
        Assignment shall not operate to place upon the Lender any responsibility
        or
        liability for the control, care, management or repair of the Premises under
        the
        Lease, unless and until Lender exercises dominion and control of the Premises
        pursuant to this Assignment. If the Lender elects to exercise dominion and
        control of the Premises pursuant to this Assignment, the Assignor hereby
        agrees
        to indemnify the Lender for, and to hold the Lender harmless from (unless
        caused
        by the willful misconduct, bad faith or gross negligence of Lender), any
        and all
        liability, loss or damage which may be incurred under the Lease or by reason
        of
        this Assignment, and from any and all claims and demands whatsoever which
        may be
        asserted against the Lender by reason of any alleged obligation or undertaking
        on its part to perform or discharge any of its obligations under the Lease.
        

       

      
        
           

        

        
          -3-

          
            

          

        

        
           

        

      


      6. Effect
        of Agreement.
        This
        Agreement is to remain in force and effect until all Obligations of Assignor
        have been fully performed. At such time, the rights assigned hereunder and
        all
        rights of the Lender hereunder shall terminate automatically without the
        necessity of any further agreement or other writing between the
        parties.

      


      7. Representations
        and Warranties.
        The
        Assignor represents and warrants and, so long as this Agreement is in effect,
        shall be deemed continuously to represent and warrant, that, unless compliance
        is waived by the Lender in writing:

      


      7.1.
         The
        Assignor has full right and title to assign its interest in the Lease to
        Lender
        and that there is no outstanding assignment, transfer, mortgage or pledge
        thereof.

      


      7.2. The
        Assignor has not executed and will not execute any assignment or security
        agreement or financing statement covering its interest in the Lease except
        to
        the Lender.

      


      7.3. The
        Assignor is authorized to enter into this Agreement.

      


      7.4. So
        long
        as this Agreement remains in force and effect, the Assignor will defend its
        interest in the Lease against the claims and demands of all other parties,
        and
        will keep the Lease free from all future security interests and other
        encumbrances, except the security interest granted hereby.

      


      7.5. The
        Assignor shall observe and perform in all respects the obligations imposed
        upon
        Assignor under the Lease, and not do or permit to be done anything to impair
        the
        security thereof.

      


      7.6. The
        Assignor shall give prompt written notice to Lender of any notice of default
        received by Assignor under the Lease, together with a complete copy of any
        such
        notice.

      


      8. Miscellaneous.
        

      


      8.1.
         The
        Lender shall have no obligation to take, and the Assignor shall have the
        sole
        responsibility for taking, any and all steps to preserve rights against any
        and
        all parties to the Lease.

      


      8.2.
         The
        Assignor agrees that any notice by the Lender of sale, disposition or other
        intended action hereunder or in connection herewith (following an Event of
        Default), shall constitute reasonable notice if such notice is mailed by
        certified mail or by nationally recognized overnight delivery service, at
        least
        five (5) days prior to such action, to the Assignor’s address as set forth below
        or to any other address which the Assignor has specified in writing to the
        Lender as the address of the Assignor;


      
        
           

        

        
          -4-

          
            

          

        

        
           

        

      

      

        
          	
                   If
                    to the Lender:

                	 	
                  Massachusetts
                    Development Finance Agency

                
	 	 	 	
                  160
                    Federal Street

                
	 	 	 	
                  Boston,
                    MA 02110

                
	 	 	 	
                  Attention:
                    James Kenney

                
	 	 	 	 
	
                   with
                    copy to:

                	 	
                  Gary
                    M. Markoff, Esquire

                
	 	 	 	
                  Sherin
                    & Lodgen, LLP

                
	 	 	 	
                  101
                    Federal Street

                
	 	 	 	
                  Boston,
                    MA 02110

                
	 	 	 	 
	
                   If
                    to the Assignor:

                	 	
                  65
                    Middlesex Road

                
	 	 	 	
                  Tyngsboro,
                    MA 01879

                
	 	 	 	
                  Attention:
                    James M. Spiezio, Vice President

                
	 	 	 	
                  of
                    Finance and Chief Financial Officer

                
	 	 	 	 
	 	 	 	 
	
                   with
                    a copy to:

                	 	
                  Edwards
                    Angell Palmer & Dodge LLP

                
	 	 	 	
                  111
                    Huntington Avenue

                
	 	 	 	
                  Boston,
                    MA 02119

                
	 	 	 	
                  Attention:
                    Albert L. Sokol, Esquire and 

                
	 	
                   

                	 	
                  Thomas
                    G. Schnorr, Esquire

                


        

         

      

      8.3.
         The
        Assignor agrees to pay all costs and expenses incurred by the Lender in
        enforcing this Agreement, including, without limitation, reasonable attorney’s
        fees and legal expenses.

      


      8.4.
         This
        Agreement shall be governed by and construed according to the laws of the
        Commonwealth of Massachusetts.

      


      8.5.
         No
        modifications, rescission, waiver, release or amendment of any provision
        of this
        Agreement shall be made, except by written agreement subscribed by the Assignor
        and the Lender.

       

      8.6.
         This
        Agreement benefits the Lender and its successors and assigns, and binds the
        Assignor and its assigns.

      


      8.7. This
        Agreement may be recorded at the option of either the Assignor or the Lender,
        however, in either regard, any and all costs of recording this Agreement
        shall
        be the sole responsibility of Assignor.

       

      
        
           

        

        
          -5-

          
            

          

        

        
           

        

      

      


      IN
        WITNESS WHEREOF, the parties hereto have executed this Agreement under seal
        as
        of the date first above written.

       

      
        	 	
                BEACON
                  POWER CORPORATION

              
	 	 	 	 
	 	 	 	 
	 	
                By:

              	
                /s/
                  F. William Capp

              	 
	 	
                Name:
                  F. William Capp

              
	 	
                Title:
                  President and CEO

              
	 	 	 	 
	 	 	 	 
	 	
                MASSACHUSETTS
                  DEVELOPMENT FINANCE AGENCY

              
	 	 	 	 
	 	 	 	 
	 	
                By:

              	
                /s/
                  Laura L. Canter

              	 
	 	
                Name:
                  Laura L. Canter

              
	 	
                Title:
                  Executive Vice President

              


      


      
        
           

        

        
          -6-

          
            

          

        

        
           

        

      

      


      COMMONWEALTH
        OF MASSACHUSETTS )

      


      COUNTY
        OF
        MIDDLESEX )

      


      On
        this
        27th
        day of
        June, 2008, before me, the undersigned notary public, personally appeared
        F.
        William Capp, the CEO of Beacon Power Corp., proved to me through satisfactory
        evidence of identification, which was personally known, to be the person
        whose
        name is signed on the preceding or attached document and acknowledged to
        me that
        she/he signed it voluntarily for its stated purpose as Collateral Assignment
        of
        Lease Agreement. 

      


      
        	 	
                /s/
                  Lynn Hall

              	 
	 	
                Notary
                  Public

              
	 	
                My
                  commission expires: 12/7/2012

              


      

      


      COMMONWEALTH
        OF MASSACHUSETTS )

      


      COUNTY
        OF
        SUFFOLK )

      


      On
        this
        27th
        day of
        June, 2008, before me, the undersigned notary public, personally appeared
        Laura
        L. Canter, the EVP, Finance Prog. of MassDevelopment, proved to me through
        satisfactory evidence of identification, which was personal knowledge, to
        be the
        person whose name is signed on the preceding or attached document and
        acknowledged to me that she/he signed it voluntarily for its stated purpose
        as
        Collateral Assignment of Lease Agreement. 

      


      
        	 	
                /s/
                  Victoria Stratton

              	 
	 	
                Notary
                  Public

              
	 	
                My
                  commission expires: 12/12/2008

              


      

       

      
        
           

        

        
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      EXHIBIT
        A

      


      Legal
        Description of Premises

       

      
        
           

        

        
          -8-