Exhibit
      10.2


    SECURITY
      AGREEMENT

    


    1. Parties.
      This
      Agreement is made on June 30, 2008, between Beacon Power Corporation, a Delaware
      corporation with its chief executive office presently at 65 Middlesex Road,
      Tyngsboro, Massachusetts 01879 (herein called "Borrower"), and Massachusetts
      Development Finance Agency, a body politic and corporate created by Chapter
      289
      of the Acts of 1998 and established under Massachusetts General Laws Chapter
      23G, as amended, with a principal place of business and mailing address of
      160
      Federal Street, Boston, Massachusetts 02110 (herein called
      "MassDevelopment").

    


    2. Security
      Interest.
      

    


    (a) Borrower
      hereby grants to MassDevelopment a continuing and exclusive first priority
      security interest in all equipment purchased with proceeds of the Loan defined
      below in section 2(b), including but not limited to the equipment (the
“Equipment”) and the tenant improvements (the “Tenant Improvements” and,
      together with the Equipment, the “Collateral”) listed on Schedule
      A
      attached
      hereto. 

    


    (b) The
      Collateral shall secure prompt, punctual and faithful observance, payment and
      performance of each and every obligation, covenant and agreement of Borrower
      under the Loan Documents, as defined below, including, but not limited to,
      payment of all amounts due from time to time under that certain Promissory
      Note
      of even date herewith in the original principal amount of Five Million Dollars
      ($5,000,000), payable by Borrower to MassDevelopment (the “Note”, and together
      with this Agreement, the “Loan Documents”) evidencing and securing a loan in the
      same amount from the Borrower to the MassDevelopment (the “Loan”). Upon payment
      in full of the Note, MassDevelopment shall at Borrower’s expense, promptly take
      any reasonable steps to evidence the termination of its security interest in
      the
      Collateral.

    


    3. Location
      of Collateral.
      The
      Collateral shall be kept and used by the Borrower solely at the manufacturing
      facility at 65 Middlesex Road, Tyngsboro, Massachusetts (the “Premises”). Other
      than removals for the purpose of repair or replacement in the ordinary course
      of
      any of the Collateral, the Borrower shall not remove the Collateral, nor any
      part thereof, from the Premises without the written consent of MassDevelopment.
      

    


    4. After-Acquired
      Property.
      All
      replacements of and renewals to the Collateral shall become and be immediately
      subject to the security interest provided herein and be covered thereby.
      Borrower warrants and represents that all Collateral now is, and that all
      replacements thereof, substitutions therefor or additions thereto will be,
      free
      and clear of liens, encumbrances or security interests of others, except for
      security interests junior in priority to the interest created by this Agreement
      and to which MassDevelopment, at its option and in its sole and absolute
      discretion, shall consent.

    


    5. Representations
      and Warranties.
      Borrower warrants and represents that:

    


    (a) Borrower
      is a corporation, duly established under the laws of the State of Delaware
      and
      qualified to conduct business in the Commonwealth of Massachusetts, and that
      the
      execution of the Loan Documents and any other instruments executed in connection
      therewith constitute representations by the individual in his capacity as a
      duly
      authorized officer of Borrower signing the Loan Documents and said instruments,
      and by Borrower, that such execution has received all such authorization as
      may
      be necessary to permit such execution, and that the Loan Documents and said
      instruments are binding and in force against Borrower; 

    


    (b) prior
      to
      the date hereof Borrower has never: disposed of, transported, or arranged for
      the transport of any hazardous material or oil without compliance in all
      material respects with all applicable statutes, regulations, ordinances,
      directives, and orders; been legally responsible for any release or threat
      of
      release of any hazardous material or oil; received notification of any potential
      or known release or threat of release of any hazardous material or oil from
      any
      site or vessel occupied or operated by Borrower and/or of the incurrence of
      any
      expense or loss in connection with the assessment, containment, or removal
      of
      any release or threat of release of any hazardous material or oil from any
      such
      site or vessel;



    
      
         

      

      
         

        
          

        

      

      
         

      

    


    (c) one-half
      of the principal amount of the Note does not constitute more than twenty-five
      percent (25%) of the overall project expenses scheduled to be expended for
      Borrower’s improvement of the Premises, including the acquisition of the
      Equipment for use at the Premises; 

    


    (d) Borrower
      has filed any and all federal, state and local tax returns required as of the
      date hereof and has paid any and all taxes due thereon, except to the extent
      contested in good faith and adequate reserves are made in accordance with
      generally accepted accounting principles (“GAAP”); and

    


    (f) except
      as
      previously disclosed to MassDevelopment by Borrower or as otherwise disclosed
      by
      Borrower in its public filings, there is no action, suit claim, proceeding,
      investigation or arbitration proceeding pending (or, to the knowledge of
      Borrower, threatened) against or otherwise involving Borrower or any of the
      officers, directors, former officers or directors, employees, shareholders
      or
      agents of Borrower (in their capacities as such) and there are no outstanding
      court orders to which Borrower is a party or by which any of its assets are
      bound that, in each case, would reasonably be expected to have a material
      adverse effect on the Borrower or the collateral for the Loan. Borrower has
      no
      reason to believe that any such action, suit, proceeding, investigation or
      arbitration proceeding may be brought against Borrower.

     

    6. Further
      Covenants of Borrower.
      Borrower further covenants as follows:

    


    (a) to
      pay
      before the same become delinquent (and to provide, by such time, evidence of
      such payment, satisfactory to MassDevelopment) all taxes (including real estate
      taxes) on the Collateral; and to pay before the same become delinquent (and
      upon
      request, to provide evidence of such payment, satisfactory to MassDevelopment)
      all other charges, sewer use fees, water rates and assessments of every name
      and
      nature, whether or not assessed against the Borrower, if applicable or
      reasonably related to the Premises, or any interest therein, or the debt,
      obligation or any agreement secured hereby, or the disbursement or the
      application or the proceeds thereof. Borrower shall have the right to contest
      the validity, applicability or amount of any asserted tax provided that, in
      MassDevelopment's sole discretion exercised in good faith, such contest will
      not
      impair the validity or priority of the lien of created by this Agreement and
      the
      Mortgage and provided that the full amount of such tax is either paid to the
      taxing authority under protest or reserved in accordance with GAAP;

    


    (b) to
      notify
      MassDevelopment promptly of any accidental damage to the Collateral in excess
      of
      twenty-five thousand dollars ($25,000); to keep the Collateral in good order,
      repair and condition, damage from casualty and from ordinary wear and tear
      excepted; and all construction on the Premises shall comply with, and each
      and
      every part of the Premises shall be maintained in accordance with, any lawful
      requirements or provisions, public or private, relating to the same or the
      use
      thereof;

    


    (c) that
      all
      proceeds of casualty insurance policies relating to the Collateral for claims
      in
      excess of twenty-five thousand dollars ($25,000) shall be paid to
      MassDevelopment and shall be released to Borrower to pay for the costs of repair
      and restoration of the Collateral; and to the extent MassDevelopment retains
      any
      funds not required for repair and restoration, those funds shall be, at
      MassDevelopment's option, applied toward the indebtedness secured
      hereby;

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    (d) that
      the
      awards of damages on account of any condemnation for public use of or injury
      to
      the Premises, to the extent affecting the Collateral, shall be paid to
      MassDevelopment; and promptly upon obtaining knowledge of the institution of
      any
      proceedings on account of any condemnation for public use of or injury to the
      Premises, or any portion thereof, Borrower will notify MassDevelopment of the
      pendency of such proceedings, and no settlement respecting such awards which
      affect the Collateral or Borrower’s access to or ability to use the Collateral
      shall be effected without the consent of MassDevelopment; 


    (e) to
      pay
      when due all reasonable out-of-pocket fees and charges incurred and billed
      to
      Borrower by MassDevelopment incident to the loan transaction evidenced by the
      Loan Documents, as well as any and all commitment fees remaining due
      thereunder;

    


    (f) that,
      from time to time, on the request of MassDevelopment, Borrower shall furnish
      a
      written statement, signed and if requested, acknowledged, setting forth the
      amount of the indebtedness which Borrower acknowledges to be due on the Note,
      specifying any claims of off-set or defense which Borrower asserts against
      the
      indebtedness secured hereby or any obligations to be paid or performed
      hereunder; and to deliver to MassDevelopment promptly copies of all junior
      mortgages, security agreements, assignments of leases and rents and similar
      instruments which Borrower may create with respect to the Premises, together
      with copies of any notices from any holder of such an instrument claiming that
      Borrower is in default in the performance or observance of any of the terms
      thereof;

    


    (g) that
      whether or not for additional interest or other consideration paid or payable
      to
      MassDevelopment, no forbearance on the part of MassDevelopment or extension
      of
      the time for payment of the whole or any part of the obligations secured hereby,
      whether oral or in writing, or any other indulgence given by MassDevelopment
      to
      Borrower or to any other party claiming any interest in or to the Collateral,
      shall operate except as provided by the forbearance or indulgence to release
      or
      in any manner affect the original liability of Borrower, or impair any right
      of
      MassDevelopment, including, without limitation, the right to realize, upon
      the
      security or any part thereof, for the obligations secured hereby or any of
      them,
      notice of any such extension, forbearance or indulgence being waived by Borrower
      and all those claiming by, through or under Borrower; and no consent or waiver,
      express or implied, by the holder to or of any default by the Borrower shall
      be
      construed as a consent or waiver to or of any further default in the same or
      any
      other term, condition, covenant or provision of this Agreement or of the
      obligations secured hereby; in case redemption is had by Borrower after
      foreclosure proceedings have begun, MassDevelopment shall be entitled to collect
      all reasonable costs, charges and expenses incurred up to the time of
      redemption; and in case any one or more of the provisions of this Agreement
      may
      be found to be invalid or unenforceable for any reason or in any respect, such
      invalidity shall not limit or impair enforcement of any other provision
      hereof;

    


    (h) that,
      except for real estate taxes and assessments before any delinquency therein
      (delinquency with reference to such taxes and assessments being herein defined,
      for the purpose of this Agreement, as meaning the time when, on the nonpayment
      thereof, interest or penalties commence to accrue), Borrower shall not create,
      permit or suffer to be created or permitted to remain (and shall discharge
      or
      promptly cause to be discharged or bonded over) any mechanics' or laborers'
      lien
      of record, or any attachment, on the Collateral or any part thereof or interest
      therein, without the consent of MassDevelopment which may be withheld in
      MassDevelopment's sole and absolute discretion, even if such encumbrance is
      inferior to the interest secured hereby; without limitation, and except where
      MassDevelopment receives independent security satisfactory to MassDevelopment
      during the pendency of legal proceedings contesting the impositions of a
      Governmental lien, the filing of a notice of Federal or State tax lien with
      MassDevelopment or the office at which, by law, such notice is to be filed
      to be
      effective against the Collateral, whether or not such lien applies, in terms,
      to
      the Collateral, shall be a breach of this condition;

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    (i) that
      Borrower shall not file a petition or any application for relief, extension,
      moratorium or reorganization under any bankruptcy, insolvency or debtor's relief
      law, or make an assignment for the benefit of creditors or enter into any trust
      mortgage arrangements, so-called, or consent to the appointment of a receiver
      of
      any of the property of Borrower, including the Collateral;

    


    (j) that
      Borrower shall not permit any petition under any bankruptcy, insolvency or
      debtor's relief law filed against it to remain undischarged for a period of
      more
      than forty-five (45) days after the filing thereof, nor shall Borrower permit
      the continuation of any receivership proceedings instituted against it for
      more
      than a period of forty-five (45) days after the commencement
      thereof;

    


    (k) that
      Borrower shall not dispose of any hazardous material or oil on the land on
      which
      the Premises is located; nor store or transport or arrange for the transport
      of
      any hazardous material or oil on such property except if such disposal, storage
      or transport is in the ordinary course of Borrower's business and is in
      compliance with all applicable statutes, regulations, ordinances, directives
      and
      orders; if Borrower obtains knowledge or notice of any potential or known
      release or threat of release of any hazardous material or oil at or from any
      site or vessel occupied or operated by Borrower, and/or upon Borrower's
      obtaining knowledge of any incurrence of any expense or loss by any governmental
      authority in connection with the assessment, containment, or removal of any
      hazardous material or oil for which expense or loss Borrower may be liable,
      then
      in either of such events, Borrower shall take all such reasonable action,
      including without limitation the conducting of engineering tests, to confirm
      whether or not a potential or known release or threat of release of any
      hazardous material or oil exists and to undertake all necessary remediation
      required under Mass. Gen. Laws Ch. 21E and the Massachusetts Contingency
      Plan;

     

    (l) that
      Borrower, at Borrower's expense, shall furnish to MassDevelopment (i) copies
      of
      its audited annual financial statements prepared by a certified public
      accountant in accordance with GAAP, as and when prepared, for such fiscal year,
      certified as complete, true and accurate by the Borrower, within one hundred
      twenty (120) days of the end of Borrower's fiscal year, (ii) copies of its
      quarterly financial statements as prepared by management within sixty (60)
      days
      after the end of each fiscal quarter throughout the term of the Loan, and (iii)
      any additional financial documentation reasonably requested in writing by
      MassDevelopment, including so-called Requests for Information from either
      MassDevelopment or any of MassDevelopment’s participants in the Loan (but not
      more than twice annually absent an Event of Default), with Borrower’s response
      made to both MassDevelopment and all participants, notwithstanding that only
      MassDevelopment or one or more participants may have submitted the Request
      for
      Information; MassDevelopment shall have the right to inspect the Premises at
      its
      sole cost and the books and records of Borrower for the purpose of verifying
      the
      accuracy of such financial documents (or, for the purpose of conducting its
      own
      audit at Borrower’s cost of the records and books of account of Borrower if
      Borrower fails to furnish or cause to be furnished and delivered the aforesaid
      financial documents), provided, however, that MassDevelopment shall not have
      the
      right to exercise its audit rights with respect to the books and records more
      than once in any calendar year, except upon and during the continuance of any
      Event of Default. Notwithstanding anything to the contrary in this Section
      6(l),
      if the Borrower has not filed its 10-K’s or 10-Q’s by the deadlines provided in
      this Section for the filing of its financial statements with MassDevelopment,
      MassDevelopment agrees to keep all such financial information filed with it
      confidential. Unless MassDevelopment obtains a similar agreement of
      confidentiality from its participants in the Loan, MassDevelopment will not
      forward such statements to its participants in the Loan before they become
      available to the public; and

    


    (m) that
      Borrower has not granted, and shall not grant after the date hereof and
      throughout the full term of the Note, a security interest to any third party
      in
      any of the Equipment constituting Collateral for the Loan.

    


    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    7. Insurance.
      Borrower agrees to maintain such insurance on the Collateral and its use as
      MassDevelopment may from time to time reasonably require and as may from time
      to
      time be required by any applicable Federal, State or local law or regulation
      including, without limitation, a general liability insurance policy naming
      MassDevelopment as an additional insured in an amount reasonably acceptable
      to
      MassDevelopment, and fire and extended coverage insurance against loss or damage
      to the Collateral by fire and any of the risks covered by insurance of the
      type
      now known as "extended coverage", including without limitation earthquake,
      cost
      of demolition, vandalism, malicious mischief, lightning, windstorm, hail,
      explosion, riot, civil commotion, damage from aircraft and vehicles, smoke
      damage, and sprinkler damage for not less than full replacement cost of the
      Collateral from time to time during the period of time this Agreement remains
      in
      force and effect; and certificates of insurance or insurance binders in forms
      satisfactory to MassDevelopment, evidencing the insurance required by
      MassDevelopment, together with any other insurance with respect to the
      Collateral maintained by Borrower, shall be deposited with MassDevelopment,
      and,
      MassDevelopment shall be added and named as an insured and loss payee, and
      shall
      be first payable to MassDevelopment in case of loss, as provided in Section
      6(c)
      above; all renewals or replacements of such insurance from time to time in
      force, together with evidence of payment of premiums thereon reasonably
      satisfactory to MassDevelopment, shall be delivered to MassDevelopment ten
      (10)
      days at least before the expiration date of the then current insurance; all
      insurance required by MassDevelopment to be maintained with respect to the
      Property shall be written by such companies on such terms, in such form and
      for
      such periods and amounts as MassDevelopment shall from time to time reasonably
      approve and shall contain a provision requiring at least thirty (30) days'
      advance written notice to MassDevelopment before any such policy may be
      cancelled or modified; and no settlement on account of any loss covered by
      such
      insurance shall be effected without the consent of
      MassDevelopment.


    8. Remedies
      of MassDevelopment.

    


    (a) In
      the
      case of (i) an Event of Default under the Note or (ii) a violation by Borrower
      of its obligations under this Agreement not remedied within thirty (30) days
      after written notice thereof from MassDevelopment
      to the
      attention of the Borrower’s Chief Financial Officer and to Borrower’s counsel,
      Edwards Angell Palmer & Dodge LLP, attn: Albert Sokol, Esq.
      (except
      that where, for any of the foregoing, a period of grace is specifically
      otherwise provided or negated, such specific periods of time or negation shall
      govern in each case), MassDevelopment shall have all of the rights and remedies
      of a secured party under the Uniform Commercial Code as currently enacted in
      the
      Commonwealth of Massachusetts (as the same may be amended from time to time,
      the
“UCC”), including without limitation the right to enter into and upon the
      Premises and any other place where the Collateral may be, and to retake the
      same
      in order to foreclose upon it in any manner permitted by applicable
      law.

    


    (b) In
      addition to the foregoing, and in addition to any remedies available to
      MassDevelopment under the Note, if there shall be any breach of the conditions
      of subsections (i), (j), or (k) of Section 6, the representation in Section
      5(b)
      or the provisions of Section 7, or if, in any respect other than the filing
      of a
      Governmental lien, there shall be any breach of any conditions or covenants
      of
      this Agreement continuing for more than thirty (30) days after the giving of
      notice by MassDevelopment or an Event of Default under the Note continuing
      beyond any applicable grace periods (except that where, for any of the
      foregoing, a period of grace is specifically otherwise provided or negated,
      such
      specific periods of time or negation shall govern in each case), or if there
      occurs any default under any prior or subordinate security interest covering
      Borrower’s leasehold interest in the Premises, or under any note or other
      obligation secured thereby, which default may result in the acceleration of
      the
      indebtedness secured thereby, or if there shall occur the commencement of
      foreclosure or other enforcement proceedings under any prior or subordinate
      security interest covering any other asset of Borrower or Borrower’s leasehold
      interest in the Premises, or under any note or other obligation secured thereby,
      then MassDevelopment, in addition to, and not in limitation of, any and all
      other rights or remedies available to it by law or by any other provision of
      any
      of the instruments given to secure the Note, shall have the right, during the
      continuance of the default beyond any applicable grace period, and without
      notice:

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    (i) to
      enter
      upon the Premises and take possession of the Collateral, or any part thereof;
      and to perform any acts MassDevelopment shall deem necessary or proper to
      conserve the Collateral, to cure any default of the Borrower under the Lease,
      and to manage and operate the Collateral, to collect and receive all rents,
      revenues, income, issues and profits from the Collateral, past-due and
      thereafter accruing, and to exercise all other rights of the Borrower with
      respect to the Collateral;

    


    (ii) to
      have a
      receiver appointed to enter and take possession of the Collateral, or any part
      thereof, and to perform any acts said receiver shall deem necessary or proper
      to
      conserve the Collateral (including, without limitation, the making of repairs,
      replacements and alterations), to maintain the Lease in good standing without
      uncured defaults, to manage and operate the Collateral, to collect and receive
      all rents, revenues, income, issues and profits from the Collateral, past-due
      and thereafter accruing, and to exercise all other rights of the Borrower with
      respect to the Collateral;

    


    (iii) to
      declare the entire indebtedness of the Borrower under the Note forthwith due
      and
      payable;

    


    (iv) to
      sell
      the Collateral at public auction on such terms and conditions as MassDevelopment
      shall determine, having first given such notice, prior to the sale, of the
      time
      and place of sale and terms and conditions of sale by publication in one (1)
      or
      more newspapers having a general circulation in the municipality in which the
      Premises, or part thereof, is located, all subject, however, to the requirements
      of this Agreement and applicable law; or to foreclose on the Collateral in
      any
      other manner permitted by law; and

     

    (v) to
      obtain
      judgment and execution for the indebtedness secured by this Agreement, to the
      extent not otherwise satisfied;

    


    (c) If
      there
      shall be any Event of Default arising out of a breach in any condition or
      covenant of this Agreement beyond any applicable grace period, MassDevelopment
      shall have the right, but without any obligation so to do, to cure such default
      for the account of Borrower, and, to the fullest extent permissible according
      to
      law, apply any funds credited by or due from MassDevelopment to Borrower against
      the same (without any obligation first to enforce any other rights of
      MassDevelopment, including, without limitation, any rights under the Note or
      this Agreement, or any guarantee thereof, and without prejudice to any such
      rights); to pay the premiums for any insurance required hereunder not paid
      when
      due; to incur and pay reasonable expenses in protecting its rights hereunder
      and
      the security hereby granted, including, again without limitation, all payments
      on account of principal, interest and such other charges as may become due
      to
      cure default under any subordinate interest, including the notes or obligations
      secured thereby, affecting the Collateral; to pay any balance due under any
      security agreement on any articles, fixtures and equipment owed by Borrower
      included as a part of the Collateral; and the payment of all amounts so incurred
      shall be secured hereby as fully and effectually as any other obligation of
      Borrower secured hereby; and, to the fullest extent permissible according to
      law, to apply to any of these purposes or to the repayment of any amounts so
      paid by MassDevelopment of any sums paid on the Note or this Agreement by
      Borrower as interest or otherwise.

    


    (d) At
      any
      foreclosure sale, any combination or all of the Collateral or security given
      to
      secure the indebtedness secured hereby, may be offered for sale for one total
      price, and the proceeds of such sale accounted for in one account without
      distinction between the items of security or without assigning to them any
      proportion of such proceeds, Borrower hereby waiving the application of any
      doctrine of marshalling; and, in case MassDevelopment, in the exercise of the
      power of sale herein given, elects to sell in parts or parcels, said sales
      may
      be held from time to time, and the power shall not be fully executed until
      all
      of the Collateral not previously sold shall have been sold.

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    


    (e) If
      MassDevelopment shall exercise the right described in either subsection (b)(i)
      or (b)(ii) of this Section 8, the expenses (including, without limitation,
      reasonable receiver's fees and reasonable attorney's fees) incurred pursuant
      to
      the powers herein contained likewise shall be secured hereby, and
      MassDevelopment shall apply such rents, income, issues and profits as shall
      be
      received by it first to the payment of all costs and expenses incurred and
      thereafter to the indebtedness secured hereby in such order of priority as
      MassDevelopment, in its sole discretion, shall determine; and the exercise
      of
      such rights and disposition of such funds shall not constitute a waiver of
      any
      foreclosure, once commenced, nor preclude the later commencement or foreclosure
      for breach hereof.

    


    (f) If
      MassDevelopment shall exercise the right described in subsection (b)(iv) of
      this
      Section 8, MassDevelopment may adjourn, from time to time, any sale by
      announcement of such adjournment at the time and place appointed for such sale
      or such adjourned sale; and, except as otherwise provided by law,
      MassDevelopment may, without further notice or publication, make such sale
      at
      the time and place to which the same shall be so adjourned. Upon completion
      of
      any sale, MassDevelopment shall execute and deliver an instrument conveying,
      assigning and transferring all right, title and interest in the Collateral,
      and
      rights sold, in the name of MassDevelopment, or in the name of Borrower, and
      the
      same shall operate to divest all right, title and interest of Borrower in any
      property or right so sold and shall be a perpetual bar, both at law and in
      equity, against Borrower and all persons claiming under Borrower unless
      MassDevelopment acts with willful neglect, gross negligence or in bad
      faith.

    


    (g) The
      rights and remedies of MassDevelopment for any default under any of the
      instruments given as security for the indebtedness secured hereby are not
      mutually exclusive, and may be exercised successively or concurrently and from
      time to time for as long as any default exists, and the failure of
      MassDevelopment to exercise any such rights in any one or more instances, or
      the
      acceptance by MassDevelopment of partial payments of amounts in default secured
      hereby, shall not constitute a waiver of such default, but such right shall
      remain continuously in force; and acceleration of maturity, once claimed hereby
      by MassDevelopment, may, at MassDevelopment's option, be rescinded by written
      acknowledgment to that effect without waiving the default or any rights,
      including the right to accelerate once again, with respect thereto; moreover,
      the tender and acceptance of partial payment of amounts in default after
      acceleration, or the commencement of any foreclosure action, shall not in any
      way affect, rescind or terminate such acceleration of maturity or such
      foreclosure action.


    (h) If
      at any
      time any law or court decree prohibits the performance of any material
      obligation undertaken hereby by Borrower which would impair MassDevelopment’s
      interest in the Collateral or its right to payment under the Note, or, at any
      time provides that any amount to be paid hereunder by Borrower, other than
      a
      payment on account of the principal or of interest on the indebtedness secured
      hereby, must be credited against Borrower's obligations under the Note,
      MassDevelopment shall have the right on thirty (30) days' prior written notice
      to Borrower, to require payment in full of the entire indebtedness secured
      hereby unless Borrower reverses such prohibition or otherwise reasonably
      satisfies MassDevelopment within said thirty (30) day period.

    


    9. MassDevelopment's
      Appointment as Attorney-in-Fact.

    


    (a) Borrower
      hereby irrevocably constitutes and appoints MassDevelopment and any officer
      or
      agent thereof, with full power of substitution, as their true and lawful
      attorney-in-fact with full irrevocable power and authority in the place and
      stead of Borrower and in the name of Borrower or in its own name, from time
      to
      time in MassDevelopment's discretion, after the occurrence of and during the
      continuance of an Event of Default, for the purpose of carrying out the terms
      of
      this Agreement, to take any and all appropriate action and to execute any and
      all documents and instruments that may be necessary or desirable to accomplish
      the purposes of this Agreement and, without limiting the generality of the
      foregoing, hereby gives MassDevelopment the power and right, on behalf of
      Borrower, without notice to or assent by Borrower, but only after an Event
      of
      Default has occurred and is continuing as aforesaid, to do the
      following:

    


    
      
         

      

      
        7

        
          

        

      

      
         

      

       

    

    (i) to
      pay or
      discharge taxes or liens levied or placed on or threatened against the
      Collateral, to effect any repairs or any insurance called for by the terms
      of
      this Agreement and to pay all or any part of the premiums therefor and the
      costs
      thereof; and

    


    (ii) (A)
      to
      direct any party liable for any payment to Borrower under the Collateral, to
      make payment of any and all moneys due and to become due thereunder directly
      to
      MassDevelopment or as MassDevelopment shall direct; (B) to receive payment
      of
      and receipt for any and all moneys, claims and other amounts due and to become
      due at any time in respect of or arising out of the Collateral; (C) to sign
      and
      endorse any invoices, freight or express bills, bills of lading, storage or
      warehouse receipts, drafts against debtors, assignments, verifications and
      notices in connection with the Collateral and other documents relating to the
      Collateral; (D) to commence and prosecute any suits, actions or proceedings
      at
      law or in equity in any court of competent jurisdiction to pursue and protect
      MassDevelopment’s interest in the Collateral or any part thereof and to enforce
      any other right in respect of the Collateral; (E) to sign Borrower’s name on any
      proof of claim against account debtors with respect to the Collateral; (F)
      to
      defend any suit, action or proceeding brought against Borrower with respect
      to
      any Collateral; (G) to settle, compromise or adjust any suit, action or
      proceeding described above and, in connection therewith, to give such discharges
      or releases as MassDevelopment may deem appropriate, all with respect solely
      to
      the Collateral; (H) to sign Borrower’s name on and file or record any financing
      statement necessary to perfect MassDevelopment's interest in the Collateral;
      and
      (I) otherwise to repair, assemble, complete, alter, supply, use, license, sell,
      transfer, pledge, make any agreement with respect to or otherwise deal with
      the
      Collateral as fully and completely as though MassDevelopment were the absolute
      owner thereof for all purposes, and to do, at MassDevelopment's option and
      at
      Borrower’s expense, at any time or from time to time, all acts and things that
      MassDevelopment deems reasonably necessary to protect, preserve or realize
      upon
      the Collateral and MassDevelopment's security interests therein, in order to
      effect the intent of this Agreement, all as fully and effectively as the
      Borrower might do.

    


    The
      Borrower hereby ratifies all that said attorneys shall lawfully do or cause
      to
      be done by virtue hereof. This power of attorney is a power coupled with an
      interest and shall be irrevocable.


    (b) The
      powers conferred on MassDevelopment hereunder are solely to protect the
      interests of MassDevelopment in the Collateral and shall not impose any duty
      upon MassDevelopment to exercise any such powers for the benefit of Borrower
      or
      any other person. MassDevelopment shall be accountable only for amounts that
      it
      actually receives as a result of the exercise of such powers, and neither it
      nor
      any of its officers, directors, employees or agents shall be responsible to
      Borrower for any act or failure to act, except for its own willful misconduct
      taken or omitted in bad faith.

    


    (c) Any
      expenses reasonably incurred by MassDevelopment under this Section shall be
      paid
      by Borrower on demand and until so paid shall be added to the principal amount
      of any Obligations secured hereby and shall bear interest (calculated on the
      basis of a 360-day year for the actual days elapsed) at the same rate as
      provided in the Loan Documents after maturity or during an Event of Default.
      

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    


    10. Miscellaneous.

    


    (a) This
      Agreement (i) shall be governed by the internal laws of the Commonwealth of
      Massachusetts; (ii) may be amended and any rights or obligations hereunder
      may
      be waived, only by a writing signed by the party against whom enforcement
      thereof is sought; (iii) may be enforced by an action brought in any court
      of
      competent jurisdiction, including the Massachusetts Superior Court in and for
      Suffolk County, to the personal jurisdiction of which court each party hereby
      submits, and in any such action each party hereby knowingly and irrevocably
      waives the right to trial by jury; and (iv) is intended to provide
      MassDevelopment with all rights and remedies of a secured party under the
      UCC.

    


    (b) Any
      notice, request, instruction or other document to be given hereunder or under
      the Note to either party by the other shall be in writing and delivered
      personally or sent by recognized overnight courier, receipt confirmed or sent
      by
      certified or registered mail, postage prepaid, to the addresses set forth in
      this Agreement. 

    


    


    


    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK]


    
      
         

      

      
        9

        
          

        

      

      
         

      

    


    


    Executed
      under seal this 30th
      day of
      June, 2008.

    


    


    
      	
              BORROWER:
                

            	
              MASSDEVELOPMENT:

            
	 	 	 	 	 	 
	
              BEACON
                POWER CORPORATION

            	
              MASSACHUSETTS
                DEVELOPMENT

            
	 	 	 	
              FINANCE
                AGENCY

            
	 	 	 	 	 	 
	 	 	 	 	 	 
	
              By:

            	
              /s/
                James M. Spiezio

            	 	
              By:

            	
               
                /s/ Laura L. Canter

            	 
	 	
              Name:
                James M. Spiezio

            	 	
              Name:
                Laura L. Canter

            
	 	
              Title:
                Chief Financial Officer

            	 	
              Title:
                Executive Vice President

            
	 	
              Hereunto
                Duly Authorized

            	 	
              Hereunto
                Duly Authorized

            


    

     


    
      
         

      

      
        10

        
          

        

      

      
         

      

    


    


    
      	
              Schedule
                A - Equipment Collateral

              Machinery
                and Equipment located at 65 Middlesex Road, Tyngsboro,
                MA

            
	 	 	 	 	 	 	 
	
              Date

              Acquired

            	
              Beacon

              Asset
                Tag

            	
              Asset
                Description

            	
              Vendor

            	
              Original
                Cost

            	
              Model

            	
              Serial
                #

            
	
              12/31/07

               

            	
              1227

               

            	
              Mfg
                Bridge Cranes

               

            	
              Mass
                Crane and Hoist

               

            	
              34,981.50
                

               

            	
              5
                Ton Cap.

               

            	
              070907-2

               

            
	
              12/31/07

               

            	
              1228

               

            	
              Mfg
                Bridge Cranes

               

            	
              Mass
                Crane and Hoist

               

            	
              34,981.50
                

               

            	
              5
                Ton Cap.

               

            	
              070907-4

               

            
	
              12/31/07

               

            	
              1229

               

            	
              Mfg
                Bridge Cranes

               

            	
              Mass
                Crane and Hoist

               

            	
              34,981.50
                

               

            	
              5
                Ton Cap.

               

            	
              070907-3

               

            
	
              12/31/07

               

            	
              1230

               

            	
              Mfg
                Bridge Cranes

               

            	
              Mass
                Crane and Hoist

               

            	
              34,981.50
                

               

            	
              5
                Ton Cap.

               

            	
              070907-1

               

            
	
              12/31/07

               

            	
              1231

               

            	
              Assembly
                Build Stand Area

               

            	
              Various

               

            	
              45,921.43
                

               

            	
              N/A

               

            	
              N/A

               

            
	
              12/31/07

               

            	
              1232

               

            	
              Balance
                Pits Tyngsboro Pit #1

               

            	
              Mulitple

               

            	
              117,934.42
                

               

            	
              N/A

               

            	
              N/A

               

            
	
              12/31/07

               

            	
              1233

               

            	
              Balance
                Pits Tyngsboro Pit #2

               

            	
              Mulitple

               

            	
              19,336.58
                

               

            	
              N/A

               

            	
              N/A

               

            
	
              12/31/07

               

            	
              1234

               

            	
              Balance
                Pits Tyngsboro Pit #3

               

            	
              Mulitple

               

            	
              19,336.58
                

               

            	
              N/A

               

            	
              N/A

               

            
	
              03/15/08

               

            	
              Untagged

               

            	
              Safety
                Pit Crane

               

            	
              D&W

               

            	
              50,000.00
                

               

            	
              7
                Ton Cap.

               

            	
              122007

               

            
	
              03/31/08

               

            	
              Untagged

               

            	
              Safety
                rails and ladders for all 4 Pits

               

            	
              D&W

               

            	
              27,576.00
                

               

            	
              N/A

               

            	
              N/A

               

            
	
              03/31/07

               

            	
              1052

               

            	
              Lambda
                Power Supply - Model 303L-2.5KV-POS-DC

               

            	
              Airak
                Inc

               

            	
              15,604.29
                

               

            	
              303L-2.5KV-POS-DC

               

            	
              22M8019

               

            
	
              06/30/07

               

            	
              1097

               

            	
              Chiller

               

            	
              Lytron

               

            	
              5,838.00

               

            	
              RC045J03BG2M007

               

            	
              773965-01

               

            
	
              06/30/07

               

            	
              1100

               

            	
              Scissor
                Lift - Skyjack 3219

               

            	
              United
                Rental Equipment

               

            	
              11,970.00
                

               

            	
              SJ111-3219

               

            	
              22000350

               

            
	
              06/30/07

               

            	
              1098

               

            	
              36000#
                Fork Truck

               

            	
              Nitco

               

            	
              163,552.20
                

               

            	
              T360L

               

            	
              SBG34155

               

            
	
              08/31/07

               

            	
              LIC

               

            	
              Upgrade
                to 2006-10 Dynamic sampler card for CAR 2006-10

               

            	
              Bentley
                Nevada

               

            	
              17,608.00
                

               

            	
              168905-02

               

            	
              N/A

               

            
	
              09/30/07

               

            	
              1362

               

            	
              Safety
                pit in Wilmington - Will move to Tyngsboro- Pit #4

               

            	
              designed
                by Beacon

               

            	
              129,206.62
                

               

            	
              N/A

               

            	
              N/A

               

            
	
              12/31/07

               

            	
              1123

               

            	
              Positioner
                Table

               

            	
              Mitrowski

               

            	
              57,510.01
                

               

            	
              WP003864

               

            	
              648

               

            


    

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

    
      	
              01/31/08

               

            	
              1218

               

            	
              Fluke
                434 Power Analyzer

               

            	
              Newark
                InOne

               

            	
              4,995.00

               

            	
              434/003

               

            	
              DM92400624

               

            
	
              01/31/08

               

            	
              1213

               

            	
              Vacuum
                Sweeping

               

            	
              The
                Durkin Company

               

            	
              5,244.75

               

            	
              EAG-TKS510ET

               

            	
              265504

               

            
	
              01/31/08

               

            	
              1214

               

            	
              Squeegie
                Machine for floor

               

            	
              The
                Durkin Company

               

            	
              5,909.49

               

            	
              CT70

               

            	
              N/A

               

            
	
              01/31/08

               

            	
              1215

               

            	
              Color
                Scanner goes with Tag 1212

               

            	
              OCE
                North America Inc.

               

            	
              7,659.75

               

            	
              TC4

               

            	
              8373

               

            
	
              01/31/08

               

            	
              1219

               

            	
              Thermal
                Image Camera

               

            	
              Fotronic
                Corporation

               

            	
              12,594.75
                

               

            	
              FLKT140FT-20

               

            	
              T140FT-0712038

               

            
	
              01/31/08

               

            	
              1217

               

            	
              Loop
                Analyzer

               

            	
              Venable
                Industries

               

            	
              17,655.00
                

               

            	
              3120

               

            	
              7063249

               

            
	
              01/31/08

               

            	
              1212

               

            	
              Color
                Plotter goes with Scanner tag 1215

               

            	
              OCE
                North America Inc.

               

            	
              24,682.00
                

               

            	
              TC5500
                

               

            	
              5400

               

            
	
              03/14/08

               

            	
              1241

               

            	
              Large
                Floor Sweeper

               

            	
              NITCO

               

            	
              26,256.75
                

               

            	
              Condor
                403OC-AXP

               

            	
              2038377

               

            
	
              03/31/08

               

            	
              Untagged

               

            	
              Fire
                Suppresstion System

               

            	
              D&W

               

            	
              4,620.00
                

               

            	
              N/A

               

            	
              N/A

               

            
	
              04/15/08

               

            	
              1247

               

            	
              Balance
                Machine

               

            	
              Hoffman

               

            	
              101,396.09
                

               

            	
              PCH-25.1

               

            	
              84401

               

            
	
              04/25/08

               

            	
              1245

               

            	
              Oven
                

               

            	
              CW
                Wood Machining

               

            	
              22,759.00
                

               

            	
              13913

               

            	
              8389AO605

               

            
	
              04/30/08

               

            	
              1243/1294

               

            	
              Xerox
                Copier

               

            	
              Conway
                Office Products

               

            	
              17,787.00
                

               

            	
              Workstation
                7345/5638

               

            	
              E153709/FKA625358

               

            
	
              12/31/07

               

            	
              1226

               

            	
              Nortel
                BCM 400 Phone System

               

            	
              Boston
                Wireless

               

            	
              28,697.33
                

               

            	
              508AA36

               

            	
              FOB671100000

               

            
	
              03/01/08

               

            	
              Untagged

               

            	
              Phone
                - Phase 2

               

            	
              Boston
                Wireless

               

            	
              7,881.41

               

            	 	 
	
              08/31/07

               

            	
              1140

               

            	
              Dell
                Precision 690 Work station

               

            	
              Dell

               

            	
              5,228.68

               

            	
              PWS690

               

            	
              G4LFDDT

               

            
	
              08/31/07

               

            	
              1141

               

            	
              Dell
                Precision 690 Work station

               

            	
              Dell

               

            	
              5,228.68

               

            	
              PWS690

               

            	
              DC00

               

            
	
              03/01/08

               

            	
              Untagged

               

            	
              Tyngsboro
                Network

               

            	
              Microdots
                Computer Services

               

            	
              10,000.00
                

               

            	 	 
	
              03/01/08

               

            	
              Untagged

               

            	
              Wireless
                Network Equipment

               

            	
              PC
                Connection

               

            	
              12,379.42
                

               

            	 	 
	
              03/01/08

               

            	
              Untagged

               

            	
              Network
                Switch Gear

               

            	
              PC
                Connection

               

            	
              28,920.64
                

               

            	 	 
	
              03/01/08

               

            	
              Untagged

               

            	
              Network
                Security

               

            	
              PC
                Connection

               

            	
              5,643.11

               

            	 	 


    

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

     

    
      	
              03/14/08

               

            	
              1242

               

            	
              Projector
                in Boardroom

               

            	
              HB
                Communications

               

            	
              8,616.50

               

            	
              LVP-XD1000U

               

            	 
	
              1/24/2008

               

            	
              Untagged

               

            	
              IP
                Phone Expansion (3 sets)

               

            	
              Boston
                Wireless

               

            	
              16,046.50
                

               

            	 	 
	 	 	
              Total

               

            	 	
              1,201,521.98
                

               

            	 	 
	 	 	 	 	 	 	 


    

     

    
      
         

      

      
        13