Document:

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;

     

    
      
         

      

      
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    (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;

     

    
      
         

      

      
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    (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.

    

    
      
         

      

      
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    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:

     

    
      
         

      

      
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    (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.

     

    
      
         

      

      
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    (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
                

               

            	 	 
	 	 	 	 	 	 	 

    

     

    
      
         

      

      
        13Exhibit
        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

              

      

       

      
        
           

        

        
          -7-

          
            

          

        

        
           

        

      

      

      EXHIBIT
        A

      

      Legal
        Description of Premises

       

      
        
           

        

        
          -8-

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