Exhibit 10.3

                                   DEMAND NOTE

$120,026.35                                                 September 17, 2001

         FOR GOOD AND VALUABLE CONSIDERATION, Maureen Lister (the "Borrower"),
hereby unconditionally promises to pay to the order of Beacon Power Corporation
(the "Lender"), in lawful money of the United States of America and in
immediately available funds, the principal amount of One Hundred Twenty Thousand
Twenty-six and 35/100 Dollars ($120,026.35) (the "Loan"), together with accrued
and unpaid interest as provided herein, UPON DEMAND (within 10 days thereafter)
at any time. This Demand Note (as amended, supplemented, extended, restated,
renewed, refunded, replaced, refinanced, increased in amount or otherwise
modified, in each case from time to time and whether in whole or in part, this
"Note") evidences the unpaid principal amount of the Loan together with all
accrued and unpaid interest thereon.

         The Lender agrees to disburse principal amounts of the Loan from time
to time ("Disbursements") at such time as the Borrower receives a margin call
from Salomon Smith Barney ("SSB") in connection with the loan (the "SSB Loan")
that Borrower has outstanding with SSB incurred by the Borrower in connection
with Borrower's holding or exercise of Borrower's options ("Options") to
purchase shares of the Lender's Common Stock (the "Shares"). Borrower shall
provide the Lender with a written copy of the SSB margin call prior to making
the Disbursement. The Borrower hereby irrevocably authorizes the Lender to make
or cause to be made on the schedule attached to this Note, at or following the
time of making any Disbursement of the Loan and of receiving any payment of
principal or interest, an appropriate notation reflecting such transaction and
the then aggregate unpaid balance of principal. Failure of the Lender to make
any such notation shall not, however affect any obligation of the Borrower
hereunder. The unpaid principal amount of this Note, as recorded by the Lender
from time to time on such schedule, shall constitute presumptive evidence of the
aggregate unpaid principal amount of the Loans absent manifest error. The
Borrower will use the proceeds of the Note solely to repay the SSB Loan.

         This Note is issued in accordance with and subject to the following
terms and conditions:

         1.       Interest.

                  (a) The outstanding principal amount of the Loan shall accrue
interest from the date hereof until all payments hereunder have been irrevocably
paid in full at a per annum rate equal at all times to three and 78/100 percent
(3.78%), compounded annually. Interest shall be calculated on the basis of a
year of 360 days and shall accrue on the outstanding principal amount of this
Note and, to the extent permitted by law, on any accrued but unpaid interest
thereon that has been compounded until all payments hereunder have been
irrevocably paid in full. Except as otherwise provided herein, accrued and
unpaid interest hereunder shall be due and payable on demand. Within 10 days
after demand, interest under this Note will, at the option of the Lender, accrue
and be payable at a rate per annum which at all times shall be equal to the sum
of (i) four (4%) percent per annum plus (ii) the rate otherwise payable
hereunder (but in no event in excess of the maximum rate permitted by then
applicable law).

                    (b) It is expressly stipulated and agreed to be the intent
of the Lender and the Borrower to, at all times, conform to and contract in
strict compliance with applicable usury law from time to time in effect. All
agreements between the Lender and the Borrower, including, without limitation,
this Note, are hereby limited by the provisions of this Section 1(b) which shall
override and control all such agreements, whether now existing or hereafter
arising and whether written or oral. In no way, nor in any event or contingency
(including, but not limited to, prepayment, default or demand for payment),
shall the interest taken, reserved, contracted for, charged, chargeable,
received or collected under this Note exceed the maximum nonusurious amount
permitted by applicable law (the "Maximum Amount"). If, from any possible
construction of any agreement, document or instrument (including, without
limitation, this Note), interest would otherwise be payable in excess of, or is
adjudicated to be payable in excess of, the Maximum Amount, any such
construction shall be subject to the provisions of this Section 1(b), and, ipso
facto, such agreement, document or instrument shall be reformed and the interest
payable shall be reduced to the Maximum Amount, without the necessity of
execution of any amendment or new document. If the Lender shall ever receive
anything of value that is characterized as interest under applicable law and
that would apart from this provision be in excess of the Maximum Amount, an
amount equal to the amount that would have been excessive interest shall,
without penalty, be applied first to the reduction of the outstanding principal
amount of this Note, and second to the reduction of any other amounts due and
payable under this Note, and not to the payment of interest, or promptly
refunded to the Borrower or the other payor thereof if and to the extent such
amount that would have been excessive exceeds such unpaid principal amount or
such other amounts. As used in this Section 1(b), the term "applicable law"
shall mean the laws of the Commonwealth of Massachusetts or the federal laws of
the United States, whichever laws allow the lesser interest, applicable to
commercial loans as such laws now exist or may be changed or amended or come
into effect in the future.

         2.       Payments.

                  (a) Except as otherwise provided herein, all payments of
principal and interest with respect to this Note shall be made within 10 days of
demand, in immediately available funds in lawful money of the United States of
America (without any counterclaim or deduction whatsoever and free and clear of,
and without withholding or deduction for or on account of, any present or future
taxes, levies, imposts, duties, charges or fees of any nature), to the Lender at
the following address:

                           Beacon Power Corporation
                           234 Ballardvale Street
                           Wilmington, MA  01887-1032

All payments (including all prepayments) hereunder received by the Lender shall
be applied first to the costs of collection (if any), then to the payment of
accrued and unpaid interest hereunder and only thereafter to the outstanding
principal balance of this Note. Any payment received by the Lender after 3:00
p.m., Boston, Massachusetts time, on any day, will be deemed to have been
received on the next following "Business Day" (as hereinafter defined).
"Business Day" means any day on which banks are not authorized to be closed for
business in Boston, Massachusetts.

         (b)      Payments of principal and interest shall be made as follows:

                  (i) If the Borrower receives a distribution of cash in respect
         of the Shares or Options at any time, the Borrower shall make a payment
         hereunder in the amount of the distribution.

                  (ii) The Borrower agrees that the Lender may, until such time
         as this Note is indefeasibly paid in full, withhold (A) 10% of the
         Borrower's salary (after tax) and (B) all or a portion of the
         Borrower's annual bonus or other amount payable to the Borrower from
         time to time (other than retirement).

         (c) The principal balance of this Note may be paid in whole or in part
at any time at the option of the Borrower without premium or penalty provided
that any prepayment must be accompanied by payment of all accrued and unpaid
interest on the principal amount to be prepaid.

         (d) The Borrower agrees that to the extent the Borrower makes a payment
or payments hereunder which payment or payments, or any part thereof, are
subsequently invalidated, declared to be fraudulent or preferential, set aside
and/or required to be repaid to the Borrower, its successors or assigns under
any bankruptcy law, state or federal law, common law or equitable cause, then,
to the extent of such payment or repayment, the obligations, or part thereof,
under this Note that have been paid, reduced or satisfied by such amount shall
be reinstated and continued in full force and effect as of the time immediately
preceding such initial payment, reduction or satisfaction.

         3. Remedies After Demand. Upon demand, the entire unpaid principal
balance hereof and all other sums paid by Lender to or on behalf of Borrower
pursuant to the terms of this Note or the Pledge Agreement (as hereinafter
defined), together with unpaid interest thereon, shall become due and payable 10
days following demand and Lender may forthwith exercise the remedies available
to Lender at law and in equity as well as those remedies set forth in this Note
and the Pledge Agreement and one or more executions may forthwith issue on any
judgment or judgments obtained by virtue thereof; and no failure on the part of
Lender to exercise any of Lender's rights hereunder or under the Pledge
Agreement shall be deemed a waiver of any such rights.

                  In addition, if the Borrower shall be adjudicated insolvent,
or shall fail to pay, or shall admit in writing Borrower's inability to pay
Borrower's debts as they mature, or shall make a general assignment for the
benefit of creditors; or the Borrower shall apply for or consent to the
appointment of any receiver, custodian, trustee or similar officer for it or for
all or any substantial part of its property, or such receiver, custodian,
trustee or similar officer shall be appointed without the application or consent
of the Borrower; or the Borrower shall institute (by petition, application,
answer, consent or otherwise), or take any action to authorize the institution
of, any bankruptcy, insolvency, reorganization, dissolution, liquidation or
similar proceeding relating to the Borrower under the laws of any jurisdiction;
or any such proceeding shall be instituted (by petition, application or
otherwise) against the Borrower and such proceeding shall not be dismissed
within sixty (60) days after being instituted, then the unpaid principal amount
of, and accrued and unpaid interest on, this Note shall automatically become
immediately due and payable, together with all other amounts payable under this
Note, without presentment, demand, protest, notice of intent to accelerate,
notice of acceleration or further notice of any kind, all of which are hereby
expressly waived by the Borrower.

         4. Security  Documents.  This Note is secured, inter alia, by a Pledge
Agreement dated the date hereof and is entitled to the benefits thereof.

         5. Covenants of Borrower While Note Is Outstanding. (a) At any time
that there is any unpaid principal or interest outstanding or other amount due
to the Lender under this Note, the Borrower shall not (i) engage in any future
transactions in which the Borrower borrows funds to purchase the Lender's stock
or any other leveraged transaction using Lender's stock as collateral, (iii)
will continue to comply with the Lender's insider trading policy and (ii) will
not sell any shares of Lender's stock without the approval of a special
committee of the Board of Directors of the Lender for the purpose of determining
compliance with such policy; provided, however, that nothing contained herein
shall prevent the Borrower from establishing a trading program in compliance
with Rule 10b5-1 of the Securities Exchange Act of 1934. If the Borrower does
not get a reply from such special committee within 3 business days of actual
contact with a member of such special committee, the Borrower may sell such
shares. The proceeds of any sale of shares of Lender's stock by Borrower shall
be applied to the unpaid principal and interest outstanding under this Note.

         (b) If the Lender makes demand for payment of this Note in full, the
Borrower agrees that he/she will not sell, pledge or otherwise directly or
indirectly transfer the beneficial or economic interest in the Pledged
Collateral (as defined in the Pledge Agreement) or make any other cash payments
(other than normal payments made by Borrower in accordance with past practice)
during the period between demand and payment of the entire amount due and
payable under this Note and the Pledge Agreement, unless the proceeds of such
sale, pledge or other transfer are used to repay the amount due and owing under
this Note and the Pledge Agreement.

         6. Business Days. If any payment is due, or any time period for giving
notice or taking action expires, on a day which is not a Business Day, the
payment shall be due and payable on, and the time period shall automatically be
extended to, the immediately succeeding Business Day, and interest shall
continue to accrue at the required rate hereunder until any such payment is
made.

         7. Governing Law; Consent to Jurisdiction. THIS NOTE SHALL BE GOVERNED
BY AND CONSTRUED AS A SEALED DOCUMENT IN ACCORDANCE WITH THE LAWS OF THE
COMMONWEALTH OF MASSACHUSETTS WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF
LAW PROVISION OR RULE THAT WOULD CAUSE THE APPLICATION OF THE DOMESTIC
SUBSTANTIVE LAWS OF ANY OTHER STATE, AND SHALL BIND AND INURE TO THE BENEFIT OF
THE PARTIES HERETO AND THEIR RESPECTIVE SUCCESSORS AND ASSIGNS.

         THE BORROWER HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION OF THE
COURTS OF MASSACHUSETTS AND THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF
MASSACHUSETTS AS WELL AS TO THE JURISDICTION OF ALL COURTS TO WHICH AN APPEAL
MAY BE TAKEN FROM SUCH COURTS, FOR THE PURPOSE OF ANY SUIT, ACTION OR OTHER
PROCEEDING ARISING OUT OF, OR IN CONNECTION WITH THIS NOTE.

         8. Notices. All notices provided for herein shall be in writing and
shall be delivered (a) if to the Borrower, to it at [Borrower address], and (b)
if to the Lender, to it at its address set forth in Section 2(a) hereof. Notice
shall be deemed given on the third Business Day following the day sent, whether
or not such notice was actually received on such day.

         9. Miscellaneous. No failure or delay on the part of the Lender in
exercising any power or right hereunder, and no course of dealing between the
Borrower and the Lender of this Note, shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. No modification or waiver of any provision of this Note nor
consent to any departure by the Borrower therefrom shall in any event be
effective unless the same shall be in writing and executed by the Lender, and
then such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given. No notice to or demand on the Borrower
in any case shall entitle the Borrower to any other or further notice or demand
in similar or other circumstances. No amendment to, or modification of, any
provision of this Note shall in any event be effective unless the same shall be
in writing and executed and delivered by the Borrower and the Lender. No waiver
of, or consent with respect to, any provision of this Note shall in any event be
effective unless the same shall be in writing and executed and delivered by the
party from whom such waiver or consent is sought. Any waiver of any provision of
this Note, and any consent to any departure by the Borrower from the terms of
any provision of this Note, shall be effective only in the specific instance and
for the specific purpose for which given. This Note shall inure to the benefit
of the Lender of this Note and the Borrower and their respective successors and
assigns and be binding upon the Lender of this Note and the Borrower and their
respective successors and assigns. In the event the Borrower fails to pay any
amounts due hereunder when due, the Borrower shall be liable for and shall pay
to the Lender hereof, in addition to such amounts due, all costs of collection,
including reasonable attorneys fees. This Note and the agreements, documents and
instruments executed in connection therewith, constitute the entire
understanding between the Borrower and the Lender with respect to the subject
matter hereof and supersede any prior agreements, written or oral, with respect
thereto.

         10. Descriptive Headings. Section headings appearing in this Note have
been inserted for convenience of reference only and shall be given no
substantive meaning or significance whatsoever in construing the terms and
provisions of this Note.

         11. Separability. Should any provision of this Note be judicially
declared to be invalid, unenforceable or void, such decision will not have the
effect of invalidating or voiding the remainder of this Note, and the parties
hereto agree that the provision of this Note so held to be invalid,
unenforceable or void will be deemed to have been stricken herefrom and the
remainder will have the same force and effectiveness as if such provision had
never been included herein, provided, however the parties hereto shall use their
best efforts to replace the provision so deemed to have been stricken herefrom
with a provision that the parties reasonably believe to be valid and enforceable
and which has a substantially identical economic and legal effect as the
provision so deemed to have been stricken herefrom.

12.               Waivers.

         (a) The Borrower hereby (a) waives notice of and consents to any and
all advances, settlements, compromises, favors and indulgences (including,
without limitation, any extension or postponement of the time for payment), any
and all receipts, substitutions, additions, exchanges and releases of
collateral, and any and all additions, substitutions and releases of any person
primarily or secondarily liable, (b) waives presentment, demand, notice, protest
and all other demands and notices generally in connection with the delivery,
acceptance, performance, default or enforcement of or under this Note, and (c)
agrees to pay all reasonable costs and expenses, including, without limitation,
reasonable attorneys' fees, incurred or paid by the Lender in enforcing this
Note and any collateral or security therefor, all whether or not litigation is
commenced.

         (b) THE BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES
THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED ON THIS NOTE OR
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE, THE PLEDGE AGREEMENT OR
ANY RELATED DOCUMENTS OR OUT OF ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY PERSON.


         IN WITNESS WHEREOF, the Borrower has duly executed and delivered this
Note as of the date first written above.


                                           -------------------------------
                                           Maureen Lister

<PAGE>


        PAYMENT/DISBURSEMENT SCHEDULE ATTACHED TO MAUREEN LISTER'S DEMAND
       NOTE DATED SEPTEMBER 17, 2001, ISSUED TO BEACON POWER CORPORATION

------- ---------- -------------   -----------------------------   -----------
          Person    Disbursements                                  Principal
          making     to SSB by      Payments by Executive to BPC   Still Owed
Date      entry         BPC         Prin.     Int.    Total Paid   by Executive
------- ---------- -------------    -------- -------  ----------   ------------