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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549



FORM 10-K/AAmendment No. 1

ý

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2009Oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from            to


Commission file number 000-31973

Beacon Power Corporation(Exact name of registrant as specified in its charter)

Delaware(State or other jurisdiction of
incorporation or organization)

04-3372365(I.R.S. Employer
Identification No.)65 Middlesex Road
Tyngsboro, MA(address of principal executive offices)

01879(Zip code)


(978) 694-9121(Registrant's telephone number, including area code)



Securities
registered pursuant to Section 12(b) of the Act:

Title of each class:

Name of each exchange on which registered:Common Stock, par value $.01 per share

The NASDAQ Stock Market LLC
(NASDAQ Capital Market)Preferred Share Purchase Rights

The NASDAQ Stock Market LLC
(NASDAQ Capital Market)


Securities
registered pursuant to Section 12(g) of the Act:None

Indicate
by check mark if the registrant is a well known seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes o    No ý

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Act. Yes o    No ý

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes ý    No o

Indicate by check mark whether the registrant has submitted electronically and posted on it corporate web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or such shorter period that the
registrant was required to submit and post such files). Yes o    No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not
be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K ý

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer or a "smaller reporting
company" per rule 12b-2 of the Exchange Act.

Large accelerated filer o

Accelerated filer ý

Non-accelerated filer o (Do not check if a smaller reporting company)

Smaller Reporting Company o


Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Act). Yes o    No ý

As of June 30, 2009 the market value of the voting and non-voting common stock of the registrant held by non-affiliates of the
registrant was $89,681,703. In determining the market value of non-affiliated voting stock, shares of the registrant's common stock beneficially owned by each executive officer, director
and any known person to be the beneficial owner of more than 20% of the registrant's voting stock have been excluded. This determination of affiliate status is not necessarily a conclusive
determination for other purposes.

The
number of shares of the Registrant's common stock, par value $.01 per share, outstanding as of April 26, 2010 was 182,216,412.

DOCUMENTS INCORPORATED BY REFERENCE

None.



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EXPLANATORY NOTE

This Amendment No. 1 on Form 10-K/A amends our Annual Report on Form 10-K for the year
ended December 31, 2009, as filed with Securities and Exchange Commission on March 15, 2010, to include the information required by Part III of Form 10-K. The
information required by Items 10 - 14 of Part III is no longer being incorporated by reference to Proxy Statement related to the Company's 2010 Annual Meeting
of Shareholders. As required by Rule 12b-15 under the Securities Exchange Act of 1934, new certifications of our principal executive officer and principal financial officer are
being filed as exhibits to this Amendment No. 1 on Form 10-K/A. Except as described above, no other changes have been made to the Annual Report as originally filed. This
amendment is not intended to update any other information presented in the Annual Report as originally filed.

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TABLE OF CONTENTS



PART III


-1-Item 10.

Directors, Executive Officers and Corporate Governance


-1-Item 11.

Executive Compensation


-8-Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters


-45-Item 13.

Certain Relationships and Related Transactions and Director Independence


-48-Item 14.

Principal Accounting Fees and Services


-50-PART IV


-52-Item 15.

Exhibits, Financial Statement Schedules


-52-SIGNATURES


-57-


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PART III

Item 10.    Directors, Executive Officers and Corporate Governance

Members of the Board of Directors

Each of the following individuals presently serves on our Board of Directors. Beginning with our proxy statement for the 2010 Annual
Meeting this year, the Securities and Exchange Commission's rules require us to discuss briefly the specific experience, qualifications, attributes, or skills that led the Board to conclude that each
director or nominee for director should serve on our Board of Directors. We have provided this discussion in a separate paragraph immediately below the biographical information provided by for each
director.

As
you read the new disclosure, please keep the following points in mind: First, any specific qualification, attribute or skill that is attributed to one director should not necessarily
imply that other
directors do not possess that qualification, attribute or skill. Second, this disclosure does not impose on the director any duties, obligations or liability that are greater than the duties,
obligations, and liability imposed on each other member of the Board.

Because
the discussion of the specific experience, qualifications, attributes or skills of a director is to be made each year in light of the Company's business and structure at that
time, the content of this discussion may change for one or more directors in future years.

F. William Capp, age 61 (director since 2001)

Mr. Capp has served as our President, Chief Executive Officer and Board member since December 1, 2001 when he joined the
Company. Mr. Capp received a Bachelor of Science in Aeronautical Engineering from Purdue University, a Master of Business Administration and a Masters Degree in Mechanical Engineering from the
University of Michigan.

The
Company believes that Mr. Capp's business expertise as Chief Executive Officer, including his extensive knowledge of the day-to-day operations of the
Company and the issues that it faces, together with his engineering background and his manufacturing and operations experience, give him the qualifications and skills to serve as a Director.

Stephen P. Adik, age 67 (director since 2004)

Mr. Adik served as Vice Chairman at NiSource Inc. (NYSE: NI), a Fortune 500 electric, natural gas and pipeline company,
from December 2000 until his retirement in December 2003. He served on the Board of NiSource from December 2000 to May 2005. He is a member of the Board of Directors and Chairman of the Audit
Committee of NorthWestern Corporation, an electric and natural gas company, and a member of the Board of Directors of American Water Works Company, a national provider of water and waste water
treatment. He is also a member of the Board of Directors of the Chicago South Shore and South Bend Railroad, a regional railroad company and the Dearborn Mid-West Conveyor Company, a
supplier of material handling equipment to the automotive and bulk materials industry. Mr. Adik received a Bachelor of Science degree in Mechanical Engineering from the Stevens Institute of
Technology, and an MBA degree in Finance from Northwestern University.

The
Company believes that Mr. Adik's financial expertise, utilities and engineering background, leadership abilities and service as a director for other public companies give him
the qualifications and skills to serve as a Director.

Daniel E. Kletter, age 71 (director since October 2006)

Mr. Kletter is an independent consultant with more than 29 years of operating management, acquisition and director
experience. From 1999 to 2001 he was with ING-BARINGS/ABN-AMRO,

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where
he was Managing Director in the Industrial Manufacturing and Technology Group. Mr. Kletter serves on the Board of Directors of Power Curbers, Inc. Mr. Kletter received a
Bachelor of Science in Mechanical Engineering from the University of Notre Dame, and a Masters Degree in Business Administration from Northwestern University.

The
Company believes that Mr. Kletter's manufacturing and operations experience, engineering and international business background, and past service as a director on other company
and association boards give him the qualifications and skills to serve as a Director.

Virgil G. Rose, age 64 (director since January 2007)
    Chairman of the Board of Directors since August 2009

Mr. Rose has been an independent consultant providing advisory services that include working with the United States Department
of Energy, California Energy Commission, California ISO, Bonneville Power Authority, National Labs, and numerous west coast utilities since 2004. From 2001 to 2004, Mr. Rose was Senior Vice
President and Director of Energy Delivery and Management at Nexant, an international energy industry consulting company. Mr. Rose has 38 years of experience in the electric utility
industry in various consulting, engineering, system operation, and management capacities, including 27 years with Pacific Gas & Electric (PG&E), where he served as Senior Vice President
of Electric Supply. Mr. Rose received a Bachelor of Science in Electrical Engineering from Fresno State University, a Master of Science in Electrical Engineering from Santa Clara University,
and has completed the Advanced Management Program at Harvard University.

The
Company believes that Mr. Rose's experience in utilities, familiarity with the regulatory environment of the electric industry, engineering background, and leadership
abilities give him the qualifications and skills to serve as a Director and as Chairman of the Board of Directors.

Jack P. Smith, age 61 (director since 2001)

Mr. Smith is Chairman, Director and co-owner of Silversmith Inc., a producer of natural gas well metering and
automated data reporting systems. Mr. Smith co-founded Silversmith Inc. in 2003. Prior to his current engagement with Silversmith, Mr. Smith was President and CEO of
Holland Neway International, a leading producer of commercial vehicle suspensions and brake systems. Mr. Smith also serves on the Board of Directors of Bissell Corporation in Grand Rapids,
Michigan, SRAM Corporation in Chicago and Weasler Engineering in Wisconsin. He is a Trustee of Grand Valley State University Foundation. Mr. Smith received a Bachelor of Science and Masters
Degree in Mechanical Engineering and a Masters Degree in Business Administration from the University of Michigan.

The
Company believes that Mr. Smith's entrepreneurial background, manufacturing and engineering experience and leadership abilities give him the qualifications and skills to serve
as a Director.

Edward A. Weihman, age 61 (director since 2007)

Mr. Weihman is currently President of Kirkwood, Weihman & Co., LLC, a consulting firm serving the oil and
gas industry. He was a Managing Director at Dresdner Kleinwort and a predecessor firm, Wasserstein Perella, from 1995 to 2006, where he was engaged in the mergers and acquisitions business for the
firm's natural Resources and Utility clients. Mr. Weihman received a Bachelor of Arts degree from Williams College and a Masters Degree in Business Administration from Columbia University.

The
Company believes that Mr. Weihman's financial expertise, particularly in the energy industry, and M&A background, gives him the qualifications and skills to serve as a
Director.

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Executive Officers

The names, ages, current positions and principal occupations during the last five years of our current executive officers are described
below:

Name

Age

PositionF. William Capp


61

President and Chief Executive OfficerMatthew L. Lazarewicz


59

Vice President of Engineering and Chief Technical OfficerJames M. Spiezio


62

Vice President of Finance, Chief Financial Officer, Treasurer and SecretaryJudith Judson


37

Vice President, Asset Management and Market Development


F. William Capp

Mr. Capp's background and business experience is noted above under "Members of the Board of Directors."

Matthew L. Lazarewicz

Mr. Lazarewicz has served as our Vice President of Engineering since February 1999, and was named our Chief Technical Officer in
September of 2001. Mr. Lazarewicz is a Registered Professional Engineer in the Commonwealth of Massachusetts and received both Bachelor's and Master's Degrees in Mechanical Engineering from the
Massachusetts Institute of Technology. Mr. Lazarewicz also completed his Master's Degree in Management at the Massachusetts Institute of Technology Sloan School of Management.

James M. Spiezio

Mr. Spiezio joined our Company in May 2000. He has served as Vice President of Finance, Chief Financial Officer and Treasurer
since July 2000, Secretary since March 2001, and was our Corporate Controller from May 2000 to July 2000. He has over twenty-seven years of diversified manufacturing and financial management
experience. Mr. Spiezio is a graduate of the Indiana University School of Business.

Judith Judson

Ms. Judson joined our Company in January 2008 as Director of Regulatory and Market Affairs. She was appointed as Vice President,
Asset Management and Market Development in April 2010. Prior to joining Beacon Power, Ms. Judson worked as a consultant to businesses in the energy sector from April 2007 through
January 2008, served as a Commissioner and Chairman of the Massachusetts Department of Telecommunications and Energy from 2005 through April 2007, and ran as a candidate for State
Representative in the 13th Essex District of Massachusetts in 2004. Ms. Judson received her Bachelor of Science in Mechanical Engineering from Kettering University and a
Master of Business Administration from Harvard Business School.

Board Leadership Structure

In August 2009, the Board of Directors formally appointed a Chairman of the Board, to recognize the differences between the roles of
Chief Executive Officer and of Chairman of the Board. The CEO articulates management's view of the Company's strategic direction and provides day-to-day leadership, while the
Chairman of the Board provides guidance to the CEO, sets the agenda for Board meetings and presides over meetings of the full Board. Our Board is comprised of six directors, five of whom are

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independent
directors. As discussed below, we have four standing Board committees, all of which are comprised entirely of, and are chaired by, independent directors. We believe that this leadership
structure has been effective for the Company by providing a balance of power with strong independent leadership.

Board's Role in Risk Oversight

The Board's role in the Company's risk oversight process includes receiving regular reports from members of senior management on areas
of material risk to the Company, including operational, financial, legal and regulatory, and strategic and reputational risks. The full Board (or the appropriate committee in the case of risks that
are under the purview of a particular committee) receives these reports from the appropriate "risk owner" within the organization to enable it to understand our risk identification, risk management
and risk mitigation strategies. When a committee receives a report, the Chairman of the relevant committee reports on the discussion to the full Board during the next Board meeting. This enables the
Board and its committees to coordinate the risk oversight role, particularly with respect to risk interrelationships.

Board of Directors' Meetings and Committees

Meetings.During the fiscal year ended December 31, 2009, our Board of Directors held 16 meetings. Each director attended more
than 75% of the
aggregate of (i) the total number of meetings of our Board of Directors held during the period for which he has been a director and (ii) the total number of meetings held by all
committees of our Board of Directors on which he served during the period.

Committees.Our Board of Directors has established four standing committees: the Audit Committee, the Compensation Committee, Finance
Committee and
the Nominating and Governance Committee. No member of any of these committees is an employee of Beacon. Effective April 1, 2010, the membership of each committee is listed below.

Audit

Compensation

Nominating and
Governance

Finance CommitteeStephen P. Adik,Chair

Jack P. Smith,Chair

Virgil G. Rose,Chair

Daniel E. Kletter,ChairEdward A. Weihman

Stephen P. Adik

Daniel E. Kletter

Stephen P. AdikDaniel E. Kletter

Virgil G. Rose

Jack P. Smith

Edward A. Weihman


Audit Committee.Under the rules of the Nasdaq Stock Market, our Audit Committee must have at least three members, all of whom must be
independent.
All members of our Audit Committee qualify as independent as defined in the Nasdaq Stock Market and SEC rules. Mr. Adik and Mr. Kletter are each qualified as an Audit Committee Financial
Expert, as defined by the SEC. The Audit Committee is appointed by and reports to our Board of Directors. Its responsibilities include, but are not limited to, the appointment, compensation and
dismissal of our independent auditors, review of the scope and results of our independent auditors' audit activities, evaluation of the independence of our independent auditors and review of our
accounting controls and policies, financial reporting practices and internal audit control procedures and related reports. During the last fiscal year, the Audit Committee held 8 meetings. The Audit
Committee's charter can be found on our website atwww.beaconpower.com.

Compensation Committee.Our Compensation Committee has the authority to set the compensation of our Chief Executive Officer and all
other executive
officers and has the responsibility to review the design, administration and effectiveness of all programs and policies concerning executive compensation and establishing and reviewing general
policies relating to compensation and benefits of employees. The Compensation Committee administers our Third Amended and Restated 1998 Stock

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Incentive
Plan and Employee Stock Purchase Plan. Messrs. Adik, Smith and Rose are non-employee directors who have no interlocking relationships as defined by the SEC,
and are all independent pursuant to the rules of the Nasdaq Stock Exchange applicable to members of this committee. The Compensation Committee held 12 meetings during the last fiscal year. The
Compensation Committee's charter can be found on our website atwww.beaconpower.com.

Nominating and Governance Committee.The Nominating and Governance Committee recommends to the Board corporate governance guidelines
applicable to
the Board and to the Company and oversees the effectiveness of our corporate governance in accordance with those guidelines. The committee also identifies individuals qualified to become Board
members, reviews the qualifications of nominee directors and recommends to the Board the director nominees for annual meetings of stockholders and candidates to fill vacancies on the Board.
Additionally, the committee recommends to the Board the directors to be appointed to Board committees. While the committee does not have a formal diversity policy for Board membership, the Board seeks
directors who represent a mix of backgrounds, perspective and experiences that will enhance the quality of the Board's deliberations and decisions.

A
stockholder may nominate a person for election as a director by complying with Section 2.2 of our By-Laws, which provides that advance notice of a nomination must be
delivered to us and must contain the name and certain information concerning the nominee and the stockholders who support the nominee's election. A copy of this By-Law provision may be
obtained by writing to Beacon Power Corporation, Attn: James M. Spiezio, Secretary, 65 Middlesex Road, Tyngsboro, Massachusetts 01879. Director nominees recommended by our stockholders will be
considered on the same terms as other nominees. All members of our Nominating and Governance Committee qualify as independent pursuant to the rules of the Nasdaq Stock Market. The Nominating and
Governance Committee held 5 meetings during the last fiscal year. The charter for our Nominating and Governance Committee can be found on our web site at www.beaconpower.com.

Finance Committee.The Finance Committee is appointed by the Board of Directors to assist the Board in monitoring material financial
matters
involving: (1) debt undertaken by the Company; (2) equity raised by the Company; (3) share splits or retirement of shares by the Company; (4) cash dividends or share
dividends paid by the Company; (5) acquisitions and divestures; (6) significant changes in Company ownership; (7) project finance for the Company and/or for affiliates that it may
sponsor; and (8) such other matters as are similar or related to these matters, or which the Board considers to be necessary or advisable. While the Committee has the responsibilities and
powers set forth in its Charter, it is not the duty of the Committee to plan or conduct financial transactions nor does the Committee have any oversight responsibility with respect to the Company's
financial reporting. The Finance Committee held 7 meetings during the last fiscal year. The Finance Committee's Charter can be found on our website at www.beaconpower.com.

Limitation of Liability and Indemnification

Our Certificate of Incorporation limits the liability of our directors, officers and various other parties whom we have requested to
serve as directors, officers, trustees or in similar capacities with other entities to us or our stockholders for any liability arising from an action to which such persons are a party by reason of
the fact that they were serving Beacon or at our request to the fullest extent permitted by the Delaware General Corporation Law.

We
have entered into indemnification agreements with our directors and executive officers. Subject to certain limited exceptions, under these agreements, we will be obligated, to the
fullest extent not prohibited by the Delaware General Corporation Law, to indemnify such directors and officers against all expenses, judgments, fines and penalties incurred in connection with the
defense or settlement of any actions brought against them by reason of the fact that they were Beacon directors or executive

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officers.
We also maintain liability insurance for our directors and executive officers in order to limit our exposure to liability for indemnification of our directors and executive officers.

Code of Conduct

We have adopted and maintain a code of conduct that applies to all of our employees, including our chief executive officer, our chief
financial officer and other senior financial officers. A copy of ourCorporate Code Of Conductcan be found on the Internet at our website www.beaconpower.com,or by request, free of charge by writing to our Investor Relations Department at our principal executive office,
65 Middlesex Road, Tyngsboro, MA 01879. We intend to disclose on our website any amendments to the Code, or any waiver from a provision of the Code, affecting our chief executive officer, our
chief financial officer or any of our other senior financial officers.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act") requires our directors and officers, and persons who
beneficially own more than ten percent of a
registered class of our equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of our Common Stock. Directors, officers and greater than ten percent
stockholders are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file.

To
our knowledge, during our fiscal year ended December 31, 2009, all Section 16(a) filing requirements applicable to our directors, officers and ten percent stockholders
were satisfied.

Communication with Our Board of Directors

Our Board of Directors provides a process for our stockholders and other interested parties to send communications directly to our
non-employee directors. Any person who desires to contact the non-employee directors may do so by writing to: Board of Directors, c/o Beacon Power Corporation, 65 Middlesex
Road, Tyngsboro, Massachusetts 01879.

Communications
received will be forwarded directly to the Chair of the Nominating and Governance Committee. The Chair of the Nominating and Governance Committee will, in his discretion,
forward such communications to other directors, members of our management or such other persons as he deems appropriate. The Chair of the Nominating and Governance Committee, or, if appropriate, our
management, will respond in a timely manner to any substantive communications from a stockholder or interested party.

Our
Audit Committee also provides a process to send communications directly to the committee about our accounting, internal accounting controls or auditing matters. Any person who
desires to contact the Audit Committee regarding such matters may do so by writing to Audit Committee of the Board of Directors, c/o Beacon Power Corporation, 65 Middlesex Road, Tyngsboro,
Massachusetts 01879.

Communications
received by mail will be forwarded directly to the Chair of the Audit Committee. The Chair of the Audit Committee, in his discretion, will forward such communications to
other directors, members of our management or such other persons as he deems appropriate. The Chair of the Audit Committee, or, if appropriate, our management, will respond in a timely manner to any
substantive communications from a stockholder or an interested party.

AUDIT COMMITTEE REPORT

The Audit Committee of our Board of Directors is composed of three members and acts under a written charter. All members of the Audit
Committee are independent directors, as defined by its charter and the rules of the Securities and Exchange Commission and Nasdaq Stock Market.

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In
connection with the preparation and filing of our Annual Report on Form 10-K for the year ended December 31, 2009, the Audit Committee (i) reviewed
and discussed the audited financial statements with management, (ii) discussed with Miller Wachman LLP, our independent auditors for the fiscal year ending December 31, 2009, the
matters required to be discussed by Statement of Auditing Standards 61, as amended, as adopted by the Public Company Accounting Oversight Board and (iii) received the written disclosures and
the letter from Miller Wachman LLP required by applicable requirements of the Public Company Accounting Oversight board regarding Miller Wachman LLP's communications with the audit
committee concerning independence, and has discussed the independence of Miller Wachman LLP with such firm. Based on the review and discussions referred to above, among other things, the Audit
Committee recommended to our Board of Directors that the audited financial statements be included in our Annual Report on Form 10-K for the year ended December 31, 2009.

Submitted by the Audit Committee:Stephen P. Adik,ChairDaniel E. Kletter
Edward A. Weihman


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Item 11.    Executive Compensation

Compensation Discussion and Analysis

Executive Summary

Our executive compensation and benefit program has been designed to encourage our named executive officers (our chief executive
officer, or CEO; our chief financial officer, or CFO; and our chief technology officer, or CTO) to pursue our strategic objectives while effectively managing the risks and challenges inherent in a
development stage company transitioning into a commercial company. We created a compensation package that combines short and long-term components through a mix of base salary, bonus and
equity compensation, in the proportions we believe are most appropriate to incentivize and reward our executive officers for achieving our strategic objectives. Moreover, the program is designed to be
competitive with comparable employers and to align management's incentives with the long-term interests
of our stockholders. Our compensation-setting process consists of establishing targeted overall compensation for each executive officer and then allocating that compensation among fixed and variable
elements. At the executive level, we design the incentive compensation to reward company-wide performance, shareholder value creation, and the achievement of specific financial,
operational and strategic objectives.

The
Compensation Committee, after considering the Company's cash position as of the end of 2008, cash requirements for 2009, and the Company's business plan for 2009, decided to hold the
executive officers' salaries at the 2008 level for 2009. Given market conditions and our stock price as of the beginning of 2009, the Compensation Committee also decided to recalibrate the 2009
executive equity award structure. During recent years, the Compensation Committee had targeted the long-term equity incentive grants to the executive officers at 100% of base salary for
our CEO and at 55% of base salary for our CFO and CTO, with the grant size calculated using the Black-Scholes fair value. When evaluating the incentive structure for 2009, the Compensation Committee
determined that the use of the Black-Scholes formula when the market price for our stock was lower than in prior years would have resulted in granting a significantly larger number of options and
Restricted Stock Units (RSUs) than in prior years. The Compensation Committee believed that this was not appropriate and after receiving guidance from its compensation consultants, an alternative
methodology was used to set long-term incentives. The revised method used to calculate the 2009 grants was to simply apply a factor of 120% as a function of the number of options and RSUs
granted for 2008. As a result of this change in methodology, the percentage of total compensation that was variable and based on the performance of the Company dropped from 58% to 47% for our CEO, and
from 46% to 36% for our CFO and CTO. However, our Compensation Committee believes that our compensation program remains a performance-oriented structure, with an appropriate portion of compensation at
risk for our executive officers.

In
2009 our executive officers' performance relative to strategic objectives resulted in a 90% payout of the targeted bonus amount. The objectives for 2009 had five primary components:
(1) funding, (2) reliable operation of our flywheel systems and cost reductions on both flywheel systems and balance of plant, (3) breaking ground at our Stephentown site,
(4) improvement of our economics through favorable tariff improvements, and (5) work on alternative applications. In addition, there were stretch objectives for a "take or pay"
agreement, agreements for sales outside the United States or funding from the stimulus legislation. In summary, the key targeted objectives and results were as follows:



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On
the stretch objectives, the target for funding from stimulus legislation was exceeded. The overall evaluation of performance to targets for 2009 was that as a percentage of targeted
objectives, an appropriate rating would be approximately 120%. However, the Compensation Committee, upon reviewing the results of executive performance for 2009 determined that an award of 90% was
appropriate. The Compensation Committee took this discretionary position that while management had performed well on its targets, the reduction in stock price during 2009 warranted a lower than target
payout. The Compensation Committee determined that 90% was a fair payout.

Role of Our Compensation Committee

Our Compensation Committee approves, administers and interprets our executive compensation policies. Our Compensation Committee is
appointed by our Board of Directors, and consists entirely of directors who are "outside directors" for purposes of Section 162(m) of the Internal Revenue Code, "non-employee
directors" for purposes of Rule 16b-3 under the Exchange Act and "independent directors" for purposes of the rules of the Nasdaq Stock Market. Our Compensation Committee has three
members: Mr. Stephen P. Adik, Mr. Virgil G. Rose and Mr. Jack P. Smith, who chairs the committee.

Our
Compensation Committee reviews and makes recommendations to our Board of Directors to ensure that our compensation program is consistent with our compensation philosophy and
corporate governance guidelines and, subject to the approval of our Board (without the participation of the CEO), establishes the compensation paid or granted to our executive officers, which include
our CEO, CFO and CTO. The Compensation Committee also establishes an overall pool of compensation for Senior Management and other employees.

Messrs. Adik,
Smith and Rose are non-employee directors who have no interlocking relationships as defined by the SEC, and are all independent pursuant to the rules of
the Nasdaq Stock Market applicable to members of this committee.

Role of Compensation Consultant

The Compensation Committee generally engages an independent compensation consultant to provide a market perspective on executive
compensation matters. Towers Watson (formerly known as Watson Wyatt) has served as the Compensation Committee's consultant since 2005. During that time, the Compensation Committee has utilized Towers
Watson for various activities, including but not limited to peer group development, competitive market analysis, incentive plan design and assistance in pay determination. During 2009, we paid Towers
Watson approximately $41,000 for all services provided. None of these services related to matters outside of our executive compensation program. The Compensation Committee expects to continue to
engage an outside advisor in the development of programs and pay setting activities.

Role of our Executive Officers

The role of our CEO and CFO is to allocate the compensation pool approved by the Compensation Committee among all our other employees
and to provide recommendations to the Compensation Committee in regard to any equity compensation to be granted to other employees.

During
the transition from development stage to commercial production, we have aligned the compensation structure of all other employees to the same company-wide strategic
objectives and performance as the executive officers' compensation. As we move into volume production of commercial products, we will continue to evaluate the effectiveness of company-wide
strategic

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objectives.
If we determine that company performance would be improved by combining these objectives with specific operational goals within areas we will modify our programs.

Program Participants

Our executive officers in 2009 were:



On
April 26, 2010, our Board of Directors promoted Judith Judson, from Director of Regulatory and Market Affairs to Vice President, Asset Management and Market Development. As an executive
officer of the Company, she is eligible to participate in our 2010 executive officer compensation programs. Because she was not an executive officer during fiscal year 2009, her compensation is not
presented for such year in this proxy statement.

Development of a Formal Compensation Program

Our Compensation Committee has taken the following steps to ensure that our compensation and benefit programs for executive officers
are consistent with our compensation philosophy and our corporate governance guidelines:



Based
on these efforts and examinations, the Compensation Committee developed a compensation program intended to be in place for the next several years and continues to monitor this
program to insure its effectiveness.

Market Referencing

To test the competitiveness of our compensation program, Towers Watson was engaged to compare our compensation practices and levels to
a group of specific peer companies, representative of companies of similar size and industry. As our company continues to grow, Towers Watson analyzes and updates the compensation benchmarking peer
group where appropriate. The recommended changes, if

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any,
in the peer group is then presented to the Compensation Committee for approval. In 2007, Towers Watson helped us to select a comparison group using the following
criteria:



In
2009, Towers Watson and the Compensation Committee reviewed the peer group previously selected and determined that the following peer group of 11 companies continues to be appropriate
and no changes were recommended:



The
Compensation Committee engaged Towers Watson in December 2009 to update its 2007 benchmarking analysis. The analysis consisted of assessing our named executive officer compensation
against that of the peer group. The analysis specifically reviewed base salaries, annual incentive targets, long-term incentive levels and overall total direct compensation. As a group,
our named executive officers' base salaries in 2009 were between the 25th and 50th percentile of the peer group, while target total direct compensation (TDC)
was closer to the market 50th percentile (CEO TDC approximated the market 30th percentile). The Committee also reviewed annual and three year Total
Shareholder Return (TSR) performance of the company versus its peer group and the Russell 2000 (small cap index). It was determined that the Company underperformed the peer group and index with
regards to shareholder return.

We
intend to continue our strategy of providing competitive compensation opportunity to our executive officers, through programs that emphasize performance-based incentive compensation
in the form of cash and equity. To that end, total executive compensation is structured to ensure that, due to the nature of our business, there is an equal focus on our operational and financial
performance and stockholder return. We believe that the positioning of our executive officer compensation was consistent with our financial performance, the individual performance of each of our
executives and the interests of our stockholders. We also believe that the total compensation was reasonable in the aggregate. Further, in light of our compensation philosophy, we believe that the
total compensation package for our executive officers should continue to consist of base salary, annual cash incentive awards (bonuses), long-term equity-based incentive compensation, and
certain other benefits.

-11-

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The competitive posture of our total annual direct compensation will vary from year to year based on our results and individual performance. as compared to the performance of the peer
group companies and the respective level of annual performance bonus awards made to their executives.

Components of Compensation Program

Our performance-driven compensation program has both short-term and long-term components. Our executive
officers' compensation is defined in the Executive Agreements (which are further detailed in the section titled "Executive Officer Employment Agreements" below). All of our other employees are
employees at will. However, all of our employees participate in the compensation programs as noted below.

Current Compensation Components

We utilize current compensation components that include base salary and cash bonuses to motivate and reward our employees, including
our executive officers, in accordance with our defined objectives. Our Compensation Committee has established this program to set and refine management objectives and to measure performance against
those objectives. The Compensation Committee reviews its conclusions on short term compensation with the Board (without the participation of the CEO), and once a consensus is reached, the short term
compensation decisions are presented to the executive officers.

Base Salary

Base salary rewards the experience, skills, knowledge and responsibilities required of each of our executive officers and reflects
competitive market conditions. The factors considered in determining salary and annual increases to salary, which are typically adjusted effective January 1 of each year,
are:



Using
the criteria outlined above, our Compensation Committee works directly with its independent compensation consultant to determine the compensation recommendations that our
Compensation Committee makes to our Board of Directors regarding specific compensation actions for the executive officers. The Compensation Committee evaluates each executive officer's base salary in
terms of his individual performance and his relative percentile performance to the peer group. However, after considering the Company's cash position as of the end of 2008, cash requirements for 2009,
and the Company's business plan for 2009, the Compensation Committee decided to hold the

-12-

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executive
officers' salaries at the 2008 level for 2009. The executive officers' base salaries were as follows:

Executive Officer



2008 Base Salary



2009 Base Salary



% IncreaseF. William Capp



$
296,125



$
296,125




0.0
%James M. Spiezio




210,813




210,813




0.0
%Matthew L. Lazarewicz




189,280




189,280




0.0
%


Performance Bonus

Overview of Performance Bonus Program

Awards under the performance bonus program are based on a quantitative and qualitative review of all of the facts and circumstances
related to the Company and each executive's or employee's performance. An executive officer may receive awards from zero to 100% of his target bonus based on the review of results. Additional awards
of up to 70% of the target bonus may be awarded for performance at levels above targeted goals and objectives or improvement in the timing of achieving certain results. The criteria for these
potential additions to the bonus are clearly defined as part of establishing the potential bonus structure each year.

On
an individual level, the Compensation Committee attempts to set clearly defined goals for each executive officer, focusing on the categories mentioned below, with an emphasis on
quantifiable and achievable goals. Once the defined goals have been identified, the Compensation Committee engages in a collaborative process with the executive officers to reach agreement on the
following aspects of the short term goals:



The
Compensation Committee sees this process both as the optimal means of assembling accurate information regarding the expectation and realization of performance, as well as an integral
part of our culture of collaborative, team-oriented management.

The
Compensation Committee evaluates each executive officer as well as our other key employees once each year based on the achievement of set goals. This review is typically done during
the first quarter of the year. We review final results for the year versus pre-determined objectives and begin discussions regarding performance objectives for the current fiscal year.
Performance bonuses, at the discretion of the Compensation Committee, may be awarded in the form of cash or RSUs and equity-based awards. During recent years, the performance bonuses have been paid in
cash.

Total
compensation for our executive officers may vary significantly from year to year, based on the percentage of achievement of goals. In addition, the value of equity awards in either
RSUs or stock options may vary significantly in value based on the performance of our stock price.

Discretionary Bonus

Additional discretionary awards of the target bonus may be awarded for performance to targets that emerge subsequent to the
establishment of the year's bonus program or other achievements not previously identified, or performance to existing targets that is greater or timelier than the target.

-13-

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2009 Performance Bonus and Resulting Bonus Payout

Our business strategy is to become a leader in providing frequency regulation services to the electrical grid. We intend to build our
service business through our internal research efforts, our use of proprietary technologies, expansion of manufacturing capabilities and our deployment of facilities dedicated to providing
economically-viable frequency regulation services to the electrical grid. In order to accomplish these goals, we will need to expand manufacturing capabilities, acquire appropriate locations for
installation of our flywheel systems and raise additional financing. We must also focus on continually strengthening our management and technical teams, in order to provide the human resources
necessary to carry out our business objectives.

In
2009, we made progress in executing our strategic plan. For 2009, the target performance goals and results were as follows:

Metrics



Comments on results



Potential
Value (%
of Bonus
Award)



Value
Awarded
Based on
Achievement
(% of Bonus
Award)Funding:Goals related to continued funding of basic cash burn; progress on DOE loan application; and debt or equity funding to support DOE-required equity contribution and beyond.



Seaside funding was completed on schedule in March 2010. The DOE loan application was approved by the credit review board, making us the first public company and the second of 16 applicants to receive the commitment. We
raised over $20 million in a December 2009 financing, providing funding for the remaining equity commitment for Stephentown and a portion of our goals outside of the DOE requirements.




25




2525kWh flywheel development:Goals related to achieving and maintaining reliable operation on flywheels and the Smart Energy Matrix System connected to grid operators; significant progress on cost
reductions for both flywheel and balance of plant



We made continuous improvement, redesigning motor generators to address an overheating issue, and achieved 3MW capacity in service. We met our goals on both flywheel and other cost reductions on an accelerated timeframe
that earned a bonus under the plan metrics.




20




26Financial reporting:Institute monthly reporting of financial results from regulation operations to the Board of Directors; develop an investor relations package; update and validate internal financial
forecasting model.



We met each of our goals in this area.




15




15


-14-

---



Metrics



Comments on results



Potential
Value (%
of Bonus
Award)



Value
Awarded
Based on
Achievement
(% of Bonus
Award)Deployment:Goals related to maintaining high operational availability in Tyngsboro, groundbreaking in Stephentown, and adding 1MW of revenue service at AEP site in PJM Interconnection and 5MW of
revenue service in New York.



We achieved about one-half of the goals relating to operational availability by solving motor issues, making progress on balance issues and achieving cost reductions. We broke ground in Stephentown in November, behind
schedule. The goals relating to adding 1 MW at AEP and 5 MW in New York were not met.




15




7Market Access:Work with ISOs on market changes and related developments that will support non-discriminatory treatment of alternative energy storage technologies.



We met or exceeded our goals in this area. In NYISO, favorable market tariff and associated software changes were approved by FERC in May 2009, earlier than our target. ISONE is now running a NYISO-style regulation
dispatch signal and is creating a working group to develop signal changes. An improved dispatch signal for storage is in place in PJM. MISO favorable market tariff and software modifications are effective January 2010. Progress made with CAISO and we
are exploring markets in Canada, ERCOT, Europe and elsewhere.




15




18R&D contracts, government and other goals:Meet deliverables under Tehachapi contract; update corporate web site; refine IR strategy and communications; expand favorable MA carbon credit treatment
to other states; safety goals; and convert Green Box into "Smart Grid Laboratory".



We have met deliverables for Tehachapi but the prime contractor has delayed the schedule. We met goals relating to investor relations and safety. Our new corporate web site was completed behind schedule. We did not meet
goals relating to expanding the MA carbon credits to other states or creating our "Smart Grid Laboratory".




5




4Additional revenue sources:Obtain a contract from state or federal agency or strategic partner to provide additional funding, e.g., Navy project or NYSERDA.



We announced a $2 million NY State Energy Research and Development Authority (NYSERDA) contract, which is being finalized in conjunction with the DOE loan.




5




5


-15-

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Metrics



Comments on results



Potential
Value (%
of Bonus
Award)



Value
Awarded
Based on
Achievement
(% of Bonus
Award)Stretch goals:Stretch goals would permit bonus amounts above the targets, for (a) signing a "take or pay" agreement with a third party for frequency regulation services (up to additional 15% of
bonus award), (b) selling services or a system outside of the US (up to 15%), (c) receiving funding from the federal stimulus legislation (up to 20%), or (d) success in promoting regulatory or legislative energy storage incentives (up
to 20%).



We were awarded a $24 million grant from the DOE for our second 20MW plant, to be located in Illinois. We did not meet our other stretch goals.




70




20Totals




170




120Discretionary adjustment









(30
)Bonus % Awarded









90


The
overall evaluation of performance to targets for 2009 was that as a percentage of targeted objectives, an appropriate rating would be approximately 120%. However, the
Compensation Committee, upon reviewing the results of executive performance for 2009 determined that an award of 90% was appropriate. The Compensation Committee took this discretionary position that
while management had performed quite well on its targets, the reduction in stock price during 2009 warranted a lower than target payout. The Compensation Committee determined that 90% was a fair
payout. Accordingly, for our executive officers, the targeted and actual bonuses paid in cash in March 2010 for our 2009 performance plan were as follows:

Name



2009 Base Salary



Targeted Bonus Potential as a % of Salary



2009 Target Bonus Potential



Bonus Percent Awarded (as a % of Target)



Bonus Amount EarnedF. William Capp



$
296,125




50.0
%


$
148,063




90.0
%


$
133,256James M. Spiezio




210,813




35.0
%



73,785




90.0
%



66,406Matthew L. Lazarewicz




189,280




35.0
%



66,248




90.0
%



59,623


The
bonus potential as a percent of salary is defined in the executive officers' Employment Agreements with the Company. These agreements are further described below.

Long-term Compensation

At present, our long-term compensation for executive officers consists of a combination of common stock options and RSUs,
all with a three year vesting period, and performance stock units (PSUs) tied to achieving specific longer term objectives. We believe this strategy of utilizing a combination of options, RSUs and
PSUs is appropriate for aligning the interests of our executive officers with those of our stockholders over the long-term, focuses on attaining key operational milestones, and provides an
effective retention feature. All options, RSUs and PSUs are granted under our Third Amended and Restated 1998 Stock Incentive Plan. Our practice is to grant stock options and

-16-

---



RSUs
on an annual basis at the time of annual performance review. The typical target expected value of the annual long term incentive grant is 100% of base salary for our CEO and 55% of base salary
for our CFO and CTO. Given market conditions and our stock price as of the beginning of 2009, the Compensation Committee decided to recalibrate the 2009 executive equity awards, because use of the
Black-Scholes formula when the market price for our stock was lower than in prior years would have resulted in granting a significantly larger number of options and RSUs. After receiving guidance from
its compensation consultants, the Board decided to calculate the 2009 executive officers' equity grants at 120% of the number of options and RSUs granted for 2008. As a result, the percentage of total
compensation that was variable and based on the performance of the Company dropped from 58% to
47% for our CEO and from 46% to 36% for our CFO and CTO. In addition, PSUs were last granted in 2006 as a special grant to motivate the executives to achieve specific long-term financial
objectives. These PSUs cliff vest in 2009 or 2010 based upon the achievement of the specified objectives. Management did not meet those objectives for 2009, and does not expect to meet them for 2010,
so no PSUs will vest from the 2006 grant. Although no additional PSUs were granted in 2007, 2008 or 2009, the Compensation Committee continues to consider PSUs a key component of our
long-term compensation strategy because of their multi-year performance approach. The 2006 PSUs have been terminated in 2010, and are being replaced in 2010 with an annual PSU
plan that will cliff vest based upon achieving newly-specified objectives.

We
analyze the following when we set the number of options or RSUs to be granted to each executive. On an individual basis, we compare:



Each
of the three elements of our LTI programstock options, restricted stock units and performance stock unitsis discussed in more detail below.

Common Stock Option Grants

Our common stock option grants are designed to align our executives' performance objectives with the interests of our stockholders. We
believe that these options provide an important component of executive compensation which is fully aligned with our shareholders' interests whereby the impact of any business setbacks, whether
Company-specific or industry based, achievement of objectives or other performance matters impacts the executive officers as well as shareholders
directly. Our Compensation Committee also grants options to key employees based on this same rationale and enables these key employees to participate in the long term appreciation of our stockholder
value. In addition, all new permanent, full-time employees are granted options when they join the Company. We further believe that our option grants provide a means to assist in the
retention of key employees, inasmuch as they are in almost all cases subject to vesting over an extended period of time.

In
2009, we granted options vesting over three years to our executive officers pursuant to the Executive Agreements as follows: Mr. Capp, 349,535 options; Mr. Spiezio,
136,918 options; and Mr. Lazarewicz, 122,911 options. These options had exercise prices based on the stock closing price on the date of grant, which was $0.49.

In
the past, we have calculated the number of options or RSUs to be granted to our executive by dividing the targeted compensation dollar amount (based on the percentage of base salary,
as described earlier) by the fair value of the option using a Black-Scholes valuation model. In light of our low stock price, the Compensation Committee determined the size of the 2009 grants by
applying a factor of 1.2

-17-

---



to
the 2008 grants. This resulted in a significantly lower grant size than would have been granted using the Black-Scholes valuation model.

Restricted Stock Unit Grants

RSUs were granted to our executive officers pursuant to the Executive Agreements, which are renegotiated annually. Our issuance of RSUs
is a further effort to align management's performance objectives with the interest of shareholders by having the same attributes as our vesting stock options with the additional alignment of each
executive officer owning actual shares. These RSUs vest quarterly over a three year period, and are generally converted to common stock on the vesting dates. The numbers of RSUs issued to each of the
executive officers based upon the 2009 Executive Agreements were as follows: Mr. Capp, 38,820 units; Mr. Spiezio, 15,214 units; and Mr. Lazarewicz, 13,639 units. The closing price
on the date of grant was $0.49. The number of RSUs granted in 2009, as with the stock options, was calculated by applying a factor of 1.2 to the number of RSUs granted in 2008. The effect of the
change in method of calculating the long-term incentive grants in 2009 was to significantly reduce the value of these incentives as a percentage of base salary as compared to the prior
year. The charts below show long-term incentive (LTI) grants as a percentage of base salary for 2008 and 2009:

Name



2008 Base Salary



Fair Value
of Options
Granted



Value of
RSUs
Granted



Total LTI



LTI as
% Base
SalaryF. William Capp



$
296,125



$
224,285



$
40,438



$
264,723




89
%James M. Spiezio




210,813




87,855




15,848




103,703




49
%Matthew L. Lazarewicz




189,280




78,868




14,208




93,076




49
%




Name



2009 Base
Salary



Fair Value
of Options
Granted



Fair Value
of RSUs
Granted



Total LTI



LTI as
% Base
SalaryF. William Capp



$
296,125



$
90,879



$
19,022



$
109,901




37
%James M. Spiezio




210,813




35,599




7,455




43,054




20
%Matthew L. Lazarewicz




189,280




31,957




6,683




38,640




20
%


Performance Stock Unit Grants

Our Performance Stock Units (PSUs) are also designed to align management's performance objectives to shareholder interest by providing
stock grants that cliff-vest upon achievement of specific longer term, multi-year objectives of interest to our investors.

The
executive officers were last granted PSUs as part of their Executive Agreements in 2006 to incentivize the executive team to maintain a sustained drive and focus on moving the
development-stage company successfully into production. The PSUs were structured to provide Mr. Capp with potential awards valued at $1,000,000 and Mr. Spiezio and Mr. Lazarewicz
with potential awards valued at $500,000 each, where the unit price used to calculate the number of units was $1.58, the average of the high and the low stock price on the date of grant. This equated
to a potential award of 632,911 shares to Mr. Capp and 316,456 shares each to Mr. Spiezio and Mr. Lazarewicz. There were no additional PSUs granted in 2007, 2008 or 2009.

The
2006 PSUs cliff vest only upon achievement of certain conditions:



-18-

---





Adjusted EBITDA in
2009 or 2010:



Number of RSUs in the Actual AwardUnder $2,000,000



No Award$2,000,000



50% of the Potential Award$2,000,000 to $4,000,000



Potential Award X (Adjusted EBITDA/4,000,000)Over $4,000,000



100% of the Potential Award




We
did not meet the award conditions as of December 31, 2009, and our executive management does not believe that it is probable that the award will be earned in 2010 based on our
current business plan. Therefore, on April 26, 2010 the 2006 PSUs were forfeited by the executives.

The
Compensation Committee believes that it is important to align management's performance with the objectives of shareholder interest by providing stock grants that
cliff-vest upon achievement of specific longer term performance objectives of interest to our investors. Hence, a new annual PSU plan was put in place April 26, 2010. The new PSU
grants cliff vest upon the achievement of specific longer-term performance objectives, e.g., PSUs granted in 2010 cliff vest upon the achievement of certain performance conditions
in 2011 or 2012. We anticipate that PSU grants will be made on an annual basis going forward.

Equity Grant Practices

During 2009, our Board granted common stock options, and RSUs based upon the recommendations of our Compensation Committee and the
Executive Agreements. These grants to executive officers were generally made during regularly scheduled meetings of the Board of Directors. Mr. Capp and Mr. Spiezio have been authorized
by the Board of Directors to issue common stock option grants to individuals being hired and promoted, within certain limits which have been predetermined by the Board based upon job title and
function.

The
Board of Directors takes into account a wide variety of factors when determining the timing of specific grants, including the pricing of our most recently completed equity financing;
the status of additional equity or debt transactions; the status of our various research and development activities; the quality and growth of our management team; and specific and general market
comparables.

In
addition to the options granted to the executive officers, our policy has been to grant common stock options to all full-time permanent new hires at the time of
employment. The number of options varies depending on the position and experience of the new hire. Further, options or RSUs may be granted to employees as part of the annual compensation review.
Typically, options granted vest quarterly over a three year period.

-19-

---





Towers Watson Analysis of Pay Mix

According to Towers Watson's 2009 analysis, we delivered a higher portion of pay to our CEO via base salary relative to annual
compensation as compared to the peer group. In 2008 and again in 2009, we reduced the value of LTI granted to executives, and LTI as a percentage of pay mix also decreased. The charts below compare
Mr. Capp's 2009 compensation pay mix to that of peer CEO's in 2008, reflecting the peer data available at the time of the study.

PIE CHARTS

The
CFO and CTO have similarly-designed LTI packages, whereas our peer group typically differentiates pay for the two executives. Generally, CTOs of development stage companies have
higher variances in their LTI packages than do CFO's, as is reflected in the peer market data. In 2008 and again in 2009, we reduced the value of LTI granted to executives, and LTI as a percentage of
pay mix also decreased. The charts below compare Mssrs. Spiezio and Lazarewicz's 2009 pay mix percentages to those of the respective peer groups in 2008, again reflecting the peer data available at
the time of the study.

PIE CHARTS

-20-

---



PIE CHARTS

In
total, we believe that our executives' pay mix still reflects a meaningful percentage of pay at risk and allows for appropriate risk-taking.

Executive Officer Employment Agreements

On April 3, 2009, we entered into employment agreements with our executive officers, commencing on the date of the agreement and
continuing until March 31, 2010, unless renewed or terminated. Additional agreements providing for long term incentive compensation consisting of vesting-based Restricted Stock Units (RSUs) and
stock options were also dated April 3, 2009. The terms of these agreements were similar to those of the executive officer agreements dated May 8, 2006, March 2, 2007 and
February 12, 2008. However, in contrast, there were no 2007, 2008 or 2009 counterparts of the performance-based RSU agreements that were signed in 2006. On April 26, 2010, we entered
into new employment agreements with the executive officers for a term that began in April 1, 2010. Additionally, the executive officers received option and PSU grants.

These
agreements, in total, will be referred to as the "Executive Agreements." In addition to the Base Salary and Targeted Bonus amounts (discussed above under "Current Compensation"
section), the Executive Agreements specified other benefits, such as vacation time and fringe benefits. The fringe benefits include those available to our other employees, such as group health and
dental insurance, life insurance, group long and short-term disability insurance, 401(k) plan, and stock plan participation. In addition, each executive officer is entitled to
reimbursement for an executive physical every other year (not to exceed $1,000 for each such physical), as well as an additional life insurance policy over and above the insurance plan provided to all
employees. Further, in the event that the executive officer becomes disabled and receives disability insurance payments that are less than his monthly base salary, we will pay him the difference
between his normal base salary and the insurance payment, for the duration of his employment. These agreements also contain certain provisions related to severance and change of control, which are
discussed further in the section titled, "Potential Payments upon Termination or Change in Control." We believe these benefits are consistent with those offered by other companies.

We
do not have a supplemental retirement plan or any form of executive retirement plan.

Some
additional provisions of the Executive Agreements include the following:



-21-

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We
believe that it is appropriate to enter into short term (year to year) Executive Agreements with our management team because of the increased flexibility that it gives us and them to
adjust compensation, long term incentive award expectations and other expectations from year to year in light of our performance, cash position, and other conditions. We recognize that negotiating new
Executive Agreements every year carries the risk of occupying management's (and the Board's) time and attention, as well as the risk that we will not be able to reach agreement with one or more of our
executive officers on a new Executive Agreement in any year. However, the committee believes that these risks are manageable and are not meaningfully greater than would be presented by setting
compensation programs on an annual basis in the absence of a new Executive Agreement

Compensation Committee Interlocks and Insider Participation

During 2009, the Compensation Committee members were Messrs. Adik (Chair), Smith and Rose, none of whom currently are or
formerly were our officers or employees. None of our executive officers served as a member of the board of directors or compensation committee of any other company that had one or more executive
officers serving as a member of our Board of Directors or Compensation Committee.

COMPENSATION COMMITTEE REPORT

We have reviewed and discussed the foregoing Compensation Discussion and Analysis with management. We have reviewed the incentive plans
for the executive officers to ensure that these incentives do not provide the executives with incentives that require actions that represent excess risks that would not be in the best interest of our
shareholders, as discussed in the section titled "Consideration of Risk in Compensation Programs which follows the Executive Compensation tables, below. Based on our review and discussion with
management, we have recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement.

The
following report is provided by the following directors, who constitute the Compensation Committee:

Submitted by the Compensation Committee:Jack P. Smith,ChairmanVirgil Rose
Stephen Adik


Notwithstanding
anything to the contrary set forth in any of our previous filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as
amended, that incorporate future filings including this Annual Report, in whole or in part, the foregoing Compensation Committee Report shall not be incorporated by reference into any such filings.

-22-

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Summary Compensation Table

The following table(s) sets forth the total compensation paid in the years ended December 31, 2007, 2008 and 2009 to the three
persons who served as our three executive officers during fiscal 2009: F. William Capp, our Principal Executive Officer; James M. Spiezio, our Principal Financial Officer; and Matthew Lazarewicz, our
Chief Technology Officer.

Name and Principal Position



Year



Salary
($)(1)



Bonus
($)(2)



Stock
Awards
($)(3)



Option
Awards
($)(4)



Non-Equity
Incentive
Plan
Comp.
($)(5)



Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings
($)(6)



All Other
Compensation
($)(7)



Total
($)Principal Executive Officer




2009



$
297,264



$




$
19,022



$
90,879



$
133,256



$




$
10,481



$
550,902F. William Capp




2008




298,551









40,438




224,285




115,489









30,425




709,1882007




258,491









35,241




235,394




103,000









5,942




638,068Principal Finance Officer




2009




211,624









7,455




35,599




66,406









20,135




341,219James M. Spiezio




2008




212,466









15,848




87,855




57,552









20,218




393,9392007




203,485









15,265




101,800




56,757









20,635




397,942Chief Technology Officer




2009




190,008









6,683




31,957




59,623









13,768




302,039Matthew L. Lazarewicz




2008




190,764









14,208




78,868




51,673









14,201




349,7142007




182,700









13,705




91,692




50,960









9,490




348,547


(1)Salaries
are reported on the accrual basis.


-23-

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Name and Principal
Position



Year



Officer
Life
Insurance
Premium
(a)



Company
Contributions
to 401(k)
Plan
(b)



Mileage
Reimbursement
(c)



Other
Reimbursement
(d)



TotalAll
Other
Compensation2009



$
2,964



$
7,517



$




$




$
10,481F. William Capp




2008




6,125




6,900




16,400




1,000




30,4252007









5,942














5,9422009




13,810




6,325














20,135James M. Spiezio




2008




13,894




6,324














20,2182007




13,940




6,695














20,6352009




3,787




5,678




4,303









13,768Matthew L. Lazarewicz




2008




3,847




5,679




4,675









14,2012007




3,861




5,629














9,490


-24-

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-25-

---







Grants of Plan-Based Awards

The following table shows all grants made to our executive officers during the year ended December 31, 2009:

Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards(1)Name



Grant
Date
(same as
approval
date)



Threshold
($)



Target
($)



Maximum
($)



All Other
Stock
Awards:
Number of
Shares of
Stock or
Units
(#)(2)



All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)(3)



Exercise
or Base
Price of
Option
Awards
($/Sh)



Market
Price
on
Grant
Date



Grant Date
Fair Value
of Stock
and
Option
Awards4/3/2009



















38,820













$
0.49



$
19,022F. William Capp




4/3/2009



$




$
148,063



$
251,7074/3/2009
























349,535



$
0.49



$
0.49




90,8794/3/2009









73,785




125,435James M. Spiezio




4/3/2009



















15,214













$
0.49




7,4554/3/2009
























136,918



$
0.49



$
0.49




35,5994/3/2009









66,248




112,622Matthew L. Lazarewicz




4/3/2009



















13,639













$
0.49




6,6834/3/2009
























122,911



$
0.49



$
0.49




31,957


Note that the column titled "Estimated Future Payouts Under Equity Incentive Plan Awards" was not presented for 2009 because there were no new Equity Incentive Plan
Awards made during 2009. (1)Non-Equity Incentive Plan Awards:The amount shown in the Target column represents
the amount which executive officers were eligible to receive if all goals for the 2009 Performance Bonus Plan were met. If none of the goals were achieved, no bonus would be paid, as reflected in the
Threshold column. In addition, there were "stretch" goals, which if achieved, could have resulted in bonus payments of up to 170% of the Target amounts for the executive officers. These stretch goal
amounts are reflected in the "Maximum" column in the table above.(2)All Other Stock Awards:    These awards represent RSUs granted to the executive officers under the
2009 Executive Agreements. These RSUs vest quarterly over three years, and were valued at $0.49, which was the closing price of our stock on the date of grant.(3)Option Awards:These awards represent options granted to the executive officers under the 2009
Executive Agreements. The exercise price of the options was $0.49, which was the closing price of our stock on the date of grant.


-26-

---





Outstanding Equity Awards at Fiscal Year-End

The following table shows the unexercised options, unvested stock grants, and equity incentive plan awards outstanding relating to our
executive officers as of December 31, 2009:

Option Awards




Stock AwardsName




Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable




Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
(1)




Equity
Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)




Option
Exercise
Price
($)




Option
Expiration
Date




Number of
Shares or
Units of
Stock
That Have
Not Vested
(#)(1)




Market
Value of
Shares or
Units of
Stock
That have
Not Vested
($)(2)(3)




Equity
Incentive
Plan Awards:
Number of
Unearned
Shares,
Units or
Other Rights
That Have
Not Vested
(#)(1)




Equity
Incentive
Plan Awards:
Market or
Payout Value
of Unearned
Shares,
Units, or
Other Rights
That Have
Not Vested
($)(2)300,000













$
0.89




12/1/2011600,000













$
0.89




12/1/2011600,000













$
0.74




10/13/2014F. William Capp




118,671













$
1.58




5/8/2016














316,456



$
155,06389,524













$
1.58




3/2/2017356,369













$
0.89




3/2/2017194,112




97,167








$
1.25




2/14/2018




10,790



$
5,287116,512




233,023








$
0.49




4/3/2019




25,880



$
12,68193,333













$
2.10




5/10/201010,000













$
2.10




5/10/201050,000













$
2.50




6/5/201047,618













$
0.70




3/15/201232,382













$
0.70




3/15/2012James M. Spiezio




450,000













$
0.74




10/13/201450,910













$
1.58




5/8/2016














158,228



$
77,53238,405













$
1.58




3/2/2017154,367













$
0.89




3/2/201776,032




38,066








$
1.25




2/14/2018




4,230



$
2,07345,640




91,278








$
0.49




4/3/2019




10,142



$
4,97030,000













$
2.50




6/5/201020,000













$
2.50




6/5/201025,477













$
0.70




3/15/201254,523













$
0.70




3/15/2012Matthew L. Lazarewicz




350,000













$
0.74




10/13/201446,602













$
1.58




5/8/2016














158,228



$
77,53235,156













$
1.58




3/2/2017138,587













$
0.89




3/2/201768,256




34,170








$
1.25




2/14/2018




3,790



$
1,85740,972




81,939








$
0.49




4/3/2019




9,091



$
4,455


-27-

---





# Shares Vesting for Date Shown:Mr. Capp




Mr. Spiezio




Mr. LazarewiczVesting Date




Options




Stock




Options




Stock




Options




StockMarch 31, 2010




53,392




5,930




20,914




2,324




18,775




2,084June 30, 2010




53,392




5,930




20,914




2,324




18,775




2,084September 30, 2010




53,392




5,930




20,914




2,324




18,775




2,084December 31, 2010




53,503




5,940




20,964




2,330




18,817




2,086March 31, 2011




29,128




3,235




11,410




1,268




10,243




1,137June 30, 2011




29,128




3,235




11,410




1,268




10,243




1,137September 30, 2011




29,128




3,235




11,410




1,268




10,243




1,137December 31, 2011




29,127




3,235




11,408




1,266




10,238




1,132


-28-

---





Option Exercises and Stock Vested

The following table sets forth the number of shares acquired and the value realized upon exercise of stock options and vesting of RSUs
during 2009 and the number of shares our common stock acquired on vesting of RSUs during 2009. None of our executive officers exercised options during 2009, so no amounts are reported under those
columns. The value realized for the RSUs is the stock closing price on the vesting date.

Option Awards



Stock AwardsName



Number of
Shares Acquired
on Exercise
(#)



Value Realized
on Exercise
($)



Number of
Shares Acquired
on Vesting
(#)



Value Realized
on Vesting
($)F. William Capp








$





36,933



$
22,527James M. Spiezio














15,016




9,159Matthew L. Lazarewicz














13,471




8,217


The
number of shares vested and value realized on vesting during 2009 includes shares that vested as of December 31, 2009, but which were not issued during 2009 under the terms of
the applicable grant agreement because the trading window for insiders was closed at the date of vesting. The number of shares involved was 9,249 for Mr. Capp, 3,370 for Mr. Lazarewicz,
and 3,757 for Mr. Spiezio. The stock price per share as of the vesting date was $0.49. However, there were also shares that vested as of December 31, 2008 which were not issued until
March 10, 2009, also because the trading window was closed at the date of vesting. The number of shares involved was 7,929 for Mr. Capp, 2,987 for Mr. Lazarewicz, and 3,312 for
Mr. Spiezio.

-29-

---



Potential Payments Upon Termination or Change in Control

Severance Compensation & Termination Protection

The Executive Agreements provide for severance compensation to be paid if the executive officers are terminated under certain
conditions, such as a change in control of the Company or a termination without cause by us, each as is defined in the agreements.

Terms Used

The "termination date" is the date on which the executive officer resigns or notifies us that he will resign, or the date on which we
notified the executive officer that employment will be terminated.

The
following are the definitions for the various termination and change of control scenarios:



Termination Payments for Each Type of Termination



-30-

---





Effect of Termination of Employment Relative to RSUs and Options

If the executive terminates for any reason, including by resignation or termination (with or without cause), the executive may retain
all RSUs that have vested before the termination date. However, any RSUs vesting after the termination date will be forfeited. In relation to options, if employment is terminated by reason of death,
disability, resignation or without cause, any vested but unexercised options will expire if not exercised within 365 days after the termination date, and any options that were not vested before
the termination date are forfeited. In the case of termination for cause, all vested and unvested options will expire immediately. In addition, we may, in our sole discretion, by written notice demand
that any or all stock certificates for shares acquired pursuant to the exercise of the option, or any profit realized from the sale or transfer of such shares, be returned to us. The exercise price
will be returned to the executive officer, without interest.

-31-

---





If
any of the executive officers' employment were terminated as of December 31, 2009 under the indicated circumstances, the following options and RSUs would have been forfeited or
would expire by December 31, 2010 if not exercised:

# Un-Vested
Units
Forfeited:

Vested Options That Would Expire 12/31/10 if Not ExercisedOfficer



Options



RSU



From
4/3/2009
Agreement



From
2/14/2008
Agreement



From
3/2/07
Agreement



From
5/8/06
Agreement



From
Prior
Option
Grants



Total
Vested
OptionsF. William Capp




330,190




36,670




116,512




194,112




445,893




118,671




1,500,000




2,375,188James M. Spiezio




129,344




14,372




45,640




76,032




192,772




50,910




683,333




1,048,687Matthew L. Lazarewicz




116,109




12,881




40,972




68,256




173,743




46,602




480,000




809,573


-32-

---



Note that the executive officers had received options from grants made prior to the May 6, 2006 Executive Agreements, as indicated in the above table. Options received from those
prior grants were fully vested as of December 31, 2009. Certain of those options would expire within 90 days of termination if not exercised, rather than within 365 days.

Effect of Termination of Employment Relative to Performance Stock Units

An executive officer would retain any PSUs that would have vested if he terminates after year end for 2009 or 2010, but prior to the
issuance of the audit opinion for that year, as long as the required audit opinion is actually received by us. Prior to year end for 2009 or 2010, if the executive officer's employment is terminated
without cause but not for resignation for good reason, the executive may receive a pro-rated actual award if the "Termination Stock Price" is higher than the "Target Stock Price." The
"Termination Stock Price" is defined as the 30-day volume weighted average price as of the date prior to the termination date. The "Target Stock Price" is defined as the average of the
high and low prices of our common stock on the effective date of the PSU grant (which was May 8, 2006), multiplied by 15% and compounded annually and prorated for any partial year.

Based
on the criteria noted above, if any of the executive officers had resigned or been terminated on December 31, 2009, the Termination Stock Price (the 30-day
volume weighted average price over the 30 days prior to termination) would have been $0.54. The Target Stock Price at that date would have been $2.63, which is the $1.58 average of the high and
low stock price on the May 8, 2006 grant date, increased at a rate equal to 15% per year through the termination date. Since the Termination Stock Price of $0.54 would be less than the Target
Stock Price of $2.63, none of the executive officers would have been entitled to a pro-rated award if he had been terminated at the end of fiscal 2009.

-33-

---





The
following table shows the total amounts that would have been payable as of December 31, 2009, under various termination scenarios:

Officer



Type of Termination



Accrued
Salary
(1)



Accrued
Vacation
(2)



Accrued
Bonus
for 2009



Health &
Dental
Benefits
(3)



Total #
Vested
Options



Potential Gain
if all Vested
Options Were
Exercised on
12/31/09
(4)



Total
Payout
Value
at 12/31/09Termination for Cause



$
4,556



$
98,188



$




$




$




$




$
102,744Resignation without Good Reason




4,556




98,188














2,375,188









102,744F. William Capp



Termination without Cause




300,681




98,188




133,256




28,480




2,375,188









560,605Resignation with Good Reason




300,681




98,188




133,256




28,480




2,375,188









560,605Death or disability(5)




78,587




98,188




133,256




28,480




2,375,188









338,511Non-renewal of contract(6)




NA




NA




NA




NA




NA




NA




NATermination for Cause




3,243




59,620
























62,863Resignation without Good Reason




3,243




59,620














1,048,687









62,863James M. Spiezio



Termination without Cause




214,056




59,620




66,406




24,781




1,048,687









364,863Resignation with Good Reason




214,056




59,620




66,406




24,781




1,048,687









364,863Death or disability(5)




55,946




59,620




66,406




24,781




1,048,687









206,753Non-renewal of contract(6)




NA




NA




NA




NA




NA




NA




NATermination for Cause




3,988




33,095
























37,083Resignation without Good Reason




3,988




33,095














809,573









37,083Matthew L. Lazarewicz



Termination without Cause




193,268




33,095




59,623




19,127




809,573









305,113Resignation with Good Reason




193,268




33,095




59,623




19,127




809,573









305,113Death or disability(5)




51,308




33,095




59,623




19,127




809,573









163,153Non-renewal of contract(6)




NA




NA




NA




NA




NA




NA




NA


(1)Salaries
are paid bi-weekly for that two week period and were paid through December 26, 2009; therefore, accrued salaries as of
December 31, 2009 represent an accrual for four days, Monday, December 28 through Thursday, December 31, 2009. Amounts shown represent termination payments under the terms of the
Executive Agreements plus accruals for regular time worked.(2)Under
the 2009 Executive Agreements, officers are allowed to carry forward only the remaining unused vacation earned prior to January 1, 2009, plus a
maximum of ten days earned in the current year. Any excess is forfeited as of the end of the year. Mr. Capp forfeited ten days of accrued vacation as of December 31, 2009.(3)Health
and dental benefits are calculated based on the 2010 monthly cost for the insurance plans in which the officers are currently enrolled.(4)There
would be no potential gain if the officers had exercised and sold all vested stock options on December 31, 2009 because the option exercise
prices for all vested options are equal to or higher than the stock closing price as of December 31, 2009.(5)One-third
of this amount to be paid each month over a three month period.(6)Since
the contracts expired subsequent to December 31, 2009, this scenario is not applicable as of that date. However, as of March 31, 2010,
if the contracts had expired without the Company offering at least equivalent terms of employment and their employment were terminated the officers would have been entitled to twelve monthly payments
calculated as one-twelfth of their annual salary and prior year bonus. Insurance benefits would be discontinued as of the termination date.


-34-

---



Change of Control

Objectives

As part of our normal course of business, we engage in discussions with other companies about possible collaborations, licensing and/or
other ways in which the companies may work together to further our respective long-term objectives. In addition, as a development stage company with intellectual property, we may become a
potential acquisition target by companies significantly larger and better financed than we are. In certain scenarios, the potential for a merger or for being acquired may be in the best interests of
our stockholders. We provide severance compensation, along with accelerated vesting of certain long-term equity compensation, if an executive officer is terminated as a result of a change
of control transaction. We believe that this promotes the ability of our executive officers to act in the best interests of our stockholders even though they could be terminated as a result of the
transaction.

Definition

An "Acquisition Event" is defined as (a) any merger or consolidation which results in our voting securities outstanding
immediately prior thereto representing immediately
thereafter (either by remaining outstanding or by being converted into voting securities of the surviving or acquiring entity) less than 50% of the combined voting power of the voting securities of
the surviving or acquiring entity outstanding immediately after such merger or consolidation; (b) any sale of all or substantially all of our assets; or (c) our complete liquidation.

Impact of Change of Control on Options and RSUs

Upon the occurrence of an Acquisition Event, the authorized administrator of our 1998 Stock Incentive Plan shall take any one or more
of the following actions with respect to the RSUs and options:



-35-

---







If
an Acquisition Event had occurred on December 31, 2009, the following unvested RSUs would have been forfeited, along with any vested options if not exercised prior to the
consummation of the acquisition event.

# Unvested Units
Forfeited:

Vested Options That Would Expire at
Acquisition Event if Not ExercisedOfficer



Options



RSU



From
4/3/2009
Agreement



From
2/14/2008
Agreement



From
3/2/2007
Agreement



From
5/8/2006
Agreement



From
Prior
Option
Grants



Total
Vested
Options



Potential Gain
if all Vested
Options Were
Exercised on
12/31/09F. William Capp




330,190




36,670




116,512




194,112




445,893




118,671




1,500,000




2,375,188



$
James M. Spiezio




129,344




14,372




45,640




76,032




192,772




50,910




683,333




1,048,687



$
Matthew L. Lazarewicz




116,109




12,881




40,972




68,256




173,743




46,602




480,000




809,573



$



-36-

---









Officer



Payment
for
Unvested
RSUs



Proceeds
for Vested
but
Unissued
RSU
Shares



Total
Proceeds
from
RSUs



Payment for
Outstanding
Options*F. William Capp



$
17,968



$
4,532



$
22,500



$
James M. Spiezio




7,042




1,841




8,883




Matthew L. Lazarewicz




6,312




1,651




7,963









Officer



Options (#)



Proceeds
from Exercise
of Options



RSU (#)



Proceeds from
RSUsF. William Capp




330,190



$





45,919



$
22,500James M. Spiezio




129,344









18,129




8,883Matthew L. Lazarewicz




116,109









16,251




7,963




-37-

---



Impact of Change of Control on PSUs

In the event of an Acquisition Event, if the average of the high and low prices of our Common Stock on the day prior to the date of the
closing is higher than the Target Stock Price (as described under "Effect of Termination of Employment Relative to Performance Stock Units" above), we will be considered to have awarded
fully vested PSUs to the executive officers on a pro-rated basis, with 1/56 of the full award vesting in each month between the grant date and the closing date of the
Acquisition Event. If such an Acquisition Event had occurred as of December 29, 2009, no pro-rated award would have been made since the price of our common stock on the day prior to
the assumed Acquisition Event was lower than the Target Stock Price of $2.63 on that date.

-38-

---





Summary of "Walk-Away" Value in the Event of a Change of Control or Acquisition Event

If a change of control were to occur, the executive officers would be entitled to resign with good reason. The following is a summary
of the total "walk-away" value as of December 31, 2009, under the various change of control or acquisition event alternatives discussed above:

Post Acquisition:Officer



Alternative



Cash
from
salary
and
benefits
(1)



Potential
proceeds
from
sale of
stock(2)



Potential
gain
from
exercise
of vested
options
(3)



Potential
cash
payment
for
unvested
options
(4)



Potential
proceeds
from
RSUs(5)



Total
"Walk-
Away"
value at
12/31/09



Unvested
options
forfeited



Unvested
RSUs
forfeited



Vested
options
that
would
expire
12/31/09
if not
exercised



# Options
outstanding



# RSUs
unvested1) RSUs / Options assumed by acquirer



$
560,605



$
264,728



$




$




$




$
825,333



















2,705,378




36,670F. William
Capp



2) Vested options/RSUs exercisable prior to acquisition and terminated if not exercised




560,605




264,728














4,532




829,865




330,190




36,670




2,375,188









3) Cash payment equal to value of unvested RSUs and all options




560,605




264,728














22,500




847,833
























4) Accelerate vesting for RSUs and options as of acquisition date




560,605




264,728














22,500




847,833



























-39-

---



Post Acquisition:Officer



Alternative



Cash
from
salary
and
benefits
(1)



Potential
proceeds
from
sale of
stock(2)



Potential
gain
from
exercise
of vested
options
(3)



Potential
cash
payment
for
unvested
options
(4)



Potential
proceeds
from
RSUs(5)



Total
"Walk-
Away"
value at
12/31/09



Unvested
options
forfeited



Unvested
RSUs
forfeited



Vested
options
that
would
expire
12/31/09
if not
exercised



# Options
outstanding



# RSUs
unvested1) RSUs / Options assumed by acquirer




364,863




126,513



















491,376



















1,178,031




14,372James M.
Spiezio



2) Vested options/RSUs exercisable prior to acquisition and terminated if not exercised




364,863




126,513














1,841




493,217




129,344




14,372




1,048,687









3) Cash payment equal to value of unvested RSUs and all options




364,863




126,513














8,883




500,259
























4) Accelerate vesting for RSUs and options as of acquisition date




364,863




126,513














8,883




500,259



























-40-

---



Post Acquisition:Officer



Alternative



Cash
from
salary
and
benefits
(1)



Potential
proceeds
from
sale of
stock(2)



Potential
gain
from
exercise
of vested
options
(3)



Potential
cash
payment
for
unvested
options
(4)



Potential
proceeds
from
RSUs(5)



Total
"Walk-
Away"
value at
12/31/09



Unvested
options
forfeited



Unvested
RSUs
forfeited



Vested
options
that
would
expire
12/31/09
if not
exercised



# Options
outstanding



# RSUs
unvested1) RSUs / Options assumed by acquirer




305,113




132,328



















437,441



















925,682




12,881Matthew L.
Lazarewicz



2) Vested options/RSUs exercisable prior to acquisition and terminated if not exercised




305,113




132,328














1,651




439,092




116,109




12,881




809,573









3) Cash payment equal to value of unvested RSUs and all options




305,113




132,328














7,963




445,404
























4) Accelerate vesting for RSUs and options as of acquisition date




305,113




132,328














7,963




445,404



























-41-

---





Since
the average stock price as of December 31, 2009 was lower than the "target stock price," as defined in the PSU award agreement, there would have been no prorated award
granted should there have been an acquisition event on that date.

Consideration of Risk in Compensation Programs

As part of its oversight of our compensation policies, the Compensation Committee considers the incentives created by our executive
compensation program and the effect that our compensation policies and practices could have on our overall risk profile. In addition, the Compensation Committee annually reviews our compensation
policies and practices to determine whether they create risks that are reasonably likely to have a material adverse effect on the Company. Examples of elements that the Committee has taken into
account are: (a) cash and non-cash incentives, (b) short, medium and long term targets and compensation, (c) time-vested and performance-based measures,
and (d) overall, targets and structures that enable the Company to attract, retain and motivate employees and align their interests with stockholders' interests. Based on its latest review, the
Committee has concluded that our compensation policies and procedures do not create risks that are reasonably likely to have a material adverse effect on the Company. In addition, the Compensation
Committee engaged Towers Watson to conduct a qualitative review of its executive compensation programs. The Committee decided that granting performance share units (PSUs) annually instead of every
four years would better mitigate risk taking and allow for more realistic goal-setting that are attuned to shareholder interests. In addition, the Committee decided to implement a share
holding requirement in the PSU plan that is expected to be implemented in 2010, i.e., a portion of the net after tax PSUs once earned will be restricted and may not be sold for two years after
vesting to insure longer term achievement of goals.

-42-

---



Director Compensation

Standard Director Compensation Arrangements

Our non-employee directors are compensated with a package that consists of both stock options and cash. The following table
illustrates our existing directors' compensation structure for all non-employee directors, except for the Chairman of the Board, for fiscal 2009:

Cash Payments



Annual AmountAnnual retainer (paid in quarterly installments, and for new
    Directors, prorated for a period of less than one year).



$
10,000Fees for attending board meetings (per meeting):In person




2,000Via conference call




1,000Fees for attending meetings of committees of
    which the director is a member:In person




1,500Via conference call




500Maximum meetings fees/day




4,500Other annual retainers/fees (paid in quarterly installments)Audit Committee Chair




10,000Audit Committee Member (non-Chair)




5,000Compensation Committee Chair




7,500Other Committee Chair




5,000Stock Compensation



AmountStock Optionsannual grant (i)



$
25,000Stock Optionsgrant upon joining board (ii)


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Chairman of the Board Compensation Arrangements

The Chairman of the Board is also compensated with a package that consists of both stock options and cash:



Director Compensation Paid in 2009

The following table represents the compensation paid to our Board of Directors with respect to fiscal 2009.

Name



Year



Fees Earned
or Paid
in Cash
($)(1)



Option
Awards
($)(2)



Total
($)Stephen P. Adik




2009



$
70,500




16,250




86,750Daniel E. Kletter




2009



$
64,500




16,250




80,750Virgil G. Rose




2009



$
68,359




28,540




96,899Jack P. Smith




2009



$
56,500




16,250




72,750Edward A. Weihman




2009



$
55,500




16,250




71,750


Certain
columns otherwise required by SEC rules were omitted from this table because no such compensation was paid or earned by the Directors in 2009. Mr. Rose assumed his
responsibilities as Chairman of the Board on August 1, 2009.

In
addition to the individuals noted above, F. William Capp, CEO of Beacon Power, serves as a member of the Board of Directors. Mr. Capp's compensation is shown in the Summary
Compensation Table. Mr. Capp does not receive any additional compensation for his service on the Board of Directors.



Total compensation per Director Compensation Table (above):

$
315,359Plus: 2008 compensation paid in 2009


42,000Less: 2009 compensation accrued at December 31, 2009


(58,859
)Total director compensation on cash basis for fiscal 2009

$
298,500




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Name



Grant Date of
Option
Awards
during 2009



Number of
Options
Granted
during 2009



Grant Date
Fair Value of
Option Awards



Options
Outstanding at
December 31,
2009
(#)Stephen P. Adik




12/01/09




46,428




16,250




372,981Daniel Kletter




12/01/09




46,428




16,250




231,234Virgil Rose (1)




12/01/09




81,543




28,540




266,349Jack P. Smith




12/01/09




46,428




16,250




406,287Edward Weihman




12/01/09




46,428




16,250




231,234


(1)Note
that the number of options granted to Mr. Rose in 2009 include the 50% premium for his expected service in 2010 as Chairman of the Board, along
with a prorated adjustment to his 2008 option grant to compensate him for his four months of service as Chairman during 2009.


Item 12.    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The following table sets forth, as of April 26, 2010, certain information concerning the ownership of shares of our Common Stock
by:



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Each
beneficial owner other than Capital Ventures International, Enable Growth Partners, LP, Goldman Sachs Asset Management LP and Ramius LLC has an address c/o
Beacon Power Corporation, 65 Middlesex Road, Tyngsboro, Massachusetts 01879.

Shares beneficially ownedName and Address of Beneficial Owner(2)

Number(1)

Percent
of ClassStephen P. Adik


349,767


*F. William Capp


3,065,031


1.7
%Judith Judson


109,304


*Daniel Kletter


258,020


*Matthew L. Lazarewicz


1,192,257


*Virgil Rose


256,528


*Jack P. Smith


411,073


*James M. Spiezio


1,210,333


*Edward Weihman


205,242


*5% ShareholdersCapital Ventures International(3)
Heights Capital Management, Inc.
One Capitol Place
Grand Cayman, Cayman Islands
British West Indies


17,033,632


8.6
%Enable Capital Management(4)
One Ferry Building, Suite 255
San Francisco, CA 94111


16,896,877


8.5
%Goldman Sachs Asset Management, L.P.(5)
32 Old Slip
New York, NY 10005


12,253,630


6.5
%Ramius LLC(6)
599 Lexington Avenue, 20th Floor
New York, NY 10022


14,677,781


7.6
%All directors and executive officers as a group (9 persons)


7,057,555


3.8
%


*Less
than 1%.(1)The
number of shares beneficially owned by each stockholder is determined under rules issued by the Securities and Exchange Commission and includes voting
or investment power with respect to those securities. Under these rules, beneficial ownership includes any shares as to which the individual or entity has sole or shared voting power or investment
power and includes any shares as to which the individual or entity has the right to acquire beneficial ownership within 60 days after April 26, 2010 through the exercise of any warrant,
stock option or other right. The inclusion in this joint proxy statement of these shares, however, does not constitute an admission that the named stockholder is a direct or indirect beneficial owner
of those shares. The number of shares of Beacon common stock outstanding used in calculating the percentage for each listed person includes the shares of Beacon common stock underlying options or
restricted stock units held by that person that are exercisable or convertible within 60 days of April 26, 2010, but excludes shares of Beacon common stock underlying options or
restricted stock units held by any other person.


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(2)Includes
the following shares of the Company's Common Stock which the indicated executive officer or director had the right to acquire within 60 days
after April 23, 2010, through the exercise of stock options or restricted stock units: Mr. Adik, 349,767; Mr. Capp, 2,515,520; Ms. Judson, 109,304; Mr. Kletter,
208,020; Mr. Lazarewicz, 807,182; Mr. Rose, 231,528; Mr. Smith, 383,073; Mr. Spiezio, 948,386; and Mr. Weihman 205,242.(3)Heights
Capital Management, Inc., the investment advisor of Capital Ventures International, has discretionary authority to vote and dispose of the
shares held by Capital Ventures International and may be deemed to be the beneficial owner of these shares. The address for Heights Capital Management, Inc. is 101 California Street,
Suite 3250, San Francisco, CA 94111. According to the Schedule 13G filing referenced below, this amount includes 15,248,953 shares underlying warrants to purchase Common Stock, which
warrants are not exercisable to the extent that the shares then beneficially owned by the reporting persons would exceed 9.99% of our outstanding Common Stock. This amount does not include 567,636
shares underlying warrants to purchase Common Stock, which warrants are not exercisable to the extent that the shares then beneficially owned by the reporting persons would exceed 4.99% of our
outstanding Common Stock. Information regarding the number of shares of Common Stock held by Capital Ventures International is based on information contained in a Schedule 13G filed with the
SEC jointly with Heights Capital Management, Inc. on February 12, 2010.(4)Enable
Capital Management, LLC ("ECM") is the general partner and/or investment manager of Enable Growth Partners, L.P. ("EGP") and Mitchell
S. Levine ("Levine"), is managing member and majority owner of Enable Capital Management, LLC. ECM and Levine may, therefore, be deemed to beneficially own the Securities owned by EGP and such
other investment limited partnerships for the purposes of Rule 13d-3 of the Securities Exchange Act of 1934, as amended, insofar as they may be deemed to have the power to direct
the voting or disposition of those securities. Each of ECM and Levine disclaims beneficial ownership as to the securities, except to the extent of his or its pecuniary interests therein. Shares
beneficially owned by ECM include 16,896,877 shares underlying warrants to purchase Common Stock.(5)Information
regarding ownership of Common Stock by Goldman Sachs Asset Management, L.P., ("GSAM") and GS Investments Strategies, LLC ("GSIS"),
each a wholly-owned subsidiary of The Goldman Sachs Group, Inc., is included herein in reliance on information set forth in the Schedule 13G filed jointly by GSAM and GSIS with the SEC
on February 16, 2010, reflecting ownership as of December 31, 2009. GSAM and GSIS are both classified as investment advisors in accordance with Rule 13d-1(b)(1)(ii)(E)
under the Securities Exchange Act of 1934.(6)Information
taken solely from Amendment No. 1 to the Schedule 13G filed jointly with the SEC on February 10, 2010 by Ramius LLC,
Ramius Advisors LLC, RCG PB, Ltd, Ramius Enterprise Master Fund Ltd, Ramius Navigation Master Fund Ltd, C4S & Co L.L.C., Peter A. Cohen, Morgan B. Stark, Jeffrey M.
Solomon, Thomas W. Strauss, Cowen Group, Inc. and RCG Holdings LLC (collectively the "Reporting Persons"). Based on the matters reported in such filing, as of December 31, 2009:
(i) Ramius Navigation Master Fund Ltd ("Navigation Master Fund") is the beneficial owner of 11,008,336 shares, including 8,272,500 shares exercisable upon the exercise of
warrants; (ii) Ramius Enterprise Master Fund Ltd ("Enterprise Master Fund") is the beneficial owner of 3,669,445 shares, including 2,757,500 shares issuable upon the exercise of
warrants; (iii) RCG PB Ltd., as the sole shareholder of Navigation Master Fund, may be deemed to beneficially own the 11,008,336 shares beneficially owned by Navigation Master Fund;
(iv) Ramius Advisors, LLC ("Ramius Advisors"), as the investment advisor of Enterprise Master Fund and Navigation Master Fund, may be deemed to beneficially own the 3,669,445 shares
owned by Enterprise Master Fund and the 11,008,336 shares owned by Navigation Master Fund; (v) Ramius LLC ("Ramius"), as the sole member of Ramius Advisors, may be deemed to beneficially
own 14,677,781 shares, inclusive of the shares owned by Navigation Master Fund and


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Enterprise
Master Fund; (vi) Cowen Group, Inc. ("Cowen"), as the sole member of Ramius, may be deemed to beneficially own 14,677,781 shares, inclusive of the shares owned by Navigation
Master Fund and Enterprise Master Fund; (vii) RCG Holdings LLC ("RCG Holdings"), as a significant shareholder of Cowen, may be deemed to beneficially own 14,677,781 shares, inclusive of
the shares owned by Navigation Master Fund and Enterprise Master Fund; (viii) C4S & Co., L.L.C. ("C4S"), as the managing member of RCG Holdings, may be deemed to beneficially own
14,677,781 shares, inclusive of the shares owned by Navigation Master Fund and Enterprise Master Fund; and (ix) as the managing members of C4S, each of Messrs. Cohen, Stark, Strauss, and
Solomon may be deemed the beneficial owner of 14,677,781 shares, inclusive of the shares owned by Navigation Master Fund and Enterprise Master Fund. Each Reporting Person (other than Navigation Master
Fund and Enterprise Master Fund) disclaims beneficial ownership of the shares reported herein except to the extent of his or its pecuniary interest therein.


Equity Compensation Plan Information.The following table provides information about the securities authorized for issuance
under the Company's
equity compensation plans as of December 31, 2009:

Plan category

Number of securities
to be issued upon
exercise of
outstanding options,
warrants and rights

Weighted average
exercise price of
outstanding options,
warrants and rights

Number of securities
remaining available
for future issuance(a)

(b)

(c)Equity compensation plans approved by security holders


11,900,028

$
1.14


6,548,931Equity compensation plans not approved by security holders


100,000

$
1.14


Total


12,000,028

$
1.14


6,548,931


For
additional information concerning our equity compensation plans, see discussion in footnote 14 to our consolidated financial statements.

Item 13.    Certain Relationships and Related Transactions and Director Independence

There were no related party transactions in the year ended December 31, 2009.

Director Independence

There are no family relationships among any of our directors or executive officers. Messrs. Adik, Smith, Kletter, Weihman and
Rose, representing a majority of our directors, are independent under the rules of the Nasdaq Stock Market. Our board holds executive sessions at most regularly scheduled meetings at which only these
independent directors are present.

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Related Party Transaction Policy and Procedures

We have adopted the following policy and procedures as part of the Nominating and Governance Committee's charter:

Policy

It is the policy of our Board of Directors that all interested transactions with related parties, are subject to approval or
ratification in accordance with the procedures set forth below.

Procedures

The Nominating and Governance Committee (the "committee") reviews the material facts of all interested transactions and either approves
or disapproves of the entry into the interested transaction, subject to the exceptions described below. If advance committee approval of an interested transaction is not feasible, then the transaction
shall be considered and, if the committee determines it to be appropriate, ratified at the committee's next regularly scheduled meeting. In determining whether to approve or ratify an interested
transaction, the committee shall take into account, among other factors it deems appropriate, whether the interested transaction is on terms no
less favorable than terms generally available to an unaffiliated third-party under the same or similar circumstances and the extent of the related person's interest in the transaction.

The
committee has reviewed the categories of interested transactions described below in "Standing Pre-Approval for Certain Interested Transactions" and determined that under
the terms of its policy, we may enter into each of the interested transactions described therein without further specific approval. The committee may add additional categories of interested
transactions to the list of standing pre-approved transactions.

No
director shall participate in any discussion or approval of an interested transaction for which he or she is a related party, except for pre-approved interested
transactions, and except that the director shall provide all material information concerning the interested transaction to the Committee.

If
an interested transaction will be ongoing, the committee may establish guidelines for our management to follow in our ongoing dealings with the related party. Thereafter, the
committee, on at least an annual basis, shall review and assess ongoing relationships with the related party to see that they are in compliance with the committee's guidelines and that the interested
transaction remains appropriate.

Terms Used in the Policy

An "interested transaction" is any transaction, arrangement or relationship or series of similar transactions, arrangements or
relationships (including any indebtedness or guarantee of indebtedness) in which (1) the aggregate amount involved will or may be expected to exceed $100,000 in any calendar year,
(2) the Company is a party or a participant, and (3) any related party has or will have a direct or indirect interest (other than solely as a result of being a director or a less than
10 percent beneficial owner of another entity).

A
"related party" is any (a) person who is or was (since the beginning of the last fiscal year, even if he or she does not presently serve in that role) an executive officer,
director or nominee for election as a director, (b) greater than 5 percent beneficial owner of the Company's common stock, or (c) immediate family member of any of the foregoing.
An "immediate family member" includes a person's spouse, parents, stepparents, children, stepchildren, siblings, mothers- and fathers-in-law, sons- and
daughters-in-law, and brothers- and sisters-in-law and anyone residing in such person's home (other than a tenant or employee).

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Standing Pre-Approval for Certain Interested Transactions

The committee has reviewed the categories of interested transactions described below and determined that under the terms of this policy
we are approved to enter into each of the interested transactions so described, even if the aggregate amount involved will exceed $100,000:

Item 14.    Principal Accounting Fees and Services

We have engaged Miller Wachman as our independent registered public accounting firm since October 29, 2004. Principal accounting
fees billed by Miller Wachman during 2009 and 2008 were as follows:

2009

2008Audit Fees

$
156,000

$
151,705Audit-Related Fees


57,802


48,477Tax Fees


21,130


21,501All Other Fees





Total Fees

$
234,932

$
221,683


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Audit Fees

The aggregate audit fees billed by Miller Wachman for the fiscal year ended December 31, 2009 and 2008 were $156,000 and
$151,705, respectively. These fees include amounts for the audit of our consolidated annual financial statements, audit of our internal controls and the reviews of the consolidated financial
statements included in our Quarterly Reports on Form 10-Q.

Audit-Related Fees

Audit-related fees billed during 2009 and 2008 were $57,802 and $48,477, respectively. These fees included work related to consent
letters and review of registration.

Tax Fees

The aggregate fees billed by Miller Wachman for tax services rendered during the fiscal years ended December 31, 2009 and 2008,
respectively, were $21,130 and $21,501, respectively. These fees were for the preparation and filing of the 2008 income tax return and developing estimated payments for 2009 income taxes.

All Other Fees

There were no other fees paid to our auditors during 2009 or 2008.

Audit Committee Pre-Approval Requirements

The charter of our Audit Committee provides that it has the sole authority to review in advance and grant any pre-approvals
of (i) all auditing services to be provided by the independent auditor, (ii) all significant non-audit services to be provided by the independent auditors as permitted by
Section 10A of the Securities Exchange Act of 1934 and (iii) all fees and the terms of engagement with respect to such services. All audit and non-audit services performed by
Miller Wachman during fiscal 2009 were pre-approved pursuant to the procedures outlined above.

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PART IV

Item 15.    Exhibits, Financial Statement Schedules



Schedules
for which provision is made in the applicable regulations of the Securities and Exchange Commission have been omitted because the information is disclosed in the Consolidated
Financial Statements presented in our Annual Report on Form 10-K filed with the SEC on March 15, 2010, or because such schedules are not required or not applicable.



The
exhibits are listed below under Part IV, Item 15(c) of this report.



Exhibit
Number

Ref

Description of Document3.1

(19)

Sixth Amended and Restated Certificate of Incorporation,3.2

(19)

Certificate of Amendment of the Sixth Amended and Restated Certificate of Incorporation, dated June 25, 2007.3.3

(19)

Certificate of Amendment of the Sixth Amended and Restated Certificate of Incorporation, dated June 26, 2007.3.4

(22)

Certificate of Amendment of the Sixth Amended and Restated Certificate of Incorporation, dated June 11, 20093.5

(15)

Amended and Restated Bylaws, as amended.3.6

(13)

Certificate of Designation of Series A Junior Participating Preferred Stock, filed with the Secretary of State of Delaware on October 4, 2002.4.1

(2)

Rights Agreement dated as of September 25, 2002 between Beacon and Equiserve Trust Company, NA.4.2

(3)

Amendment No. 1 to Rights Agreement dated as of December 27, 2002.4.3

(16)

Amendment No. 2 to Rights Agreement dated as of August 8, 2007.4.4

(17)

Amendment No. 3 to Rights Agreement dated as of October 24, 2007.4.5

(21)

Amendment No. 4 to Rights Agreement dated as of February 18, 2009.4.6

(27)

Amendment No. 5 to Rights Agreement dated as of June 19, 2009.4.7

(4)

Form of specimen stock certificate.10.1

(1)

Securities Purchase Agreement dated May 23, 2000 among the Company, Perseus Capital, L.L.C., DQE Enterprises, Inc., Micro-Generation Technology Fund, L.L.C., Mechanical Technology Incorporated, GE Capital
Equity Investments, Inc., The Beacon Group Energy Investment Fund II, L.P. and Penske Corporation.10.2

(12)

Third Amended and Restated 1998 Stock Incentive Plan of the Company.10.3

(13)

Form of Incentive Stock Option Agreement of the Company.10.4

(13)

Form of Non-Qualified Stock Option Agreement of the Company.


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Exhibit
Number

Ref

Description of Document10.5

(1)

Form of Non-Qualified Stock Option Agreement of the Company issued to certain consultants on July 24, 2000 and list of holders thereof.10.6

(12)

Employee Stock Purchase Plan of the Company.10.7

(1)

Amended and Restated License Agreement dated October 23, 1998 between the Company and SatCon Technology Corporation10.8

(19)

Lease dated as of July 23, 2007 between the Company and GFI Tyngsboro, LLC.10.9

(32)

Form of Warrant of the Company issued to GFI Tyngsboro, LLC on July 23, 2007. Filed herewith.10.10

(5)

Form of Director and Officer Indemnification Agreement of the Company.10.11

(13)

Form of Restricted Stock Unit Agreement of the Company.10.12

(9)

Form of Warrant of the Company issued pursuant to the November 2005 financing.10.13

(6)

Form of Warrant of the Company issued pursuant to the April 2005 financing.10.14

(28)

Form of Warrant of the Company issued pursuant to the February 2007 financing.10.15

(29)

Form of Warrant of the Company issued pursuant to the September 2007 financing.10.16

(17)

Form of Warrant of the Company issued pursuant to the October 2007 financing.10.17

(30)

Form of Warrant of the Company issued pursuant to the October 2008 financing.10.18

(31)

Form of Warrant of the Company issued pursuant to the December 2008 financing.10.19

(11)

Form of Warrant of the Company issued pursuant to the December 2009 financing10.20

(11)

Form of Additional Investor Rights Warrant issued pursuant to the December 2009 financing.10.21

(6)

Investment Agreement dated April 22, 2005 among the Company, Perseus 2000 Expansion, L.L.C. and Perseus Capital, L.L.C.10.22

(7)

Common Stock Purchase Warrant dated May 24, 2005 issued by the Company to Perseus 2000 Expansion, L.L.C.10.23

(7)

Amended and Restated Common Stock Purchase Warrant dated May 24, 2005 issued by the Company to Perseus Capital, L.L.C.10.24

(7)

Registration Rights Agreement dated May 24, 2005 among the Company, Perseus 2000 Expansion, L.L.C. and Perseus Capital L.L.C.10.25

(8)

Option Agreement dated July 25, 2005 between the Company and Lisa Zappala.10.26

(9)

Securities Purchase Agreement dated November 4, 2005 among the Company and Iroquois Master Fund Ltd., Gryphon Master Fund, LP, GSSF Master Fund, LP, Nite Capital LP, Enable Growth Partners,
 LP, Enable Opportunity Partners, LP, Truk Opportunity Fund, LLC, Truk International Fund, LP, Capital Ventures International and UBS O'Connor LLC FBO O'Connor PIPES Corporate Strategies Master Limited.10.27

(10)

Performance-based Restricted Stock Unit Agreement dated May 8, 2006 between the Company and F. William Capp.


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Exhibit
Number

Ref

Description of Document10.28

(10)

Performance-based Restricted Stock Unit Agreement dated May 8, 2006 between the Company and James M. Spiezio.10.29

(10)

Performance-based Restricted Stock Unit Agreement dated May 8, 2006 between the Company and Matthew L. Lazarewicz.10.30

(23)

Amended and Restated Employment agreement dated April 1, 2009 between the Company and F. William Capp10.31

(23)

Employment agreement dated April 1, 2009 between the Company and James M. Spiezio10.32

(23)

Employment agreement dated April 1, 2009 between the Company and Matthew L. Lazarewicz10.33

(14)

Restricted Stock Unit and Option Agreement dated March 2, 2007 between the Company and F. William Capp.10.34

(14)

Restricted Stock Unit and Option Agreement dated March 2, 2007 between the Company and James M. Spiezio.10.35

(14)

Restricted Stock Unit and Option Agreement dated March 2, 2007 between the Company and Matthew L. Lazarewicz.10.36

(14)

Restricted Stock Unit and Option Agreement dated February 14, 2008 between the Company and F. William Capp.10.37

(14)

Restricted Stock Unit and Option Agreement dated February 14, 2008 between the Company and James M. Spiezio.10.38

(14)

Restricted Stock Unit and Option Agreement dated February 14, 2008 between the Company and Matthew L. Lazarewicz.10.39

(23)

Restricted Stock Unit and Option Agreement dated April 3, 2009 between the Company and F. William Capp.10.40

(23)

Restricted Stock Unit and Option Agreement dated April 3, 2009 between the Company and James M. Spiezio.10.41

(23)

Restricted Stock Unit and Option Agreement dated April 3, 2009 between the Company and Matthew L. Lazarewicz.10.42

(24)

Warrant Transfer and Cancellation Agreement dated January 21, 2009 between the Company and Quercus Trust10.43

(24)

Contract, dated January 28, 2009, between the Company and the U.S. Naval Sea Systems Command.10.44

(25)

Contract, effective as of February 18, 2009 between the Company and American Electric Power, as agent for Columbus Southern Power Company.10.45

(26)

Common Stock Purchase Agreement dated February 19, 2009 between the Company and Seaside 88, LP.10.46

(27)

First Amendment to Common Stock Purchase Agreement, dated June 19, 2009, by and between the Company and Seaside 88, LP.


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Exhibit
Number

Ref

Description of Document10.47

(20)

Promissory Note dated June 30, 2008 issued by Beacon Power Corporation to Massachusetts Development Finance Agency.10.48

(20)

Security Agreement dated June 30, 2008 between Beacon Power Corporation and Massachusetts Development Finance Agency.10.49

(20)

Collateral Assignment of Lease Agreement dated June 30, 2008 between Beacon Power Corporation and Massachusetts Development Finance Agency.10.50

(20)

Form of Warrants issued on June 30, 2008 to Massachusetts Development Finance Agency.21.1

(32)

Subsidiaries of the Company.23.1

(32)

Consent of Miller Wachman LLP.31.1

+

Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2

+

Certification of Principal Financial and Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1

(32)

Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 200232.2

(32)

Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002


(1)Incorporated
by reference from the Form S-1 filed on November 16, 2000 (File No. 333-43386).(2)Incorporated
by reference from the Form 8-K filed on October 4, 2002 (File No. 001-16171).(3)Incorporated
by reference from the Form 10-K filed on March 31, 2003 (File No. 001-16171).(4)Incorporated
by reference from the Form S-3/A filed on January 23, 2006 (File No. 333-130207).(5)Incorporated
by reference from the Form 8-K filed on May 10, 2005 (File No. 001-16171).(6)Incorporated
by reference from the Form 8-K filed on April 25, 2005 (File No. 001-16171).(7)Incorporated
by reference from the Form 8-K filed on May 26, 2005 (File No. 001-16171).(8)Incorporated
by reference from the Form 8-K filed on July 29, 2005 (File No. 001-16171).(9)Incorporated
by reference from the Form 8-K filed on November 7, 2005 (File No. 001-16171).(10)Incorporated
by reference from the Form 10-Q filed on May 9, 2006 (File No. 000-31973).(11)Incorporated
by reference from the Form 8-K filed on December 4, 2009 (File No. 000-31973).(12)Incorporated
by reference from the Form S-8 filed on March 22, 2006 (File No. 333-132638).(13)Incorporated
by reference from the Form 10-K filed on March 30, 2006 (File No. 000-31973).(14)Incorporated
by reference from the Form 8-K filed on February 21, 2008 (File No. 000-31973).(15)Incorporated
by reference from the Form 8-K filed on October 1, 2007 (File No. 000-31973)(16)Incorporated
by reference from the Form S-3 filed on August 17, 2007 (Fine No. 333-145165).(17)Incorporated
by reference from the Form 8-K filed on October 26, 2007 (File No. 000-31973).


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(18)Incorporated
by reference from the Form 8-K filed on July 23, 2007 (File No. 000-31973.)(19)Incorporated
by reference from Form 10-K filed on March 17, 2008 (File No. 000-31973).(20)Incorporated
by reference from the Form 8-K filed on July 7, 2008 (File No. 000-31973).(21)Incorporated
by reference from the Form 8-K filed on February 20, 2009 (File No. 000-31973).(22)Incorporated
by reference from the Form 10-Q filed on August 6, 2009 (File No. 000-31973).(23)Incorporated
by reference from the Form 8-K filed on April 9, 2009 (File No. 000-31973).(24)Incorporated
by reference from the Form 10-Q filed on May 11, 2009 (File No. 000-31973).(25)Incorporated
by reference from the Form 8-K filed on February 26, 2009 (File No. 000-31973).(26)Incorporated
by reference from the Form 8-K filed on February 20, 2009 (File No. 000-31973).(27)Incorporated
by reference from the Form 8-K filed on June 22, 2009 (File No. 000-31973).(28)Incorporated
by reference from the Form 8-K filed on February 13, 2007 (File No. 000-31973).(29)Incorporated
by reference from the Form 8-K filed on September 10, 2007 (File No. 000-31973).(30)Incorporated
by reference from the Form 8-K filed on October 10, 2008 (File No. 000-31973).(31)Incorporated
by reference from the Form 8-K filed on December 22, 2008 (File No. 000-31973).(32)Filed
with the original Annual Report on Form 10-K for the fiscal year ended December 31, 2009, filed on March 15, 2010.+Filed
herewith.


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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned thereunto duly authorized.

BEACON POWER CORPORATIONBy:

/s/ F. WILLIAM CAPP F. William Capp President and Chief Executive OfficerDate: April 30, 2010


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