Document:

OPTION TO PURCHASE AGREEMENT

                                    AMENDMENT

THIS AMENDMENT DATED SEPTMEBER 8, 2005 IS APPLICABLE TO THE AGREEMENT made as of
the 27th day of August, 2004.

BETWEEN:

PUNEET SHARAN, businessman, 1450 Sasamat Street, Vancouver, British Columbia,
Canada V6R 4G4

(hereinafter referred to as the "Vendor")

                                                       PARTIES OF THE FIRST PART

AND:

BOULDER CREEK EXPLORATIONS, INC., a company duly incorporated under the laws of
the State of Nevada, having an office at 1450 Sasamat Street, Vancouver, British
Columbia, Canada V6R 4G4

(hereinafter referred to as "BCEI")

<PAGE>

                                                              OF THE SECOND PART

WHEREAS:

A.   Vendor is the sole beneficial owner of 100% of the mineral claims Pun and
     Tim, both located within the Lillooet Mining Division of the Ministry of
     Sustainable Resource Management which are both situated in the British
     Columbia Canada as described in Schedule "A" attached hereto and forming
     part hereof (hereinafter together with any form of successor or substitute
     mineral tenure called the "Claim").

B.   The parties now wish to enter into an agreement granting to BCEI the
     exclusive right and option to acquire an undivided 100% of the right, title
     and interest in and to the Claim on the terms and conditions as hereinafter
     set forth.

NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises and
the mutual promises, covenants and agreements herein contained, the parties
hereto agree as follows:

1.   INTERPRETATION

1.1  In this Agreement:

     (a)  "Effective Date" means the date that both parties have signed this
          Agreement;

     (b)  "Mineral Products" means the products derived from operating the Claim
          as a mine;

     (c)  "Net Smelter Returns" means the proceeds received by BCEI from any
          smelter or other purchaser from the sale of any ores, concentrates or
          minerals produced from the Claim after deducting from such proceeds
          the following charges only to the extent that they are not deducted by
          the smelter or other purchaser in computing the proceeds:

          (i)  the cost of transportation of the ores, concentrates or minerals
               from the Claim to such smelter or other purchaser, including
               related transport;

          (ii) smelting and refining charges including penalties; and

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<PAGE>

          (iii) marketing costs.

     (d)  "Option" means the option granted by Vendor to BCEI pursuant to
          Section 3;

     (e)  "Operating the Claim as a mine" or "Operation of the Claim as a mine"
          means any or all of the mining, milling, smelting, refining or other
          recovery of ores, minerals, metals or concentrates or values thereof,
          derived from the Claim;

     (f)  "Dollars ($)" means legal currency of United States of America.

2.   REPRESENTATIONS AND WARRANTIES

2.1  BCEI represents and warrants to Vendor that:

     (a)  BCEI is a body corporate duly incorporated, organized and validly
          subsisting under the laws of its incorporating jurisdiction;

     (b)  BCEI has full power and authority to carry on its business and to
          enter into this Agreement and any agreement or instrument referred to
          or contemplated by this Agreement;

     (c)  neither the execution and delivery of this Agreement nor any of the
          agreements referred to herein or contemplated hereby, nor the
          consummation of the transactions hereby contemplated will conflict
          with, result in the breach of or accelerate the performance required
          by any agreement to which BCEI is a party; and

     (d)  the execution and delivery of this Agreement and the agreements
          contemplated hereby will not violate or result in the breach of laws
          of any jurisdiction applicable or pertaining thereto or of BCEI's
          constating documents.

2.2  Vendor represents and warrants to BCEI:

     (a)  the Claim consists of the mineral claims Pun and Tim, both located
          within the Lillooet Mining Division of the Ministry of Sustainable
          Resource which has been duly and validly staked and recorded, as
          accurately described in Schedule "A", is presently in good standing
          under the laws of the jurisdiction in which it is located and, except
          as set forth herein, is free and clear of all liens, charges and
          encumbrances;

     (b)  Vendor is the sole beneficial owner of a 100% interest in and to the
          Claim and has the exclusive right to enter into this Agreement and all
          necessary authority to dispose of an undivided 100% interest in and to
          the Claim in accordance with the terms of this Agreement;

     (c)  no person, firm or corporation has any proprietary or possessory
          interest in the Claim other than Vendor and no person is entitled to
          any royalty or other payment in the nature

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                                      - 3 -
<PAGE>

          of rent or royalty on any minerals, ores, metals or concentrates or
          any other such products removed from the Claim;

     (d)  neither the execution and delivery of this Agreement nor any of the
          agreements referred to herein or contemplated hereby, nor the
          consummation of the transactions hereby contemplated will conflict
          with, result in the breach of or accelerate the performance required
          by any agreement to which Vendor is a party or by which he is bound;

     (e)  the execution and delivery of this Agreement and the agreements
          contemplated hereby will not violate or result in the breach of the
          laws of any jurisdiction applicable or pertaining thereto.

2.3  The representations and warranties hereinbefore set out are conditions on
     which the parties have relied in entering into this Agreement and will
     survive the acquisition of any interest in the Claim by BCEI and each party
     will indemnify and save the other party harmless from all loss, damage,
     costs, actions and suits arising out of or in connection with any breach or
     any representation, warranty, covenant, agreement or condition made by the
     other party and contained in this Agreement.

3.   OPTION

3.1  Vendor hereby gives and grants to BCEI the sole and exclusive right and
     option to acquire an undivided 100% of the right, title and interest of
     Vendor in and to the Claim, subject only to Vendor receiving the annual
     payments in accordance with the terms of this Agreement for and in
     consideration of the following:

     (a)  BCEI, or its permitted assigns, incurring exploration expenditures on
          the Claims of a minimum of $15,000 on or before March 31, 2006;
          and

     (b)  BCEI, or its permitted assigns, incurring exploration expenditures on
          the Claims of a further $40,000 (for aggregate minimum exploration
          expenses of $55,000) on or before March 31, 2007; and

3.2  Upon exercise of the Option, BCEI agrees to pay Vendor, commencing January
     1, 2009, the sum of $25,000 per annum for so long as BCEI, or its permitted
     assigns, holds any interest in the Claims. Failure to make any such annual
     payment shall result in termination of this Agreement in accordance with
     Section 5.1.

4.   RIGHT OF ENTRY

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                                      - 4 -
<PAGE>

4.1  Until such time as the Option has been exercised, BCEI, its employees,
     agents and independent contractors, will have the sole and exclusive right
     and option to:

     (a)  enter upon the Claims;

     (b)  have exclusive and quiet possession thereof;

     (c)  do such prospecting, exploration, development or other mining work
          thereon and thereunder as BCEI in its sole discretion may consider
          advisable; and

     (d)  bring and erect upon the Claims such facilities as BCEI may consider
          advisable.

5.   TERMINATION

5.1  Subject to Section 8, this Agreement and the Option will terminate:

     (a)   on March 31, 2006 at 11:59 P.M., unless on or before that date,
           BCEI has incurred exploration expenditures of a minimum of $15,000 on
           the Claims;

     (b)   on March 31, 2007 at 11:59 P.M., unless BCEI has incurred a
           further $40,000 of exploration expenditures on the Claims (for an
           aggregate of $55,000); or

     c)   at 11:59 P.M. on January 1 of each and every year, commencing on
          January 1, 2009, unless BCEI or its successor or assign has paid to
          Vendor the sum of $25,000 on or before that date.

6.   COVENANTS OF VENDOR

6.1  Vendor will:

     (a)  not do any act or thing which would or might in any way adversely
          affect the rights of BCEI hereunder;

     (b)  make available to BCEI and its representatives all records and files
          in the possession of Vendor relating to the Claims and permit BCEI and
          its representatives at its own expense to take abstracts therefrom and
          make copies thereof; and

     (c)  promptly provide BCEI with any and all notices and correspondence from
          government agencies in respect of the Claims.

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                                      - 5 -
<PAGE>

7.   COVENANTS OF BCEI

7.1  BCEI will:

     (a)  keep the Claims free and clear of all liens, charges and encumbrances
          arising from their operations hereunder and in good standing by the
          doing and filing of all necessary work and by the doing of all other
          acts and things and making all other payments which may be necessary
          in that regard;

     (b)  permit Vendor, or its representatives duly authorized by it in
          writing, at their own risk and expense, access to the Claims at all
          reasonable times and to all records prepared by BCEI in connection
          with work done on or with respect to the Claims;

     (c)  conduct all work on or with respect to the Claims in a careful and
          miner-like manner and in compliance with all applicable Federal,
          Provincial and local laws, rules, orders and regulations, and
          indemnify and save Vendor harmless from any and all Claims, suits,
          actions made or brought against it as a result of work done by BCEI on
          or with respect to the Claims; and

     (d)   obtain and maintain, or cause any contractor engaged hereunder to
           obtain and maintain, during any period in which active work is
           carried out hereunder, adequate insurance.

8.   EXERCISE OF OPTION

8.1  Once BCEI has incurred the exploration expenditures, and made the payments
     set out in Section 3.1, BCEI will, subject to the right of Vendor to
     receive the obligation of BCEI to make the annual payments set out in
     Section 3.2, own an undivided 100% of Vendor's right, title, and interest
     in and to the Claims.

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                                      - 6 -

<PAGE>

9.   OBLIGATIONS OF BCEI AFTER TERMINATION

9.1  In the event of the termination of the Option, BCEI will:

     (a)  leave the Claims in good standing for a minimum of one (1) year under
          all applicable legislation, free and clear of all liens, charges and
          encumbrances arising from this Agreement or their operations hereunder
          and in a safe and orderly condition;

     (b)  deliver to Vendor within 60 days of its written request a
          comprehensive report on all work carried out by BCEI on the Claims
          (limited to factual matter only) together with copies of all maps,
          drill logs, assay results and other technical data compiled by BCEI
          with respect to the Claims;

     (c)  have the right, and obligation on demand made by Vendor, to remove
          from the Claims within six (6) months of the effective date of
          termination all facilities erected, installed or brought upon the
          Claims by or at the instance of BCEI provided that at the option of
          Vendor, any or all of facilities not so removed will become the
          property of Vendor; and

     (d)  deliver to Vendor a duly executed transfer in registrable form of an
          undivided 100% right, title and interest in and to the Claims in
          favor of Vendor, or its nominee.

10.  TRANSFER OF TITLE

10.1 Upon the request of BCEI, Vendor will deliver to BCEI a duly executed
     transfer in registrable form of an undivided 100% of Vendor's right, title
     and interest in and to the Claims in favour of BCEI which BCEI will be
     entitled to register against title to the Claims provided that transfer of
     legal title to the Claims as set forth in this Subsection 10.1 is for
     administrative convenience only and beneficial ownership of an undivided
     100% interest in the Claims will pass to BCEI only in accordance with the
     terms and conditions of this Agreement.

11.  REGISTRATION OF AGREEMENT

12.1 Notwithstanding Section 10 of this Agreement, BCEI or Vendor will have the
     right at any time to register this Agreement or a Memorandum thereof
     against title to the Claims.

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<PAGE>

12.  DISPOSITION OF CLAIMS

12.1 BCEI may at any time sell, transfer or otherwise dispose of all or any
     portion of its interest in and to the Claims and this Agreement provided
     that, at any time, BCEI has first obtained the consent in writing of
     Vendor, such consent not to be unreasonably withheld and further provided
     that, at any time during the currency of this Agreement, any purchaser,
     grantee or transferee of any such interest will have first delivered to
     Vendor its agreement related to this Agreement and to the Claims,
     containing:

     (a)  a covenant with Vendor by such transferee to perform all the
          obligations of BCEI to be performed under this Agreement in respect of
          the interest to be acquired by it from BCEI, and

     (b)  a provision subjecting any further sale, transfer or other disposition
          of such interest in the Claims and this Agreement or any portion
          thereof to the restrictions contained in this Subsection 12.1.

12.2 The provisions or Subsection 13.1 of this Agreement will not prevent either
     party from entering into an amalgamation or corporate reorganization which
     will have the effect in law of the amalgamated or surviving company
     possessing all the property, rights and interests and being subject to all
     the debts, liabilities and obligations of each amalgamating or predecessor
     company.

13.  ABANDONMENT OF PROPERTY

13.l BCEI shall have the unfettered right at any time after the exercise of the
     Option to abandon all or any part of its interest in the Claims by
     delivering a notice in writing of their intention to do so to Vendor, such
     notice to list the part or parts of the Claims to be abandoned, and if
     within 30 days of receipt of such notice Vendor delivers to BCEI a notice
     ("Reacquisition Notice") stating its intention to reacquire all or part or
     parts of the Claims, BCEI will deliver to Vendor duly executed recordable
     transfers of its interest in such part or parts of the Claims as Vendor has
     set forth in the Reacquisition Notice, such part or parts to be in good
     standing for at least one year beyond the date of delivery of such
     transfers and to be free and clear of all liens, charges, and encumbrances
     arising from the operations of BCEI or its agents or subcontractors
     hereunder.

14.  CONFIDENTIAL NATURE OF INFORMATION

15.1 The parties agree that all information obtained from the work carried out
     hereunder and under the operation of this Agreement will be the exclusive
     property of the parties and will not be used other than for the activities
     contemplated hereunder except as required by law or by the rules and
     regulations of any regulatory authority having jurisdiction, or with the
     written consent of both parties, such consent not to be unreasonably
     withheld. Notwithstanding the foregoing, it is understood and agreed that a
     party will not be liable to the other party for the fraudulent or negligent
     disclosure of information by any of its employees, servants or agents,
     provided that such party has taken reasonable steps to ensure the
     preservation of the confidential nature of such information.

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<PAGE>

16.  FURTHER ASSURANCES

16.1 The parties hereto agree that they and each of them will execute all
     documents and do all acts and things within their respective powers to
     carry out and implement the provisions or intent of this Agreement.

17.  NOTICE

17.1 Any notice, direction or other instrument required or permitted to be given
     under this Agreement will be in writing and will be given by the delivery
     or the same or by mailing the same by prepaid registered or certified mail
     in each case addressed as follows:

     (a)  if to Vendor
          1450 Sasamat Street
          Vancouver, B.C., V6R4G4
          Attention : Puneet Sharan
          ---------

     (b)  if to Boulder Creek Explorations, Inc.
          2764 Lake Sahara Drive, Suite 111
          Las Vegas, Nevada 89117

l7.2 Any notice, direction or other instrument aforesaid will, if delivered, be
     deemed to have been given and received on the day it was delivered, and if
     mailed, be deemed to have been given and received on the fifth business day
     following the day of mailing, except in the event of disruption of the
     postal services in which event notice will be deemed to be received only
     when actually received.

17.3 Any party may at any time give to the other notice in writing of any change
     of address of the party giving such notice and from and after the giving of
     such notice, the address or addresses therein specified will be deemed to
     be the address of such party for the purpose of giving notice hereunder.

18.  HEADINGS

18.1 The headings to the respective sections herein will not be deemed part of
     this Agreement but will be regarded as having been used for convenience
     only.

19.  DEFAULT

19.1 If any party (a "Defaulting Party") is in default of any requirement herein
     set forth other than the provisions of Section 5 for which notice of
     default need not be given, the party affected by such default will give
     written notice to the defaulting Party specifying the default and the
     Defaulting Party will not lose any rights under this Agreement, unless
     within 30 days after the giving of notice of default by the affected party
     the Defaulting Party has cured the default by the appropriate performance
     and if the Defaulting Party fails within such period to cure any such

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<PAGE>

     default, the affected party will be entitled to seek any remedy it may have
     on account of such default.

20.  PAYMENT

20.1 All references to monies hereunder will be in Canadian funds except where
     otherwise designated. All payments to be made to any party hereunder will
     be mailed or delivered to such party at its address for notice purposes as
     provided herein, or for the account of such party at such bank or banks in
     Canada as such party may designate from time to time by written notice.
     Said bank or banks will be deemed the agent of the designating party for
     the purpose of receiving and collecting such payment.

21.  ENUREMENT

21.1 Subject to Section 13, this Agreement will ensure to the benefit of and be
     binding upon the parties hereto and their respective successors and
     permitted assigns.

22.  TERMS

22.1 The terms and provisions of this Agreement shall be interpreted in
     accordance with the laws of British Columbia Canada.

23.  FORCE MAJEURE

23.1 No party will be liable for its failure to perform any of its obligations
     under this Agreement due to a cause beyond its control (except those caused
     by its own lack of funds) including, but not limited to acts of God, fire,
     flood, explosion, strikes, lockouts or other industrial disturbances, laws,
     rules and regulations or orders of any duly constituted governmental
     authority or non- availability of materials or transportation (each an
     "Intervening Event").

23.2 All time limits imposed by this Agreement, other than those imposed by
     Section 5, will be extended by a period equivalent to the period of delay
     resulting from an Intervening Event described in Subsection 23.1.

23.3 A party relying on the provisions of Subsection 23.1 will take all
     reasonable steps to eliminate an Intervening Event and, if possible, will
     perform its obligations under this Agreement as far as practical, but
     nothing herein will require such party to settle or adjust any labour
     dispute or to question or to test the validity of any law, rule, regulation
     or order of any duly constituted governmental authority or to complete its
     obligations under this Agreement if an Intervening Event renders completion
     impossible.

24.  ENTIRE AGREEMENT

24.1 This Agreement constitutes the entire agreement between the parties and
     replaces and supersedes all prior agreements, memoranda, correspondence,
     communications, negotiations and

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     representations, whether verbal or written, express or implied, statutory
     or otherwise between the parties with respect to the subject matter herein.

25.  TIME OF ESSENCE

25.1 Time will be of the essence in this Agreement.

26.  ENFORCEMENT OF AGREEMENT

26.1 The covenants, promises, terms and conditions contained herein will be
     binding upon the parties jointly and severally and may be enforced by each
     as against each other inter se.

IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the day
and year first above written.

PUNEET SHARAN

          ________________________
          By:  Puneet Sharan

          ________________________
          Signature of Witness

          ________________________
          Printed Name of Witness

BOULDER CREEK EXPLORATIONS, INC.

Per:      _____________________________________________________
          by its Authorized Signatory: Puneet Sharan, President

<PAGE>

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This is SCHEDULE  "A" to an  Agreement  made as of the 27th day of August,  2004
between  VENDOR and BOULDER CREEK  EXPLORATIONS,  INC. and  incorporated  to the
amendment herein dated September 8, 2005.

Tenure Number         Claim Name          Issue Date        Tag Number
-------------         ----------          ----------        ----------
   409538                Pun             April 8, 2004        233318
   409539                Tim             April 8, 2004        233317

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                                     - 11 -EXHIBIT 10.1

AWARD / CONTRACT                        PAGE 1 of 19 PAGES
----------------
CONTRACT IS A RATED ORDER UNDER DPAS (15 CFR 350)
1. RATING: DO-A7
------------------------------------
2. CONTRACT (PROC. INST. IDENT.) NO.: FA9453-05-C-0082
------------------------------------
3. EFFECTIVE DATE:  07 OCT 2005
------------------------------------
4. REQUISITION / PURCHASE REQUEST / PROJECT NO.: See Section G
------------------------------------
5. ISSUED BY: AFRL/PK8VE

AF RESEARCH LABORATORY (DET 8)
2251 MAXWELL AVE., SE
KIRTLAND AFB, NM
ANDREA J. STONE
andrea.stone@kirtland.af.mil
------------------------------------
6. ADMINISTERED BY :

DCMA BOSTON
495 SUMMER STREET
BOSTON, MA 02210-2138
SBOSTON@DCMA.MIL
                               SCD: C PAS: (NONE)
------------------------------------
7. NAME AND ADDRESS OF CONTRACTOR (NO., STREET, CITY, COUNTY, STATE AND ZIP
CODE):

BEACON POWER CORPORATION
234 BALLARDVALE ST
WILMINGTON MA 01887-7103
(978) 694-9121
------------------------------------
8. DELIVERY FOB: Other (see below)
------------------------------------
9. DISCOUNT FOR PROMPT PAYMENT:  N

------------------------------------
10. SUBMIT INVOICES (4 COPIES UNLESS OTHERWISE SPECIFIED) TO
3EFH5 FACILITY CODE THE ADDRESS SHOWN IN ITEM
See Block 12
------------------------------------
12. PAYMENT WILL BE MADE BY:

DFAS COLUMBUS CENTER
DFAS CO/NORTH ENTITLEMENT OPS
P.O. BOX 182266
COLUMBUS, OH 43218-2266
EFT: T

------------------------------------
11. SHIP TO / MARK FOR : SEE SECTION F
------------------------------------
13. AUTHORITY FOR OTHER THAN FULL AND OPEN COMPETITION
------------------------------------
14. ACCOUNTING AND APPROPRIATION DATA
------------------------------------
15A. ITEM NO
------------------------------------
15B.
------------------------------------
15C. QUANTITY
------------------------------------
15D. UNIT
------------------------------------
15E. UNIT PRICE
------------------------------------
15F. AMOUNT
------------------------------------
15G. TOTAL AMOUNT OF CONTRACT $750,000.00
------------------------------------
16. Table of Contents

SEC    DESCRIPTION    PAGE(S) SEC    DESCRIPTION     PAGE(S)
--- ---------------  --------  --- -------------- ---------
O A SOLICITATION/CONTRACT FORM 1 O I CONTRACT CLAUSES 15
O B SUPPLIES OR SERVICES AND PRICES/COSTS 2 ATTACHMENTS
O C DESCRIPTION/SPECS./WORK STATEMENT 7  O J LIST OF ATTACHMENTS 19
O D PACKAGING AND MARKING 8
O E INSPECTION AND ACCEPTANCE 9  K REPRESENTATIONS, CERTIFICATIONS
O F DELIVERIES OR PERFORMANCE 10  OTHER STATEMENTS OF OFFERORS
O G CONTRACT ADMINISTRATION DATA 13  L INSTRS., CONDS., AND NOTICES TO
O H SPECIAL CONTRACT REQUIREMENTS 14  M EVALUATION FACTORS FOR AWARD

CONTRACTING OFFICER WILL COMPLETE ITEM 17 OR 18 AS APPLICABLE

17. Contractor's Negotiated Agreement
(Contractor is required to sign this document and return 1 copies to issuing
 office). Contractor agrees to furnish and deliver all items or perform all
services set forth or otherwise identified above and on any continuation sheets
for the consideration stated herein. The rights and obligations of the parties
to this contract shall besubject to and governed by the following
documents: (a) this award/contract, (b) the solicitation, if any, and (c) such
provisions, representations, certifications, and specifications, as are attached
or incorporated by reference herein. (Attachments are listed herein.)

18. Award (Contractor is not required to sign this document).
Your offer on solicitation number including the additions or changes made by you
which additions or changes set forth in full above, is hereby accepted as to
items listed above and on any continuation sheets.  This award comsummates the
contract which consists of the following documents: (a) the Government's
solicitation and your offer, and (b) this award/contract. No further contractual
document is necessary.

19A. NAME AND TITLE OF SIGNER (TYPE OR PRINT)

F. William Capp, President and CEO
----------------------------------
19B. Name of Contractor

BY: /s/ F. William Capp
------------------------
19C. Date Signed

7-OCT-2005
------------------------
20A. NAME OF CONTRACTING OFFICER

WILLIAM H. FOSTER
------------------------
20B. United States of America

BY: /s/ William H. Foster
------------------------
(signature of Contracting Officer)

20C. Date Signed
7-OCT-2005
------------------------

NSN
7540-01-152-8069 STANDARD FORM 26 (Rev 4-85) Previous Editions unusable
Prescribed by GSA FAR (48 CFR) 53.214(a) ConWrite Version 6.3.17 Created 07 Oct
2005 1:43 PM 31707.doc

<TABLE>
<CAPTION>

PART I - THE SCHEDULE
SECTION B - SUPPLIES OR SERVICES AND PRICES/COSTS

                                                                       Qty                       Unit Price
ITEM              SUPPLIES OR SERVICES                                Purch Unit                 Total Item Amount
------------------------------------------------------------------------------------------------------------------------------------
<S>               <C>                                <C>               <C>      <C>              <C>

0001                                                                   1
                                                                       Each                      $90,000.00
                  NSN: N - Not Applicable
                  Contract type: J - FIRM FIXED PRICE
                  Inspection: SOURCE
                  Acceptance: SOURCE
                  FOB: SOURCE
                  Descriptive Data:
                  The contractor shall furnish the necessary qualified
                  personnel, materials, facilities, supplies, travel and
                  services to perform research and development in accordance
                  with Statement of Work (SOW) entitled, "Extreme Energy Density
                  Flywheel Energy Storage System for Space Applications",
                  Section J, Attachments 1 and 2 and submit data items in
                  accordance with Exhibits A, Contract Data Requirements List
                  (DD Form 1423-1) dated 04 April 2005 .

000101
                  Noun:                     Funding Info Only
                  ACRN:             AA                        $90,000.00
                  PR/MIPR:                  F2KBAA5091B009                              $90,000.00

0002                                                                   1                         $90,000.00
                                                                       Each                      $90,000.00
                  Noun:                     STATUS REPORT NO. 2
                  ACRN:             9
                  NSN:                      N - Not Applicable
                  DD1423 is Exhibit:        A
                  Contract type:    FIRM FIXED PRICE
                  Inspection:               DESTINATION
                  Acceptance:               DESTINATION
                  FOB:                      DESTINATION
                  Descriptive Data:
                  The contractor shall furnish the necessary qualified
                  personnel, materials, facilities, supplies, travel and
                  services to perform research and development in accordance
                  with Statement of Work (SOW) entitled, "Extreme Energy Density
                  Flywheel Energy Storage System for Space Applications",
                  Section J, Attachments 1 and 2 and submit data items in
                  accordance with Exhibit A CDRL A002, Contract Data
                  Requirements List (DD Form 1423-1) dated 04 April 2005 .

000201
                  Noun: Funding Info Only
                  ACRN: AA $90,000.00
                  PR/MIPR: F2KBAA5091B009 $90,000.00

<PAGE>

                                                                       Qty                       Unit Price
ITEM              SUPPLIES OR SERVICES                                 Purch Unit                 Total Item Amount
------------------------------------------------------------------------------------------------------------------------------------

0003                                                                   1                         $90,000.00
                                                                       Each                      $90,000.00

                  Noun:                     STATUS REPORT NO. 3
                  ACRN:             9
                  NSN:                      N - Not Applicable
                  DD1423 is Exhibit:        A
                  Contract type:    J - FIRM FIXED PRICE
                  Inspection:               DESTINATION
                  Acceptance:               DESTINATION
                  FOB:                      DESTINATION
                  Descriptive Data:

                  The contractor shall furnish the necessary qualified
                  personnel, materials, facilities, supplies, travel and
                  services to perform research and development in accordance
                  with Statement of Work (SOW) entitled, "Extreme Energy Density
                  Flywheel Energy Storage System for Space Applications",
                  Section J, Attachments 1 and 2 and submit data items in
                  accordance with Exhibits A CDRL A002, Contract Data
                  Requirements List (DD Form 1423-1) dated 04 April 2005 .

000301
                  Noun: Funding Info Only
                  ACRN: AA                  $70,000.00
                  PR/MIPR: F2KBAA5091B009                                               $70,000.00

0004                                                          1                                  $90,000.00
                                                              Each                               $90,000.00
                  Noun:                     STATUS REPORT NO. 4
                  ACRN:                     9
                  NSN:                      N - Not Applicable
                  DD1423 is Exhibit:        A
                  Contract type:            J - FIRM FIXED PRICE
                  Inspection:               DESTINATION
                  Acceptance:               DESTINATION
                  FOB:                      DESTINATION
                  Descriptive Data:

                  The contractor shall furnish the necessary qualified
                  personnel, materials, facilities, supplies, travel and
                  services to perform research and development in accordance
                  with Statement of Work (SOW) entitled, "Extreme Energy Density
                  Flywheel Energy Storage System for Space Applications",
                  Section J, Attachments 1 and 2 and submit data items in
                  accordance with Exhibits A CDRL A002, Contract Data
                  Requirements List (DD Form 1423-1) dated 04 April 2005 .

<PAGE>

                                                                       Qty                       Unit Price
ITEM              SUPPLIES OR SERVICES                                Purch Unit                 Total Item Amount
------------------------------------------------------------------------------------------------------------------------------------

0005                                                                   1                         $90,000.00
                                                                       Each                      $90,000.00

                  Noun:                     STATUS REPORT NO. 5
                  ACRN:                     9
                  NSN:                      N - Not Applicable
                  DD1423 is Exhibit:        A
                  Contract type:            J - FIRM FIXED PRICE
                  Inspection:               DESTINATION
                  Acceptance:               DESTINATION
                  FOB:                      DESTINATION
                  Descriptive Data:

                  The contractor shall furnish the necessary qualified
                  personnel, materials, facilities, supplies, travel and
                  services to perform research and development in accordance
                  with Statement of Work (SOW) entitled, "Extreme Energy Density
                  Flywheel Energy Storage System for Space Applications",
                  Section J, Attachments 1 and 2 and submit data items in
                  accordance with Exhibits A CDRL A002, Contract Data
                  Requirements List (DD Form 1423-1) dated 04 April 2005 .

0006                                                                   1                         $90,000.00
                                                                       Each                      $90,000.00

                  Noun:                     STATUS REPORT NO. 6
                  ACRN:                     9
                  NSN:                      N - Not Applicable
                  DD1423 is Exhibit:        A
                  Contract type:            J - FIRM FIXED PRICE
                  Inspection:               DESTINATION
                  Acceptance:               DESTINATION
                  FOB:                      DESTINATION
                  Descriptive Data:

                  The contractor shall furnish the necessary qualified
                  personnel, materials, facilities, supplies, travel and
                  services to perform research and development in accordance
                  with Statement of Work (SOW) entitled, "Extreme Energy Density
                  Flywheel Energy Storage System for Space Applications",
                  Section J, Attachments 1 and 2 and submit data items in
                  accordance with Exhibits A CDRL A002, Contract Data
                  Requirements List (DD Form 1423-1) dated 04 April 2005 .

<PAGE>

                                                                       Qty                       Unit Price
ITEM              SUPPLIES OR SERVICES                                Purch Unit                 Total Item Amount
------------------------------------------------------------------------------------------------------------------------------------

0007                                                                   1                         $90,000.00
                                                                       Each                      $90,000.00

                  Noun:                     STATUS REPORT NO. 7
                  ACRN:                     9
                  NSN:                      N - Not Applicable
                  DD1423 is Exhibit:        A
                  Contract type:            J - FIRM FIXED PRICE
                  Inspection:               DESTINATION
                  Acceptance:               DESTINATION
                  FOB:                      DESTINATION
                  Descriptive Data:

                  The contractor shall furnish the necessary qualified
                  personnel, materials, facilities, supplies, travel and
                  services to perform research and development in accordance
                  with Statement of Work (SOW) entitled, "Extreme Energy Density
                  Flywheel Energy Storage System for Space Applications",
                  Section J, Attachments 1 and 2 and submit data items in
                  accordance with Exhibits A CDRL A002, Contract Data
                  Requirements List (DD Form 1423-1) dated 04 April 2005.

0008                                                                   1                         NSP
                                                                       Each                      NSP

                  Noun:                     DATA & REPORTS (A-SERIES)(A002 & A003)
                  ACRN:                     U
                  NSN:                      N - Not Applicable
                  DD1423 is Exhibit:        A
                  Contract type:            J - FIRM FIXED PRICE
                  Inspection:               DESTINATION
                  Acceptance:               DESTINATION
                  FOB:                      DESTINATION
                  Descriptive Data:

                  The contractor shall furnish data in accordance with Exhibit
                  A, Contract Data Requirements List (CDRL)(DD Form 1423-1)
                  A-Series, data items A002 & A003, dated 04 April 2005. The
                  price for these reports is included in CLIN 0001.

0009                                                                   1                         $120,000.00
                                                                       Each                      $120,000.00

                  Noun:
                  FINAL SCIENTIFIC AND TECHNICAL REPORT
                  ACRN:                     9
                  NSN:                      N - Not Applicable
                  DD1423 is Exhibit:        A
                  Contract type:            J - FIRM FIXED PRICE
                  Inspection:               DESTINATION
                  Acceptance:               DESTINATION
                  FOB:                      DESTINATION
                  Descriptive Data:

                  Submit the draft and Final Scientific & Technical Report in
                  accordance with Exhibit A, Contract Data Requirements List
                  (CDRL) (DD Form 1423-1) data item A001, dated 04 April 2005.
                  The contractor shall submit a DD Form 250Z with the Final
                  Report.

</TABLE>

PART I - THE SCHEDULE
SECTION C - DESCRIPTION/SPECS.WORK STATEMENT

OTHER CONTRACT CLAUSES IN FULL TEXT
B028 CONTRACT TYPE: FIRM FIXED PRICE (FEB 1997)
Total Price $750,000.00
Applicable to following Line Items: ALL

<PAGE>

PART I - THE SCHEDULE
SECTION D - PACKAGING AND MARKING

OTHER CONTRACT CLAUSES IN FULL TEXT

PRS-C001  C003 INCORPORATED DOCUMENTS/REQUIREMENTS (APR 1998)  (SEP 2005)

PRS-COO1 INCORPORATED DOCUMENTS/REQUIREMENTS (MARCH 2004)

1. ATTACHMENTS:
         The contractor's Statement of Work (SOW), entitled "Extreme Energy
Density Flywheel Energy Storage System for Space Applications," dated 29 Sep 05,
shall constitute the work to be performed under this contract and is hereby
incorporated in Section J as Attachment 1.

2. EXHIBITS:
         DD Forms 1423-1, Contract Data Requirements List, A-Series A001 through
A003, dated 04 Apr 05, are hereby incorporated as Exhibit A.

3. TECHNICAL INTERCHANGE MEETINGS (TIMs)
         There will be one Technical Interchange Meeting with the contractor to
be held at Kirtland AFB. The TIM shall be coordinated between the Government
Program Manager and the Contractor.

4. MEASUREMENT SYSTEMS

 All measurement units in all documents presented to the Air Force shall be as
proposed by the contractor.

<PAGE>

PART I - THE SCHEDULE
SECTION E - INSPECTION AND ACCEPTANCE

I. NOTICE: The following contract clauses pertinent to this section are hereby
incorporated by reference:

AIR FORCE MATERIEL COMMAND FEDERAL ACQUISITION REGULATION SUPPLEMENT CONTRACT
CLAUSES

5352.247-9008 CONTRACTOR COMMERCIAL PACKAGING (AFMC)  (SEP 1998)

II. NOTICE: The following contract clauses pertinent to this section are hereby
incorporated in full text:

OTHER CONTRACT CLAUSES IN FULL TEXT PRS-D001  PACKAGING AND MARKING -
(ADMINISTRATIVE)  (SEP 2005)

a. All hardware deliverable contract items shall be packaged in accordance with
established commercial practices.

b. All hardware is to be initially delivered to:

         SHIP TO: AFRL/VSSV
         Marked for: FA9453-05-C-0082
         3550 Aberdeen Ave., SE
         Kirtland AFB NM 87117-5776

c. When special delivery and/or handling instructions are required, all boxes
and/or crates must contain the following statement in plain sight and in bold
letters:

         INSTRUCTION TO RECEIVING OFFICE - DO NOT OPEN; CONTENTS ARE SENSITIVE
TO DAMAGE WHEN IMPROPERLY OPENED OR HANDLED.

         CONTACT: Dr. Jerry Fausz, AFRL/VSSV
         PH: (505) 846-7890 (VOICE)

<PAGE>

PART I - THE SCHEDULE
SECTION F - DELIVERIES OR PERFORMANCE

I. NOTICE: The following contract clauses pertinent to this section are hereby
incorporated by reference:

A. FEDERAL ACQUISITION REGULATION CONTRACT CLAUSES

52.246-09 INSPECTION OF RESEARCH AND DEVELOPMENT (SHORT FORM) (APR 1984)

B. DEFENSE FEDERAL ACQUISITION REGULATION SUPPLEMENT CONTRACT CLAUSES

252.246-7000 MATERIAL INSPECTION AND RECEIVING REPORT (MAR 2003)

II. NOTICE: The following contract clauses pertinent to this section are hereby
incorporated in full text:

OTHER CONTRACT CLAUSES IN FULL TEXT E005 INSPECTION AND ACCEPTANCE (MAR 1998)
(TAILORED)

         a. Line Item 0008 - The Data and Reports shall be delivered F.O.B.
Destination to the office(s) specified in Block 14 of Exhibit A, DD Form 1423-1,
and inspected and accepted by the Project Manager at AFRL/VSSV.

         b. The Contractor shall prepare and submit a final DD Form 250,
Material Inspection and Receiving Report, on a one-time basis, collectively
accounting for all completed items called for under Exhibit A, which called for
submission of data with a letter of transmittal. The DD Form 250 shall be
submitted with the last item required to be delivered.

<PAGE>
<TABLE>
<CAPTION>

                                                                       SHIP     MARK             TRANS
ITEM              SUPPLIES SCHEDULE DATA                     QTY       TO       FOR              PRI       DATE
------------------------------------------------------------------------------------------------------------------------------------
<C>                                                           <C>      <C>    <C>                <C>      <C>
0001                                                          1        FA9453 FA9453    0                 DARO

0002                                                          1        FA9453 FA9453                      31 Jan 2006

                  Noun: STATUS REPORT NO. 2
                  ACRN: 9

0003                                                          1        FA9453 FA9453                      31 Mar 2006

                  Noun: STATUS REPORT NO. 3
                  ACRN: 9

0004                                                          1        FA9453 FA9453                      31 May 2006

                  Noun: STATUS REPORT NO. 4
                  ACRN: 9

0005                                                          1        FA9453 FA9453                      31 Jul 2006

                  Noun: STATUS REPORT NO. 5
                  ACRN: 9

0006                                                          1         FA9453 FA9453                     30 Sep 2006

                  Noun: STATUS REPORT NO. 6
                  ACRN: 9

0007                                                          1        FA9453 FA9453                      30 Nov 2006

                  Noun: STATUS REPORT NO. 7
                  ACRN: 9

0008                                                          1        FA9453 FA9453                      ASREQ

                  Noun: DATA & REPORTS (A-SERIES)(A002 & A003)
                  ACRN: U

0009                                                          1        FA9453 FA9453                      31 Mar 2007

                  Noun: FINAL SCIENTIFIC AND TECHNICAL REPORT
                  ACRN: 9

</TABLE>
<PAGE>

PART I - THE SCHEDULE
SECTION F - DELIVERIES OR PERFORMANCE

I. NOTICE: The following contract clauses pertinent to this section are hereby
incorporated by reference:

FEDERAL ACQUISITION REGULATION CONTRACT CLAUSES

52.242-15 STOP-WORK ORDER  (AUG 1989) 52.247-34 F.O.B. DESTINATION (NOV
1991)

II. NOTICE: The following contract clauses pertinent to this section are hereby
incorporated in full text:

OTHER CONTRACT CLAUSES IN FULL TEXT F002 PERIOD OF PERFORMANCE (FEB 1997)

Period of performance under this contract shall be 15 months

Technical Completion Date: December 2006 Contract Completion
Date: March 2007.

F003 CONTRACT DELIVERIES (FEB 1997)

The following terms, if used within this contract in conjunction with contract
delivery requirements (including data deliveries), are hereby defined as
follows:

         (a) "MAC" and "MARO" mean "months after the effective date for award of
         the contractual action (as shown in block 3, Section A, SF 26)". (b)
         "WARO" means "weeks after the effective date for award of the
         contractual action". (c) "DARO" means "days after the effective date
         for award of the contractual action". (d) "ASREQ" means "as required".
         Detailed delivery requirements are then specified elsewhere in Section
         F.

F007 SHIPMENT ADDRESS (SEP 1997)
AFRL/VSSV (Project Officer)
3550 Aberdeen Ave
SE Kirtland AFB, NM 87117-5776
Marked for: FA9453-05-C-0082

Det 8 AFRL/PKVE (Contract Specialist)
2251 Maxwell Street
SE Kirtland AFB, NM 87117-5773
Marked for: FA9453-05-C-0082

AFRL/VSIR (Program Manager)
3550 Aberdeen Ave SE Bldg 414, Rm 3A
Kirtland AFB, NM 87117-5776
Marked for: FA9453-05-C-0082

                          AFRL/VSOT SBIR (SBIR Manager)
                         3550 Aberdeen Ave. SE Bldg 497
                           Kirtland AFB, NM 87117-5776
                          Marked for: FA9453-05-C-0082

ACO: See Block 6 on Page 1 for DCMA address Marked for:
FA9453-05-C-0082

<PAGE>

PART I - THE SCHEDULE
SECTION G - CONTRACT ADMINISTRATION DATA
<TABLE>
<CAPTION>

                                                                                                   Obligation
ACRN           Appropriation/Lmt Subhead/Supplemental Accounting Data                                Amount
<S>                <C>                       <C>                     <C>                          <C>
AA                                                                                                 $250,000.00
                    57  53600 295 4735 663005 6VS0PC 58800 65502F 503000 F03000
                         Funding breakdown:  On CLIN 000101:         $90,000.00
                                             On CLIN 000201:         $90,000.00
                                             On CLIN 000301:         $70,000.00
               PR/MIPR: JON: 3005VPNJ        F2KBAA5091B009           $250,000.00
</TABLE>

NOTICE: The following contract clauses pertinent to this section are hereby
incorporated in full text:

OTHER CONTRACT CLAUSES IN FULL TEXT

G016 SBIR INFORMATION AVAILABLE ON WORLD WIDE WEB (MAR 1999)

Information, instructions, and the associated 'hyperlinks' for SBIR actions are
available on the World Wide Web at URL 'http://www.afrl.af.mil/sbir/index.htm'
for the following: 'Air Force Proposal Preparation Instructions' (for SBIR Phase
II proposals); 'Report Documentation Page', 'SF 298', 'Fast Track Procedures';
and 'Sample DD 250' (for using the DD 250 as an invoice).

PRS-G002  IMPLEMENTATION OF PATENT RIGHTS CLAUSE  (SEP 2005)

All documents and information required by the patent rights and/or patent
reporting clauses set forth in Section I of this contract shall be submitted to
both the Administrative Contracting Officer and the Procuring Contracting
Officer in accordance with CDRL A003. The JAN Patent Administrator can be
reached at phone number: 505-846-1542. This notice also constitutes a request
(see FAR 52.227-12(f)(10) or DFARS 252.227-7039(c), as applicable) for
submission of a copy of the patent application, when filed, along with the
patent application serial number, filing date, subsequent U.S. patent number and
issue date, as received.

PRS-G004  PAYMENT OF FINAL INVOICE (SEP 2005)

The final invoice shall be payable upon completion of a DD Form 250, "Material
Inspection and Receiving Report," with Z-coded shipment number signed acceptance
by the Task Order Officer or Contracting Officer's Representative (COR) that all
terms and conditions of the contract have been satisfied (see Section E clause
E005, subparagraph b.)

<PAGE>

PART I - THE SCHEDULE
SECTION H - SPECIAL CONTRACT REQUIREMENTS

OTHER CONTRACT CLAUSES IN FULL TEXT

H025 INCORPORATION OF SECTION K BY REFERENCE (APR 1997)

Section K of the solicitation is hereby incorporated by reference.

H032 PRINCIPAL INVESTIGATOR (MAR 1998)

The Beacon Power Corporation Principal Investigator for this effort is Mr.
Richard Hockney.  No substitution shall be made without the prior written
approval of the Air Force Procuring Contracting Officer (PCO).

H057 SMALL BUSINESS INNOVATION RESEARCH (SBIR) PHASE I AND PHASE II CONTRACT
 REQUIREMENTS (FEB 2003)

The following requirements of the FY 2005 Department of Defense (DoD)
solicitation for the Small Business Innovation
Research (SBIR) program are incorporated herein by reference: SB032-048

PRS-H001  CONTRACTING OFFICER AUTHORIZATION (SEP 2005)

The Contracting Officer shall be the only individual authorized to direct and/or
redirect the effort or in any way amend any of the terms of this contract, other
than those instances specifically delegated to an Administrative Contracting
Officer or a Termination Contracting Officer by a contract clause of this
contract or in writing by the Procuring Contracting Officer (PCO). For purposes
of this contract "the Contracting Officer" is the individual located at the
issuing office, and may be abbreviated as "CO" or "PCO." Any changes made by the
contractor WITHOUT CO authority will be made at the contractor's own risk.

PRS-H002  LETTER OF CREDIT (OCT 2005)

Prior to any payments being made under this contract, contractor must provide an
irrevocable letter of credit in the amount of $750,000 no later than 30 November
2005, or the date of delivery of CLIN 0001, whichever occurs first.

<PAGE>

PART II - CONTRACT CLAUSES
SECTION I - CONTRACT CLAUSES

Database_Version: 6.3.x.2000;
Issued: 10/4/2005;
FAR: FAC 2005-06;
DFAR: DCN20050930;
                                DL.: DL 98- 021;
Class Deviations: CD 2005o0001;
AFFAR: 2002 Edition;
                             AFMCFAR: AFMCAC 02-07;
                             AFAC: AFAC 2005-0818;
IPN: 98-009

I. NOTICE: The following contract clauses pertinent to this section are hereby
incorporated by reference:

A. FEDERAL ACQUISITION REGULATION CONTRACT CLAUSES

52.202-01         DEFINITIONS (JUL 2004)
52.203-03         GRATUITIES (APR 1984)
52.203-05         COVENANT AGAINST CONTINGENT FEES (APR 1984)
52.203-06         RESTRICTIONS ON SUBCONTRACTOR SALES TO THE GOVERNMENT
                  (JUL 1995)
52.203-07         ANTI-KICKBACK PROCEDURES  (JUL 1995)
52.203-08         CANCELLATION, RESCISSION, AND RECOVERY OF FUNDS FOR ILLEGAL OR
                  IMPROPER ACTIVITY (JAN 1997)
52.203-10         PRICE OR FEE ADJUSTMENT FOR ILLEGAL OR IMPROPER ACTIVITY
                  (JAN 1997)
52.203-12         LIMITATION ON PAYMENTS TO INFLUENCE CERTAIN FEDERAL
                  TRANSACTIONS (JUN 2003)
52.204-04         PRINTED OR COPIED DOUBLE-SIDED ON RECYCLED PAPER (AUG 2000)
52.204-07         CENTRAL CONTRACTOR REGISTRATION (OCT 2003)
52.209-06         PROTECTING THE GOVERNMENT'S INTEREST WHEN SUBCONTRACTING WITH
                  CONTRACTORS DEBARRED, SUSPENDED, OR PROPOSED FOR DEBARMENT
                  (JAN 2005)
52.215-02 AUDIT AND RECORDS -- NEGOTIATION (JUN 1999) 52.215-08 ORDER OF
PRECEDENCE--UNIFORM CONTRACT FORMAT (OCT 1997) 52.215-10 PRICE REDUCTION FOR
DEFECTIVE COST OR PRICING DATA (OCT 1997) 52.215-12 SUBCONTRACTOR COST OR
PRICING DATA (OCT 1997) 52.215-14 INTEGRITY OF UNIT PRICES (OCT 1997) -
ALTERNATE I (OCT 1997) 52.215-15 PENSION ADJUSTMENTS AND ASSET REVERSIONS (OCT
2004) 52.215-18 REVERSION OR ADJUSTMENT OF PLANS FOR POSTRETIREMENT BENEFITS
                  (PRB) OTHER THAN PENSIONS (JUL 2005) 52.219-06 NOTICE OF TOTAL
SMALL BUSINESS SET-ASIDE (JUN 2003) 52.219-08 UTILIZATION OF SMALL BUSINESS
CONCERNS (MAY 2004) 52.219-14 LIMITATIONS ON SUBCONTRACTING (DEC 1996)
52.222-03         CONVICT LABOR (JUN 2003)
52.222-21         PROHIBITION OF SEGREGATED FACILITIES (FEB 1999)
52.222-26         EQUAL OPPORTUNITY (APR 2002)
52.222-35         EQUAL OPPORTUNITY FOR SPECIAL DISABLED VETERANS, VETERANS OF
                  THE VIETNAM ERA, AND OTHER ELIGIBLE VETERANS (DEC 2001)
52.222-36         AFFIRMATIVE ACTION FOR WORKERS WITH DISABILITIES (JUN 1998)
52.222-37         EMPLOYMENT REPORTS ON SPECIAL DISABLED VETERANS, VETERANS OF
                  THE VIETNAM ERA, AND OTHER ELIGIBLE VETERANS (DEC 2001)
52.222-39         NOTIFICATION OF EMPLOYEE RIGHTS CONCERNING PAYMENT OF UNION
                  DUES OR FEES (DEC 2004)
52.223-06         DRUG-FREE WORKPLACE  (MAY 2001)
52.223-14         TOXIC CHEMICAL RELEASE REPORTING (AUG 2003)
52.225-13         RESTRICTIONS ON CERTAIN FOREIGN PURCHASES (MAR 2005)
52.227-01         AUTHORIZATION AND CONSENT (JUL 1995)
52.227-11         PATENT RIGHTS -- RETENTION BY THE CONTRACTOR (SHORT FORM)
                  (JUN 1997)
                  Para (l), Communications: 'See Section J, Exhibit A, DD form
                  1423-1, Data Item number A003, Entitled "Interim and Final
                  Patent Reports - DD Form 882'
52.229-03         FEDERAL, STATE, AND LOCAL TAXES (APR 2003)
52.232-02         PAYMENTS UNDER FIXED-PRICE RESEARCH AND DEVELOPMENT CONTRACTS
                  (APR 1984)
52.232-09         LIMITATION ON WITHHOLDING OF PAYMENTS  (APR 1984)
52.232-17         INTEREST (JUN 1996)
52.232-25         PROMPT PAYMENT (OCT 2003)
52.232-33         PAYMENT BY ELECTRONIC FUNDS TRANSFER--CENTRAL CONTRACTOR
                  REGISTRATION (OCT 2003)
52.233-01         DISPUTES (JUL 2002)
52.233-03         PROTEST AFTER AWARD (AUG 1996)
52.233-04         APPLICABLE LAW FOR BREACH OF CONTRACT CLAIM (OCT 2004)
52.242-03         PENALTIES FOR UNALLOWABLE COSTS (MAY 2001)
52.242-13         BANKRUPTCY (JUL 1995)
52.243-01         CHANGES -- FIXED-PRICE  (AUG 1987) - ALTERNATE V (APR 1984)
52.244-02         SUBCONTRACTS (AUG 1998)
                  Para (e), approval required on subcontracts to: 'NA' Para (k),
                  Insert subcontracts evaluated during negotiations. 'Purdue
                  University Goodrich Texas A&M University Spencer Composites
                  Corporation'
52.244-05         COMPETITION IN SUBCONTRACTING (DEC 1996)
52.244-06         SUBCONTRACTS FOR COMMERCIAL ITEMS (DEC 2004)
52.245-04         GOVERNMENT-FURNISHED PROPERTY (SHORT FORM)  (JUN 2003)
52.246-23         LIMITATION OF LIABILITY (FEB 1997)
52.249-02         TERMINATION FOR CONVENIENCE OF THE GOVERNMENT (FIXED-PRICE)
                  (MAY 2004)
52.249-09         DEFAULT (FIXED-PRICE RESEARCH AND DEVELOPMENT)  (APR 1984)
52.252-06         AUTHORIZED DEVIATIONS IN CLAUSES (APR 1984)

B. DEFENSE FEDERAL ACQUISITION REGULATION SUPPLEMENT CONTRACT CLAUSES

252.203-7001      PROHIBITION ON PERSONS CONVICTED OF FRAUD OR OTHER DEFENSE-
                  CONTRACT-RELATED FELONIES  (DEC 2004)
252.204-7004      ALTERNATE A TO FAR 52.204-7, CENTRAL CONTRACTOR REGISTRATION
                  (NOV 2003)
252.209-7004      SUBCONTRACTING WITH FIRMS THAT ARE OWNED OR CONTROLLED BY THE
                  GOVERNMENT OF A TERRORIST COUNTRY (MAR 1998)
252.215-7000      PRICING ADJUSTMENTS (DEC 1991)
252.215-7002      COST ESTIMATING SYSTEM REQUIREMENTS (OCT 1998)
252.225-7006      QUARTERLY REPORTING OF ACTUAL CONTRACT PERFORMANCE OUTSIDE THE
                  UNITED STATES (JUN 2005)
252.225-7012      PREFERENCE FOR CERTAIN DOMESTIC COMMODITIES  (JUN 2004)
252.225-7014      PREFERENCE FOR DOMESTIC SPECIALTY METALS (JUN 2005)
252.225-7016      RESTRICTION ON ACQUISITION OF BALL AND ROLLER BEARINGS
                  (JUN 2005)
252.225-7025      RESTRICTION ON ACQUISITION OF FORGINGS (JUN 2005)
252.225-7030      RESTRICTION ON ACQUISITION OF CARBON, ALLOY, AND ARMOR STEEL
                  PLATE (APR 2003)
252.225-7031      SECONDARY ARAB BOYCOTT OF ISRAEL (JUN 2005)
252.226-7001      UTILIZATION OF INDIAN ORGANIZATIONS, INDIAN-OWNED ECONOMIC
                  ENTERPRISES, AND NATIVE HAWAIIAN SMALL BUSINESS CONCERNS
                  (SEP 2004)
252.227-7018      RIGHTS IN NONCOMMERCIAL TECHNICAL DATA AND COMPUTER SOFTWARE--
                  SMALL BUSINESS INNOVATION RESEARCH (SBIR) PROGRAM (JUN 1995)
252.227-7019      VALIDATION OF ASSERTED RESTRICTIONS--COMPUTER SOFTWARE
                  (JUN 1995)
252.227-7030      TECHNICAL DATA--WITHHOLDING OF PAYMENT  (MAR 2000)
252.227-7034      PATENTS--SUBCONTRACTS  (APR 1984)
252.227-7039      PATENTS--REPORTING OF SUBJECT INVENTIONS  (APR 1990)
252.231-7000      SUPPLEMENTAL COST PRINCIPLES (DEC 1991)
252.232-7007      LIMITATION OF GOVERNMENT'S OBLIGATION (AUG 1993)

                  Para (a), First CLIN that is incrementally funded. '0001' Para
                  (a), Last CLIN that is incrementally funded. '0007' Para (a),
                  Sum presently available for payment and allotted to this
                  contract. '$250,000.00' Para (i), Funds allotted at execution
                  of contract '$90,000' Para (i), Date that funds will be
                  available for 2nd funding period. '07 OCT 2005' Para (i),
                  Funds allotted for 2nd period. '$90,000.00' Para (i), Date
                  that funds will be available for 3rd funding period. '07 OCT
                  2005' Para (i), Funds allotted for 3rd date. '$70,000.00' Para
                  (i), Date that funds will be available for 4th funding period.
                  '07 OCT 2005'

252.232-7010      LEVIES ON CONTRACT PAYMENTS (SEP 2005)
252.235-7010      ACKNOWLEDGMENT OF SUPPORT AND DISCLAIMER (MAY 1995) Para (a),
                  name of contracting agency(ies): 'United States Air Force'
                  Para (a), contract number(s): 'FA9453-05-C-0082' Para (b),
                  name of contracting agency(ies): 'United States Air Force'
252.235-7011      FINAL SCIENTIFIC OR TECHNICAL REPORT (NOV 2004)
252.243-7001      PRICING OF CONTRACT MODIFICATIONS (DEC 1991)
252.243-7002      REQUESTS FOR EQUITABLE ADJUSTMENT (MAR 1998)
252.244-7000      SUBCONTRACTS FOR COMMERCIAL ITEMS AND COMMERCIAL COMPONENTS
                  (DOD CONTRACTS) (MAR 2000)
252.247-7023      TRANSPORTATION OF SUPPLIES BY SEA (MAY 2002)
252.247-7024      NOTIFICATION OF TRANSPORTATION OF SUPPLIES BY SEA (MAR 2000)

C.       AIR FORCE MATERIEL COMMAND FEDERAL ACQUISITION REGULATION SUPPLEMENT
         CONTRACT CLAUSES

5352.235-9001     KEY POSITIONS AND MINIMUM QUALIFICATIONS (AFMC) (JUL 1997)
                  para (a), job title 'Richard Hockney' para (a), qualifications
                  required 'Principal Investigator'

II. NOTICE: The following contract clauses pertinent to this section are hereby
incorporated in full text:

OTHER CONTRACT CLAUSES IN FULL TEXT

PRS-I002  USE OF WIDE AREA WORK FLOW (WAWF) FOR SUBMISSION OF INVOICING AND
        RECEIVING REQUIREMENTS (SEP 2005)

         (a)      Invoice and Receiving documents must be generated and
                  submitted electronically using Wide Area Work Flow (WAWF).

         (b)      If you use Electronic Data Interchange (EDI) for document
                  submission, your EDI transactions must be formatted in the
                  WAWF EDI Guide structure and sent to WAWF via the Defense
                  Electronic Business Exchange (DEBX). DEBX will submit to WAWF
                  for processing. For detailed registration instructions and for
                  viewing various reference tool links, access the WAWF-RA
                  website at https://wawf.eb.mil/

         (c)      Notwithstanding the above, a hard-copy packing list must be
                  included in each shipment of contract deliverables. A copy of
                  the WAWF receiving report or invoice may be used as the
                  packing list.

        (D)       THE FOLLOWING CODES WILL BE REQUIRED TO ROUTE YOUR INVOICES
                  AND ADDITIONAL E-MAILS CORRECTLY THROUGH WAWF. Select the
                  Combination (Invoice + Receiving Report)

 Use Receiving Report ON ALL DELIVERABLES, SUBSTITUES FOR ANY DD250 REQUIREMENT

         Contract Number: FA9453-05-C-0082

         Delivery Order: (If applicable)

         Issue-by DoDAAC:  FA9453

         Admin DoDAAC: S2206A

         Inspected By DoDAAC: FA9453

         Ship-To Code:  FA9453

         Service Acceptor: (Use for "Invoice as 2-in-1" -services only)

         Ship-From Code:  NOT NEEDED

        LPO DoDAAC/Ext: NOT NEEDED

         Pay DoDAAC: HQ0337

         ADDITIONAL E-MAIL NOTIFICATIONS:

Program Manager e -mail: jerry.fausz@kirtland.af.mil Payments may be expedited
electronically via the Internet through the WAWF system. To access WAWF, go to
wawf.eb.mil. WAWF Training may be accessed online at
www.wawftraining.com.

Contact your ACO for additional assistance with WAWF training, registration, and
implementation. Payment information may be accessed using the DFAS website at
www.dfas.mil. Your purchase order/contract number or invoice will be
required to check status of your payment.

<PAGE>

PART III - LIST OF DOCUMENTS, EXHIBITS & ATTACHMENTS
SECTION J - LIST OF ATTACHMENTS
<TABLE>
<CAPTION>

DOCUMENT                    PGS       DATE               TITLE
------------------------ ----------- ------------------ ------------------------------------------------------------
<S>                          <C>      <C>               <C>
EXHIBIT A                    3          04 APR 2005     CONTRACT DATA REQUIREMENTS LIST, (DD FORM 1423-1) (A
                               SERIES) (A001-A003)
ATTACHMENT 1                 5          29 SEP 2005     STATEMENT OF WORK ENTITLED, "EXTREME
                                                        ENERGY DENSITY FLYWHEEL ENERGY
                                                        STORAGE SYSTEM FOR SPACE APPLICATIONS ."
ATTACHMENT 2                 2          29 SEP 2005     PHASE II SCHEDULE

</TABLE>

<PAGE>
<TABLE>
<CAPTION>
                                                                                                                         EXHIBIT A
==================================================================================================================================
CONTRACT DATA REQUIREMENTS LIST (1 Data Item) Form Approval OMB No. 0704-0188
Public reporting burden for this collection of information is estimated to
average 110 hours per response, including the time for reviewing instructions,
searching existing data sources, gathering and maintaining the data needed, and
completing and reviewing the collection of information. Send comments regarding
this burden estimate or any other aspect of this collection of information,
including suggestions for reducing this burden, to Department of Defense,
Washington Headquarters Services, Directorate for Information Operations and
Reports, 1215 Jefferson Davis Highway, Suite 1204, Arlington, VA 22202-4302, and
to the Office of Management and Budget, Paperwork Reduction Project (0704-0188),
Washington, DC 20503. Please DO NOT RETURN your form to either of these
addresses. Send completed form to the Government Issuing Contracting Officer for
the Contract/PR No. listed in Block E.
==================================================================================================================================
<S>                                                               <C>
A.  CONTRACT LINE ITEM NO.:                                       D.  SYSTEM/ITEM........: Extreme Energy Density Flywheel Energy
B.  EXHIBIT....................................:     A            Storage System for Space Applications
C.  CATEGORY..............................: OTHER SBIR Phase II   E.  CONTRACT/PR NO.:  FA9453-05-C-0082
                                                                  F.  CONTRACTOR.........:   Beacon Power Corporation
1.  DATA ITEM NO........................:   A001
2.  TITLE OF DATA ITEM............: Scientific & Technical Report
3.  SUBTITLE..................................: Final Report

----------------------------------------------------------------------------------------------------------------------------------
4.  AUTHORITY.............................:  DI-MISC-80711A
5.  CONTRACT REFERENCE......:   SBIR Solicitation Sec 5.3
6.  REQUIRING OFFICE..............: AFRL/VSSV   9.  DIST. STATEMENT REQUIRED......:     12.  DATE OF FIRST SUBMISSION:  See Blk 16
7.  DD250 REQ................................: B                                        13.  DATE OF SUBSEQUENT SUBM.:  See Blk 16
8.  APP CODE.................................: A  10. FREQUENCY......................................: One/R
11.  AS OF DATE........................................:  N/A

------------------------------------------------------------------- ----------------------- -----------------
14. DISTRIBUTION A. ADDRESSEES B. COPIES
                                                                    ----------------------- -------- --------
                                                                                              DRAFT    FINAL
                                                                    ----------------------- -------- --------
                                                                        AFRL/VSSV                2        2
                                                                    ----------------------- -------- --------
                                                                        AFRL/VSIR (VS)           1        0
                                                                    ----------------------- -------- --------
                                                                        AFRL/VSOT-SBIR           0        1
                                                                    ----------------------- -------- --------
                                                                         AFRL/PKVE             Ltr      Ltr
                                                                                              Only     Only
                                                                    ----------------------- -------- --------
                                                                         ACO                   Ltr      Ltr
                                                                                              Only     Only
                                                                    ----------------------- -------- --------
                                                                    ----------------------- -------- --------
                                                                     15.  TOTAL:                3        3
                                                                    ----------------------- -------- --------
----------------------------------------------------------------------------------------------------------------------------------
16. REMARKS
Blk 4: The final report shall be prepared I.A.W. PS Pamphlet 61-201, Preparation
of Technical Reports. PS Pamphlet 61-201 may be accessed via the internet at
http://www.vs.afrl.af.mil/publications. The contractor shall complete and submit
an SF 298 Report Documentation Page, which is available at:
http://www.vs.afrl.af.mil/abstracts. The contractor shall incorporate all
required changes upon receipt of the technically reviewed and edited draft. An
electronic copy shall be delivered with a hard copy of the draft version(s) as
well as with a hard copy of the final version of the technical report. The
electronic copy shall be a .pdf file. A CD-ROM (CD-RW) or a zip disk are the
acceptable media for submittal. Reports shall not be submitted by email.

A nonproprietary interim summary report shall be delivered 12 months after
contract award, and a nonproprietary final summary report shall be delivered
concurrently with the final technical report. Both reports shall be delivered to
AFRL/VSOT, 3600 Hamilton Ave SE, Bldg 382, Kirtland AFB NM 87117-5776. Summary
reports shall be prepared in accordance with instructions posted on the Air
Force Virtual SBIR Shopping Mall at http://www.sbirsttrmall.com. A CD-ROM
(CD-RW) or 3.5 inch disk is the acceptable media for submittal. One paper copy
of the report shall be delivered along with the electronic copy of the report.
Reports shall not be submitted by email.

THE REPORT WILL BE PUBLISHED WITH THE DEFENSE TECHNICAL INFORMATION CENTER
(DTIC) by AFRL/VSIR. Under no circumstances shall the contractor submit either
the draft or the final technical report to DTIC.

Blk 7: Submit draft Final Report with letter of transmittal. Submit final
version of the report to the designated AFRL technical project manager. In
preparing the final DD 250 for the contract, code the shipment number with a
"Z". The "Z" coded DD form 250 shall be delivered to AFRL/VSSV to the designated
project manager.

Blk 9: All documentation shall be marked I.A.W. DoDD 5230.24 with the following
distribution statement: "Distribution authorized to U.S. Government Agencies
only; PROPRIETARY INFORMATION, 4 Apr 05. Other requests for this document shall
be referred to the Air Force Research Laboratory/VSSV, 3550 Aberdeen Ave. SE,
Kirtland AFB, NM 87117-5776."

EXPORT CONTROL WARNING: All technical data shall be marked as follows: "WARNING
-- This document contains technical data whose export is restricted by the Arms
Export Control Act (Title 22, U.S.C. Sec.2751, et seq) or the Export
Administration Act of 1979, as amended, Title 50, U.S.C. App 2401 et seq.
Violations of these export laws are subject to severe criminal penalties.
Disseminate in accordance with provisions of DOD Directive 5230.25."

Draft and final reports shall be marked with the appropriate distribution
statement and any restrictive legends that apply. If restrictive legends are not
evident, the data may be treated as unrestricted.

Blks 12 & 13: The contractor shall deliver the Final Scientific and Technical
Report, in draft, within 30 calendar days after completion of the contract
technical effort. The USAF will review, edit and return the draft no later than
30 calendar days after receipt of the draft Final Report. Upon receipt of the
reviewed and edited draft, the contractor shall take no more than 30 calendar
days to incorporate all required changes and deliver the final version of the
report. The "Z" coded form 250 shall be delivered to AFRL/VSSV technical project
manager.

--------------------- -------------------------------------------- --------------------------------- ----------------------------
17. PRICE GROUP: 18. ESTIMATED TOTAL PRICE :
--------------------- -------------------------------------------- --------------------------------- ----------------------------
G. PREPARED BY: A. Walker I. APPROVED BY: D. Patten
H. DATE: 4 Apr 05 J. DATE: 4 Apr 05
===================== ============================================ ================================= ============================
DD Form 1423-1, SEP 97  (EG) (Computer Generated)           PREVIOUS EDITIONS ARE OBSOLETE                    Page 1 of 3 Pages
=================================================================================================================================
CONTRACT DATA REQUIREMENTS LIST (1 Data Item) Form Approval OMB No. 0704-0188
Public reporting burden for this collection of information is estimated to
average 110 hours per response, including the time for reviewing instructions,
searching existing data sources, gathering and maintaining the data needed, and
completing and reviewing the collection of information. Send comments regarding
this burden estimate or any other aspect of this collection of information,
including suggestions for reducing this burden, to Department of Defense,
Washington Headquarters Services, Directorate for Information Operations and
Reports, 1215 Jefferson Davis Highway, Suite 1204, Arlington, VA 22202-4302, and
to the Office of Management and Budget, Paperwork Reduction Project (0704-0188),
Washington, DC 20503. Please DO NOT RETURN your form to either of these
addresses. Send completed form to the Government Issuing Contracting Officer for
the Contract/PR No. listed in Block E.
=================================================================================================================================
A.  CONTRACT LINE ITEM NO.:                                       D.  SYSTEM/ITEM........:  Extreme Energy Density Flywheel Energy
B.  EXHIBIT......................: A                                  Storage System for Space Applications
C.  CATEGORY.....................: OTHER SBIR Phase II            E.  CONTRACT/PR NO.:  FA9453-05-C-0082
                                                                  F.  CONTRACTOR.........:   Beacon Power Corporation
1. DATA ITEM NO..................: A002
2. TITLE OF DATA ITEM............: Status Report
3. SUBTITLE......................: Bi-Monthly
------------------------------ ---------------------------------------------------------------------------------------------------
4. AUTHORITY..................: DI-MGMT-80368
5.  CONTRACT REFERENCE........:  SBIR Solicitation Sec. 5.3
6.  REQUIRING OFFICE..............: AFRL/VSSV
7.  DD250 REQ.....................:  LT
8.  APP CODE......................: No
9.  DIST. STATEMENT REQUIRED......: B
10. FREQUENCY......................Bi-Monthly
11. AS OF DATE....................: N/A
12. DATE OF FIRST SUBMISSION: See Blk 16
13. DATE OF SUBSEQUENT SUBM.: See Blk 16
                    ------------------------------------------------------------------- ----------------------- -----------------
14. DISTRIBUTION A. ADDRESSEES B. COPIES
                                                                                                                 DRAFT    FINAL
                                                                                        ----------------------- -------- --------
                                                                                          AFRL/VSSV                0        2
                                                                                        ----------------------- -------- --------
                                                                                          AFRL/PKVE                0        1
                                                                                        ----------------------- -------- --------
                                                                                          ACO                      0        1
                                                                                        ----------------------- -------- --------
                                                                                        ----------------------- -------- --------
                                                                                        ----------------------- -------- --------
                                                                                        ----------------------- -------- --------
                                                                                        15.  TOTAL:                0        4
                                                                                        ----------------------- -------- --------
---------------------------------------------------------------------------------------------------------------------------------
16. REMARKS

Blk 4: The contractor shall document efforts described in the SBIR proposal
"work-plan" or statement of work (SOW). The contractor shall include status or
updates regarding commercialization efforts, i.e., investors, potential customer
base or "Phase III commitments" and sales. Reports shall include the total
amount of all invoice(s) submitted for payment and the balance of unpaid
invoices for each reporting period. Submit a final report summarizing all costs
through contract completion. CONTRACTOR FORMAT IS PREFERRED. Reports shall not
be submitted electronically.

Blk 9: All documentation shall be marked IAW DODD 5230.24 with the following
distribution statement: "Distribution authorized to U.S. Government Agencies
only; PROPRIETARY INFORMATION, 4 Apr 05. Other requests for this document shall
be referred to the Air Force Research Laboratory/VSSV, 3550 Aberdeen Ave. SE,
Kirtland AFB, NM 87117-5776."

EXPORT CONTROL WARNING: All technical data shall be marked as follows: "WARNING
-- This document contains technical data whose export is restricted by the Arms
Export Control Act (Title 22, U.S.C. Sec. 2751, et seq.) or the Export
Administration Act of 1979, as amended, Title 50, U.S.C. App 2401 et seq.
Violations of these export laws are subject to severe criminal penalties.
Disseminate in accordance with provisions of DoD Directive 5230.25."

Blks 11, 12 & 13: The contractor shall deliver the first Status Report within 10
calendar days after completion of the first 60 days following contract award.
Subsequent reports shall be delivered every 60 calendar days thereafter through
completion of the contract technical effort.

-------------- -------------------------------------------- --------------------------------- -----------------------------------
17. PRICE GROUP: 18. ESTIMATED TOTAL PRICE :
-------------- -------------------------------------------- --------------------------------- -----------------------------------
G. PREPARED BY: A. Walker
I. APPROVED BY: D. Patten
H. DATE: 4 Apr 05
J. DATE: 4 Apr 05
============== ============================================ ================================= ===================================
DD Form 1423-1, SEP 97  (EG) (Computer Generated)           PREVIOUS EDITIONS ARE OBSOLETE                    Page 2 of 3 Pages

<page>
============== ============================================ ================================= ===================================
DD Form 1423-1, SEP 97  (EG) (Computer Generated)           PREVIOUS EDITIONS ARE OBSOLETE                    Page 3 of 3 Pages
=================================================================================================================================
CONTRACT DATA REQUIREMENTS LIST (1 Data Item) Form Approval OMB No. 0704-0188
Public reporting burden for this collection of information is estimated to
average 110 hours per response, including the time for reviewing instructions,
searching existing data sources, gathering and maintaining the data needed, and
completing and reviewing the collection of information. Send comments regarding
this burden estimate or any other aspect of this collection of information,
including suggestions for reducing this burden, to Department of Defense,
Washington Headquarters Services, Directorate for Information Operations and
Reports, 1215 Jefferson Davis Highway, Suite 1204, Arlington, VA 22202-4302, and
to the Office of Management and Budget, Paperwork Reduction Project (0704-0188),
Washington, DC 20503. Please DO NOT RETURN your form to either of these
addresses. Send completed form to the Government Issuing Contracting Officer for
the Contract/PR No. listed in Block E.
=================================================================================================================================
A.  CONTRACT LINE ITEM NO.:                                       D.  SYSTEM/ITEM........: Extreme Energy Density Flywheel Energy
B.  EXHIBIT....................................:     A            Storage System for Space Applications
C.  CATEGORY..............................: OTHER SBIR Phase II   E.  CONTRACT/PR NO.:  FA9453-05-C-0082
                                                                  F.  CONTRACTOR.........:   Beacon Power Corporation
1.  DATA ITEM NO........................:  A003
2. TITLE OF DATA ITEM............: Technical Report - Study/Services
3. SUBTITLE..................................: Success Story and Marketing Strategy
----------------------- ---------------------------------------------------------------------------------------------------------
4. AUTHORITY.............................: DI-MISC-80508A
5.  CONTRACT REFERENCE......:   See Blk 16
6.  REQUIRING OFFICE..............: AFRL/VSSV
7.  DD250 REQ................................: LT
8.  APP CODE.................................: No
9. DIST. STATEMENT REQUIRED......: A
10. FREQUENCY................................: Two
11. AS OF DATE...............................: N/A
12. DATE OF FIRST SUBMISSION: See Blk 16
13. DATE OF SUBSEQUENT SUBM.: See Blk 16
                     ------------------------------------------------------------- ----------------------------- -----------------
14. DISTRIBUTION A. ADDRESSEES B. COPIES
                                                                                  ----------------------------- -----------------
                                                                                                                  DRAFT    FINAL
                                                                                  ----------------------------- -------- --------
                                                                                     AFRL/VSSV                      0        1
                                                                                  ----------------------------- -------- --------
                                                                                     AFRL/PKVE                     Ltr      Ltr
                                                                                  ----------------------------- -----------------
                                                                                     AFRL/VSOT (ARCHULETA)          0        1
                                                                                  ----------------------------- -----------------
                                                                                     ACO                           Ltr      Ltr
                                                                                  ----------------------------- -----------------

                                                                                  ----------------------------- -----------------
                                                                                  15.  TOTAL:                      0        1
                                                                                  ----------------------------- -------- --------
----------------------------------------------------------------------------------------------------------------------------------
16. REMARKS

Blk 4: The required Marketing Strategy Report and Success Story are to be
prepared in the contractor's own format. The first report shall be delivered
within 120 days after completion of the first full year after award; the 2nd
report shall be delivered within 90 days after completion of the contracted
Phase II technical effort. If appropriate, the Success Story portion of this
report shall be delivered as soon as results warrant. The Air Force Research
Laboratory will use the data to update SBIR commercialization records. Report
shall not be submitted electronically.

Blk 5: This is an AFRL requirement on all SBIR Phase II contracts.

Blks 12 & 13: The contractor shall deliver the initial Marketing Strategy Report
within 120 days after completion of the first year of contractual technical
effort. The second report shall be delivered within 90 days after completion of
the contract technical effort.
--------------------- -------------------------------------------- --------------------------------- ----------------------------
17. PRICE GROUP: 18. ESTIMATED TOTAL PRICE :
--------------------- -------------------------------------------- --------------------------------- ----------------------------
G. PREPARED BY: A. Walker
I. APPROVED BY: D. Patten
H. DATE: 4 Apr 05
J. DATE: 4 Apr 05
===================== ============================================ ================================= ============================
DD Form 1423-1, SEP 97  (EG) (Computer Generated)           PREVIOUS EDITIONS ARE OBSOLETE                    Page 3 of 3 Pages

</TABLE>

<PAGE>
                                                                    ATTACHMENT 1

                  DARPA SB032--048: Unconventional Space Power

                      STATEMENT OF WORK (FA9453-05-C-0082)
                (Developer from BPC_MIL04_08SBIR_DARPA_PHASE II)

  Extreme Energy Density Flywheel Energy Storage System for Space Applications

1. PHASE II - TECHNICAL OBJECTIVES

The overall objective of the proposed program is to develop the preliminary
design for the highest-possible energy-density flywheel energy storage system
within the given constraints. This Phase II program plan is presented assuming
that the power and energy requirements of the selected system are within the
boxes shown in Figures 5 and 6 of the original submission (Ref.
BPC_MIL04_08SBIR_DARPA_PHASE II). Thus, limited technology development is
planned, and the program is focused on trade-offs, design, and analysis leading
to a Preliminary Design Review (PDR). This will be presented at a level of
detail sufficient to allow a merit decision based on whether to proceed to the
proto-qualification stage in Phase III. The specific tasks of the program can be
enumerated as follows:

o        Specification Definition & Review
o        Preliminary System Sizing
o        Technology Review & Insertion
o        Trade Studies
o        Preliminary Concept
o        Preliminary Analysis
o        Concept Update
o        Final Analysis
o        Preliminary Design Review (PDR)

2. PHASE II - WORK PLAN

The Phase II work plan will include the tasks shown in the subsections below per
schedule "AFRL-DARPA Phase II Schedule".

2.1. SYSTEM DEFINITION & REVIEW
     A determination of the platform power requirements (i.e., system
     specifications) will be necessary in order to design the appropriate
     flywheel system. The following would be required at a minimum:
o

<PAGE>

o        Peak and Continuous Power
o        Input Voltage and Power
o        Output Voltage and Power
o        Usable Energy
o        Parasitic Loss
o        Cycles
o        Mean Time Between Failures
o        Response Time
o        Environment Specs
o        Size and Mass Constraints
o        Installation Requirements
o        Launch Loads
o        Satellite Interaction
o        Monitoring

<PAGE>

     Once these items are identified, the development of mechanical and
     electrical subsystem specifications and the preliminary design can proceed
     as follows.

2.2. PRELIMINARY SYSTEM SIZING
     The first step is to determine the required energy level and the rate of
     charge and discharge that is required. From this, an initial rotor and
     motor size can be established.

2.2.1. ROTOR
         Once the stored energy of the system is established, the initial size
         of the composite rim is calculated. Initial rotor dynamics are
         subsequently reviewed to establish a maximum speed for the size rim.

2.2.2. MOTOR
         Based on the required rate of charge and discharge the initial motor
size and cross-section can be established.

2.2.3. STRUCTURE/MOUNTING
         Based on the rotor and motor size an initial structure including a
         preliminary bearing system will be established. This is just a baseline
         to initiate more detailed trade studies.

2.2.4. ELECTRONICS
         The specific functions involved are: o

<PAGE>

o        Spacecraft communications interface
o        Magnetic bearing controller
o        Bus voltage regulator
o        Motor drive
o        Input power converter (if required)

<PAGE>

         The power electronics size and mass are driven by the power
         requirements as well as system input and output voltages. From this
         initial sizing, baseline efficiencies are established. This can be fed
         back into any initial assumptions to assure the first pass at the rotor
         stored energy is correct. Any significant adjustments may require a
         second iteration on the rotor and motor sizing.

2.3. TECHNOLOGY REVIEW AND INSERTION

     As part of his normal functions, the role of Beacon's Chief Engineer is to
     maintain awareness of flywheel-related technology improvements being
     advanced in both the aerospace and university sectors.

2.3.1. PRIOR PROGRAMS

         Incorporate knowledge from National Aeronautics and Space
         Administration (NASA) and Air Force Research Laboratory (AFRL) funded
         component and system design studies and experiments with both aerospace
         companies and universities. .

2.3.2. CURRENT PROGRAMS

         Monitor government agency contract awards relative to flywheel
         technology. As part of the Phase II effort, the Chief Engineer will
         work with the sponsors of this program to obtain pre-publication
         results of ongoing work.

2.3.3. TECHNOLOGY LIMITATIONS

         Track ongoing work in the field to benefit from avoiding pit-falls
discovered by others in "pushing the envelope."

2.4. TRADE STUDIES

2.4.1. MOTOR
         Permanent Magnet (PM), Induction (IM), and Switch Reluctance motors
         each can be incorporated into a flywheel energy storage system. They
         each have different efficiencies, heat loss on the rotor and stator,
         weight, impact on rotor dynamics, electronics required to drive them,
         and therefore impact the systems ability to meet performance
         requirements.

         A trade study will look at the advantages and disadvantages of each
         configuration so that the motor is selected that will optimize the
         overall system performance. A goal of the program is the motor be
         capable of a time-limited maximum-power discharge without requiring
         active cooling. Both trickle and pulse charge profiles will be
         considered.

2.4.2. BEARINGS/SUSPENSION SYSTEM
         Flywheel rotors have been supported by a combination of passive and
         active magnetic bearings as well as hybrid systems, which use magnetic
         lift with mechanical bearings for radial support. Even fully magnetic
         systems use mechanical backup-bearings for un-powered operation. Each
         has different power loss, life, reliability and impact on rotor
         dynamics, and overall complexity. Benefits of each will be summarized
         so that the system that best matches the program requirements will be
         incorporated in the final design. The magnetic bearing analysis and
         design will be performed with Beacon defined requirements.

         A significant issue for a spacecraft system is the rotor-spacecraft
         interaction in terms of torque and vibration. Torque interaction will
         be managed with the control of the motor torque applied to the
         individual counter-rotating rotors. Vibration interaction must either
         be managed by the magnetic bearings alone, or more likely in
         conjunction with a structural isolation system.

2.4.3. STRUCTURE
         Various structural arrangements can be considered depending on the size
         of the flywheel, launch loads, and rotor dynamic requirements. Assembly
         and manufacturability of the components will also be considered. There
         will be constraints imposed on the mounting interface by the spacecraft
         configuration. Concepts will be generated by the design team and
         iterated to obtain the lowest mass, while assuring the components can
         be manufactured and assembled, as well as allow the overall system to
         meet its requirements. Since a secondary goal of the program is to
         minimize the system volume, an effort will be made to nest the two
         counter-rotating rims to maximize the shared length and structure.

2.4.4. ELECTRONICS
         Each motor requires a different electronic topology to convert the
         kinetic energy of the rotor system to the output load. Inverter sizing
         and efficiencies are considered as well as the overall layout and
         packaging of the components. Interfaces with the satellites system will
         be reviewed. The general topology for the motor system will be defined.
         Once the motor is selected a more complete topology for the selected
         motor will be defined. Engineers will provide assistance with known
         techniques for EMI mitigation including shielding. The space-qualified
         electronics design parameters for the remaining functions will also
         will be provided, using as many existing designs as possible.
2.4.5. COMPOSITE HUB

         Coupons of the composite material proposed for the hub design in Phase
         I will be fabricated and tested both to determine the material
         properties and to validate the static design allowables.

2.5. PRELIMINARY CONCEPT
     The result of the trade studies will be incorporated into the preliminary
conceptual design for each of the system components: o

<PAGE>

o        Rim
o        Hub
o        Motor
o        Shaft
o        Bearings
o        Structure
o        Power Conversion
o        Control Electronics

<PAGE>

2.6. PRELIMINARY ANALYSIS
     Concept definition is followed by the detailed analysis of the salient
     parameters for each component, which must be performed to see whether the
     mission requirements can be met. Evaluation of the performance in the areas
     such as thermal, dynamics, stress, fatigue, bandwidth, environmental
     effects, etc. will be performed first with rough calculations and then
     using the most current analytical software tools available. Shortfalls in
     performance will be addressed via redesign of one or more components
     depending on the nature of the parameter interaction. At the successful
     completion of these analyses, the Concept Review will be presented to the
     sponsor's reviewers as a preliminary check on the approach, and to elicit
     feedback on the selected approaches and/or program updates.

2.7. CONCEPT UPDATE
     Input, new ideas, and additional analysis resulting from the concept review
     will be considered and evaluated. Any deficiencies in the design relative
     to the requirements will be addressed. Changes from this process will be
     reflected in an updated cross-section Component designs will be updated and
     utilized in the final analysis.

2.8. FINAL ANALYSIS

     Based on the results of the Concept Update, this task repeats any analysis
     that is required to evaluate the proposed changes. If inconsistencies are
     found, they are immediately flagged for discussion. Once the redesign is
     completed, the CAD group produces the updated build drawings for critical
     components, and the Manufacturing group creates a preliminary Manufacturing
     Plan, which includes Assembly and Test Method Sheets, and preliminary look
     at required fixtures for handling, alignment and test.

2.9. PRELIMINARY DESIGN REVIEW (PDR)

     By far the largest effort of this task is preparation for the Preliminary
     Design Review. All of the trade studies and analyses must be presented to a
     group of expert reviewers in order that the design be validated and
     analytical "holes" be uncovered. The review is expected to be very detailed
     and will be attended by expert reviewers in the fields of:
o

<PAGE>

o        Composites
o        Magnetics
o        Electronics
o        Controls
o        Structures
o        Heat Transfer
o        Spacecraft Interaction
o        Space Environment

<PAGE>

2.10. REPORTING/DELIVERABLES

     Technical progress reports will be submitted every other month with a
     complete Final Technical Report submitted at the end of the program. It is
     Beacon's expectation that a government representative will periodically
     visit our facility in Wilmington, MA. All PDR material including
     preliminary drawings, and manufacturing plans will be included in the
     drawing package.

<PAGE>

<TABLE>
<CAPTION>
                                                                                      ATTACHMENT 2

                                    SCHEDULE

                                 FA9453 PHASE II SCHEDULE 9-29-05

  ID                        TASK NAME                          DURATION              START
-------    ---------------------------------------------    ----------------    ----------------

<S>  <C>                                                         <C>                  <C>
     1     ATP                                                   1 day                10/7/2005
     2     Specification Definition & Review                    30 days              10/10/2005
     3     Preliminary System Sizing                            45 days              11/21/2005
     4     Technology Review & Insertion                        55 days              11/21/2005
     5     Trade Studies                                        55 days                2/1/2006
     6     Preliminary Concept                                  22 days               4/20/2006
     7     Preliminary Analysis                                 45 days               5/22/2006
     8     Concept Update                                       22 days               7/26/2006
     9     Final Analysis                                       60 days               8/25/2006
    10     PDR                                                  22 days              11/17/2006
    11     Reporting                                           276 days              11/30/2005
    12     Reporting CLIN 0001                                   1 day               11/30/2005
    13     Reporting CLIN 0002                                   1 day                1/31/2006
    14     Reporting CLIN 0003                                   1 day                3/31/2006
    15     Reporting CLIN 0004                                   1 day                5/31/2006
    16     Reporting CLIN 0005                                   1 day                7/31/2006
    17     Reporting CLIN 0006                                   1 day                9/30/2006
    18     Reporting CLIN 0007                                   1 day               11/30/2006
    19     Reporting CLIN 0009                                   1 day               12/30/2006

</TABLE>

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