Beacon Power and NxtPhase T&D Corporation Terminate Arrangement Agreement

Beacon Power Corporation (NASDAQ: BCON), announced that the Company, NxtPhase T&D Corporation and Class A shareholders of NxtPhase have executed a settlement agreement that terminates an arrangement agreement, originally signed on April 22, 2005, under which Beacon was to acquire NxtPhase in an all-stock transaction. As part of the settlement agreement, each side agreed to release one another from any legal claims or actions resulting from the process, and Beacon also agreed to pay $150,000 to NxtPhase. The arrangement agreement specified that the transaction would automatically terminate if not completed by December 31, 2005. Considering the status of the SEC review process and the limited time remaining until December 31, as well as the increase in Beacon’s stock price since the signing of the agreement, it was determined that the transaction was unlikely to be completed.

Under the terms of the investment agreement between Beacon Power and Perseus entered into in April 2005, the termination of the NxtPhase arrangement agreement obligates Beacon and Perseus to consummate an exchange whereby approximately 1.2 million shares of the Company’s common stock that had been issued to Perseus 2000 Expansion, L.L.C. under the investment agreement will be returned by Perseus to Beacon in exchange for Class A shares of NxtPhase that Beacon purchased with the proceeds of some of Perseus’s investment in Beacon. After giving effect to Beacon’s previously announced $15 million investment (which closed on November 8) and to this rescission and share exchange with Perseus, Beacon will have approximately 57.8 million common shares outstanding.

Beacon will withdraw its preliminary proxy statement, filed with the SEC on September 29, 2005, in connection with the proposed NxtPhase acquisition. Thus, no special shareholder meeting will be held in December, and no additional Beacon shares will be voted upon or issued as part of the NxtPhase transaction. The two companies will pursue their business objectives independently, operating as separate companies.