**EXHIBIT 10.7**

 

**WARRANT TRANSFER AND CANCELLATION AGREEMENT**

 

This Warrant Transfer andCancellation Agreement (the “Agreement”) is made by and between The QuercusTrust (the “Trust”) and Beacon Power Corporation (the “Company”), a Delawarecorporation, as of January 21, 2009 (the “Effective Date”).

 

**RECITALS**

 

Whereas, the Trust is aholder of warrants (the “Warrants”) to purchase 5,884,455 shares of CommonStock of the Company, represented by Warrant Certificate Number Q-1 dated October 31,2007 and also owns issued and outstanding shares of Common Stock of theCompany;

 

Whereas,the Trust has determined that it is in the best interest of the Company and itsstockholders for the Trust, in light of its ownership of the Common Stock ofthe Company,  to cancel the Warrants; and

 

Whereas, the Company hasdetermined that it is in the best interests of the Company and its stockholdersto enter into this Agreement.

 

**AGREEMENT**

 

Now, therefore, inconsideration of the foregoing and the payment of one-hundred dollars ($100.00)by the Company to the Trust, and other valuable consideration, the receipt andsufficiency is hereby acknowledged, the parties hereto agree as follows:

 

1.               Transfer and Cancellation.   TheTrust hereby transfers and conveys all its right, title and interest in theWarrants to the Company for cancellation, and the Company shall cancel theWarrants upon receipt.  Quercus shalldeliver the original certificate representing the Warrants endorsed in favor ofthe Company via fax with the originals to be sent by courier, as soon aspossible following the execution of this Agreement.

 

2.               Trust Representations.   TheTrust represents and warrants to the Company and the Company as follows:

 

2.1      The Trust owns the Warrants beneficially andof record, free and clear of any suit, proceeding, call, voting trust, proxy,restriction, security interest, lien or other encumbrance of any kind or naturewhatsoever (collectively, a “**Lien**”)and has full power, authority and capacity to transfer and dispose of,including surrender and cancellation of, all the Warrants free and clear of anyLien.

 

2.2      The execution and delivery of this Agreementby the Trust, the consummation of the transaction contemplated hereby, andshall no longer confer any rights upon the holder thereof, without furtheraction of the parties, and the compliance with the terms of this Agreement willnot conflict with, result in the breach of, or constitute a default under, orrequire any consent or approval under, any agreement, note, indenture, mortgage,deed of trust or other agreement, lease or instrument to which either Trust isa party or by which it may be bound.

 

2.3      This Agreement has been duly authorized,executed and delivered by the Trust and constitutes the legal, valid andbinding obligation of the Trust, enforceable against the Trust in accordancewith its terms.

 

3                  Company’sRepresentations.  The Company represents and warrants to theTrust as follows:

 

3.1      The Company has full power and authority toreceive and cancel the Warrants from the Trust in accordance with thisAgreement.

 

3.2      The execution and delivery of this Agreementby the Company, the consummation of the transaction contemplated herein, andthe compliance with the terms of this Agreement will not conflict with, resultin the breach of, or constitute a default under, or require any consent orapproval under, any note, indenture, mortgage, deed of trust or otheragreement, lease or instrument to which the Company is a party or by which itmay be bound.

 

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3.3      This Agreement has been duly authorized,executed and delivered by the Company and constitutes the legal, valid andbinding obligation of the Company, enforceable against the Company inaccordance with its terms.

 

4.               Miscellaneous.

 

4.1      Successors, Assigns and Transferees.  ThisAgreement shall be binding upon and inure to the benefit of the parties heretoand their respective legal representatives, heirs, legatees, successors andassigns.

 

4.2      Governing Law.  ThisAgreement shall be governed by and construed in accordance with the laws of theState of Delaware.

 

4.3.     Counterparts.  ThisAgreement may be executed in one or more counterparts, by the original partieshereto and any successor in interest, each of which shall be deemed to be anoriginal and all of which together shall be deemed to constitute one and thesame agreement.

 

4.4.     Severability.  Inthe event that any one or more of the provisions contained herein, or theapplication thereof in any circumstances, is held invalid, illegal orunenforceable in any respect for any reason, the validity, legality andenforceability of any such provision in every other respect and of theremaining provisions contained herein shall not be in any way impaired thereby.

 

[Signature Page Follows]

 

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INWITNESS WHEREOF, the parties have executed this Warrant Cancellation Agreementas of the date first above written.

 

 
|   | Beacon  Power Corporation |
|--------|---------------------------|
|   |                      |
|   |                      |
|   | By:                       | /s/  F. William Capp |
|   | Name:                     | F.  William Capp |
|   | Its:                      | President &  CEO |
|   |                      |
|   |                      |
|   | The  Quercus Trust        |
|   |                      |
|   | /s/  David Gelbaum        |
|   | David  Gelbaum, Trustee   |

 

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