Exhibit 10.7
                              CONSULTING AGREEMENT

This  Consulting  Agreement  (the  "Agreement")  is made as of October  10, 2001
between Beacon Power Corporation  ("BPC") and John Pearson Smith  ("Consultant")
with respect to services to be  performed  for BPC by  Consultant.  The parties'
respective addresses are as set forth below their signature lines.

1.   Employment.  Commencing  on or about  the  date  hereof,  BPC  will  engage
     Consultant,  and they each hereby accept such engagement upon the terms and
     conditions in this Agreement.

2.   Duties  and  Services.   Consultant  will  act  strictly  as  an  Executive
     Management  Consultant  and advisor to BPC and shall be subject to Internal
     Revenue Code 1099 tax reporting.  Consultant will report and coordinate his
     activities with William E. Stanton, President and CEO of BPC.

3.   Compensation.

     a.  Consultant  will be  paid $2,000 per  day for  services rendered to BPC
         invoiced on a monthly basis, and

     b.  Consultant will be reimbursed monthly by BPC for all reasonable out-of-
         pocket expenses.

4.   Independent Contractor.  Consultant is an independent contractor, is not an
     agent or employee of BPC,  and is not  authorized  to act on behalf of BPC.
     Consultant  shall have no  authority to bind BPC, and will not hold himself
     out to third parties as having such authority.  Consultant  shall be solely
     responsible  for taxes and other wage  deductions  incurred  as a result of
     performing  services under this  Agreement.  Under no  circumstances  shall
     Consultant be considered an employee or agent of BPC.

5.   Non-Solicit.  Consultant shall not:

     a.  Induce or attempt  to induce  any customer, joint venturer, developer,
         distributor or supplier  of BPC to reduce  such person's business with
         BPC, or

     b.  Solicit any of BPC's employees to leave the employ of BPC.

6.   No Disclosure of  Confidential  Information.  In addition to any provisions
     contained in the Mutual Non-Disclosure  Agreement between the parties dated
     July 20, 2001 ("MNDA"),  Consultant  shall not, at any time during the Term
     or  thereafter,  divulge,  use,  furnish,  appropriate,  disclose  or  make
     accessible  to anyone other than BPC or its  authorized  agents,  any data,
     records, files, reports, pricing information,  sales manuals, client lists,
     business  contacts,   employee  lists,   operating  procedures,   marketing
     techniques,  manufacturing  techniques  and  processes,  business  plans or
     financial information  (collectively,  "Confidential  Information"),  which
     Confidential  Information  is  disclosed  to  Consultant  by  or  known  to
     Consultant as a consequence of or through its engagement by BPC;  provided,
     however,  that Confidential  Information  shall not include  information or
     materials that are (i) generally known to the public or publicly available,
     or (ii) constitute  recognized standard industry practice, or (iii) already
     in the possession of Consultant prior to the date hereof without disclosure
     from  Consultant.  These  restrictions  shall  apply  to  all  Confidential
     Information  whether written or oral, such  Confidential  Information being
     recognized and  acknowledged as the sole and exclusive  property of BPC. In
     the event that  Consultant is required by law, court order or legal process
     to disclose any Confidential  Information,  Consultant  agrees that he will
     provide BPC prompt  notice of such  requirement(s)  so that BPC may consult
     with  Consultant as to the manner,  timing and scope of such disclosure and
     may seek an appropriate protective order.

7.   Developments.

           (a) The Consultant will make full and prompt disclosure to the
         Company of all inventions, improvements, discoveries, methods,
         developments, software, and works of authorship, whether patentable or
         not, which are created, made, conceived or reduced to practice by
         him/her or under his/her direction or jointly with others during
         his/her engagement by the Company, whether or not during normal working
         hours or on the premises of the Company (all of which are collectively
         referred to in this Agreement as "Developments").

           (b) The Consultant agrees to assign and does hereby assign to the
         Company (or any person or entity designated by the Company) all his/her
         right, title and interest in and to all Developments and all related
         patents, patent applications, copyrights and copyright applications.
         However, this paragraph 7(b) shall not apply to Developments which do
         not relate to the present or planned business or research and
         development of the Company and which are made and conceived by the
         Consultant not during normal working hours, not on the Company's
         premises and not using the Company's tools, devices, equipment or
         Proprietary Information. The Consultant understands that, to the extent
         this Agreement shall be construed in accordance with the laws of any
         state which precludes a requirement in an consulting agreement to
         assign certain classes of inventions made by a consultant, this
         paragraph 7(b) shall be interpreted not to apply to any invention which
         a court rules and/or the Company agrees falls within such classes. The
         Consultant also hereby waives all claims to moral rights in any
         Developments.

           (c) The Consultant agrees to cooperate fully with the Company, both
         during and after his/her engagement with the Company, with respect to
         the procurement, maintenance and enforcement of copyrights, patents and
         other intellectual property rights (both in the United States and
         foreign countries) relating to Developments. The Consultant shall sign
         all papers, including, without limitation, copyright applications,
         patent applications, declarations, oaths, formal assignments,
         assignments of priority rights, and powers of attorney, which the
         Company may deem necessary or desirable in order to protect its rights
         and interests in any Development. The Consultant further agrees that if
         the Company is unable, after reasonable effort, to secure the signature
         of the Consultant on any such papers, any executive officer of the
         Company shall be entitled to execute any such papers as the agent and
         the attorney-in-fact of the Consultant, and the Consultant hereby
         irrevocably designates and appoints each executive officer of the
         Company as his/her agent and attorney-in-fact to execute any such
         papers on his/her behalf, and to take any and all actions as the
         Company may deem necessary or desirable in order to protect its rights
         and interests in any Development, under the conditions described in
         this sentence.


8.   Return of Confidential Information. In addition to any provisions contained
     in the MNDA,  upon  completion  of the Term or any other time upon request,
     Consultant will promptly  deliver to BPC all notes,  memoranda,  notebooks,
     drawings,  records,  reports,  files,  lists and other  documents  (and all
     copies  or  reproductions  of such  materials  no  matter in what form such
     information  is  recorded  or stored),  as well as any  computer  programs,
     discs,  tapes or other  information  storage and  retrieval  devices in the
     possession  or  under  the  control  of  Consultant,  whether  prepared  by
     Consultant or others, which contain Confidential Information.

9.   Term and Termination. The initial term of this Agreement shall be three (3)
     months,  yet may be  extended  by BPC for any length it  desires  ("Term").
     Either party may terminate this Agreement at any time by giving thirty (30)
     days' written notice to the other party.

10.      Miscellaneous.

10.1 Waiver of Breach.  The failure of any party at any time or times to require
     performance  of any provision of this  Agreement  shall in no manner affect
     that party's right,  at a later time, to enforce the same. No waiver by any
     party of the breach of any term or covenant  contained  herein,  whether by
     conduct or otherwise,  in any one or more instances,  shall be deemed to be
     or construed  as a further or  continuing  waiver of any such breach,  or a
     waiver of the breach of any other term or covenant contained herein.

10.2 Notices.  All  notices,  requests,  demands  and any  other  communications
     hereunder  shall be made in  writing  and shall be deemed to have been duly
     given if and when  delivered  (including  delivery by  confirmed  facsimile
     transmission),  or three days  after  being  sent by  recognized  overnight
     delivery  service,  addressed  to BPC and  Consultant  at their  respective
     addresses  shown below the signature lines hereof (or such other address as
     either may  notify to the other from time to time),  with a copy being sent
     (in the case of  notices to BPC) to BPC  counsel,  Albert L.  Sokol,  Esq.,
     Edwards & Angell,  LLP, 101 Federal Street,  Floor 24 Mailroom,  Boston, MA
     02110, fax 617-439-4170.

10.3 Assignment;   Binding   Effect.   No  interest  in  this  Agreement  or  in
     Consultant's rights or obligations hereunder may be assigned by it, and any
     such  purported  assignment  shall be void and of no force or effect.  This
     Agreement  shall be  binding  upon and  inure to the  benefit  of BPC,  its
     successors  and  assigns,  and  shall  be  binding  upon  Consultant,   its
     successors and assigns.

10.4 Entire  Agreement;   Amendment.   This  Agreement  constitutes  the  entire
     agreement  between the parties with respect to the subject  matter  hereof,
     and unless otherwise  provided  herein,  supersedes all prior agreements or
     understandings,  written or oral, in respect thereof. This Agreement may be
     amended, modified, superseded, canceled, renewed or extended, and the terms
     or covenants hereof may be waived only by a written  instrument,  signed by
     the  parties  hereto,  or in the case of a  waiver,  by the  party  waiving
     compliance.

10.5 Governing  Law. This  Agreement,  and all  questions  arising in connection
     therewith,  shall be governed by and construed in accordance  with the laws
     of The Commonwealth of Massachusetts.

10.6 Certain Consultant Representations.  Consultant represents and warrants its
     engagement by BPC as described herein and shall not conflict with, and will
     not be  constrained  by, any prior  engagement or  consulting  agreement or
     relationship.

10.7 Enforcement.  The parties  recognize  and  acknowledge  that  Consultant is
     engaged  under this  Agreement  to render  services of a unique  character,
     requiring special expertise and experience by Consultant. Consultant agrees
     that a breach by it of  Section 6 could not  reasonably  or  adequately  be
     compensated  in damages in an action at law and that BPC shall be  entitled
     to  injunctive  relief,  which may  include,  but shall not be limited  to,
     restraining  Consultant  from  rendering any service that would breach this
     Agreement.  However,  no remedy conferred by any of the specific provisions
     of this Agreement  (including  this Section) is intended to be exclusive of
     any other  remedy,  and each and every  remedy shall be  cumulative  and in
     addition  to every  other  remedy  given  under  this  Agreement  or now or
     hereafter  existing  at law or in equity or by  statue  or  otherwise.  The
     election of any one or more  remedies by BPC shall not  constitute a waiver
     of the right to pursue other available remedies.

10.8 Indemnification. BPC shall indemnify and bear all costs, expenses and final
     judgments/settlements  incurred by Consultant ensuing from any legal action
     naming Consultant resulting from this Agreement;  provided,  however,  that
     BPC shall have no such  obligation if the involvement of Consultant in such
     legal action is a result of  Consultant's  fault,  negligence,  misconduct,
     misrepresentation or breach of this Agreement;  provided that in connection
     with any claim or action  described in this Section,  Consultant (aa) gives
     BPC prompt written notice of the claim,  (bb)  cooperates  with BPC (at its
     own expense) in  connection  with the defense and  settlement of the claim,
     and (cc)  permits BPC to control the  defense and  settlement  of the claim
     provided  that BPC may not  settle  the claim  without  Consultant's  prior
     written  consent  (which  will  not  be  unreasonably  withheld).  Further,
     Consultant (at its own cost) may  participate in the defense and settlement
     of the claim.  Consultant shall indemnify and bear all costs,  expenses and
     final  judgments/settlements  incurred by BPC ensuing from any legal action
     naming BPC,  resulting from this Agreement,  that is caused by Consultant's
     fault,  negligence,   misconduct,   misrepresentation  or  breach  of  this
     Agreement;  provided that in connection with any claim or action  described
     in this Section,  BPC (aa) gives  Consultant  prompt  written notice of the
     claim,  (bb)  cooperates with Consultant (at its own expense) in connection
     with the defense and settlement of the claim,  and (cc) permits  Consultant
     to control the defense and settlement of the claim provided that Consultant
     may not settle the claim without BPC's prior  written  consent  (which will
     not be unreasonably withheld). BPC (at its own cost) may participate in the
     defense and settlement of the claim.

10.9 Counterparts. This Agreement may be executed in any number of counterparts,
     each of which shall be deemed an original,  but all of which together shall
     constitute one and the same instrument.  Delivery of an executed  signature
     page of this Agreement by facsimile  transmission  shall be effective as an
     originally executed counterpart hereof.


     IN WITNESS WHEREOF, the PARTIES have executed this Agreement as of the date
first above written.


CONSULTANT,                                  BEACON POWER CORPORATION,


By:                                          By:

     John Pearson Smith                      Maureen A. Lister
                                             Vice President of Operations

     Address:  955 Cambridge Blvd. SE        Address:  234 Ballardvale Street
               Grand Rapids, MI 49506                  Wilmington, MA 01887

     Fax:                                    Fax:  978-694-9127