**Exhibit 10.23**

**SEVERANCE BENEFITS AGREEMENT**

THIS SEVERANCE BENEFITS AGREEMENT (the “Agreement”)is made as of the 29th day of October, 2008 between Active Power, Inc., (the “Company”), and John Penver, an individual resident of the State of Texas (“Employee”). Employee and the Company are collectively referredto herein as the “Parties.” 

1. At-Will Employment Status. Employee is currently employed by the Company. Employeeis employed on an “at will” basis, which means that either the Company or Employee may terminate Employee’s employment with the Company at any time and for any or no reason. 

2. Severance Benefits upon Involuntary Termination Without Cause or Resignation for Good Reason. Although Employee’s employment is at-will,if Employee is terminated by the Company without Cause (as defined below) or resigns with Good Reason (as defined below), then Employee shall be entitled to receive: 

(a) continuing severance pay at a rate equal to 100% of Employee’s base salary, as then in effect (less applicable withholdingtaxes), for a period of nine months from the date of such termination, to be paid periodically in accordance with the Company’s normal payroll practices; and 

(b) to the extent such stock options are outstanding and unvested as of the date of such termination, the number of shares of stockissuable upon exercise of options granted to Employee by the Company prior to the termination that would have been vested and exercisable as of the date that is nine months after the date of such termination shall vest and become exercisable as ofthe date of the termination, and the shares of stock of the Company that were purchased prior to the termination and that are as of the date of such termination subject to a right of repurchase by the Company (or its successor) shall have such rightof repurchase lapse with respect to the number of shares to which such right of repurchase would have lapsed for the period ending as of the date that is nine months after the date of such termination; and 

(c) if Employee elects continuation coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended(“COBRA”) for Employee, within the time period prescribed pursuant to COBRA, the Company will reimburse Employee for the COBRA premiums for such coverage (at the coverage levels in effect immediately prior to Employee’stermination) until the earlier of (i) a period of nine months from the last date of employment of the Employee with the Company, (ii) until Employee has secured other employment, or (iii) the date Employee is no longer eligible toreceive continuation coverage pursuant to COBRA. COBRA reimbursements shall be made by the Company to Employee consistent with the Company’s normal expense reimbursement policy, provided that Employee submits documentation to the Companysubstantiating Employee’s payments for such COBRA coverage; and 

(d) all or a portion of Employee’s bonus underthe Company’s management incentive program for the year in which Employee’s termination without Cause or resignation for Good Reason occurs, determined as follows: (i) with respect to corporate or individual objectives 

that are measured over a period of time (such as revenue for a fiscal year), the amount of such bonus with respect to such objective shall be determinedbased on a comparison of the amount of such objective actually achieved through the date of such termination against a pro rated portion (based on a number of days, weeks or months, as applicable, during the applicable measurement period for whichEmployee remained a service provider of the Company) of the target objective, and shall be payable on a pro rata basis (based on the number of days during the applicable measurement period for which Employee remained a service provider of theCompany), and (ii) with respect to corporate or individual objectives that are measured based on the occurrence of a specific event at a point in time, the full amount of such bonus with respect to such objective shall be payable if suchobjective is achieved prior to the date of such termination. All determinations of the amount of the achievement of such objectives and the amounts of such bonuses shall be made by the Board of Directors of the Company, in its sole discretion.

3. Acceleration Upon Termination After a Change in Control. Although Employee’s employment is at-will, in the event thatEmployee is terminated by the Company without Cause or resigns with Good Reason within twelve months after a Change in Control (as defined in the Company’s 2000 Stock Incentive Plan), all shares of stock that are issuable upon exercise of alloptions granted to Employee by the Company prior to the date of the Change in Control shall fully vest as of the date of such termination, to the extent such stock options are outstanding and unvested at the time of such termination, and all sharesof stock of the Company that were purchased prior to the Change in Control and that are subject to a right of repurchase by the Company (or its successor) shall have such right of repurchase lapse with respect to all of the shares. 

4. Confidential Information/ Non-Competition Agreement. 

(a) Employee is employed hereunder by the Company in a confidential relationship wherein Employee, in the course of his employment withthe Company, has and will continue to become familiar with and aware of Confidential Information as defined in the Confidentiality Agreement, including but not limited to confidential information regarding the Company’s customers and specificmanner of doing business, including the processes, techniques and trade secrets utilized by the Company, and future plans with respect thereto. In consideration for Employee’s promises herein, the Company agrees to provide Employee with suchConfidential Information; in return, Employee recognizes and acknowledges that such information must be maintained in confidence, and to further such protection agrees to the restrictive covenants set forth in this Section 4. 

(b) Employee acknowledges that Employee’s fulfillment of the obligations contained in this Agreement, including, but not limited to,Employee’s obligation neither to use, except for the benefit of the Company, or to disclose the Company’s Confidential Information and Employee’s obligation not to compete contained in this Section 4 is necessary to protect theCompany’s Confidential Information and to preserve the Company’s value and goodwill. Employee further acknowledges the time, geographic and scope limitations of Employee’s obligations under this Section 4 are reasonable,especially in light of the Company’s desire to protect its Confidential Information, and that Employee will not be precluded from gainful employment if Employee is obligated not to compete with the Company during the period and within theTerritory as described in Section 4. 

 

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(c) Employee will not, during the period of his employment by or with the Company, andfor a period of nine (9) months immediately following the termination of his employment with the Company, for any reason whatsoever, directly or indirectly, for himself or on behalf of or in conjunction with any other person, company,partnership, corporation, business or entity of whatever nature: 

(i) engage, as an officer, director, shareholder, owner,partner, joint venturer, or in a managerial capacity, whether as an employee, independent contractor, consultant or advisor, or as a sales representative, in any business selling any products or services in direct competition with the Company,within 100 miles of (i) the principal executive offices of the Company or (ii) any place where the Company conducts business, provides products or services, or in which the Company (including the subsidiaries thereof) is in the process ofinitiating business operations as of the date on which Employee’s employment by the Company hereunder is terminated (the “Territory”); 

(ii) call upon any person who is, at that time, within the Territory, an employee of the Company (including the subsidiaries thereof) in amanagerial capacity for the purpose or with the intent of enticing such employee away from or out of the employ of the Company (including the subsidiaries thereof); 

(iii) call upon any person or entity which is, at that time, or which has been, within one (1) year prior to that time, a customer ofthe Company (including the subsidiaries thereof’) within the Territory for the purpose of soliciting or selling products or services in direct competition with the Company within the Territory; 

(iv) call upon any prospective acquisition candidate, on Employee’s own behalf or on behalf of any competitor, which candidate waseither called upon by the Company (including the subsidiaries thereof) or for which the Company made an acquisition analysis, for the purpose of acquiring such entity, provided however, that this section (iv) will not apply if the Companyaffirmatively declined to proceed with the acquisition; or 

(v) disclose customers of the Company (or the subsidiariesthereof) to any person, firm, partnership, corporation or business for any competitive reason. 

As used in Section 4(c), references tothe business, customers, Territory, etc. of the Company refer to the status of the Company prior to any Change in Control (*i.e.*, such breadth of business, customers, Territory, etc. shall not automatically be expanded to include those of asuccessor to the Company resulting from a Change in Control). Notwithstanding the above, the foregoing covenant shall not be deemed to prohibit Employee from acquiring as an investment not more than three percent (3%) of the capital stock of acompeting business, whose stock is traded on a national securities exchange or over-the-counter. 

 

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(d) Because of the difficulty of measuring economic losses to the Company as a result ofa breach of the foregoing covenant, and because of the immediate and irreparable damage that could be caused to the Company for which it would have no other adequate remedy, Employee agrees that the foregoing covenant may be enforced by the Companyin the event of breach by him by injunctions and restraining orders without the necessity of posting any bond therefor. 

(e)In the course of Employee’s employment with the Company, Employee will become exposed to certain of the Company’s confidential information and business relationships, which the above covenants are designed to protect and Employee agrees tokeep such confidential information in the strictest confidence. It is agreed by the parties that the foregoing covenants in this Section 4 impose a reasonable restraint on Employee in light of the activities and business of the Company(including the Company’s subsidiaries) on the date of the execution of this Agreement and the current plans of the Company (including the Company’s subsidiaries); but it is also the intent of the Company and Employee that such covenants beconstrued and enforced in accordance with the changing activities, business and locations of the Company (including the Company’s subsidiaries) throughout the term of this covenant, subject to the following paragraph. For example, if, duringEmployee’s term of employment, the Company (including the Company’s subsidiaries) engages in new and different activities, enters a new business or established new locations for its current activities or business in addition to or otherthan the activities or business enumerated under the Recitals above or the locations currently established therefor, then, to the extent described in Section 4(c), Employee will be precluded from soliciting the customers or employees of suchnew activities or business or from such new location and from directly competing with such new business within 100 miles of its then-established operating locations through the term of this covenant. 

It is further agreed by the parties hereto that, in the event that Employee shall cease to be employed by the Company, and shall laterenter into a business or pursue other activities not in competition with the Company (including the Company’s subsidiaries) as of Employee’s last date of employment with the Company, or similar activities or business in locations theoperation of which, under such circumstances, does not violate clause (i) of this Section 4, and in any event such new business, activities or location are not in violation of this Section 4 or of Employee’s obligations underthis Section 4, if any, Employee shall not be chargeable with a violation of this Section 4 if the Company (including the Company’s subsidiaries) shall thereafter enter the same, similar or a competitive (i) business,(ii) course of activities or (iii) location, as applicable. 

(f) The covenants in this Section 4 areseverable and separate, and the unenforceability of any specific covenant shall not affect the provisions of any other covenant. Moreover, in the event any court of competent jurisdiction shall determine that the scope, time or territorialrestrictions set forth are unreasonable, then it is the intention of the parties that such restrictions be enforced to the fullest extent which the court deems reasonable, and the Agreement shall thereby be reformed to such extent. 

 

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(g) All of the covenants in this Section 4 shall be construed as an agreementindependent of any other provision in this Agreement, and the existence of any claim or cause of action of Employee against the Company, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by theCompany of such covenants. 

(h) It is specifically agreed that the period of nine (9) months following Employee’semployment set forth at the beginning of this Section 4, during which the agreements and covenants of Employee made in this Section 4 shall be effective, shall be computed by excluding from such computation any time during which Employeeis in violation of any provision of this Section 4. 

5. Conditions Precedent. Any severance payments and/or benefitscontemplated by Sections 2 and 3 above are conditional on Employee: 

(a) continuing to comply with the terms of thisAgreement and the Proprietary Information and Nondisclosure Agreement between Employee and the Company (the “Confidentiality Agreement”); 

(b) delivering prior to or contemporaneously with any such severance payments, and not revoking, a separation agreement including a general release of claims relating to Employee’s employment and/or thisAgreement against the Company or its successor, its subsidiaries and their respective directors, officers and stockholders and affirmation of obligations hereunder and under the Confidentiality Agreement in a form acceptable to the Company or itssuccessor, the key terms of which are included in the attached Exhibit A; and 

(c) in the event of a resignation forGood Reason, providing the Company with written notice of the acts or omissions constituting the grounds for Good Reason within ninety (90) days of the initial existence of the grounds for Good Reason and a reasonable opportunity for theCompany to cure the conditions giving rise to such Good Reason, which shall not be less than thirty (30) days following the date of notice from Employee. If the Company cures the conditions giving rise to such Good Reason within thirty(30) days of the date of such notice, Employee will not be entitled to severance payments and/or benefits contemplated by Sections 2 or 3 above if Employee thereafter resigns from the Company based on such grounds. Unless otherwiserequired by law, no severance payments and/or benefits under Sections 2 or 3 will be paid and/or provided until after the expiration of any relevant revocation period. 

6. Definitions. For purposes of this Agreement, 

(a) *Cause*. For purposes of this Agreement, “Cause” shall mean (i) Employee’s continued failure to substantially perform the duties and obligations of Employee’s position (forreasons other than death or Disability), which failure, if curable within the discretion of the Company, is not cured to the reasonable satisfaction of the Company within thirty (30) days after receipt of written notice from the Company of suchfailure; (ii) Employee’s failure or refusal to comply with reasonable written policies, standards and regulations established by the Company from time to time which failure, if curable in the discretion of the Company, is not cured to the

 

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reasonable satisfaction of the Company within thirty (30) days after receipt of written notice of such failure from the Company; (iii) any act ofpersonal dishonesty, fraud, embezzlement, misrepresentation, or other unlawful act committed by Employee that results in a substantial gain or personal enrichment of Employee at the expense of the Company; (iv) Employee’s violation of afederal or state law or regulation applicable to the Company’s business, which violation was or is reasonably likely to be materially injurious to the Company; (v) Employee’s violation of, or a plea of nolo contendere or guilty to, afelony under the laws of the United States or any state; or (vi) the Employee’s material breach of the terms of Section 4 of this Agreement or of the Confidentiality Agreement. 

(b) *Good Reason*. For purposes of this Agreement, “Good Reason” shall mean, without Employee’s writtenconsent: (i) there is a material reduction of the level of Employee’s compensation (excluding any bonuses) (except where there is a general reduction applicable to the management team generally); (ii) there is a material reduction inEmployee’s overall responsibilities or authority, or scope of duties, it being understood that a reduction in Employee’s responsibilities or authority following a Change in Control shall not constitute Good Reason unless there also occursa demotion in Employee’s title or position; or (iii) a material change in the geographic location at which Employee must perform his services; provided, that in no instance will the relocation of Employee to a facility or a location offifty (50) miles or less from Employee’s then current office location be deemed material for purposes of this Agreement. In no instance will a resignation by Employee be deemed to be for Good Reason if it is made more than twenty four(24) months following the initial occurrence of any of the events that otherwise would constitute Good Reason hereunder. 

(c) The Board shall make all determinations relating to termination, including without limitation any determination regarding Cause. 

7. Tax Treatment. The Company makes no representations or warranties with respect to the tax consequences of the payment of any sums to Employee under the terms of this Agreement. Employee agrees and understands that, with theexception of the withholdings from the severance payments, Employee is responsible for payment of any local, state and/or federal taxes on the sums paid hereunder by the Company and any penalties or assessments thereon. Employee further agrees toindemnify and hold the Company harmless from any claims, demands, deficiencies, penalties, assessments, executions, judgments, or recoveries by any government agency against the Company for any amounts claimed due on account of Employee’sfailure to pay federal or state taxes or damages sustained by the Company by reason of any such claims, including reasonable attorney fees. 

8. Section 409A. 

(a) Notwithstanding anything to the contrary in this Agreement, if Employee is a“specified employee” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and the final regulations and any guidance promulgated thereunder (“Section 409A”)at the time of Employee’s termination (other than due to death), and the continuing severance pay payable to Employee, if any, pursuant to this Agreement, when 

 

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considered together with any other severance payments or separation benefits which may be considered deferred compensation under Section 409A (together,the “Deferred Compensation Separation Benefits”) will not and could not under any circumstances, regardless of when such termination occurs, be paid in full by March 15 of the year following Employee’s termination, thenonly that portion of the Deferred Compensation Separation Benefits which do not exceed the Section 409A Limit (as defined below) may be made within the first six (6) months following Employee’s termination of employment in accordancewith the payment schedule applicable to each payment or benefit. For these purposes, each severance payment is hereby designated as a separate payment and will not collectively be treated as a single payment. Any portion of the Deferred CompensationSeparation Benefits in excess of the Section 409A Limit shall accrue and, to the extent such portion of the Deferred Compensation Separation Benefits would otherwise have been payable within the first six (6) months followingEmployee’s termination of employment, will become payable on the first payroll date that occurs on or after the date six (6) months and one (1) day following the date of Employee’s termination. All subsequent DeferredCompensation Separation Benefits, if any, will be payable in accordance with the payment schedule applicable to each payment or benefit. Notwithstanding anything herein to the contrary, if Employee dies following Employee’s termination butprior to the six (6) month anniversary of Employee’s termination, then any payments delayed in accordance with this paragraph will be payable in a lump sum as soon as administratively practicable after the date of Employee’s death andall other Deferred Compensation Separation Benefits will be payable in accordance with the payment schedule applicable to each payment or benefit. 

(b) The foregoing provision is intended to comply with the requirements of Section 409A so that none of the severance payments and benefits to be provided hereunder will be subject to the additional tax imposedunder Section 409A, and any ambiguities herein will be interpreted to so comply. The Company and Employee agree to work together in good faith to consider amendments to this Agreement and to take such reasonable actions which are necessary,appropriate or desirable to avoid imposition of any additional tax or income recognition prior to actual payment to Employee under Section 409A. 

(c) For purposes of this Agreement, “Section 409A Limit” will mean the lesser of two (2) times: (A) Employee’s annualized compensation based upon the annual rate of pay paid to Employeeduring the Company’s taxable year preceding the Company’s taxable year of Employee’s termination of employment as determined under Treasury Regulation 1.409A-1(b)(9)(iii)(A)(1) and any Internal Revenue Service guidance issued withrespect thereto; or (B) the maximum amount that may be taken into account under a qualified plan pursuant to Section 401(a)(17) of the Code for the year in which Employee’s employment is terminated. 

9. Limitation on Payments. In the event that the severance and other benefits provided for in this Agreement or otherwise payable to Employee(i) constitute “parachute payments” within the meaning of Section 280G of the Code, and (ii) would be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then Employee’sbenefits under this Agreement shall be either 

(a) delivered in full, or 

 

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(b) delivered as to such lesser extent which would result in no portion of such benefitsbeing subject to the Excise Tax, 

whichever of the foregoing amounts, taking into account the applicable federal, state and local incometaxes and the Excise Tax, results in the receipt by Employee on an after-tax basis, of the greatest amount of benefits, notwithstanding that all or some portion of such benefits may be taxable under Section 4999 of the Code. 

Unless the Company and Employee otherwise agree in writing, any determination required under this Section shall be made in writing by the Company’sindependent public accountants (the “Accountants”), whose determination shall be conclusive and binding upon Employee and the Company for all purposes. For purposes of making the calculations required by this Section, the Accountants maymake reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Section 280G and 4999 of the Code. The Company and Employee shall furnish to theAccountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section. The Company shall bear all costs the Accountants may reasonably incur in connection with any calculationscontemplated by this Section. 

10. Confidential Information. Employee shall continue to comply with the terms and conditions of theConfidentiality Agreement, and maintain the confidentiality of all of the Company’s confidential and proprietary information. Such information includes, but is not limited to, all customer lists, equipment, records, data, notes, reports,proposals, correspondence, specifications, drawings, blueprints, sketches, materials, or other documents or property belonging to the Company. 

11. Miscellaneous. 

(a) Withholding Taxes. The Company may withhold from all benefits payable underthis Agreement all federal, state, city or other taxes as shall be required pursuant to any law or governmental regulation or ruling. 

(b) Entire Agreement; Binding Effect. This Agreement and the Confidentiality Agreement set forth the entire understanding between the Parties as to the subject matter of this Agreement and supersede all prioragreements, commitments, representations, writings and discussions between them*,* including the January 31, 2005 offer letter; and neither of the Parties shall be bound by any obligations, conditions, warranties or representations withrespect to the subject matter of this Agreement, except as expressly provided herein or therein or as duly set forth on or subsequent to the date hereof in a written instrument signed by the proper and fully authorized representative of the party tobe bound hereby. This Agreement is binding on Employee and on the Company and his/her and its successors and assigns (whether by assignment, by operation of law or otherwise). 

 

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(c) Arbitration. The Parties agree that, unless otherwise agreed to in a writingsigned by the Employee and the Chairman of the Board of Directors of the Company, any and all disputes arising out of, or relating to, the terms of this Agreement, their interpretation, and any of the matters herein released, shall be subject tobinding arbitration in Travis County, Texas before the American Arbitration Association under its National Rules for the Resolution of Employment Disputes. The Parties agree that the prevailing party in any arbitration shall be entitled toinjunctive relief in any court of competent jurisdiction to enforce the arbitration award. The Parties agree that the prevailing party in any arbitration shall be awarded its reasonable attorney fees and costs. **The Parties hereby agree to waivetheir right to have any dispute between them resolved in a court of law by a judge or jury.** This section will not prevent either party from seeking injunctive relief (or any other provisional remedy) from any court having jurisdiction over theParties and the subject matter of their dispute relating to Employee’s obligations under this Agreement and the agreements incorporated herein by reference. 

(d) Governing Law; Jurisdiction. This Agreement shall be governed by, and construed and enforced in accordance with, the employmentlaws of Texas and the other laws of the State of Texas as they apply to contracts entered into and wholly to be performed therein by residents thereof. In addition, each party hereto irrevocably and unconditionally agrees that any suit, action orother legal proceeding arising out of this Agreement may be brought only in a state or federal court within Texas. 

(e)Severability. In the event that any provision hereof becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable of void, this Agreement shall continue in full force and effect without said provision. 

(f) Effect of Headings. The Section and subsection headings contained herein are for convenience only and shall not affect theconstruction hereof. 

(g) Counterparts. This Agreement may be executed in multiple counterparts, each of which shallbe deemed to be an original, and all such counterparts shall constitute but one instrument. 

IN WITNESS WHEREOF, the Parties have executedthis Agreement on the dates set forth below. 

 
**Employee**  **Active Power, Inc.**/s/ John Penver  By: /s/ Benjamin ScottSignature    Benjamin Scott, ChairmanJohn Penver  Dated: October 29, 2008(Print Name)   
Dated: October 29, 2008 

 

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**Exhibit A**

**ACTIVE POWER, INC.**

**RELEASE OF CLAIMS**

This Release of Claims (“Agreement”) is made by and between Active Power, Inc. (the “Company”), and                                    (“Employee”). 

WHEREAS, Employee has agreed to enter into a release of claims in favor of the Company upon certain eventsspecified in the Severance Benefits Agreement by and between Company and Employee (the “Severance Agreement”). 

NOWTHEREFORE, in consideration of the mutual promises made herein, the Parties hereby agree as follows: 

1. Termination.Employee’s employment from the Company terminated on                     . 

2. Confidential Information. Employee shall continue to maintain the confidentiality of all confidential and proprietary information of theCompany and shall continue to comply with the terms and conditions of the Proprietary Information and Nondisclosure Agreement between Employee and the Company (the “Confidentiality Agreement”), as well as Section 4 of theSeverance Agreement. Employee shall return all the Company property and confidential and proprietary information in his possession to the Company on the Effective Date of this Agreement. 

3. Payment of Salary. Employee acknowledges and represents that the Company has paid all salary, wages, bonuses, accrued vacation, commissions andany and all other benefits due to Employee. 

4. Release of Claims. Except as set forth in the last paragraph of this Section 4,Employee agrees that the foregoing consideration represents settlement in full of all outstanding obligations owed to Employee by the Company. Employee, on behalf of himself, and his respective heirs, family members, executors and assigns, herebyfully and forever releases the Company and its past, present and future officers, agents, directors, employees, investors, shareholders, administrators, affiliates, divisions, subsidiaries, parents, predecessor and successor corporations, andassigns, from, and agrees not to sue or otherwise institute or cause to be instituted any legal or administrative proceedings concerning any claim, duty, obligation or cause of action relating to any matters of any kind, whether presently known orunknown, suspected or unsuspected, that he may possess arising from any omissions, acts or facts that have occurred up until and including the Effective Date of this Agreement including, without limitation, 

(h) any and all claims relating to or arising from Employee’s employment relationship with the Company and the termination of thatrelationship; 

(i) any and all claims relating to, or arising from, Employee’s right to purchase,or actual purchase of shares of stock of the Company, including, without limitation, any claims for fraud, misrepresentation, breach of fiduciary duty, breach of duty under applicable state corporate law, and securities fraud under any state orfederal law; 

(j) any and all claims for wrongful discharge of employment; termination in violation of public policy;discrimination; breach of contract, both express and implied; breach of a covenant of good faith and fair dealing, both express and implied; promissory estoppel; negligent or intentional infliction of emotional distress; negligent or intentionalmisrepresentation; negligent or intentional interference with contract or prospective economic advantage; unfair business practices; defamation; libel; slander; negligence; personal injury; assault; battery; invasion of privacy; false imprisonment;and conversion; 

(k) any and all claims for violation of any federal, state or municipal statute, including, but not limitedto, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Age Discrimination in Employment Act of 1967, the Americans with Disabilities Act of 1990, the Fair Labor Standards Act, the Employee Retirement Income Security Act of1974, The Worker Adjustment and Retraining Notification Act, any provisions of the Texas Labor Code, and any other law of the State of Texas; 

(l) any and all claims for violation of the federal, or any state, constitution; 

(m) anyand all claims arising out of any other laws and regulations relating to employment or employment discrimination; and 

(n)any and all claims for attorneys’ fees and costs. 

Employee agrees that the release set forth in this section shall be and remain in effect in allrespects as a complete general release as to the matters released. Nothing in this Agreement waives Employee’s rights to indemnification or any payments under any fiduciary insurance policy, if any, provided by any act or agreement of theCompany, state or federal law or policy of insurance. 

5. Acknowledgment of Waiver of Claims under ADEA. Employee acknowledges thathe is waiving and releasing any rights he may have under the Age Discrimination in Employment Act of 1967 (“ADEA”) and that this waiver and release is knowing and voluntary. Employee and the Company agree that this waiver and release doesnot apply to any rights or claims that may arise under the ADEA after the Effective Date of this Agreement. Employee acknowledges that the consideration given for this waiver and release Agreement is in addition to anything of value to whichEmployee was already entitled. Employee further acknowledges that he has been advised by this writing that (a) he should consult with an attorney prior to executing this Agreement; (b) he has at least twenty-one (21) dayswithin which to consider this Agreement; (c) he has seven (7) days following the execution of this Agreement by the parties to revoke the Agreement; (d) this Agreement shall not be effective until the revocation period has expired;and (e) nothing in this Agreement prevents or precludes Employee from challenging or 

 

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seeking a determination in good faith of the validity of this waiver under the ADEA, nor does it impose any condition precedent, penalties or costs for doingso, unless specifically authorized by federal law. Any revocation should be in writing and delivered to                         at the Company by close of business on the seventh day from the date that Employee signs thisAgreement. 

6. No Pending or Future Lawsuits. Employee represents that he has no lawsuits, claims, or actions pending in his name,or on behalf of any other person or entity, against the Company or any other person or entity referred to herein. Employee also represents that he does not intend to bring any claims on his own behalf or on behalf of any other person or entityagainst the Company or any other person or entity referred to herein. 

7. Application for Employment. Employee understands andagrees that, as a condition of this Agreement, he shall not be entitled to any employment with the Company, its subsidiaries, or any successor, and he hereby waives any right, or alleged right, of employment or re-employment with the Company.

8. No Cooperation. Employee agrees that he will not counsel or assist any attorneys or their clients in the presentation orprosecution of any disputes, differences, grievances, claims, charges, or complaints by any third party against the Company and/or any officer, director, employee, agent, representative, shareholder or attorney of the Company, unless under asubpoena or other court order to do so. 

9. Cooperation with Company. Employee agrees to cooperate, at the request of the Company,in the defense and/or prosecution of any charges, claims, investigations (internal or external), administrative proceedings and/or lawsuits relating to matters occurring during or relating to Employee’s period of employment about which Employeemay have relevant information. Employee shall further reasonably cooperate with regard to the transition of Employee’s job duties and business relationships. Employee agrees to respond to reasonable requests for information from the Company ina timely manner. 

10. No Admission of Liability. No action taken by the Company, either previously or in connection with thisAgreement shall be deemed or construed to be (a) an admission of the truth or falsity of any claims heretofore made or (b) an acknowledgment or admission by the Company of any fault or liability whatsoever to the Employee or to any thirdparty. 

11. Costs. The Parties shall each bear their own costs, expert fees, attorneys’ fees and other fees incurred inconnection with this Agreement. 

12. Authority. Employee represents and warrants that he has the capacity to act on his own behalfand on behalf of all who might claim through him to bind them to the terms and conditions of this Agreement. 

13. NoRepresentations. Employee represents that he has had the opportunity to consult with an attorney, and has carefully read and understands the scope and effect of the provisions of this Agreement. Neither party has relied upon any representationsor statements made by the other party hereto which are not specifically set forth in this Agreement. 

 

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14. Severability. In the event that any provision hereof becomes or is declared by a court ofcompetent jurisdiction to be illegal, unenforceable or void, this Agreement shall continue in full force and effect without said provision. 

15. Entire Agreement. This Agreement, along with the Confidentiality Agreement, and Employee’s written equity compensation agreements with the Company, represents the entire agreement and understanding between the Company andEmployee concerning Employee’s separation from the Company. 

16. No Oral Modification. This Agreement may only be amended inwriting signed by Employee and a duly authorized officer of the Company (other than Employee). 

17. Governing Law. This Agreementshall be governed by the internal substantive laws, but not the choice of law rules, of the State of Texas. 

18. Effective Date.Each Party has seven (7) days after that Party signs this Agreement to revoke it. This Agreement will become effective on the eighth (8th) day after Employee signed this Agreement, so long as it has been signed by both Parties. 

19. Counterparts. This Agreement may be executed in counterparts, and each counterpart shall have the same force and effect as an original andshall constitute an effective, binding agreement on the part of each of the undersigned. 

20. Voluntary Execution of Agreement. ThisAgreement is executed voluntarily and without any duress or undue influence on the part or behalf of the Parties hereto, with the full intent of releasing all claims. The Parties acknowledge that: 

(o) They have read this Agreement; 

(p) They have had the opportunity of being represented in the preparation, negotiation, and execution of this Agreement by legal counsel of their own choice or that they have voluntarily declined to seek such counsel;

(q) They understand the terms and consequences of this Agreement and of the releases it contains; 

(r) They are fully aware of the legal and binding effect of this Agreement. 

 

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IN WITNESS WHEREOF, the Parties have executed this Agreement on the respective dates set forth below.

 
  Active Power, Inc.Dated:                     , 20__  By      __________________, an individualDated:                     , 20__    
 

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