UQM TECHNOLOGIES, INC.
2002 EQUITY INCENTIVE PLAN

NON-QUALIFIED STOCK OPTION AGREEMENT

THIS AGREEMENT made as of this ___ day of ______, 2008, between UQM
TECHNOLOGIES, INC., a Colorado corporation (together with its Affiliated
Corporations, except where the context requires otherwise, the "Company"), and
_____________ (the "Option Holder").

 1. Grant of Option

. Pursuant to the UQM Technologies, Inc. 2002 Equity Incentive Plan (the "Plan")
and subject to the terms and conditions of this Agreement, the Company hereby
grants to the Option Holder a non-qualified option (the "Option") to purchase
______ shares of the common stock of the Company (the "Stock") at an exercise
price per share of $______ (the "Option Price"). The Option grant shall be
effective as of ________ (the "Effective Date"). The Option is not intended to
qualify as an incentive stock option under Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code").

Requirements for Exercise; Vesting

.

 a. In General

. Except as provided otherwise in this Agreement, the Option shall not become
exercisable until the Option Holder has completed one full year of continuous
employment after the Effective Date. Upon the completion of one full year of
continuous employment after the Effective Date, the Option shall become vested
and exercisable in increments, if the Option Holder is still in the employ of
the Company on the dates indicated in the following schedule:

Employment
Vesting Date

 

Percentage of Option
That Shall Become Vested
and Exercisable on Each Date

One year from date of grant  

33%

Two years from date of grant an additional 33%  Three years from date of grant
an additional 34%

> Except as set forth in Sections 5 and 6 of this Agreement, the Option shall
> not be exercisable as to any shares of Stock as to which the vesting
> requirements of this Section 2 shall not be satisfied, regardless of the
> circumstances under which the Option Holder's employment by the Company shall
> be terminated. The number of shares of Stock as to which the Option may be
> exercised shall be cumulative, so that once the Option shall become vested and
> exercisable as to any shares of Stock it shall continue to be vested and
> exercisable as to such shares, until expiration or termination of the Option
> as provided in Section 6 hereof. If at any time the number of shares of Stock
> that are covered by the vested and exercisable portion of the Option includes
> a fractional share, the number of shares of Stock as to which the Option shall
> be actually vested and exercisable shall be rounded down to the next whole
> share of Stock.
> 
>  b. Accelerated Vesting in Certain Circumstances
> 
> . The Option Holder shall become 100% vested with respect to the entire
> Option, and the entire Option shall become exercisable, upon a reorganization
> or change in control of the Company (as defined in Section 5(b) below).

 3. Method for Exercising the Option

. The Option may be exercised only by delivery of written notice of exercise,
together with payment of the Option Price as provided below, in person or
through certified or registered mail, fax or overnight delivery to the Company
at the following address: UQM Technologies, Inc., Attention: Corporate
Secretary, 425 Corporate Circle, Golden, Colorado 80401, or such other address
as shall be furnished in writing to the Option Holder by the Company. Such
written notice shall specify that the Option is being exercised, and the number
of shares of Stock with respect to which the Option is exercised, the Option
Price shall be paid no later than 30 days after the notice of exercise is
delivered. The Option shall be exercised only when the Option Price is paid in
full.

> The Company intends to register the shares of Stock subject to this Option and
> this Option on a Form S-8 Registration Statement (or any successor or
> replacement Form). Notwithstanding such registration, the Company may require
> the Option Holder, as a condition of exercise of this Option, to give written
> assurance in substance and form satisfactory to the Company and its counsel to
> the effect that the Option Holder is acquiring the Stock for his own account
> for investment and not with any present intention of selling or otherwise
> distributing the same, and to such other effects as the Company deems
> necessary or appropriate in order to comply with federal and state securities
> laws. Legends evidencing such restrictions may be placed on the Stock
> certificates.
> 
> The purchase of such Stock shall take place at the address of the Company set
> forth above upon delivery of a notice of exercise that specifies the number of
> shares with respect to which the Option is being exercised and payment of the
> Option Price for the Stock in full, within 30 days of the delivery of the
> notice of exercise, (i) by certified or cashier's check payable to the
> Company's order, or (ii) by wire transfer to such account as may be specified
> by the Company for this purpose, or (iii) by delivery to the Company of
> certificates representing the number of shares of Stock then owned by the
> Option Holder, the Fair Market Value of which equals the Option Price of the
> Stock to be purchased pursuant to the Option, properly endorsed for transfer
> to the Company; provided, however, that no Option may be exercised by delivery
> to the Company of certificates representing Stock, unless such Stock has been
> held by the Option Holder for more than six (6) months, or (iv) by delivery to
> the Company of a properly executed notice of exercise together with
> irrevocable instructions to a broker to deliver to the Company promptly the
> amount of the proceeds of the sale of all or a portion of the Stock or of a
> loan from the broker to the Option Holder required to pay the Option Price;
> provided, however, that if the Option Holder is subject to the Sarbanes-Oxley
> Act of 2002, the Option Price shall not be paid with the proceeds of a loan.
> For purposes of this Option, the Fair Market Value of any shares of Stock
> delivered in payment of the Option Price upon exercise of the Option shall be
> the Fair Market Value as of the exercise date; the exercise date shall be the
> day of delivery of the certificates for the Stock used as payment of the
> Option Price.
> 
> Upon such notice to the Company and payment of the Option Price, the exercise
> of the Option shall be deemed to be effective, and a properly executed
> certificate or certificates representing the Stock so purchased shall be
> issued by the Company and delivered to the Option Holder.

 4. Adjustment of the Option

.

>  a. Adjustment by Stock Split, Stock Dividend, Etc.

If at any time the Company increases or decreases the number of its outstanding
shares of Stock, or changes in any way the rights and privileges of such shares,
by means of the payment of a stock dividend or the making of any other
distribution on such shares payable in Stock, or through a Stock split or
subdivision of shares, or a consolidation or combination of shares, or through a
reclassification or recapitalization involving the Stock, the numbers, rights
and privileges of the shares of Stock included in the Option shall be increased,
decreased or changed in like manner as if such shares had been issued and
outstanding, fully paid and non-assessable at the time of such occurrence.

Other Distributions and Changes in the Stock

. If the Company shall at any time distribute with respect to the Stock assets
or securities of persons other than the Company (excluding cash or distributions
referred to in subsection (a)) or grant to the holders of its Stock rights to
subscribe pro rata for additional shares thereof or for any other securities of
the Company or there shall be any other change (except as described in
subsection (a)) in the number or kind of outstanding shares of Stock or of any
stock or other securities into which the Stock shall be changed or for which it
shall have been exchanged, and if the Committee shall in its discretion
determine that the event equitably requires an adjustment in the number or kind
of shares subject to the Option, an adjustment to the Option Price, or the
taking of any other action by the Committee, including without limitation, the
setting aside of any property for delivery to the Option Holder upon the
exercise of the Option, then such adjustment shall be made, or other actions
taken, by the Committee and shall be effective for all purposes of this
Agreement.

Apportionment of Option Price

. Upon any occurrence described in the preceding subsections (a) and (b), the
aggregate Option Price for the shares of Stock then subject to the Option shall
remain unchanged and shall be apportioned ratably over the increased or
decreased number or changed kinds of securities or other properties subject to
the Option. Any fractional shares resulting from any of the foregoing
adjustments shall be disregarded and eliminated from this Option.

General Adjustment Rules

. No adjustment or substitution provided for in Section 4 or Section 5 shall
require the Company to sell a fractional Share under any Option, or otherwise
issue a fractional Share, and the total substitution or adjustment with respect
to each Option shall be limited by deleting any fractional Share. In the case of
any such substitution or adjustment, the aggregate Option Price for the total
number of Shares then subject to an Option shall remain unchanged but the Option
Price per Share under each such Option shall be equitably adjusted by the
Committee to reflect the greater or lesser number of Shares or other securities
into which the Stock subject to the Option may have been changed and all such
adjustments shall be completed pursuant to the rules of Code section 424 and the
regulations promulgated thereunder. If the Option is covered by Code section
409A, any and all adjustments under this Agreement shall be made in a manner
that is consistent with Code section 409A.

 5. Reorganization and Change in Control

.

>  a. Full Vesting; Termination; Assumption or Substitution

. Upon the occurrence of a Corporate Transaction (as defined in subsection
5(c)), the Option shall become fully exercisable regardless of whether all
conditions of exercise relating to length of service have been satisfied. The
Committee may also provide for the assumption or substitution of the Option by
the surviving entity as described in subsection 5(b) and make any other
provision for the Option as the Committee deems appropriate in its sole
discretion. The Committee may provide that any portion of the Option that
outstanding at the time the Corporate Transaction is closed shall expire at the
time of the closing, as the Committee determines in its sole discretion.

Assumption or Substitution

. The Company, or the successor or purchaser, as the case may be, may make
adequate provision for the assumption of the Option or the substitution of a new
option for the outstanding Option on terms comparable to the Option.

Corporate Transaction

. A Corporate Transaction shall include the following:

>  i. Merger; Reorganization:
> 
> the merger or consolidation of the Company with or into another corporation or
> other reorganization (other than a reorganization under the United States
> Bankruptcy Code) of the Company (other than a consolidation, merger, or
> reorganization in which the Company is the continuing corporation and which
> does not result in any reclassification or change of outstanding Shares); or
> 
> Sale:
> 
> the sale or conveyance of the property of the Company as an entirety or
> substantially as an entirety (other than a sale or conveyance in which the
> Company continues as a holding company of an entity or entities that conduct
> the business or businesses formerly conducted by the Company) or the sale of
> more than 50% of the outstanding voting stock of the Company; or
> 
> Liquidation:
> 
> the dissolution or liquidation of the Company; or
> 
> Change in Control:
> 
> a "Change in Control" shall be deemed to have occurred if at any time during
> any period of two consecutive years (including any period prior to the
> Effective Date of the Plan), individuals who at the beginning of such period
> constitute the Board (and any new director whose election by the Board or
> whose nomination for election by the Company's stockholders was approved by a
> vote of at least two-thirds (2/3) of the directors then still in office who
> either were directors at the beginning of such period or whose election or
> nomination for election was previously so approved) cease for any reason to
> constitute a majority of all directors at any time during such period; or
> 
> Other Transactions:
> 
> any other transaction that the Board determines by resolution to be a
> Corporate Transaction.

Notwithstanding anything to the contrary in this Section 5 to the contrary, no
Option or other Award will become exercisable and/or vested by virtue of the
occurrence of a Corporate Transaction if the Participant or any group of which
such Participant is a member of the person whose acquisition constituted the
Corporate Transaction.

 6. Expiration and Termination of the Option

. The Option shall expire on the ________ anniversary of the Effective Date,
(the period from the Effective Date to the expiration date is the "Option
Period") or prior to such time as follows:

 a. Termination for Cause

. If the Option Holder's employment by the Company is terminated for "cause," as
determined by the Company, within the Option Period, the entire Option, whether
or not vested, shall become void, shall be forfeited and shall terminate
immediately upon the termination of employment of the Option Holder. For this
purpose, "cause" shall mean a gross violation, as determined by the Company, of
the Company's established policies and procedures.

Termination on Account of Disability

. If the Option Holder becomes Disabled, the Option may be exercised by the
Option Holder within one year following the Option Holder's termination of
services on account of Disability (provided that such exercise must occur within
the Option Period), but not thereafter. In any such case, the Option may be
exercised only as to the shares as to which the Option had become exercisable on
or before the date of the Option Holder's termination of services.

Death

. If the Option Holder dies during the Option Period while still employed by or
performing services for the Company or within the one year period referred to in
(b) above or the twelve (12) month period referred to in (d) or (e) below, the
Option may be exercised by those entitled to do so under the Option Holder's
will or by the laws of descent and distribution within one year following the
Option Holder's death (provided that such exercise must occur within the Option
Period), but not thereafter. In any such case, the Option may be exercised only
as to the shares as to which the Option had become exercisable on or before the
date of the Option Holder's death.

Retirement

. If the Option Holder terminates employment during the Option Period on account
of Retirement, the Option may be exercised by the Option Holder within twelve
(12) months following the date of such termination (provided that such exercise
must occur within the Option Period), but not thereafter. In any such case, the
Option shall become fully vested and may be exercised as to all Shares remaining
subject to the Option on the date of Retirement. Retirement shall mean
termination of services on or after the Option Holder's 65th birthday or
pursuant to an early retirement provision in an employment agreement between the
Company and the Option Holder.

Termination for Other Reasons

. If the services of the Option Holder are terminated (which for this purpose
means that the Option Holder is no longer employed by the Company or performing
services for the Company) within the Option Period for any reason other than
cause, Disability, death, or Retirement, the Option may be exercised by the
Option Holder within twelve (12) months following the date of such termination
(provided that such exercise must occur within the Option Period), but not
thereafter. In any such case, the Option may be exercised only as to the shares
as to which the Option had become exercisable on or before the date of
termination of services.

Transferability

.

>  a. In General: No Lifetime Transfers

. Except as provided in subsection (b) below, the Option may not be transferred
except by will or pursuant to the laws of descent and distribution, and it shall
be exercisable during the Option Holder's life only by him, or in the event of
Disability or incapacity, by his guardian or legal representative, and after his
death, only by those entitled to do so under his will or the applicable laws of
descent and distribution. Except as specifically provided herein, upon any
attempt to transfer, assign, pledge, hypothecate or otherwise dispose of the
Option or any right or privilege granted hereunder, or upon the levy of any
attachment or similar process upon the rights and privileges herein conferred,
the Option and the rights and privileges hereunder shall become immediately null
and void.

InterVivos Transfer to Certain Family Members

. The Option Holder may transfer the Option to a member of the Option Holder's
immediate family, a trust of which members of the Option Holder's immediate
family are the only beneficiaries, or a partnership of which members of the
Option Holder's immediate family or trusts for the sole benefit of the Option
Holder's immediate family are the only partners (the "InterVivos Transferee").
Immediate family means the Option Holder's spouse, issue (by birth or adoption),
parents, grandparents, siblings (including half brothers and sisters and adopted
siblings) and nieces and nephews. No transfer shall be effective unless the
Option Holder shall have notified the Company of the transfer in writing and has
furnished a copy of the documents that effect the transfer to the Company. The
InterVivos Transferee shall be subject to all of the terms of this Agreement and
the Plan, including, but not limited to, the vesting schedule, termination
provisions, and the manner in which the Option may be exercised. The Option
Holder and the InterVivos Transferee shall enter into an appropriate agreement
with the Company providing for, among other things, the satisfaction of required
tax withholding with respect to the exercise of the transferred Option and the
satisfaction of any Stock retention requirements applicable to the Option
Holder, together with such other terms and conditions as may be specified by the
Committee. Except to the extent provided otherwise in such agreement, the
InterVivos Transferee shall have all of the rights and obligations of the Option
Holder under this Agreement and the Plan; provided that the InterVivos
Transferee shall not have any Stock withheld to pay withholding taxes pursuant
to Section 17.2 of the Plan unless the agreement referred to in the preceding
sentence specifically provides otherwise.

 8. Limitation of Rights

. The Option Holder or his successor shall have no rights as a stockholder with
respect to the shares of Stock covered by this Option until the Option Holder or
his successors become the holder of record of such shares.

Stock Reserve

. The Company shall at all times during the term of this Agreement reserve and
keep available such number of shares of Stock as will be sufficient to satisfy
the requirements of this Agreement, and the Company shall pay all original issue
taxes (if any) on the exercise of the Option, and all other fees and expenses
necessarily incurred by the Company in connection therewith.

Withholding

. The issuance of Stock pursuant to the exercise of this Option shall be subject
to the requirement that the Option Holder shall make appropriate arrangements
with the Company to provide for the amount of additional income and other tax
withholding applicable to the exercise of the Option.

Miscellaneous

.

>  a. Notices

. Any notice required or permitted to be given under this Agreement shall be in
writing and shall be given by first class registered or certified mail, postage
prepaid, or by personal delivery to the appropriate party, addressed:

> >  i.  If to the Company, to UQM Technologies, Inc., Attention: Corporate
> >      Secretary, 7501 Miller Drive, Frederick, Colorado 80530, or at such
> >      other address as may have been furnished to the Option Holder in
> >      writing by the Company; or
> > 
> >  ii. If to the Option Holder, to the Option Holder at UQM Technologies,
> >      Inc., 7501 Miller Drive, Frederick, Colorado 80530, or at other address
> >      as may have been furnished to the Company by the Option Holder.

Any such notice shall be deemed to have been given as of the second day after
deposit in the United States mails, postage prepaid, properly addressed as set
forth above, in the case of mailed notice, or as of the date delivered in the
case of personal delivery.

 b. Amendment

. Except as provided herein, this Agreement may not be amended or otherwise
modified unless evidenced in writing and signed by the Company and the Option
Holder.

Defined Terms

. Capitalized terms shall have the meaning set forth in the Plan or herein, as
the case may be.

Compliance with Securities Laws

. This Agreement shall be subject to the requirement that if at any time counsel
to the Company shall determine that the listing, registration or qualification
of the shares of Stock subject to the Option upon any securities exchange or
under any state or federal law, or the consent or approval of any governmental
or regulatory body, is necessary as a condition of, or in connection with, the
issuance or purchase of such shares thereunder, the Option may not be exercised
in whole or in part unless such listing, registration, qualification, consent or
approval shall have been effected or obtained on conditions acceptable to the
Committee. Nothing herein shall be deemed to require the Company to apply for or
obtain such listing, registration or qualification.

Construction; Severability

. The section headings contained herein are for reference purposes only and
shall not in any way affect the meaning or interpretation of this Agreement. The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement,
and each other provision of this Agreement shall be severable and enforceable to
the extent permitted by law.

Waiver

. Any provision contained in this Agreement may be waived, either generally or
in any particular instance, by the Committee appointed under the Plan, but only
to the extent permitted under the Plan.

Binding Effect

. This Agreement shall be binding upon and inure to the benefit of the Company
and the Option Holder and their respective heirs, executors, administrators,
legal representatives, successors and assigns.

Rights to Employment

. Nothing contained in this Agreement shall be construed as giving the Option
Holder any right to be retained in the employ of the Company and this Agreement
is limited solely to governing the rights and obligations of the Option Holder
with respect to the Stock and the Option.

Governing Law

. This Agreement shall be governed by and construed in accordance with the laws
of the State of Colorado.

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

 

UQM TECHNOLOGIES, INC.

By

                                                          

Donald A. French, Treasurer

 

 

 

 

OPTION HOLDER

By