UQM TECHNOLOGIES, INC.

EMPLOYMENT AGREEMENT

 

THIS AGREEMENT is made and entered into as of September17, 2007, by and between **UQM TECHNOLOGIES, INC.**, a corporation organizedunder the laws of Colorado ("Employer"), and Jon Lutz, an adultresident of Westminster, Colorado ("Executive").

WHEREAS, Executive and Employer wish to enter into anAgreement defining their employment relationship;

NOW, THEREFORE, in consideration of the mutual promises,covenants and conditions hereinafter set forth, Employer and Executive agree asfollows:

-  Effective Date. Upon execution, this Agreement,  shall be effective as of the date first written above.**Employment. Employer hereby agrees to employExecutive as its Vice President of Technology for the term of employment setforth herein, and Executive hereby accepts such employment, all upon the termsand conditions hereinafter set forth.**Duties. Executive shall perform the duties assignedto him by the Senior Vice President of Operations, subject to the control,supervision and direction of the Chief Executive Officer.**Performance. During the term of Executive'semployment under this Agreement and any renewal thereof, Executive shall devoteExecutive's best efforts and full working time and attention exclusively tothe performance of the duties hereunder and to promoting and furthering thebusiness of Employer, and shall not, during the term of employment, be engagedin any other business activity for personal pecuniary advantage. This paragraphshall not be construed as preventing Executive from investing Executive'sassets in such form or manner as will not require any services on the part ofExecutive in the operation of the affairs of the companies in which suchinvestments are made, subject to the provisions of Paragraph 17 hereof.Notwithstanding the foregoing, Executive may perform and assume other activitiesand obligations as the Board of Directors shall from time to time approve.**Term of Employment, Expiration and Termination.*-  Term. Subject to the provisions of    Paragraphs 15 and 16, the term of employment of Executive pursuant to    this Agreement shall commence on the date first written above, and shall    continue through August 21, 2012 (the "Original Term of    Employment").***Termination for Cause. On termination ofExecutive's employment by Employer for cause during the Original Term ofEmployment pursuant to Paragraph 15(a), Executive shall receive no furthersalary or benefits.***Termination Without Cause.***-  Payment Amount. On termination of Executive's    employment without cause by Employer either (1) during the Original Term of    Employment or (2) after expiration of the Original Term of Employment if    Executive's employment continues without a written agreement, Employer shall    pay Executive a lump sum equal to one month's salary for each completed    full year of service as an officer of Employer, or six (6) months' salary,    whichever is greater.***Section 409A Involuntary Separation. If the amountpayable under this paragraph 5(c) qualifies as separation pay due toinvoluntary separation from service within the meaning of Treasury Regulationsection 1.409A-1(b)(9)(iii), the lump sum shall be paid on or before the 30thday after Executive's separation from service, provided however, that if, atthe time of separation from service, Executive is a "specifiedemployee" within the meaning of Section 409A(a)(2)(B)(i) of the InternalRevenue Code and the Treasury Regulations, then the payment of the portion ofthe lump sum that is an amount equal to two (2) months' salary shall bedelayed and shall be paid on the earliest date on which payment may be madeunder Section 409A(a)(2)(B)(i) (the six month delay rule for specifiedemployees) after Executive separates from the service of Employer as defined inSection 409A(a)(2)(A)(i) and the Treasury Regulations.***No Section 409A Involuntary Separation;***Not ASpecified Employee.*** If the amount payable under this paragraph 5(c)does not qualify as separation pay due to involuntary separation from servicewithin the meaning of Treasury Regulation section 1.409A-1(b)(9)(iii), and if,at the time of separation from service, Executive is not a "specifiedemployee" within the meaning of Section 409A(a)(2)(B)(i) and the TreasuryRegulations, the lump sum shall be paid on or before the 30th dayafter Executive separates from the service of Employer as defined in Section409A(a)(2)(A) and the Treasury Regulations. Employer, and not Executive, shalldetermine the date of payment.***No Section 409A Involuntary Separation;***SpecifiedEmployee.*** If the amount payable under this paragraph 5(c) does notqualify as separation pay due to involuntary separation from service within themeaning of Treasury Regulation section 1.409A-1(b)(9)(iii), and if, at the timeof separation from service, Executive is a "specified employee," thelump sum shall be paid on the earliest date on which payment may be made underSection 409A(a)(2)(B)(i) (the six month delay rule for specified employees)after Executive separates from the service of Employer as defined in Section409A(a)(2)(A)(i) and the Treasury Regulations.***-  Voluntary Termination. On termination of  Executive's employment by Executive without cause either (i) during the  Original Term of Employment pursuant to Paragraph 16(b), or (ii) after  expiration of the Original Term of Employment if Executive's employment  continues without written agreement, provided that Executive has given  Employer at least six (6) months' prior written notice of such termination,  Employer shall pay Executive a lump sum equal to six (6) months' salary. If  Executive does not provide the notice required in this subparagraph 5(d),  Executive shall receive a lump sum payment equal to two (2) months' salary.  Notwithstanding the foregoing, if Executive's termination is under the  provisions of Subparagraph 5(f) regarding voluntary retirement after the age  of sixty-two years and six months (62-1/2), the provisions of this Subparagraph  5(d) shall not be applicable and the provisions of Subparagraph 5(f) shall  control. The timing of the amount payable to Executive under this subparagraph  5(d) shall be in accordance with paragraph 5 (i).***Termination Upon Certain Changes in Control. IfExecutive's employment is terminated as a result of a hostile Change in Control(as defined below) of Employer, such termination shall be deemed a terminationwithout cause under the provisions of Paragraph 5(c), except that Executiveshall receive a lump sum severance amount equal to twice any amount due underParagraph 5(c). Any termination of Executive in contemplation of or withintwelve (12) months after such Change in Control, except a termination for causeunder Paragraph 15(a), shall be deemed a termination under this Subparagraph5(e). Further, if Executive's position is materially changed by Employer incontemplation of or within twelve (12) months after any such Change in Control,Executive may elect to treat such change as a constructive termination underthis subparagraph entitling Executive to the benefits hereunder. "Change ofControl" means the election of new board members constituting a majority ofthe directors then in office, which new board members were not nominated by amajority of the directors in office on the date hereof. The timing of the amountpayable to Executive under this subparagraph 5(e) shall be in accordance withparagraph 5(c).***Voluntary Retirement. Upon Executive's voluntaryretirement after age sixty-two years and six months (62-1/2) (i) during theOriginal Term of Employment pursuant to Paragraph 16(b), or (ii) afterexpiration of the Original Term of Employment if Executive's employmentcontinues without written agreement, Executive shall receive the severancebenefits described under Paragraph 5(c), *i.e.*, as if the severancewas a termination without cause by Employer plus an additional six months pay upto a maximum payment of twenty-four (24) months. In order to exercise his rightsunder this Subparagraph 5(f), Executive shall provide Employer at least six (6)months' prior written notice of his voluntary retirement. The amount due toExecutive under this subparagraph 5(f) shall be paid in accordance withparagraph 5 (i). Executive has "voluntarily retired" if he has"separated from service" as defined in Section 409A and the TreasuryRegulations.***Return of Documents. Upon the expiration ortermination of Executive's employment, Executive or Executive's legalrepresentative upon request shall promptly deliver to Employer all originals andall duplicates or copies of all documents, records, notebooks and similarrepositories of or containing Confidential Information as defined inParagraph 18 then in his possession, whether prepared by Executive or not.***Other Benefits.-  General. Upon any termination of Executive's    employment under the provisions of Subparagraphs 5(c), (d), (e),(f), or    Paragraph 10, if Executive has attained sixty two and one-half (62-1/2) years    of age on or before the termination date or completed at least twenty (20)    complete years of service as an officer of Employer, (1) Executive and his    dependent(s) shall be entitled to continue to participate in Employer's    health care and hospitalization plan(s) ("health plans") at the    same cost as active employees of Employer until Executive attains age 65 as    provided in Subparagraph 5(h)(ii) below, (2) Executive's stock    options, both incentive and nonqualified, and restricted stock shall vest in    full as of the day before the date on which they would otherwise have been    forfeited for failure to vest under the terms of Employer's applicable    plans, and (3) at Executive's election, Employer shall assign to Executive    or Executives designees any life and disability insurance policies or other    fringe benefits that may be assigned. Any continued cost of such policies or    benefits shall be Executive's sole responsibility.***Health Plans. If, at the time of separation fromservice, Executive is a "specified employee" within the meaning ofSection 409A(a)(2)(B)(i) and the Treasury Regulations, Executive shall pay thefull cost of coverage for Executive and his dependent(s) under Employer'shealth care and hospitalization plan(s), determined according to the rates forcontinuation coverage under COBRA (but excluding the additional two percent (2%)administrative fee) for the first six (6) months of coverage following Executive'sseparation from the service of Employer as defined in Code section 409A(a)(2)(A)(i)and the Treasury Regulations. Beginning with the seventh (7th) monthfollowing Executive's separation from the service of Employer as defined inCode section 409A(a)(2)(A)(i) and the Treasury Regulations if Executive is a"specified employee," or beginning with the first month of coverageif, at the time of separation from service, Executive is not a "specifiedemployee," Executive shall pay the same cost for coverage under the healthplan as active employees of Employer. Coverage for Executive and Executive'sdependents shall terminate on the last day of the month in which Executive's65th birthday shall occur. All claims made by Executive and Executive'sdependents under the health plan shall be paid no later than the last day of thecalendar year following the calendar year in which such claims were incurred.Executive agrees that he will promptly reimburse Employer for any claims thatare paid after the last day of the calendar year following the calendar year inwhich such claims were incurred.***-  Timing of Payment; Section 409A. The lump sum  payments under Subparagraphs 5(d) and (f) shall be made at the time  provided in this Subparagraph 5(i). If, at the time of separation from  service, Executive is not a "specified employee" within the meaning  of Section 409A(a)(2)(B)(i) and the Treasury Regulations, the lump sum payable  shall be paid on or before the 30th day after Executive separates from the  service of Employer as defined in Section 409A(a)(2)(A) and the Treasury  Regulations, and Employer, and not Executive, shall determine the date of  payment. If, at the time of separation from service, Executive is a  "specified employee," the lump sum shall be paid on the earliest  date on which payment may be made under Code Section 409A(a)(2)(B)(i) (the six  month delay rule for specified employees) after Executive separates from the  service of Employer as defined in Code section 409A(a)(2)(A)(i) and the  Treasury Regulations.****-  Compensation. For the services to be rendered by  Executive hereunder, Employer agrees to pay Executive during the term of  employment, and Executive agrees to accept:-  An annual base salary of $134,000. Executive's annual      base salary shall not be decreased during the Original Term of Employment.Executive's salary shall be paid in equal semi-monthly      installments on the fifteenth and final day of each month during the term      of his employment.Executive shall receive fringe benefits in accordance      with Employer's policies and practices for employees generally (including,      without limitation, participation in any stock option plans, life and      disability insurance plans, health care and hospitalization plans, medical      and dental reimbursement plans, profit sharing plans, retirement plans and      other employee benefit plans) for which Executive is qualified. At      Employer's expense Executive shall have a medical exam every year. In      addition to the foregoing, Executive shall receive an automobile allowance      of $810 per month for the use of an automobile for combined business and      personal use.During the second quarter of each fiscal year of      Employment, Employer shall review Executive's performance under this      Agreement and establish goals and objectives for Executive's performance      for the next fiscal year. In such review, Employer, in its reasonable      discretion, shall consider increasing Executive's salary and compensation      based on relevant factors such as Executive's performance, Employer's      accomplishments, increase or decrease in Executive's responsibilities, and      cost of living increases. Any salary increases normally are to be      effective on such date as may be specified by Employer.Employer has adopted additional compensation plans that      are administered by its Compensation Committee and the Compensation      Committee may in its sole and absolute discretion award cash bonuses,      stock awards and stock options to Executive on terms to be determined by      the Compensation Committee.**-  Working Facilities. Executive shall be furnished  with appropriate office space, secretarial assistance, and such other  facilities and services as are suitable to Executive's position and adequate  for the performance of Executive's duties.**Expenses. Employer shall reimburse Executive forall reasonable expenses that Executive incurs in connection with the business ofEmployer or any of its subsidiaries and in the performance of Executive's dutiesunder this Agreement. Employer shall also reimburse Executive for membershipfees and expenses related to Executive's membership in professionalorganizations, clubs, societies and groups as may be approved by the Board ofDirectors from time to time, subject to such rules, regulations andrecord-keeping requirements as may be established from time to time by theBoard.**Paid Time Off. Executive shall be entitled eachyear to twenty-eight (28) paid days off plus six (6) holiday paid days offduring which time his compensation shall be paid in full. Paid time off accruedduring each calendar year must be used by the end of each calendar year, or willbe lost, and will not accrue from one calendar year to the next, providedhowever that Executive shall be eligible to receive payment from the Company forany unused paid time off in accordance with any such Company policy then ineffect . Exceptions to the foregoing non-accrual policy may be provided underterms and conditions approved in writing by resolution of the Board of Directorsor its compensation committee in such body's sole discretion based on prolongedextra-ordinary work demands preventing Executive's timely taking vacation.**Disability. If Executive is unable to performExecutive's services by reason of illness or incapacity for a period of morethan six (6) consecutive months, and subject to the provisions of Paragraph 11,Employer may terminate Executive's employment. Employer shall receive a creditagainst Executive's salary for any disability compensation benefit for the samecalendar period received by Executive from Worker's Compensation or anycommercial insurance carrier under Paragraph 11 while Executive is employed withEmployer. In the event Executive's employment is terminated under thisParagraph 10, Executive shall receive the severance benefits described underSubparagraph 5(c). The severance benefits shall be payable as specified inSubparagraph 5(c).**Insurance for the Benefit of Executive.-  Subject to the provisions of Paragraph 6(c), Executive      shall be covered by Employer's medical and disability insurance in effect      from time to time, the premiums for which shall be paid for by Employer.Employer shall at its expense continuously maintain      without interruption in the name of Executive or Executive's designee or      for the benefit of Executive or Executive's designee, life insurance      coverage in an amount equal to Executive's then current salary for three      (3) years.**-  Insurance for the Benefit of Employer. Employer  shall have the right from time to time to apply for and take out in its name  and at its own expense, life, health or other insurance upon Executive in any  sum or sums which may be deemed necessary by Employer to protect its interest  under this Agreement and Executive shall do all such things as may be  necessary to assist in the procuring of such insurance by making a proper  application therefore as may be required by the insurance company and  submitting to the usual and customary medical examinations. Executive, in  Executive's capacity as Executive, shall have no right, title or interest in  or to such insurance, but the same shall be solely for the benefit of Employer  and any amounts payable thereunder shall be solely payable to such Employer.**Death During Employment. If Executive dies duringthe term of his employment under this Agreement, Employer shall pay to theestate of Executive the compensation which would otherwise be payable toExecutive up to the end of the sixth (6th) month after the month inwhich his death occurs. If, by that time, Executive's estate has not receivedany proceeds of the insurance provided for in Paragraph 11, Employer shallcontinue Executive's salary hereunder for up to an additional three months, oruntil such insurance proceeds are received, whichever is earlier("Reimbursable Payments"), provided that Executive's estate shallreimburse Employer for any such Reimbursable Payments made from the proceeds ofsuch insurance. All payments of compensation under this Paragraph 13 shallbe paid on the fifteenth (15th) and final day of each month accordingto Employer's customary payroll practices.**Representation and Warranty. Executive representsand warrants that he is not now, and will not be on the date of commencement ofthis Agreement, a party to any agreement, contract or understanding, whether ofemployment, agency or otherwise, which would in any way restrict or prohibitExecutive from undertaking and performing Executive's duties in accordance withthe terms and provisions of this Agreement.**Termination by Employer.-  Employer may terminate Executive's employment for      cause, which is defined as follows:-  Fraud, malfeasance, or embezzlement against        Employer's assets or conviction of any felony;Except under circumstances of disability contemplated        by the provisions of Paragraph 10, cessation of Executive's performance        of Executive's duties hereunder or deliberate and substantial failure to        perform them in a capable and conscientious manner;Violation of the provisions of Paragraph 14; orDeliberate and substantial breach of Executive's        material obligations under any other provision hereof that is not cured        within 30 days after notice to Executive of the breach.-  Should the Board of Directors of Employer determine      cause exists, as defined in Subparagraph (a), to terminate Executive's      employment, prior to termination for such cause, Employer shall provide      Executive written notice reasonably describing the basis for the      contemplated termination and a two-week period of time in which to respond      in writing and in person prior to Employer's final determination of cause.      During the period between such notice and final determination, the Board      may suspend the performance of Executive's duties under this Agreement and      direct Executive's non-attendance at work. However, Executive's right to      compensation under this Agreement shall continue through and to any final      termination of employment for cause.Employer may terminate Executive's employment at any      time without cause, subject to the applicable provisions of Paragraph 5.      During the period between such notice and final determination, the Board      may suspend the performance of Executive's duties under this Agreement and      direct Executive's non-attendance at work.**-  Termination by Executive.-  Executive shall have the right to terminate his      employment on forty-five (45) days' written notice to Employer of any      default by Employer in performing its duties under this Agreement and      provided that Executive may not terminate his employment if Employer cures      the default within thirty (30) days after receiving such notice.Executive may terminate Executive's employment as      provided in Subparagraphs 5(d) and (f).**-  Restrictive Covenant.-  Executive agrees and covenants that, without the      Board's prior written consent and except on behalf of Employer, he will      not in any manner, directly or indirectly, own, manage, operate, control,      be employed by, participate in, assist or be associated in any manner with      any person, firm or corporation anywhere in the world whose business      competes with Employer or any subsidiary of Employer. This covenant shall      remain in effect until a date one (1) year after the date Executive's      employment is terminated or, if his employment is terminated pursuant to      Paragraph 16(a), until the termination date. Notwithstanding any other      provision of this Agreement, Executive may own up to three percent (3 %)      of the outstanding stock of a competing publicly traded corporation so      long as he takes no other action furthering the business of such      corporation.Until a date one (1) year after the termination date,      Executive shall not (i) solicit any other employee of Employer to leave      the employ of Employer, or in any way interfere with the relationship      between Employer and any other employee of Employer, or (ii) induce any      customer, supplier, licensee, or other business relation of Employer to      cease doing business with Employer, or in any way interfere with the      relationship between any customer or business relation and Employer.**-  Confidentiality.-  Definitions. For purposes of this Agreement, the      following definitions shall apply:*-  "Inventions" shall mean all inventions,      improvements, modifications, and enhancements, whether or not patentable,      made by Executive within the scope of Executive's duties during      Executive's employment by Employer.*"Confidential Information" shall mean    Employer's proprietary know-how and information disclosed by Employer to    Executive or acquired by Executive from Employer during Executive's    employment with Employer about Employer's plans, products, processes and    services, which Employer protects against disclosure to third parties.    Confidential Information shall not include Executive's general knowledge and    experience possessed prior to or obtained during his employment with    Employer.-  Restrictions on Disclosure.-  During the period of employment with Employer and      thereafter, Executive shall not disclose Confidential Information to any      third parties other than Employer, its employees, agents, consultants,      contractors and designees without the prior written permission of      Employer, or use Confidential Information for any purpose other than the      conduct of Employer's business.The restrictions on disclosure and use set forth herein      shall not apply to any Confidential Information which:-  At the time of disclosure to Executive by Employer is        generally available to the public or thereafter becomes generally known        to the public, through no fault of Executive;Was known by Executive prior to his employment with        Employer;Executive at any time receives from a third party not        under any obligation of secrecy or confidentiality to Employer;Employer discloses to a third party not under any        obligation of secrecy or confidentiality to it; andExecutive is requested or required to disclose        pursuant to a subpoena or order of a court or other governmental agency,        in which case Executive shall notify Employer as far in advance of        disclosure as is practicable.-  Obligations Regarding Inventions. Without any royalty    or any other additional consideration to Executive: (i) Executive shall    promptly inform Employer of any Inventions by a written report, setting    forth the conception and reduction to practice of all inventions; (ii)    Executive hereby agrees to assign and assigns to Employer all of his right,    title and interest: (1) to any Inventions made during the term of his    employment by Employer (including without limitation the right to license or    sell such Invention to others), (2) to applications for United States and    foreign letters patent, and (3) to United States and foreign letters patent    granted upon such Inventions; and (iii) Executive agrees upon request and at    the sole cost and expense of Employer to, at all times, do such acts (such    as giving testimony in support of his inventorship) and execute and deliver    promptly to Employer such papers, instruments, and documents as from time to    time may be necessary or useful to apply for, secure, maintain, reissue,    extend or defend Employer's interest in any Inventions or any or all United    States and foreign letters patent, so as to secure Employer the full    benefits of any Inventions or discoveries or otherwise to carry into full    force and effect the intent of the assignment set out in subparagraph    18(c)(ii).Remedies. Executive acknowledges and agrees that  Executive's disclosure of any Confidential Information would result in  irreparable injury to Employer. Executive acknowledges and agrees that the  Confidential Information is non-public information which Executive has  expended substantial time, money and effort to develop and is property  considered "Trade Secrets" of Employer within the meaning of  Colorado law. Therefore, upon the breach or threatened breach of the covenants  in this paragraph by Executive, Employer shall be entitled to obtain from any  court of competent jurisdiction a preliminary and permanent injunction  prohibiting such disclosure and any other equitable relief that the court  deems appropriate. In addition, Employer shall be entitled to seek damages.Any Confidential Information that is directly or indirectly  originated, developed or perfected to any degree by Executive during the term  of his employment by Employer shall be and remain the sole property of  Employer.**-  Resolution of Disputes. In addition to any other  remedies available to Employer, Employer shall be entitled to specific  performance of the covenants contained in Paragraphs 17 and 18. If either  party is successful in enforcing its rights under this Paragraph 19, the  unsuccessful party shall reimburse the successful party for all of the costs  of such enforcement, including but not limited to costs, litigation expenses  and reasonable attorneys' fees. Except for an action to interpret or enforce  Paragraphs 17 or 18, any controversy or claim arising out of or relating to  the interpretation, alleged breach or enforcement of this Agreement shall be  settled by arbitration before a single arbitrator in Denver, Colorado, in  accordance with the commercial rules then in effect of the American  Arbitration Association, Colorado Revised Statutes pertaining to the  arbitration of civil disputes. The arbitrator, who shall be a person  experienced in negotiating and making employment agreements and resolving  employment disputes and in any other pertinent areas of law, shall make  reasonably detailed findings to support any decision and award. The award of  the arbitrator shall be final and binding and may be entered as a judgment in  any court of competent jurisdiction. As part of the award in any arbitration  or judicial proceedings, the prevailing party may be awarded its reasonable  attorneys' fees, witness fees, expert witness fees and related costs and  expenses in the discretion of the arbitrator.**Notices. All notices under this Agreement shall bedelivered by hand or by registered or certified mail. Notices intended forExecutive shall be addressed to Executive at 9408 West 104th Way,Westminster, Colorado 80021. Notices intended for Employer shall be addressed toit at 7501 Miller Drive, Frederick, Colorado 80530. All notices shall beeffective upon actual delivery if by hand, or, if by mail, five (5) days afterbeing deposited in the United States mail, postage prepaid and addressed asrequired by this section. Either party may by notice accomplished in accordancewith this Paragraph 20 change the address to which future notices may be sent.**Miscellaneous Provisions.-  This Agreement contains the entire agreement between      the parties and supersedes all prior agreements and it shall not be      amended or otherwise modified in any manner except by an instrument in      writing executed by both parties.Neither this Agreement nor any rights or duties under      this Agreement may be assigned or delegated by either party unless the      other party consents in writing.Except as otherwise provided herein, this Agreement      shall be binding upon the inure to the benefit of the parties and their      respective heirs, personal representatives, successors and assigns.This Agreement has been entered into in Colorado and      shall be governed by the laws of that state.In fulfilling their respective obligations under this      Agreement and conducting themselves pursuant to it, each party shall act      reasonably and in good faith.If any provisions of this Agreement shall be held to be      invalid or unenforceable for any reason, the invalid or unenforceable      provision shall be deemed severed from this Agreement and the balance of      this Agreement shall remain in full force and effect and be enforceable in      accordance with its terms.To the extent necessary, the provisions of this      Agreement shall be construed and administered in compliance with the      requirements of Code section 409A and the regulations and any other      guidance promulgated thereunder.**IN WITNESS WHEREOF, the parties have executed thisAgreement the day and year first above written.

 

EXECUTIVE:
By
                                                        

Jon Lutz
 
EMPLOYER:**UQM TECHNOLOGIES, INC.
By
                                                                                        its President
William                                G. Rankin**************************************************************************************