2002 EQUITY INCENTIVE PLAN







 

 


 

 

 

 

 

 


UQM TECHNOLOGIES, INC.




 


2002 EQUITY INCENTIVE PLAN




(effective April 3, 2002)




 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 


UQM TECHNOLOGIES, INC.





2002 EQUITY INCENTIVE PLAN


 


ARTICLE I

INTRODUCTION


1.1 Establishment. UQM Technologies, Inc., a
Colorado corporation, effective April 3, 2002, hereby establishes the UQM
Technologies, Inc. 2002 Equity Incentive Plan (the "Plan") for certain employees
of the Company (as defined in subsection 2.1(g)) and certain consultants to the
Company. The Plan permits the grant of incentive stock options within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended, and
non-qualified stock options to certain key employees of the Company and to
certain consultants to the Company.



1.2 Purposes. The purposes of the Plan are to
provide those who are selected for participation in the Plan with added
incentives to continue in the long-term service of the Company and to create in
such persons a more direct interest in the future success of the operations of
the Company by relating incentive compensation to increases in shareholder
value, so that the income of those participating in the Plan is more closely
aligned with the income of the Company's shareholders. The Plan is also designed
to provide a financial incentive that will help the Company attract, retain and
motivate the most qualified employees and consultants.



1.3 Effective Date. The initial effective date
of the Plan is April 3, 2002. No Option shall be granted to any individual who
is or who may be covered by Section 162(m) of the Internal Revenue Code of 1986,
as amended, until the Plan has approved by the Company's shareholders. The Plan
shall be approved the Company's shareholders to the extent and in the manner
such approval is required by applicable law or the rules of the exchange or
other market on which the Company's stock is traded.




 

ARTICLE II

DEFINITIONS


2.1 Definitions. The following terms shall have
the meanings set forth below:



(a) "Affiliated Corporation" means any
corporation or other entity that is affiliated with UQM through stock ownership
or otherwise and is designated as an "Affiliated Corporation" by the Board,
provided, however, that for purposes of Incentive Options granted pursuant to
the Plan, an "Affiliated Corporation" means any parent or subsidiary of the
Company as defined in Section 424 of the Code.



(b) "Board" means the Board of Directors of UQM.



(c) "Code" means the Internal Revenue Code of
1986, as it may be amended from time to time.



(d) "Committee" means a committee consisting of
members of the Board who are empowered hereunder to take actions in the
administration of the Plan. If applicable, the Committee shall be so constituted
at all times as to permit the Plan to comply with Rule 16b-3 or any successor
rule promulgated under the Exchange Act. Except as provided in Section 3.2, the
Committee shall select Participants from Eligible Employees and Eligible
Consultants of the Company and shall determine the Options to be granted
pursuant to the Plan and the terms and conditions thereof.



(e) "Company" means UQM Technologies, Inc. and
the Affiliated Corporations.



(f) "Disabled" or "Disability"
shall have the meaning given to such terms in Section 22(e)(3) of the Code.



(g) "Effective Date" means the original
effective date of the Plan, April 3, 2002.



(h) "Eligible Consultants" means those
consultants to the Company who are determined, by the Committee, to be
individuals whose services are important to the Company and who are eligible to
receive Non-Qualified Options under the Plan.



(i) "Eligible Employees" means those employees
(including, without limitation, officers and directors who are also employees)
of the Company or any subsidiary or division thereof, upon whose judgment,
initiative and efforts the Company is, or will become, largely dependent for the
successful conduct of its business. For purposes of the Plan, an employee is any
individual who provides services to the Company or any subsidiary or division
thereof as a common law employee and whose remuneration is subject to the
withholding of federal income tax pursuant to section 3401 of the Code. Employee
shall not include any individual (A) who provides services to the Company or any
subsidiary or division thereof under an agreement, contract, or any other
arrangement pursuant to which the individual is initially classified as an
independent contractor or (B) whose remuneration for services has not been
treated initially as subject to the withholding of federal income tax pursuant
to section 3401 of the Code even if the individual is subsequently reclassified
as a common law employee as a result of a final decree of a court of competent
jurisdiction or the settlement of an administrative or judicial proceeding.
Leased employees shall not be treated as employees under this Plan.



(j) "Exchange Act" shall mean the Securities
Exchange Act of 1934, as it may be amended from time to time.



(k) "Fair Market Value" means, as of a given
date, (i) the closing price of a Share on the principal stock exchange on which
Shares are then trading, if any (or as reported on any composite index that
includes such principal exchange) on such date, or if Shares were not traded on
such date, then on the next preceding date on which a trade occurred; or (ii) if
the Stock is not traded on an exchange but is quoted on Nasdaq or a successor
quotation system, the mean between the closing representative bid and asked
prices for the Stock on such date as reported by Nasdaq or such successor
quotation system; or (iii) if the Stock is not publicly traded on an exchange
and not quoted on Nasdaq or a successor quotation system, the Fair Market Value
of a Share shall be determined by the Committee acting in good faith. If, upon
exercise of an Option, the exercise price is paid by a broker's transaction as
provided in subsection 7.2(g)(ii)(E), Fair Market Value, for purposes of the
exercise, shall be the price at which the Stock is sold by the broker.



(l) "Incentive Option" means an Option
designated as such and granted in accordance with Section 422 of the Code.



(m) "Non-Qualified Option" means any Option
other than an Incentive Option.



(n) "Option" means a right to purchase Stock at
a stated or formula price for a specified period of time. Options granted under
the Plan shall be either Incentive Options or Non-Qualified Options.



(o) "Option Agreement" shall have the meaning
given to such term in Section 7.2 hereof.



(p) "Option Holder" means a Participant who has
been granted one or more Options under the Plan.



(q) "Option Period" means the period of time,
determined by the Committee, during which an Option may be exercised by the
Option Holder.



(r) "Option Price" means the price at which
each share of Stock subject to an Option may be purchased, determined in
accordance with subsection 7.2(b).



(s) "Participant" means an Eligible Employee or
Eligible Consultant designated by the Committee from time to time during the
term of the Plan to receive one or more Options under the Plan.



(t) "Securities Act" means the Securities Act
of 1933, as it may be amended from time to time.



(u) "Share" means one whole share of Stock.



(v) "Stock" means the $0.01 par value common
stock of UQM Technologies, Inc.



(w) "UQM" means UQM Technologies, Inc., a
Colorado corporation, and any successor thereto.



2.2 Gender and Number. Except when otherwise
indicated by the context, the masculine gender shall also include the feminine
gender, and the definition of any term herein in the singular shall also include
the plural.



 


ARTICLE III

PLAN ADMINISTRATION


3.1 General. The Plan shall be administered by
the Committee. In accordance with the provisions of the Plan, the Committee
shall, in its sole discretion, select the Participants from among the Eligible
Employees and Eligible Consultants, determine the Options to be granted pursuant
to the Plan, fix the Option Price, Option Period and manner in which an Option
becomes exercisable, as the Committee may deem necessary or desirable and
consistent with the terms of the Plan. The Committee shall determine the form or
forms of the agreements with Participants that shall evidence the particular
provisions, terms, conditions, rights and duties of the Company and the
Participants with respect to Options granted pursuant to the Plan, which
provisions need not be identical except as may be provided herein; provided,
however, that Eligible Consultants shall not be eligible to receive Incentive
Options. The Committee may from time to time adopt such rules and regulations
for carrying out the purposes of the Plan as it may deem proper and in the best
interests of the Company. The Committee may correct any defect, supply any
omission or reconcile any inconsistency in the Plan or in any agreement entered
into hereunder in the manner and to the extent it shall deem expedient and it
shall be the sole and final judge of such expediency. No member of the Committee
shall be liable for any action or determination made in good faith. The
determinations, interpretations and other actions of the Committee pursuant to
the provisions of the Plan shall be binding and conclusive for all purposes and
on all persons.



3.2 Delegation by Committee. The Committee may,
from time to time, delegate, to a specified officer or officers of the Company,
the power and authority to grant Options under the Plan to specified groups of
Eligible Employees and Eligible Consultants, subject to such restrictions and
conditions as the Committee, in its sole discretion, may impose. The delegation
shall be as broad or as narrow as the Committee shall determine. To the extent
that the Committee has delegated the authority to determine certain terms and
conditions of an Option, all references in the Plan to the Committee's exercise
of authority in determining such terms and conditions shall be construed to
include the officer or officers to whom the Committee has delegated the power
and authority to make such determination. The power and authority to grant
Options to any Eligible Employee or Eligible Consultant who is covered by
Section 16(b) of the Exchange Act or who is, or is expected to be, covered by
Section 162(m) of the Code shall not be delegated by the Committee.

 


ARTICLE IV

STOCK SUBJECT TO THE PLAN


4.1 Number of Shares. The maximum aggregate
number of Shares that may be issued under the Plan pursuant to Options is
1,500,000 Shares. The maximum number of Shares that may be issued under
Incentive Options is 1,500,000 Shares. The Shares may be either authorized and
unissued Shares or previously issued Shares acquired by the Company. Such
maximum numbers may be increased from time to time by approval of the Board and
by the stockholders of the Company if, in the opinion of counsel for the
Company, stockholder approval is required. The Company shall at all times during
the term of the Plan and while any Options are outstanding retain as authorized
and unissued Stock at least the number of Shares from time to time required
under the provisions of the Plan, or otherwise assure itself of its ability to
perform its obligations hereunder.



4.2 Limit on Option Grants. The maximum number
of Shares with respect to which a Participant may receive Options under the Plan
in any calendar year is 500,000 Shares. The maximum number may be increased from
time to time by approval of the Board and by the stockholders of the Company. No
Options may be granted with respect to any increased number of Shares until such
increase has been approved by the stockholders. Stockholder approval shall not
be required for increases solely pursuant to Section 4.4 below.



4.3 Other Shares of Stock. Any Shares that are
subject to an Option that expires or for any reason is terminated unexercised,
and any Shares withheld for the payment of taxes or received by the Company as
payment of the exercise price of an Option shall automatically become available
for use under the Plan, provided, however, that no more than 1,500,000 Shares
may be issued under Incentive Options.



4.4 Adjustments for Stock Split, Stock Dividend, Etc.
If the Company shall at any time increase or decrease the number of its
outstanding Shares or change in any way the rights and privileges of such Shares
by means of the payment of a stock dividend or any other distribution upon such
Shares payable in Stock, or through a stock split, subdivision, consolidation,
combination, reclassification or recapitalization involving the Stock, then in
relation to the Stock that is affected by one or more of the above events, the
numbers, rights and privileges of the following shall be increased, decreased or
changed in like manner as if they had been issued and outstanding, fully paid
and nonassessable at the time of such occurrence: (i) the Shares as to which
Options may be granted under the Plan, (ii) the Shares then included in each
outstanding Option granted hereunder, (iii) the maximum number of Shares
available for grant to any one person in a calendar year pursuant to
Section 4.2, (iv) the maximum number of Shares available for grant pursuant to
Incentive Options, and (v) the number of Shares subject to a delegation of
authority under Section 3.2 of this Plan.



4.5 Other Distributions and Changes in the Stock.
If



(a) 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 Section 4.4), or



(b) The Company shall at any time 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



(c) There shall be any other change (except as described in
Section 4.4) in the number or kind of outstanding Shares 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 described in subsection (a), (b), or (c) above equitably requires an
adjustment in the number or kind of Shares subject to an Option, an adjustment
in 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 Participant upon the exercise of an Option or the full vesting of an Option,
then such adjustments shall be made, or other action shall be taken, by the
Committee and shall be effective for all purposes of the Plan and for each
outstanding Option that involves the particular type of stock for which a change
was effected. 



4.6 General Adjustment Rules. No adjustment or
substitution provided for in this Article IV 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.



4.7 Determination by the Committee, Etc. 
Adjustments under this Article IV shall be made by the Committee, whose
determinations with regard thereto shall be final and binding upon all parties
thereto.



 


ARTICLE V

CORPORATE REORGANIZATION; CHANGE IN CONTROL




5.1 Vesting and Termination of Options. Unless
the Committee provides otherwise at the time an Option is granted, upon the
occurrence of a Corporate Transaction (as defined in Section 5.3), all Options
shall become fully exercisable regardless of whether all conditions of exercise
relating to length of service, attainment of financial performance goals or
otherwise have been satisfied. The Committee may also provide for the assumption
or substitution of any or all Awards as described in Section 5.2 and make any
other provision for outstanding Awards as the Committee deems appropriate. The
Committee may provide that any Options that are outstanding at the time the
Corporate Transaction is closed shall expire at the time of the closing. The
Committee need not take the same action with respect to all outstanding Options.



5.2 Assumption or Substitution of Options. The
Company, or the successor or purchaser, as the case may be, may make adequate
provision for the assumption of the outstanding Options or the substitution of
new options for the outstanding Options on terms comparable to the outstanding
Options.



5.3 Corporate Transaction. A Corporate
Transaction shall include the following:



(a) 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 of Stock); or



(b) 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;



(c) Liquidation: the dissolution or liquidation
of the Company;



(d) 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),
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 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 thereof; or



(e) Other Transactions: any other transaction
that the Board determines by resolution to be a Corporate Transaction.



 


ARTICLE VI

PARTICIPATION




Participants in the Plan shall be those Eligible Employees
who, in the judgment of the Committee, are performing, or during the term of
their incentive arrangement will perform, vital services in the management,
operation and development of the Company, and significantly contribute, or are
expected to significantly contribute, to the achievement of long-term corporate
economic objectives. Eligible Consultants shall be selected from those
non-Employee consultants to the Company who are performing services important to
the operation and growth of the Company. Participants may be granted from time
to time one or more Options; provided, however, that the grant of each such
Option shall be separately approved by the Committee and receipt of one such
Award shall not result in automatic receipt of any other Option. Upon
determination by the Committee that an Option is to be granted to a Participant,
written notice shall be given to such person, specifying the terms, conditions,
rights and duties related thereto. Each Participant shall, if required by the
Committee, enter into an agreement with the Company, in such form as the
Committee shall determine and which is consistent with the provisions of the
Plan, specifying such terms, conditions, rights and duties. Options shall be
deemed to be granted as of the date specified in the grant resolution of the
Committee, which date shall be the date of any related agreement with the
Participant. In the event of any inconsistency between the provisions of the
Plan and any such agreement entered into hereunder, the provisions of the Plan
shall govern.



 


ARTICLE VII

OPTIONS




7.1 Grant of Options. Coincident with or
following designation for participation in the Plan, a Participant may be
granted one or more Options. The Committee in its sole discretion shall
designate whether an Option is an Incentive Option or a Non-Qualified Option;
provided, however, that Eligible Consultants may not be granted Incentive
Options. The Committee may grant both an Incentive Option and a Non-Qualified
Option to an Eligible Employee at the same time or at different times. Incentive
Options and Non-Qualified Options, whether granted at the same time or at
different times, shall be deemed to have been awarded in separate grants and
shall be clearly identified, and in no event shall the exercise of one Option
affect the right to exercise any other Option or affect the number of shares for
which any other Option may be exercised. An Option shall be considered as having
been granted on the date specified in the grant resolution of the Committee.



7.2 Stock Option Agreements. Each Option
granted under the Plan shall be evidenced by a written stock option certificate
or agreement (an "Option Agreement"). An Option Agreement shall be issued by the
Company in the name of the Participant to whom the Option is granted and in such
form as may be approved by the Committee. The Option Agreement shall incorporate
and conform to the conditions set forth in this Section 7.2 as well as such
other terms and conditions that are not inconsistent as the Committee may
consider appropriate in each case.



(a) Number of Shares. Each Option Agreement
shall state that it covers a specified number of shares of Stock, as determined
by the Committee.



(b) Price. The price at which each share of
Stock covered by an Option may be purchased shall be determined in each case by
the Committee and set forth in the Option Agreement, but, in the case of an
Incentive Option, in no event shall the price be less than 100 percent of the
Fair Market Value of the Stock on the date the Incentive Option is granted.



(c) Duration of Options; Restrictions on Exercise.
Each Option Agreement shall state the Option Period. The Option Period must end,
in all cases, not more than ten years from the date the Option is granted. The
Option Agreement shall also set forth any installment or other restrictions on
exercise of the Option during such period, if any, as may be determined by the
Committee. Each Option shall become exercisable and vest over such period of
time, if any, or upon such events, as determined by the Committee.



(d) Eligible Employees: Termination of Services, Death,
Disability, Etc. The Committee may specify the period, if any, during
which an Option may be exercised following termination of the Option Holder's
services. The effect of this subsection 7.2(d) shall be limited to determining
the consequences of a termination and nothing in this subsection 7.2(d) shall
restrict or otherwise interfere with the Company's discretion with respect to
the termination of any individual's services. If the Committee does not
otherwise specify, the following shall apply:



(i) If the services of the Option Holder are terminated
within the Option Period for "cause", as determined by the Company, the Option
shall thereafter be void for all purposes. As used in this subsection 7.2(d),
"cause" shall mean a gross violation, as determined by the Company, of the
Company's established policies and procedures.



(ii) 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
because of Disability.



(iii) If the Option Holder dies during the Option Period
while still performing services for the Company or within the one year period
referred to in (ii) above or the three-month period or, in the case of
Non-Qualified Options, the twelve-month period, referred to in (iv) 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.



(iv) 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) by the Company within the
Option Period for any reason other than cause, Disability, or death, the Option
may be exercised by the Option Holder as follows: (A) in the case of an
Incentive Option, within three (3) months following the date of such termination
(provided that such exercise must occur within the Option Period), but not
thereafter and (B) in the case of a Non-Qualified Option, 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.



(e) Eligible Independent Contractors: Termination of
Services, Death. Each Option agreement shall provide as follows with
respect to the exercise of the Option:



(i) If the services of the Option Holder terminate within the
Option Period other than on account of cause or the Option Holder's death, the
Option may be exercised during the remainder of the Option Period. 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.



(ii) If the services of the Option Holder terminate within
the Option Period for "cause," as determined by the Company, the Option shall
thereafter be void for all purposes; provided however, that if the agreement
between the Company and an Independent Contractor provides for termination of
the agreement for "cause," the term "cause" for purposes of this subsection
shall have the same meaning as in such agreement.



(iii) If the Option Holder dies during the Option Period, 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 for fifteen (15) months after
the Option Holder's death (if otherwise in 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.



(f) Consideration for Grant of Option. Each
Option Holder agrees to remain in the employment of the Company or to continue
providing consulting services to the Company, as the case may be, at the
pleasure of the Company, for a continuous period of at least one year after the
date the Option is granted, at the rate of compensation in effect on the date of
such agreement or at such changed rate as may be fixed, from time to time, by
the Company. Nothing in this paragraph shall limit or impair the Company's right
to terminate the employment of any employee or to terminate the consulting
services of any consultant.



(g) Exercise, Payments, Etc.




(i) Manner of Exercise. The method for
exercising each Option granted hereunder shall be by delivery to the Company of
written notice specifying the number of Shares with respect to which such Option
is exercised. The purchase of such Shares shall take place at the principal
offices of the Company within thirty (30) days following delivery of such
notice, at which time the Option Price of the Shares shall be paid in full by
any of the methods set forth below or a combination thereof. Except as set forth
in the next sentence, the Option shall be exercised when the Option Price for
the number of shares as to which the Option is exercised is paid to the Company
in full. If the Option Price is paid by means of a broker's transaction
described in subsection 7.2(g)(ii)(D), in whole or in part, the closing of the
purchase of the Stock under the Option shall take place (and the Option shall be
treated as exercised) on the date on which, and only if, the sale of Stock upon
which the broker's transaction was based has been closed and settled, unless the
Option Holder makes an irrevocable written election, at the time of exercise of
the Option, to have the exercise treated as fully effective for all purposes
upon receipt of the Option Price by the Company regardless of whether or not the
sale of the Stock by the broker is closed and settled. A properly executed
certificate or certificates representing the Shares shall be delivered to or at
the direction of the Option Holder upon payment therefor. If Options on less
than all shares evidenced by an Option Certificate are exercised, the Company
shall deliver a new Option Certificate evidencing the Option on the remaining
shares upon delivery of the Option Certificate for the Option being exercised.



(ii) The exercise price shall be paid by any of the following
methods or any combination of the following methods at the election of the
Option Holder, or by any other method approved by the Committee upon the request
of the Option Holder:



(A) in cash;



(B) by certified check, cashier's check or other check
acceptable to the Company, payable to the order of the Company;



(C) by delivery to the Company of certificates representing
the number of shares then owned by the Option Holder, the Fair Market Value of
which equals the purchase price of the Stock 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; for purposes of this Plan, the Fair Market Value of any shares of Stock
delivered in payment of the purchase 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;



(D) by delivery to the Company of a promissory note, which
shall be in a principal amount equal to the Option Price plus any federal and
state income tax required to be withheld; which shall be full recourse and
secured by all or a portion of the Stock acquired pursuant to the exercise of
the Option; which shall bear interest at a rate determined by the Committee, but
not lower than the rate required to avoid the imputation of interest under the
Code; which shall provide for level quarterly payments of interest and principal
over its term; which shall become payable in full upon the first to occur of the
fifth anniversary of the date the Option is exercised, failure to pay any
payment of principal and interest within five days after it is due or
termination of the Option Holder's employment or service for any reason; and
which shall contain such other terms and conditions including the provision of
security in addition to the Stock that the Company, in its sole discretion,
deems necessary or appropriate; or



(E) 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.



(h) Date of Grant. An Option shall be
considered as having been granted on the date specified in the grant resolution
of the Committee.



(i) Withholding.




(i) Non-Qualified Options. Upon exercise of an Option,
the Option Holder shall make appropriate arrangements with the Company to
provide for the amount of additional withholding required by Sections 3102 and
3402 of the Code and applicable state and local tax laws, including payment of
such taxes through delivery of shares of Stock or by withholding Stock to be
issued under the Option, as provided in Article XII.



(ii) Incentive Options. Upon exercise of an Incentive
Option, the Option Holder shall make appropriate arrangements with the Company
to provide for the amount of withholding required by applicable federal, state,
and local tax laws. If an Option Holder makes a disposition (as defined in
Section 424(c) of the Code) of any Stock acquired pursuant to the exercise of an
Incentive Option prior to the expiration of two years from the date on which the
Incentive Option was granted or prior to the expiration of one year from the
date on which the Option was exercised, the Option Holder shall send written
notice to the Company at the Company's principal place of business of the date
of such disposition, the number of shares disposed of, the amount of proceeds
received from such disposition and any other information relating to such
disposition as the Company may reasonably request. The Option Holder shall, in
the event of such a disposition, make appropriate arrangements with the Company
to provide for the amount of additional withholding, if any, required by
Sections 3102 and 3402 of the Code and applicable state income tax laws.



7.3 Restrictions on Incentive Options.



(a) Initial Exercise. The aggregate Fair Market
Value of the Shares with respect to which Incentive Options are exercisable for
the first time by an Option Holder in any calendar year, under the Plan or
otherwise, shall not exceed $100,000. For this purpose, the Fair Market Value of
the Shares shall be determined as of the date of grant of the Option and
Incentive Options shall be taken into account in the order granted.



(b) Ten Percent Stockholders. Incentive Options
granted to an Option Holder who is the holder of record of 10% or more of the
outstanding Stock of the Company shall have an Option Price equal to 110% of the
Fair Market Value of the Shares on the date of grant of the Option and the
Option Period for any such Option shall not exceed five years.



7.4 Transferability.



(a) General Rule: No Lifetime Transfers. 
An Option shall not be transferable by the Option Holder except by will or
pursuant to the laws of descent and distribution. An Option shall be exercisable
during the Option Holder's lifetime only by him or her, or in the event of
Disability or incapacity, by his or her guardian or legal representative. The
Option Holder's guardian or legal representative shall have all of the rights of
the Option Holder under this Plan.



(b) InterVivos Transfer to Certain Family Members.
The Committee may, however, provide at the time of grant or thereafter that the
Option Holder may transfer a Non-Qualified 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 Plan and the Option, including, but not limited to, the
vesting schedule, termination provisions, and the manner in which the Option may
be exercised. The Committee may require the Option Holder and the InterVivos
Transferee to 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 Plan;
provided that the InterVivos Transferee shall not have any Stock withheld to pay
withholding taxes pursuant to Section 17.2 unless the agreement referred to in
the preceding sentence specifically provides otherwise.



(c) No Transfer of ISOs. During the Option
Holder's lifetime the Option Holder may not transfer an Incentive Option under
any circumstances.



(d) No Assignment. No right or interest of any
Option Holder in an Option granted pursuant to the Plan shall be assignable or
transferable during the lifetime of the Option Holder, either voluntarily or
involuntarily, or be subjected to any lien, directly or indirectly, by operation
of law, or otherwise, including execution, levy, garnishment, attachment, pledge
or bankruptcy, except as set forth above.



7.5 Shareholder Privileges. No Option Holder
shall have any rights as a shareholder with respect to any shares of Stock
covered by an Option until the Option Holder becomes the holder of record of
such Stock, and no adjustments shall be made for dividends or other
distributions or other rights as to which there is a record date preceding the
date such Option Holder becomes the holder of record of such Stock, except as
provided in Article IV.



 


ARTICLE VIII

RIGHTS OF PARTICIPANTS




8.1 Service. Nothing contained in the Plan or
in any Option granted under the Plan shall confer upon any Participant any right
with respect to the continuation of his employment by, or consulting
relationship with, the Company, or interfere in any way with the right of the
Company, subject to the terms of any separate employment agreement or other
contract to the contrary, at any time to terminate such services or to increase
or decrease the compensation of the Participant from the rate in existence at
the time of the grant of an Option. Whether an authorized leave of absence, or
absence in military or government service, shall constitute a termination of
service shall be determined by the Committee at the time.



8.2 No Plan Funding. Obligations to
Participants under the Plan will not be funded, trusteed, insured or secured in
any manner. The Participants under the Plan shall have no security interest in
any assets of the Company, and shall be only general creditors of the Company.



 


ARTICLE IX

GENERAL RESTRICTIONS




9.1 Investment Representations. The Company may
require any person to whom an Option is granted, as a condition of exercising
such Option, to give written assurances in substance and form satisfactory to
the Company and its counsel to the effect that such person 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
applicable state securities laws. Legends evidencing such restrictions may be
placed on the Stock certificates.



9.2 Compliance with Securities Laws. Each
Option grant 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 subject to such Option grant 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 shares thereunder, such Option grant may not be accepted
or 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 to obtain such listing, registration or
qualification.



9.3 Changes in Accounting Rules. Except as
provided otherwise at the time an Option is granted, notwithstanding any other
provision of the Plan to the contrary, if, during the term of the Plan, any
changes in the financial or tax accounting rules applicable to Options shall
occur which, in the sole judgment of the Committee, may have a material adverse
effect on the reported earnings, assets or liabilities of the Company, the
Committee shall have the right and power to modify as necessary, any then
outstanding and unexercised Options as to which the applicable services or other
restrictions have not been satisfied.



 


ARTICLE X

OTHER EMPLOYEE BENEFITS




The amount of any compensation deemed to be received by a
Participant as a result of the exercise of an Option shall not constitute
"earnings" or "compensation" with respect to which any other employee benefits
of such employee are determined, including without limitation benefits under any
pension, profit sharing, 401(k), life insurance or salary continuation plan.



 


ARTICLE XI

PLAN AMENDMENT, MODIFICATION AND TERMINATION




The Board may at any time terminate, and from time to time
may amend or modify the Plan provided, however, that no amendment or
modification may become effective without approval of the amendment or
modification by the shareholders if shareholder approval is required to enable
the Plan to satisfy any applicable statutory or regulatory requirements, or if
the Company, on the advice of counsel, determines that shareholder approval is
otherwise necessary or desirable.



No amendment, modification or termination of the Plan shall
in any manner adversely affect any Options theretofore granted under the Plan,
without the consent of the Participant holding such Options.



 


ARTICLE XII

WITHHOLDING




12.1 Withholding Requirement. The Company's
obligations to deliver shares of Stock upon the exercise of any Option shall be
subject to the Participant's satisfaction of all applicable federal, state and
local income and other tax withholding requirements.



12.2 Withholding With Stock. At the time the
Committee grants an Option or at any time thereafter, it may, in its sole
discretion, grant the Participant an election to pay all such amounts of tax
withholding, or any part thereof, by electing (a) to have the Company withhold
from shares otherwise issuable to the Participant, shares of Stock having a
value equal to the amount required to be withheld or such lesser amount as may
be elected by the Participant; provided however, that the amount of Stock so
withheld shall not exceed the minimum amount required to be withheld under the
method of withholding that results in the smallest amount of withholding, or
(b) to transfer to the Company a number of shares of Stock that were acquired by
the Participant more than six (6) months prior to the transfer to the Company
and that have a value equal to the amount required to be withheld or such lesser
amount as may be elected by the Participant. All elections shall be subject to
the approval or disapproval of the Committee. The value of shares of Stock to be
withheld shall be based on the Fair Market Value of the Stock on the date that
the amount of tax to be withheld is to be determined (the "Tax Date"). Any such
elections by Participants to have shares of Stock withheld for this purpose will
be subject to the following restrictions:



(a) All elections must be made prior to the Tax Date.



(b) All elections shall be irrevocable.



(c) If the Participant is an officer or director of the
Company within the meaning of Section 16 of the Exchange Act ("Section 16"), the
Participant must satisfy the requirements of such Section 16 and any applicable
Rules thereunder with respect to the use of Stock to satisfy such tax
withholding obligation.



 


ARTICLE XIII

REQUIREMENTS OF LAW




13.1 Requirements of Law. The issuance of Stock
and the payment of cash pursuant to the Plan shall be subject to all applicable
laws, rules and regulations.



13.2 Federal Securities Law Requirements. If a
Participant is an officer or director of the Company within the meaning of
Section 16, Options granted hereunder shall be subject to all conditions
required under Rule 16b-3, or any successor rule promulgated under the Exchange
Act, to qualify the Option for any exception from the provisions of
Section 16(b) of the Exchange Act available under that Rule. Such conditions
shall be set forth in the agreement with the Participant which describes the
Option or other document evidencing or accompanying the Option.



13.3 Governing Law. The Plan and all agreements
hereunder shall be construed in accordance with and governed by the laws of the
State of Colorado.



 


ARTICLE XIV

DURATION OF THE PLAN


Unless sooner terminated by the Board of Directors, the Plan
shall terminate at the close of business on April 2, 2012 and no Option shall be
granted, or offer to purchase Stock made, after such termination. Options
outstanding at the time of the Plan termination may continue to be exercised, or
become free of restrictions, or paid, in accordance with their terms.

Dated: April 3, 2002, 2002

UQM TECHNOLOGIES, INC.

                    
                    a Colorado corporation

                     

                  
                
              
            
          
        
      
    
  


  
    
      
        
          
            
              
                
                  
                    By:   /s/