Document:

United Financial Corporation Exhibit 10.1 to Form 10-Q Dated: 6-30-05

EXHIBIT 10.1 

AMENDMENT TO UNITED
FINANCIAL CORP. 2000 LONG-TERM INCENTIVE AND STOCK OPTION PLAN

AMENDMENT  TO  UNITED  FINANCIAL
 CORP.  2000  LONG-TERM  INCENTIVE  AND  STOCK  OPTION  PLAN,  dated as of May 24,  2005
(the "Amendment") of United Financial Corp., a Minnesota corporation (the "Corporation"). 

W I T N E S S E T H : 

        WHEREAS, the
Board of Directors of the Corporation adopted the United Financial Corp. 2000 Long-Term
Incentive and Stock Option Plan (the “Plan”) in January 2000, and the
shareholders of the Corporation approved the Plan in May 2000; and 

        WHEREAS,
Section 16 of the Plan permits the Board of Directors to amend the Plan to increase the
maximum number of shares available thereunder, subject to the receipt of the approval of
the shareholders of the Corporation; and 

        WHEREAS,
prior to March 2005, there were 198,000 shares authorized for issuance under the Plan,
as a result of the 120,000 shares initially authorized when the Plan was adopted, as
adjusted by subsequent stock dividends; and 

        WHEREAS,
in March 2005, the Board of Directors amended the Plan to increase the number of shares
available thereunder from 198,000 to 258,000, and the shareholders of the Corporation
approved this increase at the 2005 Annual Meeting on May 24, 2005. 

        NOW
THEREFORE, the Plan is hereby amended as set forth below: 

             1.    
          Amendment of Section 2. The Plan is hereby amended by increasing the
          aggregate number of shares for which options may be exercised or other awards
          issued to 258,000. 

             2.    
          Remaining Terms. Except as expressly provided above, the Plan shall
          remain in full force and effect. 

             3.    
          Effectiveness. This Amendment is effective as of May 24, 2005.Amended and Restated 2002 Equity Incentive Plan

 

 

UQM TECHNOLOGIES, INC.

2002 EQUITY INCENTIVE PLAN

(originally effective April 3, 2002)

(amended and restated,

effective January 1, 2005 and July 28, 2005)

 

 

Table of Contents

  
    
      
        ARTICLE I INTRODUCTION 

      

    

  

  
    
      
        
          1.1 Establishment 

          1.2 Purposes 

          1.3 Effective Date; Amendment 

        

        ARTICLE II DEFINITIONS 

        
          2.1 Definitions 

          2.2 Gender and Number 

        

        ARTICLE III PLAN ADMINISTRATION 

        
          3.1 General 

          3.2 Delegation by Committee 

        

        ARTICLE IV STOCK SUBJECT TO THE PLAN 

        
          4.1 Number of Shares 

          4.2 Limit on Option Grants

          4.3 Other Shares of Stock 

          4.4 Adjustments for Stock Split, Stock Dividend, Etc.

          4.5 Other Distributions and Changes in the Stock 

          4.6 General Adjustment Rules 

          4.7 Determination by the Committee, Etc. 

        

        ARTICLE V CORPORATE REORGANIZATION; CHANGE IN CONTROL 

        
          5.1 Vesting and Termination of Options 

          5.2 Assumption or Substitution of Options 

          5.3 Corporate Transaction 

        

        ARTICLE VI PARTICIPATION 

        ARTICLE VII OPTIONS 

        
          7.1 Grant of Options 

          7.2 Stock Option Agreements 

          7.3 Restrictions on Incentive Options 

          7.4 Transferability 

          7.5 Shareholder Privileges 

        

        ARTICLE VIII RIGHTS OF PARTICIPANTS 

        
          8.1 Service

          8.2 No Plan Funding

        

        ARTICLE IX GENERAL RESTRICTIONS

        
          9.1 Investment Representations

          9.2 Compliance with Securities Laws

          9.3 Changes in Accounting Rules

          9.4 Tax Laws.

        

        ARTICLE X OTHER EMPLOYEE BENEFITS

        ARTICLE XI PLAN AMENDMENT, MODIFICATION AND TERMINATION

        ARTICLE XII WITHHOLDING

        
          12.1 Withholding Requirement

          12.2 Withholding With Stock

        

        ARTICLE XIII REQUIREMENTS OF LAW

        
          13.1 Requirements of Law

          13.2 Federal Securities Law Requirements

          13.3 Governing Law

        

        ARTICLE XIV DURATION OF THE PLAN

      

    

  

 

UQM TECHNOLOGIES, INC.

2002 EQUITY INCENTIVE PLAN

ARTICLE I

INTRODUCTION

1.1 Establishment. UQM Technologies, Inc., a Colorado
corporation, effective April 3, 2002, established the UQM Technologies, Inc. 2002
Equity Incentive Plan (the "Plan") for certain employees of the Company (as
defined in subsection 0) 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; Amendment. The initial effective date
of the Plan was April 3, 2002. No Option was 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 was approved by the Company’s shareholders on August 21, 2002.
The Plan and any amendments to 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. The Plan is
further amended and restated to increase the number of shares by 1,500,000, to provide for
full vesting of options upon retirement (as defined below), to provide that the exercise
price for all options shall be no less than the fair market value of the Company’s
stock on the date the option is granted, and to provide that options shall be granted and
administered in accordance with the requirements of Section 409A of the Internal
Revenue Code. The amendments shall be effective upon approval by the shareholders of the
Company at the meeting on July 28, 2005; provided however that the amendments
relating to Section 409A of the Internal Revenue Code shall become effective as of
January 1, 2005.

 

ARTICLE II

DEFINITIONS

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

"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.

"Board" means the Board of Directors of UQM.

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

"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 0, 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.

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

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

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

"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.

"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.

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

"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 0, Fair Market Value, for purposes of the exercise, shall be
the price at which the Stock is sold by the broker.

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

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

"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.

"Option Agreement" shall have the meaning given to
such term in Section 0 hereof.

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

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

"Option Price" means the price at which each share of
Stock subject to an Option may be purchased, determined in accordance with
subsection 0.

"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.

"Retirement" means termination of services on or
after the Participant’s 65th birthday or pursuant to an early retirement provision in
an employment agreement between the Company and the Participant.

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

"Share" means one whole share of Stock.

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

"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 3,000,000 Shares. The maximum number of Shares that may be issued under Incentive
Options is 3,000,000 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 0 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 3,000,000 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 0, (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 0 of this Plan.

4.5  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 Section 0), or

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

There shall be any other change (except as
described in Section 0) 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 0, 0, or 0) 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 0 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. Notwithstanding the provisions of this 0, if any Award is covered by Code
section 409A, any and all adjustments shall be made in a manner that is consistent with
Code section 409A.

4.7  Determination by the Committee, Etc.
Adjustments under this 0 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 0), 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 0 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:

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

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;

Liquidation: the dissolution or liquidation of the Company;

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

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 0 as well as such other terms and conditions that are not
inconsistent as the Committee may consider appropriate in each case.

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

Price. The price at which each share of
Stock covered by an Option may be purchased shall be no less than 100 percent of the
Fair Market Value of the Stock on the date the Option is granted.

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.

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 0 shall be limited to determining the consequences of a
termination and nothing in this subsection 0 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:

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 0, "cause" shall mean a
gross violation, as determined by the Company, of the Company’s established policies
and procedures.

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.

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.

If the Option Holder terminates employment on account of Retirement
during the Option Period, 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 shall become
fully vested and may be exercised as to the all Shares remaining subject to the Option on
the date of Retirement.

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, death, or Retirement, 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.

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

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.

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.

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.

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.

Exercise, Payments, Etc.

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 0, 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.

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:

in cash;

by certified check, cashier’s check or other check acceptable to
the Company, payable to the order of the Company;

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;

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; effective for Option exercises on and after July 30, 2002, executive
officers covered by Section 402 of the Sarbanes-Oxley Act of 2002 shall not be
permitted to pay the exercise price by delivery of a promissory note; or

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.

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

Withholding.

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 0.

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

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.

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

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.

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.

No Transfer of ISOs. During the Option Holder’s lifetime
the Option Holder may not transfer an Incentive Option under any circumstances.

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 0.

 

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.

9.4  Tax Laws. 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 tax laws
or regulations applicable to any Options or to any Participants shall occur which, in the
sole judgment of the Committee, may have a material adverse effect on the items of income,
gain, loss, or deduction of the Company for tax purposes, the Committee shall have the
right and power to modify as necessary any then outstanding Options as to which the
applicable services or other restrictions have not been satisfied. In particular, the
Committee shall have the right and power to modify any outstanding Options as necessary to
satisfy the requirements of section 409A of the Code. Any Option that is intended to be
treated as "performance-based compensation" under section 162(m) of the Code
shall be granted, administered and paid in compliance with the requirements of Code
section 162(m).

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:

All elections must be made prior to the Tax Date.

All elections shall be irrevocable.

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:
	August 11,
	2005
	
		UQM TECHNOLOGIES,
    INC.        

		a Colorado
    corporation                         

		By: 
	 /s/ Donald A. French

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