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                                                                 EXHIBIT 4.2

                         FIRST SUPPLEMENTAL INDENTURE

                                    between

                               MBNA CORPORATION

                                      and

                             THE BANK OF NEW YORK

                           Dated as of June 27, 2002

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                               Table of Contents

                                                                          Page

ARTICLE I  Defined Terms...................................................1

         Section 1.1.    Definitions.......................................1

ARTICLE II  General Terms And Conditions of The Debentures.................4

         Section 2.1.    Designation And Principal Amount..................4
         Section 2.2.    Maturity..........................................4
         Section 2.3.    Form And Payment..................................4
         Section 2.4.    Global Debenture..................................5
         Section 2.5.    Interest..........................................6

ARTICLE III  Redemption of The Debentures..................................7

         Section 3.1.    Tax Event Redemption..............................7
         Section 3.2.    Capital Treatment Event of Redemption.............7
         Section 3.3.    Investment Company Event of Redemption............7
         Section 3.4.    Optional Redemption By Company....................8
         Section 3.5.    No Sinking Fund...................................8

ARTICLE IV  Extension of Interest Payment Period...........................8

         Section 4.1.    Extension of Interest Payment Period..............8
         Section 4.2.    Notice of Extension...............................9

ARTICLE V  Expenses........................................................9

         Section 5.1.    Payment of Expenses...............................9

ARTICLE VI  Form of Debenture..............................................9

         Section 6.1.    Form of Debenture.................................9

ARTICLE VII  Original Issue of Debentures.................................10

         Section 7.1.    Original Issue of Debentures.....................10

ARTICLE VIII  Covenants...................................................10

         Section 8.1.    Limitation On Dividends..........................10
         Section 8.2.    Covenants As To The Trust........................11

ARTICLE IX  Miscellaneous.................................................11

                                      i

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         Section 9.1.    Ratification of Indenture........................11
         Section 9.2.    Acknowledgment of Rights.........................11
         Section 9.3.    Trustee Not Responsible For Recitals.............12
         Section 9.4.    Governing Law....................................12
         Section 9.5.    Separability.....................................12
         Section 9.6.    Counterparts.....................................12

                                     ii

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          FIRST SUPPLEMENTAL INDENTURE, dated as of June 27, 2002 (the "First
Supplemental Indenture"), between MBNA Corporation, a Maryland corporation
(the "Company"), and The Bank of New York, a New York banking corporation, as
trustee (the "Trustee"), under the Indenture dated as of December 18, 1996
between the Company and the Trustee (the "Indenture").

          WHEREAS, the Company executed and delivered the Indenture to the
Trustee to provide for the future issuance of the Company's unsecured
subordinated debt securities to be issued from time to time in one or more
series as might be determined by the Company under the Indenture, in an
unlimited aggregate principal amount which may be authenticated and delivered
as provided in the Indenture;

          WHEREAS, pursuant to the terms of the Indenture, the Company desires
to provide for the establishment of a new series of its Securities to be known
as its 8.125% Junior Subordinated Debentures, Series D, due 2032 (the
"Debentures"), the form and substance of such Debentures and the terms,
provisions and conditions thereof to be set forth as provided in the Indenture
and this First Supplemental Indenture;

          WHEREAS, MBNA Capital D, a Delaware statutory business trust (the
"Trust"), has offered to the public $300,000,000 aggregate liquidation amount
of its 8.125% Trust Preferred Securities (TruPS(R)), Series D (the "Preferred
Securities"), representing beneficial ownership interests in the assets of the
Trust, and proposes to invest the proceeds from such offering, together with
the proceeds of the issuance and sale by the Trust to the Company of
$9,278,375 aggregate liquidation amount of its Common Securities, in the
Debentures; and

          WHEREAS, the Company has requested that the Trustee execute and
deliver this First Supplemental Indenture pursuant to Sections 2.1, 3.1 and
9.1 of the Indenture and all requirements necessary to make this First
Supplemental Indenture a valid and binding instrument in accordance with its
terms, and to make the Debentures, when executed by the Company and
authenticated and delivered by the Trustee, the valid and binding obligations
of the Company, have been performed, and the execution and delivery of this
First Supplemental Indenture has been duly authorized in all respects:

          NOW THEREFORE, in consideration of the purchase of the Debentures by
the Holders thereof, and for the purpose of setting forth, as provided in the
Indenture, the form and substance of the Debentures and the additional terms,
provisions and conditions thereof, the Company covenants and agrees with the
Trustee as follows:

                              ARTICLE I

          DEFINED TERMS Section 1.1. Definitions.

          Unless the context otherwise requires:
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                                      2

          (a) a term defined in the Indenture has the same meaning when used
in this First Supplemental Indenture;

          (b) a term defined anywhere in this First Supplemental Indenture has
the same meaning throughout;

          (c) the singular includes the plural and vice versa;

          (d) a reference to a Section or Article is to a Section or Article
of this First Supplemental Indenture;

          (e) headings are for convenience of reference only and do not affect
interpretation;

          (f) the following terms have the meanings given to them in the Trust
Agreement: Administrative Trustee; Business Day; Clearing Agency; Common
Security; Delaware Trustee; Direct Action; Distributions; Federal Reserve;
Guarantee Preferred Security; Preferred Securities Certificate; Payment
Account; and Underwriting Agreement;

          (g) the following terms have the meanings given to them in this
Section 1.1(g):

          "Additional Interest" shall have the meaning set forth in Section
2.5(e).

         "Capital Treatment Event" means the reasonable determination by the
Company that, as a result of (i) any amendment to, or change (including any
announced proposed change) in, the laws or regulations of the United States or
any political subdivision thereof or therein or other governmental agency or
regulatory authority, or (ii) any official administrative pronouncement or
action or judicial decision interpreting or applying such laws or regulations,
which, in the case of either clause (i) or (ii) is effective or is announced
on or after the date of issuance of the Preferred Securities, there is more
than an insubstantial risk that the Company will not be entitled to treat an
amount equal to the liquidation amount of the Preferred Securities as "Tier 1
Capital" (or the then equivalent thereof) under the risk-based capital
adequacy guidelines of the Federal Reserve, as then in effect and applicable
to the Company.

         "Change in Investment Company Act Law" shall have the meaning set
forth in the definition of "Investment Company Event."

         "Compounded Interest" shall have the meaning set forth in Section
4.1.

         "Debentures" shall have the meaning set forth in the preamble of this
First Supplemental Indenture.

         "Deferred Interest" shall have the meaning set forth in Section 4.1.

         "Depositary", with respect to the Debentures, means The Depository
Trust Company or such other successor Clearing Agency for the Preferred
Securities.
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                                      3

         "Dissolution Event" means the liquidation of the Trust pursuant to
the Trust Agreement and the distribution of the Debentures held by the
Property Trustee to the holders of the Trust Securities issued by the Trust
pro rata in accordance with the Trust Agreement.

         "Extension Period" shall have the meaning set forth in Section 4.1.

         "Global Debenture" shall have the meaning set forth in Section
2.4(a)(i).

         "Interest Payment Date" shall have the meaning set forth in Section
2.5(d).

         "Interest Period" means each period beginning on, and including, June
27, 2002, and ending on, but excluding, the first Interest Payment Date, and
each successive period beginning on, and including, an Interest Payment Date
and ending on, but excluding, the next succeeding Interest Payment Date.

         "Investment Company" means an investment company as defined in the
Investment Company Act.

         "Investment Company Act" means the Investment Company Act of 1940, as
amended from time to time, or any successor legislation.

         "Investment Company Event" means that the Trust or the Company shall
have received an Opinion of Counsel which states that, as a result of the
occurrence of an amendment to, or change (including any announced proposed
change) in, the laws or regulations of the United States or any political
subdivision thereof or therein or any other governmental agency or regulatory
authority (a "Change in Investment Company Act Law"), there is more than an
insubstantial risk that the Trust is or will be considered an Investment
Company which is required to be registered under the Investment Company Act,
which Change in Investment Company Act Law becomes effective on or after the
date of issuance of the Preferred Securities.

         "Maturity Date" shall mean October 1, 2032.

         "Non Book-Entry Preferred Securities" shall have the meaning set
forth in Section 2.4(a)(ii).

         "Paying Agent" shall mean the Trustee or any Person authorized by the
Trustee to calculate the amount of interest payable on the Debentures in
respect of each Interest Period.

         "Redemption Price" shall mean, with respect to any redemption of the
Debentures pursuant to Article III hereof, an amount in cash equal to 100% of
the principal amount of Debentures to be redeemed plus any accrued and unpaid
interest thereon, including Compounded Interest and Additional Interest, if
any, to, but excluding, the date of such redemption.

         "Security Registrar" shall have the meaning set forth in Section 2.3.

         "Tax Event" means the receipt by the Trust or the Company of an
Opinion of Counsel to the effect that, as a result of (i) any amendment to, or
change (including any announced proposed change) in, the laws or regulations
of the United States or any political subdivision or taxing
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                                      4

authority thereof or therein, or (ii) any official administrative
pronouncement or action or judicial decision interpreting or applying such
laws or regulations, which change or amendment is enacted or becomes
effective, or which proposed change, pronouncement, action or decision is
announced or occurs, on or after the date of issuance of the Preferred
Securities, there is more than an insubstantial risk that (A) the Trust is, or
within 90 days after the date of such Opinion of Counsel will be, subject to
United States federal income tax with respect to interest accrued or received
on the Debentures, (B) interest payable by the Company on the Debentures is
not, or within 90 days after the date of such Opinion of Counsel, will not be,
deductible by the Company, in whole or in part, for United States federal
income tax purposes or (C) the Trust is, or within 90 days after the date of
such Opinion of Counsel will be, subject to more than a de minimis amount of
other taxes, duties or other governmental charges.

         "Trust" shall have the meaning set forth in the preamble of this
First Supplemental Indenture.

         "Trust Agreement" means the Amended and Restated Trust Agreement
among MBNA Corporation, as Depositor, The Bank of New York, as Property
Trustee, The Bank of New York (Delaware), as Delaware Trustee, The
Administrative Trustees named therein, and the Several Holders (as defined
therein), dated as of June 27, 2002, as amended from time to time.

         "Trust Securities" shall mean the Preferred Securities and the Common
Securities, collectively.

                                  ARTICLE II

                GENERAL TERMS AND CONDITIONS OF THE DEBENTURES

          Section 2.1. Designation And Principal Amount.

          There is hereby authorized a series of Securities designated the
"8.125% Junior Subordinated Debentures, Series D, due 2032" limited in
aggregate principal amount to $309,278,375 which amount shall be as set forth
in any written order of the Company for the authentication and delivery of
Debentures pursuant to Section 3.3 of the Indenture.

          Section 2.2. Maturity.

          The Maturity Date (which shall constitute the Stated Maturity of the
Debentures for purposes of the Indenture) shall be the date on which the
Debentures mature and on which the principal thereof shall be due and payable
together with all accrued and unpaid interest thereon (including Compounded
Interest and Additional Interest, if any).

          Section 2.3. Form And Payment.

          Except as provided in Section 2.4, the Debentures shall be issued in
fully registered certificated form without interest coupons. Principal of,
premium, if any, and interest on (including Compounded Interest and Additional
Interest, if any) the Debentures issued in certificated form will be payable,
the transfer of such Debentures will be registrable and such

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                                      5

Debentures will be exchangeable for Debentures bearing identical terms and
provisions at the office or agency of the Company maintained for such purpose
as set forth in the Indenture; provided, however, that payment of interest
with respect to Debentures (other than a Global Debenture) may be made at the
option of the Company (i) by check mailed to the Holder at such address as
shall appear in the Security Register or (ii) by transfer to an account
maintained by the Person entitled thereto, provided that proper transfer
instructions have been received in writing by the relevant record date. The
Company selects New York, New York as a place of payment where the principal
of, and premium, if any, and interest on the Debentures are payable as
specified in accordance herewith, and hereby appoints The Bank of New York,
the Trustee, as registrar for the Debentures (the "Security Registrar").
Notwithstanding the foregoing, so long as the Holder of any Debentures is the
Property Trustee, the payment of the principal of, premium, if any, and
interest (including Compounded Interest and Additional Interest, if any) on
such Debentures held by the Property Trustee will be made at such place and to
such account as may be designated by the Property Trustee.

          Section 2.4. Global Debenture.

          (a) In connection with a Dissolution Event,

                    (i) the Debentures in certificated form may be presented
          to the Trustee by the Property Trustee in exchange for a global
          Debenture in an aggregate principal amount equal to the aggregate
          principal amount of all outstanding Debentures (a "Global
          Debenture"), to be registered in the name of the Depositary, or its
          nominee, and delivered by the Trustee to or upon the order of the
          Depositary for crediting to the accounts of its participants
          pursuant to the instructions of the Administrative Trustees. The
          Company upon any such presentation shall execute a Global Debenture
          in such aggregate principal amount and deliver the same to the
          Trustee for authentication and delivery in accordance with the
          Indenture. Payments on the Debentures issued as a Global Debenture
          will be made to the Depositary; and

                    (ii) if any Preferred Securities are held in non
          book-entry certificated form, the Debentures in certificated form
          may be presented to the Trustee by the Property Trustee and any
          Preferred Security Certificate which represents Preferred Securities
          other than Preferred Securities held by the Clearing Agency or its
          nominee ("Non Book-Entry Preferred Securities") will be deemed to
          represent beneficial interests in Debentures presented to the
          Trustee by the Property Trustee having an aggregate principal amount
          equal to the aggregate liquidation amount of the Non Book-Entry
          Preferred Securities until such Preferred Security Certificates are
          presented to the Security Registrar for transfer or reissuance at
          which time such Preferred Security Certificates will be cancelled
          and a Debenture, registered in the name of the holder of the
          Preferred Security Certificate or the transferee of the holder of
          such Preferred Security Certificate, as the case may be, with an
          aggregate principal amount equal to the aggregate liquidation amount
          of the Preferred Security Certificate cancelled, will be executed by
          the Company and delivered to the Trustee for authentication and
          delivery in accordance with the Indenture. Upon the issuance of such
          Debentures, Debentures with an equivalent aggregate principal amount
          that were presented by the Property Trustee to the Trustee will be
          deemed to have been cancelled.
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                                      6

          (b) A Global Debenture may be transferred, in whole but not in part,
only to another nominee of the Depositary, or to a successor Depositary
selected or approved by the Company or to a nominee of such successor
Depositary.

          Section 2.5. Interest.

          (a) Each Debenture will bear interest at a rate of 8.125% per annum
from June 27, 2002, until the principal thereof becomes due and payable, and
on any overdue principal at a rate of 8.125% per annum and (to the extent that
payment of such interest is enforceable under applicable law) on any overdue
installment of interest at a rate of 8.125% per annum, compounded quarterly,
payable (subject to the provisions of Article IV) quarterly in arrears on the
1st day of January, April, July and October of each year, commencing on
October 1, 2002, to the Person in whose name such Debenture or any predecessor
Debenture is registered, at the close of business on the regular record date
for such interest installment, which, in respect of any Debentures of which
the Property Trustee is the Holder or in the case of a Global Debenture, shall
be the close of business on the Business Day next preceding that Interest
Payment Date (as defined below). Notwithstanding the foregoing sentence, if
the Debentures are no longer in book-entry only form, except if the Debentures
are held by the Property Trustee, the record dates shall be the close of
business on the December 15, March 15, June 15 and September 15 immediately
preceding the relevant Interest Payment Date, whether or not a Business Day.

          (b) Unless otherwise provided by the Trustee, the Paying Agent will
calculate the amount of interest payable on the Debentures in respect of each
Interest Period. The amount of interest payable for any Interest Period will
be computed on the basis of a 360-day year consisting of twelve 30-day months
and rounding the resulting figure to the nearest cent (with one-half cent or
more being rounded upwards). The amount of interest payable for any partial
Interest Period will be computed on the basis of the actual number of days
elapsed during any such 30-day month. The determination of the amount of
interest payable by Paying Agent will (in the absence of willful default, bad
faith or manifest error) be final, conclusive and binding on all concerned.

          (c) All certificates, communications, opinions, determinations,
calculations, quotations and decisions given, expressed, made or obtained for
the purposes of the provisions relating to the payment and calculation of
interest on the Debentures, whether by the Trustee or Paying Agent, will (in
the absence of willful default, bad faith or manifest error) be binding on the
Trust, the Company, the Trustee and all of the holders of the Debentures, and
no liability will (in the absence of willful default, bad faith or manifest
error) attach to the Trustee or Paying Agent in connection with the exercise
or non-exercise by any of them of their powers, duties and discretion.

          (d) In the event that any date on which interest is payable on the
Debentures is not a Business Day, then payment of interest payable on such
date will be made on the next succeeding day which is a Business Day, except
that, if such Business Day is in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business Day, in each case
with the same force and effect as if made on such date (each date on which
interest is actually payable, an "Interest Payment Date").
<PAGE>
                                      7

          (e) If at any time the Trust is required to pay any taxes, duties,
assessments or governmental charges of whatever nature (other than withholding
taxes) imposed by the United States, or any other taxing authority, then the
Company will pay such Additional Interest ("Additional Interest") on the
Debentures held by the Property Trustee as shall be required so that the net
amounts received and retained by the Trust after paying such taxes, duties,
assessments or other governmental charges will be equal to the amounts the
Trust would have received had the Trust not been subject to such taxes,
duties, assessments or other government charges imposed.

          (f) All percentages resulting from any calculations referred to in
this First Supplemental Indenture will be rounded, if necessary, to the
nearest multiple of 1/100 of 1% and all U.S. dollar amounts used in or
resulting from such calculations will be rounded to the nearest cent (with
one-half cent or more being rounded upwards).

                                  ARTICLE III

                         REDEMPTION OF THE DEBENTURES

          Section 3.1. Tax Event Redemption.

         Subject to the prior approval of the Federal Reserve, if such
approval is then required under applicable law, rules, guidelines or policies,
if at any time a Tax Event shall occur and be continuing, the Company shall
have the right upon not less than 30 nor more than 60 days' notice, to redeem
the Debentures, in whole, but not in part, for cash within 90 days following
the occurrence of such Tax Event (or, if the approval of the Federal Reserve
is then required for such redemption, on such later date as promptly
practicable after such approval is obtained) at the Redemption Price.

             Section 3.2. Capital Treatment Event of Redemption.

         Subject to the prior approval of the Federal Reserve, if such
approval is then required under applicable law, rules, guidelines or policies,
if at any time a Capital Treatment Event shall occur and be continuing, the
Company shall have the right, upon not less than 30 nor more 60 days' notice,
to redeem the Debentures, in whole, but not in part, for cash within 90 days
following the occurrence of such Capital Treatment Event (or, if the approval
of the Federal Reserve is then required for such redemption, on such later
date as promptly as practicable after such approval is obtained) at the
Redemption Price.

          Section 3.3. Investment Company Event of Redemption.

          Subject to the prior approval of the Federal Reserve, if such
approval is then required under applicable law, rules, guidelines or policies,
if at any time an Investment Company Event shall occur and be continuing, the
Company shall have the right, upon not less than 30 nor more 60 days' notice,
to redeem the Debentures, in whole, but not in part, for cash within 90 days
following the occurrence of such Investment Company Event (or, if the approval
of the Federal Reserve is then required for such redemption, on such later
date as promptly as practicable after such approval is obtained) at the
Redemption Price.
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                                      8

          Section 3.4. Optional Redemption By Company.

          (a) Subject to the prior approval of the Federal Reserve, if such
approval is then required under applicable law, rules, guidelines or policies,
the Company shall have the right to redeem the Debentures, in whole or in
part, from time to time, on or after October 1, 2007, upon not less than 30
nor more than 60 days' notice at the Redemption Price.

          (b) If the Debentures are only partially redeemed pursuant to this
Section 3.4, the Debentures will be redeemed pro rata or by lot or by any
other method utilized by the Security Registrar; provided, that if at the time
of redemption the Debentures are registered as a Global Debenture, the
Depositary shall determine, in accordance with its procedures, the principal
amount of such Debentures beneficially held by each Holder of Debentures to be
redeemed.

          Section 3.5. No Sinking Fund.

          The Debentures are not entitled to the benefit of any sinking fund.

                                  ARTICLE IV

                     EXTENSION OF INTEREST PAYMENT PERIOD

          Section 4.1. Extension of Interest Payment Period.

          So long as no Event of Default has occurred and is continuing, the
Company shall have the right, at any time and from time to time during the
term of the Debentures, to defer payments of interest on the Debentures by
extending the interest payment period of such Debentures for a period not
exceeding 20 consecutive quarterly periods (the "Extension Period"), during
which Extension Period no interest shall be due and payable; provided that no
Extension Period shall end on a date other than an Interest Payment Date or
extend beyond the Maturity Date. To the extent permitted by applicable law,
interest, the payment of which has been deferred because of the extension of
the interest payment period pursuant to this Section 4.1, will bear interest
thereon at a rate of 8.125% per annum compounded quarterly for each quarterly
period of the Extension Period ("Compounded Interest"). At the end of the
Extension Period, the Company shall pay all interest accrued and unpaid on the
Debentures, including any Additional Interest and Compounded Interest
(together, "Deferred Interest") that shall be payable to the Holders in whose
names the Debentures are registered in the Security Register on the record
date relating to the Interest Payment Date on which the Extension Period ends.
Before the termination of any Extension Period, the Company may further defer
payments of interest by further extending such period, provided that such
period, together with all such previous and further extensions within such
Extension Period, shall not exceed 20 consecutive quarterly periods or extend
beyond the Maturity Date of the Debentures. Upon the termination of any
Extension Period and the payment of all Deferred Interest then due, the
Company may commence a new Extension Period, subject to the foregoing
requirements. No interest shall be due and payable during an Extension Period,
except at the end thereof. The provisions of this Section 4.1 and Section 4.2
shall apply to the Debentures in lieu of Section 3.11 of the Indenture.
<PAGE>
                                      9

          Section 4.2. Notice of Extension.

          (a) If the Property Trustee is the only registered Holder at the
time the Company selects an Extension Period, the Company shall give written
notice to the Administrative Trustees, the Property Trustee and the Trustee of
its selection of such Extension Period one Business Day before the earlier of
(i) the next succeeding date on which Distributions on the Trust Securities
issued by the Trust are payable, or (ii) the date the Trust is required to
give notice of the record date, or the date such Distributions are payable, to
any national securities exchange or interdealer quotation system or to holders
of the Preferred Securities issued by the Trust, but in any event at least one
Business Day before such record date.

          (b) If the Property Trustee is not the only Holder at the time the
Company selects an Extension Period, the Company shall give the Holders and
the Trustee written notice of its selection of such Extension Period at least
one Business Day before the earlier of (i) the next succeeding Interest
Payment Date, or (ii) the date the Company is required to give notice of the
record or payment date of such interest payment to any national securities
exchange or interdealer quotation system or to the Holders.

          (c) The quarterly period in which any notice is given pursuant to
paragraphs (a) or (b) of this Section 4.2 shall be counted as one of the 20
quarterly periods permitted in the maximum Extension Period permitted under
Section 4.1.

                                   ARTICLE V

                                   EXPENSES

          Section 5.1. Payment of Expenses.

          In connection with the offering, sale and issuance of the Debentures
to the Trust and in connection with the sale of the Trust Securities by the
Trust, the Company, in its capacity as borrower with respect to the
Debentures, shall pay (i) all costs and expenses relating to the offering,
sale and issuance of the Debentures and the Trust Securities, (ii) the
compensation of the Trustee and (iii) all costs and expenses relating to the
organization, operation and dissolution of the Trust in accordance with the
provisions of Sections 6.7 and 10.6 of the Indenture.

                                  ARTICLE VI

                               FORM OF DEBENTURE

          Section 6.1. Form of Debenture.

          The Debentures and the Trustee's Certificate of Authentication to be
endorsed thereon are to be substantially in the forms set forth in Exhibit A
hereto.
<PAGE>
                                      10

                                 ARTICLE VII

                         ORIGINAL ISSUE OF DEBENTURES

          Section 7.1. Original Issue of Debentures.

          Debentures in the aggregate principal amount of $309,278,375 may,
upon execution of this First Supplemental Indenture, be executed by the
Company and delivered to the Trustee for authentication as provided in
Sections 3.1 and 3.3 of the Indenture.

                                 ARTICLE VIII

                                   COVENANTS

          Section 8.1. Limitation On Dividends.

          The Company will not, and will not permit any Subsidiary to, (i)
declare or pay any dividends or distributions on, or redeem, purchase,
acquire, or make a liquidation payment with respect to, any of the Company's
capital stock, (ii) make any payment of principal of, or premium, if any, or
interest on, or repay, repurchase or redeem any debt securities of the Company
that rank pari passu with, or junior in right of payment to, the Debentures or
(iii) make any guarantee payment with respect to any guarantee by the Company
of the debt securities of any Subsidiary of the Company if such guarantee
ranks pari passu with, or junior in right of payment to, the Debentures (other
than (a) dividends, distributions, redemptions, purchases or acquisitions made
by the Company by way of issuance of its capital stock (or options, warrants
or other rights to subscribe therefor), (b) any declaration of a dividend in
connection with the implementation of a shareholder's rights plan, or the
issuance of stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto, (c) payments under the
Guarantee, (d) the purchase of fractional interests in shares resulting from a
reclassification of the Company's capital stock, (e) the purchase of
fractional interests in shares of the Company's capital stock pursuant to the
conversion or exchange provisions of such capital stock or the security being
converted or exchanged, (f) purchases of Common Stock related to the issuance
of Common Stock or rights under any of the Company's benefit plans for its
directors, officers or employees and (g) obligations under any dividend
reinvestment plan or stock purchase plan of the Company), if at such time (1)
there shall have occurred any event of which the Company has actual knowledge
that with the giving of notice, or the lapse of time, or both, would
constitute an Event of Default (as defined in the Indenture) and in respect of
which the Company shall not have taken reasonable steps to cure, (2) if such
Debentures are held by the Property Trustee, the Company shall be in default
with respect to its payment obligations under the Guarantee or (3) the Company
shall have given notice of its selection of an Extension Period and shall not
have rescinded such notice or such Extension Period and such Extension Period
shall be continuing. The provisions of this Section 8.1 shall apply to the
Debentures in lieu of the first paragraph of Section 10.7 of the Indenture.
<PAGE>
                                      11

          Section 8.2. Covenants As To The Trust.

          In the event Debentures are issued to the Trust or a trustee of such
trust in connection with the issuance of Trust Securities by the Trust, for so
long as such Trust Securities remain outstanding, the Company (i) will
maintain 100% direct or indirect ownership of the Common Securities of the
Trust; provided, however, that any successor of the Company, permitted
pursuant to Article X of the Indenture, may succeed to the Company's ownership
of such Common Securities, (ii) will use commercially reasonable efforts to
cause the Trust (a) to remain a grantor trust, except in connection with a
distribution of Debentures to the holders of Trust Securities in liquidation
of the Trust, the redemption of all of the Trust Securities of the Trust, or
certain mergers, consolidations or amalgamations, each as permitted by the
Declaration, and (b) to otherwise continue to be classified as a grantor trust
and not an association taxable as a corporation for United States federal
income tax purposes and (iii) will not cause, as sponsor of the Trust, or
permit, as holder of the Common Securities, the dissolution, winding-up or
termination of the Trust, except in connection with a distribution of the
Debentures as provided in the Declaration and in connection with certain
mergers, consolidations or amalgamations. The provisions of this Section 8.2
shall apply to the Debentures in lieu of the second paragraph of Section 10.7
of the Indenture.

                                  ARTICLE IX

                                 MISCELLANEOUS

          Section 9.1. Ratification of Indenture.

          The Indenture, as supplemented by this First Supplemental Indenture,
is in all respects ratified and confirmed, and this First Supplemental
Indenture shall be deemed part of the Indenture in the manner and to the
extent herein and therein provided.

          Section 9.2. Acknowledgment of Rights.

          The Company acknowledges that, with respect to any Debentures held
by the Trust or a trustee thereof, if the Property Trustee of such Trust fails
to enforce its rights under this First Supplemental Indenture or the Indenture
as the Holder of the Debentures held as the assets of the Trust, any holder of
Preferred Securities may institute legal proceedings directly against the
Company to enforce such Property Trustee's rights under this First
Supplemental Indenture or the Indenture without first instituting any legal
proceedings against such Property Trustee or any other person or entity.
Notwithstanding the foregoing, if an Event of Default has occurred and is
continuing and such event is attributable to the failure of the Company to pay
principal of, premium, if any, or interest on the Debentures when due, the
Company acknowledges that a holder of Preferred Securities may institute a
direct action for enforcement of payment to such holder of the principal of,
premium, if any, or interest on the Debentures having a principal amount equal
to the aggregate liquidation amount of the Preferred Securities of such holder
on or after the respective due date specified in the Debentures.
<PAGE>
                                      12

          Section 9.3. Trustee Not Responsible For Recitals.

          The recitals contained herein and in the Debentures, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and neither the Trustee nor any Authenticating Agent assumes any
responsibility for their correctness. The Trustee makes no representations as
to the validity or sufficiency of this Indenture or of the Debentures. Neither
the Trustee nor any Authenticating Agent shall be accountable for the use or
application by the Company of the Debentures or the proceeds thereof.

          Section 9.4. Governing Law.

          THIS FIRST SUPPLEMENTAL INDENTURE AND THE DEBENTURES SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK.

          Section 9.5. Separability.

          In case any provision of this First Supplemental Indenture or in the
Debentures shall be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.

          Section 9.6. Counterparts.

          This instrument may be executed in any number of counterparts, each
of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.

          IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed, all as of the day and year first
above written.

                                        MBNA CORPORATION

                                        By:_________________________________
                                           Name:  Thomas D. Wren
                                           Title: Vice President

                                       THE BANK OF NEW YORK
                                        as Trustee

                                       By: _________________________________
                                           Name:
                                           Title:

<PAGE>

                                   EXHIBIT A

                          (FORM OF FACE OF DEBENTURE)

          [IF THE DEBENTURE IS TO BE A GLOBAL DEBENTURE, INSERT - This
Debenture is a Book-Entry Security within the meaning of the Indenture
hereinafter referred to and is registered in the name of a Depositary or a
nominee of a Depositary. This Debenture is exchangeable for Debentures
registered in the name of a person other than the Depositary or its nominee
only in the limited circumstances described in the Indenture, and no transfer
of this Debenture (other than a transfer of this Debenture as a whole by the
Depositary to a nominee of the Depositary or by a nominee of the Depositary to
the Depositary or another nominee of the Depositary) may be registered except
in limited circumstances.

         Unless this Debenture is presented by an authorized representative of
The Depository Trust Company (55 Water Street, New York, New York) to the
issuer or its agent for registration of transfer, exchange or payment, and any
Debenture issued is registered in the name of Cede & Co. or such other name as
requested by an authorized representative of The Depository Trust Company and
any payment hereon is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL since the registered
owner hereof, Cede & Co., has an interest herein.]

                                     A-1
<PAGE>

No. D-__

                               MBNA CORPORATION

         MBNA CORPORATION, a corporation organized and existing under the laws
of the state of Maryland (hereinafter called the "Company", which term
includes any successor corporation under the Indenture hereinafter referred
to), for value received, hereby promises to pay to, or registered assigns, the
principal sum of $309,278,375 on October 1, 2032, and to pay interest on said
principal sum from the 1st day of January, April, July and October or from the
most recent interest payment date (each such date, an "Interest Payment Date")
on which interest has been paid or duly provided for, quarterly (subject to
deferral as set forth herein) in arrears on the January 1, April 1, July 1 and
October 1 of each year, commencing on October 1, 2002 at the rate of 8.125%
per annum until the principal hereof shall have become due and payable, plus
Additional Interest, if any, until the principal hereof is paid or duly
provided for or made available for payment and on any overdue principal and
(without duplication and to the extent that payment of such interest is
enforceable under applicable law) on any overdue installment of interest at
the rate of 8.125% per annum, compounded quarterly. The amount of interest
payable on any Interest Payment Date (as defined above) shall be calculated as
provided in the Indenture. In the event that any date on which interest is
payable on this Debenture is not a Business Day, then payment of the interest
payable on such date will be made on the next succeeding day that is a
Business Day (and without any interest or other payment in respect of any such
delay), except that, if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on the date the payment
was originally payable. The interest installment so payable, and punctually
paid or duly provided for, on any Interest Payment Date will, as provided in
the Indenture, be paid to the Person in whose name this Debenture (or one or
more Predecessor Securities, as defined in the Indenture) is registered at the
close of business on the Regular Record Date for such interest installment,
which shall be, if the Debentures are not in book entry only form, except if
the Debentures are held by the Property Trustee, the close of business on the
December 15, March 15, June 15 and September 15 immediately preceding the
relevant Interest Payment Date, whether or not a Business Day. In the case of
a Global Debenture or any Debentures of which the Property Trustee is the
Holder, such regular record date shall be the close of business on the
Business Day next preceding the applicable Interest Payment Date. Any such
interest installment not punctually paid or duly provided for shall forthwith
cease to be payable to the registered Holders on such Regular Record Date and
may either be paid to the Person in whose name this Debenture (or one or more
Predecessor Securities) is registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to the registered Holders not less than
10 days prior to such Special Record Date, or be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities
exchange or interdealer quotation system on which the Debentures may be listed
or traded, and upon such notice as may be required by such exchange or
self-regulatory organization, all as more fully provided in the Indenture.

         Payment of principal of (and premium, if any) and interest (including
Compounded Interest and Additional Interest, if any) on this Debenture will be
payable at the office or agency of the Trustee maintained for that purpose in
the United States, in any coin or currency of the

                                     A-2
<PAGE>

United States of America that at the time of payment is legal tender for
payment of public and private debts; provided, however, that at the option of
the Company payment of interest may be made (i) by check mailed to the
Registered Holder at such address as shall appear in the Securities Register
or (ii) by wire transfer to an account designated by a Holder in writing not
less than ten days prior to the date of payment. Notwithstanding the
foregoing, so long as the Holder of this Debenture is the Property Trustee,
the payment of the principal of, premium, if any, and interest on this
Debenture will be made at the place and to the account as may be designated by
the Property Trustee.

         The indebtedness evidenced by this Debenture is, to the extent
provided in the Indenture, subordinate and junior in right of payment to the
prior payment in full of all Senior Indebtedness, and this Debenture is issued
subject to the provisions of the Indenture with respect thereto. Each Holder
of this Debenture, by accepting the same, (a) agrees to and shall be bound by
such provisions, (b) authorizes and directs the Trustee on his behalf to take
such action as may be necessary or appropriate to acknowledge or effectuate
the subordination so provided and (c) appoints the Trustee his
attorney-in-fact for any and all such purposes. Each Holder hereof, by his
acceptance hereof, waives all notice of the acceptance of the subordination
provisions contained herein and in the Indenture by each holder of Senior
Indebtedness, whether now outstanding or hereafter incurred, and waives
reliance by each such holder or creditor upon said provisions.

         Reference is hereby made to the further provisions of this Debenture
set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.

         This Debenture shall not be entitled to any benefit under the
Indenture or be valid or obligatory for any purpose until the Certificate of
Authentication hereon has been executed by the Trustee referred to on the
reverse hereof by manual signature.

         THIS DEBENTURE IS NOT A SAVINGS ACCOUNT DEPOSIT OR OTHER OBLIGATION
OF ANY BANK OR A NONBANK SUBSIDIARY THEREOF, AND IS NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE BANK INSURANCE FUND OR ANY OTHER
GOVERNMENTAL AGENCY.

                                     A-3

<PAGE>

         IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.

                                          MBNA CORPORATION

                                          By:  ________________________
                                               Name:
                                               Title:

         Attest:

         By: ___________________________
             Name:
             Title:

         This is one of the Debentures of the series designated therein
referred to in the within-mentioned Indenture.

         Date of Authentication: June 27, 2002

         The Bank of New York,
             as Trustee

         By:   ____________________________
               Authorized Officer

                                     A-4
<PAGE>

         (FORM OF REVERSE OF DEBENTURE)

         This Debenture is one of a duly authorized series of debt securities
of the Company (herein called the "Debentures"), issued and to be issued in
one or more series under a Junior Subordinated Indenture, dated as of December
18, 1996, duly executed and delivered between the Company and The Bank of New
York, as Trustee (herein called the "Trustee") (the "Indenture," such term,
unless the context specifies otherwise, to include any supplement including
the First Supplemental Indenture (as defined below)), as supplemented by the
First Supplemental Indenture, dated as of June 27, 2002, between the Company
and the Trustee (the "First Supplemental Indenture"), to which Indenture and
all indentures supplemental thereto reference is hereby made for a description
of the respective rights, limitations of rights, obligations, duties and
immunities thereunder of the Trustee, the Company and the Holders of the
Debentures, and of the terms upon which the Debentures are, and are to be,
authenticated and delivered. This Debenture is one of the series designated on
the face hereof and is limited in aggregate principal amount as specified in
said First Supplemental Indenture.

         The Company may at any time, at its option, on or after October 1,
2007, and subject to the terms and conditions of Article XI of the Indenture
and Article III of the First Supplemental Indenture, redeem this Debenture, in
whole at any time or in part from time to time, without premium or penalty, at
a redemption price equal to 100% of the principal amount thereof plus accrued
and unpaid interest including Additional Interest, if any, to the Redemption
Date. Any redemption pursuant to this paragraph will be made upon not less
than 30 days' nor more than 60 days' notice. If the Debentures are only
partially redeemed by the Company pursuant to an Optional Redemption, the
Debentures will be redeemed pro rata or by lot or by any other method utilized
by the Security Registrar; provided that if, at the time of redemption, the
Debentures are registered as a Global Debenture, the Depositary shall
determine the principal amount of such Debentures beneficially held by each
Debenture holder to be redeemed in accordance with its procedures.

         Upon the occurrence and during the continuation of a Tax Event,
Investment Company Event or a Capital Treatment Event in respect of a Trust,
the Company may, at its option, at any time within 90 days of the occurrence
of such Tax Event, Investment Company Event or Capital Treatment Event redeem
this Debenture, in whole but not in part, subject to the provisions of Article
XI of the Indenture and Article III of the First Supplemental Indenture, at a
redemption price equal to 100% of the principal amount thereof plus accrued
and unpaid interest, including Additional Interest, if any, to the Redemption
Date.

         In the event of redemption of this Debenture in part only, a new
Debenture or Debentures for the unredeemed portion hereof will be issued in
the name of the Holder hereof upon the cancellation hereof.

         Notwithstanding the foregoing, any redemption of Debentures by the
Company shall be subject to the prior approval of the Federal Reserve, if such
approval is then required under applicable law, rules, guidelines or policies
of the Federal Reserve.

         In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of all of the Debentures may be
declared, and upon such declaration

                                     A-5
<PAGE>

shall become, due and payable, in the manner, with the effect and subject to
the conditions provided in the Indenture.

         The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the Holders of not less than a majority in
aggregate principal amount of the outstanding Securities of all series
affected (acting as one class), to execute supplemental indentures for the
purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of the Indenture or of any supplemental indenture or of
modifying in any manner the rights of the Holders of the Securities; provided,
however, that no such supplemental indenture shall without the consent of the
Holders of the outstanding Debentures affected thereby (i) change the Maturity
Date, or reduce the rate or extend the time of payment of interest (except as
contemplated by Section 4.1 of the First Supplemental Indenture), or reduce
the principal amount thereof, or reduce any amount payable on prepayment
thereof, or make the principal thereof or any interest or premium thereon
payable in any coin or currency other than that in which any Debenture (or
premium, if any, thereon) or the interest thereon is payable according to its
terms, or impair or affect the right of any Holder to institute suit for
payment thereof; or (ii) reduce the percentage in principal amount of the
outstanding Debentures, the Holders of which are required to consent to any
such amendment to the First Supplemental Indenture; provided, however, that if
the Debentures are held by the Property Trustee of the Trust, such amendment
shall not be effective until the holders of a majority in liquidation amount
of Trust Securities shall have consented to such amendment; provided, further,
that if the consent of the Holder of each outstanding Debenture is required,
such amendment shall not be effective until each holder of the Trust
Securities shall have consented to such amendment. The Indenture also contains
provisions permitting the Holders of a majority in aggregate principal amount
of the outstanding Securities of any series affected thereby, on behalf of all
of the Holders of the Securities of such series, to waive any past default in
the performance of any of the covenants contained in the Indenture, or
established pursuant to the Indenture with respect to such series, and its
consequences, except a default in the payment of the principal of, premium, if
any, or interest on any of the Securities of such series. Any such consent or
waiver by the registered Holder of this Debenture (unless revoked as provided
in the Indenture) shall be conclusive and binding upon such Holder and upon
all future Holders and owners of this Debenture and of any Debenture issued in
exchange therefor or in place hereof (whether by registration of transfer or
otherwise), irrespective of whether or not any notation of such consent or
waiver is made upon this Debenture.

         No reference herein to the Indenture and no provision of this
Debenture or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of (and
premium, if any) and interest on this Debenture at the times, place and rate,
and in the coin or currency, herein prescribed.

         So long as no Event of Default has occurred and is continuing, the
Company shall have the right, at any time and from time to time during the
term of the Debentures, to defer payments of interest on this Debenture by
extending the interest payment period of this Debenture for a period not
exceeding 20 consecutive quarterly periods (an "Extension Period") during
which Extension Period no interest shall be due and payable; provided that no
Extension Period shall end on a date other than an Interest Payment Date or
extend beyond the Maturity Date. Before the termination of any Extension
Period, the Company may further defer payments of interest by

                                     A-6
<PAGE>

further extending such period, provided that such period, together with all
such previous and further extensions within such Extension Period, shall not
exceed 20 consecutive quarterly periods or extend beyond the Maturity Date.
Upon the termination of any Extension Period and the payment of all accrued
and unpaid interest and including any Additional Interest and Compounded
Interest then due, the Company may commence a new Extension Period, subject to
the foregoing requirements.

         Subject to the prior approval of the Federal Reserve if such approval
is then required under applicable law, rules, guidelines or policies of the
Federal Reserve, the Company will have the right at any time to liquidate the
Trust and cause the Debentures to be distributed to the holders of the Trust
Securities in liquidation of the Trust.

         As provided in the Indenture and subject to certain limitations
therein set forth, this Debenture is transferable by the registered Holder
hereof on the Security Register of the Company, upon surrender of this
Debenture for registration of transfer at the office or agency of the Trustee
101 Barclay Street, New York, New York 10286, accompanied by a written
instrument or instruments of transfer in form satisfactory to the Company and
the Security Registrar duly executed by the registered Holder hereof or his or
her attorney duly authorized in writing, and thereupon one or more new
Debentures of authorized denominations and for the same aggregate principal
amount will be issued to the designated transferee or transferees. No service
charge will be made for any such transfer, but the Company may require payment
of a sum sufficient to cover any tax or other governmental charge payable in
relation thereto.

         Prior to due presentment of this Debenture for registration of
transfer, the Company, the Trustee, any paying agent and the Security
Registrar may deem and treat the registered holder hereof as the owner hereof
for all purposes, whether or not this Debenture be overdue, and neither the
Company, the Trustee nor any such agent shall be affected by notice to the
contrary.

         No recourse shall be had for the payment of the principal of or the
interest on this Debenture, or for any claim based hereon, or otherwise in
respect hereof, or based on or in respect of the Indenture, against any
incorporator, stockholder, officer or director, past, present or future, as
such, of the Company or of any predecessor or successor corporation, whether
by virtue of any constitution, statute or rule of law, or by the enforcement
of any assessment or penalty or otherwise, all such liability being, by the
acceptance hereof and as part of the consideration for the issuance hereof,
expressly waived and released.

         The Debentures are issuable only in registered form without coupons
in denominations of $25.00 and any integral multiple thereof.

         The Company and, by its acceptance of this Debenture or a beneficial
interest therein, the Holder of, and any Person that acquires a beneficial
interest in, this Debenture agree that for United States federal, state and
local tax purposes it is intended that this Debenture constitute indebtedness.

         All terms used in this Debenture that are defined in the Indenture
shall have the meanings assigned to them in the Indenture. THE INDENTURE AND
THE DEBENTURES SHALL BE

                                     A-7

<PAGE>

GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK.

                                     A-82002 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/

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