Exhibit (d)(3)
CAPSTONE TURBINE CORPORATION
AMENDED AND RESTATED 2000 EQUITY INCENTIVE PLAN
TABLE OF CONTENTS
Page
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1. PURPOSES OF THE PLAN.................................................. 1
2. DEFINITIONS........................................................... 1
3. STOCK SUBJECT TO THE PLAN............................................. 4
4. ADMINISTRATION OF THE PLAN............................................ 5
5. ELIGIBILITY........................................................... 7
6. LIMITATIONS........................................................... 7
7. TERM OF PLAN.......................................................... 8
8. TERM OF OPTION........................................................ 8
9. OPTION EXERCISE PRICE AND CONSIDERATION............................... 8
10. EXERCISE OF OPTION.................................................... 9
11. NON-TRANSFERABILITY OF OPTIONS AND STOCK PURCHASE RIGHTS.............. 12
12. GRANTING OF OPTIONS TO INDEPENDENT DIRECTORS.......................... 12
13. TERMS OF OPTIONS GRANTED TO INDEPENDENT DIRECTORS..................... 12
14. STOCK PURCHASE RIGHTS AND STOCK BONUSES............................... 13
15. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, MERGER OR ASSET
SALE.................................................................. 13
16. TIME OF GRANTING OPTIONS, STOCK PURCHASE RIGHTS AND STOCK
BONUSES............................................................... 16
17. AMENDMENT AND TERMINATION OF THE PLAN................................. 16
18. STOCKHOLDER APPROVAL.................................................. 17
19. INABILITY TO OBTAIN AUTHORITY......................................... 17
20. RESERVATION OF SHARES................................................. 17
21. INFORMATION TO HOLDERS AND PURCHASERS................................. 17
22. REPURCHASE PROVISIONS................................................. 17
23. INVESTMENT INTENT..................................................... 18
24. GOVERNING LAW......................................................... 18
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CAPSTONE TURBINE CORPORATION
AMENDED AND RESTATED 2000 EQUITY INCENTIVE PLAN
1. Purposes of the Plan. The purposes of the Capstone Turbine Corporation
Amended and Restated 2000 Equity Incentive Plan are to attract and retain the
best available personnel for positions of substantial responsibility, to provide
additional incentive to Employees, Directors and Consultants and to promote the
success of the Company's business. Options granted under the Plan may be
Incentive Stock Options or Non-Qualified Stock Options, as determined by the
Administrator at the time of grant. Stock Purchase Rights and Stock Bonuses may
also be granted under the Plan.
2. Definitions. As used herein, the following definitions shall
apply:
(a) "Acquisition" means (i) any consolidation or merger of the
Company with or into any other corporation or other entity or person in which
the stockholders of the Company prior to such consolidation or merger own less
than fifty percent (50%) of the Company's voting power immediately after such
consolidation or merger, excluding any consolidation or merger effected
exclusively to change the domicile of the Company; or (ii) a sale of all or
substantially all of the assets of the Company.
(b) "Administrator" means the Board or the Committee responsible for
conducting the general administration of the Plan, as applicable, in accordance
with Section 4 hereof.
(c) "Applicable Laws" means the requirements relating to the
administration of stock option plans under U.S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws of
any foreign country or jurisdiction where Options, Stock Purchase Rights or
Stock Bonuses are granted under the Plan.
(d) "Board" means the Board of Directors of the Company.
(e) "Cause" means (i) with respect to a Holder who is an Employee,
and whose employment contract expressly provides for termination of such Holder
in certain specified circumstances constituting "cause", those circumstances
that constitute "cause" under such Holder's employment contract; (ii) with
respect to a Holder who is an Employee, but who does not have an employment
contract or whose employment contract does not expressly provide for termination
of such Holder in certain specified circumstances constituting "cause", (A) the
commission of any act by such Holder involving fraud, embezzlement or a felony,
(B) the commission of any act by such Holder constituting financial dishonesty
against the Company or its Parent or any of its Subsidiaries, (C) repeated and
gross dereliction of duty to the Company or its Parent or any of its
Subsidiaries to which such Holder's duties extend, (D) an act involving moral
turpitude which (1) brings the Company or its Parent or any of its Subsidiaries
into public disrepute or disgrace, or (2) causes material injury to the customer
relations, operations or the business prospects of the Company or its Parent or
any of its Subsidiaries, (E) the breach by such Holder of any of such Holder's
obligations under such Holder's employee or employment
agreement with the Company or its Parent or any of its Subsidiaries, or (F) the
refusal or failure of such Holder to follow the lawful directives of the Board,
the President and Chief Executive Officer of the Company or his designee or such
Holder's supervisor; and (iii) with respect to a Holder who is a Director, (A)
the commission of any act by such Holder involving fraud, embezzlement or a
felony, (B) the commission of any act by such Holder constituting financial
dishonesty against the Company or its Parent or any of its Subsidiaries, (C)
repeated and gross dereliction of duty to the Company or its Parent or any of
its Subsidiaries to which such Holder's duties extend, (D) an act involving
moral turpitude which (1) brings the Company or its Parent or any of its
Subsidiaries into public disrepute or disgrace, or (2) causes material injury to
the customer relations, operations or the business prospects of the Company or
its Parent or any of its Subsidiaries.
(f) "Code" means the Internal Revenue Code of 1986, as amended, or
any successor statute or statutes thereto. Reference to any particular Code
section shall include any successor section.
(g) "Committee" means a committee appointed by the Board in
accordance with Section 4 hereof.
(h) "Common Stock" means the Common Stock of the Company, par value
$0.001 per share.
(i) "Company" means Capstone Turbine Corporation, a Delaware
corporation.
(j) "Consultant" means any consultant or adviser if: (i) the
consultant or adviser renders bona fide services to the Company; (ii) the
services rendered by the consultant or adviser are not in connection with the
offer or sale of securities in a capital-raising transaction and do not directly
or indirectly promote or maintain a market for the Company's securities; and
(iii) the consultant or adviser is a natural person who has contracted directly
with the Company to render such services.
(k) "Director" means a member of the Board.
(l) "Employee" means any person, including an Officer or Director,
who is an employee (as defined in accordance with Section 3401(c) of the Code)
of the Company or any Parent or Subsidiary of the Company. A Service Provider
shall not cease to be an Employee in the case of (i) any leave of absence
approved by the Company or (ii) transfers between locations of the Company or
between the Company, its Parent, any Subsidiary, or any successor. For purposes
of Incentive Stock Options, no such leave may exceed ninety (90) days, unless
reemployment upon expiration of such leave is guaranteed by statute or contract.
Neither service as a Director nor payment of a director's fee by the Company
shall be sufficient, by itself, to constitute "employment" by the Company.
(m) "Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any successor statute or statutes thereto. Reference to any
particular Exchange Act section shall include any successor section.
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(n) "Fair Market Value" means, as of any date, the value of a share
of Common Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system, including, without limitation, the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for a share of such stock (or
the closing bid, if no sales were reported) as quoted on such exchange or system
for the last market trading day prior to the time of determination, as reported
in The Wall Street Journal or such other source as the Administrator deems
reliable;
(ii) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market Value
shall be the mean between the high bid and low asked prices for a share of the
Common Stock on the last market trading day prior to the day of determination;
or
(iii) In the absence of an established market for the Common
Stock, the Fair Market Value thereof shall be determined in good faith by the
Administrator.
(o) "Holder" means a person who has been granted or awarded an
Option or Stock Purchase Right or who holds Shares acquired pursuant to the
exercise of an Option or Stock Purchase Right or pursuant to a Stock Bonus.
(p) "Incentive Stock Option" means an Option intended to qualify as
an incentive stock option within the meaning of Section 422 of the Code and
which is designated as an Incentive Stock Option by the Administrator.
(q) "Independent Director" means a Director who is not an Employee
of the Company.
(r) "Non-Qualified Stock Option" means an Option (or portion
thereof) that is not designated as an Incentive Stock Option by the
Administrator, or which is designated as an Incentive Stock Option by the
Administrator but fails to qualify as an incentive stock option within the
meaning of Section 422 of the Code.
(s) "Officer" means a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
(t) "Option" means a stock option granted pursuant to the Plan.
(u) "Option Agreement" means a written agreement between the Company
and a Holder evidencing the terms and conditions of an individual Option grant.
The Option Agreement is subject to the terms and conditions of the Plan.
(v) "Option Exchange Program" means a program whereby outstanding
Options are surrendered or cancelled in exchange for Options of the same type
(which may have a lower exercise price or purchase price), of a different type
and/or cash.
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(w) "Parent" means any corporation, whether now or hereafter
existing (other than the Company), in an unbroken chain of corporations ending
with the Company if each of the corporations other than the last corporation in
the unbroken chain owns stock possessing more than fifty percent of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
(x) "Plan" means the Capstone Turbine Corporation Amended and
Restated 2000 Equity Incentive Plan.
(y) "Public Trading Date" means the first date upon which Common
Stock of the Company is listed (or approved for listing) upon notice of issuance
on any securities exchange or designated (or approved for designation) upon
notice of issuance as a national market security on an interdealer quotation
system.
(z) "Restricted Stock" means Shares acquired pursuant to the
exercise of an unvested Option in accordance with Section 10(h) below or
pursuant to a Stock Purchase Right granted under Section 14 below.
(aa) "Rule 16b-3" means that certain Rule 16b-3 under the Exchange
Act, as such Rule may be amended from time to time.
(bb) "Section 16(b)" means Section 16(b) of the Exchange Act, as
such Section may be amended from time to time.
(cc) "Securities Act" means the Securities Act of 1933, as amended,
or any successor statute or statutes thereto. Reference to any particular
Securities Act section shall include any successor section.
(dd) "Service Provider" means an Employee, Director or Consultant.
(ee) "Share" means a share of Common Stock, as adjusted in
accordance with Section 15 below.
(ff) "Stock Bonus" means a grant of Common Stock granted pursuant to
Section 14(e) of the Plan.
(gg) "Stock Purchase Right" means a right to purchase Common Stock
pursuant to Section 14 below or the right to receive a bonus of Common Stock for
past services.
(hh) "Subsidiary" means any corporation, whether now or hereafter
existing (other than the Company), in an unbroken chain of corporations
beginning with the Company if each of the corporations other than the last
corporation in the unbroken chain owns stock possessing more than fifty percent
of the total combined voting power of all classes of stock in one of the other
corporations in such chain.
3. Stock Subject to the Plan. Subject to the provisions of Section 15 of
the Plan, the shares of stock subject to Options, Stock Purchase Rights or Stock
Bonuses shall be Common Stock, initially shares of the Company's Common Stock,
par value $0.001 per share. Subject to
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the provisions of Section 15 of the Plan, the maximum aggregate number of Shares
which may be issued upon exercise of such Options or Stock Purchase Rights or
pursuant to such Stock Bonuses is six million two hundred thousand (6,200,000)
Shares, plus the number of Shares previously authorized and remaining available
under the Company's 1993 Stock Incentive Plan, as amended, as of the Public
Trading Date, plus any Shares covered by options granted under the Company's
1993 Stock Incentive Plan that are forfeited or expire unexercised or otherwise
become available after the Public Trading Date; provided, however, that the
maximum aggregate number of Shares which may be issued upon exercise of
Incentive Stock Options is three million seven hundred thousand (3,700,000)
Shares. Shares issued upon exercise of Options or Stock Purchase Rights or
pursuant to Stock Bonuses may be authorized but unissued, or reacquired Common
Stock. If an Option or Stock Purchase Right expires or becomes unexercisable
without having been exercised in full, or is surrendered pursuant to an Option
Exchange Program, the unpurchased Shares which were subject thereto shall become
available for future grant or sale under the Plan (unless the Plan has
terminated). Shares which are delivered by the Holder or withheld by the Company
upon the exercise of an Option or Stock Purchase Right or in respect of a Stock
Bonus under the Plan, in payment of the exercise price thereof or tax
withholding thereon, may again be optioned, granted or awarded hereunder,
subject to the limitations of this Section 3. If Shares of Restricted Stock are
repurchased by the Company at their original purchase price, such Shares shall
become available for future grant under the Plan. Notwithstanding the provisions
of this Section 3, no Shares may again be optioned, granted or awarded if such
action would cause an Incentive Stock Option to fail to qualify as an Incentive
Stock Option under Code Section 422.
4. Administration of the Plan.
(a) Administrator. Unless and until the Board delegates
administration to a Committee as set forth below, the Plan shall be administered
by the Board. The Board may delegate administration of the Plan to a Committee
or Committees of one or more members of the Board, and the term "Committee"
shall apply to any person or persons to whom such authority has been delegated.
If administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers theretofore possessed
by the Board, including the power to delegate to a subcommittee any of the
administrative powers the Committee is authorized to exercise (and references in
this Plan to the Board shall thereafter be to the Committee or subcommittee),
subject, however, to such resolutions, not inconsistent with the provisions of
the Plan, as may be adopted from time to time by the Board. Notwithstanding the
foregoing, however, from and after the Public Trading Date, a Committee of the
Board shall administer the Plan and the Committee shall consist solely of two or
more Independent Directors each of whom is both an "outside director," within
the meaning of Section 162(m) of the Code, and a "non-employee director" within
the meaning of Rule 16b-3. Within the scope of such authority, the Board or the
Committee may (i) delegate to a committee of one or more members of the Board
who are not Independent Directors the authority to grant awards under the Plan
to eligible persons who are either (1) not then "covered employees," within the
meaning of Section 162(m) of the Code and are not expected to be "covered
employees" at the time of recognition of income resulting from such award or (2)
not persons with respect to whom the Company wishes to comply with Section
162(m) of the Code and/or (ii) delegate to a committee of one or more members of
the Board who are not "non-employee directors," within the meaning of Rule
16b-3, the authority to grant awards under the Plan to eligible persons who are
not then subject to
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Section 16 of the Exchange Act. The Board may abolish the Committee at any time
and revest in the Board the administration of the Plan. Appointment of Committee
members shall be effective upon acceptance of appointment. Committee members may
resign at any time by delivering written notice to the Board. Vacancies in the
Committee may only be filled by the Board.
(b) Powers of the Administrator. Subject to the provisions of the
Plan and the specific duties delegated by the Board to such Committee, and
subject to the approval of any relevant authorities, the Administrator shall
have the authority in its sole discretion:
(i) to determine the Fair Market Value;
(ii) to select the Service Providers to whom Options, Stock
Purchase Rights, and Stock Bonuses may from time to time be granted hereunder;
(iii) to determine the number of Shares to be covered by each
such award granted hereunder;
(iv) to approve forms of agreement for use under the Plan;
(v) to determine the terms and conditions of any award granted
hereunder (such terms and conditions include, but are not limited to, the
exercise price, the time or times when Options or Stock Purchase Rights may vest
or be exercised (which may be based on performance criteria), any vesting
acceleration or waiver of forfeiture restrictions, and any restriction or
limitation regarding any award granted hereunder or the Common Stock relating
thereto, based in each case on such factors as the Administrator, in its sole
discretion, shall determine);
(vi) to reduce the exercise price of any Option or Stock
Purchase Right to the then current Fair Market Value if the Fair Market Value of
the Common Stock covered by such Option or Stock Purchase Right shall have
declined since the date the Option or Stock Purchase Right was granted;
(vii) to institute an Option Exchange Program;
(viii) to determine whether to offer to buyout a previously
granted Option as provided in subsection 10(i) and to determine the terms and
conditions of such offer and buyout (including whether payment is to be made in
cash or Shares);
(ix) to prescribe, amend and rescind rules and regulations
relating to the Plan, including rules and regulations relating to sub-plans
established for the purpose of qualifying for preferred tax treatment under
foreign tax laws;
(x) to allow Holders to satisfy withholding tax obligations by
electing to have the Company withhold from the Shares to be issued upon exercise
of an Option or Stock Purchase Right or pursuant to a Stock Bonus that number of
Shares having a Fair Market Value equal to the minimum amount required to be
withheld based on the statutory withholding rates for federal and state tax
purposes that apply to supplemental taxable income. The Fair Market
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Value of the Shares to be withheld shall be determined on the date that the
amount of tax to be withheld is to be determined. All elections by Holders to
have Shares withheld for this purpose shall be made in such form and under such
conditions as the Administrator may deem necessary or advisable;
(xi) to amend the Plan or any Option or Stock Purchase Right
granted under the Plan as provided in Section 17; and
(xii) to construe and interpret the terms of the Plan and
awards granted pursuant to the Plan and to exercise such powers and perform such
acts as the Administrator deems necessary or desirable to promote the best
interests of the Company which are not in conflict with the provisions of the
Plan.
(c) Effect of Administrator's Decision. All decisions,
determinations and interpretations of the Administrator shall be final and
binding on all Holders.
5. Eligibility. Non-Qualified Stock Options, Stock Purchase Rights and
Stock Bonuses may be granted to Service Providers. Incentive Stock Options may
be granted only to Employees. If otherwise eligible, an Employee or Consultant
who has been granted an Option, Stock Purchase Right or Stock Bonus may be
granted additional Options, Stock Purchase Rights or Stock Bonuses. In addition
to the foregoing, each Independent Director shall be eligible to be granted
Options at the times and in the manner set forth in Section 12.
6. Limitations.
(a) Each Option shall be designated by the Administrator in the
Option Agreement as either an Incentive Stock Option or a Non-Qualified Stock
Option. However, notwithstanding such designations, to the extent that the
aggregate Fair Market Value of Shares subject to a Holder's Incentive Stock
Options and other incentive stock options granted by the Company, any Parent or
Subsidiary, which become exercisable for the first time during any calendar year
(under all plans of the Company or any Parent or Subsidiary) exceeds $100,000,
such excess Options or other options shall be treated as Non-Qualified Stock
Options.
For purposes of this Section 6(a), Incentive Stock Options shall be
taken into account in the order in which they were granted, and the Fair Market
Value of the Shares shall be determined as of the time of grant.
(b) None of the Plan, any Option, Stock Purchase Right or Stock
Bonus shall confer upon a Holder any right with respect to continuing the
Holder's employment or consulting relationship with the Company, nor shall they
interfere in any way with the Holder's right or the Company's right to terminate
such employment or consulting relationship at any time, with or without cause.
(c) No Service Provider shall be granted, in any calendar year,
Options, Stock Purchase Rights or Stock Bonuses to acquire more than three
million (3,000,000) Shares. The foregoing limitation shall be adjusted
proportionately in connection with any change in the Company's capitalization as
described in Section 15. For purposes of this Section 6(c), if an Option is
canceled in the same calendar year it was granted (other than in connection with
a
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transaction described in Section 15), the canceled Option will be counted
against the limit set forth in this Section 6(c). For this purpose, if the
exercise price of an Option is reduced, the transaction shall be treated as a
cancellation of the Option and the grant of a new Option.
7. Term of Plan. The Plan shall become effective upon its initial adoption
by the Board and shall continue in effect until it is terminated under Section
17 of the Plan. No Options, Stock Purchase Rights or Stock Bonuses may be issued
under the Plan after the tenth (10th) anniversary of the earlier of (i) the date
upon which the Plan is adopted by the Board or (ii) the date the Plan is
approved by the stockholders.
8. Term of Option. The term of each Option shall be stated in the Option
Agreement; provided, however, that the term shall be no more than ten (10) years
from the date of grant thereof. In the case of an Incentive Stock Option granted
to a Holder who, at the time the Option is granted, owns (or is treated as
owning under Code Section 424) stock representing more than ten percent (10%) of
the voting power of all classes of stock of the Company or any Parent or
Subsidiary, the term of the Option shall be five (5) years from the date of
grant or such shorter term as may be provided in the Option Agreement.
9. Option Exercise Price and Consideration.
(a) Except as provided in Section 13, the per share exercise price
for the Shares to be issued upon exercise of an Option shall be such price as is
determined by the Administrator, but shall be subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time of grant of
such Option, owns (or is treated as owning under Code Section 424) stock
representing more than ten percent (10%) of the voting power of all classes of
stock of the Company or any Parent or Subsidiary, the per Share exercise price
shall be no less than one hundred ten percent (110%) of the Fair Market Value
per Share on the date of grant.
(B) granted to any other Employee, the per Share
exercise price shall be no less than one hundred percent (100%) of the Fair
Market Value per Share on the date of grant.
(ii) In the case of a Non-Qualified Stock Option
(A) granted to a Service Provider who, at the time of
grant of such Option, owns stock representing more than ten percent (10%) of the
voting power of all classes of stock of the Company or any Parent or Subsidiary,
the exercise price shall be no less than one hundred ten percent (110%) of the
Fair Market Value per Share on the date of the grant.
(B) granted to any other Service Provider, the per Share
exercise price shall be no less than eighty-five percent (85%) of the Fair
Market Value per Share on the date of grant.
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(iii) Notwithstanding the foregoing, Options may be granted
with a per Share exercise price other than as required in this subsection (a)
above pursuant to a merger or other corporate transaction.
(b) The consideration to be paid for the Shares to be issued upon
exercise of an Option, including the method of payment, shall be determined by
the Administrator (and, in the case of an Incentive Stock Option, shall be
determined at the time of grant). Such consideration may consist of (1) cash,
(2) check, (3) with the consent of the Administrator, a full recourse promissory
note bearing interest (at no less than such rate as shall then preclude the
imputation of interest under the Code) and payable upon such terms as may be
prescribed by the Administrator, (4) with the consent of the Administrator,
other Shares which (x) in the case of Shares acquired from the Company, have
been owned by the Holder for more than six (6) months on the date of surrender,
and (y) have a Fair Market Value on the date of surrender equal to the aggregate
exercise price of the Shares as to which such Option shall be exercised, (5)
with the consent of the Administrator, surrendered Shares then issuable upon
exercise of the Option having a Fair Market Value on the date of exercise equal
to the aggregate exercise price of the Option or exercised portion thereof, (6)
with the consent of the Administrator, property of any kind which constitutes
good and valuable consideration, (7) with the consent of the Administrator,
delivery of a notice that the Holder has placed a market sell order with a
broker with respect to Shares then issuable upon exercise of the Options and
that the broker has been directed to pay a sufficient portion of the net
proceeds of the sale to the Company in satisfaction of the Option exercise
price, provided, that payment of such proceeds is then made to the Company upon
settlement of such sale, or (8) with the consent of the Administrator, any
combination of the foregoing methods of payment.
10. Exercise of Option.
(a) Vesting; Fractional Exercises. Except as provided in Section 13,
Options granted hereunder shall be vested and exercisable according to the terms
hereof at such times and under such conditions as determined by the
Administrator and set forth in the Option Agreement; provided, however, that,
except with regard to Options granted to Officers, Directors or Consultants, in
no event shall an Option granted hereunder become vested and exercisable at a
rate of less than twenty percent (20%) per year over five (5) years from the
date the Option is granted, subject to reasonable conditions, such as continuing
to be a Service Provider. An Option may not be exercised for a fraction of a
Share.
(b) Deliveries upon Exercise. All or a portion of an exercisable
Option shall be deemed exercised upon delivery of all of the following to the
Secretary of the Company or his or her office:
(i) A written or electronic notice complying with the
applicable rules established by the Administrator stating that the Option, or a
portion thereof, is exercised. The notice shall be signed by the Holder or other
person then entitled to exercise the Option or such portion of the Option;
(ii) Such representations and documents as the Administrator,
in its sole discretion, deems necessary or advisable to effect compliance with
Applicable Laws. The
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Administrator may, in its sole discretion, also take whatever additional actions
it deems appropriate to effect such compliance, including, without limitation,
placing legends on share certificates and issuing stop transfer notices to
agents and registrars;
(iii) Upon the exercise of all or a portion of an unvested
Option pursuant to Section 10(h), a Restricted Stock purchase agreement in a
form determined by the Administrator and signed by the Holder or other person
then entitled to exercise the Option or such portion of the Option; and
(iv) In the event that the Option shall be exercised pursuant
to Section 10(f) by any person or persons other than the Holder, appropriate
proof of the right of such person or persons to exercise the Option.
(c) Conditions to Delivery of Share Certificates. The Company shall
not be required to issue or deliver any certificate or certificates for Shares
purchased upon the exercise of any Option or portion thereof prior to
fulfillment of all of the following conditions:
(i) The admission of such Shares to listing on all stock
exchanges on which such class of stock is then listed;
(ii) The completion of any registration or other qualification
of such Shares under any state or federal law, or under the rulings or
regulations of the Securities and Exchange Commission or any other governmental
regulatory body which the Administrator shall, in its sole discretion, deem
necessary or advisable;
(iii) The obtaining of any approval or other clearance from
any state or federal governmental agency which the Administrator shall, in its
sole discretion, determine to be necessary or advisable;
(iv) The lapse of such reasonable period of time following the
exercise of the Option as the Administrator may establish from time to time for
reasons of administrative convenience; and
(v) The receipt by the Company of full payment for such
Shares, including payment of any applicable withholding tax, which in the sole
discretion of the Administrator may be in the form of consideration used by the
Holder to pay for such Shares under Section 9(b).
(d) Termination of Relationship as a Service Provider. If a Holder
ceases to be a Service Provider other than by reason of the Holder's disability
or death, such Holder may exercise his or her Option within such period of time
as is specified in the Option Agreement to the extent that the Option is vested
on the date of termination (but in no event later than the expiration of the
term of the Option as set forth in the Option Agreement). In the absence of a
specified time in the Option Agreement, the Option shall remain exercisable for
three (3) months following the Holder's termination. If, on the date of
termination, the Holder is not vested as to his or her entire Option, the Shares
covered by the unvested portion of the Option immediately cease to be issuable
under the Option and shall again become available for issuance under the Plan.
If, after termination, the Holder does not exercise his or her Option within the
time period
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specified herein, the Option shall terminate, and the Shares covered by such
Option shall again become available for issuance under the Plan. If a Holder is
terminated for Cause, the Option shall immediately terminate, and the Shares
covered by such Option shall again become available for issuance under the Plan.
(e) Disability of Holder. If a Holder ceases to be a Service
Provider as a result of the Holder's disability, the Holder may exercise his or
her Option within such period of time as is specified in the Option Agreement to
the extent the Option is vested on the date of termination (but in no event
later than the expiration of the term of such Option as set forth in the Option
Agreement). In the absence of a specified time in the Option Agreement, the
Option shall remain exercisable for twelve (12) months following the Holder's
termination. If such disability is not a "disability" as such term is defined in
Section 22(e)(3) of the Code, in the case of an Incentive Stock Option such
Incentive Stock Option shall automatically cease to be treated as an Incentive
Stock Option and shall be treated for tax purposes as a Non-Qualified Stock
Option from and after the day which is three (3) months and one (1) day
following such termination. If, on the date of termination, the Holder is not
vested as to his or her entire Option, the Shares covered by the unvested
portion of the Option shall immediately cease to be issuable under the Option
and shall again become available for issuance under the Plan. If, after
termination, the Holder does not exercise his or her Option within the time
specified herein, the Option shall terminate, and the Shares covered by such
Option shall again become available for issuance under the Plan.
(f) Death of Holder. If a Holder dies while a Service Provider, the
Option may be exercised within such period of time as is specified in the Option
Agreement (but in no event later than the expiration of the term of such Option
as set forth in the Notice of Grant), by the Holder's estate or by a person who
acquires the right to exercise the Option by bequest or inheritance, but only to
the extent that the Option is vested on the date of death. In the absence of a
specified time in the Option Agreement, the Option shall remain exercisable for
twelve (12) months following the Holder's termination. If, at the time of death,
the Holder is not vested as to his or her entire Option, the Shares covered by
the unvested portion of the Option shall immediately cease to be issuable under
the Option and shall again become available for issuance under the Plan. The
Option may be exercised by the executor or administrator of the Holder's estate
or, if none, by the person(s) entitled to exercise the Option under the Holder's
will or the laws of descent or distribution. If the Option is not so exercised
within the time specified herein, the Option shall terminate, and the Shares
covered by such Option shall again become available for issuance under the Plan.
The Company shall notify the Holder's estate or the person who acquires the
right to exercise the Option by bequest or inheritance of the existence of the
Holder's outstanding Option and the date of the expiration of the term of such
Option as soon after the death of the Holder as is practicable.
(g) Regulatory Extension. A Holder's Option Agreement may provide
that if the exercise of the Option following the termination of the Holder's
status as a Service Provider (other than upon the Holder's death or Disability)
would be prohibited at any time solely because the issuance of shares would
violate the registration requirements under the Securities Act, then the Option
shall terminate on the earlier of (i) the expiration of the term of the Option
set forth in Section 8 or (ii) the expiration of a period of three (3) months
after the termination of the
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Holder's status as a Service Provider during which the exercise of the Option
would not be in violation of such registration requirements.
(h) Early Exercisability. The Administrator may provide in the terms
of a Holder's Option Agreement that the Holder may, at any time before the
Holder's status as a Service Provider terminates, exercise the Option in whole
or in part prior to the full vesting of the Option; provided, however, that
subject to Section 22, Shares acquired upon exercise of an Option which has not
fully vested may be subject to any forfeiture, transfer or other restrictions as
the Administrator may determine in its sole discretion.
(i) Buyout Provisions. The Administrator may at any time offer to
buyout for a payment in cash or Shares, an Option previously granted, based on
such terms and conditions as the Administrator shall establish and communicate
to the Holder at the time that such offer is made.
11. Non-Transferability of Options and Stock Purchase Rights. Options and
Stock Purchase Rights may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws of
descent or distribution and may be exercised, during the lifetime of the Holder,
only by the Holder.
12. Granting of Options to Independent Directors.
(a) During the term of the Plan, a person who is an Independent
Director as of the Public Trading Date, or a person who is initially elected to
the Board following the Public Trading Date and who is an Independent Director
at the time of such initial election, may be granted an Option to purchase
twenty-one thousand six hundred (21,600) shares of Common Stock (subject to
adjustment as provided in Section 15) on the Public Trading Date or such initial
election, as applicable (each, an "Initial Option"). Members of the Board who
are employees of the Company who subsequently retire from the Company and remain
on the Board will not receive an Initial Option. The Initial Option grants
authorized by this Section 12(a) shall be made by the Board.
13. Terms of Initial Options. The per Share price of each Initial Option
granted to an Independent Director shall equal 100% of the Fair Market Value of
a share of Common Stock on the date the Initial Option is granted; provided,
however, that the per Share price of each Initial Option granted to an
Independent Director on the date of the initial public offering of Common Stock
shall equal the initial public offering price (net of underwriting discounts and
commissions) per Share. Initial Options granted to Independent Directors shall
become exercisable in cumulative annual installments of one third (1/3) of the
Shares subject to such option on each of the yearly anniversaries of the date of
Initial Option grant, commencing with the first such anniversary, such that each
Initial Option shall be one hundred percent (100%) vested on the third
anniversary of its date of grant, subject to the Independent Director remaining
a Director on each such date. Subject to Section 10, the term of each Initial
Option granted to an Independent Director shall be ten (10) years from the date
the Initial Option is granted. No portion of an Initial Option which is
unexercisable at the time of an Independent Director's termination of membership
on the Board shall thereafter become exercisable.
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14. Stock Purchase Rights and Stock Bonuses.
(a) Rights to Purchase. Stock Purchase Rights may be issued either
alone, in addition to, or in tandem with Options granted under the Plan and/or
cash awards made outside of the Plan. After the Administrator determines that it
will offer Stock Purchase Rights under the Plan, it shall advise the offeree in
writing of the terms, conditions and restrictions related to the offer,
including the number of Shares that such person shall be entitled to purchase,
the price to be paid, and the time within which such person must accept such
offer. The offer shall be accepted by execution of a Restricted Stock purchase
agreement in the form determined by the Administrator.
(b) Repurchase Right. Unless the Administrator determines otherwise,
the Restricted Stock purchase agreement shall grant the Company the right to
repurchase Shares acquired upon exercise of a Stock Purchase Right upon the
termination of the purchaser's status as a Service Provider for any reason.
Subject to Section 22, the purchase price for Shares repurchased by the Company
pursuant to such repurchase right and the rate at which such repurchase right
shall lapse shall be determined by the Administrator in its sole discretion, and
shall be set forth in the Restricted Stock purchase agreement.
(c) Other Provisions. The Restricted Stock purchase agreement shall
contain such other terms, provisions and conditions not inconsistent with the
Plan as may be determined by the Administrator in its sole discretion.
(d) Rights as a Shareholder. Once the Stock Purchase Right is
exercised, the purchaser shall have rights equivalent to those of a shareholder
and shall be a shareholder when his or her purchase is entered upon the records
of the duly authorized transfer agent of the Company. No adjustment shall be
made for a dividend or other right for which the record date is prior to the
date the Stock Purchase Right is exercised, except as provided in Section 15 of
the Plan.
(e) Stock Bonuses. Notwithstanding any other provision of the Plan,
the Administrator may grant Stock Bonuses, as compensation or as bonuses, to
such Service Providers as the Administrator may select in its sole discretion
from time to time. Such Stock Bonuses may be issued either alone, in addition
to, or in tandem with Options or Stock Purchase Rights granted under the Plan
and/or cash awards made outside of the Plan. After the Administrator determines
that it will offer Stock Bonuses under the Plan, it shall advise the offeree in
writing of the terms and conditions related to the offer, including the number
of Shares that such person shall be entitled to receive, the price to be paid,
if any, the time within which such person must accept such offer, and the manner
of acceptance of such offer.
15. Adjustments upon Changes in Capitalization, Merger or Asset Sale.
(a) In the event that the Administrator determines that any dividend
or other distribution (whether in the form of cash, Common Stock, other
securities, or other property), recapitalization, reclassification, stock split,
reverse stock split, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase, liquidation, dissolution, or sale, transfer, exchange
or other disposition of all or substantially all of the assets of the Company,
or
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exchange of Common Stock or other securities of the Company, issuance of
warrants or other rights to purchase Common Stock or other securities of the
Company, or other similar corporate transaction or event, in the Administrator's
sole discretion, affects the Common Stock such that an adjustment is determined
by the Administrator to be appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available
under the Plan or with respect to any Option, Stock Purchase Right or Restricted
Stock, then the Administrator shall, in such manner as it may deem equitable,
adjust any or all of:
(i) the number and kind of shares of Common Stock (or other
securities or property) with respect to which Options or Stock Purchase Rights
may be granted or awarded (including, but not limited to, adjustments of the
limitations in Section 3 on the maximum number and kind of shares which may be
issued and adjustments of the maximum number of Shares that may be purchased by
any Holder in any calendar year pursuant to Section 6(c));
(ii) the number and kind of shares of Common Stock (or other
securities or property) subject to outstanding Options, Stock Purchase Rights or
Restricted Stock; and
(iii) the grant or exercise price with respect to any Option
or Stock Purchase Right.
(b) In the event of any transaction or event described in Section
15(a), the Administrator, in its sole discretion, and on such terms and
conditions as it deems appropriate, either by the terms of the Option, Stock
Purchase Right or Restricted Stock or by action taken prior to the occurrence of
such transaction or event and either automatically or upon the Holder's request,
is hereby authorized to take any one or more of the following actions whenever
the Administrator determines that such action is appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended by the
Company to be made available under the Plan or with respect to any Option, Stock
Purchase Right or Restricted Stock granted or issued under the Plan or to
facilitate such transaction or event:
(i) To provide for either the purchase of any such Option,
Stock Purchase Right or Restricted Stock for an amount of cash equal to the
amount that could have been obtained upon the exercise of such Option or Stock
Purchase Right or realization of the Holder's rights had such Option, Stock
Purchase Right or Restricted Stock been currently exercisable or payable or
fully vested or the replacement of such Option, Stock Purchase Right or
Restricted Stock with other rights or property selected by the Administrator in
its sole discretion;
(ii) To provide that such Option or Stock Purchase Right shall
be exercisable as to all shares covered thereby, notwithstanding anything to the
contrary in the Plan or the provisions of such Option or Stock Purchase Right;
(iii) To provide that such Option, Stock Purchase Right or
Restricted Stock be assumed by the successor or survivor corporation, or a
parent or subsidiary thereof, or shall be substituted for by similar options,
rights or awards covering the stock of the successor or
14
survivor corporation, or a parent or subsidiary thereof, with appropriate
adjustments as to the number and kind of shares and prices;
(iv) To make adjustments in the number and type of shares of
Common Stock (or other securities or property) subject to outstanding Options
and Stock Purchase Rights, and/or in the terms and conditions of (including the
grant or exercise price), and the criteria included in, outstanding Options,
Stock Purchase Rights or Restricted Stock or Options, Stock Purchase Rights or
Restricted Stock which may be granted in the future; and
(v) To provide that immediately upon the consummation of such
event, such Option or Stock Purchase Right shall not be exercisable and shall
terminate; provided, that for a specified period of time prior to such event,
such Option or Stock Purchase Right shall be exercisable as to all Shares
covered thereby, and the restrictions imposed under an Option Agreement or
Restricted Stock purchase agreement upon some or all Shares may be terminated
and, in the case of Restricted Stock, some or all shares of such Restricted
Stock may cease to be subject to repurchase, notwithstanding anything to the
contrary in the Plan or the provisions of such Option, Stock Purchase Right or
Restricted Stock purchase agreement.
(c) Subject to Section 3, the Administrator may, in its sole
discretion, include such further provisions and limitations in any Option, Stock
Purchase Right, Restricted Stock agreement or certificate, as it may deem
equitable and in the best interests of the Company.
(d) If the Company undergoes an Acquisition, then any surviving
corporation or entity or acquiring corporation or entity, or affiliate of such
corporation or entity, may assume any Options, Stock Purchase Rights or
Restricted Stock outstanding under the Plan or may substitute similar stock
awards (including an award to acquire the same consideration paid to the
stockholders in the transaction described in this subsection 15(d)) for those
outstanding under the Plan. In the event any surviving corporation or entity or
acquiring corporation or entity in an Acquisition, or affiliate of such
corporation or entity, does not assume such Options, Stock Purchase Rights or
Restricted Stock or does not substitute similar stock awards for those
outstanding under the Plan, then with respect to (i) Options, Stock Purchase
Rights or Restricted Stock held by participants in the Plan whose status as a
Service Provider has not terminated prior to such event, the vesting of such
Options, Stock Purchase Rights or Restricted Stock (and, if applicable, the time
during which such awards may be exercised) shall be accelerated and made fully
exercisable and all restrictions thereon shall lapse at least ten (10) days
prior to the closing of the Acquisition (and the Options or Stock Purchase
Rights terminated if not exercised prior to the closing of such Acquisition),
and (ii) any other Options or Stock Purchase Rights outstanding under the Plan,
such Options or Stock Purchase rights shall be terminated if not exercised prior
to the closing of the Acquisition.
(e) In the event the Company undergoes an Acquisition and any
surviving corporation or entity or acquiring corporation or entity, or affiliate
of such corporation or entity, does assume any Options, Stock Purchase Rights or
Restricted Stock outstanding under the Plan (or substitutes similar stock
awards, including an award to acquire the same consideration paid to the
stockholders in the transaction described in this subsection 15(e), for those
outstanding under the Plan), then, with respect to each stock award held by
participants in the Plan then performing services as Employees or Directors, the
vesting of each such stock award (and, if applicable, the
15
time during which such stock award may be exercised) shall be accelerated and
such stock award shall immediately become fully vested and exercisable, if any
of the following events occurs within nine (9) months after the effective date
of the Acquisition: (1) the Employee status or Director status, as applicable,
of the participant holding such stock award is terminated by the Company without
Cause; (2) the Employee holding such stock award terminates his or her Employee
status due to the fact that the principal place of the performance of the
responsibilities and duties of the Employee is changed to a location more than
fifty (50) miles from such Employee's existing work location without the
Employee's express consent (this clause (2) is not applicable to Directors); or
(3) the Employee holding such stock award terminates his or her Employee status
due to the fact that there is a material reduction in such Employee's
responsibilities and duties without the Employee's express consent (this clause
(3) is not applicable to Directors).
(f) The existence of the Plan, any Option Agreement or Restricted
Stock purchase agreement and the Options or Stock Purchase Rights granted
hereunder shall not affect or restrict in any way the right or power of the
Company or the stockholders of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company's capital
structure or its business, any merger or consolidation of the Company, any issue
of stock or of options, warrants or rights to purchase stock or of bonds,
debentures, preferred or prior preference stocks whose rights are superior to or
affect the Common Stock or the rights thereof or which are convertible into or
exchangeable for Common Stock, or the dissolution or liquidation of the Company,
or any sale or transfer of all or any part of its assets or business, or any
other corporate act or proceeding, whether of a similar character or otherwise.
16. Time of Granting Options, Stock Purchase Rights and Stock Bonuses. The
date of grant of an Option, Stock Purchase Right or Stock Bonus shall, for all
purposes, be the date on which the Administrator makes the determination
granting such Option, Stock Purchase Right or Stock Bonus, or such other date as
is determined by the Administrator. Notice of the determination shall be given
to each Employee or Consultant to whom an Option, Stock Purchase Right or Stock
Bonus is so granted within a reasonable time after the date of such grant.
17. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time wholly or
partially amend, alter, suspend or terminate the Plan. However, without approval
of the Company's stockholders given within twelve (12) months before or after
the action by the Board, no action of the Board may, except as provided in
Section 15, increase the limits imposed in Section 3 on the maximum number of
Shares which may be issued under the Plan or extend the term of the Plan under
Section 7.
(b) Stockholder Approval. The Board shall obtain stockholder
approval of any Plan amendment to the extent necessary and desirable to comply
with Applicable Laws.
(c) Effect of Amendment or Termination. No amendment, alteration,
suspension or termination of the Plan shall impair the rights of any Holder,
unless mutually agreed otherwise between the Holder and the Administrator, which
agreement must be in writing
16
and signed by the Holder and the Company. Termination of the Plan shall not
affect the Administrator's ability to exercise the powers granted to it
hereunder with respect to Options, Stock Purchase Rights, Stock Bonuses or
Restricted Stock granted or awarded under the Plan prior to the date of such
termination.
18. Stockholder Approval. The Capstone Turbine Corporation 2000 Equity
Incentive Plan, as originally adopted, was submitted for the approval of the
Company's stockholders and such approval was received within twelve (12) months
after the date of the Board's initial adoption thereof. In addition, an
amendment to increase the number of Shares authorized for issuance hereunder
from 3,300,000 to 3,700,000 was approved by the Company's stockholders, and such
amendment is incorporated herein.
19. Inability to Obtain Authority. The inability of the Company to obtain
authority from any regulatory body having jurisdiction, which authority is
deemed by the Company's counsel to be necessary to the lawful issuance and sale
of any Shares hereunder, shall relieve the Company of any liability in respect
of the failure to issue or sell such Shares as to which such requisite authority
shall not have been obtained.
20. Reservation of Shares. The Company, during the term of this Plan,
shall at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
21. Information to Holders and Purchasers. Prior to the Public Trading
Date and to the extent required by Section 260.140.46 of Title 10 of the
California Code of Regulations, the Company shall provide to each Holder and to
each individual who acquires Shares pursuant to the Plan, not less frequently
than annually during the period such Holder or purchaser has one or more Options
or Stock Purchase Rights outstanding, and, in the case of an individual who
acquires Shares pursuant to the Plan, during the period such individual owns
such Shares, copies of annual financial statements. Notwithstanding the
preceding sentence, the Company shall not be required to provide such statements
to key employees whose duties in connection with the Company assure their access
to equivalent information.
22. Repurchase Provisions. The Administrator in its sole discretion may
provide that the Company may repurchase Shares acquired upon exercise of an
Option or Stock Purchase Right upon the occurrence of certain specified events,
including, without limitation, a Holder's termination as a Service Provider,
divorce, bankruptcy or insolvency; provided, however, that any such repurchase
right shall be set forth in the applicable Option Agreement or Restricted Stock
purchase agreement or in another agreement referred to in such agreement and,
provided, further, that to the extent required by Section 260.140.41 and Section
260.140.42 of Title 10 of the California Code of Regulations, any such
repurchase right set forth in an Option or Stock Purchase Right granted prior to
the Public Trading Date to a person who is not an Officer, Director or
Consultant shall be upon the following terms: (i) if the repurchase option gives
the Company the right to repurchase the shares upon termination as a Service
Provider at not less than the Fair Market Value of the shares to be purchased on
the date of termination of status as a Service Provider, then (A) the right to
repurchase shall be exercised for cash or cancellation of purchase money
indebtedness for the shares within ninety (90) days of termination of status as
a Service Provider (or in the case of shares issued upon exercise of Options or
Stock Purchase
17
Rights after such date of termination, within ninety (90) days after the date of
the exercise) or such longer period as may be agreed to by the Administrator and
the Plan participant and (B) the right terminates when the shares become
publicly traded; and (ii) if the repurchase option gives the Company the right
to repurchase the Shares upon termination as a Service Provider at the original
purchase price for such Shares, then (A) the right to repurchase at the original
purchase price shall lapse at the rate of at least twenty percent (20%) of the
shares per year over five (5) years from the date the Option or Stock Purchase
Right is granted (without respect to the date the Option or Stock Purchase Right
was exercised or became exercisable) and (B) the right to repurchase shall be
exercised for cash or cancellation of purchase money indebtedness for the shares
within ninety (90) days of termination of status as a Service Provider (or, in
the case of shares issued upon exercise of Options or Stock Purchase Rights,
after such date of termination, within ninety (90) days after the date of the
exercise) or such longer period as may be agreed to by the Company and the Plan
participant.
23. Investment Intent. The Company may require a Plan participant, as a
condition of exercising or acquiring stock under any Option, Stock Purchase
Right or Stock Bonus, (i) to give written assurances satisfactory to the Company
as to the participant's knowledge and experience in financial and business
matters and/or to employ a purchaser representative reasonably satisfactory to
the Company who is knowledgeable and experienced in financial and business
matters and that he or she is capable of evaluating, alone or together with the
purchaser representative, the merits and risks of exercising the Option or Stock
Purchase Right or accepting the Stock Bonus; and (ii) to give written assurances
satisfactory to the Company stating that the participant is acquiring the stock
subject to the Option, Stock Purchase Right or Stock Bonus for the participant's
own account and not with any present intention of selling or otherwise
distributing the stock. The foregoing requirements, and any assurances given
pursuant to such requirements, shall be inoperative if (A) the issuance of the
shares upon the exercise or acquisition of stock under the applicable Option,
Stock Purchase Right or Stock Bonus has been registered under a then currently
effective registration statement under the Securities Act or (B) as to any
particular requirement, a determination is made by counsel for the Company that
such requirement need not be met in the circumstances under the then applicable
securities laws. The Company may, upon advice of counsel to the Company, place
legends on stock certificates issued under the Plan as such counsel deems
necessary or appropriate in order to comply with applicable securities laws,
including, but not limited to, legends restricting the transfer of the stock.
24. Governing Law. The validity and enforceability of this Plan shall
be governed by and construed in accordance with the laws of the State of
Delaware without regard to otherwise governing principles of conflicts of law.
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