EXHIBIT 10.11
CAPSTONE TURBINE CORPORATION
CHANGE OF CONTROL SEVERANCE PLAN
Capstone Turbine Company (the "Company") believes that the key to its
success is the retention of its team of Executives (as defined below). In order
to retain those Executives, and to assure them of adequate severance pay in the
event of a Change of Control, as defined below, the Company adopts the following
plan, effective as of April 24, 2002.
EXECUTIVE OFFICERS TO WHICH THE POLICY IS APPLICABLE
This Plan is applicable to each executive(1). ("Executive(s)")
designated by the Board from time to time. Executives may be added or deleted
based on Board approval; provided that, only such Board approvals which have
been received prior to the consummation of the applicable Change of Control
shall be effective as to the addition or deletion of Executives.
SEVERANCE BENEFITS
In the event that an Executive is Involuntarily Terminated within
twelve (12) months of a Change of Control (as defined below), such Executive
shall be entitled to receive from the Company an amount equal to such
Executive's annual base salary plus the cash incentive compensation paid for the
year in which the effective date for the Change in Control occurs (such amount,
the "Salary"). The Salary shall be paid in one lump sum on the date such
Executive was Involuntarily Terminated (the "Termination Date"). Pursuant to
COBRA, the Company shall continue such Executive Officer's health care coverage
as it currently exists under the Company's medical and dental plans. The Company
will pay for such coverage until twelve (12) months after the Termination Date.
Thereafter, such Executive shall be eligible to continue such coverage at his or
her own expense for the remainder of his or her applicable COBRA continuation
period. As used herein, the term "Involuntarily Terminated" shall mean the
termination of an Executive's service by reason of:
a. involuntary dismissal or discharge by the Company for reasons other
than Misconduct (as defined below), or
b. such individual's voluntary resignation following (A) a change in
position with the Company which reduces his or her level of
responsibility, (B) any reduction in his or her level of compensation
(including base salary, fringe benefits, participation in any plans and
target bonuses under any corporate-performance based bonus or incentive
programs) or (C) a relocation of such individual's place of employment
by more than fifty (50) miles, provided and only if such change,
reduction or relocation is effected without the individual's consent.
As used herein, "Misconduct" shall mean the commission of any act of fraud,
embezzlement, theft or dishonesty by such individual, any unauthorized use or
disclosure by such individual of confidential information or trade secrets of
the Company (or any parent or subsidiary thereof), or any other intentional
misconduct by such individual adversely affecting the business or affairs of the
Company (or any parent or subsidiary) in a material manner. The foregoing
definition shall not be deemed to be inclusive of all the acts or omissions
which the Company (or any parent or subsidiary) may consider as grounds for the
dismissal or discharge of any Executive.
CHANGE OF CONTROL
For the purposes of this severance plan, the term "Change in Control"
means any one or more of the following:
(i) the successful acquisition by a person or related group of
persons, (other than the Company or a person that directly or
indirectly controls, is controlled by or is under common
control with, the Company) of beneficial ownership (within the
meaning of Rule 13d-3 of the Securities Exchange Act of 1934,
as amended) of securities possessing more than fifty percent
(50%) of the total combined voting power of the Company's
outstanding securities pursuant to a transaction or series of
related transactions which the Board does not at any time
recommend the Company's stockholders to accept or approve;
(ii) the first date within any period of twelve (12) consecutive
months or less on which there is effected a change in the
composition of the Company's Board such that a majority of the
Board ceases, by reason of one or more contested
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1. Ake Almgren is designated under this Plan but he is approved to receive two
times his cash compensation upon a change of control and his involuntary
termination.
elections for Board membership, to be comprised of individuals
who either (i) have been members of the Company's Board
continuously since the beginning of such period or (ii) have
been elected or nominated for election as Board members during
such period by at least a majority of the Board members
described in clause (i) who were still in office at the time
such election or nomination was approved by the Board;
(iii) a merger or consolidation in which the Company is not the
surviving entity, except for a transaction the principal
purpose of which is to change the state in which the Company
is incorporated;
(iv) the sale, transfer or other disposition of all or
substantially all of the assets of the Company in complete
liquidation or dissolution of the Company;
(v) any reverse merger in which the Company is the surviving
entity but in which securities possessing more than fifty
percent (50%) of the total combined voting power of the
Company's outstanding securities are transferred to a person
or persons different from the persons holding those securities
immediately prior to such merger; or
(vi) the issuance by the Company to a single person or related
group of persons (other than the Company or a person that
directly or indirectly controls, is controlled by or is under
common control with, the Company) of securities possessing
more than fifty percent (50%) of the total combined voting
power of the Company's outstanding securities (determined
after such issuance) in a single transaction or a series of
related transactions.