EXHIBIT 10.4
CAPSTONE TURBINE CORPORATION
AMENDED AND RESTATED 2000 EQUITY INCENTIVE PLAN
TABLE OF CONTENTS
<Table>
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PAGE
1. PURPOSES OF THE PLAN ................................................. 1
2. DEFINITIONS .......................................................... 1
3. STOCK SUBJECT TO THE PLAN ............................................ 5
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 .............................. 9
10. EXERCISE OF OPTION ................................................... 10
11. NON-TRANSFERABILITY OF OPTIONS AND STOCK PURCHASE RIGHTS ............. 13
12. GRANTING OF OPTIONS TO INDEPENDENT DIRECTORS ......................... 13
13. TERMS OF OPTIONS GRANTED TO INDEPENDENT DIRECTORS .................... 13
14. STOCK PURCHASE RIGHTS AND STOCK BONUSES .............................. 13
15. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, MERGER OR ASSET SALE ..... 14
16. TIME OF GRANTING OPTIONS, STOCK PURCHASE RIGHTS AND STOCK BONUSES .... 17
17. AMENDMENT AND TERMINATION OF THE PLAN ................................ 17
18. STOCKHOLDER APPROVAL ................................................. 18
19. INABILITY TO OBTAIN AUTHORITY ........................................ 18
20. RESERVATION OF SHARES ................................................ 18
21. INFORMATION TO HOLDERS AND PURCHASERS ................................ 18
22. REPURCHASE PROVISIONS ................................................ 18
23. INVESTMENT INTENT .................................................... 19
24. GOVERNING LAW ........................................................ 20
</Table>
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
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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
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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.
(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.
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(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.
(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.
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(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 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
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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
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);
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(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 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.
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(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 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.
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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.
(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
9
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 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.
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(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 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
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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 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
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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.
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
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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 exchange of Common Stock or other securities of the Company, issuance of
warrants or other
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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;
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(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 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.
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(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 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
17
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 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
18
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 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.
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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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