EXHIBIT 10.14
CAPSTONE TURBINE CORPORATION
SEVERANCE PAY PLAN AND
SUMMARY PLAN DESCRIPTION
ARTICLE I
INTRODUCTION
Capstone Turbine Corporation (the "Company") hereby establishes, effective as of
May 1, 2002, the 2002 Capstone Turbine Corporation Severance Pay Plan (the
"Plan"), to provide severance pay benefits for eligible employees whose
employment is involuntarily terminated without cause, subject to the terms of
the Plan. This document serves as both the Plan document and the summary plan
description of the Plan. Except as provided in any individual written contracts,
this Plan replaces and supercedes any formal or informal prior severance pay
plan, program or arrangement that may have covered you previously as an employee
of the Company. The purpose of this Plan is to assist associates in their
transition to finding new employment, not to reward an employee for years of
service. Benefits paid to an employee hereunder are not earned or otherwise
accrued by an associate.
ARTICLE II
PARTICIPATION IN THE PLAN
Full-time employees employed by the Company are eligible to receive benefits
under the Plan, subject to its terms (hereinafter referred to as "Eligible
Employees"). For purposes herein, "full-time" employee means an employee
regularly scheduled to work 30 hours per week. Individuals who work for the
Company as a temporary, seasonal, intern, leased or independent contractor basis
are expressly excluded from participation in this Plan. Executives of the
Company who are covered by another plan or contract are also excluded from this
Plan. Full-time employees employed by any Company subsidiary within the United
States are also covered by this Plan.
ARTICLE III
BENEFIT ELIGIBILITY
An Eligible Employee is entitled to benefits under this Plan if, and only if,
the Company without "Cause" terminates his/her employment. For purposes herein,
"Cause" shall mean violation of company policy, fraud, willful malfeasance (or
similar wrongful acts) and continuing (after notice) neglect of job duties.
Notwithstanding the foregoing, no Eligible Employee shall be eligible for
benefits where, as a result of a Change in Business, as hereinafter defined, he
or she become employed or are offered employment by a different employer in
substantially the same position as he or she had with the Company. A Change in
Business means the sale or transfer of all or a portion of the assets or stock
or a merger of Capstone or related companies, or the Company's cessation of
conducting certain business activities that are formally or informally
transferred to another organization. The Company has the sole and absolute
discretion to determine when a reduction in force or job elimination has
occurred and will notify you of such determination.
If your regular employment is terminated for any other reason, you will not be
entitled to receive any of the benefits offered through this Plan. This means,
for example, that if you voluntarily
resign, are terminated for Cause, then you will not be entitled to receive the
benefits offered through this Plan.
Notwithstanding the foregoing, if you refuse a reasonable reassignment to
another position with the Company, you will not be considered as terminated due
to a reduction in force or job elimination, and will not eligible to receive any
benefits under this Plan.
ARTICLE IV
SEVERANCE BENEFIT
If you are entitled to benefits under Article III, your severance benefits will
be determined under Section 4.01 or Section 4.02, subject to the forfeiture
provisions of Section 4.09.
SECTION 4.01. MINIMUM BENEFIT - If you do not execute the General Release &
Separation Agreement, as required in Section 4.04, you will receive two (2)
weeks of severance pay.
SECTION 4.02. SEVERANCE BENEFIT FORMULA - If you execute the General Release &
Separation Agreement, as required in Section 4.04, you will receive the greater
of: (i) one (1) week of severance pay for each full year of service with the
Company as an Eligible Employee (except for years of service for which severance
benefits have previously been paid by Company) for the period ending on the date
of your termination; or, (ii) four (4) weeks of severance pay.
SECTION 4.03. PAYMENT. Each week of severance pay equals the weekly compensation
regularly paid to you at the time your employment terminates, excluding any
overtime pay, bonuses and imputed income. The severance pay benefit will be paid
in the same manner as the Company's regular payroll practices during the
severance period. Employees will also be paid for any unused vacation time, as
defined in the Company's vacation policy, determined as of the termination date,
which payment shall be made no later than required by applicable state law.
The payment of benefits hereunder does not extend an individual's employment
with the Company. Unless specifically provided for under the Plan or required by
applicable law, all benefits cease as of your date of termination, including,
but not limited to, healthcare, dental, life, long term disability insurance,
holiday pay and vacation accrual.
SECTION 4.04. GENERAL RELEASE & SEPARATION AGREEMENT - To receive benefits under
Section 4.02 of this Plan, you must sign a "General Release & Separation
Agreement" in the form prescribed by the Plan Administrator. If you do not sign
the "General Release & Separation Agreement," you will receive benefits under
Section 4.01 of this Plan. The General Release & Separation Agreement will
include a release and waiver satisfactory to Company, substantially in the form
as Exhibit A.
SECTION 4.05. RETIREMENT PLANS - Participation in this Plan is not intended to
alter any benefits you are entitled to receive under the Company's retirement
plans. Those benefits will continue to be determined by the terms of those
plans. For more information, please refer to the plan documents and summary plan
descriptions for those plans.
-2-
SECTION 4.06. NON-ALIENATION OF BENEFIT - You may not, in any manner, sell,
pledge, transfer, assign, encumber, or otherwise dispose of any severance pay
benefit, either voluntarily or involuntarily, before you receive it, and any
attempt to do so or to otherwise dispose of any right to benefits under this
Plan will be void.
SECTION 4.07. APPLICATION FOR BENEFITS - To receive benefits under this Plan,
you must notify the Vice President, Human Resources, by executing and delivering
to him the "General Release & Separation Agreement" by no later than the end of
the time period set forth in the General Release & Separation Agreement. If you
do not receive a benefit to which you believe you are entitled, you may write to
the Company at the address set forth in this document and state the benefit to
which you believe you are entitled. This writing will be considered a claim for
benefits described in the section of this Plan entitled "Claims Procedures."
SECTION 4.08. FORFEITURE. Notwithstanding anything to the contrary set forth
herein, any and all remaining severance benefits shall be forfeited and cease
immediately upon:
(1) Any breach of the terms set forth in the General Release &
Separation Agreement;
(2) Your rejection of an offer of re-employment with the Company
in the same or an equivalent position; or,
(3) Your acceptance of re-employment with the Company.
SECTION 4.09. NO DUPLICATION. An employee of the Company may not receive
severance benefits under the Plan and another arrangement with the Company. Such
an associate will only be entitled to the severance benefit that provides him
with the greatest amount of severance pay.
ARTICLE V
PLAN ADMINISTRATOR
The Company is the administrator of the Plan and a named fiduciary within the
meaning of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"). As Plan administrator, the Company has discretionary authority to
interpret, with discretionary authority, the provisions of the Plan and to
resolve, with discretionary authority, all disputed questions of Plan
interpretation, including eligibility, rights and status of participants.
ARTICLE VI
MISCELLANEOUS
SECTION 6.01. FUNDING OF PLAN - Payments under the Plan are made directly from
the Company's general assets.
SECTION 6.02. CLAIMS PROCEDURES - If you make a claim for benefits and the
Company denies the claim, in whole or in part, the Company will give you written
notice of the denial within ninety (90) days after the date on which it received
the claim. If special circumstances require extension of the ninety (90) day
response period, the Company may extend the period for up to
-3-
ninety (90) additional days by notifying you, within the original ninety (90)
day period, of the extension, the reason for it, and when you can expect a
decision. The written notice of the denial of a claim will contain the following
information:
(1) the specific reason or reasons for denial of the claim,
(2) specific reference to the provisions of the Plan on which the
denial is based,
(3) a description of any additional material or information that
you may need to prove the claim, with an explanation as to why
the material or information is necessary, and
(4) an explanation of the right to appeal for review of the claim
denial and the procedure for appeal.
If the Company denies your claim, in whole or in part, you have the right to
appeal to the Company's Vice President - Human Resources for review of the
denial. The following provisions apply to that right of appeal:
(1) The request for review must be filed with the Company within
sixty (60) days following delivery to you of the written
notice of denial of the claim.
(2) The request must be in writing signed by you or your
authorized representative.
(3) You have the right, upon request, to review records and
documents in the Company's possession relating to the claim.
(4) You may submit issues, arguments, and other comments in
writing to the Company, with any documentary evidence in
support of the claim.
(5) The Company's decision must be given to you in writing within
sixty (60) days after receipt of your request for review. If
special circumstances require extension of the sixty (60) day
response period, the Company may extend the period for up to
sixty (60) additional days by notifying you, within the
original sixty (60) day period, of the extension, the reason
for it, and when you can expect a decision. The decision on
review must state specific reasons for the decision, including
specific reference to the Plan provision or provisions on
which the decision is based.
SECTION 6.03. PARTICIPANTS' RIGHTS UNDER ERISA - The following lengthy statement
concerning rights of participants under ERISA is required by regulations issued
by the U.S. Department of Labor:
As a participant in the Plan you are entitled to certain rights and protections
under ERISA. ERISA provides that all Plan participants shall be entitled to
examine, without charge, at the Company's offices, all Plan documents, including
copies of all documents filed by the Plan with the U.S. Department of Labor,
such as annual reports and summary plan descriptions. All Plan
-4-
participants may obtain copies of all Plan documents and other Plan information
upon written request to the Company. The Company may make a reasonable charge
for the copies. Plan participants shall receive a summary of the Plan's annual
financial report, if the Plan is required by law to file one. In that event, the
Company is required by law to furnish each participant with a copy of the
summary annual report.
In addition to creating rights for Plan participants, ERISA imposes obligations
upon the persons who are responsible for the operation of the Plan. These
persons are referred to as "fiduciaries" in the law. Fiduciaries must act solely
in the interest of the Plan participants, and they must exercise prudence in the
performance of their Plan duties. No one, including your Company, may fire you
or discriminate against you to prevent you from obtaining a Plan benefit or
exercising your rights under ERISA. If your claim for a Plan benefit is denied
in whole or in part, you must receive a written explanation of the denial. You
have the right to have the Plan review and reconsider your claim. Under ERISA,
there are steps you can take to enforce these rights. For instance, if you
request materials from the Plan and do not receive them within thirty (30) days,
you may file suit in a federal court. In such a case, the court may require the
Company to provide the materials and pay you up to $110.00 a day until you
receive the materials, unless the materials were not sent because of reasons
beyond the Company's control. If you have a claim for benefits that is denied or
ignored, in whole or in part, you may file suit in a state or federal court. If
it should happen that Plan fiduciaries misuse the Plan's money, of if you are
discriminated against for asserting your rights, you may seek assistance from
the U.S. Department of Labor, or you may file suit in a federal court. The court
will decide who should pay court costs and legal fees. If you are successful,
the court may order the person you have sued to pay these costs and fees. If you
lose, the court may order you to pay these costs and fees - for example, if it
finds your claim is frivolous. If you have any questions about your Plan, you
should contact the Company. If you have any questions about this statement or
about your rights under ERISA, you should contact the nearest Area Office of the
Pension and Welfare Benefits Administration, U.S. Department of Labor listed in
your telephone directory or the Division of Technical Assistance and Inquiries,
Pension and Welfare Benefits Administration, U.S. Department of Labor, 200
Constitution Avenue, N.W., Washington, D.C. 20210.
SECTION 6.04. AMENDMENT AND TERMINATION - The Company has the right to amend or
terminate the Plan at any time.
SECTION 6.05. SPECIFIC INFORMATION ABOUT THE PLAN -
Name of Plan: Capstone Turbine Corporation. Severance Pay Plan
Plan Number: 506
Name, Address, and Capstone Turbine Corporation
Telephone Number of 21211 Nordhoff Street
Plan Sponsor: Chatsworth, CA 91311
818 734 5300
-5-
Plan Sponsor's Federal
Identification Number:
Name, Address and Capstone Turbine Corporation
Telephone Number of 21211 Nordhoff Street
Plan Administrator: Chatsworth, CA 91311
818 734 5300
Type of Plan: Welfare benefit plan providing severance pay
benefits to all Eligible Associates.
Agent for Service of General Counsel
Legal Process: Capstone Turbine Corporation
21211 Nordhoff Street
Chatsworth, CA 91311
Date of End of Plan Year: December 31
Basis of Keeping Records: Plan Year
IN WITNESS WHEREOF, Capstone Turbine Corporation has executed this
Severance Pay Plan effective the 1st day of May, 2002.
Capstone Turbine Corporation
By: /s/ AKE ALMGREN
-6-
FIRST AMENDMENT TO THE
2002 CAPSTONE TURBINE CORPORATION
SEVERANCE PAY PLAN
The 2002 Capstone Turbine Corporation Severance Pay Plan (the "Plan")
hereby is amended, effective February 4, 2003, to read as follows:
I.
Section 4.02 of the Plan is amended in its entirety to read as follows:
"SECTION 4.02. SEVERANCE BENEFIT FORMULA - If you execute the General
Release & Separation Agreement, as required in Section 4.04, you will
receive the following benefits:
(1) If at the time of termination of your employment with
the Company, you are an employee of the Company other
than a Director or Executive, you will receive one
(1) week of severance pay for each full year of
service with the Company as an Eligible Employee
(except for years of service for which severance
benefits have previously been paid by Company) for
the period ending on the date of your termination;
provided, however, that benefits payable under this
Section 4.02(1) will not be less than four (4) weeks
of severance pay, or more than twelve (12) weeks of
severance pay;
(2) If at the time of termination of your employment with
the Company, you are a Director of the Company, you
will receive two (2) weeks of severance pay for each
full year of service with the Company as an Eligible
Employee (except for years of service for which
severance benefits have previously been paid by
Company) for the period ending on the date of your
termination; provided, however, that benefits payable
under this Section 4.02(2) will not be less than four
(4) weeks of
-7-
severance pay, or more than twelve (12) weeks of
severance pay;
(3) If at the time of termination of your employment with
the Company, you are an Executive of the Company, you
will receive twenty-six (26) weeks of severance pay.
For purposes of this Section 4.02, 'Executive' shall mean any employee
of the Company who reports directly to the President and Chief
Executive Officer of the Company, and 'Director' shall mean any
employee of the Company who reports directly to an Executive of the
Company and makes greater than or equal to Eighty-Five Thousand Dollars
($85,000) in annual base salary.
II.
In all other respects, the Plan will remain in full force and effect.
CAPSTONE TURBINE CORPORATION
By: /s/ EMILY M. LIGGETT
Title: Chief Operating Officer
-8-