UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Picture 5

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.     )

Filed by the Registrant  x
Filed by a Party other than the Registrant  o
Check the appropriate box:
xPreliminary Proxy Statement
oConfidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
oDefinitive Proxy Statement
oDefinitive Additional Materials
oSoliciting Material Pursuant to §240.14a-12
UQM TECHNOLOGIES, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
xNo fee required.
oFee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1)Title of each class of securities to which transaction applies:
(2)Aggregate number of securities to which transaction applies:
(3)Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
(4)Proposed maximum aggregate value of transaction:
(5)Total fee paid:
oFee paid previously with preliminary materials.
oCheck box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
(1)Amount Previously Paid:
(2)Form, Schedule or Registration Statement No.:
(3)Filing Party:
(4)Date Filed:

 

Dear Shareholder:

On August 25, 2017, UQM Technologies, Inc. (“UQM” or the “Company”) entered into a stock purchase agreement (the “Purchase Agreement”) with China National Heavy Duty Truck Group Co., Ltd. (“CNHTC”) and its wholly-owned subsidiary, Sinotruk (BVI) Limited (the “Buyer”), pursuant to which the Buyer will acquire newly issued shares of common stock of UQM in two stages, and UQM and CNHTC plan to create a joint venture to manufacture and sell electric propulsion systems for commercial vehicles and other vehicles in China. The terms of the Purchase Agreement were unanimously approved by the boards of directors of both companies.

In the first stage, which closed on September 25, 2017, the Buyer acquired 5,347,300 shares, representing 9.9% of the total outstanding shares of UQM as of the date of the Purchase Agreement, for an aggregate consideration of approximately $5.1 million. In the second stage, the Buyer will acquire such number of additional shares (the “Second Stage Shares”) resulting in the Buyer owning a total of 34% of UQM’s then-outstanding common stock on a fully diluted basis, accounting for all outstanding stock options and warrants (38% on the basis of common stock shares currently outstanding) (the “Second Stage Transaction”).

Given the significant percentage of shares that may be issued in the Second Stage Transaction, the NYSE American stock exchange deems the Second Stage Transaction to result in a “change of control” requiring shareholder approval. Accordingly, at this year’s annual meeting, you will be asked to consider and vote on a proposal to approve the issuance by the Company of the Second Stage Shares pursuant to the terms of the Purchase Agreement in addition to other proposals as set forth in the accompanying proxy statement.

THE BOARD OF DIRECTORS OF UQM UNANIMOUSLY RECOMMENDS THAT YOU VOTEFOR THE APPROVAL OF THE ISSUANCE OF THE SECOND STAGE SHARES AS CONTEMPLATED BY THE PURCHASE AGREEMENT ANDFOR THE OTHER PROPOSALS PRESENTED AT THE ANNUAL MEETING.

The proxy statement provides information about the matters you will be asked to consider and vote on at the Annual Meeting, including information about the Second Stage Transaction. UQM encourages you to read the entire proxy statement carefully, including the annexes and documents incorporated by reference. You may also obtain more information about the Company from documents the Company has filed with the Securities and Exchange Commission.

Thank you for your cooperation and continued support.

Very truly yours,
 /s/ DONALD W. VANLANDINGHAM
Donald W. Vanlandingham
Chairman of the Board
 /s/ JOSEPH R. MITCHELL
Joseph R. Mitchell
Chief Executive Officer and Director

PRELIMINARY COPY-SUBJECT TO COMPLETION

UQM TECHNOLOGIES, INC.

4120 Specialty Place

Longmont, Colorado 80504

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD ON NOVEMBER 30, 2017OCTOBER 17, 2018

 

The 2017 Annual Meetingannual meeting of Shareholdersshareholders (the Annual Meeting“Annual Meeting”) of UQM Technologies, Inc. (“we,” “us,” “our,” “UQMUQM” or the Company“Company”) will be held on the 30th day of November, 2017,Wednesday, October 17, 2018, at 10:00 a.m., local time at the Company’s headquarters located at 4120 Specialty Place, Longmont, Colorado 80504 for the following purposes:

1.

To approve the issuance by the Company of the Second Stage Shares (as defined in this proxy statement) pursuant to the terms of the stock purchase agreement, dated August 25, 2017 (the “Purchase Agreement”), entered into with China National Heavy Duty Truck Group Co., Ltd. (“CNHTC”) and its wholly-owned subsidiary, Sinotruk (BVI) Limited (the “Buyer”), for purposes of complying with Section 713 of the NYSE American Company Guide.

2.

To elect five directors to serve on our Board of Directors for a term expiring at the 2018 Annual Meeting of Shareholdersensuing year or until their respective successors have beenare duly elected and qualified.

3.

2.

To approve an amendment and restatement of the Company’s Employee Stock Purchase Plan to increase the number of shares available for issuance by 500,000 shares.

4.

To approve on an advisory basis the compensation for our named executive officers.

5.

3.

To vote, on an advisory basis, onapprove the frequencyamendment of future advisory votes to approve compensation for our named executive officers.2012 equity incentive plan.

6.

4.

To approve the amendment of our stock bonus plan.

5.

To consider and vote upon a proposal to ratify the appointment of Hein & AssociatesMoss Adams LLP to act as our independent registered public accounting firmauditors for the fiscal year ending December 31, 2017.2018.

7.

6.

To transact such other business as may properly come before the Annual Meeting.meeting.

The record date for the Annual Meeting has been fixed at October 5, 2017.August 24, 2018. Only shareholders of record at the close of business on that date will be entitled to notice of, and to vote at, the meeting.Annual Meeting.

July __

 

-, 2017

September 5, 2018

By order of the boardBoard of directorsDirectors

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/s/ DAVID I. ROSENTHAL

David I. Rosenthal, Secretary

YOUR VOTE IS IMPORTANT. Please vote, whether or not you expect to attend the Annual Meeting, as soon as possible. You may vote by using the Internet or by telephone or by signing and returning the paper proxy card by mail. Your vote is being solicited by the boardBoard of directors.Directors. If you attend the meeting,Annual Meeting, you may vote in person even though you have submitted a proxy.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SHAREHOLDER

SHAREHOLDERS MEETING TO BE HELD ON NOVEMBER 30, 2017:OCTOBER 17, 2018

 

The Company’s proxy statement for theOur Proxy Statement and Year End 2017 Annual Meeting and its Transition Report on Form 10-K for the transition period from April 1, 2016 to December 31, 2016 (the “Annual Report”) are available online at www.envisionreports.com/UQM.UQM


 

TABLE OF CONTENTS

Page

SUMMARY …………………………………………………………………………………………………………

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PROPOSAL 1:  Election of Directors …………………………………………………………………….

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…………………………………………………...

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    Committees of the Board ………………………………………………………………………………

9

    Compensation Committee Interlocks and Insider Participation ………………………

10

MANAGEMENT ……………………………………………………………………………………………………

10

    Section 16(a) Beneficial Ownership Reporting Compliance ……………………………….

11

COMPENSATION DISCUSSION AND ANALYSIS ……………………………………………………………..

11

    Executive Compensation ……………………………………………………………………………….

15

EMPLOYMENT AGREEMENTS ………………………………………………………………………………….

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PAYMENTS AND POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL ………..

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DIRECTOR COMPENSATION …………………………………………………………………………………….

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COMPENSATION  COMMITTEE REPORT ……………………………………………………………………...

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS ……………………………………………...

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SECURITY OWNERSHIP OF CERTAIN OWNERS AND MANAGEMENT …………………………………...

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EQUITY COMPENSATION PLAN INFORMATION…………………………………..........................................

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PROPOSAL 2:  Advisory Vote to Approve Compensation for Our Named Executive Officers…………………………………...............................................................................................................

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PROPOSAL 3: Approval of the Amendment to the 2012 Equity Incentive Plan to Increase the Number oF Shares Available for Grant by 2,500,000 Shares ……………….

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    Purpose and Background of the Equity Incentive Plan …………………………………...

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    Dilution, Burn Rate and Overhang of the Company’s Equity-Based Compensation Plans ………………………………………………………………………………………

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    Summary of the Equity Incentive Plan …………………………………………………………...

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    Federal Income Tax Consequences ………………………………………………………………...

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    Shareholder Approval …………………………………………………………………………………

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PROPOSAL 4: Vote upon a Proposal to Approve the Amendment of the Stock Bonus Plan to Increase the Number of Shares Available for Grant by 300,000 Shares ……..

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    Purpose and Background of the Stock Bonus Plan ………………………………………....

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    Summary of the Stock Bonus Plan ……………………………………………………....................

32

    Federal Income Tax Consequences ………………………………………………………………...

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    Shareholder Approval …………………………………………………………………………………

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[PRELIMINARY COPY-SUBJECT TO COMPLETION]

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TOC, continued

Page

PROPOSAL 5 Ratification of Selection of Independent REGISTERED PUBLIC Auditors ..

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    Independent REGISTERED PUBLIC Auditor’s Fees …………………………..……………………

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    Pre-Approval Policies and Procedures …………………………..……………………………….

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    Disagreements with Auditors …………………………..……………………………………………

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REPORT OF THE AUDIT COMMITTEE …………………………..……………………………………………..

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PROPOSALS BY SHAREHOLDERS …………………………..………………………….………………………

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OTHER MATTERS …………………………..……………………..……………………..………………………..

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ANNUAL REPORT …………………………..……………………..……………………..……………………….

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PROXY STATEMENT

 

UQM TECHNOLOGIES, INC.

4120 Specialty Place

Longmont, Colorado 80504

 

ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD ON NOVEMBER 30, 2017OCTOBER 17, 2018

 

This proxy statement and proxy card are furnished in connection with the solicitation of proxies by our Board of Directors (the “Board”) to be voted at theour Annual Meeting, which will be held at the Company’s headquarters located at 4120 Specialty Place, Longmont, Colorado  80504, on November 30, 2017,October 17, 2018, at 10:00 a.m. local time.  On October·, 2017,or about September 5, 2018, we began mailing to shareholders as of the close of business on October 5, 2017 (the “Record Date”)record either a Notice of Internet Availability of Proxy Materials (the “Notice(“Notice”) or thisthe proxy statement, proxy card, and proxy card.Annual Report on Form 10-K.

QUESTIONS AND ANSWERS ABOUT THE SECOND STAGE TRANSACTION AND ANNUAL MEETING

SUMMARY

Why am I receiving these proxy materials?

You have received these proxy materials because you own shares of UQM Technologies, Inc. common stock as of the Record Date, and our Board of Directors (the “Board”) is soliciting your proxy to vote your shares at the Annual Meeting. This proxy statement describes the proposals on which we would like you to be votedvote at our Annual Meeting. It also gives you information on at the Annual Meetingthese proposals so that you can make an informed decisiondecision.

The expense of this solicitation is being borne by the Company.  Further solicitation of proxies may be made by telephone or oral communication by regular employees of the Company, who will not be additionally compensated for this work or by Alliance Advisors, a proxy solicitation firm, which is being paid $4,500 base fee plus out-of-pocket expenses for its services.

When you vote by using the Internet, by telephone or (if you received your proxy card by mail) by signing and returning the proxy card, you appoint David I. Rosenthal and Joseph R. Mitchell as your representatives at the Annual Meeting. They will vote your shares at the Annual Meeting as you have instructed them or, if an issue that is not on the proxy card comes up for vote, in accordance with respecttheir best judgment. This way, your shares will be voted whether or not you attend the Annual Meeting. Even if you plan to attend the Annual Meeting, we encourage you to vote in advance by using the Internet, by telephone or (if you received your vote.

proxy card by mail) by signing and returning your proxy card.

Why did I receive a Notice of Internet Availability of Proxy Materials in the mail instead of a printed set of proxy materials?

Pursuant to rules adopted by the Securities and Exchange Commission (the SEC“SEC”), we are permitted to furnish our proxy materials over the Internet to our shareholders by delivering a Notice in the mail. We are sending the Notice to most shareholders. If you received a Notice by mail, you will not receive a printed copy of the proxy materials in the mail. Instead, the Notice instructs you on how to access and review the proxy materials, including this proxy statement and the Annual Report on Form 10-K over the Internet.  The Notice also instructs you on how you may submit your proxy over the Internet.  If you received a Notice by mail and would like to receive a printed copy of our proxy materials, you should follow the instructions for requesting these materials contained in the Notice.

Shareholders who receive a printed set of proxy materials will not receive the Notice, but may still access our proxy materials and submit their proxies over the Internet at www.envisionreports.com/UQM.UQM.

On what items am I voting?

You will be voting on six proposals at the Annual Meeting, one of which relates to the sale of the Second Stage Shares to the Buyer (Proposal 1):

Proposal 1: approval of the issuance by the Company of the Second Stage Shares pursuant to the terms of the Purchase Agreement for purposes of complying with Section 713 of the NYSE American Company Guide.

Proposal 2: election of five directors for a term expiring at the 2018 Annual Meeting of Shareholders or until their respective successors have been duly elected and qualified.

Proposal 3: approval of an amendment and restatement of the Company’s Employee Stock Purchase Plan (the “ESPP”) to increase the number of shares available for issuance by 500,000 shares.

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Proposal 4: advisory vote to approve the compensation for our named executive officers.

Proposal 5: advisory vote to recommend the frequency of future advisory votes to approve compensation for our named executive officers.

Proposal 6: ratification of the appointment of Hein & Associates LLP to act as our independent registered public accounting firm for the year ending December 31, 2017.

What are the principal terms of the transaction with the Buyer?

Pursuant to the Purchase Agreement, the Buyer will acquire newly issued shares of common stock of UQM in two stages. In the first stage, which closed on September 25, 2017, the Buyer acquired 5,347,300 shares, representing 9.9% of the total outstanding shares as of the date of the Purchase Agreement, for an aggregate consideration of approximately $5.1 million (the “First Stage Transaction”). In the second stage, the Buyer will acquire such number of additional shares (the “Second Stage Shares”) resulting in the Buyer owning a total of 34% of UQM’s then-outstanding common stock on a fully diluted basis, accounting for all outstanding stock options and warrants (38% on the basis of common stock shares currently outstanding) (the “Second Stage Transaction”). The purchase price for the Second Stage Shares (which is the same price at which the shares were sold in the First Stage Transaction) will be set at approximately $0.95 per share, which represents a 15 percent premium to the average daily trading price of Company common stock during the 30 days immediately prior to the signing of the Purchase Agreement.

Based on the current total outstanding shares of common stock of UQM, the total number of shares of common stock of UQM to be acquired by the Buyer in the Second Stage Transaction would be 24,348,500 shares for total proceeds of approximately $23.2 million.

Closing of the Second Stage Transaction is subject to the approval of UQM’s shareholders of the issuance of the Second Stage Shares (Proposal 1). Closing of the Second Stage Transaction is also subject to approval by the Committee on Foreign Investment in the United States (“CFIUS”) under Section 721 of the Defense Production Act of 1950, as amended, as it will result in a material investment by a foreign-controlled entity in the Company. For more details about the Second Stage Transaction and the transaction with the Buyer, please see Proposal 1 to this proxy statement.

If shareholders approve the Second Stage Transaction, will I be required to sell my shares of UQM common stock?

No. The Second Stage Transaction involves the purchase by the Buyer of newly issued shares of common stock of UQM. It is not a purchase of shares from UQM’s existing shareholders or a merger agreement, pursuant to which UQM shareholders would receive consideration in exchange for their common stock. Thus, you are not requested to sell your shares and shareholders of the Company prior to the Second Stage Transaction’s closing will continue to own their shares of UQM common stock following the closing.

If the Second Stage Transaction is approved, will UQM remain a public company?

Yes. Following closing of the Transaction, UQM will continue to remain a public company with its shares listed for trading on the NYSE American stock exchange and the requirement to file its annual reports (including the audited financial statements contained therein) and other reports with the SEC.

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What is the effect to UQM and its other shareholders if the Second Stage Transaction is completed and the Buyer becomes a significant shareholder?

Pursuant to the terms of the Purchase Agreement, upon closing of the First Stage Transaction on September 25, 2017, CNHTC exercised its right to nominate (subject to the Company’s reasonable consent) one non-voting observer to the Board (the “Board Observer”). Accordingly, the Board appointed Mr. Ma Chunji, who is the chairman of the board of directors of both CNHTC and the Buyer, as the Board Observer. Upon closing of the Second Stage Transaction, (i) the Company will increase the size of the Board to eight members, (ii) the Board Observer shall have all the rights of a full Board member and (iii) CNHTC will have the right to nominate two additional Board members. In addition, for as long as CNHTC owns at least 33% of the total outstanding shares of common stock of the Company, CNHTC will have the right to nominate three of the Board’s eight members, including the Chairman of the Board.

Following the successful completion of the Second Stage Transaction and for as long as CNHTC maintains an ownership interest of at least 25% of the Company’s common stock shares outstanding, the Company has also agreed to confer with CNHTC in advance (unless it is impractical to confer in advance) of undertaking certain extraordinary actions, including (i) issuing new shares of stock, (ii) increasing our Board size beyond eight directors, (iii) amending the Company’s by-laws, (iv) consummating agreements involving payments or encumbrances exceeding $500,000 annually, (v) entering any union agreement or plan, (vi) granting new equity compensation awards exceeding 1.5% of the current outstanding common stock, (vii) issuing any dividend or distribution of cash or property, or (viii) terminating the employment of (except for cause) or amending any of the employment agreements with current Company executives;provided,however, that following receipt of any good-faith, material objections from CNHTC to any of the above actions, the Company will modify such actions to the extent commercially reasonable without violating restrictions or requirements arising under applicable corporation laws, director fiduciary duties or the Company’s articles of incorporation or bylaws.

In addition, as a result of the Buyer’s significant ownership percentage following the completion of the Second Stage Transaction, the Buyer will be able to affect the outcome of, or exert significant influence over, all matters requiring stockholder approval, including the election and removal of directors and any change in control. In particular, this concentration of ownership of our common stock could have the effect of delaying or preventing a change in control of us or otherwise discouraging or preventing a potential acquirer from attempting to obtain control of us. This, in turn, could have a negative effect on the market price of our common stock. It could also prevent our shareholders from realizing a premium over the market prices for their shares of common stock. Moreover, the interests of this concentration of ownership may not always coincide with our interests or the interests of other shareholders. The concentration of ownership may also contribute to the low trading volume and volatility of our common stock.

Does the Board recommend the Second Stage Transaction?

Our Board determined that the Second Stage Transaction, on the terms and conditions set forth in the Purchase Agreement, are fair to and in the best interests of the Company and our shareholders. The Board approved the Purchase Agreement, including the Second Stage Transaction, and directed the officers of the Company to sign the Purchase Agreement and to perform all of the obligations on the part of the Company under the Purchase Agreement in order that the Second Stage Transaction may be closed as expeditiously as possible.

Accordingly, our Board recommends that our shareholders vote “FOR” Proposal 1: approval of the issuance by the Company of the Second Stage Shares pursuant to the terms of the Purchase Agreement for purposes of complying with Section 713 of the NYSE American Company Guide.

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What factors did the Board consider and what were its reasons for approving the Second Stage Transaction and recommending that the shareholders approve the issuance of the Second Stage Shares?

In making its determinations, our Board considered various factors, including:

·the immediate and long-term benefit to UQM’s financial condition of receiving approximately $23.2 million in cash from the sale of the shares in the Second Stage Transaction, in light of UQM’s current cash position and longer-term liquidity concerns;
·UQM has conducted, with the assistance of a business development firm, a formal process over several years to seek strategic partners and/or investors for its electric motors and controllers business in the growing Chinese market as well as explored other opportunities for strategic partnership and/or investment. This process resulted in a proposed transaction with a smaller China market participant in 2016, which sought a majority interest in the Company’s shares and which sought to amend the Company’s articles of incorporation and bylaws in ways to reduce minority shareholder voting rights. That transaction was not approved by the Company’s shareholders due to this request to reduce minority shareholder rights, and the transaction was ultimately terminated. Thereafter, following that process, the Company entered discussions with the Buyer that have resulted in a transaction which the Company believes offers even a more compelling opportunity to build its financial capacity, access and market presence in the China market, which represents the Company’s most strategic growth target;
·CNHTC is the parent company of Sinotruk (Hong Kong) Limited (“Sinotruk”), a leading heavy duty commercial vehicle manufacturer in China and one of the largest commercial vehicle groups in the world. In the year ended December 31, 2016, Sinotruk reported revenues from its heavy and light duty commercial trucks and buses, parts, and components of $4.9 billion, and reported shipping over 172,000 commercial vehicles and over 106,000 engines; and
·the market position, captive market and apparent prospects, and financial condition of the Buyer, as UQM’s major shareholder and as a well-positioned guiding “partner” in helping UQM establish its China business.

See “PROPOSAL 1: Approval of the Issuance of the Second Stage Shares—Board Considerations” for additional considerations by the Board.

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING INFORMATION

This proxy statement contains statements that constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including statements about the receipt and timing of required approvals and satisfaction of other conditions to the closing of the Second Stage Transaction, our intended use of the proceeds from the sale of the Second Stage Shares, our beliefs or current expectations of the future financial prospects, operations and corporate governance procedures of the Company following the closing of the Second Stage Transaction with the Buyer, as well as our current beliefs of the future prospects of the Company if the Second Stage Transaction does not occur, whether as a result of a failure of our shareholders to approve the issuance of the Second Stage Shares or otherwise. We intend the forward-looking statements throughout this proxy statement to be covered by the safe harbor provisions for forward-looking statements. These forward-looking statements involve risks and uncertainties that could cause actual outcomes to differ materially from our expectations. Additional information about the risks and uncertainties faced by the Company are described in the Annual Report and any subsequent reports filed with the SEC. Any forward-looking statement speaks only as of the date on which it is made. UQM does not undertake or assume any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

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THE ANNUAL MEETING OF THE COMPANY’S SHAREHOLDERS

Time, Place and Purpose of the Annual Meeting

The Annual Meeting will be held at 10 a.m., local time, on November 30, 2017 at 4120 Specialty Place, Longmont, Colorado 80504. The Annual Meeting is being held for UQM’s shareholders to vote on the proposals described in this proxy statement.

If we do not receive sufficient votes by proxy or in person to constitute a quorum or to approve the items presented at the Annual Meeting, as permitted under Colorado law and by our bylaws, we will adjourn the meeting until a future date.

Who Can Vote at the Annual Meeting

is entitled to vote?

Holders of our common stock at the close of business on the Record Date (October 5, 2017)August 24, 2018 are entitled to vote.  As of that date, there were- 54,207,190 shares of our $0.01 par value common stock outstanding, each share being entitled to one vote.  There are no other classes of voting securities outstanding.securities.

How do I vote?

Quorum; Vote Required

The presence, in person or by proxy, of the holders of one-third of the outstanding shares of our common stock entitled to vote will constitute a quorum, which will allow us to hold the Annual Meeting and conduct business. If a quorum is present, the affirmative vote of a majority of the shares represented at the Annual Meeting and entitled to vote is required for passage of each of Proposal 1 (approval of the issuance of the Second Stage Shares), Proposal 2 (election of the directors), Proposal 3 (amendment and restatement of the ESPP), Proposal 4 (advisory vote on named executive officer compensation) and Proposal 6 (ratification of independent registered public accounting firm). In addition, for Proposal 5, the option of one year, two years or three years that receives the greatest number of votes will be considered the frequency selected by our shareholders of future advisory votes to approve compensation for our named executive officers.

Abstentions and broker non-votes (as described below) will be counted toward the presence of a quorum. No cumulative voting rights are authorized, and dissenters’ rights are not applicable to the matters on which shareholders are voting at the Annual Meeting.

Voting Your Shares

Method of Voting. Shareholders of record may vote by using the Internet, by telephone or (if you received a proxy card by mail) by mail as described below:below. Shareholders also may attend the meeting and vote in person.  If you own common shares through a bank or broker, please refer to your proxy card, Notice or other information forwarded by your bank or broker to see which voting options are available to you.

·

You may vote by using the Internet.Internet.  The address of the website for Internet voting is www.envisionreports.com/UQM.UQM.  Internet voting is available 24 hours a day and will be accessible until- 1:00 a.m. Eastern Time on November-, 2017.October 17, 2018. Easy-to-follow instructions allow you to vote your shares and confirm that your instructions have been properly recorded.

·

You may vote by telephone.telephone.  The toll-free telephone number is noted on your proxy card. Telephone voting is available 24 hours a day and will be accessible until- 1:00 a.m. Eastern Time on November-, 2017.October 17, 2018. Easy-to-follow voice prompts allow you to vote your shares and confirm that your instructions have been properly recorded.

·

You may vote by mail.mail.  If you received a proxy card by mail and choose to vote by mail, simply mark your proxy card, date and sign it, and return it in the postage-paid envelope.

·You may vote in person. You may deliver a completed proxy card at the meeting or vote in person. While shareholders also may attend the meeting and vote in person, we strongly encourage you to vote in advance by using the Internet, by telephone or by signing and returning your proxy card.

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If you are a shareholder of record voting by using the Internet, by telephone or by signing and returning the proxy card, you appoint Joseph R. Mitchell and David I. Rosenthal as your representatives at the Annual Meeting. They will vote your shares at the Annual Meeting as you have instructed them or, if an issue that is not on the proxy card comes up for vote, in accordance with their best judgment. This way, your shares will be voted whether or not you attend the Annual Meeting.

If you own our common stock through a bank or broker, please refer to the voting instructions on the form you receive from such institution to see which voting options are available to you.

The method you use to vote will not limit your right to vote at the Annual Meeting if you decide to attend in person. Written ballots will be passed out to anyone who wants to vote at the Annual Meeting. If you hold your shares in “street name,” you must obtain a proxy, executed in your favor, from the holder of record to be able to vote in person at the Annual Meeting.

What if I change my mind after I return my proxy?

Changing your Vote. You may revoke your proxy and change your vote at any time before the polls close at the Annual Meeting. You may do this by:

·

submitting a subsequent proxy by using the Internet, by telephone or by mail with a later date;

·

sending written notice of revocation to our Corporate Secretary at 4120 Specialty Place, Longmont, ColoradoCO 80504; or

·

voting in person at the Annual Meeting.

Attendance at the meeting will not by itself revoke a proxy.

How many votes do you need to hold the Annual Meeting and what is the required vote on each proposal?

Broker Non-Votes.  The presence, in person or by proxy, of the holders of one-third of the outstanding shares of common stock entitled to vote will constitute a quorum. If a quorum is present, we can hold the Annual Meeting and conduct business.  In the event there are not sufficient shares present to constitute a quorum or to approve any proposals at the time of the Annual Meeting, the Annual Meeting may be adjourned in order to permit further solicitation of proxies.  If a quorum is present, the affirmative vote of a majority of the shares represented at the Annual Meeting and entitled to vote is required for

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passage for each of the proposals other than for the election of directors.  For the election of the directors, the five candidates having the highest number of votes cast for their election will be elected.

Shares that either abstain from voting on a proposal presented or which lack authority to vote will have no effect in the tabulation of votes on such proposal although they will be counted toward the presence of a quorum.  No cumulative voting rights are authorized, and dissenters’ rights are not applicable to these matters.

On what proposals am I voting?

You are being asked to vote on five proposals: 

·

to elect five  directors nominated by the Board and named in the proxy statement to serve until our 2019 Annual Meeting of shareholders;

·

to approve, on an advisory basis, the executive compensation for the named executive officers as disclosed in this proxy statement;

·

to approve an amendment to our 2012 Equity Incentive Plan to increase the number of shares available for grant under that plan by 2,500,000 shares;

·

to approve an amendment to our Stock Bonus Plan to increase the number of shares available for grant under that plan by 300,000 shares; and

·

to ratify the appointment of Moss Adams LLP as our independent registered public accountants for the year ending December 31, 2018.

The proposed corporate actions, on which the shareholders are being asked to vote at the Annual Meeting, are not corporate actions for which shareholders of a Colorado corporation have the right to dissent under the Colorado Business Corporation Act.

How may I vote in the election of directors, and how many votes must the nominees receive to be elected?

With respect to the election of directors, for each of the five  (5) director nominees you may: 

·

vote FOR the nominee for director; or

·

WITHHOLD approval of the nominee for director.

At the Annual Meeting, the five candidates having the highest numbers of votes cast for their election will be elected. 

What happens if a nominee is unable to stand for election?

If a nominee is unable to stand for election, the Board may either: 

·

reduce the number of directors that serve on the Board, or

·

designate a substitute nominee.

If the Board designates a substitute nominee, shares represented by proxies voted for the nominee who is unable to stand for election will be voted for the substitute nominee.

3


How may I vote on the proposals other than the election of directors, and how many votes must this proposal receive to pass?

With respect to each of Proposal 2 (advisory vote on executive compensation), Proposal 3 (approval of an amendment to our 2012 Equity Incentive Plan to increase the number of shares available for grant by 2,500,000 shares, Proposal 4 (approval of an amendment to our Stock Bonus Plan to increase the number of shares available for grant by 300,000 shares), and Proposal 5 (ratification of independent registered public accountants), you may: 

·

vote FOR the approval of the proposal;

·

vote AGAINST the approval of the proposal; or

·

ABSTAIN from voting on the proposal.

In order to pass, the respective proposals must receive the affirmative vote of a majority of the shares represented at the Annual Meeting and entitled to vote on the proposal.  

How does the board of directors recommend that I vote?

The Board recommends that you vote as follows: 

·

FOR all five director nominees;

·

FOR the approval, on an advisory basis, of executive compensation;

·

FOR the approval of an amendment to our 2012 Equity Incentive Plan to increase the number of shares available for grant under that plan by 2,500,000 shares;

·

FOR the approval of an amendment to our Stock Bonus Plan to increase the number of shares available for grant under that plan by 300,000 shares; and

·

FOR the ratification of the independent registered public accountants.

What happens if I sign and return my proxy card but do not provide voting instructions?

If you return a signed card but do not provide voting instructions, your shares will be voted as follows: 

·

FOR all five director nominees;

·

FOR the approval, on an advisory basis, of executive compensation;

·

FOR the approval of an amendment to our 2012 Equity Incentive Plan to increase the number of shares available for grant under that plan by 2,500,000 shares;

·

FOR the approval of an amendment to our Stock Bonus Plan to increase the number of shares available for grant under that plan by 300,000 shares; and

·

FOR the ratification of the independent registered public accountants.

4


Will my shares be voted if I do not vote by using the Internet, by telephone or by signing and returning my proxy card?

If your shares are held in “street name”street name through a bank or broker, your bank or broker may only vote your shares under certain limited circumstances if you do not provide voting instructions before the Annual Meeting, in accordance with New York Stock Exchange American (“NYSE American”) rules that govern the banks and brokers. These circumstances include voting your shares on “routine matters,” such as the ratification of the appointment of our independent registered public accounting firmaccountants described in this proxy statement (Proposal 6)Number 5). With respect to Proposal 6,Number 5, therefore, if you do not vote your shares, your bank or broker may vote your shares on your behalf or leave your shares unvoted.

un-voted.

The remaining proposals are not considered routine matters under NYSE American rules relating to voting by banks and brokers. When a proposal is not a routine matter and the brokerage firm has not received voting instructions from the beneficial owner of the shares with respect to that proposal, the brokerage firm cannot vote the shares on that proposal. This is called a “broker non-vote.” Broker non-votes that are represented at the Annual Meeting will be counted for purposes of establishing a quorum, but generally not for determining the number of shares voted for or against any non-routine matter, and therefore will have no effect on the outcome of the vote with respect to any non-routine matter.

IN ORDER TO HAVE YOUR VOTING PREFERENCES ON PROPOSAL NUMBERS 1, 2, 3 AND 4 REFLECTED IN THE VOTING TABULATION, YOU MUST PROVIDE INSTRUCTIONS DIRECTLY TO YOUR BANK OR BROKERAGE FIRM IN ACCORDANCE WITH THE VOTING INSTRUCTIONS YOU RECEIVE FROM SUCH INSTITUTION.INSTITUTION OR OTHERWISE VIA TELEPHONE OR THE INTERNET OR BY VOTING AND MAILING THE PAPER PROXY CARD MAILED TO YOU.  

6

Will the voting results be announced by the Company?

Voting Recommendations of UQM’s Board

For the reasons described below in the proxy statement, our Board unanimously recommends voting your shares:

·FOR the approval of the issuance by the Company of the Second Stage Shares pursuant to the terms of the Purchase Agreement, as required under Section 713 of the NYSE American Company Guide (Proposal 1).

·FOR the election of each of the five nominated directors (Proposal 2).

·FOR the approval of the amendment and restatement of the ESPP to increase the number of shares available for issuance by 500,000 shares (Proposal 3).

·FOR the approval, on an advisory basis, of the compensation for our named executive officers (Proposal 4).

·ONE YEAR for the recommendation, on an advisory basis, of the frequency of future advisory votes to approve compensation for our named executive officers (Proposal 5).

·FOR the ratification of the appointment of Hein & Associates LLP as our independent registered public accounting firm (Proposal 6).

Announcement of Voting Results

Yes. We will report the voting results on Form 8-K within four business days following the conclusion of the Annual Meeting.  The Form 8-K will be available through our website at www.uqm.com or at www.sec.gov.

www.sec.gov.

Householding

of Annual Meeting Materials

We, along with some banks, brokers, and other nominee record holders, may be participating in the practice of “Householding” proxy statements and annual reports.  This means that only one copy of the proxy materials may have been sent to multiple shareholders sharing a household.  The Company will promptly deliver a separate copy of the proxy materials to any shareholder upon written or oral request to the Corporate Secretary of the Company, UQM Technologies, Inc., 4120 Specialty Place, Longmont, Colorado 80504, telephone: (303) 682-4900.  Any shareholder who wants to receive separate copies of the proxy materials in the future, or any shareholder who is receiving multiple copies and would like to receive only one per household, should contact the shareholder’s bank, broker, or other nominee record holder, or the shareholder may contact the Company at the above address and phone number.

 

Solicitation of Proxies

The expense of this solicitation is being borne by the Company. Solicitation of proxies may be made by mail, telephone or electronic transmission on our behalf by our directors, officers or employees, who will not be additionally compensated for this work.

7

PROPOSAL 1: Approval of the Issuance of the Second Stage Shares

Overview

On August 25, 2017, UQM entered into the Purchase Agreement with China National Heavy Duty Truck Group Co., Ltd. (“CNHTC”) and its wholly-owned subsidiary, Sinotruk (BVI) Limited (the “Buyer”), pursuant to which, the Buyer will acquire newly issued shares of common stock of UQM in two stages, and UQM and CNHTC plan to create a joint venture (the “JV”) to manufacture and sell electric propulsion systems for commercial vehicles and other vehicles in China. The terms of the Purchase Agreement were unanimously approved by the boards of directors of both companies.

In the First Stage Transaction, which closed on September 25, 2017, the Buyer acquired 5,347,300 shares, representing 9.9% of the total outstanding shares as of the date of the Purchase Agreement, for an aggregate consideration of approximately $5.1 million. In the second stage, the Buyer will acquire such number of additional shares (the “Second Stage Shares”) resulting in the Buyer owning a total of 34% of UQM’s then-outstanding common stock on a fully diluted basis, accounting for all outstanding stock options and warrants (38% on the basis of common stock shares currently outstanding) (the “Second Stage Transaction”). The purchase price for the Second Stage Shares (which is the same price at which the shares were sold in the First Stage Transaction) will be approximately $0.95 per share, which represents a 15 percent premium to the average daily trading price of Company common stock during the 30 days immediately prior to the signing of the Purchase Agreement.

Given the significant percentage of shares that may be issued in the Second Stage Transaction, the NYSE American stock exchange deems the Second Stage Transaction to result in a “change of control” requiring shareholder approval in accordance with Section 713 of the NYSE American Company Guide. Accordingly, we are seeking shareholder approval prior to the issuance of the Second Stage Shares pursuant to the terms of the Purchase Agreement.

Further Information about the Second Stage Transaction, including background regarding the transaction with the Buyer and the reasons why the Board believes the Second Stage Transaction is in the best interests of the Company and its shareholders, is discussed below.

Background

More than seven years ago, management and our Board realized a potential opportunity for sales of our products into the China market, which represents a fast-growing market and the largest potential market globally. In late 2013, the Board directed that management explore the best alternatives for increasing the Company’s business operations and prospects in China. After considering many alternative scenarios to enable direct sales into China, management determined that manufacturing products in an Asian-based facility with a well-positioned local partner offered the best strategic and economic alternative to service the large and growing Chinese domestic market.

In connection with pursuing a transaction with a company with experience in China, on September 25, 2013 the Board formed a Special Committee of independent directors of the Board (the “Special Committee”) to oversee and approve any significant transactions with a local partner. The Special Committee was reauthorized through a Special Committee Charter approved on June 2, 2017.

From 2014 through 2016, the Special Committee and an investment banking firm engaged by the Company considered and evaluated a number of potential strategic investors and/or partners that they believed would be a good fit for the Company and its strategic plans. In 2016, this process resulted in a proposed transaction (the “HK Transaction”) with Hybrid Kinetic Group Limited (“HK”), a smaller China market participant, which sought a majority interest in the Company’s shares and which sought to amend the Company’s articles of incorporation and bylaws in ways to reduce minority shareholder voting rights. The HK Transaction was not fully approved by the Company’s shareholders due to this request to amend the article of incorporation and reduce minority shareholder rights, and the transaction was ultimately terminated.

8

Following the termination of the HK Transaction, the Board conducted a review of the China strategy in January 2017. The Board determined that all of the reasons supporting the decision to enter into an investment and joint venture agreement with a potential China partner remained. However, the Board noted the significant loss of autonomy the Company faced in selling a majority interest in the Company to HK, and the Board noted the vote of the shareholders approving the HK Transaction but rejecting any change which would have reduced the voting rights of minority shareholders. On that basis, the Company’s management and Board determined that the Company should continue its search for a strategic China partner, but should focus its search on investors in China who were willing to acquire a minority interest in the Company, rather than a majority interest or other controlling interest that would require a change in the Company’s articles of incorporation. Thereafter, the Company entered into discussions with the Buyer that have resulted in a transaction which the Company believes offers even a more compelling opportunity to build its financial capacity, access and market presence in the China market, which continues to represent the Company’s most strategic growth target.

Summary of the Second Stage Transaction

Transaction

The Company will issue and sell to the Buyer, a wholly-owned subsidiary of CNHTC, newly issued shares of the Company’s common stock upon the terms and conditions of the Purchase Agreement.

Purchase Price

Based on the current total outstanding shares of common stock of UQM, the total number of Second Stage Shares to be acquired by the Buyer in the Second Stage Transaction would be 24,348,500 shares for total proceeds of approximately $23.2 million. This price is equal to approximately $0.95 per share, reflecting a 15% premium over the trading average of the Company’s common stock on a volume weighted average basis over the 30 trading days ended on August 25, 2017, the execution date of the Purchase Agreement. The Purchase Agreement does not provide for any adjustment to the per share purchase price. However, the total number of Second Stage Shares to be issued may be adjusted depending on the total number of shares then outstanding at closing, such that the Buyer will own a total of 34% of such shares outstanding on a fully diluted basis, accounting for all outstanding stock options and warrants.

Use of Proceeds

We intend to use the proceeds from the sale of the Second Stage Shares for business growth, particularly for the establishment and development of the JV, and for working capital and other general corporate purposes.

Buyer Ownership:

Following closing of the Second Stage Transaction, the Buyer will own a total of 34% of UQM’s then-outstanding common stock on a fully diluted basis, accounting for all outstanding stock options and warrants.

Conditions to Closing the
Second Stage Transaction
Closing of the Second Stage Transaction is subject to the approval of UQM’s shareholders as set forth in this Proposal 1.  Closing of the Second Stage Transaction is also subject to approval by the Committee on Foreign Investment in the United States (“CFIUS”) under Section 721 of the Defense Production Act of 1950, as amended, as it will result in a material investment by a foreign-controlled entity in the Company.  The parties have agreed to submit a joint draft and final voluntary notice relating to the Second Stage Transaction to CFIUS as promptly as practicable following the execution of the Purchase Agreement, and the parties have further agreed to use reasonable best efforts to obtain all shareholder approvals and other consents and approvals from all governmental authorities that may be or become necessary for completion of the Second Stage Transaction.  The parties expect to receive the aforementioned shareholder and CFIUS approval within 120 days of the execution of the Agreement, with options to extend such period as needed. However, there can be no assurance that any such approval will be obtained within such timeframe or at all.

9

The closing of the Second Stage Transaction is also subject to the satisfaction or waiver by the respective parties of customary closing conditions and other conditions, including, among others:  (a) the accuracy at closing of the parties’ representations and warranties set forth in the Purchase Agreement and the parties’ compliance with their covenant obligations therein; (b) prior to the closing of the Second Stage Transaction, completion of a joint venture agreement (the “Joint Venture Agreement”) and a technology transfer agreement (the “Technology Transfer and Service Agreement”) between the parties governing development and sale of electric motor products in China, and (c) the filing of the Purchase Agreement with applicable Chinese governmental agencies.
Covenants Following the Closing of the Second Stage Transaction

Following the successful completion of the Second Stage Transaction and for as long as the Buyer maintains an ownership interest of at least 25% of the Company’s common stock shares outstanding, the Company has agreed to confer with CNHTC in advance (unless it is impractical to confer in advance) of undertaking certain extraordinary actions, including (i) issuing new shares of stock, (ii) increasing our Board size beyond eight directors, (iii) amending the Company’s by-laws, (iv) consummating agreements involving payments or encumbrances exceeding $500,000 annually, (v) entering any union agreement or plan, (vi) granting new equity compensation awards exceeding 1.5% of the current outstanding common stock, (vii) issuing any dividend or distribution of cash or property, or (viii) terminating the employment of (except for cause) or amending any of the employment agreements with current Company executives;provided,however, that following receipt of any good-faith, material objections from CNHTC to any of the above actions, the Company will modify such actions to the extent commercially reasonable without violating restrictions or requirements arising under applicable corporation laws, director fiduciary duties or the Company’s articles of incorporation or bylaws.

In addition, following the closing of the Second Stage Transaction and for so long as CNHTC beneficially owns more than 9.9% of the Company’s common stock and the Joint Venture Agreement has not been terminated, the Company will not, without the prior written consent of CNHTC, take any action to materially modify the Company’s business strategy in China from that contemplated in the Joint Venture Agreement or the Joint Venture’s annual budget or business plan, including strategy regarding automotive passenger cars in China, sales to Chinese third parties, licensing of technology to Chinese entities or other matters related to the China new energy vehicle market.

10

Board of Directors Following Closing of the Second Stage Transaction

Upon closing of the First Stage Transaction on September 25, 2017, CNHTC exercised its right to nominate (subject to the Company’s reasonable consent) one non-voting observer to the Board (the “Board Observer”). Accordingly, the Board appointed Mr. Ma Chunji, who is the chairman of the board of directors of both CNHTC and the Buyer, as the Board Observer. Prior to the closing of the Second Stage Transaction, the Board Observer has no voting power on the Board. Upon closing of the Second Stage Transaction, (i) the Company will increase the size of the Board to eight members, (ii) the Board Observer shall have all the rights of a full Board member and (iii) CNHTC will have the right to nominate two additional Board members. In addition, for as long as CNHTC owns at least 33% of the total outstanding shares of common stock of the Company, CNHTC will have the right to nominate three of the Board’s eight members, including the Chairman of the Board.

Noncompetition

The Company and CNHTC have agreed to negotiate in good faith to establish the JV through which the Company will conduct its business in China. Following the closing of the First Stage Transaction until the later of the termination of the Joint Venture Agreement and the date on which CNHTC ceases to own any shares of common stock of the Company, the Company has agreed not to undertake business in China that would directly or indirectly compete with the JV’s or CNHTC’s business in China.

Lockup and Standstill

The Buyer has agreed that from the date of the Purchase Agreement until the end of the first anniversary following the closing of the Second Stage Transaction, neither the Buyer nor any of its affiliates will, directly or indirectly, purchase any shares of capital stock of the Company representing a majority of the voting power of all the capital stock of the Company.

The Buyer also agreed that it will not, during the period commencing on the date of the Purchase Agreement and continuing for a period of one year (the “Lock-Up Period”), lend, offer, pledge, or sell, directly or indirectly, any shares of common stock of the Company without the prior written consent of a majority of the Board, subject to certain exceptions. The parties agreed that the Lock-Up Period will be immediately terminated and the Buyer will be entitled to sell or offer for sale its common stock purchased in the First Stage Transaction if the closing of the Second Stage Transaction cannot be consummated through the failure to obtain CFIUS approval or the failure of the parties to execute and deliver the Joint Venture Agreement and the Technology Transfer and Service Agreement, due to no act or omission by the Buyer.

Termination and EffectIf the Purchase Agreement is terminated without the Second Stage Transaction closing, then the Purchase Agreement will become void and of no further force and effect, with no liability on the part of any party to the Purchase Agreement (or any shareholder, director, officer, employee, agent or representative of such party) to any other party, except with respect to the parties’ confidentiality and indemnification obligations and the survival of customary governing law, notice and similar miscellaneous provisions.  In addition, a termination of the Purchase Agreement will not impact the Buyer’s purchase of any shares prior to such termination date, including the shares purchased by the Buyer in the First Stage Transaction.

11

Registration Rights AgreementPursuant to the terms of the Purchase Agreement, the Company entered into a registration rights agreement (the “Registration Rights Agreement”) with the Buyer.  The Registration Rights Agreement provides that within 15 days of the earlier of 75 days after submission of the initial CFIUS application and three months after the date of the Purchase Agreement, the Company will file an initial registration statement covering the Buyer’s registrable securities.  The Buyer will have customary “piggyback” registration rights.  The Registration Rights Agreement also requires the Company to pay expenses relating to such registrations, indemnify the registration rights holders against certain liabilities, and pay the Buyer certain liquidated damages in the event its registration statements are not declared effective.

Board Considerations

In determining that the Second Stage Transaction is in the best interests of the Company and its shareholders, the Board and the Special Committee considered various factors, including the following (not necessarily in order of importance):

1.Strategic objective of entry into China:

·The Company’s management team and Board determined that the Buyer met their three most important criteria needed for a strategic partner in China: (1) strong capital position; (2) proven manufacturing capacity and other infrastructure in China; and (3) access to the Asia market.
·Based on the understanding of the management team and the Board of the Company’s business, operations, financial condition and financing needs, earnings, growth prospects and products, they determined that it is critical that the Company expand its manufacturing, marketing and sales capacity into the growing Chinese market, the largest market in the world for electric vehicles. Accordingly, the Company has conducted, with the assistance of a business development firm focused on Asian opportunities, a formal process over the past few years to seek strategic partners and investors for the Company’s electric motors and controllers business in China, as well as to explore other opportunities for strategic partnership and/or investment.
·The Company and its Board determined that to be a successful entrant into China, the Company needs additional capital reserves and a strong business affiliation with a China partner.
·The completed First Stage Transaction and the contemplated Second Stage Transaction enable expansion into China and other international markets while providing the immediate and long-term financial benefit to the Company of receiving an aggregate of approximately $28.3 million in cash from the sale of its stock, thereby significantly enhancing the Company’s current cash position and alleviating longer-term liquidity concerns.
·The Board believes that the transaction with the Buyer represents the best offer following an exhaustive market search aided by independent advisors with knowledge of the Asian markets. The Company’s management team and its Board believe this transaction provides compelling financial benefit and a strong likelihood of a successful entry into the China market.

12

2.Concerns if the Company is unable to close the Second Stage Transaction or a similar transaction:

·The Board and the Special Committee also considered the effect to the Company of not pursuing the transactions contemplated by the Purchase Agreement with the Buyer, including the Second Stage Transaction, or a similar transaction to acquire additional funds to continue its operations and pursue its desired strategy, and the consequences to the Company and its shareholders of this inaction, including:

oAt June 30, 2017, the Company had cash and cash equivalents of $2.1 million and working capital of $3.2 million. The Company’s net loss for the quarter ended June 30, 2017 was $1.3 million and its operating loss for the same quarter was $1.3 million. The Company’s current levels of cash and working capital will not continue to support this rate of operating losses until the future time at which the Company’s management and Board believes the Company will become profitable.

oEven if the Company’s level of operations did not result in a continuing operating loss or the Company had sufficient cash and working capital on hand to satisfy its current rate of losses, the Company does not currently have sufficient funds for capital expenditures and initial working capital necessary to establish an Asia-based manufacturing facility to support the Chinese and other Asian markets. The Company’s management also believes, from its discussion with numerous China-based potential customers, that having an Asia-based manufacturing facility rather than exporting product from the United States is essential to its ability to generate sales in the China electric vehicle market.

·Based on the analysis of the Company’s management on alternative sources of capital, including public or private sales of common stock, warrants, or convertible or nonconvertible debt securities and the likely price and other terms and conditions of such sales, the Board and the Special Committee determined that the significant cost of such financing, even if it could be obtained, to the Company and the attendant significant dilution to its shareholders was substantially less favorable to the Company than pursuing the Second Stage Transaction.

·If the closing of the Second Stage Transaction cannot be consummated through the failure to obtain CFIUS approval or the failure of the parties to execute and deliver the Joint Venture Agreement and the Technology Transfer and Service Agreement due to no act or omission by the Buyer, then the Lock-Up Period will be immediately terminated and the Buyer will be entitled to sell or offer for sale its common stock purchased in the First Stage Transaction. Accordingly, any sales by the Buyer of a substantial number of shares of our common stock in the public market following a termination of the Lock-Up Period may cause the market price of our shares to decline.

3.Adverse Factors:

·The Second Stage Transaction might be delayed or might not close, including the risk that the required CFIUS approvals might not be obtained, and the likely loss of value to the Company if there is a delay or the Second Stage Transaction fails to close for any reason.

13

·The Buyer will have a significant ownership percentage following the Second Stage Transaction and participation on the Company’s Board, which will enable the Buyer to affect the outcome of, or exert significant influence over, all matters requiring Board or shareholder approval, including the election and removal of directors and any change in control. In particular, this concentration of ownership of our common stock could have the effect of delaying or preventing a change in control of us or otherwise discouraging or preventing a potential acquirer from attempting to obtain control of us. This, in turn, could have a negative effect on the market price of our common stock. It could also prevent our shareholders from realizing a premium over the market prices for their shares of common stock. Moreover, the interests of this concentration of ownership may not always coincide with our interests or the interests of other shareholders. The concentration of ownership may also contribute to a low trading volume and volatility of our common stock.

·The Company has must confer with CNHTC in advance of undertaking certain extraordinary actions and that CNHTC will have certain Board rights, as described under “-Summary of the Second Stage Transaction” above.

·There may be commercial, cultural and other hurdles in executing the strategy of establishing a joint venture and market the Company’s products in China.

4.Additional Factors:

·The purchase price for the Second Stage Shares (which is the same price at which the shares were sold in the First Stage Transaction) will be set at approximately $0.95 per share, which represents a 15 percent premium to the average daily trading price of Company common stock during the 30 days immediately prior to the signing of the Purchase Agreement.

·The terms and conditions of the Purchase Agreement, including, among other things, the representations, warranties, covenants and agreements of the parties, the conditions to closing, the form and governance of the Company post-closing and the termination rights of the parties, taken as a whole, were more favorable than those terms and conditions negotiated with other potential strategic partners and/or investors.

·Pursuant to the terms of the Purchase Agreement, all of the Company’s independent directors will continue to serve on the Board following the consummation of the Second Stage Transaction.

The foregoing discussion of the information and factors considered by the Company’s management team, the Board, and the Special Committee is not intended to be exhaustive, but includes the material factors considered by them. The Board based its favorable recommendation to the Company’s shareholders on the totality of the information presented.

Portions of this explanation of the reasons for the transactions contemplated by the Purchase Agreement, including the Second Stage Transaction, and other information presented in this section are forward-looking in nature and, therefore, should be read in light of the section entitled “Cautionary Statement Concerning Forward-Looking Information” elsewhere in this proxy statement. In addition, you are encouraged to read the Purchase Agreement carefully in its entirety, which was included as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on August 30, 2017.

14

Interests of the Company’s Directors and Executive Officers in the Transaction

None of the directors or executive officers of UQM have any interest in the Buyer or any relationship with the Buyer other than from association with the Buyer and its executives through the course of the negotiation of the Purchase Agreement.

 

The Purchase Agreement contemplates no change in management following the closing of the Second Stage Transaction. Mr. Mitchell and our other executive officers are parties to employment agreements with the Company, the terms of which end on December 31, 2019 in each case. As a condition to the closing of the Purchase Agreement, Messrs. Mitchell and Ley have amended their employment agreements to extend the non-competition and non-solicitation time periods set forth in their current agreements from a period of one year to two years from the date of termination of employment for any reason. In addition, in exchange for the extension of the non-competition and non-solicitation periods, the amendments to the employment agreements increased the severance payable to Mr. Mitchell upon a termination without cause (or termination for good reason) to two years of base salary (from one year of base salary) and increased the severance payable to Mr. Ley upon a termination without cause (or termination for good reason) to two years of base salary (from six months of base salary). The parties have agreed that following the closing of the Transaction, the Company will continue to honor the terms of those employment agreements, as amended.

5


 

Required Vote

The affirmative vote of a majority of the shares represented at the Annual Meeting and entitled to vote is required for this proposal. Abstentions will be counted as present and entitled to vote on this proposal and will therefore have the effect of a negative vote. Broker non-votes will not be counted as present and entitled to vote on this proposal and will therefore have no effect on the outcome of this proposal.

THE BOARD RECOMMENDS A VOTE “FOR” THE APPROVAL OF THE ISSUANCE BY THE COMPANY OF THE SECOND STAGE SHARES.

15

PROPOSAL 1: 
Election of Directors

PROPOSAL 2: Election of Directors

Pursuant to the bylaws of the Company, the Board sets the number of directors.  The Board currentlyconsists of five members. The Board has nominated five candidates to stand for re-election to the Board four of whom (Messrs. Vanlandingham, Mitchell, Roy, Sellinger and Sztykiel), four of whom are independent directors, as defined in the applicable rules of the SEC and the NYSE American. The other member is the Company’s Chief Executive Officer.American Stock Exchange (“NYSE American”).  Proxies may not be voted for more than five persons.  The Board is not classified, and each director serves for a term of one year and thereafter until his successor is duly elected and qualified.

At the Annual Meeting, the shareholders will elect five members to the Board.  In the absence of instructions to the contrary, the proxy holders will vote the shares represented by proxy in favor of the nominees listed below.  The Company expects each of the nominees listed below to be able to serve as a director.  If any nominee should become unavailable, however, it is intended that the proxy holders will vote for a substitute designated by management.

Name

 

 

Age

 

 

 

Position with the Company

 

 

 

Officer or
Director
Since

 

 

Business Experience

Donald W. Vanlandingham 77 Chairman of the Board, Member of the Compensation Committee and Member of the Governance and Nominating Committee 2003 

Chairman of the Board of Directors of Ball Aerospace and Technologies Corporation, a wholly-owned subsidiary of Ball Corporation from 2002 to 2003; President and Chief Executive Officer of Ball Aerospace and Technologies Corporation from 1996 to 2002.

 

Joseph R. Mitchell 57 President and Chief Executive Officer 2012 

President and CEO of UQM since January 2016. Interim President and CEO of UQM from July 2015 to January 2016. Senior VP of Operations of UQM from June, 2012 to December 2015. Director of Quality, North America for A123 Systems, Inc. from March to May, 2012. Director of Operations and Quality - North American Hybrid Electric Drives for Continental Automotive from 2008 to February, 2012.

 

 

16

 

 

 

 

 

 

 

 

 

 

Name

    

Age

    

Position with the Company

    

Officer or
Director
Since

    

Business Experience

 

 

 

 

 

 

 

 

 

 

 

Donald W. 

Vanlandingham

 

78 

 

Chairman of the Board, Member of the Compensation Committee and Member of the Governance and Nominating Committee

 

2003 

 

Retired since 2003. Chairman of the board of directors of Ball Aerospace and Technologies Corporation, a wholly-owned subsidiary of Ball Corporation from 2002 to 2003; President and Chief Executive Officer of Ball Aerospace and Technologies Corporation from 1996 to 2002.

 

 

 

 

 

 

 

 

 

 

 

Joseph R. Mitchell

 

 

57 

 

President and Chief Executive Officer

 

2012 

 

President and CEO of UQM since January 2016. Interim President, CEO, and Chief Operating Officer (COO) of UQM from July 2015 to January 2016.  Senior VP of Operations of UQM from June 2012 to July 2015. Director of Quality, North America for A123 Systems, Inc. from March to May 2012. Director of Operations and Quality – North American Hybrid Electric Drives for Continental Automotive from 2008 to February 2012.

 

 

 

 

 

 

 

 

 

 

 

Stephen J. Roy

 

68 

 

Director, Chairman of the Audit Committee and Member of the Compensation Committee

 

2000 

 

Principal, STL Capital Partners, LLC since 2002.  Managing Director - Investment Banking for A. G. Edwards & Sons, Inc. from 1989 through 2002.

 

 

 

 

 

 

 

 

 

 

 

Joseph P. Sellinger

 

72 

 

Director, Chairman of the Compensation Committee, and Member of the Audit Committee and Member of the  Governance and Nominating Committee

 

2008 

 

Retired since 2006. Vice President, Anheuser Busch Companies and Chairman, President and Chief Executive Officer of the Anheuser Busch Packaging Group from 2000 to 2006.

 

 

 

 

 

 

 

 

 

 

 

John E. Sztykiel

 

61 

 

Director, Chairman of the Governance and Nominating Committee and Member of the Audit Committee

 

2012 

 

President, Chief Executive Officer and Director, Spartan Motors, Inc. from 2002 to February 2015.

 

 

Name

 

Age

 

Position with the Company

 

Officer or
Director
Since

 

Business Experience

Stephen J. Roy 67 

Director, Chairman of the Audit Committee and Member of the Compensation Committee

 

 2000 

Principal, STL Capital Partners, LLC since 2002. Managing Director - Investment Banking for A. G. Edwards & Sons, Inc. from 1989 through 2002.

 

Joseph P. Sellinger 71 

Director, Chairman of the Compensation Committee, and Member of the Audit Committee and the Governance and Nominating Committee

 

 2008 

Vice President, Anheuser Busch Companies and Chairman, President and Chief Executive Officer of the Anheuser Busch Packaging Group from 2000 to 2006.

 

John E. Sztykiel 60 Director, Chairman of the Governance and Nominating Committee and Member of the Audit Committee 2012 

President, Chief Executive Officer and Director, Spartan Motors, Inc. from 2002 to February 2015.

 

6


 

We have provided below information about each director’s specific experience, qualifications, attributes or skills that led our Board to conclude, in light of our business and corporate strategy that each such individual should serve as a director of the Company.Company at the time of their reelection in October 2018.

 

Mr. Vanlandingham, our Chairman, has been an independent director of the Company for 1415 years.  He brings many years of leadership and management experience as Chairman and Chief Executive Officer of a major technology and manufacturing company to his role on the Board.  With experience in overseeing development of technology and complex equipment with attention to development schedules, production, quality, business development and budgets, he brings valuable insight to the Board as it oversees the Company’s operations and strategy.

 

Mr. Mitchell is our President and Chief Executive Officer.  Mr. Mitchell has over 2627 years of experience in the automotive sector with particular focus in operations and quality, and over 1617 years of experience in hybrid electric automotive applications.  Mr. Mitchell brings operational and management experience specific to UQM’s business and is a recognized leader in the electric propulsion industry.

 

Mr. Roy has been an independent director of the Company for over 1718 years.  With over 30 years of investment banking experience and over ten years’ experience as a principal and co-founder of a private equity business, Mr. Roy brings valuable insight to the Company in finance and accounting, capital markets, business analysis and strategy.  Mr. Roy has the financial background and skills to serve as an “audit committee financial expert.”

 

Mr. Sellinger has been an independent director of the Company since 2008.  He brings extensive senior management experience with a major manufacturing company to his role on the Board.  From his experience running a high volume manufacturing business with annual sales in excess of $1 billion, he provides valuable insight to the Board on operations, planning and implementation of strategy, risk management and other issues as the Company launches volume production of its products.

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Mr. Sztykiel has been an independent director of the Company since 2012.  Mr. Sztykiel was the Chief Executive Officer of a manufacturer of trucks and truck components for 12 years.  In this capacity, Mr. Sztykiel has extensive senior management and marketing experience in the North American truck market. Mr. Sztykiel’s extensive management experience in a manufacturing company servicing the truck market provides valuable insight to the Board on strategy, marketing and manufacturing of the Company’s products.

 

No family relationship exists between any director, executive officer, significant employee or person nominated or chosen by the Company to become a director or executive officer.  There are no arrangements or understandings between any director and any other person pursuant to which any director was nominated as a director. None of our directors have been involved during the last ten years in any legal proceedings that is required to be disclosed under Item 401(f) of Regulation S-K.

 

During the transitional nine monthsyear ended December 31, 2016,2017, the Board held twelveeleven meetings. Each incumbent director attended or participated in more than 80 percent of the meetings of the Board and Board committees on which he served during the period he was a director.  Participation at meetings was sometimes by telephone, which is authorized under Colorado law.  The Company encourages directors to attend the annual meetingAnnual Meeting of shareholdersShareholders each year.  At the 20162017 Annual Meeting of Shareholders held November 22, 2016,30, 2017, all members of the Board attended.  The independent directors serving on the Board periodically meet as a group without management present.  None of the directors listed above have been involved during the last ten years in any legal proceedings that are material to an evaluation of the ability or integrity of that person to serve as a director of the Company.

 

Changes to Board if the Second Stage Transaction is Completed

Pursuant to the terms of the Purchase Agreement, upon closing of the First Stage Transaction on September 25, 2017, CNHTC exercised its right to nominate (subject to the Company’s reasonable consent) one non-voting observer to the Board. Accordingly, the Board appointed Mr. Ma Chunji, who is the chairman of the board of directors of both CNHTC and the Buyer, as the Board Observer. Mr. Ma is a senior economist with over 30 years’ experience in government, corporate management and strategic planning.

Prior to the closing of the Second Stage Transaction, the Board Observer has no voting power on the Board. Upon closing of the Second Stage Transaction, (i) the Company will increase the size of the Board to eight members, (ii) the Board Observer shall have all the rights of a full Board member and (iii) CNHTC will have the right to nominate two additional Board members. In addition, for as long as CNHTC owns at least 33% of the total outstanding shares of common stock of the Company, CNHTC will have the right to nominate three of the Board’s eight members, including the Chairman of the Board. Shareholders should note that while they will elect five directors at the Annual Meeting, the remaining three directors to be nominated by the Buyer pursuant to the terms of the Purchase agreement will not be nominated and elected until after the closing of the Second Stage Transaction.

Required Vote

Each of the five nominees for director will be elected upon the affirmative vote of a majority of the shares represented at the Annual Meeting and entitled to vote is required for this proposal. Abstentions will be counted as present and entitled to vote on this proposal and will therefore have the effect of a negative vote. Broker non-votes will not be counted as present and entitled to vote on this proposal and will therefore have no effect on the outcome of this proposal.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR“FOR” EACH OF THE NOMINEES PRESENTED.

 

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7


 

Board and Corporate Governance Matters

Selecting Nominees for Director

The Board has delegated to the Governance and Nominating Committee the responsibility for reviewing and recommending to the Board nominees for director.  The Governance and Nominating Committee, in evaluating director candidates, considers factors such as professional background and skills, age and business experience, personal character and values, ethical standards, diversity, existing outside commitments and planned future commitments, among other things.  However, the Governance and Nominating Committee has not established any specific minimum criteria or qualifications that a nominee must possess.

The Governance and Nominating Committee is responsible for recommending nominees for election at the Annual Meeting and for identifying one or more candidates to fill any vacancies that may occur on the Board.  The Governance and Nominating Committee may use a variety of sources to identify new candidates such as recommendations from independent directors or members of management, search firms, discussions with business associates and other persons who may know of suitable candidates to serve on the Board and shareholder recommendations.  Evaluation of candidates typically includes a review of the candidate’s qualifications by the Governance and Nominating Committee based upon the factors described above, interviews with one or more members of the committee and interviews with one or more members of the Board.  The Governance and Nominating Committee then recommends suitable candidates to the full Board who then approves or rejects the nominee.

The Governance and Nominating Committee will consider director candidates proposed by shareholders using the same evaluation criteria as for candidates recommended from other sources.  Any shareholder interested in submitting a prospective nominee for consideration by the Governance and Nominating Committee should submit the candidate’s name and qualifications addressed to: Corporate Secretary at 4120 Specialty Place, Longmont, Colorado 80504. See the section entitled “Proposals by Shareholders for the 2018 Annual Meeting” for additional information.

Board Diversity

Our Board is comprised of persons the Company believes are accomplished professionals who represent diverse and key areas of expertise including, national and international business, operations, marketing, manufacturing, finance and investing, management, entrepreneurship, government and science, research and technology.  While we do not have a formal diversity policy with respect to director nominations, we believe that the diversity of skills, knowledge, opinions and fields of expertise represented on our Board is one of the Board’s core strengths. When identifying and selecting director nominees, the Governance and Nominating Committee considers the impact a nominee would have in terms of increasing the diversity of the Board with respect to professional experience, background, viewpoints, skills and areas of expertise together with considering diversity of race, gender and national origin of potential director candidates.  We believe that the resulting diversity of directors allows the Board to engage in honest and challenging discussions, in service of the best decisions for the Company and its shareholders. The diversity of our directors’ skills allows each director an opportunity to provide specific leadership in his respective areas of expertise.

 

Board Leadership Structure

We have a Board leadership structure whereby the positions of Chairman of the Board and Chief Executive Officer are separate. We believe this structure provides the Board with independent leadership and oversight of management and allows the Chief Executive Officer to concentrate on the Company’s business operations.

Our Board is comprised of five directors, four of whom are independent directors.  All of our independent directors are highly accomplished and experienced business leaders in their respective fields, who have demonstrated leadership in significant enterprises and are familiar with Boardboard processes.

  For additional information about the backgrounds and qualifications of our directors, see “Election of Directors” in this proxy statement. 

We believe the current Board leadership structure facilitates effective communication, oversight and governance of the Company consistent with the best interests of the Company’s shareholders and other stakeholders.

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8


 

Board Risk Oversight

Our Company faces a number of risks including financial, operational, reputational, credit and liquidity, governance and regulatory.  The Chief Executive Officer and Chief Financial Officer are primarily responsible for identifying, assessing and managing these risks.  The Board provides additional risk oversight in several ways, including:  (a) discussing internal controls and financial reporting annually through review and approval of the Company’s annual budget, including a review of potential risks that could negatively impact the proposed budget and plan; (b) performing regular reviews with management regarding the Company’s liquidity and capital requirements; and (c) engaging in periodic discussions regarding operational, asset protection and security, regulatory and other risks with our Chief Executive Officer, Chief Financial Officer, and other Company officers, as it deems appropriate.

 

Communications from Shareholders to the Board

of Directors

The Board recommends that any communications from shareholders be in writing and addressed to the Board in care of the Corporate Secretary, 4120 Specialty Place, Longmont, Colorado 80504.  The name of any specific intended Board members should be noted in the communication. The Board has instructed the Corporate Secretary to forward such correspondence only to the intended recipients; however, the Board has also authorized the Corporate Secretary, prior to forwarding any correspondence, to review the correspondence, and in his discretion, not to forward certain items if they are deemed frivolous, of inconsequential commercial value or otherwise inappropriate for Board consideration.

Code of Ethics

The Company has adopted a Code of Business Conduct Ethics that applies to all directors, officers, employees, consultants, representatives and agents. The Code of Business Conduct Ethics is available on our website at www.uqm.com “Investors - Corporate Governance.”  If the Company makes any substantive amendments to the Code of Business Conduct Ethics or grants any waiver from a provision of the code to any executive officer or director, the Company will promptly disclose the nature of the amendment or waiver on its website.

 

Committees of the Board

Our Board has three standing committees - Audit, Compensation, and Governance and Nominating.  Each of the Audit, Compensation and Governance and Nominating committees is comprised entirely of independent directors and is led by a committee chair.  All of our independent directors are encouraged to, and do, actively participate in the development of the Company’s business strategy in collaboration with the Chief Executive Officer and in the general oversight of the Company’s operations and financial affairs.

 

Mr. Roy serves as the committee chair of the Audit Committee. In this role, he exercises substantial influence and judgment over the Company’s financial affairs and financial reporting. The Audit Committee has a written charter adopted by the Board that specifies its duties including assisting the Board in its general oversight of the Company’s financial reporting, internal controls and audit functions, and its direct responsibility for the appointment, retention, compensation and oversight of the independent registered public auditors.  A copy of the Company’s Audit Committee charter is available on our website at www.uqm.com “Investors - Corporate Governance”.  The Audit Committee consists of three directors, Messrs. Roy, Sellinger and Sztykiel and met threefive times during the transitional nine months endedyear ending December 31, 2016.2017.  All members of the Audit Committee are independent directors as defined in applicable rules of the NYSE American and the SEC.  The Board has determined that Mr. Roy meets the qualifications of an “audit committee financial expert” in accordance with SEC rules.  See also “Report of the Audit Committee” below.

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Mr. Sztykiel serves as the committee chair of the Governance and Nominating Committee. In this role, he exercises substantial influence and judgment over the Company’s governance policies and the identification and evaluation of candidates for our Board.  The Governance and Nominating Committee considers such matters as whether the size and composition of the Board is appropriate in the context of the Company’s business operations, monitors and addresses issues related to corporate governance and suggests changes when it deems appropriate and oversees the annual assessment of Board performance.  A copy of the Company’sThe Governance and Nominating Committee has a written charter is available on our website at www.uqm.com “Investors - Corporate Governance”.specifying its responsibilities.  See also “Selecting Nominees for Director” above. The Governance and Nominating Committee

9


consists of three directors,directors; Messrs. Sellinger, Sztykiel and Vanlandingham and met one timethree times during the transitional nine months endedyear ending December 31, 2016.2017.  All members of the Governance and Nominating Committee are independent directors as defined in applicable rules of the NYSE American and the SEC.American.

 

Mr. Sellinger serves as the committee chair of the Compensation Committee.  In this role, he exercises substantial influence and judgment over the Company’s compensation practices, particularly as it relates to the structure and competitiveness of the Company’s executive compensation.  The Compensation Committee reviews the performance and compensation of the Company’s Chief Executive Officer and administers the 2012 Equity Incentive Plan, Employee Stock Purchase Plan, Non-Employee Director Stock Option Plan and Stock Bonus Plan.  The Compensation Committee consists of three directors.directors, Messrs. Roy, Sellinger and Vanlandingham, and met foureight times during the transitional nine months endedyear ending December 31, 2016.2017.  All members of the Compensation Committee are independent directors as defined in applicable rules of the NYSE American and the SEC.American.  The Compensation Committee has a written charter specifying its responsibilities which is available on our website at www.uqm.com “Investors - Corporate Governance.”

Compensation Committee Interlocks and Insider Participation

Messrs. Roy, Sellinger and Vanlandingham were members of the Compensation Committee during the year ending December 31, 2017. All members of the Compensation Committee were independent directors, and no member was an employee or former employee of the Company. During the year ending December 31, 2017, none of the Company’s executive officers served on the compensation committee (or its equivalent) or board of directors of another entity whose executive officer served on the Board or the Compensation Committee.

 

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MANAGEMENT

MANAGEMENT

The executive officers of the Company are:

 

Name

Age

Position

Joseph R. Mitchell

57

President and Chief Executive Officer

David I. Rosenthal

62

63 

Treasurer, Secretary and Chief Financial Officer

Adrian P. Schaffer

55

56 

Senior Vice President of Sales and Business Development

Josh M. Ley

42

43 

Vice President of Engineering

 

On January 5, 2016, Joseph R. Mitchell was appointed our President and Chief Executive Officer in conjunction with already beinghaving been appointed Chief Operating Officer on July 20, 2015.  Mr. Mitchell served as our interim President and Chief Executive Officer from July 20, 2015 until January 5, 2016.  Mr. Mitchell joined the Company on June 1, 2012 and served as Senior Vice President of Operations.  From March 2012 until joining the Company, Mr. Mitchell was Director of Quality, North America, for A123 Systems, Inc. Mr. Mitchell served as Director, Operations and Quality - North American Hybrid Electric Drives for Continental Automotive from January 2008 through March 2012. From January 2007 through January 2008, Mr. Mitchell served as Director of Operations and Hybrid Drive Segment Manager for Siemens VDO. Prior to that, Mr. Mitchell held a series of manufacturing and quality positions at Ballard Power Systems and Ford Motor Company.

 

David I. Rosenthal joined the Company as Treasurer, Secretary and Chief Financial Officer on May 1, 2013.  From March 2011 until joining the Company, Mr. Rosenthal was a Financial Consultant for start-up and turnaround companies. From February 2010 until February 2011, Mr. Rosenthal was Interim President and Chief Executive Officer of Cyanotech Corporation, a publicly-traded manufacturer of nutritional supplement products.  Mr. Rosenthal served as a director of Cyanotech from August 2000 until September 2011.  From May 2008 until March 2009, Mr. Rosenthal served as Chief Financial Officer for Hickory Farms and from June 2007 until November 2007 served as Chief Financial Officer of Sanz, Inc., both portfolio companies of the private-equityprivate equity firm Sun Capital Partners.

 

10


Adrian P. Schaffer joined the Company on December 1, 2011 as Vice President of Sales and Business Development.  From February 2006 until joining the Company, Mr. Schaffer served as Vice President of Sales for the Industrial, Commercial and Energy Group of Linamar Corporation, a leading supplier to the global vehicle and mobile industrial markets. Mr. Schaffer also spent thirteen years with Motorola Corporation where he held positions in sales, business development and account management in Motorola’s Telematics, Powertrain, Autobody and Heavy Vehicle Electronics Groups, including most recently as Director of Global Marketing for the global automotive group.

 

Josh M. Ley joined the Company in January 1994 and was appointed Vice President of Engineering on March 4, 2015.  Mr. Ley previously served as Motor Design Engineer and Manager of Motor Design Engineering for the Company.

 

There are no arrangements or understandings between any executive officer and any other person pursuant to which any executive officer was selected as an executive officer.  None of the executive officers listed above have been involved during the last ten years in any legal proceedings that are materialis required to an evaluationbe disclosed under Item 401(f) of the ability of that person to serve as an executive officer of the Company.Regulation S-K.

 

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SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) Beneficial Ownership Reporting Compliance

Under Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Company’s directors, its executive (and certain other) officers, and any persons holding more than ten percent of the Company’s common stock are required to report their ownership of the Company’s common stock and any changes in that ownership to the SEC.  The Company is required to report in this statement any failure to file timely reports with the SEC during the transitional nine months endedyear ending December 31, 2016.2017.  Based solely on its review of Form 3, Form 4 and Form 5 filings, the Company believes that the following required Section 16(a) reports werereport was not filed timely during the transitional nine months endedyear ending December 31, 2016.2017.

 

Name # of Late Forms  # of Transactions
Reported Late
  Failure to File a
Required Form
 
Joseph R. Mitchell  1   1    
David I. Rosenthal  2   2    
Adrian P. Schaffer  2   2    
Donald W. Vanlandingham  1   1    
Stephen J. Roy  1   1    
Joseph P. Sellinger  1   1    
John E. Sztykiel  1   1    

 

 

 

 

Name

# of Late Forms

# of Transactions Reported Late

Failure to File a Required Form

Joseph R. Mitchell

1

1

-

 

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COMPENSATION DISCUSSION AND ANALYSIS

COMPENSATION DISCUSSION AND ANALYSIS

Compensation Philosophy and Objectives

 

Our executive compensation program is designed to attract, motivate and retain highly qualified executives, while providing performance-based incentives for the attainment of strategic business objectives, rewarding superior performance and aligning the interests of our executives with those of our shareholders.

 

Our management compensation program has three primary components:

 

Base pay

Provides an annual salary level consistent with market conditions, the individuals’individual’s position, responsibility and contributions.

 

Bonus

Provides variable cash compensation based on the achievement of Company, organizational and individual performance objectives.

 

Long-term equity-based Incentive pay

Aligns a portion of each executive’s annual compensation to the long-term success of the Company and encourages an ownership mindset that aligns the interests of management with those of the Company’s other shareholders.

 

The minimum base pay component of executive compensation is specified in employment agreements with our executive officers.  Bonus payments are performance-based payments that are payable annually in lump sum cash payments.cash. Long-term equity-based incentive awards consist of shares of the Company’s common stock, stock options to acquire shares of the Company’s common stock or a combination of both.

11


 

Bonus payments and long-term incentive grants are determined by the Compensation Committee based principally on objective criteria consisting of each executive officer’s achievement of personal and Company-wide goals.  Payments of bonus awards each fiscal year are based on a retrospective review of the prior fiscal year’s performance.  The amount of the cash bonus payment and long-term incentive grant for each executive is determined based on the Compensation Committee’s deliberations regarding attainment of individual and Company-wide goals by Company executives.  The Compensation Committee’s determination of the degree of attainment of these goals by each executive was subjective and based on the Committee’sits deliberations.  The Compensation Committee also annually reviews the base pay of our executive offices and may increase (but not decrease) the amount of base pay as specified in the respective employment agreement with each executive.

 

The Compensation Committee is composed of three members of our Board, each of which is independent as defined in applicable rules of the NYSE American and the SEC.American.  The Compensation Committee does not delegate its authority to establish executive compensation to any other persons.  The Compensation Committee approved the total compensation (and each of the individual elements of compensation) for Joseph R. Mitchell, President and Chief Executive Officer.  The Committee also approved the compensation of the other named executive officers with input from the Chief Executive Officer.

 

In the twelve months ended March 31, 2015,2017, the Compensation Committee engaged Pay Governance LLCretained the consulting firm Frederic W. Cook & Co., Inc. to providereview and assist in establishing appropriate compensation for the Company’s executive officers.  Frederic W. Cook & Co. evaluated the compensation practices of a peer group of 18 publicly-traded companies with broadly similar operations as UQM.  The consulting services on executivefirm affirmed that the compensation pay scales and alternative executive compensation plans.packages of the Company’s executives are in-line with market comparisons.  The Compensation Committee anticipates that it may engage a compensation consultant at an interval of every three to five years to assist it in evaluating the competitiveness of itsthe Company’s executive compensation program.

 

The Compensation Committee has also reviewed compensation data from a peer group of alternative energy companies that it believed to be in competition with the Company in the marketplace for executive talent.  While the Compensation Committee does not set benchmark percentile targets for executive compensation, the compensation levels for the three primary elements of executive compensation are generally set to establish pay levels that are competitive with those of the identified peer group of companies.

24

 

The Compensation Committee has reviewed all compensation policies and practices for executive officers and employees to determine if there is risk arising from such policies and practices that could reasonably have a material adverse effect on the Company. The Compensation Committee reviews all aspects of performance in determining bonus awards and there are no specific threshold targets that increase bonuses.  In addition, the Company’s maximum bonus award in any year is limited to two times the target bonus, and the Company has to date never exceeded a bonus payout of more than 100% of the target.  Further, bonuses awarded may be recouped pursuant to our Clawback Policy.clawback policy.  Therefore, the Compensation Committee believes there is a low risk for any material adverse effect on the Company arising from compensation policies and practices.

 

We have entered into employment agreements with our executive officers that contain severance payment provisions, including change in control severance payments, and provide a modest program of executive perquisites and personal benefits as are further described in the section “Employment Agreements” below.  The purpose of the employment agreements is to provide financial security for the executive, to aid in retention and to encourage loyalty to and long-term employment with the Company.

 

2017 Say-on-Pay Advisory Vote

 

As selected byAt our 2017 annual meeting of shareholders, atapproximately 87% of the 2011 Annual Meeting of Shareholders and approved by our Board, an advisory vote to approve the compensation of our named executive officers is held annually, subject tovotes cast on the advisory vote to recommend the frequency of such vote as set forthon executive compensation voted in Proposal 5 for the Annual Meeting. At our 2016 Annual Meeting of Shareholders, over 76% of the Company’s voting shareholders approved, on an advisory basis, the compensationfavor of our named executive officers.compensation program.  Our Compensation Committee considered the results of the advisory vote on executive compensation. In this proxy statement (Proposal 5), the Company proposes to continue the advisory vote to approve the compensation of our named executive officers on an annual basis.

 

12


Adoption of Compensation Clawback Policy

 

OnIn July 7, 2015, our Board adopted the UQM Technologies, Inc. Clawback Policy.  This clawback policy allows us to recoup executive incentive compensation in the event of an accounting restatement resulting from material noncompliance with financial reporting requirements under the federal securities laws.   The clawback policy applies to all forms of incentive compensation previously granted to executive officers, including stock options, cash bonuses, and restricted stock, that were granted during the three years prior to any accounting restatement. The amount to be recovered will be the excess of the executive compensation paid to the named executive officer based on the erroneous data over the executive compensation that would have been paid to the named executive officer had it been based on the restated results, as determined by the Compensation Committee.

 

Elements of Compensation

Base Salary. Salary.  Base salaries for our executives are established based on the scope of their responsibilities, taking into account competitive market compensation for similar positions in the peer group of companies, as well as the experience and performance of the individual, our ability to replace the individual and other primarily judgmental factors deemed relevant by the Compensation Committee.  Base salaries are reviewed annually by the Compensation Committee and the Board and may be increased, but not decreased without the consent of the executive, by the Board from time to time coincident with our annual review.

 

During the transitional nine months endedyear ending December 31, 2016,2017, the Compensation Committee increased annual base salary for each executive by approximately 2.0%3.0%. These increases consisted of cost of living and merit based adjustments and are reflected in the current employment agreement for each executive.adjustments. 

Cash Bonus Compensation. Compensation. The Compensation Committee annually considers the award of performance-based cash bonuses to compensate executives for achieving financial, operational and strategic goals and for individual performance.  The amount of cash bonuses, if any, is established during deliberations by the Compensation Committee using its judgment after considering the objective and subjective factors discussed above and the individual’s performance. As a result, bonuses may vary greatly from one year to the next.

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The Compensation Committee has established target cash bonus levels as a percentage of base salary for each executive officer based on the level of responsibility for each executive position and by reference to the level of target cash bonus payments by the peer group of companies. The target cash bonus levels for each of the Company’s executive officers as a percentage of each officer’s base salary is as follows:

 

Name of Executive Officer

Target Bonus
Percentage

Joseph R. Mitchell

75 

75

%

David I. Rosenthal

40 

40

%

Adrian P. Schaffer

35 

30

%

 

Actual cash bonus payments may either exceed or be less than the target level based on the Compensation and Benefit Committee’s judgment as to whether individual and Company-wide goals were met, exceeded or partially-met, subject to a maximum bonus award in any year of two times the target bonus.

 

For the transitional nine months endedyear ending December 31, 2016,2017, cash bonuses paid to executive officers as a percentage of their base salary in April, 2018, were as follows:

 

Name of Executive Officer

Bonus Percentage
Paid

Joseph R. Mitchell

56 

28

%

David I. Rosenthal

30 

14

%

Adrian P. Schaffer

26 

11

%

 

The principal Company-wide goals for the transitional nine months endedyear ending December 31, 20162017 used by the Compensation Committee for purposes of determining bonus payments included solidifyinggrowing the Company’s base revenue, maintaining and improving gross margins, securing a long-term contract,strategic partner, controlling the rate of cash outflows with cost management and efficiencies, and executing on product innovation and product quality.

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In reviewing management’s performance for the transitional nine monthsyear ended December 31, 20162017 against the goals, in July 2017April 2018, the Compensation Committee noted management’s success in controlling cash outflows with cost management and efficiencies, product innovation and product quality, andachieving its less satisfactory performance in securing a long-term strategic partner and solidifying base revenue.goals.  Based on this performance, the Compensation Committee determined that a cash bonus of 35%100% of the target levelprorated at 75% be awarded to the executives. In addition,These bonuses were paid in May, 2018.   The proration was due to the Compensation Committee awarded an additional 2%timing of payment of the cash bonus as a result of the change in fiscal years from March 31 to Mr. Mitchell.December 31.

 

Pursuant to the prior executive employment agreements (which were entered into in July of 2015), the Company paid retention bonuses to certain executives for remaining employed through June 30, 2017. In this regard, the Company paid Mr. Mitchell $100,000, Mr. Rosenthal $100,000, and Mr. Schaffer $75,000 in July 2017. On July 1, 2017,When the Company entered into new employment agreements with eachits named executive officers in July 2015, it agreed to provide retention bonuses to its named executive officers to incent them to remain employees of Messrs.the Company while it explored strategic alternatives.  If the executive remained an employee of the Company continuously through June 30, 2017, he would be paid a cash bonus after that date in the amount specified in his respective employment agreement.  The retention bonuses were paid to its named executive officers, Mr. Mitchell, Mr. Rosenthal, and Shaffer. See “Executive CompensationEmployment Agreements” for additional information

Mr. Schaffer, in July 2017 in the amounts of $100,000, $100,000, and $75,000, respectively.

 

Long-Term Incentive Compensation.Compensation.  The Compensation Committee annually considers the award of long-term incentive compensation to compensate executive officers for their efforts in positioning the Company for long-term growth. The Compensation Committee considers a number of qualitative factors in setting the long-term incentive compensation for each executive officer, including the specific goals listed above as well as each executive officer’s contribution to a variety of  other Company-wide goals such as new customer and market development activities, supply chain optimization and improvement, technology base enhancements, new product development and launch activities, enhanced investor relations and implementation of certain extraordinary transactions, among other things.

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Long-term incentive compensation may be paid in the form of Company common stock or in the form of a grant of stock options or any combination of stock and stock options.  The Committee believes that equity-based compensation awards aid in the retention of the executive and serve to align the interests of the executive with those of the Company’s other shareholders. Equity-based compensation awards have a future service requirement (vesting period) of three years.

 

Qualitative criteria are generally used to establish goals and objectives that the Board believes add value to the Company and enhance its prospects for long-term growth and success.  The Compensation Committee has established target levels for long-term incentive compensation for each executive officer based on the level of responsibility for each executive position and the peer group of companies. The target long-term incentive compensation level (as a percentage of each officer’s base salary) for each of the Company’s executive officers is as follows:

 

Name of Executive Officer

Target Long-Term
Incentive Compensation

Joseph R. Mitchell

100 

100

%

David I. Rosenthal

65 

65

%

Adrian P. Schaffer

55 

50

%

 

The Compensation Committee reviewed performance for the transitional nine monthsyear ended December 31, 20162017 in July 2017April 2018 and determined to award long-term incentive compensation to the executive officers at 35%100% of the target level.  The fair value of long-term incentive compensation awards granted to executive officers in July 2017April 2018 for their performance, against goals for the transitional nine months ended December 31, 2016, as a percentage of their base salary, were as follows:

 

 

 

 

 

 

 

Name of Executive Officer Actual Long-Term
Incentive Compensation
Percentage Awarded
  Stock Options
# of Shares
 

 

Actual Long-Term Incentive Compensation Percentage Awarded

 

Options Granted
# of Shares

 

Stock Granted
# of Shares

Joseph R. Mitchell  35.0%  153,000 

 

100%

 

294,737

 

56,000

David I. Rosenthal  22.8%  74,804 

 

65%

 

142,143

 

27,007

Adrian P. Schaffer  17.5%  51,095 

 

55%

 

115,243

 

21,896

Employment Agreements

 

Employment Agreements

Each of our executive officers has an employment agreement with the Company, as described below.  The agreements provide for compensation in the form of annual base salary, which cannot be decreased during the term of the agreement

14


without the consent of the executive, a monthly automobile allowance, the opportunity for cash bonuses, stock awards and stock options and employee benefits available to other Company employees.  The agreements also provide for potential payments upon termination without cause, termination for good reason, termination during the 24 month period followingupon a change in control, disability death, and non-renewal of the employment agreement by the Company.or death.  See Executive CompensationEmployment Agreements” for additional information.“Employment Agreements” below.

 

Tax and Accounting Considerations

 

All elements of our employee and executive compensation program generate charges to earnings under generally accepted accounting principles in the United States.  Our allocations of the elements of total compensation are generally not influenced by the accounting treatment of each element.  We do, however, consider the tax treatment of compensation elements as one factor in the allocation of each element.

 

27

Executive Compensation

The following tables and narrative discuss the compensation of our Chief Executive Officer Chief Financial Officer and other highlyour next two highest compensated officerofficers serving as of December 31, 2017 as determined under the SEC rules for compensation earned or paid during the transitional nine months ended December 31, 2016 and twelve months ended on March 31, 2016.rules.  These persons are referred to as our named executive officers.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Summary Compensation Table

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Name and Principal Position       

 

Period ended (1)

 

Salary

 

Bonus (2)

 

Stock awards (3)

 

Option awards (3)

 

Non-equity incentive plan compensation (4)

 

All other compensation (5)

 

Total

 

 

 

 

 

($)

 

($)

 

($)

 

($)

 

($)

 

($)

 

($)

 

Joseph R. Mitchell

 

Dec-17

 

 344,975

 

  100,000

 

              -

 

          100,980

 

              196,875

 

             19,551

 

     762,381

 

    President and Chief

 

Dec-16

 

 251,625

 

              -

 

    28,215

 

            95,931

 

                93,000

 

             14,663

 

     483,435

 

    Executive Officer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

David I. Rosenthal

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Treasurer, Secretary

 

Dec-17

 

 257,247

 

  100,000

 

              -

 

            49,368

 

                77,905

 

                       -

 

     484,520

 

   And Chief Financial

 

Dec-16

 

 189,269

 

              -

 

    13,795

 

            46,904

 

                36,000

 

             11,912

 

     297,880

 

   Officer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adrian P. Schaffer

 

Dec-17

 

 237,570

 

    75,000

 

              -

 

            33,726

 

                65,315

 

             31,848

 

     443,459

 

  Sr. Vice President of Sales

 

Dec-16

 

 168,065

 

              -

 

      9,423

 

            32,038

 

                24,300

 

             32,588

 

     266,414

 

  and Business Development

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

The Company changed its fiscal year end date from March 31 to December 31 in 2016.  The amounts reflected for December, 2016 are for a nine month transition period.  The amounts reflected for December, 2017 are for a twelve month period.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2)

These payments were retention bonuses that were paid in July 2017 pursuant to the named executive officer's employment agreements.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3)

The amounts reported in the stock and option awards’ columns represent the aggregate grant date fair value in the year granted for prior year services performed computed pursuant to FASB ASC Topic 718 in the Company’s financial statements, not reduced by the estimated forfeiture rate.  The assumptions used in determining the fair value are contained in footnote 12 to the Company’s consolidated financial statements contained in Item 8 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4)

Non-equity incentive payments listed for the year ended December 31, 2017 represent payments to be made in May, 2018 with respect to performance in the year ended December 31, 2017.  Non-equity incentive payments listed for the nine months ended December, 2016 represent payments made in July 2017 with respect to performance during the nine months ended December 31, 2016.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5)

Amounts reported in the all other compensation column above are comprised of the following items:

 

Summary Compensation Table

Name and Principal
Position
 

Period
ended (2)

  Salary  

Bonus (3)

  

Stock
awards
(4)

  

Option
awards
(4)

  

All other
compensation
(5)

  Total 
       ($)   ($)   ($)   ($)   ($)   ($) 
Joseph R. Mitchell  Dec–16   251,625   93,000      100,980   14,663   460,268 
President and Chief Executive Officer(1)  Mar–16   265,280   141,000   21,576   103,925   19,576   551,357 
David I. Rosenthal  Dec–16   189,269   36,000      49,368   11,913   286,549 
Treasurer, Secretary and Chief Financial Officer  Mar–16   247,326   57,000   10,549   50,813   15,011   380,699 
Adrian P. Schaffer  Dec–16   168,065   24,300      33,726   32,588   258,679 
Vice President of Sales and Business Development  Mar–16   219,618   37,800   7,206   34,708   14,204   313,536 

15

(1)Mr. Mitchell was appointed President and Chief Executive Officer on January 5, 2016. Prior to that, Mr. Mitchell was appointed interim Chief Executive Officer on July 20, 2015 and Chief Operating Officer.

(2)UQM Technologies, Inc. changed its year-end date from March 31 to December 31 in 2016. The amounts reflected for March 2016 are for a twelve month period. The amounts reflected for December 2016 are for a nine month transition period.

(3)Bonus payments listed for the nine months ended December 31, 2016 represent payments made in July 2017 with respect to performance in the nine months ended December 31, 2016. Bonus payments listed for the twelve months ended March 31, 2016 represent payments made in July 2016 with respect to performance in the twelve months ended March 31, 2016.

(4)The amounts reported in the stock and option awards’ columns represent the aggregate grant date fair value computed pursuant to FASB ASC Topic 718 in the Company’s financial statements, not reduced by the estimated forfeiture rate. The assumptions used in determining the fair value are contained in footnote 10 to the Company’s consolidated financial statements contained in Item 8 of the Annual Report.

(5)Amounts reported in the all other compensation column above are comprised of the following items:

28

 

All Other Compensation

Name Period ended
(2)
  401(k) plan
matching
contributions
  Automobile
allowance
  Employer
paid life
insurance
(3)
  Moving,
professional
dues,
education &
other
  Total 
       ($)   ($)   ($)   ($)   ($) 
Joseph R. Mitchell(1)  Dec–16   5,999   7,290   1,374      14,663 
   Mar–16   7,992   9,720   1,864      19,576 
David I. Rosenthal  Dec–16   3,151   7,290   1,471      11,912 
   Mar–16   3,294   9,720   1,997      15,011 
Adrian P. Schaffer  Dec–16   2,798   7,290   1,159   21,341(4)  32,588 
   Mar–16   2,925   9,720   1,559      14,204 

 

(1)Mr. Mitchell was appointed President and Chief Executive Officer on January 5, 2016 and served as interim President and Chief Executive Officer from July 20, 2015 until January 5, 2016.

(2)UQM Technologies, Inc. changed their year-end date from March 31 to December 31 in 2016. The amounts reflected for March 2016 are for a twelve month period. The amounts reflected for December 2016 are for a nine month transition period.

(3)Premiums paid by the Company on Company-owned insurance policies to insure the salary continuation provisions contained in executive employment agreements which provide for the payment of three years annual base salary to the estate of the executive in the event of his death during the term of the employment agreement.

(4)Includes income tax gross-ups on apartment living expenses of $14,517.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

All Other Compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Moving,

 

 

 

 

 

 

 

 

 

 

 

 

 

professional

 

 

 

 

 

 

 

401(k) plan

 

 

 

Employer

 

dues,

 

 

 

 

 

 

 

matching

 

Automobile

 

paid life

 

education

 

 

 

Name 

 

Period ended (1)

 

 contributions

 

 allowance 

 

   insurance (2)

 

  & other  

 

Total   

 

 

 

 

 

($)

 

($)

 

($)

 

($)

 

($)    

 

Joseph R. Mitchell

 

Dec-17

 

                 7,999

 

          9,720

 

                1,832

 

                     -

 

  19,551

 

 

 

Dec-16

 

                 5,999

 

          7,290

 

                1,374

 

                     -

 

  14,663

 

 David I. Rosenthal

 

Dec-17

 

                 7,973

 

          9,720

 

                1,962

 

                     -

 

  19,655

 

 

 

Dec-16

 

                 3,151

 

          7,290

 

                1,471

 

                     -

 

  11,912

 

Adrian P. Schaffer

 

Dec-17

 

                 4,622

 

          9,720

 

                1,559

 

            15,947

(3)

  31,848

 

 

 

Dec-16

 

                 2,798

 

          7,290

 

                1,159

 

            21,341

(3)

  32,588

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

The Company changed its fiscal year end date from March 31 to December 31 in 2016.  The amounts reflected for December 31, 2017 are for a twelve month period.  The amounts reflected for December, 2016 are for a nine month transition period.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2)

Premiums paid by the Company on Company-owned insurance policies to insure the salary continuation provisions contained in executive employment agreements which provide for the payment of three years annual base salary to the estate of the executive in the event of his death during the term of the employment agreement.  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3)

Includes apartment living expenses of $10,930 for the twelve months ended December 31, 2017 and $14,517 for the nine months ended December 31, 2016, and income tax gross-ups on those expenses.

Stock Awards

 

We granted stock awards under the Company’s Stock Bonus Plan.  The shares granted vest in three equal annual installments beginning on the first anniversary of the grant date.

 

16


Option Awards

 

We granted option awards under the Company’s 2012 Equity Incentive Plan.  The options granted vest in three equal annual installments beginning on the first anniversary of the grant date.  The options granted were incentive stock options and are exercisable for a term of ten years from the date of grant.  The exercise price of the options is equal to the closing price of our common stock on the NYSE American stock exchange on the date of grant.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Outstanding Equity Awards at December 31, 2017

 

 

 

 

                                 Option awards                                   

 

           Stock awards         

 

 

 

Number

 

Number

 

 

 

 

 

 

 

 

 

 

 

of securities

 

of securities

 

 

 

 

 

Number

 

Market value

 

 

 

underlying

 

underlying

 

 

 

 

 

of shares

 

of shares

 

 

 

unexercised

 

unexercised

 

Option

 

Option

 

of stock

 

of stock

 

 

 

options

 

options

 

exercise

 

expiration

 

that have

 

that have

 

Name

 

exercisable

 

unexercisable

 

  price  

 

    date    

 

not vested

 

not vested (5)

 

 

 

(#)

 

(#)

 

($)

 

 

 

(#)

 

($)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Joseph R.

 

 -

 

153,000

(1)

0.87

 

7/11/2027

 

 

 

 

 

Mitchell

 

66,619

 

133,237

(2)

0.68

 

7/11/2026

 

27,662

(4)

38,450

 

 

 

45,205

 

22,603

(3)

0.66

 

9/23/2025

 

 

 

 

 

 

 

27,278

 

 -

 

1.71

 

8/18/2024

 

 

 

 

 

 

 

24,193

 

 -

 

0.89

 

7/11/2022

 

 

 

 

 

David I.

 

 -

 

74,800

(1)

0.87

 

7/11/2027

 

 

 

 

 

Rosenthal

 

32,572

 

65,145

(2)

0.68

 

7/11/2026

 

13,525

(4)

18,799

 

 

 

57,224

 

28,612

(3)

0.66

 

9/23/2025

 

 

 

 

 

 

 

40,651

 

 -

 

1.71

 

8/18/2024

 

 

 

 

 

 

 

14,000

 

 -

 

0.69

 

4/30/2018

 

 

 

 

 

Adrian P.

 

 -

 

51,100

(1)

0.87

 

7/11/2027

 

 

 

 

 

Schaffer

 

22,249

 

44,497

(2)

0.68

 

7/11/2026

 

9,238

(4)

12,841

 

 

 

39,087

 

19,543

(3)

0.66

 

9/23/2025

 

 

 

 

 

 

 

27,677

 

 -

 

1.71

 

8/18/2024

 

 

 

 

 

 

 

71,854

 

 -

 

0.89

 

7/11/2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

These unexercisable options were granted on July 12, 2017. One-third of the options will vest over each of the next three years starting on July 12, 2018.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2)

These unexercisable options were granted on July 12, 2016.  One-third of the options have vested, and an additional one-third of the options are scheduled to vest on each of July 12, 2018 and July 12, 2019.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3)

These unexercisable options were granted on September 24, 2015. Two-thirds of the options have vested, the remaining one-third of the options are scheduled to vest on September 24, 2018.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4)

The restricted shares were granted on July 12, 2016. One-third of the shares have vested, and an additional one-third of the shares are scheduled to vest on each of July 12, 2018 and July 12, 2019.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5)

The market value has been determined based on the closing price of Company common stock on December 29, 2017 of $1.39 per share.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

17


29

EMPLOYMENT AGREEMENTS 

 

Outstanding Equity Awards at December 31, 2016

  Option awards  Stock awards 
Name Number of
securities
underlying
unexercised
options
exercisable
  Number of
securities
underlying
unexercised
options
unexercisable
  Option
exercise
price
  Option
expiration
date
 Number of
shares of
stock that
have not
vested
  

Market
value of
shares of
stock that
have not
vested(6)

 
  (#)  (#)  ($)  (#) ($)    
Joseph R. Mitchell     199,856(1)  0.68  7/11/2026  41,493(4)  19,087 
   22,603   45,205(2)  0.66  9/23/2025        
   18,185   9,093(3)  1.71  8/18/2024  4,397(5)  2,022 
   24,193      0.89  7/11/2022        
   25,000      1.03  5/31/2017        
David I. Rosenthal     97,717(1)  0.68  7/11/2026  20,287(4)  9,332 
   28,612   57,224(2)  0.66  9/23/2025        
   27,101   13,550(3)  1.71  8/18/2024  6,552(5)  3,014 
   14,000      0.69  4/30/2018        
Adrian P. Schaffer     66,746(1)  0.68  7/11/2026  13,857(4)  6,374 
   19,543   39,087(2)  0.66  9/23/2025        
   18,451   9,226(3)  1.71  8/18/2024  4,460(5)  2,052 
   71,854      0.89  7/11/2022        

(1)These unexercisable options were granted on July 12, 2016. One-third of the options will vest over the next three years starting on July 12, 2017.

(2)These unexercisable options were granted on September 24, 2015. One-third of the options have vested, an additional one-third of the options are scheduled to vest on September 24, 2017.

(3)These unexercisable options were granted on August 19, 2014. Two-thirds of the options have vested, an additional one-third of the options are scheduled to vest on August 19, 2017.

(4)The restricted shares were granted on July 12, 2016. One-third of the shares will vest over the next three years starting on July 12, 2017.

(5)These restricted shares were granted on August 19, 2014. Two-thirds of the shares have vested, an additional one-third of the share are to vest on August 19, 2017.

(6)The market value has been determined based on the closing price of Company common stock on December 30, 2016 of $0.46 per share.

30

Employment Agreements

We have employment agreements with each of our named executive officers as described below.

Current Named Executive Officers

 

On July 20, 2015, the Company entered into employment agreements with Messrs. Mitchell, Rosenthal, and Schaffer, which continue through June 30, 2017. When Mr. Mitchell was appointed our President and Chief Executive Officer on January 5, 2016, we entered into a new employment agreement with Mr. Mitchell and amended the employment agreements with each of Messrs. Rosenthal, and Schaffer to revise the non-competition and non-solicitation obligations and the change of control definition to match what was contained in Mr. Mitchell’s employment agreement. As described above, these old agreements required that, in July of 2017, the Company pay retention bonuses to the following executives in the following amounts: Mr. Mitchell $100,000, Mr. Rosenthal $100,000, and Mr. Schaffer $75,000.

Upon expiration of their prior employment agreements, on July 1, 2017, the Company entered into new employment agreements with each of Messrs. Mitchell, Rosenthal, and Schaffer, which continue through December 31, 2019 with automatic2019.  The agreements will thereafter automatically renew on generally the same  terms and conditions for successive twenty-four (24) month period extensionsperiods, unless either party to the Company orapplicable agreement gives written notice of non-renewal to the officer provides noticeother party at least sixty (60) days prior to December 31, 2019 or any such renewal term then in effect.  The agreements for these officers contain certain severance provisions, including severance provisions arising from a change in control of the end of such term. The new employment agreements provide for an annual base salary of $350,000 for Mr. Mitchell, $259,684 for Mr. Rosenthal and $248,820 for Mr. Schaffer.  In addition, the Officers are eligible to receive (i) a discretionary annual cash bonus at a target level of 75% (in the case of Mr. Mitchell), 40% (in the case of Mr. Rosenthal) or 35% (in the case of Mr. Schaffer) of his respective base salary and (ii) long-term incentive equity grants at a target level of 100% (in the case of Mr. Mitchell), 65% (in the case of Mr. Rosenthal) or 55% (in the case of Mr. Schaffer) of his respective base salary.Company.

 

In addition, as a condition toIf the closing of the Purchase Agreement, Messrs. Mitchell and Ley have amended their employment agreements to extend the terms of their respective non-competition and non-solicitation obligations to a period of twenty four months following termination of employment for any reason.

Each agreement provides that if an executive’s employment is terminated by the Company without Cause (as definedcause, other than upon a change in control event, the agreements) or for Good Reason (as defined in the agreements), such executive will be entitled to: (i) vested employee benefits, if any, to which such Officer is entitled pursuant to the terms and conditions of the Company’s benefit plans (the “Accrued Obligations”); and (ii)paid a cash paymentlump sum equal to twenty-four (24) months (insix months’ base salary (twenty-four months’ base salary in the case of Mr. Mitchell)Mitchell, because Mr. Mitchell’s employment agreement mandates that, in the event of termination, Mr. Mitchell would be prohibited from working with any competitor for twenty-four months).  

Health and Life Insurance and Other Benefits 

The executive employment agreements provide that upon termination without cause, change in control or six (6) months (inbecause of disability, the caseCompany will pay two-thirds of Messrs. Rosenthal and Schaffer)the cost of such executive’s then base salaryplus an amount equal to the product of (y) 66% and (z) six (6) times the monthly amount that is charged to COBRA qualified beneficiariespremiums for the same medical coverage options electedexecutive and any covered dependents for a period of six months or, if earlier, until the executive is employed by such Officer immediately prior to the termination date.  Upon a termination due to Disability (as defined in the agreements), suchanother employer.  Each executive will be entitled to: (i) the Accrued Obligations; and (ii) a cash payment equal to six (6) months of Executive’s then base salaryless an amount equal to any disability compensation benefits received by executive pursuant to the Company’s disability benefit plans. Upon a termination due to death, such executive will be entitled to: (i) the Accrued Obligations; and (ii) a cash payment equal to six (6) months of executive’s then base salary. Upon a non-renewal of the agreements by the Company such executive will be entitled to: (i) the Accrued Obligations; and (ii)also receives a cash payment equal to six (6) months (in the case of Mr. Mitchell) or three (3) months (in the case of Messrs. Rosenthal and Schaffer) of executive’s then base salary.monthly automobile allowance. 

All of the employment agreements provide that the Company shall maintain at its expense, life insurance coverage on the executive payable to the executive’s designees in an amount equal to three times the annual salary payable to the executive.  Each executive is also entitled to an automobile allowance of $810 per month and usual and customary additional employee benefits in accordance with the Company’s benefit plan programs.

Change in Control

 

IfIn the event of a change in control, occursall stock options and ifbonus stock awards held by executive officers become immediately vested under the terms of the employment agreements.  In addition, upon a termination of the executive officer’s employment (or a material diminution to his responsibilities or other material changes) within twelve months following a change of control, the twenty-four (24) month period immediately following such event, (a) the Company or its successor terminates an executive’s employment without Cause, or (b) an executive terminates his employment on account ofwill receive a Material Change (as defined in the agreements), such executive shall be entitled to: (i) the Accrued Obligations; and (ii) a cash paymentlump sum equal to twenty-four (24) months (inone year’s base salary (two years’ base salary in the case of Mr. Mitchell) or twelve (12) months (in the case of Messrs. Rosenthal and Schaffer) of such Officer’s then base salaryplus, a cash bonus (equal to two times the average of the annual discretionary cash bonus paid to such Officer for the preceding three calendar yearsplus an amount equal to the product of (y) 66%fiscal years), and (z) six (6)two times the monthly amount that is charged to COBRA qualified beneficiaries for the same medical coverage options elected by such Officer immediately prior to the termination date.  In addition, all outstanding but unvested options and restricted stock awardshis respective retention bonus.  For purposes of the agreements, a change in control generally means any merger, reorganization, sale of substantially all Company heldassets, liquidation, a change in the composition of the Company’s Board as defined in the employment agreement and any other transaction that the Board determines by such executive will become fully vested and exercisable for the remainder of their original term.

31

Other Provisionsresolution to be a corporate transaction.  

 

Other Provisions

The employment agreements have customary confidentiality obligations.  The employment agreements further provide that the executive, for a period of one (1) year after the term of his respective employment agreement, (in the case of Messrs. Rosenthal and Schaffer) or two (2) years (in the case of Mr. Mitchell), will not become affiliated with any person, firm or corporation whose business is similar to or in competition with the Company. In addition,Company and for a period of one (1) year (in the case of Mr. Mitchell) or six months (in the case of the other executives) after termination of the executive’s employment agreement, (in the case of Messrs. Rosenthal and Schaffer) or two (2) years (in the case of Mr. Mitchell), the executive willto not induce or attempt to induce any employee of the Company to leave the employ of the Company; nor will the executive induce or attempt to induce any customer, supplier or licensee to cease doing business with the Company.

 

Payments and Potential Payments upon Termination or Change in Control

18


PAYMENTS AND POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL 

 

Our current executive employment agreements provide compensation to Messrs. Mitchell, Rosenthal and Schaffer in the event of a termination of employment, including termination of employment (or deemed termination) following a change in control.  The tables below show the potential payments or benefits upon a termination or change in control for each of the Company’s executive officers assuming the triggering event took place on December 31, 2016.2017.  The closing price per share of our common stock on the last trading day prior to December 31, 20162017 was $0.43.$1.39.  Actual amounts can only be determined at the date of the triggering event.  The amount of acceleration of unvested equity awards represents the intrinsic value of in-the-money non-vested stock options and non-vested stock awards as of December 31, 20162017 that would vest upon termination or change in control.

 

 

 

 

 

 

 

 

Termination

 

Termination

 

 

 

Termination

by us for

 

by us without

 

Termination

 

due to a change

 Termination by us
for cause
 Termination by us
without cause
 Termination
due to death
 Termination
due to a change
in control

  cause  

 

  cause  

 

due to death 

 

  in control  

 ($) ($) ($) ($)

($)

 

($)

 

($)

 

($)

Joseph R. Mitchell:        

Joseph R. Mitchell:

 

 

 

 

 

 

 

Base Salary/Severance  336,600 168,300 1,003,992

Base Salary/Severance

 -

 

709,249

 

175,000

 

792,916

Life Insurance Proceeds   1,009,800 

Life Insurance Proceeds

 -

 

 -

 

1,050,000

 

 -

Acceleration of unvested equity awards   3,325 21,109

Acceleration of unvested equity awards

 -

 

 -

 

 -

 

229,109

Total  336,600 1,181,425 1,025,101

Total

 -

 

709,249

 

1,225,000

 

1,022,025

        
David I. Rosenthal:        

David I. Rosenthal:

 

 

 

 

 

 

 

Base Salary/Severance  126,592 126,592 535,651

Base Salary/Severance

 -

 

138,993

 

129,842

 

304,835

Life Insurance Proceeds   759,552 

Life Insurance Proceeds

 -

 

 -

 

779,052

 

 -

Acceleration of unvested equity awards   2,301 12,345

Acceleration of unvested equity awards

 -

 

 -

 

 -

 

124,835

Total  126,592 888,445 547,996

Total

 -

 

138,993

 

908,894

 

429,670

        
Adrian P. Schaffer:        

Adrian P. Schaffer:

 

 

 

 

 

 

 

Base Salary/Severance  112,410 112,410 428,087

Base Salary/Severance

 -

 

130,803

 

124,410

 

280,413

Life Insurance Proceeds   674,460 

Life Insurance Proceeds

 -

 

 -

 

746,460

 

 -

Acceleration of unvested equity awards   1,569 8,426

Acceleration of unvested equity awards

 -

 

 -

 

 -

 

85,273

Total  112,410 788,439 436,512

Total

 -

 

130,803

 

870,870

 

365,686

 

32

DIRECTOR COMPENSATION 

DIRECTOR COMPENSATION

 

In 2009,2017, the Compensation Committee retained the consulting firm Towers WatsonFrederic W. Cook & Co., Inc. to review and assist it in establishing appropriate compensation for the Company’s non-employee directors.  Towers WatsonFrederic W. Cook & Co. evaluated the Board compensation practices of thea peer group of alternative energy18 publicly-traded companies listed under “Compensation Philosophy and Objectives” above in the twelve months ended March 31, 2011 which the consulting firm selected based on its belief that the listed companies competed with the Company in the marketplace for executive talent.broadly similar operations as UQM.  After consideringreviewing the recommendations of the compensation consultant, the Board adopted a director compensation policy consisting of an annual cash retainercompensation and equity-basedan equity compensation that it believes appropriately alignscompensates the non-employee directors while aligning the interests of directors with those of the Company’s shareholders.

 

Starting in April, 2018, each non-employee director receives an annual cash retainer of $35,000.  In addition the Chairman of the Board receives a cash retainer of $21,000.  The Chairman of the Audit Committee, the Chairman of the Compensation Committee and the Chairman of the Governance and Nominating Committee receive additional cash retainers of $10,000, $8,000, and $5,000 respectively.    Each non-employee director receives $2,000 for each committee served on except the committee chaired.

Non-employee directors also receive each year shares of the Company’s common stock with a fair value of $14,000 on the date of the grant.  These shares vest immediately.  In addition, each non-employee director receives a stock option for the number of shares that is equivalent to $21,000 as determined by utilizing the Black-Scholes-Merton option-pricing model on the date of the grant.  Options granted under this component of directors’ compensation vest immediately.

19


In addition, each non-employee director upon initial election to the Board is awarded 2,000 shares of the Company’s common stock at a purchase price of $0.01 per share.  Directors who are employees of the Company are not entitled to additional compensation for their service as directors.  Accordingly, Mr. Mitchell did not receive additional compensation for his service as a director. 

For the transitional nine monthsyear ended December 31, 2016,2017, directors of the Company who are not employees may elect to receive an annual retainer of $35,000 in cash or the grant of options with an exercise period of ten years to acquire that number of shares of the

Company’s common stock that is equivalent to $35,000 as determined by utilizing the Black-Scholes-Merton option pricing model on the date of grant or a combination of cash and options that together have a fair value of $35,000.  Options granted under the plan vest immediately. In addition, the Chairman of the Board receives an additional annual cash retainer of $9,000 and the Chairman of the Compensation Committee, the Chairman of the Audit Committee and the Chairman of the Governance and Nominating Committee each receive an additional annual cash retainer of $5,000 each.

 

Non-employeeDuring the year ended December 31, 2017, non-employee directors also receive each yearreceived shares of Company common stock with a fair value of $14,000 on the date of grant, except for the Chairman of the Board who receivesreceived shares with a fair value of $17,000 on the date of grant.  These shares vest immediately.  In addition, each non-employee director receivesreceived a stock option for that number of shares of the Company’s common stock that is equivalent to $21,000, or $26,000 in the case of the Chairman of the Board, as determined by utilizing the Black-Scholes-Merton option pricing model on the date of grant.  Options granted under this component of director compensation vest immediately. DuringIn the transitional nine monthsyear ended December 31, 2016,2017, the directors received shares equal to 85%35% of the dollar values noted above.

In addition, each non-employee director upon his initial election to the Board is awarded 2,000 shares of the Company’s common stock at a purchase price of $0.01 per share. Directors who are employees of the Company are not entitled to additional compensation for their service as directors. Accordingly, Mr. Mitchell did not receive additional compensation for his service as a director.

 

The following table sets forth information concerning remuneration paid to non-employee directors of the Company during the transitional nine months ended December 31, 2016:2017:

 

Non-Employee Director Compensation Nine Months Ended December 31, 2016

(Transition Period)

  Fees earned or
paid in cash
  

Stock
awards(1)

  Options
awards (1)
  All other
compensation
  Total 
  ($)  ($)  ($)  ($)  ($) 
Donald W. Vanlandingham  33,000   14,450   14,918      62,368 
Stephen J. Roy  30,000   11,900   12,049      53,949 
Joseph P. Sellinger  30,000   11,900   12,049      53,949 
John E. Sztykiel  30,000   11,900   12,049      53,949 

(1)The amount reported is the aggregate grant date fair value computed under FASB ASC Topic 718. The fair value of stock options is computed utilizing the Black-Scholes-Merton pricing model. The assumptions used in determining the fair value are contained in footnote 10 to the Company’s consolidated financial statements contained in Item 8 of the Annual Report. Stock and option awards vest in full on the date of grant.

33

 

 

 

 

 

 

 

 

 

 

 

Non-Employee Director Compensation Year Ended December 31, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

Fees earned

 

 

 

 

 

All

 

 

 

 

or paid in

 

Stock

 

Option

 

other

 

 

 

 

cash

 

awards (1)

 

awards (1)

 

compensation

 

Total

 

 

($)

 

($)

 

($)

 

($)

 

($)

 

Donald W. Vanlandingham

44,000

 

5,950

 

7,815

 

 -

 

57,765

 

Stephen J. Roy

40,000

 

4,900

 

6,312

 

 -

 

51,212

 

Joseph P. Sellinger

40,000

 

4,900

 

6,312

 

 -

 

51,212

 

John E. Sztykiel

40,000

 

4,900

 

6,312

 

 -

 

51,212

 

 

 

 

 

 

 

 

 

 

 

(1)

The amount reported is the aggregate grant date fair value computed under FASB ASC Topic 718.  The fair value of stock options is computed utilizing the Black-Scholes-Merton pricing model.  The assumptions used in determining the fair value are contained in footnote 10 to the Company’s consolidated financial statements contained in Item 8 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. Stock and option awards vest in full on the date of grant.

 

The table below shows the aggregate number of shares of common stock granted under the Stock Bonus Plan held by each non-employee director as of December 31, 2016:2017:

 

Name

Name

Number of common shares

Donald W. Vanlandingham

79,960

86,799

Stephen J. Roy

74,045

79,677

Joseph P. Sellinger

71,688

77,320

John E. Sztykiel

53,048

47,416

 

20


The table below shows the aggregate number of options held by each non-employee director as of December 31, 2016:2017: 

 

 

 

 

 

 

 

 

 

 

Number of

 

Option

 

Option

 

 

options

 

exercise

 

expiration

 Grant date Number of options
outstanding
 Option exercise
price
 Option
expiration date

Grant date

 

outstanding

 

  price  

 

   date   

 (#) ($) 

 

 

(#)

 

($)

 

 

Donald W. Vanlandingham 7/12/2016 27,625 0.68 7/11/2026

7/12/2017

 

10,706

 

0.87

 

7/11/2027

 9/24/2015 16,250 0.66 9/23/2025

7/12/2016

 

27,625

 

0.68

 

7/11/2026

 8/19/2014 13,240 1.71 8/18/2024

9/24/2015

 

16,250

 

0.66

 

9/23/2025

 8/7/2013 14,383 1.19 8/6/2023

8/19/2014

 

13,240

 

1.71

 

8/18/2024

 8/3/2011 58,095 2.04 8/2/2018

8/7/2013

 

14,383

 

1.19

 

8/6/2023

   129,593    

8/3/2011

 

58,095

 

2.04

 

8/2/2018

 

 

140,299

 

 

 

 

Stephen J. Roy 7/12/2016 22,313 0.68 7/11/2026

7/12/2017

 

8,647

 

0.87

 

7/11/2027

7/12/2016

 

22,313

 

0.68

 

7/11/2026

 9/24/2015 13,125 0.66 9/23/2025

9/24/2015

 

13,125

 

0.66

 

9/23/2025

 8/19/2014 10,694 1.71 8/18/2024

8/19/2014

 

10,694

 

1.71

 

8/18/2024

 8/7/2013 14,383 1.19 8/6/2023

8/7/2013

 

14,383

 

1.19

 

8/6/2023

 8/8/2012 51,220 0.79 8/7/2019

8/8/2012

 

51,220

 

0.79

 

8/7/2019

 8/13/2010 14,789 2.63 8/12/2018

8/13/2010

 

14,789

 

2.63

 

8/12/2018

   126,524    

 

 

135,171

 

 

 

 

Joseph P. Sellinger 7/12/2016 22,313 0.68 7/11/2026

7/12/2017

 

8,647

 

0.87

 

7/11/2027

 9/24/2015 13,125 0.66 9/23/2025

7/12/2016

 

22,313

 

0.68

 

7/11/2026

 8/19/2014 10,694 1.71 8/18/2024

9/24/2015

 

13,125

 

0.66

 

9/23/2025

 8/7/2013 14,383 1.19 8/6/2023

8/19/2014

 

10,694

 

1.71

 

8/18/2024

 8/8/2012 56,757 0.79 8/7/2017

8/7/2013

 

14,383

 

1.19

 

8/6/2023

 8/3/2011 17,073 2.04 8/2/2021

8/3/2011

 

17,073

 

2.04

 

8/2/2021

 11/3/2009 12,111 4.73 11/2/2019

11/3/2009

 

12,111

 

4.73

 

11/2/2019

   146,456    

 

 

98,346

 

 

 

 

John E. Sztykiel 7/12/2016 22,313 0.68 7/11/2026

7/12/2017

 

8,647

 

0.87

 

7/11/2027

 9/24/2015 13,125 0.66 9/23/2025

7/12/2016

 

22,313

 

0.68

 

7/11/2026

 8/19/2014 10,694 1.71 8/18/2024

9/24/2015

 

13,125

 

0.66

 

9/23/2025

 8/7/2013 14,383 1.19 8/6/2023

8/19/2014

 

10,694

 

1.71

 

8/18/2024

 11/1/2012 36,741 0.88 10/31/2017

8/7/2013

 

14,383

 

1.19

 

8/6/2023

   97,256    

 

 

69,162

 

 

 

 

 

The Board determines the total amount of the annual retainer, bonus share award and stock option award payable to non-employee members of the Board.

21


COMPENSATION COMMITTEE REPORT (1)

The Compensation Committee of the Board has reviewed and discussed the Compensation Discussion and Analysis with management and, based on this review and discussion, recommends that it be included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017 and Proxy Statement for the Annual Meeting of Shareholders to be held October 17, 2018.

Compensation Committee

Stephen J. Roy

Joseph P. Sellinger

Donald W. Vanlandingham

September 5, 2018 

_________________

1 The material in this report is not deemed “filed” with the SEC, and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation contained in such filing.

 

34

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The Company has entered into indemnification agreements with all members of the Board and with all of its executive officers. These agreements require that the Company to indemnify such officer or director, under the circumstances and to the extent provided for therein, for expenses, damages, judgments, fines and settlements he or she may be required to pay in actions or proceedings which he or she is or may be made a party by reason of his or her position as a director, officer or other agent of the Company, and otherwise to the fullest extent permitted under Colorado law and the Company’s bylaws.Bylaws.

 

Since March 31, 2015, the Company did not have any transactions to which it has been a participant that involved amounts that exceeded or will exceed the lesser of (i) $120,000 or (ii) one percent of the average of the Company’s total assets at March 31, 2016Certain Relationships and December 31, 2016, and in which any of the Company’s directors, executive officers or any other “related person” as defined in Item 404(a) of Regulation S-K had or will have a direct or indirect material interest.Related Transactions

 

The Company does not have a written policy regarding the identification, review, consideration and approval or ratification of “related person’s transactions.” Rather, such policy is evidenced by long standing principles set forth in the Company’s Code of Business Conduct Ethics and adhered to by the Board and the Audit Committee.   The Company does not endorse insider transactions and there have been no insider transactions during the reported periods. The Audit Committee approves any transaction between the Company and a related person.  A related person is any executive officer, director, or more than five percent shareholder of the Company’s stock, including any of their immediate family members, and any entity owned or controlled by such persons.

 

35

SECURITY OWNERSHIP OF CERTAIN OWNERS AND MANAGEMENTThe following is a summary of transactions since January 1, 2017 to which the Company has been a participant that involved amounts that exceeded or will exceed the lesser of (i) $120,000 or (ii) one percent of the average of the Company’s total assets at December 31, 2016 and 2017, and in which any of the Company’s directors, executive officers or any other “related person” as defined in Item 404(a) of Regulation S-K had or will have a direct or indirect material interest.

 

On August 25, 2017, the Company entered into a stock purchase agreement (the “Purchase Agreement”) with China National Heavy Duty Truck Group Co. Ltd. (“CNHTC”) and its wholly-owned subsidiary, Sinotruk (BVI) Limited (“Sinotruk”), pursuant to which Sinotruk would acquire newly issued shares of our common stock in two stages, and UQM and CNHTC would plan to create a joint venture to manufacture and sell electric propulsion systems for commercial vehicles and other vehicles in China. 

In the first stage, which closed on September 25, 2017, Sinotruk acquired 5,347,300 shares of our common stock, representing 9.9% of the total outstanding shares as of the date of the Purchase Agreement, for aggregate consideration of approximately $5.1 million (the “First Stage Transaction”). In the second stage, Sinotruk was to acquire such number of additional shares (the “Second Stage Shares”) resulting in Sinotruk owning a total of 34% of the Company’s then-

22


outstanding common stock on a fully diluted basis (the “Second Stage Transaction”). The purchase price for the Second Stage Shares (which is the same price at which the shares were sold in the First Stage Transaction) was to be set at approximately $0.95 per share, which represented a 15 percent premium to the average daily trading price of the Company’s common stock during the 30 days immediately prior to the signing of the Purchase Agreement. If completed, the total transaction would have brought approximately $28.3 million in cash to UQM.  

On May 9, 2018, the Company announced that the closing of the Second Stage Transaction would not occur because the Committee on Foreign Investment in the United States determined that it would not approve the Second Stage Investment.

In September 2017, Sinotruk made an initial purchase of UQM PowerPhase® DT systems of approximately $28,000 for implementation and evaluation in their commercial vehicles.

In November 2017, the Company entered into a Joint Venture Agreement (“JVA”) with CNHTC and Sinotruk Global Village Investment Limited, a Hong Kong based limited liability company owned by CNHTC. Under the JVA, UQM will acquire a 25% ownership share of the joint venture entity, Qingdao Zhongqi New Energy Automobile Co., LTD (the “JV Entity”), with CNHTC and its affiliate collectively acquiring a 75% share. The Company has the option to increase its ownership position to 33% in the next one to three years. The initial total capital of the joint venture will be $24 million, with UQM contributing $6 million in three installments. UQM’s funding requirement was contingent on the closing of the Second Stage Transaction with CNHTC, and the parties are now contemplating alternative funding structures to initiate the joint venture.

In November 2017, we entered into Technology License and Services Agreement with the JV Entity, pursuant to which the Company will grant to the JV Entity a non-transferable and exclusive right in China to use the Company’s permanent magnet synchronous motors and inverter controllers used for the commercial vehicle market, specifically related to the Company’s current PowerPhaseHD and PowerPhasePro motor and motor-controlling, transmission controller and speed shifting appliance technologies. The scope of the license is limited to the manufacture and sale of UQM products in China, although the parties may in the future jointly develop and sell electric motor, E-axle and integrated motor and transmission products manufactured by the JV Entity outside of China. The license includes a right to use the patents, copyrights, technical documents and related knowhow owned by the Company as required to manufacture and sell these products in the commercial vehicle market in China. The license has no effect on the Company’s current revenues or its development plans outside of China. The initial term of the license will be seven (7) years. 

Forward-Looking Statements

Certain statements in this report constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act. These statements, including those relating to the completion of the transactions with CNHTC and Sinotruk, involve risks and uncertainties. Actual results may differ materially from those contemplated (expressed or implied) by such forward-looking statements.  Factors that may cause such a difference include risks and uncertainties related to the impact of any changes in general economic and market conditions. Additional information about the risks and uncertainties faced by the Company are described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 and any subsequent reports filed with the SEC. Any forward-looking statement speaks only as of the date on which it is made. UQM does not undertake or assume any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

Director Independence

The NYSE American Company Guide requires that a majority of the Board be independent. Pursuant to such rules, an “independent director”, in general, means a person other than an executive officer or employee of the Company.  Additionally, no director qualifies as independent unless the Board affirmatively determines that the director does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.  The Board has affirmatively determined that each of Messrs. Vanlandingham, Roy, Sztykiel and Sellinger is independent under the NYSE American Company Guide. 

23


In addition to the independence guidelines discussed above, members of the committees of the Board also must satisfy additional independence requirements established by the applicable rules of the NYSE American and, in certain cases, the SEC.  See the section entitled “Committees of the Board” of this Proxy Statement for additional information.

SECURITY OWNERSHIP OF CERTAIN OWNERS AND MANAGEMENT

The following table shows the ownership of the Company’s $0.01 par value common stock by (i) beneficial owners of five percent or more of the Company’s common stock, (ii) each director, (iii) each of our named executive officers (as defined by Item 402(m)(2) of Regulation S-K) and (iv) all directors and executive officers as a group, as of September 27, 2017.August 24, 2018, the record date.  Unless otherwise noted, each shareholder’s address is the address of the Company and exercises sole voting and investment power with respect to the shares beneficially owned. None of the shares reported below are pledged as security or have been placed in a margin account by any executive officer or director.

 

 

 

 

 

 

 

 

 

 

 

Name of Beneficial Owner

 

Shares of Common Stock Ownership as of August 24, 2018

 

Shares of Common Stock Holder has a Right to Acquire by October 23, 2018

 

Total Shares Beneficially Owned

 

Percent of Class (1)

 

Sinotruk (BVI) Limited (2)

 

 

 

 

 

 

 

 

 

 Units 2102-03 Shun Tak Centre,

 

5,347,300

 

                -  

 

5,347,300

 

9.86%

 

 China Merchants Tower,

 

 

 

 

 

 

 

 

 

 168-200 Connaught Rd.,

 

 

 

 

 

 

 

 

 

 Central, Hong Kong

 

 

 

 

 

 

 

 

 

GDG Green Dolphin, LLC (3)

 

 

 

 

 

 

 

 

 

 1 N. Wacker Drive, Suite 2500,

 

4,537,850

 

                -  

 

3,148,523

 

8.37%

 

 Chicago, Illinois 60606

 

 

 

 

 

 

 

 

 

Joseph R. Mitchell

 

181,847

 

280,914

 

462,761

 

*

 

David I. Rosenthal

 

86,254

 

187,953

 

274,207

 

*

 

Adrian P. Schaffer

 

102,699

 

200,148

 

302,847

 

*

 

Donald W. Vanlandingham

 

152,399

 

106,966

 

259,365

 

*

 

Stephen J. Roy

 

97,877

 

140,382

 

238,259

 

*

 

Joseph P. Sellinger

 

88,520

 

118,346

 

206,866

 

*

 

John E. Sztykiel

 

79,248

 

89,162

 

168,410

 

*

 

Director and Executive Officers as a Group (eight persons)

 

828,091

 

1,270,720

 

2,098,811

 

3.78%

*

Less than 1%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Based on 54,207,190 shares of our common stock issued and outstanding as of August 24, 2018.  Pursuant to Exchange Act Rule 13d-3(d)(1), shares of common stock of which a person has the right to acquire beneficial ownership at any time by October 23, 2018 are deemed outstanding and beneficially owned by the person for the purpose of computing the number of shares and percentage beneficially owned by such person, but are not deemed outstanding for purpose of computing the percentage beneficially owned by any other person.

 

 

 

 

 

 

 

 

 

 

 

 

(2)

Share data based on information in an amendment to a Schedule 13D filed on October 5, 2017 with the SEC by Sinotruk (BVI) Limited.  The securities reported are held by Sinotruk (BVI) Limited and China National Heavy Duty Truck Group Co. Ltd.  As of September 25, 2017, the Schedule 13D indicates that Sinotruk (BVI) Limited and China National Heavy Duty Truck Group Co. Ltd. have shared voting and investment power with respect to 5,347,300 shares of common stock.

24


 

Name of Beneficial Owner Shares
of Common
Stock
Owned as
of
September
27, 2017
  Shares
of
Common
Stock
Holder
has a
right to
acquire
by
November
26, 2017
  Total
Shares
Beneficially
Owned
  Percent
of
Class
(1)
 

Sinotruk (BVI) Limited
Units 2102–03 Shun Tak Centre, China Merchants
Tower, 168–200 Connaught Rd., Central,
Hong Kong

  5,347,300      5,347,300   9.70%

GDG Green Dolphin, LLC
1 N. Wacker Drive, Suite 2500
Chicago, Illinois 60606(2)

  3,148,523      3,148,523   5.71%
                 
Joseph R. Mitchell  117,822   163,295   281,117   * 
                 
David I. Rosenthal  57,620   144,447   202,067   * 
                 
Adrian P. Schaffer  77,522   160,866   238,388   * 
                 
Donald W. Vanlandingham  142,666   184,845   327,511   * 
                 
Stephen J. Roy  86,677   135,171   221,848   * 
                 
Joseph P. Sellinger  77,320   98,346   175,666   * 
                 
John E. Sztykiel  53,048   105,903   158,951   * 
                 
Director and Executive Officers as a Group (eight persons)  632,755   1,112,634   1,745,389   3.16%

* Less than 1%

 

(1)Based on 54,035,328 shares of our common stock issued and outstanding as of September 27, 2017. Pursuant to Exchange Act Rule 13d-3(d)(1), shares of common stock of which a person has the right to acquire beneficial ownership at any time by November 26, 2017 are deemed outstanding and beneficially owned by the person for the purpose of computing the number of shares and percentage beneficially owned by such person, but are not deemed outstanding for purposes of computing the percentage beneficially owned by any other person.

 

(2)

(3)

Share data based on information in an amendment to a Schedule 13G filed on January 30, 2015February 5, 2018 with the SEC by GDG Green Dolphin, LLC.  The securities reported are held by GDG Green Dolphin, LLC and Gregory D. Glyman.  As of December 31, 2014,2017, the Schedule 13G indicates that (i) GDG Green Dolphin, LLC had shared voting and investment power with respect to 3,133,3234,522,650 shares of common stock and (ii) Gregory D. Glyman had sole voting and investment power with respect to 15,200 shares of common stock and shared voting and investment power with respect to 3,133,3234,522,650 shares of common stock.

 

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EQUITY COMPENSATION PLAN INFORMATION

EQUITY COMPENSATION PLAN INFORMATION

 

The following table sets forth information as of December 31, 2016,2017, with respect to the Company’s equity compensation plans:

 

Plan Category Number of securities
to be issued upon
exercise of
outstanding options,
warrants and rights
  Weighted–average
exercise price of
outstanding options,
warrants and rights
  Number of securities
remaining available for
future issuance under
equity compensation plans
(excluding securities
reflected in column (a))
 
  (a)  (b)  (c) 
Equity compensation plans approved by security holders:            
Equity Incentive Plan  2,487,161  $1.12   2,554,193 
Non–Employee Director Stock Option Plan  517,637  $1.23   389,784 
Stock Bonus Plan  102,048  $0.84   252,227 
Equity compensation plans not approved by security holders         
Total  3,106,846       3,196,204 

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Plan category

 

Number of securities to be issued upon exercise of outstanding options, warrants, and rights

 

 

Weighted-average exercise price of outstanding options, warrants and rights

 

Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))

 

 

(a)

 

 

(b)

 

(c)

Equity compensation plans approved by security holders:

 

 

 

 

 

 

 

Equity Incentive Plan

 

2,403,366

 

$

1.23

 

2,117,893

Non–Employee Director Stock Option Plan

 

460,786

 

$

1.28

 

446,635

Stock Bonus Plan

 

57,760

 

$

0.68

 

416,153

Equity compensation plans not approved by security holders

 

 -

 

 

 -

 

 -

Total

 

2,921,912

 

$

1.23

 

2,980,681

 

PROPOSAL 3: Proposal to approve an amendment and restatement of the Company’s Employee Stock Purchase Plan

 

The Board is submitting for approval by our shareholders the amendment and restatement of the Company’s Employee Stock Purchase Plan (the “ESPP”) to increase the number of shares available for issuance under the ESPP by 500,000 shares for a total of 1,200,000 shares.

 

The ESPP was originally approved by the Board on December 14, 1987 and by the Company’s shareholders on March 13, 1990. At the 2011 Annual Meeting of Shareholders, the Company’s shareholders approved an amendment and restatement of the ESPP to increase the number of shares available for issuance under the ESPP by 500,000 (from 200,000 to 700,000 shares). As of September 20, 2017, the Company had approximately 79,257 shares of its common stock remaining available for issuance under the ESPP.

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The Board believes that the ESPP promotes the interests of the Company and its shareholders by encouraging employees of the Company to become shareholders, and therefore promotes the Company’s growth and success. In addition, the Board believes that (i) it is desirable and in the best interests of the Company and its shareholders to continue to provide employees of the Company with benefits under the ESPP and (ii) additional shares must be reserved for use under the ESPP. Accordingly, on August 30, 2017, the Board approved, subject to shareholder approval, an amendment and restatement of the ESPP to increase the number of shares available for issuance under the ESPP by 500,000 shares for a total of 1,200,000 shares.

The principal terms and provisions of the ESPP are summarized below. The summary, however, is not intended to be a complete description of all the terms of the ESPP and is qualified in its entirety by reference to the complete text of the ESPP, as proposed to be amended and restated, a copy of which is attached as Appendix A to this proxy statement and incorporated herein by reference.

Purpose of the ESPP

The purpose of the ESPP is to provide eligible employees who wish to become shareholders of the Company, or who wish to increase their ownership in the Company, with an opportunity to purchase shares of the Company’s common stock on a basis that is more convenient and more favorable than would otherwise be available. It is believed that employee participation in the ESPP will be mutually beneficial to both employees and the Company.

Nature of the ESPP

The ESPP provides for grants of rights to acquire shares of common stock to employees to be exercised using funds from payroll deductions. Upon exercise of the rights, the common stock will be delivered to the participant as soon as practicable. It is intended that the ESPP constitute an “Employee Stock Purchase Plan” within the meaning of Section 423 of the Internal Revenue Code of 1986, as amended (the “Code”). As a result, the participant may receive beneficial tax treatment on the purchase and ultimate disposition of the shares purchased through the ESPP. See “-Summary of U.S. Federal Income Tax Consequences” below for additional information.

1,200,000 shares of common stock have been reserved for issuance pursuant to the terms of the ESPP, assuming shareholder approval of this proposal. The ESPP provides for quarterly offerings that begin on the first day of each calendar quarter (January 1, April 1, July 1, and October 1). The purchase price of common stock during any offer will be 85% of the Fair Market Value of a share of common stock on the first day of the calendar quarter or, if the exchange on which the common stock is traded is not open on that day, of the first trading day thereafter. For purposes of the ESPP, the “Fair Market Value” of common stock on any day means the composite closing price on the NYSE American or such successor exchange or if the common stock is not listed or admitted to trading on any national securities exchange or on the National Association of Securities Dealers Automatic Quotation System (Nasdaq), the average closing bid price if available. If the price of the common stock is not reported on any securities exchange or national market system, the Fair Market Value of the common stock on a particular date shall be determined by the Compensation Committee.

 

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PROPOSAL 2:
Advisory Vote to Approve Compensation for Our Named Executive Officers 

Amounts collected via payroll deduction are used to purchase common stock on a quarterly basis. In general, each employee eligible to participate in the ESPP may elect to have up to 10% of such employee’s Base Pay (as such term is defined in the ESPP), but in no event more than $25,000 per annum, used to purchase stock pursuant to the ESPP.

Administration of the ESPP

The Compensation Committee of the Board has the sole responsibility for the administration of the ESPP, and, subject to certain exceptions, has the exclusive right to interpret the provisions of the ESPP and to determine any questions arising under the ESPP or in connection with the administration of the ESPP, including, but not limited to, the remedying of any omission, inconsistency, or ambiguity, and the determination of benefits and eligibility. The Compensation Committee’s decisions, determinations, interpretations or other actions in respect of the ESPP are conclusive and binding upon all participants, former participants, beneficiaries, heirs, executors, and assigns. Any final determination by the Compensation Committee is binding on all parties.

Details of the ESPP

Any employee of the Company or the Company’s participating affiliates who has completed at least six months of service with the Company or a participating affiliate may participate in the ESPP if the employee’s customary employment is for more than 20 hours per week and for more than five months in any calendar year is eligible to participate in the ESPP. Non-employee directors, leased employees and independent contractors are not eligible to participate in the ESPP. Employees who own more than five percent of the total combined voting power or value of the stock of the Company or an affiliate of the Company are not eligible to participate. Although officers are generally eligible to participate, the Board may, in its discretion, provide that individuals who are designated “highly compensated employees” may not be eligible to participate in the ESPP.

Each employee who is not eligible to participate in the ESPP on the effective date of an offer (the first day of a calendar quarter) but who becomes eligible to participate during the term of the offer may not participate in that offer, but will be eligible to participate in the next and later offers so long as such individual remains eligible to participate pursuant to the terms of the ESPP.

The maximum number of shares permitted to be purchased pursuant to any offer is determined by a formula on a quarterly basis, which is generally calculated as follows, in each instance as more particularly set forth in the ESPP:

Step 1:Determine the product of (i) the employee’s percentage of Base Pay for the calendar quarter chosen by the employee to be used to purchase stock pursuant to the ESPP,multiplied by(ii) the employee’s Base Pay projected for such calendar quarter (the “Purchase Consideration”);

Step 2:Determine the quotient of (i) the Fair Market Value of the common stock on the offering date,divided by (ii) 85% (the “Purchase Price”); and

Step 3:Determine the maximum number of shares permitted to be purchased by multiplying (i) the Purchase Consideration by (ii) the Purchase Price.

Notwithstanding the above general formula and the parameters set forth in the ESPP, the Board or the Compensation Committee may specify a maximum number of shares that each participant can purchase during an offer as well as the aggregate number of shares that may be purchased by all participants during the offer. If (i) the aggregate number of shares intended by the employees, in the aggregate, to be purchased pursuant to the exercise of rights granted pursuant to the ESPP offer is greater than (ii) the maximum number of shares specified by the Board or the Committee as being available for purchase, then the Board or the Committee will make apro rata allocation of shares available for purchase among participants.

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Pursuant to Section 423(b) of the Code, no employee may purchase, pursuant to the ESPP, more than $25,000 of common stock per year (determined at the time the rights were granted). If an employee’s contributions to the ESPP exceed such amount in any given calendar year, then payroll deductions for that employee will cease and will not resume until the beginning of the next calendar year (assuming the individual is eligible to participate in the ESPP at such time).

All costs of administration of the ESPP are paid by the Company and its participating affiliates.

If a participant takes a leave of absence or has a period of inactive employment, and the participant continues to receive Base Pay, the participant can elect to continue payroll deductions during the first 90 days of the paid leave or period of paid inactive employment. If a participant does not receive Base Pay during a leave of absence or an inactive period and returns to active employment from inactive status or a leave of absence, the participant’s payroll deductions will resume automatically if the participant returns to active employment or from a leave of absence within 90 days. If the participant elects to discontinue contributions, the election will be treated as a withdrawal from the plan. In all events, the participant will be treated as having withdrawn from the plan on the ninety-first day of any period of inactive employment or leave of absence.

Employees may, at any time and for any reason, by giving written notice to the Company or following such other procedure as may be required or permitted by the Company, elect to withdraw from further participation in the ESPP.

Amendment and Termination of the ESPP

Each offering will commence on the first day of each calendar quarter and continue for one calendar quarter each. The Board may suspend offerings or terminate the ESPP at any time and for any reason.

The terms of the ESPP are subject to change at any time in the Company’s sole discretion, unless stockholder approval is required by Section 423 of the Code or by any other applicable law or administrative requirement. The Board may review and modify the operation and administration of the ESPP on a periodic basis. Upon termination of the ESPP, the entire account of each participant will be distributed as soon as practicable.

Summary of U.S. Federal Income Tax Consequences

The following is intended only as a general summary of the Federal income tax consequences of participation in the ESPP and does not purport to be a complete statement of such consequences. This summary does not address the state and local tax consequences of plan participation, which may differ from the Federal tax consequences. In addition, this summary does not address the estate tax consequences of plan participation.

The ESPP is not qualified under Section 401(a) of the Code. A participant’s contributions to the ESPP through payroll deductions are not tax deductible and instead are subject to employment and income taxes even though such amounts are not received by the employee and are instead paid directly to the ESPP. Such amounts are, however, treated as part of the employee’s cost basis of the common stock purchased under the ESPP.

No tax liability results upon either (i) the grant of a right to purchase stock pursuant to the ESPP, or (ii) the purchase of common stock pursuant to the ESPP. Instead, the employee becomes liable for Federal income tax on the disposition of the common stock acquired pursuant to the ESPP.

(1)Stock Purchased Pursuant to the ESPP and Disposed of Following the Expiration of the Applicable Holding Period, or Upon the Employee’s Death

In order to receive the beneficial treatment provided under Section 423 of the Code, a participant must hold the acquired common stock for two years from the date of the offer, or one year from the date of purchase, whichever is later (the “holding period”). If an employee disposes of shares acquired under the ESPP after the expiration of the holding period, or if an employee dies while holding any share acquired under the ESPP, the employee recognizes income equal to the difference between (i) the employee’s adjusted tax basis in the shares acquired, and (ii) the purchase consideration received in connection with the sale of such shares.

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Except in the case of death, an employee’s adjusted tax basis of the shares in the employee’s hands at the time of the disposition will generally equal the price paid for the shares increased by the amount, if any, included in the employee’s gross income as compensation. In the case of death of the employee, the basis of the shares to the employee’s estate or heirs will be determined under Section 1014 of the Code.

The income arising from the sale of stock purchased pursuant to the ESPP and sold after the expiration of the applicable holding period is bifurcated into two component parts, each of which is subject to different tax treatment. The first component part is treated as ordinary income and must be included, as compensation, in the employee’s gross income in the taxable year of disposition or death. With respect to each share, such amount is equal to thelesser of:

·the excess of (i) the Fair Market Value of such share at the time of the disposition or death, over (ii) the amount paid for such share, or

·the excess of (i) the Fair Market Value of the share on the first day of the offering, over (ii) 85% of the Fair Market Value of the share on the first day of such offering.

The second component is treated by the employee as capital gain and is comprised of any gain from the disposition of such shares which is not treated as compensatory ordinary income.

The Company is not allowed a corresponding deduction for the amount treated as ordinary compensatory income.

(2)Stock Purchased Pursuant to the ESPP and Disposed of Before the Expiration of the Applicable Holding Period

The income arising from the sale of stock purchased pursuant to the ESPP and sold before the expiration of the applicable holding period is similarly bifurcated into two component parts. The first component part is treated as ordinary income and must be included, as compensation, in the employee’s gross income in the taxable year of the disposition. Such amount is calculated as the excess of (i) the Fair Market Value of the share in the date of the purchase, over (ii) the purchase price paid for such share. The second component is treated by the employee as capital gain and is comprised of any gain from the sale of such shares which is not treated as compensatory ordinary income. Upon a disposition of shares prior to the expiration of the applicable holding period the Company is allowed a corresponding deduction in the same year, and in the same amount required to be included in gross income by the employee, assuming such amount is an ordinary and necessary business expense and satisfies the test respecting reasonable compensation.

Dividends declared and paid by the Company and any other distributions that are made with respect to common stock held in a participant’s account will be considered gross income to the participant.

Any gain or loss from the sale of any rights or other property distributed with respect to a share of common stock held on behalf of a participant is gain or loss to the participant.

New Plan Benefits

Because the benefits under the amended and restated ESPP as set forth in this proposal will depend on each eligible individual’s voluntary election to participate and the fair market value of the Company’s common stock at various future dates, it is not possible to determine the benefits that will be received by any eligible individual if this proposal is approved by our shareholders.

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Existing Plan Benefits

The following table sets forth the number of shares of the Company’s common stock that were purchased under the existing ESPP during the transitional nine months ended December 31, 2016 by the individuals and groups identified below.

Name and PositionNumber of Shares
Joseph R. Mitchell President and Chief Executive Officer0
David I. Rosenthal Treasurer, Secretary and Chief Financial Officer0
Adrian P. Schaffer Vice President of Sales and Business Development0
All executive officers0
All directors who are not executive officers0
All employees excluding executive officers64,148

Required Vote

The affirmative vote of a majority of the shares represented at the Annual Meeting and entitled to vote is required for this proposal. Abstentions will be counted as present and entitled to vote on this proposal and will therefore have the effect of a negative vote. Broker non-votes will not be counted as present and entitled to vote on this proposal and will therefore have no effect on the outcome of this proposal.

THE BOARD RECOMMENDS A VOTE “FOR” APPROVAL OF THE AMENDMENT AND RESTATEMENT OF THE COMPANY’S EMPLOYEE STOCK PURCHASE PLAN

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PROPOSAL 4: Advisory Vote to Approve Compensation for Our Named Executive Officers

Pursuant to Section 14A of the Exchange Act, shareholdersShareholders have the opportunity to vote, on an advisory basis, on the compensation of our named executive officers. This advisory vote offers shareholders the opportunity to endorse or not endorse the Company’s executive compensation policies and practices described in this proxy statement.  Last year, over 76% percent87% of the advisory votes cast by the Company’s shareholders approved of our executive compensation policies and practices.  As selected byFollowing each of our shareholders at the 2011 Annual Meeting of Shareholders and approved by our Board,2017 Annual Meeting, at which our shareholders supported an annual frequency for the advisory vote to approveon the compensation of our named executive officers, is held annually, subjectour Board has determined to hold the advisory vote to recommend the frequency of such vote as set forth in Proposal 5 for the Annual Meeting.

on executive compensation each year. 

Our executive compensation programs are designed with the objectives of attracting, motivating and retaining highly qualified executives, providing performance-based incentives for the attainment of strategic business objectives, rewarding superior performance and aligning the interests of our executives with those of our shareholders.  Accordingly, we are submitting the following resolution for shareholder vote at the Annual Meeting:

“RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED.”

For a more complete discussion of our compensation policies and practices please see the “Compensation Discussion and Analysis” section and the accompanying compensation tables and narrative disclosures in this proxy statement.

proxy. 

Your vote on this matter is advisory and non-binding, and therefore cannot overrule any decisions made by the Board.Board of the Company.  However, the Compensation Committee will consider the outcome of this shareholder vote in its future deliberations on executive compensation.

Required Vote

The affirmative vote of a majority of the shares represented at the Annual Meeting and entitled to vote is required for this proposal. Abstentions will be counted as present and entitled to vote on this proposal and will therefore have the effect of a negative vote. Broker non-votes will not be counted as present and entitled to vote on this proposal and will therefore have no effect on the outcome of this proposal.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” APPROVAL OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERSOFFICERS.

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PROPOSAL 3:
Approval of the Amendment to the 2012 Equity Incentive Plan to Increase the Number of Shares Available for Grant by 2,500,000 Shares

The Board is seeking the approval of shareholders to an amendment to the Company’s 2012 Equity Incentive Plan (the “Equity Incentive Plan”) to increase the number of shares of Company common stock available for award by 2,500,000 shares. This amount is approximately 4.6% of the Company’s currently outstanding shares of common stock. If approved by the shareholders, the amendment would serve to amend Section 4.1 of the 2012 Equity Incentive Plan to increase the number of shares of Company common stock reserved under the plan from 4,600,000 to 7,100,000.  

Purpose and Background of the Equity Incentive Plan 

The Equity Incentive Plan provides for the grant of non-qualified stock options and incentive stock options to our employees and consultants.  The purpose of our Equity Incentive Plan is to attract and retain the best available employees and consultants for positions of substantial responsibility, to provide additional incentives to continue in our long-term service and to optimize the future success of our operations through incentives that are consistent with the Company’s goals and that link the personal interests of participants in the Equity Incentive Plan to those of our shareholders. On April 11, 2012, our Board adopted the Equity Incentive Plan to replace the previous equity incentive program, which expired by its terms in 2012.  Our shareholders approved adoption of the Equity Incentive Plan on August 8, 2012.  On May 27, 2014, our Board approved an amendment to the Equity Incentive Plan to increase the number of shares by an additional 1,000,000 shares, which was approved by our shareholders on August 13, 2014. On August 30, 2016, our Board approved an amendment to the Equity Incentive Plan to increase the number of shares by an additional 2,500,000 shares, which was approved by our shareholders on November 22, 2016.  On August 18, 2018, our Board approved an amendment to the Equity Incentive Plan to increase the number of shares by an additional 2,500,000 shares, subject to the approval of the Company’s shareholders.

The number of shares of the Company’s common stock reserved for issuance under the Equity Incentive Plan, as amended, was 4,600,000. As of April 20, 2018, the Company had granted awards for an aggregate of 3,441,069 shares of common stock to employees under the Equity Incentive Plan, leaving 1,158,931 shares available for future grant. If the amendment is approved, the number of shares available for future grants under the Equity Incentive Plan will increase by 2,500,000 shares. If shareholder approval is not obtained, then the amendment to the Equity Incentive Plan will not be implemented, and the Equity Incentive Plan will continue in effect pursuant to its current terms. Approval of the amendment will help ensure that the Company is able to continue recruiting and retaining talented employees and consultants and award, as a portion of their compensation package, equity awards that further align the employees’ and consultants’ interests with the Company’s shareholders.  The Company expects that additional employees will be hired as a result of expansion into Asia and believes that these equity awards are necessary to attract and retain qualified personnel.

Our compensation structure for executives consists of base pay, payable in cash, and performance-based variable compensation to reward our executives for achieving financial, operational, and strategic goals as well as for individual performance.  The Board has established grants of stock options under the Equity Incentive Plan as a significant component of our equity-based compensation program.  The grant of equity-based compensation is generally linked to the attainment of performance objectives established by the Board.  Performance-based variable compensation may be paid either in cash or in the form of common stock under the Stock Bonus Plan, stock options under the Equity Incentive Plan, or a combination of both.  Over the last several years, equity-based compensation (common stock and stock options) have been a significant component of each executive officer’s total compensation, in certain years representing more than 25% of total annual compensation.  This significant equity-based compensation component of executive compensation is designed to encourage an ownership mindset that aligns the interests of management with those of our shareholders.

Management believes that the grant of options to acquire common stock under the Equity Incentive Plan is critically important to attracting and retaining highly qualified employees.  Many large companies have substantially greater financial resources that permit them to offer highly competitive compensation packages.  Grants of equity-based compensation to existing and potential employees under the Equity Incentive Plan is a significant tool that we can use in

27


 

competing for and retaining highly qualified employees in a competitive job market where we routinely compete with large companies for personnel.  Equity-based compensation awards with multiple-year vesting periods can also serve as a powerful retention tool by requiring employees to remain with us over a number of years to earn the full amount of the compensation.

 

PROPOSAL 5: Advisory VoteIf the shareholders do not approve the amendment of the Equity Incentive Plan, the Compensation Committee expects to Recommendpay in cash the Frequencyfair value of Future Advisory Voteseach executive’s annual compensation typically paid through the grant of stock options.  Consequently, a vote against the amendment of the Equity Incentive Plan will not have the effect of reducing the total amount of executive compensation, but rather will convert a noncash compensation cost to Approvea compensation cost payable in cash.

Dilution, Burn Rate and Overhang of the Company’s Equity-Based Compensation Plans 

The Company’s two equity-based compensation plans for Our Named Executive Officersits employees and consultants are the Equity Incentive Plan (the subject of this Proposal 3 and the Stock Bonus Plan (the subject of Proposal 4 below).  The annual dilution as the result of awards made under these two plans was approximately -1.2%, -0.7%, -1.0%, 1.25, and 0.8% in each of the fiscal years ended March 31, 2014, 2015, 2016, nine months ended December 31, 2016, and year ending December 31, 2017, respectively.  Dilution is generally defined as the total equity awards granted under these two plans less cancellations or forfeitures of awards under these two plans, divided by total number of the Company’s common stock outstanding at the beginning of each fiscal year.  The Company manages its long-term dilution by limiting the number of equity awards that are granted annually, commonly referred to as burn rate.  Burn rate differs from dilution, as it does not account for equity awards that have been cancelled.  The Company’s annual burn rate for the fiscal years ending March 31, 2014, 2015, 2016, nine months ended December 31, 2016, and year ending December 31, 2017 was 1.5%, 1.3%, 1.1%, 1.6%, and 1.1% respectively.

An additional metric that the Company uses to measure the cumulative impact of our equity-based compensation programs for employees and consultants is overhang.  Overhang is the number of equity awards outstanding but not exercised, plus equity awards available to be granted, divided by the total number of common shares outstanding at the end of the year.  At December 31, 2017, the Company’s overhang was 11.6% and for the nine months ending December 31, 2016, the Company’s overhang was 13.2%.

 

In additionconsidering the number of shares to providing our shareholders withadd to the opportunityEquity Incentive Plan (pursuant to cast an advisory votethis Proposal 3) and to the Stock Bonus Plan (pursuant to Proposal 4), the Company’s Board and Compensation  Committee considered the Company’s historical grant practices as well as the potential dilution and potential costs of these plans.  The Company estimates that, based on its historical grant practices over the past several years, the number of shares authorized under the Equity Incentive Plan would last approximately two years and the number of shares authorized under the Stock Bonus Plan would last approximately two years.

Future grants under the Equity Incentive Plan will be determined by the Compensation Committee and may vary from year to year and from participant to participant and are not determinable at this time. Future benefits or amounts to be received by or allocated will be determined by future action of the Compensation Committee and are not determinable at this time.

On  August 24, 2018, the closing price of a share of common stock on the compensationNYSE American was $1.15. 

Summary of the Equity Incentive Plan 

The following paragraphs provide a summary of the principal features of the Equity Incentive Plan and do not purport to be complete and are subject to and qualified in its entirety by the actual terms of the plan.

Shares Subject to the Equity Incentive Plan. The number of shares of the Company’s common stock reserved for issuance under the Equity Incentive Plan, as amended, was 4,600,000.  If the amendment is adopted, there will be an aggregate of 7,100,000 shares covered by the Plan.  The Equity Incentive Plan provides that all shares of common stock reserved for the Equity Incentive Plan can be granted with respect to incentive options.  Shares of common stock covered

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by unexercised options that expire, terminate, or are canceled, together with shares of common stock that are used to pay withholding taxes or the option exercise price, will again be available for awards under the Equity Incentive Plan. 

Per-Person Limit.  In order to qualify the options as “performance-based compensation” not subject to the limit on deductibility under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), the Plan limits the maximum number of shares subject to one or more options that can be granted during any calendar year to any employee or consultant to 500,000 shares of Common Stock.

Adjustment of Shares.  The number of shares eligible for option grants under the Equity Incentive Plan, the number of shares subject to outstanding options, the number of shares that may be granted to any individual, the number of shares available for grant pursuant to incentive options, and the number of shares subject to a delegation of authority are subject to adjustment on account of stock splits, stock dividends, recapitalizations and other dilutive changes in the common stock.

Eligibility. The Equity Incentive Plan provides that options may be granted to those key employees and consultants who are selected by the Compensation Committee in its sole discretion.  We currently consider certain of our named executiveemployees and consultants to be eligible for the grant of options under the Equity Incentive Plan.  As of August 24, 2018, there were approximately 57 eligible individuals.

Administration of the Equity Incentive Plan.The Equity Incentive Plan is administered by the members of the Compensation Committee of the Board.  The Compensation Committee may, when necessary, appoint one or more subcommittees to (1) consist solely of individuals who satisfy the requirements of any exchange or market on which the common stock is traded, (2) consist solely of persons who qualify as an “outside director” under Section 162(m) of the Code, or (3) consist solely of individuals who qualify as “non-employee” directors under Rule 16b-3 under the Exchange Act.  The Compensation Committee has the sole discretion to determine the employees and consultants to whom options may be granted under the Equity Incentive Plan and the manner in which such options will vest.  Options are granted by the Compensation Committee to employees and consultants in such numbers and at such times during the term of the Equity Incentive Plan as it shall determine.  In granting options, the Compensation Committee intends to take into account such factors as it may deem relevant in order to accomplish the Equity Incentive Plan’s purposes, including one or more of the following:  the extent to which performance goals have been met, the duties of the respective employees and consultants, and their present and potential contributions to our success.

The Equity Incentive Plan provides that the Compensation Committee may delegate authority to grant options to specified officers (see Proposal 4), we also are seeking a non-binding, advisory vote on how frequentlyof the advisory vote on executive compensation shouldCompany; provided no grants of options may be presentedmade by such specified officers to shareholders, as requiredany employee or consultant who is covered by Section 14A16(b) of the Exchange Act.  YouAt this time, the Compensation Committee has not made such a delegation.

Grant of Options. The Compensation Committee may votegrant stock options, including incentive stock options (“ISOs”), which may be eligible for favorable tax treatment for the option holder, or non-qualified options (“NQOs”).  ISOs may only be granted to employees.

Exercise Price. The Compensation Committee determines the exercise price for each option, which must be equal to or greater than the fair market value of the common stock on the date of grant.  An ISO that is granted to an employee who owns common stock having more than 10% of the voting power must have an exercise price that is at least equal to 110% of the fair market value of the common stock on the date the ISO is granted.

No Repricing. The Equity Incentive Plan provides that, without prior shareholder approval, we will not (1) amend the terms of any outstanding option to reduce the option price, (2) cancel any outstanding option and replace it with a new option with a lower exercise price where the economic effect would be the same as reducing the option price of the cancelled option, (3) cancel any outstanding option in exchange for cash, or (4) take any other action with respect to an option that would be treated as a “repricing” under the accounting rules or under the rules of the SEC.  

Vesting. The Compensation Committee determines the vesting schedule for options in its sole discretion.

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Exercise of Options.An option holder may exercise an option by written notice and payment of the exercise price (1) in cash or certified funds, (2) by the surrender of a number of shares of common stock already owned by the option holder for at least 6 months and having a fair market value equal to the exercise price, or (3) through a broker’s transaction by directing the broker to sell all or a portion of the common stock to pay the exercise price or make a loan to the option holder to permit the option holder to pay the exercise price.  Option holders who are subject to tax withholding may pay the withholding in cash.  Otherwise, we will withhold the number of shares necessary to satisfy the minimum required tax withholding obligation.

Option Term. The Compensation Committee determines the term of each option, which shall be no longer than 10 years (5 years in the case of an ISO granted to an employee who owns common stock having more than 10% of the voting power).

Termination of Employment or Services. Unless the Compensation Committee provides otherwise, the following provisions apply in the event of an employee option holder’s termination of employment.  If the option holder’s employment is terminated for cause, the option terminates immediately.  If the option holder becomes disabled, the option may be exercised for one year after the option holder’s employment terminates on account of disability.  If the option holder dies during employment or in the one-year period referred to in the preceding sentence, or in the 3-month (ISOs) or 12-month (NQOs) period following termination of employment other than on account of cause, disability or retirement, the option may be exercised for one year after the option holder’s death.  If the option holder’s employment terminates for any reason other than cause, disability, death, or retirement, an ISO may be exercised for 3 months after termination of employment, and a NQO may be exercised for 12 months after termination of employment.  If the option holder’s employment terminates on account of retirement, an ISO may be exercised for 3 months after retirement and an NQO can be exercised for the rest of the option term.  For this purpose, retirement means termination of employment after the option holder’s 65th birthday, termination pursuant to an early retirement provision in the option holder’s employment agreement, or voluntary termination of employment by a UQM officer who has served as a UQM officer for 20 or more years.  In all cases, the option can be exercised only to the extent that it is vested at the time of termination of employment and only during the term of the option, except that the option will become 100% vested upon a termination of employment on account of retirement.

The following provisions shall apply in the event of a consultant option holder’s termination of services.  If the option holder’s services are terminated other than on account of cause or the option holder’s death, the option may be exercised during the remainder of the option term.  If the option holder’s services are terminated for cause, as determined by the Company, the option terminates immediately; however, if the agreement between the Company and the consultant provides for termination of the agreement for cause, cause will have the advisorymeaning set forth in the agreement.  If the option holder dies during the option period, the option may be exercised for 15 months after the option holder’s death.  In all cases, the option can be exercised only to the extent that it is vested at the time of termination and only during the term of the option.

Nontransferability. Generally, NQOs granted under the Equity Incentive Plan are not transferable other than by will or by the laws of descent and distribution.  The Compensation Committee may, however, permit a transfer of NQOs to certain members of the option holder’s family or to a trust or partnership of which certain members of the option holder’s family are the only beneficiaries or partners.  ISOs may not be transferred under any circumstances other than by will or by the laws of descent and distribution.

Change in Control. Upon the occurrence of a “corporate transaction” (as defined in the Equity Incentive Plan), all outstanding options will become fully vested.  The successor to the Company may assume the options or substitute new options.  The Equity Incentive Plan provides that all assumptions or substitutions shall be made in compliance with Sections 409A and 424 of the Code.

Amendment and Termination.Our Board may amend the Equity Incentive Plan in any respect at any time provided shareholder approval is obtained when necessary or desirable, but no amendment may adversely affect any option previously granted without the option holder’s consent.  The Equity Incentive Plan will terminate on April 10, 2022, unless sooner terminated by the Board.

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Federal Income Tax Consequences 

The following is a summary of the principal United States federal income tax consequences to the option holders and to the Company as of the date of this proxy statement.  The discussion does not address state, local, or foreign tax consequences nor does it address any estate or gift tax consequences. 

The grant of an ISO or an NQO has no federal income tax consequences for the option holder or the Company.

An option holder will have no federal income tax consequences upon exercise of an ISO, except that the alternative minimum tax may apply.  If the option holder disposes of the common stock before the end of the ISO holding periods (two years from the date of grant and one year from the date of exercise), the option holder recognizes ordinary income equal to the excess of (1) the fair market value of the common stock on the date the ISO was exercised or, if less, the amount received in the disposition of the common stock over (2) the exercise price for the ISO.  Generally, the Company will receive a tax deduction if the shares are disposed of before the ISO holding periods are met.  If the option holder disposes of the common stock after the end of the ISO holding periods, the option holder will recognize capital gain.  The Company does not receive a tax deduction for any capital gain income of the option holder.

When an NQO is exercised, the option holder will recognize ordinary income equal to the excess of the fair market value of the common stock on the date of exercise over the exercise price.  Generally, the Company will receive a tax deduction for that same amount.

Under Section 162(m) of the Code, the Company’s federal income tax deductions may be limited to the extent that total annual compensation in excess of $1 million is paid to the Company’s chief executive officer or any one of the three highest paid executive officers (other than the chief financial officer) who were employed by the Company on the last day of the taxable year.  However, certain “performance-based compensation,” the material terms of which are disclosed to and approved by the Company’s shareholders, is not subject to this limitation on deductibility.  We have designed the Equity Incentive Plan with the intention that compensation resulting from options granted under the plan would be deductible without regard to the limitations otherwise imposed by Section 162(m) of the Code.

Shareholder Approval 

The affirmative vote on executive compensation held every one, twoof the majority of the votes that could be cast at the Annual Meeting by the holders who are present in person or three year(s), or you may abstainby proxy is required to approve the amendment to the Equity Incentive Plan.  The Board believes the amendment to the Equity Incentive Plan is in the best interests of the Company and its shareholders and is important in order to help assure the ability of the Company to continue to recruit and retain highly qualified employees and consultants.

THE BOARD OF DIRECTORS RECOMMENDS VOTING “FOR” THE AMENDMENT OF THE EQUITY INCENTIVE PLAN.  

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PROPOSAL 4:
Vote upon a Proposal to Approve the Amendment of the Stock Bonus Plan to Increase the Number of Shares Available for Grant by 300,000 Shares

The Board is seeking the approval of shareholders to an amendment to the Company’s Stock Bonus Plan (the “Stock Bonus Plan”) to increase the number of shares of Company common stock available for award by 300,000 shares. This amount is about 0.6% of the Company's currently outstanding shares of common stock. If approved by the shareholders, the amendment would serve to amend Section 4.1 of the Stock Bonus Plan to increase the number of shares of Company common stock reserved under the plan from voting.2,554,994 to 2,854,994.  

Purpose and Background of the Stock Bonus Plan 

   

Our Board approved a Stock Bonus Plan (the “Stock Bonus Plan”) in 1985 to permit the grant of shares of common stock to employees and key consultants to the Company as additional compensation for services rendered.  As of August 24, 2018, there were 238,747 shares available for grant under the Stock Bonus Plan, which had previously been approved by the Company’s shareholders.  On August 18, 2018, our Board approved an amendment to the Stock Bonus Plan to increase the number of shares by an additional 300,000 shares, subject to the approval of the Company’s shareholders.

Shares granted under the Stock Bonus Plan, unlike stock options granted under the Equity Incentive Plan, have a measurable market value on the date of grant.  The Compensation Committee believes the combination of awards under the Stock Bonus Plan and the Equity Incentive Plan is appropriate to accomplish the objectives of Company’s employee compensation and retention program.  Shares granted under the Stock Bonus Plan provide immediate value to the employee or consultant, with the issuance of fewer numbers of shares than would be needed to be awarded under the Equity Incentive Plan to provide similar value.  Awards under the Equity Incentive Plan, due to the nature of options and generally more shares covered by awards under this Plan, provide a greater “multiplier” on increases in the stock price of the Company’s common stock.  The Compensation Committee believes having both types of awards available for compensation increases the flexibility of the Company’s compensation plans and reduces the amount of cash necessary to compensate the Company’s employees and consultants.

Similar to awards under the Equity Incentive Plan, grants of equity-based compensation to existing and potential employees under the Stock Bonus Plan is a significant tool that we can use in competing for and retaining highly qualified employees in a competitive job market where we routinely compete with large companies for personnel.  Equity-based compensation awards with multiple-year vesting periods can also serve as a powerful retention tool by requiring employees to remain with us over a number of years to earn the full amount of the compensation.

Because a substantial portion of the total compensation paid to our executives is equity-based compensation paid through grants of common stock under the Stock Bonus Plan, the Board has determined that an advisoryit is in our best interests to further increase the number of shares of common stock available for grant under the Stock Bonus Plan.  If the shareholders do not approve this amendment to the Stock Bonus Plan, the Board expects to, upon exhausting the shares in the Stock Bonus Plan previously approved by the Company’s shareholders, to pay in cash the fair value of each executive’s annual compensation typically paid through the grant of common stock under the Stock Bonus Plan.  Consequently, a vote onagainst this amendment will not have the effect of reducing the total amount of executive compensation, but rather will convert a noncash compensation cost to a compensation cost payable in cash.

For a discussion of dilution and other effects of the proposed amendment of the Stock Bonus Plan, see the section titled “Dilution, Burn Rate and Overhang of the Company’s Equity- Based Compensation Plans” above in Proposal 3. 

Future grants under the Stock Bonus Plan will be determined by the Compensation Committee and may vary from year to year and from participant to participant and are not determinable at this time. Future benefits or amounts to be received by or allocated will be determined by future action of the Compensation Committee and are not determinable at this time.

Summary of the Stock Bonus Plan 

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The following paragraphs provide a summary of the principal features of the Stock Bonus Plan and do not purport to be complete and are subject to and qualified in its entirety by the actual terms of the plan.

Shares Subject to the Plan.The number of shares of the Company’s common stock initially reserved for issuance under the Stock Bonus Plan, as amended, was 2,554,994.  If the amendment is adopted, there will be an aggregate 2,854,994 shares under the Stock Bonus Plan. 

Adjustment of Shares.The number of shares eligible for grant under the Stock Bonus Plan, the number of shares that occurs every year ismay be granted to any individual, and the most appropriate alternativenumber of shares subject to a delegation of authority are subject to adjustment on account of stock splits, stock dividends, recapitalizations and therefore, ourother dilutive changes in common stock.  Shares of common stock that terminate or are canceled, are reacquired in accordance with plan provisions, together with shares of common stock that are used to pay withholding taxes, will again be available for option under the Stock Bonus Plan.

Participation.The Stock Bonus Plan provides that shares of common stock may be granted to those employees and key consultants who are selected by the Compensation Committee in its sole discretion and to non-employee directors who are selected by the Board recommends that you vote for a one year frequencyin its sole discretion.  The Company currently considers certain of its employees and consultants to be eligible for the advisory vote on executive compensation. In formulating its recommendation, our Board consideredgrant of shares of common stock under the Stock Bonus Plan.  As of August 24, 2018, there were approximately 57 eligible individuals.  The Stock Bonus Plan is a discretionary plan and, accordingly, it is not possible at present to determine the number of shares that an annual advisory vote on executive compensation will allow our shareholdersmay be granted to provide us with their timely feedback on our compensation philosophy, policies and practices.any individual during the term of the Stock Bonus Plan.  There is no minimum or maximum number of shares that may be issued to any eligible participant.

   

Required VoteAdministration.The Stock Bonus Plan is administered as to grants to employees and key consultants by the Compensation Committee and as to grants to non-employee directors by the Board.  The Stock Bonus Plan may be terminated at any time by resolution of the Board.  To the extent applicable, the Compensation Committee must be structured at all times so it satisfies the “non-employee director” requirement of Rule 16b-3 under the Exchange Act.  In addition, to the extent that vesting of a grant is performance-based, we intend that the Compensation Committee be structured so that it satisfies the “outside director” requirement of Section 162(m) of the Code.  The Compensation Committee has the sole discretion to determine the employees and key consultants to whom common stock may be granted under the Stock Bonus Plan and the manner in which such shares will vest.  The Board has the sole discretion to determine to whom common stock may be granted and the manner in which it will vest.  Shares of common stock are granted by the Compensation Committee to employees and key consultants in such numbers and at such times during the term of the Stock Bonus Plan as the Compensation Committee and the Board, respectively, determine.  In making grants, the Compensation Committee and the Board will take into account such factors as they may deem relevant in order to accomplish the Stock Bonus Plan’s purposes, including one or more of the following:  the extent to which performance goals have been met, the duties of the respective employees and consultants, and their present and potential contributions to the Company’s success.

   

The optionStock Bonus Plan provides that the Compensation Committee may delegate authority to specified officers of one,the Company to grant shares of common stock to our employees and key consultants; provided no grants of shares may be made by such specified officers to any employee or key consultant who is covered by Section 16(b) of the Exchange Act or to any employee who is, or who may become, subject to Section 162(m) of the Code.  At this time, the Compensation Committee has not made such a delegation.

Restrictions.The Compensation Committee and the Board, respectively, determine the restrictions, if any, applicable to each grant of common stock under the Stock Bonus Plan.  The restrictions may include vesting over a specified period of time or the attainment of specified performance goals and objectives as determined by the Compensation Committee or the Board of Directors.  The restrictions may vary among awards and grantees.

Change in Control.All restrictions with respect to stock granted under the Plan lapse upon a “change in control” of the Company, unless the Compensation Committee or the Board, as applicable, has provided otherwise when the common stock is granted.  A “change in control” occurs if (1) we are merged or consolidated with another company or reorganized (other than a bankruptcy reorganization) unless we are the surviving or continuing company and there is no change in the Common Stock, (2) substantially all of our business or assets are sold or transferred (unless we continue as

33


the holding company of the entity or entities that continue our business) or a sale of more than 50% of our outstanding voting stock, (3) we are liquidated or dissolved, (4) at any time during a period of two consecutive years, persons who constituted the Board at the beginning of the period (including any new directors whose election by the Board or three year(s)whose nomination was approved by a vote of more than two-thirds of the directors who were directors at the beginning of the period or whose election or nomination was previously so approved) cease for any reason to be a majority of the Board, or (5) there is any other transaction that receives the greatestBoard determines to be a change in control. 

Termination of Services.If a grantee dies or becomes disabled, common stock that is subject to restrictions will become fully vested as to a pro rata portion of each grant based on the ratio of the number of votesmonths of employment or service completed at termination of service from the date of the grant to the total number of months of service required for each grant to become fully vested.  The remaining portion of the restricted stock will be consideredforfeited.  If the frequency selectedgrantee terminates service after attaining age 65 (or if an employee terminates service under the retirement provisions of his employment agreement), the unvested shares will become fully vested. If a grantee terminates services for any other reason, all unvested shares will be forfeited.

Termination and Amendment of the Plan.Our Board may amend the Stock Bonus Plan provided that shareholder approval is obtained where necessary or desirable, but no amendment may impair any award previously granted without the award holder’s consent.  The Plan will continue until it is terminated by a resolution of our shareholdersBoard.

Federal Income Tax Consequences 

In general, the grant of future advisorycommon stock that is subject to restrictions on transfer and is subject to a substantial risk of forfeiture does not have tax consequences for the grantee.  The grantee will recognize ordinary compensation income in the taxable year in which the restrictions lapse and the common stock vests.  The compensation is generally equal to the fair market value of the common stock when it vests, unless the grantee has made the Section 83(b) election described below.  If the common stock is vested on the date of grant, then the recipient recognizes ordinary compensation income equal to the fair market value of the common stock on the date of grant.  The grantee’s basis, for purposes of determining gain or loss, on a later taxable disposition of the common stock is generally equal to the compensation recognized when the common stock vests, or, if the common stock is vested upon grant, when the common stock is granted.  In general, the gain or loss will be short-term or long-term capital gain or loss depending on how long the grantee holds the shares after they vest.  In general, the Company is entitled to a federal income tax deduction equal to the compensation recognized by the grantee, assuming that the compensation amounts satisfy the ordinary and necessary and reasonable compensation requirements for deductibility and that the deduction is not limited by Section 162(m) of the Code.

The grantee of common stock that is subject to restrictions can make an election under Section 83(b) of the Code to recognize ordinary compensation income at the time the common stock is granted in an amount equal to the fair market value of the common stock at the date of grant, without taking into account any restrictions.  In this situation, the Company is entitled to a federal income tax deduction equal to the amount of income recognized by the grantee.  The grantee’s basis for purposes of determining gain or loss on a later taxable disposition of the common stock is equal to the compensation recognized.  Generally, the gain or loss will be short-term or long-term capital gain or loss depending on how long the grantee holds the shares after they are granted.

Shareholder Approval 

The affirmative vote of the majority of the votes that could be cast at the Annual Meeting by the holders who are present in person or by proxy is required to approve compensation for our named executive officers. Abstentionsthe amendment to the Stock Bonus Plan.  The Board believes the amendment to the Stock Bonus Plan is in the best interests of the Company and broker non-votes will have no effect onits shareholders and is important in order to help assure the outcomeability of this proposal.the Company to continue to recruit and retain highly qualified employees, consultants, and non-employee directors.

 

THE BOARD OF DIRECTORS RECOMMENDS A VOTE VOTING “FOR EVERY “ONE YEARAS THE OPTION FOR CONSIDERING, ON AN ADVISORY BASIS,ADOPTION OF THE FREQUENCY OF FUTURE ADVISORY VOTESAMENDMENT TO APPROVE COMPENSATION FOR OUR NAMED EXECUTIVE OFFICERSTHE STOCK BONUS PLAN.

 

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44

PROPOSAL 5:
Ratification of Selection of Independent Registered Public Auditors

PROPOSAL 6: Ratification of Selection of independent registered public accounting firm

The Audit Committee of the Board has selected Hein & AssociatesMoss Adams LLP, a registered public accounting firm, as the Company’s independent registered public auditors for the year ending December 31, 2017,2018, and has further directed management to submit the selection of independent registered public auditors for ratification by the shareholders at the Annual Meeting. Effective November 16, 2017, Hein & Associates LLP was(“Hein”), the independent registered public accounting firm engaged by the Company in September 2015, combined with Moss Adams LLP (“Moss Adams”). As a result of this transaction, on November 16, 2017, Hein resigned and needed to be replaced as the independent registered public accounting firm for the Company. Concurrent with such resignation of Hein, the Company’s auditors in August 2015. audit committee approved the engagement of Moss Adams as the new independent registered public accounting firm for the Company effective for the year ended December 31, 2017.

Representatives of Hein & Associates LLPMoss Adams are expected to be present at the Annual Meeting. They will have an opportunity to make a statement if they so desire and will be available to respond to appropriate questions.

 

Neither the Company’s governing documents, nor law, require shareholder ratification of the selection of Hein & Associates LLPMoss Adams as the Company’s independent registered public auditors. However, the Audit Committee of the Board is submitting the selection of Hein & Associates LLPMoss Adams to the shareholders for ratification as a matter of good corporate practice. If the shareholders fail to ratify the selection, the Audit Committee of the Board will reconsider whether or not to retain that firm. Even if the selection is ratified, the Audit Committee of the Board in its discretion may direct the appointment of different independent registered public auditors at any time during the year if they determine that such a change would be in the best interests of the Company and its shareholders.

 

Independent Auditor’s FeesTo be ratified, the proposal must be approved by the affirmative vote of a greater number of votes cast for the proposal than are cast against the proposal. If a ballot is called for, proxies in the accompanying form appointing the persons whose names are printed therein to act (unless the proxy form has been marked against or authority to vote is withheld) will be voted in favor of the proposal.

 

The following table represents aggregate fees billed to the Company by Moss Adams and Hein & Associates LLP for the transitionalyear ended December 31, 2017 and nine months ended December 31, 2016, and twelve months ended March 31, 2016, respectively:

 

  Nine Months Ended
December 31, 2016
  Twelve Months Ended
March 31, 2016
 
Audit Fees(1) $105,990  $98,015 
Audit–Related Fees(2) $8,610  $ 
Tax Fees $  $ 
All Other Fees $  $ 

 

 

 

 

 

 

 

 

 

 

 

2017

 

2016

 

 

 

Moss Adams

 

Hein

 

Hein

 

 

 

($)

 

($)

 

($)

 

Audit Fees (1)

 

80,590

 

43,435

 

105,990

 

Audit - Related Fees (2)

 

-

 

2,730

 

8,610

 

Tax Fees

 

-

 

-

 

-

 

All Other Fees

 

-

 

-

 

-

 

 

 

 

 

 

 

 

(1)

Audit Fees consist of fees for professional services rendered for the audit of our annual consolidated financial statements, review of the interim consolidated financial statements included in quarterly reports on Form 10-Q and professional services rendered related to comfort letter procedures for stock offering and providing consent to include the auditor's opinion in registration statements.

 

 

 

 

 

 

 

 

(2)

Audit - Related Fees consist of fees for assurance and related services that are reasonably related to the performance of the audit or review of our consolidated financial statements and are not reported in Audit Fees.

 

 

(1)Audit Fees consist of fees for professional services rendered for the audit of our annual consolidated financial statements, review of the interim consolidated financial statements included in quarterly reports on Form 10-Q and professional services rendered related to comfort letter procedures for stock offering and providing consent to include the Auditor’s opinion in registration statements.

(2)Audit-Related Fees consist of fees for assurance and related services that are reasonably related to the performance of the audit or review of our consolidated financial statements and are not reported in Audit Fees.

 Independent Registered Public Auditor’s Fees 

All fees described above incurred in connection with services performed by Moss Adams and Hein & Associates LLP were approved by the Audit Committee.

 

45

35


 

Pre-Approval Policies and Procedures

The Audit Committee pre-approves all auditing services and permitted non-audit services (including the fees and terms thereof) to be performed for the Company by our independent registered public auditor, Hein & Associates LLPMoss Adams (subject to de minimis exceptions for non-audit services described in Section 10A(i)(1)(B) of the Exchange Act which are approved by the Audit Committee prior to completion of the audit). The Audit Committee may form and delegate authority to subcommittees consisting of one or more members when appropriate, including the authority to grant pre-approvals of audit and permitted non-audit services, provided that decisions of such subcommittee to grant pre-approvals shall be presented to the full Audit Committee at its next scheduled meeting.

 

Disagreements with Auditors

There have been no disagreements with Hein & Associates LLPMoss Adams on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure.

Required Vote

The affirmative vote of a majority of the shares represented at the Annual Meeting and entitled to vote is required for this proposal. Abstentions will be counted as present and entitled to vote on this proposal and will therefore have the effect of a negative vote. Broker non-votes will not be counted as present and entitled to vote on this proposal and will therefore have no effect on the outcome of this proposal.

THE BOARD RECOMMENDS A VOTE “FOR” RATIFICATION OF THE SELECTION OF HEIN & ASSOCIATES LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.

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REPORT OF THE AUDIT COMMITTEE(1)

REPORT OF THE AUDIT COMMITTEE (1)

The Audit Committee of the Board has furnished the following report on its activities:

The AuditCommittee appointed the independent registered public auditors Moss Adams LLP and Hein & Associates LLP to serve for the fiscal years ended December 31, 2016 and December 31, 2017 and this selection was ratified by the Company’s shareholders on November 30, 2017.  The Committee reviewed and discussed the financial statements included in the Quarterly Reports on Form 10-Q and the audited financial statements in the TransitionAnnual Report on Form 10-KT transition period ended December 31, 2016 and the Annual Report on Form 10-K for the nine monthsyear ended December 31, 20162017 with Moss Adams LLP and Hein & Associates LLP, the Company’s independent registered public accounting firm.LLP.  The Audit Committee discussed with Hein & Associates LLPthe independent registered public auditors matters required to be discussed under applicable standards, including Public Company Accounting Oversight Board (“PCAOB”) Auditing Standard No. 1301.16.  The Audit Committee also reviewed with management and Hein & Associates LLPthe independent registered public auditors the reasonableness of significant judgments and the clarity and quality of disclosures in the financial statements, not just the acceptability of the Company’s accounting principles and such other matters as are required to be discussed with the Audit Committee under generally accepted auditing standards.  Hein & Associates LLPThe independent registered public auditors also provided to the Audit Committee the written disclosures and the letter required by the PCAOB regarding Hein & Associates LLP’s communications with the Audit Committee concerning independence.Public Company Accounting Oversight Board (“PCAOB”).  The Audit Committee discussed with Hein & Associates LLPthe independent registered public auditors their independence from management and the Company, including the matters in the written disclosures required by the PCAOB, and considered whether Hein & Associates LLP’sthe independent registered public auditors’ provision of non-audit services is compatible with the auditors’ independence.

 

In accordance with the Audit Committee policy and applicable law, the Audit Committee pre-approves all auditing services and permitted non-audit services (including the fees and terms thereof) to be performed for the Company by our independent registered public auditor, Moss Adams LLP and Hein & Associates LLP (subject to de minimis exceptions for non-audit services described in Section 10A(i)(1)(B) of the Exchange Act which are approved by the Audit Committee prior to completion of the audit).  Non-audit services, such as tax return preparation, are provided by service providers other than Moss Adams LLP and Hein & Associates LLP.

The Audit Committee discussed with Hein & Associates LLPthe Company’s independent registered public auditors the overall scope and plans for their audit and met with the auditors to discuss the results of their examinations, their consideration and testing of the Company’s internal controls as part of their audit, and the overall quality of the Company’s financial reporting.  The Committee also reviewed the Company’s disclosure controls.  ThreeFive Audit Committee meetings were held during the transitional nine monthsyear ended December 31, 2016.2017.

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In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board that the audited financial statements be included in the TransitionAnnual Report on Form 10-KT transition period ended December 31, 2016 and the Annual Report on Form 10-K for the nine monthsyear ended December 31, 20162017 and filed with the SEC.

Securities and Exchange Commission. 

The Audit Committee of the Boardboard of Directors:

directors:

Stephen J. Roy

Joseph P. Sellinger

John E. Sztykiel

 

March 16, 2017September 5, 2018 

__________________

1 The material in this report is not “soliciting material,” is not deemed “filed” with the SEC, and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation contained in such filing.

 

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” RATIFICATION OF THE SELECTION OF THE INDEPENDENT REGISTERED PUBLIC AUDITORS.

 

(1)The material in this report is not “soliciting material,” is not deemed “filed” with the SEC, and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation contained in such filing.

 

47

PROPOSALS BY SHAREHOLDERS

PROPOSALS BY SHAREHOLDERS FOR THE 2018 ANNUAL MEETING

To be considered for inclusion in thenext year’s proxy materials, for the 2018 Annual Meeting of Shareholders pursuant to Rule 14a-8 under the Exchange Act, a shareholderyour proposal must be submitted in writing by- May 8, 2019 to UQM Technologies, Inc., 2018 to ourAttn: Corporate Secretary, 4120 Specialty Place, Longmont, Colorado 80504.  Such proposals must also meet the other requirements of the rules of the Securities and Exchange Commission relating to shareholders’ proposals and the provisions of our Bylaws.

Our Bylaws provide that any proposals by shareholders for the next Annual Meeting will not be acted on at the address below.

Our bylaws further provide that a shareholder proposal of other business thatmeeting unless notice thereof is not submitted for inclusion in the Company’s proxy materials, but that a shareholder instead wishes to present directlyreceived at the 2018 Annual Meeting of Shareholders, must be submitted by notice in writing and received by our Corporate Secretary at the address belowprincipal executive offices not less than 60 days or more than 90 days before the 2018 Annual Meeting of Shareholders. However, in the event that less than 40 days’ notice or prior public disclosure of the date of the 2018 Annual Meeting of Shareholders is given or made to the shareholders, such notice must be received not later than the close of business on the tenth day following the day we provide notice of, or publicly disclose, the date of the 2018 Annual Meeting of Shareholders.

meeting.  Our bylawsBylaws also provide that nominations to the Board for the 20182019 Annual Meeting of Shareholders may not be made by shareholders unless written notice is received by the Secretary of the Company before March 15, 2019.  You should review our Corporate Secretarybylaws, which contain additional requirements about advance notice of shareholder proposals and director nominations.

If we are not notified of intent to present a proposal at the address below before-, 2018. However, in the event the date for the 2018our 2019 Annual Meeting of Shareholders has been changed by more than60 calendar days before the 2019 meeting date, which we expect will be within 30 calendar days from the date of the Annual Meeting, such written notice must be received not less than 30 days prior to the date of the 2018 Annual Meeting of Shareholders.

Any proposals or nominations described above must be delivered to: UQM Technologies, Inc., 4120 Specialty Place, Longmont, Colorado 80504, Attention: Corporate Secretary. Please refer to the advance notice provisions of our bylaws for additional information and requirements regarding shareholder nominations or other shareholder proposals.

WeJune 1, 2019, we will not consider any proposal or nomination that is not timely or otherwise does not meet our bylaws and SEC requirements for submitting a proposal or nomination. We reservehave the right to reject, rule out of order or take other appropriate actionexercise discretionary voting authority with respect to any proposal, or nomination that does not comply with these and other applicable requirements.if presented at the meeting, without including information regarding such proposal in our proxy materials.

 

OTHER MATTERS

 

OTHER MATTERS

As of the date of this proxy statement, the Board is not aware of any other matters to be presented for action at the meeting, nor has it been advised that others will present any other matters.  If any other matters do properly come before the meeting, the proxy holders intend to vote the proxies held by them in accordance with their best judgment on such matters.

 

ANNUAL REPORT

 

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ANNUAL REPORT

Upon the receipt of a written request from any shareholder, the Company will mail, at no charge to the shareholder, a copy of the Company’s Fiscal Year 2017 Annual Report on Form 10-K, including the financial statements and schedules required to be filed with the Securities and Exchange Commission pursuant to Rule 13a-1 under the Exchange Act.  Written requests for the Annualsuch Report should be directed to:

Corporate Secretary

UQM Technologies, Inc.

4120 Specialty Place

Longmont, Colorado 80504

Phone (303) 682-4900

 

The Company’s Annual Report on Form 10-K is also available on the Company’s web site at www.uqm.com or at the web site that the SECSecurities and Exchange Commission maintains at www.sec.gov.

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APPENDIX Awww.sec.gov.

 

UQM TECHNOLOGIES, INC.

 

EMPLOYEE STOCK PURCHASE PLAN

(amended and restated, effective August 30, 2017)

1.            Preamble. UQM Technologies, Inc., a Colorado corporation, formerly known as Unique Mobility, Inc. (together with its Subsidiary Corporations, hereinafter referred to, unless the context otherwise requires, as the “Company”), established the Unique Mobility, Inc. Employee Stock Purchase Plan (the “Plan”), effective April 1, 1990. The Plan was amended in April 2003 to change the name of the Plan to UQM Technologies, Inc. Employee Stock Purchase Plan in connection with the change in the Company’s name. The Plan was previously amended and restated effective as of November 12, 2009. The Company’s Board of Directors adopted this amendment and restatement effective as of August 30, 2017, subject to shareholder approval.

2.            Purposes. The Plan is intended to provide a method whereby eligible employees of the Company and its Subsidiary Corporations, as defined in Paragraph 3(e) below and that are designated as provided in Paragraph 13 below, will have an opportunity to acquire a proprietary interest in the Company through the purchase of shares of the $0.01 par value voting Common Stock of the Company (the “Common Stock”). It is the intention of the Company that the Plan qualify as an “employee stock purchase plan” under Section 423 of the Internal Revenue Code of 1986, as amended from time to time (the “Code”). The provisions of the Plan shall, accordingly, be construed so as to extend and limit participation in a manner consistent with the requirements of that section of the Code.

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3.            Definitions.

(a)            “Base pay” means an Employee’s rate of regular compensation (before reduction for contributions to plans maintained pursuant to Sections 125, 132(t)(4), and 401(k) of the Code) in effect on the applicable Offering Commencement Date, but excluding payments for overtime, shift premium, incentive compensation, bonuses, and other special payments.

(b)            “Committee” means the Compensation Committee of the Company’s Board of Directors.

(c)            “Employee” means any individual who provides services to the Company or a Subsidiary Corporation as a common law employee, whose remuneration is subject to the withholding of federal income tax pursuant to Code section 3401, and who is customarily employed for more than 20 hours per week and more than five months in a calendar year by the Company or a Subsidiary Corporation. Employee shall not include any individual (a) who provides services to the Company or a Subsidiary Corporation under an agreement, contract, or any other arrangement pursuant to which the individual is initially classified as an independent contractor or (b) whose remuneration for services has not been treated initially as subject to the withholding of federal income tax pursuant to Code section 3401 even if the individual is subsequently reclassified as a common law employee as a result of a final decree of a court of competent jurisdiction or the settlement of an administrative or judicial proceeding.

(d)            “Plan Administrator” means the person appointed by the Company or the Committee to maintain the records of the Plan.

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(e)            “Subsidiary Corporation” shall mean any present or future corporation that (i) would be a “subsidiary corporation” with respect to the Company as that term is defined in section 424 of the Code, and (ii) is designated as a participant in the Plan by the Committee described in Paragraph 13.

4.            Eligibility.

(a)            Participation in the Plan is completely voluntary. An Employee will be eligible to become a participant in an offering if employed by the Company for six months or more, measured from date of employment, on the applicable offering Commencement Date. Whether or not an Employee participates in any offering will not have any effect on his or her eligibility to participate in any subsequent Offerings.

(b)           Any provision of the Plan to the contrary notwithstanding, an Employee shall not be granted an option under the Plan:

(i)            if, immediately after the grant, such Employee would own stock, and/or hold outstanding options to purchase stock, possessing 5% or more of the total combined voting power or value of all classes of stock of the Company or of any Subsidiary Corporation (for purposes of this Paragraph the rules of Section 424(d) of the Code shall apply in determining stock ownership of any Employee and stock that an Employee may purchase under all outstanding rights and options shall be treated as stock owned by the Employee); or

(ii)            that permits his or her rights to purchase stock under all employee stock purchase plans of the Company and its subsidiary corporations as specified by Section 424(d) of the Code to accrue at a rate that exceeds $25,000 of the fair market value of the stock (determined at the time such option is granted) for each calendar year in which such option is outstanding at any time.

(c)            Officers of the Company and any designated Subsidiary Corporation shall be eligible to participate in Offerings under the Plan, provided, however, that the Board may provide in an Offering that certain employees who are highly compensated employees within the meaning of Section 423(b)(4)(D) of the Code shall not be eligible to participate.

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5.            Offering Dates. From and after the effective date of this Plan, the Plan will be implemented by offerings of Common Stock of the Company. The first such offering (“Offering I”) shall commence on April 1, 1990 (the “Offering I Commencement Date”) and shall terminate on June 30, 1990 (the “Offering I Termination Date”). Each subsequent offering shall be consecutively numbered Offering II, III, etc., shall commence on July 1, 1990 and every three months thereafter (the “Offering II, III, etc. Commencement Date”) and shall terminate on September 30, 1990 and every three months thereafter (the “Offering II, III, etc. Termination Date”). Participation in any of the offerings under the Plan shall neither limit, nor require, participation in any other offering.

6.            Participation.

(a)            An eligible Employee may become a participant by completing an authorization for a payroll deduction up to the maximum amount permitted on the form provided by the Company and filing it with the Committee during the month immediately preceding the applicable offering Commencement Date, or at such other time or place as may be established from time to time by the Committee.

(b)            Payroll deductions for a participant shall commence on the applicable Offering Commencement Date when an authorization for a payroll deduction becomes effective and shall end on the Offering Termination Date of the Offering to which such authorization is applicable unless sooner terminated by the participant as provided in Paragraph 11.

7.            Payroll Deductions.

(a)            At the time a participant files an authorization for a payroll deduction, the participant shall elect to have deductions made from his or her Base Pay, and held by the Company in its general funds, on each payday during the time the Employee is a participant in an Offering at the rate of 1, 2, 3, 4, 5, 6, 7, 8, 9, or 10% of the Base Pay in effect on the Offering Commencement Date.

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(b)            All payroll deductions made for each participant and held by the Company shall be credited to a book account for each participant that shall reflect the cumulative payroll deductions made for such participant and available for the purchase of Common Stock. A participant may not make any separate cash payments into such account.

(c)            A participant may discontinue participation in the Plan as provided in Paragraph 11, but no other change can be made during an Offering and, specifically, a participant may not alter the rate of payroll deductions for that Offering.

(d)            Notwithstanding the foregoing, to the extent necessary to comply with Section 423(b)(8) of the Code and Paragraph 4(b) above, a participant’s payroll deductions may be decreased to zero percent at any time during an Offering. Payroll deductions shall recommence at the rate originally elected by the participant effective as of the beginning of the first Offering in the next calendar year, unless terminated by the participant.

8.            Terms and Conditions of Options.

(a)            On the applicable Offering Commencement Date when a participant’s authorization for a payroll deduction becomes effective, the participant shall be deemed to have been granted an option to purchase a maximum number of shares of Common Stock equal to an amount determined as follows: 85% of the market value of the Common Stock on the applicable offering Commencement Date shall be divided into an amount equal to (x) that percentage of the Employee’s Base Pay which lie or she has elected to have withheld, multiplied by (y) the Employee’s projected Base Pay for the applicable Offering Period, calculated on the assumption that the Employee’s Base Pay remains constant over the Offering Period. The market value of the Company’s Common Stock shall be determined in accordance with Paragraph 8(c).

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(b)            In connection with each Offering made under the Plan, the Board or the Committee may specify a maximum number of shares that may be purchased by any Employee as well as a maximum aggregate number of shares that may be purchased by all eligible Employees pursuant to such Offering. If the aggregate purchase of shares upon exercise of rights granted under the Offering would exceed any such maximum aggregate number, the Board or the Committee shall make a pro rata allocation of the shares available in as nearly a uniform manner as shall be practicable and as it shall deem to be equitable.

(c)            The option price of Common Stock purchased with payroll deductions made during each offering for a participant therein shall be 85% of the composite closing price of the Common Stock on the NYSE American on the applicable Offering Commencement Date (or the next regular business date on which trades of shares of Common Stock shall be reported on the NYSE American if no shares have been traded on the Offering Commencement Date). If the Common Stock is listed or admitted for trading on any other national stock exchange, the option price of the Common Stock shall be 85% of the composite closing price of the Common Stock on such exchange on the applicable Offering Commencement Date (or the next regular business date on which trades of shares of shares of Common Stock shall be reported on the NYSE American if no shares have been traded on the Offering Commencement Date).

(d)            Fractional shares will not be issued under the Plan and any accumulated payroll deductions that would have been used to purchase fractional shares, together with any amounts that are in excess of the limitations of Paragraph 8(a), shall be returned to each participant promptly following the termination of an Offering.

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9.            Exercise of Option.

(a)            A participant who has not given a written notice of withdrawal in accordance with Paragraph 11 and who has not terminated employment (except on account of death or disability) may elect (1) to exercise his option to purchase shares of Common Stock (but not in excess of the number of whole shares for which options have been granted the participant pursuant to paragraph 8(a) and subject to any limit on the maximum number of shares that may be permitted with respect to the Offering), with any excess refunded in cash as provided in Paragraph 8(c), or (2) to have the amount credited to his account paid in cash, without interest. A participant or beneficiary, as the case may be, may not elect to have a portion of the amount credited to his account used to purchase Common Stock and a portion of the amount credited to his account paid in cash. No amount credited to a Participant’s account during one offering may be carried over to another offering. A participant who fails to timely elect to exercise his option shall be deemed to have elected to have the amount credited to his account paid to him in cash.

(b)            Each participant shall notify the Committee of his election to exercise the option to purchase Common Stock or to have the amount credited to his account paid in cash no later than the tenth day after the Offering Termination Date. The Committee shall furnish forms to each participant for purposes of making such elections.

(c)            No options granted under the Plan may be exercised to any extent unless the shares to be issued upon such exercise under the Plan (including rights granted thereunder) are covered by an effective registration statement pursuant to the Securities Act of 1933, as amended (the “Securities Act”) and the Plan is in material compliance with all applicable state, foreign and other securities and other laws applicable to the Plan. If, on any Offering Termination Date under the Plan, the Plan is not so registered or in such compliance, no options granted under the Plan or any Offering shall be exercised on such Offering Termination Date, and the purchase date shall be delayed until the Plan is subject to such an effective registration statement and such compliance, except that the purchase date shall not be delayed more than 12 months and the purchase date shall in no event be more than twenty-seven (27) months from the Offering Commencement Date. If on the Offering Termination Date, as delayed to the maximum extent permissible, the Plan is not registered and in such compliance, no options granted under the Plan or any Offering shall be exercised and all payroll deductions accumulated during the Offering (reduced to the extent, if any, such deductions have been used to acquire stock) shall be distributed to the participants, without interest.

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10.           Delivery. As promptly as practicable after the Offering Termination Date of each Offering, the Company will deliver to each participant, as appropriate, the shares of Common Stock purchased upon the exercise of the participant’s option.

11.           Withdrawal and Termination.

(a)            Prior to the applicable Offering Termination Date, any participant may withdraw payroll deductions credited to the participant’s account by giving written notice of withdrawal to the Committee, which shall then cause the Company to return to the participant all of the participant’s payroll deductions, without interest, credited to his account as promptly as practical after receipt of the notice of withdrawal, and no further payroll deductions for such participant will be made during such Offering. For administrative convenience, the Committee may cause the Company to pay all requested withdrawals received during a given period, such as a month, at one time. The Company may, at its option, treat any attempt to borrow by a participant on the security of the accumulated payroll deductions allocated to the participant’s account as an election, under this Paragraph 11(a), to withdraw such deductions.

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(b)            A participant’s withdrawal from any Offering will not have any effect upon eligibility to participate in any subsequent Offering or in any similar plan that may hereafter be adopted by the Company.

(c)            Prior to the Offering Termination Date, upon termination of the participant’s employment with the Company and all Subsidiary Corporations for any reason, including retirement but excluding death or disability while in the employ of the Company or a Subsidiary Corporation, the payroll deductions credited to the participant’s account, without interest, will be returned to the participant, or, in the case of a participant’s death subsequent to the termination of employment, to the person or persons entitled thereto under Paragraph 14. For purposes of the Plan, a participant shall be considered disabled if the Committee, in its sole discretion, determines that the participant is unable to perform the usual and customary requirements of his or her job with the Company and will be unable to do so for at least six months.

(d)            Prior to the offering Termination Date, upon termination of the participant’s employment because of death or disability, the participant or the participant’s beneficiary (as defined in Paragraph 14) shall have the right to elect, by written notice given to the Committee prior to the expiration of the period of 90 days commencing with the death or disability of the participant, and prior to the tenth day after the Offering Termination Date, either

(i)            to withdraw all of the payroll deductions credited to the participant’s account, or

(ii)            to exercise the participant’s option for the purchase of Common Stock on the Offering Termination Date next following the date of the participant’s death or disability for the purchase of the number of full shares of Common Stock which the amount in the participant’s account at the date of the participant’s death or disability will purchase at the applicable option price, and any excess credited to such Account will be returned to said participant or his or her beneficiary.

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In the event that no such written notice of election shall be duly received by the Committee within the time period required above, the participant or beneficiary shall automatically be deemed to have elected to withdraw the payroll deductions credited to the participant’s account at the date of the participant’s death or disability, and the same will be paid promptly to said participant or beneficiary. Notwithstanding the foregoing, if a participant’s employment with the Company and all Subsidiary Corporations terminates because of disability more than three months prior to the Offering Termination Date, the provisions of this Paragraph 11(d) shall not apply and the provisions of Paragraph 11(c) shall apply to such participant.

(e)            Options granted under the Plan shall not be transferable by a participant otherwise than by will or the laws of descent and distribution, or by a beneficiary designation as provided in Paragraph 14 and, otherwise during his or her lifetime, shall be exercisable only by the person to whom such options are granted.

12.           Stock.

(a)            The maximum number of shares of Common Stock that shall be made available for sale under the Plan is 1,200,000, as such number may be adjusted pursuant to Paragraph 17. The initial maximum number of shares was 200,000. By resolution adopted November 12, 2009, the Board increased the maximum number of shares by an additional 500,000 shares. By resolution adopted August 30, 2017, the Board further increased the maximum number of shares by an additional 500,000 shares. If any option granted under the Plan shall for any reason terminate without having been exercised, the shares of Common Stock not purchased under such option shall again become available under the Plan.

(b)            A participant shall have no interest in Common Stock covered by the participant’s option until such option has been exercised.

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13.           Administration. The Plan shall be administered by the Committee. The Committee shall have the power, subject however, at all times to the final jurisdiction of the Company, which shall rest in the Board of Directors of the Company, within the limitations of the Plan:

(a)            To construe and interpret the Plan and rights granted under it, and to establish, amend and revoke rules and regulations for its administration. The Committee, in the exercise of this power, may correct any defect, omission or inconsistency in the Plan, in a manner and to the extent it shall deem necessary or expedient to make the Plan fully effective.

(b)            To designate from time to time which Subsidiary Corporations shall be eligible to participate in the Plan.

(c)            Generally, to exercise such powers and to perform such acts as the Board deems necessary or expedient to promote the best interests of the Company and its Affiliates and to carry out the intent that the Plan be treated as an “employee stock purchase plan” within the meaning of Section 423 of the Code.

Determinations made by the Committee and approved by the Board of Directors with respect to any matter or provision contained in the Plan shall be final, conclusive and binding upon the Company and upon all participants, their heirs or legal representatives. Any rules or regulations adopted by the Committee shall remain in full force and effect unless and until altered, amended, or repealed by the Committee or the Board of Directors. The records of the Plan shall be maintained by the Plan Administrator, which shall also perform any other duties delegated to it by the Committee.

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14.           Designation of Beneficiary. A participant may file with the Company, pursuant to rules adopted by the Committee, a written designation of a beneficiary who is to receive any Common Stock and/or cash pursuant to the provisions of the Plan in the event of the participant’s death. Such designation of beneficiary may be changed by the participant at any time by written notice. Upon the death of a participant and upon receipt by the Company of proof of the identity and existence at the participant’s death of a beneficiary validly designated by him under the Plan, the Company shall deliver such Common Stock to such beneficiary and/or pay any cash in the participant’s account to the beneficiary, as may be required under the provisions of Paragraph 11(d). In the event of the death of a participant and in the absence of a beneficiary validly designated under the Plan who is living at the time of such participant’s death, the Company shall cause such cash to be paid to the person or persons or the entity duly designated by the participant, as shown on the Company’s records, as his or her beneficiary for the proceeds of any Company paid life insurance. In the absence of such a beneficiary who is living at the time of the participant’s death, the Company shall cause such cash to be paid to the executor or administrator of the estate of the participant, or if no such executor or administrator of the estate has been appointed (to the knowledge of the Company) the Company, in its discretion, may pay such cash to the spouse or to any one or more dependents of the participant as the Company may designate. No beneficiary shall, prior to the death of the participant by whom he or she has been designated, acquire any interest in the Common Stock or in amounts credited to the participant’s account.

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15.           Transferability. Neither payroll deductions credited to a participant’s account nor any rights with regard to the exercise of an option or to receive Common Stock under the Plan may be assigned, transferred, pledged, or otherwise disposed of in any way by the participant otherwise than by will or the laws of descent and distribution. Any such attempted assignment, transfer, pledge or other disposition shall be without effect, except that the Company may treat such act as an election to withdraw funds in accordance with Paragraph 11.

16.           Ownership of Deductions. All payroll deductions received or held by the Company shall remain the property of the respective participants in the Plan, and the Company shall have no interest in such amounts until the exercise of options and the purchase of the Common Stock pursuant to Paragraph 9.

17.           Effect of Changes in Capital Structure. If the outstanding shares of Common Stock are changed into or exchanged for a different number or kind of shares or other securities of the Company by reason of any recapitalization, reclassification, stock split, stock dividend, combination, or subdivision, or if the Company takes any other action of a similar nature affecting such Common Stock (excluding, however, any reorganization under the United States Bankruptcy Code), then the number and class of shares of Common Stock which may thereafter be optioned (in the aggregate and to any participant) shall be adjusted accordingly and, in the case of each option outstanding at the time of any such action, the number and class of shares which may thereafter be purchased pursuant to such option and the option price per share shall be adjusted, in each case to such extent and in such manner, if at all, as may be determined by the Board upon the recommendations of the Committee, with the approval of independent public accountants and counsel, to be necessary to preserve unimpaired the rights of the holder of such option.

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18.           Amendment of the Plan.

(a)            The Board at any time, and from time to time, may amend the Plan. However, except as provided in paragraph 12 relating to adjustments upon changes in stock, no amendment shall be effective unless approved by the stockholders of the Company within 12 months before or after the adoption of the amendment, where the amendment will:

Increase the number of shares reserved for options under the Plan;

(i)            Modify the provisions as to eligibility for participation in the Plan (to the extent such modification requires stockholder approval in order for the Plan to obtain employee stock purchase plan treatment under Section 423 of the Code or to comply with the requirements of Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended (“Rule 16b-3”)); or

(ii)            Modify the Plan in any other way if such modification requires stockholder approval in order for the Plan to obtain employee stock purchase plan treatment under Section 423 of the Code or to comply with the requirements of Rule 16b-3. It is expressly contemplated that the Board may amend the Plan in any respect the Board deems necessary or advisable to provide eligible employees with the maximum benefits provided or to be provided under the provisions of the Code and the regulations promulgated thereunder relating to employee stock purchase plans and/or to bring the Plan and/or rights granted under it into compliance therewith.

Notwithstanding paragraph 18(a)(i) above, the Board may determine that, if the stockholders of the Company fail to approve an increase in the number of shares reserved for options under the Plan, options granted and exercised with respect to such unapproved shares shall not be treated as options granted under Code section 423, and the exercising participant shall recognize compensation income, subject to wage withholding upon exercise of the option equal to the excess of the fair market value of the Common Stock on the date of exercise over the exercise price.

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(b)            Rights and obligations under any rights granted before amendment of the Plan shall not be altered or impaired by any amendment of the Plan, except with the consent of the person to whom such rights were granted, or except as necessary to comply with any laws or governmental regulations, or except as necessary to ensure that the Plan and/or rights granted under the Plan comply with the requirements of Section 423 of the Code.

19.           Notices.All notices or other communications by a participant to the Company under or in connection with the Plan shall be deemed to have been duly given when received by the Committee.

20.           Merger or Consolidation. In the event of:

(a)            a dissolution or liquidation of the Company;

(b)            a merger or consolidation in which the Company is not the surviving corporation;

(c)            a reverse merger in which the Company is the surviving corporation but the shares of the Company’s Common Stock outstanding immediately preceding the merger are converted by virtue of the merger into other property, whether in the form of securities, cash or otherwise; or

(d)            the acquisition by any person, entity or group within the meaning of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or any comparable successor provisions (excluding any employee benefit plan, or related trust, sponsored or maintained by the Company or any Affiliate of the Company) of the beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act, or comparable successor rule) of securities of the Company representing at least fifty percent (50%) of the combined voting power entitled to vote in the election of directors, then, as determined by the Board in its sole discretion (i) any surviving or acquiring corporation may assume outstanding rights or substitute similar rights for those under the Plan, (ii) such rights may continue in full force and effect, or (iii) participants’ accumulated payroll deductions may be used to purchase Common Stock immediately prior to the transaction described above and the participants’ rights under the ongoing Offering terminated.

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21.           Termination or Suspension of the Plan.

(a)            The Board in its discretion may terminate the Plan at any time. No options may be granted under the Plan while the Plan is suspended or after it is terminated.

(b)            Rights and obligations under any rights granted while the Plan is in effect shall not be altered or impaired by suspension or termination of the Plan, except as expressly provided in the Plan or with the consent of the person to whom such rights were granted, or except as necessary to comply with any laws or governmental regulation, or except as necessary to ensure that the Plan and/or rights granted under the Plan comply with the requirements of Section 423 of the Code.

22.           Effective Date Approval of Stockholders. The Plan was adopted by the Board of Directors of the Company on December 15, 1989, to be effective as of April 1, 1990, and was approved by the stockholders on March 13, 1990. The Plan was previously amended and restated effective as of November 12, 2009. This amendment and restatement shall be effective as of August 30, 2017, subject to shareholder approval; provided however, that any options granted with respect to the additional 500,000 shares shall not be treated as options granted under Section 423 of the Code unless the stockholders of the Company approve the increase within 12 months after the Board adopts the amendment.

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PROXY CARD

UQM Technologies, Inc.
4120 Specialty Place, Longmont, Colorado 80504

PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
UQM TECHNOLOGIES, INC.
FOR THE ANNUAL MEETING OF SHAREHOLDERS - November 30, 2017

Joseph R. Mitchell and David I. Rosenthal, or any of them, each with the power of substitution, are hereby authorized to represent and vote the shares of the undersigned, with all the powers which the undersigned would possess if personally present, at the Annual Meeting of Shareholders of UQM Technologies, Inc. to be held on November 30, 2017 or any postponement or adjournment thereof.

The Board of Directors is not aware of any other matters to be presented at the meeting for approval by the shareholders.

SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS INDICATED BY THE SHAREHOLDER ON THE PROXY CARD.IF NO SUCH DIRECTIONS ARE INDICATED, THESE SHARES WILL BE VOTED “FOR” APPROVAL OF THE ISSUANCE BY THE COMPANY OF THE SECOND STAGE SHARES PURSUANT TO THE TERMS OF THE PURCHASE AGREEMENT, “FOR” THE ELECTION OF THE DIRECTOR NOMINEES, “FOR” THE AMENDED AND RESTATED EMPLOYEE STOCK PURCHASE PLAN TO INCREASE THE NUMBER OF AUTHORIZED SHARES, “FOR” THE ADVISORY APPROVAL OF COMPENSATION FOR OUR NAMED EXECUTIVE OFFICERS, “ONE YEAR” FOR THE ADVISORY RECOMMENDATION ON THE FREQUENCY OF FUTURE ADVISORY VOTES TO APPROVE COMPENSATION FOR OUR NAMED EXECUTIVE OFFICERS, AND “FOR” THE RATIFICATION OF HEIN & ASSOCIATES LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.

Please mark, sign, date and return the proxy card promptly using the enclosed envelope.

(Continued and to be signed on reverse side.)

 


UQM TECHNOLOGIES, INC.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” PROPOSALS 1, 3, 4, 5, AND 6, AND “FOR” THE NOMINEES FOR DIRECTOR LISTED IN PROPOSAL 2.

PLEASE MARK VOTE IN BOX IN THE FOLLOWING MANNER USING DARK INK ONLY. (X)

1.To approve the issuance of UQM common stock of the Second Stage Shares pursuant to the terms of the stock purchase agreement, dated August 25, 2017 (the “Purchase Agreement”), entered into with China National Heavy Duty Truck Group Co., Ltd. and its wholly-owned subsidiary, Sinotruk (BVI) Limited, for purposes of complying with Section 713 of the NYSE American Company Guide.

FORoAGAINSToABSTAINo

2.

To elect a Board of five directors for a term expiring at the 2018 Annual Meeting of Shareholders or until the respective successors have been duly elected and qualified.

01. Donald W. Vanlandingham

02. Joseph R. Mitchell03. Stephen J. Roy04. Joseph P. Sellinger05. John E. Sztykiel

oMark here to vote “FOR” all nominees

o Mark here to “WITHOLD” vote from all nominees

o “FOR” all EXCEPT - To withhold a vote for one or more nominees, mark the box to the left and the corresponding numbered box(es) below

01o02o    03o 04o05o

3.To approve the amendment and restatement of the Company’s Employee Stock Purchase Plan to increase the number of shares available for issuance by 500,000 shares.

FORoAGAINSToABSTAINo

4.

To approve, on an advisory basis, the compensation for our named executive officers. 

FORoAGAINSTo

ABSTAINo

5.

To vote, on an advisory basis, on the frequency of future advisory votes to approve compensation for our named executive officers. 

ONE YEARoTWO YEARSoTHREE YEARSo

ABSTAINo

6.To ratify the appointment of Hein & Associates LLP to act as our independent registered public accounting firm for the year ending December 31, 2017. 

FORoAGAINSToABSTAINo

In their discretion, the proxies are authorized to vote upon such other business as may properly come before the meeting.

This proxy, when properly executed, will be voted in the manner directed herein by the undersigned.

Dated:  ______________, 2017Signature(s)
Print Name(s)


Please mark, sign and return promptly using the enclosed envelope. Executors, administrators, trustees, etc. should give a title as such.