Exhibit 10.4

CHANGE OF CONTROL SEVERANCE AGREEMENT

THIS AGREEMENT (“the Agreement”) is made and entered into between Capstone
Turbine Corporation (the “Company”) and Darren R. Jamison (the “Executive”) to
be effective December 18, 2006.

RECITALS:

WHEREAS, effective December 18, 2006, the Executive became the Company’s
president and chief executive officer pursuant to the terms of a letter
agreement dated December 1, 2006, (the “Letter Agreement”) which includes
certain benefits and payments upon the severance of the Executive following a
change in control of the Company;

WHEREAS, in connection therewith, the Executive has been made eligible for
participation in the Capstone Turbine Corporation Change in Control Severance
Plan (the “Plan”), which provides a portion of the severance benefits described
in the Letter Agreement; and

WHEREAS, the parties desire to enter into this arrangement to provide the
severance benefits described in the Letter Agreement that are not provided
through the Plan;

NOW, THEREFORE, the parties do hereby agree to the following terms and
conditions regarding severance payable to Executive in the events described
herein:

Section 1.                                          Termination of Employment
Without Cause

In the event that Executive’s employment is terminated by the Company for
reasons other than Misconduct (as defined herein), the Executive will receive
continuation of payments in the amount of his base salary then in effect for a
period of one year following termination of employment. Provided, however, that
the provisions of this Section 1 will not apply in the event that Executive is
entitled to payments provided in Section 2 hereof. “Misconduct” shall mean the
commission of any act of fraud, embezzlement, theft or dishonesty by Executive,
any unauthorized use or disclosure by Executive of confidential information or
trade secrets of the Company (or any parent or subsidiary thereof), or any other
intentional misconduct by Executive adversely affecting the business or affairs
of the Company (or any parent or subsidiary) in a material manner.

The foregoing definition shall not be deemed to be inclusive of all the acts or
omissions which the Company (or any parent or subsidiary) may consider as
grounds for the termination of the employment of the Executive. Except as
provided in Section 2, Executive will not be entitled to severance under this
Agreement upon a termination of employment for reasons other than Misconduct.

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Section 2.                                          Termination Upon a Change in
Control

In the event that Executive is Involuntarily Terminated within 12 months of a
Change of Control or within the Trial Period, Executive shall be entitled to
receive from the Company an amount equal to the base salary that would be
payable to the Executive for a period of 18 months. The payment shall be made in
one lump sum on the date of termination of employment. Notwithstanding anything
herein to the contrary, the amount payable under this Section 2 shall be reduced
by the amount of the cash severance amount payable to Executive under the Plan.

Section 3.                                          General Terms

Except as otherwise provided herein, the capitalized terms used in this
agreement shall have the meanings ascribed thereto in the Plan. The benefits
provided through this Agreement and through the Plan are intended by the parties
to be granted in fulfillment of the Company’s obligations regarding cash
severance payments pursuant to the Letter Agreement; the terms of this Agreement
and the Plan completely replace and supersede the terms addressing the subject
matter contained in the Letter Agreement.

Section 4.                                        Term of Agreement

The provisions of this Agreement shall apply in the event of the termination of
the employment of the Executive or a Change in Control that occurs during the
period between December 18, 2006 and December 18, 2009.

Section 5.                                          Commencement of Deferred
Compensation Payments

Notwithstanding anything herein to the contrary, any payments to Executive that
would be subject to an additional tax described in section 409A of the Internal
Revenue Code shall commence six months following Executive’s separation from
service or, if sooner, upon the death of the Executive.

Section 6.                                          Amendment or Termination

The Company may amend this Agreement in its sole discretion at any time,
provided that any amendment that would diminish the rights of the Executive is
subject to Executive’s express written consent.

Section 7.                                          Successors

This Agreement shall be binding upon and accrue to the benefit of any successors
and assigns of the Company.

Section 8.                                          Construction

This Agreement shall be construed under and enforced in accordance with the laws
of the State of California.

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IN WITNESS WHEREOF, the Company, acting through the undersigned authorized
representative, has executed this instrument and the Executive has set his hand
hereto on this the 25th day of January, 2007, but to be effective on the date
first written above.

DARREN R. JAMISON

CAPSTONE TURBINE CORPORATION

 

 

 

 

 

 

/s/ DARREN R. JAMISON

 

By:

/s/ LARRY COLSON

 

 

 

 

 

Its:

Executive Vice President, Human Resources

 

 

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