Exhibit 10.3

December 1, 2006

Mr. Darren R. Jamison

201 Hawley Road

Shelburne, Vermont 05482

Dear Darren:

I am pleased to offer you the position of President and Chief Executive Officer
of Capstone Turbine Corporation reporting to the Board of Directors at a salary
of $400,000.00 annually, payable at $15,400.00 bi-weekly.

In addition to your salary you will receive the following:

·                  A “Signing Bonus” of $150,000.00 payable at the first pay
period following your start date.

·                  A Non-Statutory Stock Option to purchase 2,000,000 shares of
Capstone common stock which includes 25% vesting on the first anniversary date
and monthly thereafter subject to the provisions of the 2000 Equity Incentive
Plan. The purchase price will be the fair market value of Capstone common stock
on the option grant date, which is expected to be the date of the start of your
employment.

·                  A restricted stock grant of 500,000 shares of Capstone common
stock subject to annual vesting of 25% and other provisions of the 2000 Equity
Incentive Plan.

·                  A Special Performance Bonus of $100,000.00 to be paid upon
the achievement of Capstone cash flow positive for any two (2) consecutive
quarters during the first two years of employment. Payment will be in addition
to any payments pursuant to the bonus plan noted in the following bullet.

·                  A cash bonus each year based on performance targets
negotiated with the Compensation Committee of the Board with respect to each
year in which the Company reports, after taking into account any such bonus, an
operating profit. The target bonus shall be 100% of your base salary.

·                  Relocation provisions to include the third party purchase of
your home in Vermont within 60 days of the start of your employment, with a
provision for your family to use the home until their relocation in June,
reasonable and customary relocation expenses including moving costs and two (2)
trips per month from California to Vermont until June, 2007 (or such earlier
date as you purchase and move into a home in California), interim housing
allowance of $1,500.00 per month from January to June, 2007 and the shipment of
your personal automobile to California. In addition, Capstone will reimburse you
for expenses associated with your travel to your new place of residence. You
agree that funds paid to you in conjunction with this relocation program must be
repaid to Capstone if you voluntarily terminate your employment prior to your
one (1) year anniversary with the Company. Also, Capstone will “gross-up” the
taxable portion of your relocation expenses to insure that you do not incur
addition personal income tax obligations.

You will be eligible to participate in the Capstone benefit plans which include
paid holidays, four (4) weeks vacation per year, a 401(k) plan with Company
match and several insurance choices for you and your family. Upon your first day
of employment you will be required to sign our standard agreement with regard to
confidentiality and the assignment of inventions.

Your employment at Capstone will be “at will” in that employment may be
terminated with or without cause and with or without notice, at any time, either
at your option or at the option of Capstone Turbine Corporation. Should you be
terminated, without cause, during the first three (3) years of employment you
will receive a termination benefit of continuation of your base salary for one
(1) year. However, if your employment is terminated in connection with a change
of control, instead of the termination benefit, you

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shall be entitled to an eighteen month (18) severance benefit which includes
full acceleration of vesting of stock options and grants as detailed in our
stock option plans. In addition, you will be required to resolve any disputes
concerning your employment through the Capstone Dispute Resolution Procedure,
details which will be made available to you under separate cover.

You will be covered by the Company’s standard Indemnification Agreement and
Directors and Officers Liability Policy.

As is our standard practice, you will be required to authorize Capstone to
execute a standard background check, satisfactorily complete a drug screening
test and provide proof of U.S. citizenship or qualification to work in the U.S.

We would like you to start as soon as possible and suggest a start date of
December 18, 2006. This offer will expire at the close of business on December
6, 2006.

We are excited by the prospect of you becoming the President and Chief Executive
Officer of Capstone, and believe that your leadership combined with the
dedication and talent of our team will make the future of Capstone bright. All
of us involved in the unique venture of Capstone look forward to working with
you.

Sincerely,

 

/s/ ELIOT G. PROTSCH

 

 

Eliot G. Protsch

Chairman of the Board

Capstone Turbine Corporation

 

 

I hereby accept the employment offer as stated above:

 

 

/s/ DARREN R. JAMISON

December 4, 2006

 

Signature

Date

 

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