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Exhibit 10.1


Capstone Turbine Corporation

Code of Business Conduct



Capstone Turbine Corporation (“Capstone”) strives to be the world leader in the
application of microturbine solutions for distributed generation power. In
achieving this goal, we must remain committed to the highest standards of
ethical and legal behavior. We firmly believe that operating with a strong
sense of integrity is critical to maintaining trust and credibility with all of
our stakeholders, including our customers, stockholders and employees. Our
Code of Business Conduct (the “Code”) provides guidance to all Capstone
directors and employees and assists us in carrying out our daily activities
within appropriate ethical and legal standards. Our Code also summarizes our
expectations of accountability and the responsibility of all Capstone directors
and employees. The general principles that guide our conduct go beyond mere
compliance with laws and regulations. They are the foundation to the kind of
company we want to be.


Introduction



We will uphold the highest professional standards in all global business
operations. Likewise, the ethics of our suppliers, service providers and
business partners is of utmost importance. We expect those with whom we do
business to have, and follow, a similar code of ethical conduct.


While we are all obligated to follow this Code and are responsible and
accountable for our own conduct, Capstone expects our leaders to set the
example - to be in every respect a model. They must ensure that those who
report to them have sufficient information to comply with law, regulation, and
policy, as well as the resources to resolve ethical dilemmas. They must foster
and maintain a culture within Capstone that promotes the highest standards of
ethics and compliance. This culture must encourage everyone in the organization
to raise concerns when they arise. We must never sacrifice ethical and
compliant behavior in the pursuit of business objectives. Everyone is
responsible and accountable for promptly reporting any potential violations of
the Code or any law or regulation. We must do more than follow the letter of
the law – we must do the right thing.


When in doubt - ask. Capstone employees who have questions regarding business
conduct or possible violations and/or want to report a potential violation
should contact the Corporate Ethics Manager who has direct access to the Audit
Committee of the Board of Directors, as needed. All inquiries and/or reporting
violations are confidential and may be made anonymously. You may contact the
Corporate Ethics Manager via e-mail, mail, or telephone:



	 	 	 
	Debbie Bernard

Email:

Phone:

Address:	 	
 

dbernard@capstoneturbine.com

(818) 734-5431

21211 Nordhoff St.

Chatsworth, CA 91311



Members of the Board of Directors may contact the Chairman of the Audit
Committee directly. The Code supplements, and must be read together with, the
policies and procedures contained in Capstone’s Employee Handbook, as amended
from time-to-time.


Conflicts of Interest



Directors and employees are expected to make or participate in business
decisions and actions in the course of their employment with Capstone based
solely on the best interests of the company as a whole, free of conflicts of
interest. A conflict of interest may occur if your outside activities or
personal interests influence or appear to influence your ability to make
objective decisions in the course of your job responsibilities. A conflict of
interest may also exist if the demands of any outside activities hinder or
distract you from the performance of your job or cause you to use Capstone’s
resources for purposes other than Capstone’s. It is your obligation to ensure
that your interests remain free of conflicts in the performance of your
responsibilities at Capstone. It is impossible to identify all potential
conflicts of interests, but they may include investments that may create a
conflict, the outside development of technology or intellectual property within
Capstone’s industry, outside directorships or serving on technical advisory
boards and the receipt or giving of any gift. Any potential conflict of
interest must be


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reported as soon as it is recognized. No employee shall accept a position as a
director, officer, partner or employee with any other non-Capstone business,
without the consent of the Corporate Ethics Manager. If you have any question
as to whether any action may create a conflict of interest, you must first
discuss the matter with our Corporate Ethics Manager.


Gifts



Capstone may receive or evaluate appropriate complimentary products or
services. Capstone may also make a gift of equipment to a company or
organization, provided that the gift is openly given, with full knowledge by
the company or organization, and is consistent with applicable law. Any gifts
received should be turned over to the Corporate Ethics Manager for appropriate
disposition. In all cases, the exchange of gifts will be conducted so there is
no appearance of impropriety. Gifts may only be given in accordance with
applicable laws, including the U.S. Foreign Corrupt Practices Act (“FCPA”).


Corporate Opportunities



Directors and employees of Capstone stand in a fiduciary relationship to
Capstone and must advance its legitimate interests when the opportunity to do
so arises. It is a breach of this duty for any such person to take advantage
of a business opportunity for his or her own or another person’s personal
profit or benefit when the opportunity is within the corporate powers of
Capstone and when the opportunity is of present or potential practical
advantage to Capstone unless Capstone’s Board of Directors knowingly elects not
to avail itself of such opportunity and such person’s participation is approved
in advance by the Board of Directors. If such a person appropriates such a
Capstone corporate opportunity, Capstone may claim the benefit of the
transaction or business and such person exposes himself or herself to liability
in this regard.


Confidential and Proprietary Information



It is essential that every director and employee maintain confidentiality
regarding information and trade secrets encountered at work. Confidential
information may not be released to or discussed with outside parties or with
other employees who do not have a valid business reason to know the
information. Capstone’s business and business relationships depend upon the
confidential and proprietary nature of our information and of those with whom
we do business - customers, vendors, suppliers, agents, and others. The use of
confidential and proprietary information (whether Capstone’s or a
third-party’s) should be covered by a written confidential disclosure agreement
or non-disclosure agreement.


Financial Reporting



As a public company, Capstone’s filings with the Securities and Exchange
Commission must be accurate and timely. Each Capstone employee is responsible
for the integrity and accuracy of our documents and records, not only to comply
with regulatory and legal requirements but also to ensure that records are
available to defend our business practices and actions. No one may alter or
falsify information on any record or document. Depending on their position with
Capstone, employees may be called upon to provide information to assure that
the Company’s public reports are complete, fair and understandable. Every
employee, therefore, plays a role in accurate and ethical financial reporting,
and is accountable for that responsibility. Furthermore, the Code of Ethics
for Senior Financial Officers and Chief Executive Officer applies to all Senior
Financial Officers, as defined therein, and is attached hereto as Exhibit A for
reference purposes.


Insider Trading



Directors and employees must read and comply with Capstone’s Insider Trading
Policy, which details the trading restrictions imposed on any director,
employee, or any person related to that director or employee. Trading
restrictions are imposed when a director or employee is in possession of
material, non-public information relating to Capstone or any other company,
including our customers or suppliers, if such director or employee has
material, non-public information about that company which the director or
employee obtained in the course of his or her service of or employment by
Capstone.


International Business, Laws, and Governments



As a U.S.-based company with international operations, Capstone is subject to
laws and regulations both in the U.S. and abroad. In addition to contradicting
this Code, violation of governing laws and regulations subjects Capstone (and,
in many cases, the individual who caused the violation) to significant risk in
the


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form of fines, penalties and damaged reputation. Each employee, therefore,
must comply with applicable laws, regulations and corporate policies.



	 	 	 	Foreign Corrupt Practices Act (FCPA)
	 
	 	 	 	Capstone requires full compliance with the FCPA by all of its employees,
consultants, agents, distributors, and resellers. The anti-bribery and
corrupt payment provisions of the FCPA make illegal any corrupt offer,
payment, promise to pay or authorization to pay any money, gift or
anything of value to any foreign official, or any foreign political
party, candidate or official, for the purpose of:




	 	•	 	Influencing any act, or failure to act, in
the official capacity of that foreign official or party
	 
	 	•	 	Inducing the foreign official or party to
use influence to affect a decision of a foreign government
or agency, in order to obtain or retain business for
anyone, or direct business to anyone.




	 	 	 	Export, Re-Export, and Transfer
	 
	 	 	 	Export of design, development, and production technology is subject to
national security, foreign policy, and anti-terrorism laws and
regulations. Employees will obtain written authorization from Capstone’s
Senior Vice President, Engineering and Operations before providing
design, development, or production technology to other countries, or
nationals of other countries.
	 
	 	 	 	Customs Compliance for International Shipping
	 
	 	 	 	Capstone’s policy is to comply fully with customs laws, regulations and
policies in all countries where Capstone does business. Accurate customs
information on shipping documents is required for all international
shipments.
	 
	 	 	 	Antitrust
	 
	 	 	 	The economy of the U.S., and of most nations in which Capstone does
business, is based on the principle that competition and profit will
produce high-quality goods at fair prices. To ensure that this principle
is played out in the marketplace, most countries have laws prohibiting
certain business practices that could inhibit effective competition.
Capstone fully appreciates these concepts.



Government Business



Capstone employees should understand that special requirements might apply when
contracting with any government body (including national, state, provincial,
municipal, or other similar government divisions in local jurisdictions).
Because government officials are obligated to follow specific codes of conduct
and laws, special care will be taken in government contracts. These contracts
must have requisite legal review and approval.


Political Contributions



No Capstone assets may be contributed to any political candidate, political
actions committee (aka “PAC”), political party, or ballot measure without the
permission of the Corporate Ethics Manager. Of course, Capstone directors and
employees may participate in any political activities of their choice on an
individual basis, with their own money and on their own time.


Using Third-Party Intellectual Property



Intellectual property includes copyrights, trademarks and patents. Capstone
employees may sometimes need to use third-party copyrighted material to perform
their jobs. Before such third-party material may be used, appropriate
authorization from the copyright holder will be obtained. It is against
Capstone policy and it may be unlawful for any employee to copy, reproduce,
scan, digitize, broadcast, or modify third-party copyrighted material, unless
written permission from the copyright holder has been obtained prior to the
proposed use.


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Environmental Responsibility



One of our key environmental goals is to conduct our operations in an
environmentally responsible manner. We are committed to reducing any negative
environmental impact of our company by working together with the government,
industry and our customers to develop policies and practices that will ensure a
healthy environment for present and future generations.


Waivers of the Code of Business Conduct



Any waiver of this Code may be made only by the Board of Directors to the
extent necessary and warranted and will be promptly disclosed if required by
law or regulation of any applicable securities exchange or market.


Reporting Any Illegal or Unethical Behavior



Employees are encouraged to talk to the Corporate Ethics Manager, supervisors,
managers or other appropriate personnel about observed illegal or unethical
behavior and when in doubt about the best course of action in a particular
situation. Capstone will not tolerate retaliation for reports made in good
faith, and provides full protection for those reporting violations. Anyone who
retaliates or attempts to retaliate against a reporting employee will be
subject to discipline, up to and including termination. Employees are expected
to cooperate in internal investigations of misconduct.


Employees must read Capstone’s Business Conduct Reporting Methods in Addendum 1
of the Employee Handbook, which describes Capstone’s procedures for the
receipt, retention and treatment of complaints received by the Audit Committee
regarding accounting, internal accounting controls or auditing matters. Any
employee may submit a good faith concern regarding questionable accounting or
auditing matters without fear of dismissal or retaliation of any kind.


Investigations of Reports, Corrective Action and Discipline



The Board of Directors, through the Corporate Ethics Manager and/or the Audit
Committee, will investigate all reported concerns promptly, fairly and
confidentially to the extent possible. All employees are expected to cooperate
fully in internal investigations of misconduct. The Board, or the Audit
Committee, will assess any findings from the investigation and recommend
appropriate discipline, up to and including possible termination, corrective
action or other changes that need to be made.


Final Words of Advice



This Code is not intended to be all-inclusive. All employees are required to
comply with each of the rules, regulations and policies outlined above, as well
as others adopted by Capstone in the exercise of its right to manage its
business.


A reasonable and practical standard of ethical behavior in business decisions
and actions is that which would not be embarrassing to you, your family, or
Capstone, if it were revealed publicly. If you have any doubt about what
you’re doing, don’t do it. No resource is more important to Capstone than the
contributions made by its employees. We strive to create and maintain a work
environment that fosters honesty, personal growth, teamwork, open communication
and a dedication to our values. Our employees are the source from which our
ideas, actions and performance flow. The full potential of Capstone is best
realized in an environment that breeds fairness, self-fulfillment, teamwork and
dedication to excellence.


Remember, your words, as well as your actions, illustrate your commitment to
ethical and lawful behavior and adherence to the policies of Capstone.
Misconduct by a few can discredit and harm our company’s reputation. Each
individual is ultimately responsible for his or her own ethical practices. By
working together, each of us can contribute to the continuing growth, quality,
productivity and SUCCESS of Capstone.


Adopted October 21, 2003



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Capstone Turbine Corporation

Code of Business Conduct

Acknowledgement



          I have received the Capstone Turbine Corporation Code of Business Conduct
(the “Code”). I certify that I have read, understand and will comply with the
Code. I understand that my failure to comply in all respects with Capstone
Turbine Corporation’s policies and codes, including the Code, is basis for
disciplinary action against me up to and including termination of my employment
or relationship with Capstone Turbine Corporation.




	 	 	 	 	 
	Dated:
	 	 	 	 
	 
	 	
	 	

	 
	 	 	 	(Signature)
	 
	 
	 	 	 	

	 
	 	 	 	(Print Name)




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