<PAGE>

                                                                   Exhibit 10.13

                     TRANSITION AGREEMENT AND MUTUAL RELEASE

         This Transition Agreement and Mutual Release (this "Agreement") is made
by and between Dr. Ake Almgren ("Executive") and Capstone Turbine Corporation
(the "Company") (jointly referred to as the "Parties"):

         WHEREAS, Executive is employed by the Company as its President and
Chief Executive Officer and is a member of the Company's Board of Directors (the
"Board");

         WHEREAS, on or about July 1, 1998, Executive entered into a
Confidential Information and Invention Assignment Agreement (the
"Confidentiality Agreement");

         WHEREAS, on or about July 1, 1998, May 1, 1999, and March 1, 2000,
Executive was granted stock options to purchase an aggregate of 2,175,000 shares
of the Company's common stock (of which, stock options to purchase 2,005,000
shares of the Company's common stock remain outstanding) subject to the terms
and conditions of the Company's 1993 Incentive Stock Plan and the stock option
agreements issued to Executive thereunder (the "1993 Stock Options");

         WHEREAS, on or about May 16, 2001 and June 26, 2002, Executive was
granted stock options to purchase an aggregate of 250,000 shares of the
Company's common stock subject to the terms and conditions of the Company's 2000
Equity Incentive Plan and the stock option agreements issued to Executive
thereunder (the "2000 Stock Options"); and

         WHEREAS, the Parties desire that Executive tender his resignation as
President, Chief Executive Officer, and a member of the Board;

         WHEREAS, the Parties desire to continue Executive's employment until
the earlier of six (6) months from the Effective Date of this Agreement or at
such earlier time as determined by the Board in its sole discretion;

         WHEREAS, the Parties wish to (a) resolve any and all disputes, claims,
complaints, grievances, charges, actions, petitions and demands that they may
have against each other that arise or are in any way related to Executive's
employment with the Company as of the Effective Date (as defined in Section 24
below) of this Agreement; and (b) set forth the terms of Executive's continued
employment and potential consulting relationship with the Company;

         NOW THEREFORE, in consideration of the promises made herein, the
Parties hereby agree as follows:

1.       Consideration. As consideration for Executive's release of the Company
from all claims arising from Executive's employment with the Company as set
forth in Section 4 below as of the Effective Date, the Company agrees as
follows:

Transitional Employment. The Parties agree that the Company shall continue to
employ Executive as its President and Chief Executive Officer with the following
duties and responsibilities: Executive shall develop business relationships with
potential strategic partners as identified by the Board. Executive shall report
directly to the Chairman of the Board on at least a bi-weekly basis. Executive
acknowledges and agrees that he shall not be authorized to, and shall not,
execute any agreements with, or otherwise close any transactions with, any
potential strategic partners unless he has received prior, written authorization
from the Board with respect to the specific agreement or transaction at issue.
Executive shall not be responsible for the management of the Company's
day-to-day operations or the supervision or management of any Company employees
with the sole exception of such individual(s) who may be assigned by the Board
to assist Executive with respect to his business development responsibilities.
Notwithstanding the foregoing description of Executive's business development
responsibilities, Executive acknowledges and agrees that his responsibilities
shall include such other management duties as the Board may reasonably request
from time to time, consistent with his position as President and Chief Executive
Officer. Executive acknowledges and agrees that his employment shall continue to
be "at-will" and either Executive or the Company may terminate Executive's
employment at any time and for any reason, with or without cause or notice.

                  (i)      Tender of Resignation. Executive hereby tenders his
resignation from the positions of President and Chief Executive Officer.
Executive hereby acknowledges and agrees that his tender of such resignations is
irrevocable and that such resignations shall become effective upon acceptance by
the Board. Executive acknowledges and agrees that he shall not be entitled to
receive any severance benefits or other benefits pursuant to the Company's
Change of Control Severance Plan approved by the Board on or about July 16, 2002
and further acknowledges and agrees that the Board shall delete Executive's name
from list of participants in such Change of Control Severance Plan. Executive
further tenders his resignation as a member of the Board, to be effective
immediately upon the Company's hiring of a new President and Chief Executive
Officer.

                  (ii)     Transitional Employment Compensation/Benefits. The
Company shall continue to compensate Executive at the rate of three hundred
seventy thousand and three hundred dollars ($370,300 USD) per year, to be paid
in equal

                                       59

<PAGE>

installments, less applicable withholding and in accordance with the Company's
normal payroll practices. Executive shall not receive any bonus of any kind
after the Effective Date including, but not limited to, any fiscal-year
performance bonuses or earnings performance bonuses based on Executive's
performance goals or the Company's earnings per share for the 2002 and 2003
fiscal years. Executive's 1993 Stock Options and 2000 Stock Options shall
continue to vest pursuant to the terms of the applicable stock plans and stock
option agreements, and Executive shall continue to be eligible to participate in
the Company's group health insurance and in all other benefits and incidents of
employment, subject to the terms of any such benefit plans. Executive's
participation in the 2000 Employee Stock Purchase Plan (the "ESPP") shall
continue to be governed by the terms of the ESPP.

Company Release. The Company agrees to release all known claims against
Executive arising from his employment with the Company as of the Effective Date,
as set forth in Section 4 below.

Incentive Consideration. If: (I) Executive remains employed with the Company
through the six-month anniversary of the Effective Date of this Agreement; or
(II) Executive's employment with the Company is terminated by the Company (by
accepting Executive's resignation) without Cause (as defined herein) before the
end of the six-month period, the Company further agrees to provide Executive
with the incentive consideration as set forth below; provided, however, that as
a condition to receiving any such incentive consideration, Executive must first
execute a Supplemental Release, the form of which is attached hereto as Exhibit
A (the "Supplemental Release"). For the purposes of determining whether
Executive is eligible to receive incentive consideration, the term "Cause" is
defined as: (A) an act of dishonesty by Executive in connection with Executive's
responsibilities as an employee, (B) Executive's conviction of, or plea of nolo
contendere to, a felony, (C) Executive's gross misconduct, (D) Executive's
rendering of services, whether or not for compensation, to any company or
business without the prior written consent of the Board (provided, however, that
the Company acknowledges and agrees that Executive will begin searching for
employment during this period, and will be contacting prospective employers in
connection with such search, which search shall not interfere with Executive's
duties and responsibilities as set forth in this Agreement); (E) the
determination by the Board, in its reasonable good faith discretion, that
Executive is not satisfactorily discharging his duties and responsibilities as
President and Chief Executive Officer; or (F) any material breach of this
Agreement, which breach (other than a breach of Sections 1(a), 2, 4, 8, 10, 11
and 12, for which no cure period shall apply) continues unremedied for fifteen
days following written notice of such breach. Executive acknowledges and agrees
that he shall not be eligible to receive the incentive consideration set forth
below under any other circumstances.

                  (i)      Balance of Transitional Employment Compensation. In
the event that Executive's employment is terminated by the Company (by accepting
Executive's resignation) without Cause (as defined above) prior to the six-month
anniversary of the Effective Date of this Agreement: (A) the Company shall pay
Executive a lump sum in the amount equal to the balance of the salary that
Executive would have received if Executive had remained employed until the
six-month anniversary of the Effective Date of this Agreement, less applicable
withholding, on the Effective Date of the Supplemental Release; and (B) during
the twelve month period beginning on the six-month anniversary of the Effective
Date of this Agreement and ending on the eighteen month anniversary of the
Effective Date of this Agreement, the Company shall pay Executive an additional
one hundred eighty-five thousand and one hundred and fifty dollars ($185,150
USD), to be paid in equal installments, less applicable withholding and in
accordance with the Company's normal payroll practices.

                  (ii)     Supplemental Payment. The Company shall pay Executive
a lump sum in the amount of one hundred thousand dollars ($100,000 USD) (the
"Supplemental Payment"), less applicable withholding, on the Effective Date of
the Supplemental Release; and

                  (iii)    Consulting Agreement. The Company shall enter into a
consulting relationship with Executive pursuant to the terms of a consulting
agreement substantially in the form attached hereto as Exhibit B on the
Effective Date of the Supplemental Release.

2.       Confidential Information. Executive shall continue to maintain the
confidentiality of all confidential and proprietary information of the Company
and shall continue to comply with the terms and conditions of the
Confidentiality Agreement between Executive and the Company.

3.       Payment of Salary. Executive acknowledges and represents that the
Company has paid all salary, wages, bonuses, severance, stock, stock options,
vesting, reimbursements, commissions and any and all other benefits due to
Executive as of the Effective Date of this Agreement.

4.       Release of Claims. Executive agrees that the foregoing consideration
represents settlement in full of all outstanding obligations owed to Executive
by the Company and its officers, managers, supervisors, agents and employees.
Executive, on his own behalf, and on behalf of his respective heirs, family
members, executors, agents, and assigns, hereby fully and forever releases the
Company and

                                       60

<PAGE>

its officers, directors, employees, agents, investors, shareholders,
administrators, affiliates, divisions, subsidiaries, predecessor and successor
corporations, and assigns (the "Releasees"), from, and agrees not to sue
concerning, any claim, duty, obligation or cause of action relating to any
matters of any kind, whether presently known or unknown, suspected or
unsuspected, that Executive may possess against any of the Releasees arising
from any omissions, acts or facts that have occurred up until and including the
Effective Date of this Agreement. The Company hereby fully and forever releases
Executive from, and agrees not to sue concerning, any claim, duty, obligation or
cause of action relating to any matters of any kind, whether presently known or
unknown, suspected or unsuspected, that it may possess arising from any
omissions, acts or facts that have occurred up until and including the Effective
Date of this Agreement; provided, however, that the Parties acknowledge and
agree that Company is not releasing any unknown claims, duties, obligations, or
causes of action arising from any criminal activity, fraud, or embezzlement by
Executive including, but not limited to, any claims for indemnification against
Executive based on such omissions, acts or facts. The claims released include,
without limitation:

         4.1      any and all claims relating to or arising from Executive's
employment relationship with the Company and the termination of that
relationship;

         4.2      any and all claims relating to, or arising from, Executive's
 right to purchase, or actual purchase of shares of stock of the Company,
including, without limitation, any claims for fraud, misrepresentation, breach
of fiduciary duty, breach of duty under applicable state corporate law, and
securities fraud under any state or federal law;

         4.3      any and all claims for wrongful discharge of employment;
termination in violation of public policy; discrimination; breach of contract,
both express and implied; breach of a covenant of good faith and fair dealing,
both express and implied; promissory estoppel; negligent or intentional
infliction of emotional distress; negligent or intentional misrepresentation;
negligent or intentional interference with contract or prospective economic
advantage; unfair business practices; defamation; libel; slander; negligence;
personal injury; assault; battery; invasion of privacy; false imprisonment; and
conversion;

         4.4      any and all claims for violation of any federal, state or
municipal statute, including, but not limited to, Title VII of the Civil Rights
Act of 1964, the Civil Rights Act of 1991, the Age Discrimination in Employment
Act of 1967, the Americans with Disabilities Act of 1990, the Fair Labor
Standards Act, the Employee Retirement Income Security Act of 1974, the Worker
Adjustment and Retraining Notification Act, the Family Medical Leave Act, the
California Fair Employment and Housing Act, the California Family Rights Act,
and the California Labor Code and all amendments to each such Act as well as the
regulations issued thereunder;

         4.5      any and all claims for violation of the federal, or any state,
constitution;

         4.6      any and all claims arising out of any other laws and
regulations relating to employment or employment discrimination;

         4.7      any and all claims for attorneys' fees and costs.

The Company and Executive agree that the release set forth in this section shall
be and remain in effect in all respects as a complete general release as to the
matters released. Notwithstanding the foregoing provisions of this Section, this
release does not extend to any obligations incurred under this Agreement, and
the Parties agree that: (1) the Company's release does not extend to unknown
claims arising from any criminal activity, fraud, or embezzlement by Executive
including, but not limited to, any claims for indemnification against Executive
based on such omissions, acts or facts; (2) this release does not extend to any
claims by Executive for indemnification pursuant to applicable law or contract,
or pursuant to the Company's Directors & Officers insurance policies to the
extent such indemnification is allowed such under such insurance policies; and
(3) this release does not preclude Executive from exercising any vested stock
options to purchase shares of the Company's common stock pursuant to the terms
of the 1993 Incentive Stock Plan or 2000 Equity Incentive Plan, as applicable,
and Executive's applicable stock option agreement(s) thereunder and Executive's
stock options shall continue to vest subject to the terms and conditions set
forth in the 1993 Incentive Stock Plan or 2000 Equity Incentive Plan, as
applicable, and Executive's applicable stock option agreement(s).

Executive acknowledges and agrees that any breach by him of this Section, or of
Sections 1(a), 2, 10, 11 or 12 of this Agreement, shall constitute a material
breach of this Agreement, and shall entitle the Company immediately to recover
and/or cease the payments and other benefits provided to Executive under this
Agreement, the Supplemental Release, and the consulting agreement, except as
provided by law.

5.       Acknowledgement of Waiver of Claims Under ADEA. Executive acknowledges
that he is waiving and releasing any rights he may have under the Age
Discrimination in Employment Act of 1967 ("ADEA") and that this waiver and
release is knowing and

                                       61

<PAGE>

voluntary. Executive and the Company agree that this waiver and release does not
apply to any rights or claims that may arise under ADEA after the Effective Date
of this Agreement. Executive acknowledges that the consideration given for this
waiver and release Agreement is in addition to anything of value to which
Executive was already entitled. Executive further acknowledges that he has been
advised by this writing that:

         5.1      he should consult with an attorney prior to executing this
Agreement;

         5.2      he has twenty-one (21) days within which to consider this
Agreement;

         5.3      he has seven (7) days following his execution of this
Agreement to revoke the Agreement;

         5.4      this Agreement shall not be effective until the revocation
period has expired; and

         5.5      nothing in this Agreement prevents or precludes Executive from
challenging or seeking a determination in good faith of the validity of this
waiver under the ADEA, nor does it impose any condition precedent, penalties or
costs from doing so, unless specifically authorized by federal law.

6.       Civil Code Section 1542. Executive represents that he is not aware of
any claims by him other than the claims that are released by this Agreement.
Executive acknowledges that he has had the opportunity to be advised by legal
counsel and is familiar with the provisions of California Civil Code Section
1542, which provides as follows:

                  A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR
                  DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF
                  EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE
                  MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.

         Executive, being aware of said code section, agrees to expressly waive
any rights he may have thereunder, as well as under any other statute or common
law principles of similar effect.

7.       No Pending or Future Lawsuits. Executive and the Company each represent
to the other that they have no lawsuits, claims, or actions pending in their
respective names, or on behalf of any other person or entity, against the other
party or, in the case of the Executive, any of the Releasees. Executive and the
Company each also represent to the other that they do not intend to bring any
claims on their own behalf or on behalf of any other person or entity against
the other party or any other person or entity referred to herein.

8.       Confidentiality. The Parties acknowledge that the Parties' agreement to
keep the terms and conditions of this Agreement confidential was a material
factor on which all parties relied in entering into this Agreement. Executive
and the Company each agrees to use its best efforts to maintain in confidence
the contents and terms of this Agreement and the consideration for this
Agreement (hereinafter collectively referred to as "Separation Information").
Executive and the Company each agree to take every reasonable precaution to
prevent disclosure of any Separation Information to third parties, and further
agree that they will not publicize, directly or indirectly, any Separation
Information. Executive agrees, and the Company acknowledges, that he may
disclose Separation Information only to those attorneys, accountants,
governmental entities and family members who have a reasonable need to know of
such Separation Information. The Company agrees, and the Executive acknowledges,
that it may disclose Separation Information (A) only to those directors,
employees, attorneys, accountants, governmental entities and family members who
have a reasonable need to know of such Separation Information, or (B) only to
the extent necessary to comply with disclosure or similar obligations imposed on
the Company by applicable law.

9.       No Cooperation. Executive agrees he will not act in any manner that
might damage the business of the Company. Executive agrees that he will not
encourage, counsel or assist any attorneys or their persons in the presentation
or prosecution of any disputes, differences, grievances, claims, charges, or
complaints by any third party against any of the Releasees, unless under a
subpoena or other court order to do so, or as otherwise required pursuant to
valid legal process. Executive shall inform the Company in writing within three
(3) days of receiving any such subpoena or other court order.

10.      Non-Disparagement. Executive agrees to refrain from any defamation,
libel or slander of the Releasees, and any tortious interference with the
contracts, relationships and prospective economic advantage of the Releasees.
The Company shall use commercially reasonable efforts to cause its current and
future officers and directors to refrain from any defamation, libel or slander
of Executive, and any tortious interference with the contracts, relationships
and prospective economic advantage of Executive; provided,

                                       62

<PAGE>

however, that the Company shall have no such obligation with respect to such
officers and directors after the termination of their employment and/or
membership on the Board, as applicable. Executive agrees that he shall direct
all inquiries by potential future employers regarding Executive's employment or
compensation history to the Chairman of the Board. The Company agrees that the
Chairman shall limit all responses to such inquiries to a statement of (A) the
dates of employment of Executive, (B) the titles and positions held by
Executive, and (C) Executive's compensation history with the Company.

11.      Non-Solicitation. Executive agrees that, during the period of his
employment and any subsequent period in which he may provide consulting or other
services to the Company; Executive shall not either directly or indirectly
solicit, induce, recruit or encourage any of the Company's employees or
consultants to leave their employment, or attempt to do so, either for himself
or any other person or entity.

12.      Non-Competition. Executive hereby agrees that during the period of his
employment and any subsequent period in which he may provide consulting or other
services to the Company, Executive shall not directly or indirectly engage in
(whether as an employee, consultant, agent, proprietor, principal, partner,
stockholder, corporate officer, director or otherwise), nor have any ownership
interest in or participate in, the financing, operation, management or control
of, any person firm, corporation or business that develops and/or manufactures
competing (25 - 600 kW) microturbines or develops and manufactures reciprocating
generation products designed to compete with microturbines from Capstone (other
than investments in professionally managed funds over which the Executive does
not have control or discretion in investment decisions and investments in
publicly traded companies, so long as the Executive's beneficial ownership does
not exceed 2% of any such public companies' outstanding voting stock). However,
Executive shall after the period of his employment not be constrained from
providing consulting services unrelated to the design and manufacturing of
competing microturbines and reciprocating generation products. Executive
represents that he (i) is familiar with the foregoing covenant not to compete,
and (ii) is fully aware of his obligations hereunder, including, without
limitation, the reasonableness of the length of time, scope and geographic
coverage of this covenant.

13.      Attorneys' Fees. In the event that either Party brings an action to
enforce or effect its rights under this Agreement, the prevailing party shall be
entitled to recover its costs and expenses, including the costs of mediation,
arbitration, litigation, court fees, plus reasonable attorneys' fees, incurred
in connection with such an action.

14.      No Admission of Liability. The Parties understand and acknowledge that
this Agreement constitutes a compromise and settlement of actual or potential
disputed claims. No action taken by the Parties hereto, or either of them,
either previously or in connection with this Agreement shall be deemed or
construed to be: (a) an admission of the truth or falsity of any claims made or
any potential claims; or (b) an acknowledgment or admission by either party of
any fault or liability whatsoever to the other party or to any third party.

15.      Costs. The Parties shall each bear their own costs, expert fees,
attorneys' fees and other fees incurred in connection with the preparation of
Agreement, except as provided herein.

16.      Arbitration. The Parties agree that any and all disputes arising out of
the terms of this Agreement, their interpretation, and any of the matters herein
released, shall be subject to binding arbitration in Los Angeles County before
the American Arbitration Association under its National Rules for the Resolution
of Employment Disputes, supplemented by the California Code of Civil Procedure.
The Parties agree that the prevailing party in any arbitration shall be entitled
to injunctive relief in any court of competent jurisdiction to enforce the
arbitration award. The Parties hereby agree to waive their right to have any
dispute between them resolved in a court of law by a judge or jury. This
paragraph will not prevent either party from seeking injunctive relief (or any
other provisional remedy) from any court having jurisdiction over the Parties
and the subject matter of their dispute relating to the Parties' obligations
under this Agreement or the Confidentiality Agreement.

17.      Authority. The Company represents and warrants that the undersigned has
the authority to act on behalf of the Company and to bind the Company and all
who may claim through it to the terms and conditions of this Agreement.
Executive represents and warrants that he has the capacity to act on his own
behalf and on behalf of all who might claim through him to bind them to the
terms and conditions of this Agreement. Each party warrants and represents that
there are no liens or claims of lien or assignments in law or equity or
otherwise of or against any of the claims or causes of action released herein.

18.      No Representations. Each party represents that it has had the
opportunity to consult with an attorney, and has carefully read and understands
the scope and effect of the provisions of this Agreement. In entering into this
Agreement, neither party has relied upon any representations or statements made
by the other party hereto which are not specifically set forth in this
Agreement.

                                       63

<PAGE>

19.      Severability. In the event that any provision, or any portion thereof,
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision or portion of said provision.

20.      Entire Agreement. This Agreement represents the entire agreement and
understanding between the Company and Executive and supersedes and replaces any
and all prior agreements and understandings between the Parties, with the
exception of the Confidentiality Agreement, the 1993 Incentive Stock Plan, the
2000 Equity Incentive Plan, 2000 Employee Stock Purchase Plan, and any stock
option agreements thereunder between Executive and the Company.

21.      No Waiver. The failure of the Company to insist upon the performance of
any of the terms and conditions in this Agreement, or the failure to prosecute
any breach of any of the terms and conditions of this Agreement, shall not be
construed thereafter as a waiver of any such terms or conditions. This entire
Agreement shall remain in full force and effect as if no such forbearance or
failure of performance had occurred.

22.      No Oral Modification. This Agreement may only be amended in a writing
signed by Executive and the Chairman of the Board of Directors of the Company.

23.      Governing Law. This Agreement shall be construed, interpreted,
governed, and enforced in accordance with the laws of the State of California,
without regard to choice-of-law provisions. Executive hereby consents to
personal and exclusive jurisdiction and venue in the State of California.

24.      Effective Date. This Agreement will become effective after it has been
signed by both Parties and after seven days have passed since Executive signed
the Agreement (the "Effective Date"). Each Party has seven days after that Party
signs the Agreement to revoke it.

25.      Counterparts. This Agreement may be executed in counterparts, and each
counterpart shall have the same force and effect as an original and shall
constitute an effective, binding agreement on the part of each of the
undersigned.

26.      Voluntary Execution of Agreement. This Agreement is executed
voluntarily and without any duress or undue influence on the part or behalf of
the Parties hereto, with the full intent of releasing all claims. The Parties
acknowledge that:

         26.1     They have read this Agreement;

         26.2     They have been represented in the preparation, negotiation,
and execution of this Agreement by legal counsel of their own choice or that
they have voluntarily declined to seek such counsel;

         26.3     They understand the terms and consequences of this Agreement
and of the releases it contains; and

         26.4     They are fully aware of the legal and binding effect of this
Agreement.

                  [Remainder of Page Intentionally Left Blank]

                                       64

<PAGE>

         IN WITNESS WHEREOF, the Parties have executed this Agreement on the
respective dates set forth below.

                                     CAPSTONE TURBINE CORPORATION

Dated: 10/31/02                      By: /S/ ELIOT PROTSCH
                                         Eliot G. Protsch
                                         Chairman of the Board of Directors

                                     AKE ALMGREN

Dated: 10/31/02                      /S/ AKE ALMGREN
                                     Ake Almgren

           [Signature Page to Transition Agreement and Mutual Release]

                                       65

<PAGE>

February 26, 2003

VIA HAND DELIVERY
Dr. Ake Almgren
Capstone Turbine Corporation

                                    Re: Transition Agreement

Dear Dr. Almgren:

         As Chairman of the Board of Capstone Turbine Corporation, I wanted to
confirm our understanding regarding your position at the Company and your
Transition Agreement, effective as of November 7, 2002 (the "Agreement").
Effective February 27, 2003 the Board will accept your resignation as President,
CEO and a member of the Board of Directors of Capstone Turbine Corporation;
provided, you continue as an employee and a senior advisor to the Company
through May 6, 2003. You will continue to receive your current monthly salary
through the six-month period following the Effective Date of the Agreement.

         I also wanted to clarify section1(c) of the Agreement, as it may not
clearly reflect the intent of the parties. Unless you are terminated for Cause
(as defined in the Agreement), you are entitled to receive during the twelve
month period beginning on the six-month anniversary of the Effective Date of
this Agreement and ending on the eighteen month anniversary of the Effective
Date of this Agreement one hundred eighty-five thousand and one hundred and
fifty dollars ($185,150 USD), to be paid in equal installments, less applicable
withholding and in accordance with the Company's normal payroll practices, if
you remain employed with the Company through the six-month anniversary of the
Effective Date of the Agreement.

         I wanted to again thank you for your services to Capstone during your
tenure. I wish you the best in your future endeavors.

                                    Sincerely,

                                    Capstone Turbine Corporation

                                    /s/ Eliot Protsch
                                    -----------------
                                    Eliot Protsch
                                    Chairman of the Board

ACKNOWLEDGED AND AGREED:

/s/ Ake Almgren             2/26/03
---------------             -------
Dr. Ake Almgren             Date

                                       66