Exhibit
10.35


Capstone
Turbine Corporation


restricted stock agreement


This
Agreement is entered into by and between Capstone Turbine
Corporation (the “Company”) with James
D. Crouse (“Executive”) to evidence the award of the common stock of
the Company that was made on February 5, 2007.


RECITALS:


WHEREAS, the
Company, through action of the compensation committee of its board of directors
taken on January 30, 2007, made a conditional award of the Company’s Common
Stock (the “Award”) as an inducement to encourage Executive to accept an offer
of employment as the Company’s Executive Vice-President of Sales;


WHEREAS, the
parties, in connection therewith, entered into a letter agreement dated January
31, 2007, that sets forth general terms of employment of the Executive by the
Company, including the terms of the Award that is evidenced by this Agreement,
which employment commenced on February 5, 2007;


WHEREAS, the
parties desire to set forth the terms of such Award and to acknowledge that the
shares of Common Stock that may be acquired hereunder shall be registered under
the Securities Act of 1933, as amended (“Securities Act”) on Form S-8; and


WHEREAS, the
parties further acknowledge that this Award is granted separately from the
Capstone Turbine Corporation 2000 Equity Incentive Plan (the “2000 Plan”), but
desire that this Award be subject to the terms contained in the of the 2000
Plan, except as otherwise provided for herein;


NOW, THEREFORE, in
consideration of these premises, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties do  hereby agree to the following terms and
conditions regarding the Award covered hereby:


I.            NOTICE OF STOCK
AWARD


Notice is hereby given of the grant of the
Award, subject to the following terms. 
References in this Agreement to certain terms of the Award shall be
defined in this Article I:


	
  Date of Grant:

  	
   

  	
  February 5, 2007

  
	
   

  	
   

  	
   

  
	
  Total Number of Shares:

  	
   

  	
  200,000

  
	
   

  	
   

  	
   

  
	
  Type of Award:

  	
   

  	
  Restricted Stock Units

  
	
   

  	
   

  	
   

  
	
  Term for Vesting/Stock Transfer:

  	
   

  	
  4 Years

  



 











Transfer of Shares; Vesting Schedule:


Pursuant to the Award, ownership of the Common Stock shall be
transferred to Executive on the dates and in the amounts described in this
paragraph, subject to the Executive continuing to be either an Employee or a
Consultant to the Company on such dates:


	
  Transfer Date

  	
   

  	
  Shares Transferred

  
	
   

  	
   

  	
   

  
	
  February 5, 2008

  	
   

  	
  50,000

  
	
  February 5, 2009

  	
   

  	
  Additional
  50,000 shares

  
	
  February 5, 2010

  	
   

  	
  Additional
  50,000 shares

  
	
  February 5, 2011

  	
   

  	
  Additional
  50,000 shares

  



 


The Common Stock transferred to Executive pursuant to this Award shall
be fully vested and not subject to restrictions or forfeiture on the respective
transfer dates, except as provided in this Agreement.  If Executive’s employment is terminated by
the Company other than for Cause prior to the one-year anniversary of the Date
of Grant, Executive shall become vested in and  have the vested right to receive a transfer of
the Common Stock under this Award with respect to 1/48th of the number of Shares subject
to the Award for each full month of employment following the Date of Grant,
based on the day of the month corresponding to the Date of Grant, through the
date of such termination.


Award Termination:


The Award shall terminate on the date that Executive ceases to be
either an Employee or a Consultant of the Company.  Upon termination, no further shares described
herein will be transferred to Executive and any unvested portion of the Award
will lapse.


II.            AGREEMENT


1.             Grant of Award. 
This Award is subject to the terms set forth in Article I of this
Agreement and, except as expressly provided for herein, the terms, definitions
and provisions of the 2000 Plan regarding awards of Common Stock (including
Stock Bonus grants), which are incorporated herein by reference.  All capitalized terms used in this Agreement
shall have the meanings ascribed to such terms in the 2000 Plan, except as may
be otherwise defined herein.  The Award
evidenced in this Agreement is intended by the parties to be granted in
fulfillment of the Company’s obligation to award restricted stock pursuant to
the letter agreement between the parties dated January 31, 2007; the terms of
this Agreement completely replace and supersede the terms addressing the
subject matter contained in such letter agreement.


2.             Status of Executive.  The Executive shall not be deemed a
stockholder of the Company with respect to Common Stock covered by this Award
and shall not be entitled to receive dividends and exercise voting rights with
respect thereto until such Shares are  Transferred
to Executive on the dates described in Article I of this Agreement.  The Company is not required to deliver shares
of Common Stock to the Participant until all applicable requirements of law
have been complied with and such shares shall have been duly listed on any
securities exchange on which the Common Stock may then be listed.  Any certificates representing the shares of
Common Stock awarded pursuant to this Agreement shall be issued in the
Participant’s name.



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3.             Tax Withholding.  At the time that any portion of the Award
becomes vested and Shares are transferred to the Executive, the Company shall
withhold from the Shares to be delivered to Executive a number of Shares that
have a Fair Market Value equivalent to the tax withholdings that are required
to be remitted by the Company to the appropriate governmental entity or
entities on behalf of the Executive with respect to such transaction.


4.             No Effect on
Capital Structure.  This Award shall
not affect the right of the Company or any Subsidiary to reclassify,
recapitalize or otherwise change its capital or debt structure or to merge,
consolidate, convey any of all of its assets, dissolve, liquidate, windup, or
otherwise reorganize.


5.             Committee
Authority.  Any question concerning
the interpretation of this Agreement, any adjustments required to be made under
the Plan and any controversy that may arise under the Plan or this Agreement
shall be determined by the Committee in its sole discretion.  Such decision by the Committee shall be final
and binding.


6.             Lock-Up Period.  Executive hereby agrees that if so requested
by the Company or any representative of the underwriters (the “Managing
Underwriter”) in connection with any registration of the offering of any
securities of the Company under the Securities Act or any applicable state
laws, Executive shall not sell or otherwise transfer any Shares or other
securities of the Company during the 180-day period (or such longer period as
may be requested in writing by the Managing Underwriter and agreed to in
writing by the Company) (the “Market Standoff Period”) following the effective
date of a registration statement of the Company filed under the Securities Act.
 The Company may impose stop-transfer
instructions with respect to securities subject to the foregoing restrictions
until the end of such Market Standoff Period.


7.             Non-Transferability
of Award.  The Award may not be
transferred in any manner except by will or by the laws of descent or
distribution.  It may be exercised during
the lifetime of Executive only by Executive. 
The terms of the Award shall be binding upon the executors,
administrators, heirs, successors and assigns of the Executive.


This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original and all of which shall constitute one
document


	
   

  	
   

  	
  CAPSTONE TURBINE CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
   /s/ DARREN
  R. JAMISON

  
	
   

  	
   

  	
   

  	
  Darren R. Jamison

  
	
   

  	
   

  	
   

  	
  President and Chief Executive Officer

  



 



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EXECUTIVE ACKNOWLEDGES AND AGREES THAT THE TRANSFER
AND VESTING OF SHARES PURSUANT TO THIS AWARD IS EARNED ONLY BY CONTINUING
EMPLOYMENT OR CONSULTANCY AT THE WILL OF THE COMPANY (NOT THROUGH THE ACT OF
BEING HIRED, BEING GRANTED THE AWARD OR ACQUIRING SHARES HEREUNDER).  EXECUTIVE FURTHER ACKNOWLEDGES AND AGREES
THAT NOTHING IN THIS AGREEMENT, NOR IN THE CAPSTONE TURBINE CORPORATION 2000
EQUITY INCENTIVE PLAN, WHICH IS INCORPORATED HEREIN BY REFERENCE, SHALL CONFER
UPON EXECUTIVE ANY RIGHT WITH RESPECT TO CONTINUATION OR EMPLOYMENT OR
CONSULTANCY BY THE COMPANY, NOR SHALL IT INTERFERE IN ANY WAY WITH EXECUTIVE’S
RIGHT OR THE COMPANY’S RIGHT TO TERMINATE EXECUTIVE’S EMPLOYMENT OR CONSULTANCY
AT ANY TIME, WITH OR WITHOUT CAUSE.


Executive hereby acknowledges receipt of the 2000 Plan and a current
prospectus for the offering represented by the grant of this Award.  Executive represents that he is familiar with
the terms and provisions of the 2000 Plan and this Agreement and does hereby
accept the Award subject to all of its terms. 
Executive has had an opportunity to obtain the advice of counsel prior
to executing the Agreement and fully understands all provisions of this
Agreement and the Award granted hereunder. 
Executive hereby agrees to accept as binding, conclusive and final all
decisions or interpretations of the Committee upon any questions arising under
the 2000 Plan or this Agreement. 
Executive further agrees to notify the Company upon any change in the
residence address indicated below:


	
  Dated: February 5, 2007

  	
   

  	
   /s/ JAMES D. CROUSE

  	
   

  
	
   

  	
   

  	
  James D. Crouse

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Residence
  Address: 

  	
  on file

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  



 



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