Document:

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                                                                     EXHIBIT 4.5

                                    FORM OF
                              AMENDED AND RESTATED
                                ESCROW AGREEMENT
                                       FOR
                             PENNSYLVANIA INVESTORS

     This ESCROW AGREEMENT, effective on November 10, 2005, as amended and
restated as of __________, 2006 by and among WELLS TIMBER REAL ESTATE INVESTMENT
TRUST, INC., a Maryland corporation ("COMPANY"), WELLS INVESTMENT SECURITIES,
INC., a Georgia corporation ("DEALER MANAGER"), and U.S. BANK NATIONAL
ASSOCIATION, a national banking association ("ESCROW AGENT").

                                   WITNESSETH:

     WHEREAS, Company proposes to offer to the public (the "PUBLIC OFFERING") up
to a maximum of 85,000,000 shares of its common stock, par value $0.01 per share
("SHARES") pursuant to the terms of, and at the prices set forth in, Company's
prospectus ("PROSPECTUS") contained in the registration statement (the
"REGISTRATION Statement") filed with the Securities and Exchange Commission
("COMMISSION") (capitalized terms used but not otherwise defined herein shall
have the respective meanings given in the Prospectus);

     WHEREAS, the Dealer Manager will distribute the Shares on behalf of Company
on a "best efforts" basis;

     WHEREAS, it is anticipated that prospective investors will subscribe for
Shares and will provide Dealer Manager with subscription payments for such
Shares (the "SUBSCRIPTION PAYMENTS"), which subscriptions will be contingent
upon (i) their respective acceptances by Company and (ii) Company's acceptance
of subscriptions aggregating at least $2,000,000 in subscription proceeds (the
"MINIMUM SUBSCRIPTION") by the close of business on the date exactly one year
after the original effective date of the Registration Statement (the "MINIMUM
SUBSCRIPTION TERMINATION DATE");

     WHEREAS, the Commonwealth of Pennsylvania requires Company to have raised a
minimum of $37,500,000 prior to the acceptance of Subscription Payments from
Pennsylvania investors (the "PENNSYLVANIA MINIMUM SUBSCRIPTION");

     WHEREAS, the Pennsylvania Minimum Subscription must be satisfied within 120
days (or subsequent 120-day periods as set forth in Section 4) from the receipt
of any instruments of payment from an investor in the Commonwealth of
Pennsylvania;

     WHEREAS, Escrow Agent has agreed to receive and hold in escrow all
Subscription Payments from Pennsylvania investors and to distribute such
Subscription Payments in each case in accordance with the terms and conditions
herein set forth;

     NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements hereinafter set forth, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:

     1. APPOINTMENT OF ESCROW AGENT. Company and Dealer Manager hereby appoint
Escrow Agent to serve as escrow agent for Pennsylvania investors hereunder, and
Escrow Agent hereby accepts such appointment in accordance with the terms of
this Escrow Agreement. Company and Dealer Manager hereby acknowledge that the
status of Escrow Agent is that of agent only for the limited purposes set forth
herein, and hereby agree that they will not represent or imply that Escrow Agent
has investigated the

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desirability or advisability of investment in the Shares or has approved,
endorsed or passed upon the merits of the investment therein. Company and Dealer
Manager further agree that the name of the Escrow Agent shall not be used in any
manner in connection with the offer or sale of the Shares other than to state
that the Escrow Agent has agreed to serve as escrow agent for the limited
purposes set forth herein.

     2. DEPOSIT INTO ESCROW. Until such time as prospective Pennsylvania
investors have subscribed for the Pennsylvania Minimum Subscription, and,
thereafter, whenever the Dealer Manager receives an instrument of payment made
payable to the Escrow Agent, the Dealer Manager will (i) by 12:00 p.m. Eastern
Time on the next business day following Dealer Manager's receipt of the same,
deposit with Escrow Agent, or cause to be deposited with Escrow Agent, all
Subscription Payments received by it from Pennsylvania investors, accompanied by
a list of the names, social security numbers or tax identification numbers, and
addresses (and any other information required for withholding purposes) of, and
amounts paid by, each prospective investor, and (ii) allow such Subscription
Payments to remain in escrow with Escrow Agent and not withdraw, or attempt to
withdraw, such Subscription Payments from Escrow Agent, except as herein
provided. Notwithstanding the foregoing, if any prospective investor shall
exercise any right provided by law to rescind his or her subscription, Escrow
Agent shall, upon notice from Company or Dealer Manager, return to such
prospective investor all Subscription Payments pertaining to such subscription,
together with any earnings thereon during the period that such Subscription
Payments were held by Escrow Agent under this Escrow Agreement.

     All Subscription Payments delivered to Escrow Agent by Dealer Manager
pursuant hereto shall be deposited immediately by Escrow Agent in a separate
account designated as the "Pennsylvania Escrow Account for the Benefit of
Subscribers for Common Stock of Wells Timber Real Estate Investment Trust, Inc."
(the "PENNSYLVANIA ESCROW ACCOUNT"). The Pennsylvania Escrow Account shall be
created and maintained subject to the terms of this Escrow Agreement and the
customary rules and regulations of Escrow Agent pertaining to such accounts.

     If any of the prospective investors' instruments of payment for the
subscription of Shares are dishonored or returned to Escrow Agent for nonpayment
prior to receipt of the Pennsylvania Minimum Subscription, Escrow Agent shall
promptly notify Dealer Manager in writing of such nonpayment and return such
instruments of payment to the prospective investors. In any such instance,
Escrow Agent is authorized to debit the Pennsylvania Escrow Account in the
amount of such return payment as well as any earnings on the investment
represented by such payment.

     3. INVESTMENT OF THE FUNDS IN THE PENNSYLVANIA ESCROW ACCOUNT. Escrow Agent
shall hold funds delivered to it under the terms of this Escrow Agreement and
shall from time to time invest and reinvest the funds held in the Pennsylvania
Escrow Account, as and when instructed pursuant to joint written instructions by
Company and Dealer Manager, in any one or more of the following:

     (a) obligations of the United States of America;

     (b) obligations guaranteed or collateralized by the United States of
America;

     (c) money market accounts of any national banks or state banks insured by
the Federal Deposit Insurance Corporation, including Escrow Agent; and

     (d) certificates of deposit of any national banks or state banks insured by
the Federal Deposit Insurance Corporation, including Escrow Agent.

     No investment shall be made in any instrument or security that has a
maturity of greater than three (3) months. If no joint written instructions are
received by Escrow Agent as provided above, Escrow

                                      -2-

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Agent may invest amounts held in the Pennsylvania Escrow Account in money market
funds of the type described in subparagraph (c) above. Any income or interest
realized from the investments made by Escrow Agent pursuant hereto shall be
reinvested by Escrow Agent until directed otherwise under the terms of this
Escrow Agreement. Dealer Manager and Company may examine any and all
documentation regarding the investment of the Pennsylvania Escrow Account during
normal business hours at the offices of Escrow Agent.

     4. DISBURSEMENTS FROM PENNSYLVANIA ESCROW ACCOUNT.

     (a) Rejected Subscriptions. No later than five (5) business days after
receipt by Escrow Agent of written notice from Company or Dealer Manager that
Company intends to reject a potential investor's subscription, Escrow Agent
shall pay, by certified or bank check and by first-class mail, the amount of the
Subscription Payment paid by such potential investor (together with all earnings
thereon) or Escrow Agent shall return the instruments of payment delivered to
Escrow Agent with respect to any Subscription Payment if such instruments have
not been processed for collection prior to such time directly to such potential
investor.

     (b) Termination of the Public Offering in Pennsylvania. In the event that
the Pennsylvania Minimum Subscription has not been satisfied at the close of
business on the date exactly 120 days from the date of receipt of the first
instruments of payment from an investor in the Commonwealth of Pennsylvania (the
"INITIAL TERMINATION DATE"), which date will be communicated to Escrow Agent in
writing as soon as possible after determination, Company will, within 10 days of
the end of the Initial Termination Date, notify the investors whose funds are
held in the Pennsylvania Escrow Account of their right to receive a refund,
with interest and without deductions for expenses. If the Pennsylvania investor
requests a refund within 10 days of receiving the notice, Company shall so
notify Escrow Agent, and Escrow Agent shall promptly return by check the funds
deposited in the Pennsylvania Escrow Account and any interest, or shall return
the instruments of payment delivered to Escrow Agent if such instruments have
not been processed for collection prior to such time, directly to each
subscriber at the address given to Company, but in any event within 15 calendar
days from the date Company received the refund request, as notified by Company
to Escrow Agent.

     Amounts held in the Pennsylvania Escrow Account from Pennsylvania investors
not requesting a refund will continue to be held for subsequent 120-day periods
(each a "SUBSEQUENT ESCROW PERIOD") until the Pennsylvania Minimum Subscription
is received; provided that on the last day of each Subsequent Escrow Period
(each a "SUBSEQUENT TERMINATION DATE"), Company will again notify investors of
their right to receive refunds with interest and without deductions for expenses
from the date after the Initial Termination Date subject to the same time period
enumerated above. Promptly following each Subsequent Termination Date, and on
the next business day after each Subsequent Termination Date or as soon as
possible thereafter, Escrow Agent shall return promptly by check the funds
deposited in the Pennsylvania Escrow Account and any interest, or shall return
the instruments of payment delivered to Escrow Agent if such instruments have
not been processed for collection prior to such time, directly to each
subscriber so requesting a refund at the address given to Company.

     (c) Termination of Public Offering. In the event that on the Minimum
Subscription Termination Date, Escrow Agent is not in receipt of evidence of
subscriptions accepted on or before such date, and instruments of payment dated
not later than that date (or actual wired funds), for the purchase of Shares at
least equal to the Minimum Subscription, Escrow Agent shall promptly notify
Company and Escrow Agent shall promptly return all funds received in full to
Pennsylvania investors, together with their pro rata share of any interest
earned thereon, pursuant to instructions made by Company, upon which Escrow
Agent may conclusively rely.

     (d) Receipt of Pennsylvania Minimum Subscription Payments. Subject to the
provisions of Section 2 and Section 4(a), (b) and (c) hereof, Escrow Agent shall
hold the Subscription Payments deposited

                                      -3-

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 with Escrow Agent in the Pennsylvania Escrow Account under the terms of this
Escrow Agreement and not rejected or refunded pursuant to the terms hereof until
such date ("PENNSYLVANIA MINIMUM SUBSCRIPTION SATISFACTION DATE") as Company and
Dealer Manager shall have delivered to the Escrow Agent a joint written
instruction notifying Escrow Agent that the Pennsylvania Minimum Subscription
has been received and accepted (the "PENNSYLVANIA MINIMUM SUBSCRIPTION NOTICE
AND DISBURSEMENT INSTRUCTION"). Within two (2) business days of the Pennsylvania
Minimum Subscription Notice and Disbursement Instruction, Escrow Agent shall
deliver all Subscription Payments in the Pennsylvania Escrow Account and all
earnings thereon to Company in the manner, amounts and to the bank accounts set
forth in the Pennsylvania Minimum Subscription Notice and Disbursement
Instruction. If after the Escrow Agent has received the Pennsylvania Minimum
Subscription Notice and Disbursement Instruction, the Dealer Manager shall send
the Escrow Agent Subscription Payments made payable to the Escrow Agent, the
Escrow Agent will deposit the Subscription Payments into the Escrow Account, as
described herein and, within twenty four (24) hours of such deposit, deliver the
Subscription Payments in the Escrow Account in the manner, amounts and to the
bank accounts set forth in the Pennsylvania Minimum Subscription Notice and
Disbursement Instruction.

     In the event that Escrow Agent receives instruments of payment after the
Pennsylvania Minimum Subscription Satisfaction Date, Escrow Agent is hereby
authorized to deposit such instruments of payment to any deposit account as
directed by Company and Dealer Manager. The application of such funds into a
deposit account directed by Company and Dealer Manager shall be a full
acquittance to the Escrow Agent and Escrow Agent shall not be responsible for
the application of such funds.

     5. ESCROW AGENT COMPENSATION. Escrow Agent shall be entitled to receive
compensation for its services as Escrow Agent hereunder as set forth on the
schedule attached hereto and made a part hereof as Exhibit A, which compensation
shall be paid by Company. Notwithstanding anything contained in this Escrow
Agreement to the contrary, in no event shall any fee, reimbursement for costs
and expenses, indemnification for any damages incurred by Escrow Agent, or
monies whatsoever be paid out of or chargeable to the income or assets in the
Pennsylvania Escrow Account held by Escrow Agent.

     6. RESIGNATION AND REMOVAL OF ESCROW AGENT. Escrow Agent may resign at any
time from its obligations under this Escrow Agreement by providing written
notice to Company and Dealer Manager. Such resignation shall be effective on the
date specified in such notice, which shall be not less than thirty (30) days
after such written notice has been given. In addition, Company and Dealer
Manager may jointly remove Escrow Agent as the escrow agent at any time with or
without cause, by a written instrument executed by both of them (which may be
executed in counterparts) given to Escrow Agent, which instrument shall
designate the effective date of such removal. In the event of any such
resignation or removal, a successor escrow agent, which shall be a bank or trust
company organized under the laws of the United States of America, shall be
appointed by the mutual agreement of Company and Dealer Manager. Any such
successor escrow agent shall deliver to Company and Dealer Manager a written
instrument accepting such appointment, and thereupon it shall succeed to all the
rights and duties of Escrow Agent hereunder and shall be entitled to receive the
Pennsylvania Escrow Account. If no successor escrow agent is named by Company
and Dealer Manager, Escrow Agent may apply to a court of competent jurisdiction
for appointment of a successor Escrow Agent.

     7. LIABILITY OF ESCROW AGENT. Escrow Agent shall not be liable to anyone
for any losses, claims, damages, liabilities or expenses that it may incur as a
result of any act or omission of Escrow Agent, unless such losses, claims,
damages, liabilities or expenses are caused by Escrow Agent's bad faith, willful
misconduct or gross negligence. Accordingly, Escrow Agent shall not incur any
such liability with respect to (i) any action taken or omitted in good faith
upon the advice of Escrow Agent's counsel or counsel for any other party hereto,
given with respect to any question relating to the duties and responsibilities
of Escrow Agent under this Escrow Agreement or (ii) any action taken or omitted
in reliance upon any instrument, including execution, or the identity or
authority of any person executing such instrument, its validity and
effectiveness, but also as to the truth and accuracy of any information
contained therein that Escrow Agent shall, in good faith, believe to be genuine,
to have been signed by a proper person or persons and to conform to the
provisions of this Escrow Agreement.

                                      -4-

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     8. INDEMNIFICATION OF ESCROW AGENT. Company and Dealer Manager hereby
jointly and severally agree to indemnify and hold Escrow Agent (and its
officers, directors, employees and agents) harmless from and against any and all
losses, claims, damages, liabilities and expenses, including reasonable
attorney's fees and expenses, that may be imposed on Escrow Agent or incurred by
Escrow Agent in connection with Escrow Agent's acceptance of its appointment
hereunder, or the performance of Escrow Agent's duties hereunder, except where
such losses, claims, damages, liabilities and expenses result from Escrow
Agent's bad faith, gross negligence or willful misconduct.

     9. DISPUTES. In the event of any disagreement among any of the parties to
this Escrow Agreement, or among them or any other person resulting in adverse
claims and demands being made in connection with or from any property in the
Pennsylvania Escrow Account, Escrow Agent shall be entitled to refuse to comply
with any such claims or demands as long as such disagreement may continue, and
in so refusing, shall make no delivery or other disposition of any property then
held by it in the Pennsylvania Escrow Account under this Escrow Agreement, and
in so doing Escrow Agent shall be entitled to continue to refrain from acting
until (i) the right of adverse claimants shall have been finally settled by
binding arbitration or finally adjudicated in a court assuming and having
jurisdiction of the property involved herein or affected hereby or (ii) all
differences shall have been adjusted by agreement and Escrow Agent shall have
been notified in writing of such agreement signed by the parties hereto.

     In the event of such disagreement (or a resignation by Escrow Agent under
the terms of this Escrow Agreement), Escrow Agent may tender into the registry
or custody of any court of competent jurisdiction all money or property in its
hands under the terms of this Escrow Agreement, together with instituting any
other legal proceeding it deems appropriate, and thereupon Escrow Agent shall be
discharged from all further duties under this Escrow Agreement. The filing of
any such legal proceeding shall not deprive Escrow Agent of its compensation
earned prior to such filing.

     10. REPRESENTATIONS AND WARRANTIES. Each of Company and Dealer Manager
respectively makes the following representations and warranties to Escrow Agent:

     (a) It is a corporation, duly organized, validly existing, and in good
standing under the laws of the state of its incorporation, and has full power
and authority to execute and deliver this Escrow Agreement and to perform its
obligations hereunder.

     (b) This Escrow Agreement has been duly approved by all necessary corporate
action, including any necessary shareholder approval, has been executed by its
duly authorized officers, and constitutes its valid and binding agreement,
enforceable in accordance with its terms.

     (c) The execution, delivery, and performance of this Escrow Agreement will
not violate, conflict with, or cause a default under its articles of
incorporation or bylaws, any applicable law or regulation, any court order or
administrative ruling or decree to which it is a party or any of its property is
subject, or any agreement, contract, indenture, or other binding arrangement to
which it is a party or any of its property is subject. The execution, delivery
and performance of this Escrow Agreement are consistent with the Prospectus, and
the Prospectus properly describes the allocation of interest and other earnings
to potential Pennsylvania investors pursuant to this Escrow Agreement.

     (d) All of its representations and warranties contained herein are true and
complete as of the date hereof and will be true and complete at the time of any
deposit to or disbursement from the Pennsylvania Escrow Account.

     11. IDENTIFYING INFORMATION. Company and Dealer Manager acknowledge that
the identifying information set forth on Exhibit B is being requested by Escrow
Agent in connection with the

                                      -5-

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USA Patriot Act, Pub.L.107-56 (the "ACT"), and Company and Dealer Manager agree
to provide any additional information reasonably requested by Escrow Agent in
connection with the Act or any similar legislation or regulation to which Escrow
Agent is subject, in a timely manner. Company and Dealer Manager each represents
that its respective identifying information set forth on Exhibit B, including
without limitation, its Taxpayer Identification Number assigned by the Internal
Revenue Service or any other taxing authority, is true and complete on the date
hereof and each agrees to notify Escrow Agent of any change with respect thereto
during the term of this Escrow Agreement.

     12. NOTICES. All notices, demands or other communications to be given or
delivered under or by reason of any provision of this Escrow Agreement shall be
in writing and shall be deemed to have been given (i) on the date delivered in
person, (ii) on the date indicated on the return receipt if mailed postage
prepaid, by certified or registered U.S. Mail, with return receipt requested,
(iii) on the date transmitted by facsimile, if sent by 5:00 P.M., Eastern Time
on a business day (or the next business day if after such time or if sent on a
day other than a business day), and confirmation of receipt thereof is obtained,
or (iv) on the next business day after delivery (in time for and specifying next
day delivery) to Federal Express or other nationally recognized overnight
courier service or overnight express U.S. Mail, with service charges or postage
prepaid. The addresses and facsimile numbers of the parties for purposes of this
Escrow Agreement are:

     If to Company:          Wells Timber Real Estate Investment Trust, Inc.
                             6200 The Corners Parkway
                             Norcross, Georgia 30092
                             Facsimile No.: (770) 243-8198
                             Attention: Leo F. Wells, III, President

     With a copy to:         Alston & Bird LLP
                             One Atlantic Center
                             1201 West Peachtree Street
                             Atlanta, Georgia 30309-3424
                             Facsimile No.: (404) 881-7777
                             Attention: Rosemarie A. Thurston

     If to Dealer Manager:   Wells Investment Securities, Inc.
                             6200 The Corners Parkway
                             Norcross, Georgia 30092
                             Facsimile No.: (770) 243-8198
                             Attention: Thomas E. Larkin, President

     With a copy to:         Alston & Bird LLP
                             One Atlantic Center
                             1201 West Peachtree Street
                             Atlanta, Georgia 30309-3424
                             Facsimile No.: (404) 881-7777
                             Attention: Rosemarie A. Thurston

     If to Escrow Agent:     U.S. Bank Corporate Trust Services
                             360 Interstate North Parkway SE
                             Suite 500 - GA4605
                             Atlanta, Georgia 30339-2216
                             Facsimile No.: (770) 644-6869
                             Attention: Paul L. Henderson, Assistant Vice
                                        President

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or to such other address or facsimile number, or to the attention of such other
person, as the receiving party has specified by prior written notice to the
sending party pursuant to this Section 12.

     13. BINDING EFFECT. This Escrow Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective heirs, executors,
administrators, successors and assigns.

     14. TERM. This Escrow Agreement shall terminate within thirty (30) days of
receipt of written notice by the Escrow Agent that the Company and the Dealer
Manager have agreed to terminate this Escrow Agreement.

     15. AMENDMENTS. This Escrow Agreement shall not be modified, revoked,
released or terminated except upon the mutual consent of Company and Dealer
Manager, given in writing and delivered to the Escrow Agent. Should, at any
time, any attempt be made to modify this Escrow Agreement in a manner that would
increase the duties and responsibilities of Escrow Agent or to modify this
Escrow Agreement in any manner that Escrow Agent deems undesirable, Escrow Agent
may resign by notifying Company and Dealer Manager in writing, by certified
mail, and until (i) acceptance by a successor escrow agent appointed jointly by
Company and Dealer Manager or (ii) thirty (30) days following the date upon
which such notice was delivered by Escrow Agent, whichever occurs sooner, Escrow
Agent's only remaining obligation shall be to perform its duties hereunder in
accordance with the terms of the Escrow Agreement without regards to any such
modification.

     16. ASSIGNMENT. Except as otherwise provided herein, no party may, without
the express written consent of each other party, assign or transfer this Escrow
Agreement in whole or in part.

     17. GOVERNING LAW. This Escrow Agreement is governed by, and shall be
construed and enforced in accordance with, the laws of the State of Georgia
without regard to its conflict of laws rules.

     18. SEVERABILITY. Whenever possible, each provision of this Escrow
Agreement shall be interpreted in such manner as to be effective and valid under
Georgia law, but if any provision shall be prohibited by or be invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Escrow Agreement.

     19. HEADINGS. The headings as to contents of particular sections of this
Escrow Agreement are inserted for convenience and shall not be construed as a
part of this Escrow Agreement or as a limitation on or expansion of the scope of
any terms or provisions of this Escrow Agreement.

     20. COUNTERPARTS. This Escrow Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. It shall not be necessary
for every party hereto to sign each counterpart but only that each party shall
sign at least one such counterpart.

     21. ENTIRE AGREEMENT. This Escrow Agreement contains the entire
understanding between and among the parties hereto and supersedes any previous
understandings, written or oral, that the parties may have reached, with respect
to the subject matter of this Escrow Agreement.

                            [Signatures on Next Page]

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     IN WITNESS WHEREOF, the parties hereto have made and entered into this
Pennsylvania Escrow Agreement on the date first hereinabove set forth.

                                        COMPANY:

                                        WELLS TIMBER REAL ESTATE
                                        INVESTMENT TRUST, INC.

                                        By:
                                            ------------------------------------
                                            Name:
                                            Title:

                                        DEALER MANAGER:

                                        WELLS INVESTMENT SECURITIES, INC.

                                        By:
                                            ------------------------------------
                                            Name:
                                            Title:

                                        ESCROW AGENT:

                                        U.S. BANK NATIONAL
                                        ASSOCIATION

                                        By:
                                            ------------------------------------
                                            Name:
                                            Title:

                                      -8-

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                                    EXHIBIT A

                                ESCROW AGENT FEES

One-Time Escrow Services Fee - Payable in advance - $500

                                       A-1

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                                    EXHIBIT B

                             IDENTIFYING INFORMATION

Taxpayer Identification Numbers:

Company:          20-3536671

Dealer Manager:   58-1572141

                                       B-1<PAGE>

                                  July 24, 2006

Dear John,

         Capstone Turbine Corporation (the "Company") is in receipt of your
resignation as President, CEO and a director of the Company effective as of July
31, 2006. This letter sets forth certain agreements and understandings between
you and the Company, all to be effective as of August 1, 2006.

         In consideration of your agreement to serve the Company in a consulting
capacity for a one-year period after the effective date of your resignation (the
"Consulting Period"), the terms of your outstanding stock options will be
revised as stated below to allow you to exercise your stock options that were
vested as of that date until July 31, 2007. In exchange, you will agree to be
available to the Company for consulting advice for up to ten hours per month,
not to use any of the Company's confidential or proprietary information during
the term of this agreement, except on behalf of the Company, and thereafter, and
not to interfere with certain relationships of the Company during the term of
this agreement and thereafter, as set forth in more detail below. In the event
that you are requested to provide greater than ten hours per month of consulting
advice, the Company shall compensate you at a rate of $500 per hour. You will be
reimbursed for your reasonable expenses incurred in providing such consulting
services to the Company. Such payments and reimbursements shall be made within
fifteen days of the Company's receipt of an invoice from you reflecting same,
with supporting documentation regarding expenses attached. In addition, the
Company will continue to provide medical benefits for you as currently provided
for a one month period following the effective date of your resignation.

         As an inducement to become the President and Chief Executive Officer of
the Company, you were awarded an option to acquire 2,000,000 shares of the
Company's common stock. Your right to exercise the option would expire three
months following the termination of your employment with the Company. The terms
of the option permit you, however, to continue to exercise the vested portion if
you are providing services to the Company as a consultant. You and the Company
hereby revise the Stock Option Agreement, dated August 1, 2003 and the
Restricted Stock Agreement, dated August 4, 2003, both between you and the
Company as follows: (i) you will provide consulting services to Capstone as
outlined in this letter, (ii) the option is vested as to 1,500,000 shares of
common stock and the remaining portion of the option is cancelled and the right
to exercise the vested option will expire on July 31, 2007 or, if sooner, three
months after the termination of your relationship as a consultant to the
Company, (iii) you are vested as to 375,000 shares of restricted stock, and the
right to accrue additional vesting of the restricted stock under the award
granted to you on August 4, 2003 is hereby cancelled, and (iv) the options
granted to you on June 12, 2006 and June 22, 2006 are hereby cancelled. The
Company intends to exercise its repurchase option under the August 4, 2003
Restricted Stock Agreement to acquire the unvested shares under the terms
described in the Restricted Stock Agreement.

         By reason of your service as the President, CEO and a director of the
Company, you have had access to and contact with the trade secrets and
confidential and proprietary business information of the Company and its
affiliates (the "Confidential Information"). You acknowledge that the Company

<PAGE>

conducts its business in an industry that is highly competitive, and that the
Confidential Information constitutes a valuable, special and unique asset of the
Company, and therefore you covenant and agree that, for a period of five years:

         (a) You will at all times use your best efforts and exercise diligence
         to protect and safeguard the Confidential Information, including,
         without limitation, customer-related information, including names,
         addresses, specifications or requirements and the identity of customers
         and suppliers; arrangements with customers and suppliers; technical
         data, records, compilations of information, processes, intellectual
         property, patents, technology, computer software, and specifications
         relating to customers, suppliers, products and services; the manner of
         operation of the Company's, plans, policies, budgets, financial
         projections, business and/or marketing plans, concepts and/or
         projections; information about the finances and financial condition of
         the Company's business, costs, profits, profit margins, salaries and
         other financial information pertaining to the Company; and the trade
         secrets and other technical and non-technical information of the
         Company.

         (b) You will not at any time disclose any of such Confidential
         Information, except as may be required by law.

         (c) You will not at any time use, directly or indirectly, for your own
         benefit or for the benefit of another, any of such Confidential
         Information, except as is required in your capacity as consultant to
         the Company during the term of this agreement.

         (d) The confidentiality provisions set forth above shall not be
         applicable to any information which is in the public domain, other than
         as a result of action by you in violation of such confidentiality
         provisions, or which was obtained from sources other than the Company
         or its affiliates who are not under a duty of nondisclosure. All files,
         records, documents, drawings, specifications, computer software,
         memoranda, notes, or other documents relating to the business of the
         Company and its affiliates, whether prepared by you or that otherwise
         came into your possession, shall be the exclusive property of the
         Company and its affiliates and shall not be retained by you for any
         reason whatsoever.

         (e) You acknowledge that the confidentiality provisions set forth above
         are a reasonable and necessary protection of the legitimate business
         interests of the Company. In the event of any violation of the such
         confidentiality provisions, the Company shall be entitled to
         preliminary and permanent injunctive relief. Nothing herein contained
         shall be construed as prohibiting the Company from pursuing any other
         legal or equitable remedies available to the Company as a result of a
         violation of the confidentiality provisions set forth herein. The
         confidentiality provisions set forth above shall continue to be binding
         upon you for a period of five years and supplement, but do not replace
         or modify, any and all other legal obligations you have with respect to
         maintaining the confidentiality of information related to the Company.

         (f) You will not assist any person or entity in any way to do, or
         attempt to do, anything prohibited by clauses (a) through (e) above.

         By reason of your service as the President, CEO and a director of the
Company, you have knowledge about, access to and/or contact with the Company's
employees, dealers, distributors, customers, prospective customers, potential
customers and other relationships that are or potentially are beneficial to the
Company. You acknowledge that such relationships are a valuable, special and
unique asset of the Company, and therefore you agree that, during the Consulting
Period and for one year thereafter:

                                       2

<PAGE>

          (w) You will not, nor will your affiliates, solicit any person or
          entity that is a dealer, distributor, customer, prospective customer
          or potential customer of the Company or its affiliates as of July 31,
          2006 or during the Consulting Period to purchase any goods or services
          sold by, or competitive with a type sold by the Company or its
          affiliates from anyone other than Company or its affiliates.

          (x) You will not, nor will your affiliates, (i) solicit, recruit or
          hire any person employed by the Company or its affiliates on July 31,
          2006 or during the Consulting Period and any person who has worked for
          Company or its affiliates on July 31, 2006 or during the Consulting
          Period unless such person's employment was involuntarily terminated by
          such employer, or (ii) solicit or encourage any person employed by the
          Company or its affiliates on July 31, 2006 or during the Consulting
          Period to leave the employment of the Company or its affiliates.

          (y) You acknowledge that the non-solicitation provisions set forth
          above are a reasonable and necessary protection of the legitimate
          business interests of the Company. In the event of any violation of
          the such non-solicitation provisions, the Company shall be entitled
          solely to preliminary and permanent injunctive relief.

          (z) You will not, nor will your affiliates, assist any person or
          entity in any way to do, or attempt to do, anything prohibited by
          clauses (w) through (y) above.

                   On behalf of the Board of Directors and stockholders of the
Company, I want to thank you for the valuable service you have provided to us
during the past three years and express our appreciation for your willingness to
continue to assist the Company in this new role. If this letter correctly
reflects the agreement of the parties with respect to the matters addressed
herein, please execute two copies of this letter and return one fully executed
copy of this letter to the undersigned. This letter may be executed in two or
more counterparts, each of which shall be deemed to be an original document and
all of which, taken together, shall be deemed to constitute a single original
document.

                                          Sincerely,

                                          CAPSTONE TURBINE CORPORATION

                                          ----------------------------
                                          Eliot Protsch
                                          Chairman, Board of Directors

Acknowledged and agreed to
this ___ day of July, 2006

--------------------------
John R. Tucker

                                       3

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