Document:

Exhibit
10.3

December 1, 2006

Mr. Darren R. Jamison

201 Hawley Road

Shelburne, Vermont 05482

Dear Darren:

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

In addition to your
salary you will receive the following:

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

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

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

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

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

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

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

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

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

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

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

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

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

	
  Sincerely,

  
	
   

  
	
  /s/ ELIOT G.
  PROTSCH

  	
   

  
	
   

  
	
  Eliot G. Protsch

  
	
  Chairman of the
  Board

  
	
  Capstone Turbine
  Corporation

  

 

 

I hereby accept the employment offer as stated above:

 

 

	
  /s/ DARREN R. JAMISON

  	
  December 4, 2006

  	
   

  
	
  Signature

  	
  DateExhibit 10.4
CHANGE OF CONTROL SEVERANCE AGREEMENT
THIS AGREEMENT (“the Agreement”) is made and entered into between Capstone Turbine Corporation (the “Company”) and Darren R. Jamison (the “Executive”) to be effective December 18, 2006.
RECITALS:
WHEREAS, effective December 18, 2006, the Executive became the Company’s president and chief executive officer pursuant to the terms of a letter agreement dated December 1, 2006, (the “Letter Agreement”) which includes certain benefits and payments upon the severance of the Executive following a change in control of the Company;
WHEREAS, in connection therewith, the Executive has been made eligible for participation in the Capstone Turbine Corporation Change in Control Severance Plan (the “Plan”), which provides a portion of the severance benefits described in the Letter Agreement; and
WHEREAS, the parties desire to enter into this arrangement to provide the severance benefits described in the Letter Agreement that are not provided through the Plan;
NOW, THEREFORE, the parties do hereby agree to the following terms and conditions regarding severance payable to Executive in the events described herein:
Section 1.                                          Termination of Employment Without Cause
In the event that Executive’s employment is terminated by the Company for reasons other than Misconduct (as defined herein), the Executive will receive continuation of payments in the amount of his base salary then in effect for a period of one year following termination of employment. Provided, however, that the provisions of this Section 1 will not apply in the event that Executive is entitled to payments provided in Section 2 hereof. “Misconduct” shall mean the commission of any act of fraud, embezzlement, theft or dishonesty by Executive, any unauthorized use or disclosure by Executive of confidential information or trade secrets of the Company (or any parent or subsidiary thereof), or any other intentional misconduct by Executive adversely affecting the business or affairs of the Company (or any parent or subsidiary) in a material manner.
The foregoing definition shall not be deemed to be inclusive of all the acts or omissions which the Company (or any parent or subsidiary) may consider as grounds for the termination of the employment of the Executive. Except as provided in Section 2, Executive will not be entitled to severance under this Agreement upon a termination of employment for reasons other than Misconduct.

Section 2.                                          Termination Upon a Change in Control
In the event that Executive is Involuntarily Terminated within 12 months of a Change of Control or within the Trial Period, Executive shall be entitled to receive from the Company an amount equal to the base salary that would be payable to the Executive for a period of 18 months. The payment shall be made in one lump sum on the date of termination of employment. Notwithstanding anything herein to the contrary, the amount payable under this Section 2 shall be reduced by the amount of the cash severance amount payable to Executive under the Plan.
Section 3.                                          General Terms
Except as otherwise provided herein, the capitalized terms used in this agreement shall have the meanings ascribed thereto in the Plan. The benefits provided through this Agreement and through the Plan are intended by the parties to be granted in fulfillment of the Company’s obligations regarding cash severance payments pursuant to the Letter Agreement; the terms of this Agreement and the Plan completely replace and supersede the terms addressing the subject matter contained in the Letter Agreement.

Section 4.                                        Term of Agreement

The provisions of this Agreement shall apply in the event of the
termination of the employment of the Executive or a Change in Control that
occurs during the period between December 18, 2006 and December 18, 2009.

Section 5.                                          Commencement of Deferred Compensation Payments

Notwithstanding anything herein to the contrary, any payments to
Executive that would be subject to an additional tax described in section 409A
of the Internal Revenue Code shall commence six months following Executive’s
separation from service or, if sooner, upon the death of the Executive.

Section 6.                                          Amendment or Termination

The Company may amend this Agreement in its sole discretion at any
time, provided that any amendment that would diminish the rights of the
Executive is subject to Executive’s express written consent.

Section 7.                                          Successors

This Agreement
shall be binding upon and accrue to the benefit of any successors and assigns
of the Company.

Section 8.                                          Construction

This Agreement
shall be construed under and enforced in accordance with the laws of the State
of California.

 2
 

IN WITNESS WHEREOF, the Company, acting through the undersigned
authorized representative, has executed this instrument and the Executive has
set his hand hereto on this the 25th day of January, 2007, but to be effective
on the date first written above.

	
  DARREN R. JAMISON

  	
  CAPSTONE TURBINE CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ DARREN R. JAMISON

  	
   

  	
  By:

  	
  /s/ LARRY COLSON

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  Executive Vice President, Human Resources

  	
   

  
						

 

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