Document:

Exhibit
10.33

21211 Nordhoff Street * Chatsworth,
CA 91311

Phone: 818-734-5300 * Fax
818-734-5320

www.microturbine.com

January 31, 2007

James D. Crouse

Coto de Caza, CA

Dear James:

I am pleased to offer you
the position of Executive Vice-President of Sales, reporting to Darren Jamison,
President and Chief Executive Officer at a salary of $220,000.00 annually,
(payable $8,461.54 bi-weekly).

In addition to your
salary you will participate in an Incentive Compensation Plan that will pay you
a bonus of three quarters of one per cent of annual sales for FY 2008 that is in
excess of the total sales for FY 2007. Details of the plan will be provided
under separate cover.

Under guidelines
established by Capstone, you will receive a Stock Option to purchase 850,000 shares
of Capstone common stock which includes 25% vesting on the first anniversary
date and monthly thereafter subject to 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. You will also receive 200,000 restricted stock units subject to
annual vesting of 25% and other provisions of the 2000 Equity Incentive Plan.

As a regular employee,
you will be eligible to participate in the Capstone benefit plans which include
paid holidays, four weeks of vacation per year, a 401(k) plan, and several
insurance choices for you and your family.

We would like you to
start work as soon as possible; therefore, we are suggesting a start date of
February 5, 2007. Please sign the second sheet of this letter confirming your
acceptance of this offer and its terms and indicate your start date. Unless
otherwise agreed to in writing, this offer will expire at the end of business
on February 5, 2007.

Upon your first day of
employment, you will be required to sign our standard agreement with regard to
confidentiality and the assignment of inventions as well as to show
documentation which verifies your legal right to work in the United States, as
required under the Federal Immigration and Reform Act of 1986.  Attached to this letter, as page 3, is a list
of acceptable documentation.

All of us involved in the
unique venture of Capstone Turbine look forward to working with you.

Sincerely,

	
  /s/ LARRY COLSON

  	
   

  

Larry Colson

Vice President, Human
Resources

Re: James D. Crouse

Position: Executive Vice-President of Sales

Salary: $220,000.00 annually

Stock Options: 850,000

Restricted Stock Units:
200,000

We understand that you
may possess certain confidential information of your past employer and you
hereby agree not to disclose any such confidential information to Capstone
Turbine Corporation.  Further, you agree
to indemnify and hold harmless Capstone Turbine Corporation from any adverse
consequences to Capstone Turbine Corporation caused by your disclosure of such
confidential information to Capstone Turbine Corporation.

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.

Additionally, Capstone
Turbine Corporation is committed to resolving any disputes between the Company
and employees as fairly and promptly as possible.  To meet these goals, the Company has
developed an “employee dispute resolution procedures” which provides the
exclusive remedy for resolving all employee disputes including statutory
disputes.  By accepting employment with
the Company you are agreeing to this procedure, which results in binding,
neutral arbitration for all disputes, which cannot be resolved amicably between
us.  A copy of these procedures will be
provided shortly.

Your offer of employment
is contingent upon Capstone Turbine Corporation’s receipt of an acceptable
background check, as authorized by you on the Information Authorization and
Release agreement.

Finally, you will be
subject to Capstone standard employment practices, including drug testing and
proof of U.S. citizenship or qualification to work in the U.S.

You hereby accept the
employment offer as stated above.   Your
scheduled start date will be February 5, 2007.

	
  /s/ JAMES D. CROUSE

  	
   

  	
   

  	
  January 31, 2007

  
	
  Signature

  	
  Date

  	
   

  

 

Once signed, please return this page to:

Capstone Turbine Corporation * 21211 Nordhoff Street * Chatsworth,
CA  91311

Attn:  Sherida B. Simmons,
Manager Human Resources

Fax:  818-734-5381

 2Exhibit
10.34

Capstone
Turbine Corporation

inducement stock
option agreement

This Agreement
is entered into by and between Capstone Turbine Corporation (the “Company”) with
James D. Crouse (the “Optionee”)
to evidence the award of an option to purchase 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 option award to Optionee to
purchase the Company’s Common Stock (the “Option”) as an inducement to
encourage Optionee 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 Optionee by the
Company, including the terms of the Option that is evidenced by this Agreement,
which employment commenced on February 5, 2007;

WHEREAS, the
parties desire to set forth the terms of such Option 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 Option is granted separately from the
Capstone Turbine Corporation 2000 Equity Incentive Plan (the “2000 Plan”), but
desire that this Option 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 Option covered
hereby:

I.            NOTICE OF STOCK AWARD

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

	
  Date of Grant:

  	
   

  	
  February 5, 2007

  
	
   

  	
   

  	
   

  
	
  Exercise Price:

  	
   

  	
  $0.86 per Share

  
	
   

  	
   

  	
   

  
	
  Total Number of Shares:

  	
   

  	
  850,000

  
	
   

  	
   

  	
   

  
	
  Total Exercise Price:

  	
   

  	
  $731,000

  
	
   

  	
   

  	
   

  
	
  Type of Option:

  	
   

  	
  Non-Qualified Stock Option

  
	
   

  	
   

  	
   

  
	
  Term:

  	
   

  	
  10 years commencing on Date of Grant

  

 

Exercise and Vesting Schedule:

This Option shall vest and become exercisable on the dates and as
described in this paragraph, subject to the Optionee continuing to be either an
Employee or a Consultant to the Company on such vesting dates.  On February 5, 2008,
Optionee shall be vested in and have the right to exercise the Option with
respect to 212,500 Shares.  Thereafter,
Optionee shall become vested in and have the right to exercise this Option with
respect to 1/48th of the
number of Shares subject to the Option on the day of each month corresponding
to the Date of Grant, so that the Option shall be fully vested and exercisable
on the fourth anniversary of the Date of Grant. 
However, if Optionee is terminated by the Company other than for Cause
prior to the one-year anniversary of the Date of the Grant, Optionee shall
become vested in and have the right to exercise this Option with respect to
1/48th of the
number of Shares subject to the Option 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.

Option Termination:

The Option shall terminate at the close of business on February 5, 2017; provided, however, that if Optionee ceases
to be either an Employee or a Consultant prior thereto, then the Option shall
terminate earlier pursuant to the terms of Sections 10(d), 10(e), and 10(f) of
the Plan.

II.            AGREEMENT

1.             Grant of Option.  The Option to purchase the Shares of Common
Stock is subject to the terms set forth in Article I of this Agreement. Except
as expressly provided for herein, this Option is also subject to the terms,
definitions and provisions of the 2000 Plan, 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 Option evidenced in this
Agreement is intended by the parties to be granted in fulfillment of the
Company’s obligation to award a stock option 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.             Exercise of
Option.  The Option shall be
exercisable cumulatively according to the vesting schedule set forth in Article
I of this Agreement, based on Optionee’s continued status as an Employee or
Consultant, and subject to the procedures and methods for payment set forth in
the 2000 Plan.  Any portion of the
exercisable portion of the Option may be exercised at any time by the Optionee
until the Option has terminated.

3.             Lock-Up Period.  Optionee
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, Optionee 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.

 2
 

4.             Non-Transferability
of Option.  The Option 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 Optionee only by Optionee. 
The terms of the Option shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.

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

	
   

  	
   

  	
  CAPSTONE TURBINE CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
  /s/ DARREN R.
  JAMISON

  
	
   

  	
   

  	
   

  	
  Darren R. Jamison

  
	
   

  	
   

  	
   

  	
  President and Chief Executive Officer

  

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

Optionee hereby acknowledges receipt of the 2000 Plan and a current
prospectus for the offering represented by the grant of this Option. Optionee
represents that he is familiar with the terms and provisions of the 2000 Plan
and this Agreement and does hereby accept the Option subject to all of its
terms.  Optionee 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 Option granted
hereunder.  Optionee 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.  Optionee 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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