Exhibit
10.2


LEASE
AGREEMENT


THIS LEASE AGREEMENT,
dated the fifteenth day of October, 2005, by and between CapGen CHP, Inc.,
whose address is 10101 - C. Avenue D, Brooklyn, New York, 11236, (hereinafter
called “Landlord”), and Capstone Turbine Corporation, whose address is 21211
Nordhoff Street, Chatsworth, California, 91311 (hereinafter called “Tenant”).


WHEREAS, the City of New
York is the fee owner of the property known as 101 - 01 Avenue D, Brooklyn, New
York (the “Property”), as more particularly described in the Master Lease. The
City of New York has heretofore entered into that certain Subordinate Lease,
dated as of September 1,1984, with Laura Realty Co. (successor in interest to
Rentar Development Corporation, and hereinafter referred to as “LRC”), as
tenant (the “Master Lease”).


WHEREAS, LRC further
subleased the property to A.P.L. Corporation (predecessor in interest to
Landlord) pursuant to that certain lease dated September 7th, 1967, as amended
by that First Amendatory Agreement, dated April 30, 1968, and that certain
Second Amendatory Agreement, dated October 21,1968, and that certain Agreement
pursuant to Section 2.03, dated May 6,1969, and made a part hereof (said lease
and all of the above agreements, as amended, being referred to as the “Lease”).


For and in consideration
of the respective covenants, conditions and agreements set forth herein
Landlord does hereby demise to Tenant approximately 6,000 +/–square feet of
space in the Property together with all required or necessary easements, rights
and ways appurtenant thereto, and those portions of Landlord’s rights, title
and interest necessary for access in all public ways adjoining the same and any
buildings, improvements, equipment and fixtures located within the rental
property hereinafter collectively called the “premises”).


Representations. (a)
Landlord represents that (1) It has a leasehold interest in the premises
pursuant to the Lease, and that the term of the Lease is equal to or greater
than the lease term hereof, including the renewal term set forth in paragraph 4
hereof; (2) Landlord has full power and authority to lease the premises to
Tenant; and (3) Landlord covenants the Tenant, upon payment or lease and
performance of the covenants contained herein, shall peaceably and quietly
have, hold and enjoy the premises during term of the lease agreement and any
renewal thereof.


(b) Tenant represents that (1) it has full power and
authority to enter into this agreement and (2) the execution and delivery of
this agreement has been duly authorized by Tenant.


Term. The primary term of
this lease agreement shall commence on October 15, 2005, and end upon October
14, 2010 unless modified by an approved sub-lease prior to the ending date.


Rent.
During the term of this Lease agreement, Tenant agrees to pay to Landlord for
the premises, the following sums:


	
  Years 1 and 2

  	
  (10/15/05 - 10/14/07)

  	
   

  	
  $8,375.00 per month

  
	
  Years 3 and 4

  	
  (10/15/07 - 10/14/09)

  	
   

  	
  $8,850.00 per month

  
	
  Year 5

  	
  (10/15/09 - 10/14/10)

  	
   

  	
  $9,250.00 per month

  



 


 


(Tenant shall also have three (3) individual one year
options to extend this lease for year 6 at $9,250.00 per month, year 7 and year
8 at $ 9,750.00 per month)


(b)  Lease shall
commence on October 15, 2005. As used herein the “Year” shall mean the period
from the commencement of the term to the end of the (12th) full calendar month
thereafter; subsequent years shall commence on the first (1st) day of the next month of the term and
on each anniversary thereafter. Tenant covenants and agrees to pay all lease
amounts reserved hereunder to Landlord, without notice or demand, in advance,
on the first (1st) day
of each month during the term of this agreement.


(c)  All
payments shall be paid to CapGen CHP, Inc., 10101 - C. Avenue D, Brooklyn, New
York, 11236, or at such other place or to such appointee of the Landlord as the
Landlord may from time to time designate in writing.









 



Utilities. Telephone and any
other utilities installed and utilized or consumed in the premises shall be
billed directly to Tenant, and Tenant shall be responsible for payment of said
bills. Tenant shall be responsible for the cost of bringing telephone and other
related utilities into the premises and the cost of their use. Landlord
represents that such utilities have been brought to the premises by landlord
and tenant must merely bring same into the demised premises.


Real Estate Taxes,
(a) Landlord shall pay the real estate taxes on the premises. Tenant shall pay
any tax assessed on the personal property, inventory, or additional equipment
used in the operation of his business.


Security Deposits. Upon
execution of this lease agreement, Tenant shall deliver to Landlord the first
month payment based on the monthly lease price.


Assignment
and Subletting. Tenant shall not have the right to assign
this agreement or sub-lease or to sublet all or any portion of the rental
premises, without Landlord’s consent which shall not be unreasonably withheld
or delayed.


Use of Premises. Tenant
shall use the premises for office space to support sales of its products and
services. Tenant shall not change the use of the premises without the prior
written consent of the Landlord which shall not be unreasonably withheld or
delayed. No hazardous waste or hazardous material shall be stored, disposed of
or used on the premises. Tenant agrees to comply with all applicable zoning and
other laws and regulations, and provide and install at its own expense any
additional equipment or alterations required to comply with all such laws and
regulations as required from time to time. Tenant further covenants and agrees
(1) to use the premises in a manner which does not interfere with the rights of
quiet enjoyment of any other tenants of the building and which is not a
nuisance, and (ii) not to make any objectionable use of the premises to
generate any objectionable odor therefrom. Notwithstanding the portioning
Landlord represents premises to have a valid Certificate of Occupancy for
Tenant’s use of this premise.


Parking. Tenant shall have a
non-exclusive use of the parking lot or parking areas. Tenant shall abide by
the terms and conditions as stated for In the Non-Exclusive use of the Common
Area of the parking lot, but will enjoy exclusive use of those areas designated
for parking in the additional Warehouse & Manufacturing spaces lease.


Compliance
with Laws: Environmental.


(a)  Tenant
covenants and agrees that it will, at its own expense, observe, comply with and
execute all laws, orders, rules, requirements and regulations of any and all
governmental departments, bodies, bureaus, agencies and officers, and all
rules, directions, requirements recommendations of local board of fire
underwriters and the fire insurance rating organizations having jurisdiction
over the area In which the premises are situated, or other bodies or agencies
now or hereinafter exercising similar functions in the area in which the
premises are situated, (collectively “Laws”), in any way pertaining to the
premises or the use and occupancy of the premises except that Landlord shall be
responsible for the Certificate of Occupancy and structural repairs. In the
event tenant shall fail or neglect to comply with any of the Laws, Landlord or
its agents may enter the premises and take all such action and do all such work
in or to the premises as may be necessary in order to cause compliance with
such laws, orders, rules, requirements or recommendations, and Tenant covenants
and agrees to reimburse Landlord promptly upon demand for the expense incurred
by Landlord in taking such action performing such work, which may be the
responsibility of Tenant.


(b)  Tenant will
not do, or suffer to be done, anything in or about the premises contrary to use
clause herein, or keep anything in or about the premises, contrary to use
clause herein, which will contravene or affect any policy of insurance against
loss by fire or other hazards, including, but not limited to, public liability,
now existing or which the Landlord may hereafter place thereon, or which will
prevent the Landlord from procuring such policies in companies acceptable to
Landlord at standard rates.


(c)  Tenant
shall use and operate the premises, at all times during the term hereof, under
and in compliance with all federal and State of New York laws and regulations,
and in compliance with all applicable Environmental Legal Requirements. “Environmental
Legal Requirements” shall mean any applicable law relating to public health,
safety, or the environment, including, without limitation, relating to
releases, discharges or omissions to air, water, land or groundwater, to the
withdrawal or use Of groundwater, to the use and handling of polychlorinated
biphenyls (“PCB’s”) or asbestos, or asbestos containing products, to the









 



disposal, treatment storage or management of solid or
other hazardous or harmful wastes or to exposure to toxic, hazardous or other
harmful materials (collectively Hazardous Substances”) to the handling,
transportation, discharge or release of gaseous or liquid substance and any
regulation or final order or directive issues pursuant to such statute or
ordinance, in each case applicable to the premises, the building or its
operation, construction or modification, including without limitation the
following: the Clean Air Act, the Federal Water Pollution Control Act (“FWPCA”),
the Safe Drinking Water Act, the Toxic Substances Control Act, the
Comprehensive Environmental Response Compensation and Liability Act, as amended
by the Solid and Hazardous Waste Amendments of 1984 (“RCRA”), the Occupational
Safety and Health Act, the Emergency Planning and Community Right-to-Know Act
of 1936, the Solid Waste Disposal Act, and any state statutes addressing
similar matters, and any state statute providing for financial responsibility
for clean-up or other actions with respect to the release or threatened release
of any the above-referenced substances.


(d)  Tenant
hereby indemnifies and saves landlord harmless from all liabilities and claims
arising from the use, storage or placement of any Hazardous Substances upon the
premises or elsewhere within the property of the Landlord related to the
premises.of Landlord (if brought or placed thereon by Tenant, its agents,
employees, contractors or invitees); and Tenant shall (i) within fifteen (15)
days after written notice thereof, take or cause to be taken, at its sole
expense, such actions as may be necessary to comply with all Environmental
Legal Requirements and (ii) within fifteen (15) days after written demand
therefore, reimburse Landlord for any amounts expended by Landlord to comply
with any Environmental Requirements with respect to the premises or with
respect to any other portions of Landlord’s property related to the premises as
the result of the placement or storage of Hazardous Substance by Tenant, its
agents, employees, contractors or invitees, or in connection with any judicial
or administrative investigation or proceeding relating thereto, including,
without limitation, reasonable attorneys’ fees, fines or the penalty payments.


(e)  For
purposes of this provision, Tenant shall be conclusively deemed to have
violated the Environmental Legal Requirements if (i) any notice or orders
directed to either Landlord or Tenant by any governmental agency, body, or
court alleging that such violation by Tenant has occurred; or (ii) if Landlord
obtains and delivers to Tenant a certified report prepared by an engineer or
other party engaged in the business of testing for determining the existence of
Hazardous Substances, which report states that there are Hazardous Substances
used, stored or placed upon the premises by Tenant.


Indemnification.   (a)
Tenant shall defend all actions against and shall pay, protect, indemnify and
hold harmless the Landlord or any officer, director, employee or shareholder of
Landlord, from and against any and all liabilities, losses, damages, costs,
expenses (including, without limitation, reasonable attorneys’ fees and
expenses), causes of action, suits, claims, demands or judgments of any nature
(but excepting such as may be due to the negligence of Landlord) arising out of
(a) any breach by tenant of any warranty, representation or covenant contained
in this Rental agreement; (b) the violation of the permitted specified
occupancy or use of the premises by tenant. The foregoing indemnification shall
survive the expiration or sooner termination of the lease agreement.


(b) Landlord shall defend all actions against and
shall pay, protect, indemnify and hold harmless the Tenant or any officer,
director, employee or shareholder of Tenant, from and against any and all
liabilities, losses, damages, costs, expenses (including, without limitation,
reasonable attorneys’ fees and expenses), causes of action, suits, claims,
demands or judgments of any nature (but excepting such as may be due to the
negligence of Tenant) arising out of any breach by Landlord of any warranty,
representation or covenant contained in the rental agreement. The foregoing
indemnification shall survive the expiration or sooner termination of the
rental agreement.


Tenant shall be responsible for any legal requirements
made necessary by any act or work performed by Tenant or by the particular
nature of Tenant’s use of the premises except for Landlords Certificate of
Occupancy obligation. Landlord shall be responsible for any legal requirements
made necessary by and act or work performed by Landlord or its agents. Any
legal requirement not meeting either of the above criteria shall be the
responsibility of Tenant if such requirements relate to a non-structural item
and apply to the premises (but not to other portions of the property of
Landlord or any easement area) and shall be the responsibility of Landlord if
such requirements relate to a structural item as they pertain to the premises
or relate to a structural or non- structural item as they pertain to any other
portions of Landlord’s property excluding the premises (including any easement
area).









 



Maintenance and Repairs and Work by Landlord.
Throughout the Term, Landlord shall be responsible for all repairs, maintenance
or replacement of structural portions of the premises, all easement areas, the
roof, building systems, parking lot, sidewalks, exterior of the building,
facade, all other areas other than the nonstructural portions of the premises
and any damage caused by the negligence of Landlord, its agents, contractors,
employees, invitees or licensees. Landlord’s obligations to repair, maintain or
replace shall not apply with respect to any damage caused by the negligence of
Tenant, its agents, contractors, employees, invitees or licensees.


Maintenance, Repairs and Work by Tenant.


(a)  Tenant
shall be responsible for all other repairs not expressly reserved to Landlord.
Tenant shall obtain certificates of insurance from any contractors performing
work on the premises as reasonably required by Landlord, Laura Realty Company
and/or the City of New York.


(b)  Tenant
shall submit in advance to Landlord details of plans for any work which will be
reviewed by Landlord, and is reasonably acceptable to Landlord shall be
submitted to CapGen, CHP Inc. Food Professionals, Inc. SETCO, LRC and the City
of New York for consent. Tenant shall not begin such work or any other
renovation or work without the prior written reasonable consent. of Landlord,
Setco, LRC, and the City of New York. Upon receipt of such consents, Tenant may
commence the work provided that such work is material in conformance with the
approved scope work and is performed in compliance with all applicable laws and
codes.


(c)  Tenant at
its cost shall have the right to place, construct and maintain interior signs
and, subject to Landlord’s reasonable consent, exterior signs on the premises
and the Building in compliance with all applicable laws, codes and governmental
regulations.


(d)  Tenant
further agrees that it will maintain the premises at its own expense in a clean,
orderly and sanitary condition, free of insects, rodents, vermin, and other
pests; and that it will not permit undue accumulation of garbage, trash,
rubbish or other refuse, but will remove the same at its own expense and will
keep such refuse in proper containers within the interior of the premises until
called for to be removed.


Insurance. Tenant at its sole
cost and expense, shall provide and keep in force comprehensive general
liability insurance against claims for bodily injury, death or property damage
occurring in or about the premises, operation and control of the premises,
including, but not limited to contractual liability in connection with the
indemnification of Landlord, in a combined
single event of not less than $ 2,000,000.00 (Two million dollars.) Such
Insurance shall be provided by an insurance company or Company’s licensed to do
business in the State of New York and reasonably acceptable to Landlord. Tenant
shall cause Landlord to be named as an additional insured on said liability
insurance and shall provide Landlord with a certificate evidencing such
coverage. Landlord shall maintain fire, casualty and extended risk insurance
coverage on the Building. Landlord represents and warrants that at all times
during the term hereof it will maintain such insurance in full force and
effect.


Miscellaneous. It is
understood and agreed that all prior understandings and agreements between the
parties hereto are merged in this instrument, which alone fully and completely
expresses their agreement, with neither party relying upon any statement or
representation made by the other which is not embodied in these instruments.
These instruments may not be changed or terminated orally. The terms,
covenants, and conditions of this rental agreement shall be binding upon, and
inure to the benefit of each of the parties hereto, their heirs, personal
representatives, successors and assigns, and shall run with the land. Whenever
used herein, the singular number shall include the plural, the plural the singular
and the use of any gender shall be applicable to all genders. At the request of
either party, and at the expense of the requesting party, both parties shall
execute recordable instruments evidencing this rental agreement.


Notices. All notices required
hereunder shall be sent by certified mail, return receipt requested, or by
recognized overnight delivery service to the following: To Landlord: at 10101-C
Avenue D, Brooklyn, NY 11236. To Tenant: 21211 Nordhoff Street, Chatsworth,
California, 91311.


Waiver of Jury Trial. THE
LANDLORD AND THE TENTANT WAIVE ALL RIGHTS TO A TRIAL BY JURY IN ANY ACTION,
COUNTERCLAIM, OR PROCEEDING BASED UPON, OR RELATED TO, THE SUBJECT MATTER OF
THIS RENTAL AGREEMENT. THIS WAIVER APPLIES TO ALL CLAIMS AGAINST ALL









 



PARTIES TO SUCH ACTIONS AND
PROCEEDINGS, INCLUDING PARTIES WHO ARE NOT PARTIES TO THIS RENTAL AGREEMENT.
THIS WAIVER IS KNOWINGLY, INTENTIONALLY, AND INVOLUNTARILY MADE BY THE TENANT
AND THE TENANT ACKNOWLEDGES THAT NEITHER THE LANDLORD, NOR ANY PERSON ACTING ON
BEHALF OF THE LANDLORD HAS MADE ANY REPRESENTATIONS OF FACT TO INDUCE THIS
WAIVER OF TRIAL BY JURY OR IN ANY WAY MODIFY OR NULLIFY ITS EFFECTS.


IN WITNESS WHEREOF, the
parties hereto have caused this rental agreement to be executed, and their
respective seals affixed thereto, as of the date first above written.


	
  Capstone Turbine Corporation

  
	
   

  
	
  By

  	
  /s/ John R
  Tucker

  	
   

  	
  Date:

  	
  12/01/05

  
	
   

  	
  John R. Tucker,
  CEO and President

  
	
   

  
	
  CapGen CHP, Inc.

  
	
   

  
	
   

  
	
  By:

  	
  /s/ Dennis Lane

  	
   

  	
  Date:

  	
  12/06/05

  
	
   

  	
  Dennis Lane,
  Vice President

  



 









 



Addendum 1 to the Commercial Lease between CapGen CHP, Inc and Capstone
Turbine Corporation


This addendum (“Addendum”) to
the commercial lease effective October 15, 2005 between CapGen CHP, Inc (signed
in December, 2005) herein called Lessor, and Capstone Turbine Corporation,
herein called Lessee, is entered into for the purpose of changing the monthly
rent to accommodate additional square footage as follows:


Rent Paragraph of the lease is revised from:


Rent.   During the term of this Lease
agreement, Tenant agrees to pay to Landlord for the premises, the following
sums:


	
  Years 1 and 2 

  	
  (10/15/05 - 10/14/07) 

  	
   

  	
  $8,375.00 per month

  
	
  Years 3 and 4

  	
  (10/15/07 - 10/14/09)

  	
   

  	
  $8,850 00 per month

  
	
  Year 5

  	
  (10/15/09 - 10/14/10)

  	
   

  	
  $9,250 00 per month

  



 


(Tenant shall also have three
(3) individual one year options to extend this lease for year 6 at $9,250 00
per month, year 7 and year 8 at $ 9.750 00 per month)


TO:


Rent  
During the term of this Lease agreement, Tenant agrees to pay to
Landlord for the premises, the following sums:


	
  Year 1

  	
  (10/15/05 - 09/30/06)

  	
   

  	
  $8,375 00 per month

  	
   

  
	
  Year 2

  	
  (10/01/06 - 10/14/07)

  	
   

  	
  $45,850 00 per month

  	
   

  
	
  Years 3 and 4

  	
  (10/15/07 - 10/14/09)

  	
   

  	
  $ 47,250 00 per month

  	
   

  
	
  Year 5

  	
  (10/15/09 - 10/14/10)

  	
   

  	
  $48,250 00 per month

  	
   

  



 


(Tenant shall also have three
(3) individual one year options to extend this lease for year 6 at $ 49,250 00
per month, year 7 and year 8 at
$ 51,500 00 per month)


Assignment and Subletting  Paragraph of the lease is revised
from:


Assignment and Subletting  Tenant
shall not have the right to assign this agreement or sub-lease or to sublet all
or any portion of the rental premises, without Landlord’s consent which shall
not be unreasonably withheld or delayed.


TO:


Assignment and Subletting Tenant shall not have the right to assign this agreement or sub-lease
or to sublet all or any portion of the rental premises,
without Landlord’s consent which shall not be reasonably withheld or delayed.  Because of the multiple occupancies and
tenants within the building and their respective usage and utilization of the
building, and Tenant’s overlap of those adjoining occupancy spaces, additional
documents and/or amendments to this lease may be required by the
Landlord and Tenant in the future.


 









 



 


Use of Premises Paragraph of the lease is revised from:


Use of Premises  Tenant
shall use the premises for and as non-retail office space.  Tenant shall not change the use of the
premises without the prior written consent of the Landlord which shall not be
unreasonebly withheld or delayed.   No hazardous waste or hazardous material
shall be stored, disposed of or used on the premises.  Tenant agrees to comply with all applicable
zoning and other laws and regulations, and provide and install at its own
expense any additional equipment or alterations required to comply with all
such laws and regulations as required from time to time.  Tenant further covenants and agrees (1) to use
the premises in a manner which does not interfere with the rights of quiet
enjoyment of any other tenants of the building and which is not a nuisance, and
(ii) not to make any objectionable use of the premises to generate any
objectionable odor therefrom.  
Notwithstanding the portioning Landlord represents premises to have a
valid Certificate of Occupancy for Tenant’s use of this premise.


TO:


Use of
Premises  Tenant shall use the premises for office space
(approximately 5,000 sf), warehousing (approximately 17,500 sf), manufacturing
and light component assembly work (approximately 25,000 sf), for an approximate
aggregate total of 47,500 square feet. 
Tenant shall not change the use of the premises without the prior
written consent of the Landlord which shall not be unreasonably withheld or
delayed.   No hazardous waste or
hazardous material shall be stored, disposed of or used on the premises.  Tenant agrees to comply with all applicable
zoning and other laws and regulations, and provide and install at its own
expense any additional equipment or alterations required to comply with all
such laws and regulations as required from time to time.  Tenant further covenants and agrees (1) to
use the premises in a manner which does not interfere with the rights of quiet
enjoyment of any other tenants of the building and which is not a nuisance, and
(ii) not to make any objectionable use of the premises to generate any
objectionable odor therefrom. Notwithstanding the portioning Landlord
represents premises to have a valid Certificate of Occupancy for Tenant’s use
of this premise.


Signed
this 27 day of September 2006


	
  

  	
  LESSEE:

  CAPSTONE TURBINE CORPORATION

  	
   

  	
   

  	
  LESSOR: 

  CAPGEN CHP, INC,

  
	
  BY:

  	
  /s/ Mark Gilbreth

  	
   

  	
  BY:

  	
  /s/ Dennis Lane

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  NAME:

  	
  Mark Gilbreth

  	
   

  	
  NAME

  	
  Dennis Lane

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TITLE:  

  	
  President
  & CEO/COO

  	
   

  	
  TITLE:  

  	
  Vice President

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  DATE:

  	
  9/27/06

  	
   

  	
  DATE:

  	
  9/27/06