COMMERCIAL LEASE
TABLE OF CONTENTS
Preamble
ARTICLE 1. TERM OF LEASE
1.01 Original Term
1.02 Extended Term
1.03 Holding Over
1.04 Landlord's Inability to Deliver Possession
1.05 Termination for Failure
ARTICLE 2. RENT
2.01 Security Deposit
2.02 Minimum Rent
2.03 Late Charge
2.04 Rental Increase
ARTICLE 3. USE OF PREMISES
3.01 Permitted Use
3.02 Insurance Hazards
3.03 Waste or Nuisance
3.04 Compliance With Laws
ARTICLE 4. TAXES AND UTILITIES
4.01 Utilities
4.02 Personal Property Taxes
4.03 Real Property Taxes
ARTICLE 5. ALTERATIONS AND REPAIRS
5.01 Condition of Premises
5.02 Maintenance by Landlord
5.03 Maintenance by Tenant
5.04 Maintenance of Plate Glass
5.05 Alterations and Liens
5.06 Inspection by Landlord
5.07 Surrender of Premises
ARTICLE 6. INDEMNITY AND INSURANCE
6.01 Hold-Harmless Clause
6.02 Public Liability and Property Damage
ARTICLE 7. SIGNS AND TRADE FIXTURES
7.01 Installation and Removal of Trade Fixtures
7.02 Unremoved Trade Fixtures
7.03 Signs
ARTICLE 8. DESTRUCTION OF PREMISES
8.01 Landlord's Election to Repair or Terminate
8.02 Insurance Proceeds
ARTICLE 9. CONDEMNATION
9.01 Total Condemnation
ARTICLE 10. DEFAULT, ASSIGNMENT, AND TERMINATION
10.01 Prohibition Against Subletting or Assignment
10.02 Subordination
10.03 Default Defined
10.04 Termination of Lease and Recovery of Damages
10.05 Landlord's Right to Continue Lease in Effect
10.06 Landlord's Right to Relet
10.07 Landlord's Right to Cure Tenant Defaults
10.08 Cumulative Remedies
10.09 Waiver of Breach
ARTICLE 11. MISCELLANEOUS
11.01 Force Majeure-Unavoidable Delays
11.02. Attorney's Fees
11.03 Notices
11.04 Binding on Heirs and Successors
11.05 Partial Invalidity
11.06 Sole and Only Agreement
11.07 Time of Essence
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Preamble
This lease is made and entered into on June 5, 1998, by and between DANIEL O.
DAVIS and ROBBIN H. DAVIS ("landlord") and ZAP POWER SYSTEMS, a California
Corporation ("Tenant"). It is understood by parties hereto, that Tenant has
leased and been in possession of approximately 1/2 the property since August 1,
1997 and has paid rent in full for each month to date.
Landlord, for and in consideration of the rent to be paid by Tenant and
of the covenants and provisions to be kept and performed by Tenant under this
lease, hereby leases to Tenant, and Tenant agrees to lease from Landlord, the
following: the real property commonly known as 111 Morris Street, Sebastopol,
California, together with the warehouse and office space and parking space now
existing thereon and all improvements now existing. The term "Premises" as used
in this lease shall mean all of the Real Property, the structures known as 111
Morris Street and all of the improvements thereto.
ARTICLE 1
TERM OF LEASE
Original Term
Section 1.01. This lease for the property shall be for a term of (3)
years, commencing at 12:01 A.M. on June 1, 1998 ("Commencement Date"), and
ending at 12:01 A.M. on June 1, 2001 ("Original Term"), unless terminated
earlier pursuant to the provisions of this lease. The Tenant understands and
agrees that possession of 111 Morris Street shall be delivered by Landlord June
1, 1998 subject to the provisions of this lease. Regardless of the date of
Possession, the Commencement date of this lease shall be June 1, 1998.
Extended Term
Section 1.02. In the event Tenant is not then in default under this
lease, Tenant shall have the option and right to extend the Original Term of
this lease for one period of (3) years commencing on expiration of the Original
Term. In the event Tenant is not then in default under this lease, Tenant shall
have the option and right to extend this lease for one additional period of
three (3) years commencing on expiration of the first three (3) year Extended
Term. If Tenant elects to extend the term of this lease, Tenant must give
landlord written notice of Tenant's election to extend at least sixty (60) days
before expiration of the previous term. During the Extended Term of this lease,
if any, Landlord and Tenant shall be bound by all of the obligations, covenants,
and agreements of this lease except that Tenant shall have no right to further
extend the term of this lease beyond or after expiration of the two three (3)
year Extended Terms granted under this section. References throughout this lease
to "the term of this lease" shall include both the Original Term and the
Extended Term, if any, unless otherwise indicated.
Holding Over
Section 1.03. In the event Tenant holds over and continues in
possession of the Premises after expiration of the Original Term (when Tenant
has not validly exercised its option to extend the term of the lease in
accordance with Section 1.02) or after expiration of the Extended Term (when
Tenant has validly exercised its option to extend the term of the lease in
accordance with Section 1.02), Tenant's continued occupancy of the Premises
shall be considered a month-to-month tenancy subject to all the terms and
conditions of this lease.
Landlord's Inability to Deliver Possession
Section 1.04. If Landlord is for any reason unable to deliver
possession of the Premises to Tenant on the dates of Possession set forth in
Section 1.01 of this lease, this lease shall not be void or voidable nor shall
Landlord be liable to Tenant for any loss or damage resulting from failure to
deliver possession to Tenant so long as Landlord has exercised, and continues to
exercise, reasonable diligence to deliver possession of the Premises to Tenant.
No rent shall, however, accrue or become due from Tenant to Landlord under this
lease until the actual physical possession of the Premises is delivered, or the
right to actual unrestricted physical possession of the Premises under this
lease is tendered by Landlord to Tenant. Furthermore, the term of this lease
shall not be extended by Landlord's inability to deliver possession of the
Premises to Tenant on the dates of Possession set forth in Section 1.01.
Termination for Failure of Possession
Section 1.05. Notwithstanding any provision of Section 1.04 of this
lease, if Landlord for any reason fails to deliver actual physical possession of
the Premises, or fails to tender actual unrestricted physical possession of the
Premises under this lease, to Tenant within one hundred eighty (180) days after
the date for Possession specified in Section 1 .01 of this lease, Tenant may
terminate this lease by giving Landlord written notice of its election to do so.
In the event Tenant elects to so terminate this lease, this lease shall become
null and void as of the date Tenant delivers its written notice of termination
to Landlord, and thereafter neither party to this lease shall be under any
further obligation or liability to the other because of this lease and Landlord
shall return to Tenant any consideration received from Tenant pursuant to or for
execution of this lease. If Tenant elects to terminate this lease in accordance
with the provisions of this section, it shall give written notice of its
election to terminate to Landlord not later than five (5) days after the dates
specified for Possession in Section 1.01 of this lease.
ARTICLE 2
RENT
Section 2.01. Tenant has, contemporaneously with the execution of this
lease and in addition to the minimum cash rental for the first month of the term
hereof, deposited with Landlord the sum of five hundred dollars ($500.00) which
constitutes the balance for the remainder of the building, receipt of which is
hereby acknowledged by Landlord, said sum being hereinafter referred to as the
"Deposit Amount". The Deposit Amount shall be held by Landlord as security for
the faithful performance by Tenant of all the terms, covenants and
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conditions of this lease by Tenant to be kept and performed during the term
hereof, including payment of rent, repair of damages to the premises caused by
Tenant, and to clean the premises upon termination. If at any time during the
term of this lease any of the rent herein reserved shall be overdue and unpaid,
or any other sum payable to Tenant to Landlord hereunder shall be overdue and
unpaid, then Landlord may at its option (but Landlord shall not be required to),
apply any portion of the Deposit Amount to the payment of any such overdue rent
or other sum. In the event of the failure of Tenant to keep and perform all of
the terms, covenants and conditions of this lease to be kept and performed by
Tenant then, at its option, Landlord may, after terminating this lease, apply
the entire Deposit Amount, or so much thereof as may be necessary, to compensate
Landlord for all loss or damage sustained or suffered by Landlord due to such
breach on the part of Tenant. Should the entire Deposit Amount, or any portion
thereof, be applied by Landlord for the payment of overdue rent or other sums
due and payable to Landlord by Tenant hereunder, then Tenant shall, upon the
written demand of Landlord, forthwith remit to Landlord a sufficient amount in
cash to restore said security to the original Deposit Amount; the Tenant's
failure to do so within five (5) days after receipt of such demand shall
constitute a breach of this lease. If the claim of the Landlord upon the deposit
is only for defaults in payment of rent, then any remaining portion of the
deposit shall be returned to Tenant no later than two (2) weeks after the date
the Landlord receives possession of the premises. Where the claim of Landlord
upon the deposit includes amounts reasonably necessary to repair damages to the
premises caused by the Tenant or to clean the premises (not to include
reasonable wear and tear), then any remaining portion of the deposit shall be
returned to the Tenant no later than thirty (30) days from the date the Landlord
receives possession of the premises.
Upon termination of the Landlord's interest in the demised premises, Landlord
shall within a reasonable time, do one of the following acts, either of which
shall relieve the Landlord of further liability with respect to the deposit:
(1) Transfer the portion of the deposit remaining after any lawful deductions to
the Landlord's successor in interest, and thereafter notify the Tenant by
personal delivery or certified mail of the transfer, of any claims made against
the deposit, and of the transferee's name and address.
(2) Return the portion of the deposit remaining after any lawful deductions to
the Tenant.
Minimum Rent
Section 2.02. Tenant agrees to pay to Landlord a fixed minimum rental
for the use and occupancy of the Premises (the "Minimum Rent"). The amount of
Minimum Rent payable for each month during the Original Term shall be two
thousand ($2,000.00), and the amount of Minimum Rent payable for each month
during the Extended Terms, if any, shall be the same. The Minimum Rent shall be
payable on the first day of each and every month commencing the first day the
premises are made available for possession. The rent shall be payable at the
office of the Landlord at 1051 Todd Road, Santa Rosa, California, or at any
other place or places as Landlord may from time to time designate by written
notice delivered
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to Tenant. Minimum Rent for partial calendar months occurring at the
commencement and termination of the term of this lease shall be prorated
accordingly.
Rental Increase
Section 2.03. The Minimum Rent described above shall be adjusted on
every 1st Anniversary of the commencement date of this lease beginning on June
1, 1999 (including during any extension of this lease) to reflect the average
percentage increase in the Consumer Price Index or All Urban Consumers using
1977 as a base year, as compiled by the Bureau of Labor Statistics of the United
States Department of Labor for the San Francisco-Oakland Metropolitan Area for
the month closest preceding each of the adjustment dates over the same Consumer
Price Index for all Urban Consumers for the base reference month immediately
preceding the commencement of this lease. The Minimum Rent as adjusted on each
of the adjustment dates shall be the rent payable by Tenant to Landlord monthly
for the use and occupancy of the premises until the next adjustment date;
provided, however, in no event shall any adjustment result in a decrease in the
Minimum Rent to a sum less than the Minimum Rent payable for each month of the
Original Term.
Late Charges
Section 2.04. Tenant acknowledges that late payment of rent may cause
Landlord to incur costs and expenses, the exact amount of such costs being
extremely difficult and impractical to fix. Such costs may include, but are not
limited to, processing and accounting expenses, late charges that may be imposed
on Landlord by terms of any loan secured by the property, costs for additional
attempts to collect rent, and preparation of notices. Therefore, if any
installment of rent due from Tenant is not received by Landlord within five (5)
business days after the date due, Tenant shall pay to Landlord an additional sum
of ten percent (10%) of the amount due as a late charge, which shall be deemed
additional rent. The parties agree that this late charge represents a fair and
reasonable estimate of the costs that Landlord may incur by reason of Tenant's
late payments. Acceptance of any late charge shall not constitute a waiver of
Tenant's default with respect to the past due amount, or prevent Landlord from
exercising any other rights and remedies under this agreement, and as provided
by law.
ARTICLE 3
USE OF PREMISES
Permitted Use
Section 3.01. During the term of this lease (including the Original
Term and the Extended Term, if any), the Premises shall be used for the
exclusive purpose of operating and conducting a solar energy and environmental
equipment sales and production facility, Including bicycles, scooters and other
equipment for uses normally incident to that purpose, and for no other purpose.
Tenant shall not use or permit the Premises to be used for any other purpose,
without the prior written consent of Landlord. In conducting the business
specified in this section in and on the Premises, Tenant shall sell any
merchandise and render any services that are customarily sold and rendered by
the operators of similar businesses.
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Insurance Hazards
Section 3.02. Tenant shall not commit or permit the commission of any
acts on the Premises nor use or permit the use of the Premises in any manner
that will increase the existing rates for or cause the cancellation of any fire,
liability, or other insurance policy insuring the Premises or the improvements
on the Premises. Tenant shall, at its own cost and expense, comply with any and
all requirements of Landlord's insurance carriers necessary for the continued
maintenance at reasonable rates of fire and liability insurance policies on the
Premises and the improvements on the Premises.
Waste or Nuisance
Section 3.03. Tenant shall not commit or permit the commission by
others of any waste on the Premises; Tenant shall not maintain, commit, or
permit the maintenance or commission of any nuisance as defined in Civil Code
Section 3479 on the Premises; and Tenant shall not use or permit the use of the
Premises for any unlawful purpose.
Compliance With Laws
Section 3.04. Tenant shall at Tenant's own cost and expense comply with
all statutes, ordinances, regulations, and requirements of all governmental
entities, both federal and state and county or municipal, [including those
requiring capital improvements to the Premises,] relating to Tenant's use and
occupancy of the Premises whether those statutes, ordinances, regulations, and
requirements are now in force or are subsequently enacted. The judgment of any
court of competent jurisdiction, or the admission by Tenant in a proceeding
brought against Tenant by any government entity, that Tenant has violated any
such statute, ordinance, regulation, or requirement shall be conclusive as
between Landlord and Tenant and shall constitute grounds for termination of this
lease by Landlord. The Landlord shall be responsible for any hazardous waste
which is discovered on subject premises and which is proven to have existed at
the commencement of this lease.
ARTICLE 4
TAXES AND UTILITIES
Utilities
Section 4.01. Tenant shall pay for all utilities and services furnished
to or used by it, including, without limitation, gas, electricity, water,
telephone service, and trash collection. Tenant shall make all arrangement for
such services and shall pay all connection charges and shall hold Landlord
harmless from any liability for charges for said service.
Personal Property Taxes
Section 4.02. Tenant shall pay before they become delinquent all taxes,
assessments, and other charges levied or imposed by any governmental entity on
the furniture, trade fixtures, appliances, etc. brought on the Premises by
Tenant.
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Real Property Taxes
Section 4.03. Landlord shall pay all real property taxes and
assessments levied or assessed against the premises during the term of this
lease.
ARTICLE 5
ALTERATIONS AND REPAIRS
Condition of Premises
Section 5.01. Tenant accepts the Premises, as well as the Improvements
indicated and agreed on as per plan, in their present condition or as planned to
be made, and stipulates with Landlord that the Premises and Improvements are in
good, clean, safe, and tenantable condition as of the date of this lease. Tenant
further agrees with and represents to Landlord that the Premises have been
inspected by Tenant, that it has received assurances acceptable to Tenant by
means independent of Landlord or any agent of Landlord of the truth of all facts
material to this lease, and that the Premises are being leased by Tenant as a
result of its own inspection and investigation and not as a result of any
representations made by Landlord or any agent of Landlord except those expressly
set forth in this lease.
Maintenance by Landlord
Section 5.02. Landlord shall, at its own cost and expense, maintain in
good condition and repair the structural elements of the Building , landscaping,
walkways, driveways, trash enclosures, and painting and maintenance of exterior
walls. For purposes of this section, "structural elements" shall mean the
exterior roof, exterior walls (except show window glass), structural supports,
and foundation of the Building. Landlord shall not be liable for any damages to
Tenant or the property of Tenant resulting from Landlord's failure to make any
repairs required by this section unless written notice of the need for those
repairs has been given to Landlord by Tenant and Landlord has failed for a
period of 30 days after receipt of the notice, unless prevented by causes not
the fault of the Landlord, to make the needed repairs. Notwithstanding anything
in this section to the contrary, Tenant shall promptly reimburse Landlord for
the full cost of any repairs made pursuant to this section required because of
the negligence or other fault, other than normal and proper use, of Tenant or
its employees or agents or subtenants, if any.
Landlord and its agents shall have the right to enter the Premises at
all reasonable times after giving Tenant twenty-four (24) hours notice (and at
any time during an emergency) for the purpose of inspecting them or to make any
repairs required to be made by Landlord under this lease.
Maintenance by Tenant
Section 5.03. Except as otherwise expressly provided in Section 5.02 of
this lease, Tenant shall at its own cost and expense keep and maintain all
portions of the Premises and all Improvements located on the Premises in good
order and repair and in as safe and clean a
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condition as they were when received by Tenant from Landlord, reasonable wear
and tear excepted.
Maintenance of Plate Glass
Section 5.04. Tenant shall, at its own cost and expense, repair and
replace any plate glass in any show window on the Premises that is broken
regardless of any cause. Furthermore, Tenant shall at Tenant's own cost and
expense at all times during the term of this lease carry adequate plate glass
insurance on the glass in all show windows on the Premises to perform the repair
and replacement requirements of this section. Should Tenant fail to repair or
replace any glass broken in a show window or fail to maintain adequate plate
glass insurance on the glass in show windows on the Premises, Landlord may
replace or repair the broken glass or secure that insurance and Tenant shall
promptly reimburse Landlord for the cost of the repair, replacement, or
insurance. In addition, Tenant shall pay Landlord interest on those costs at the
rate of ten percent (10%) per year from the date the costs were incurred by
Landlord to the date they are reimbursed to Landlord by Tenant.
Alterations and Liens
Section 5.05. Tenant shall not make or permit any other person to make
any alterations to the Premises or to any Improvements on the Premises without
the prior written consent of Landlord. Landlord shall not unreasonably withhold
this consent. Tenant shall keep the premises free and clear from any and all
liens, claims, and demands for work performed, materials furnished, or
operations conducted on the Premises at the instance or request of Tenant.
Furthermore, any and all alterations, additions, improvements, and fixtures,
except furniture and trade fixtures, made or placed in or on the Premises by
Tenant or any other person shall on expiration or earlier termination of this
lease, become the property of Landlord and remain on the Premises. Landlord
shall have the option, however, on expiration or termination of this lease, of
requiring Tenant, at Tenant's sole cost and expense, to remove any or all such
alterations, additions, improvements, or fixtures from the Premises.
Inspection by Landlord
Section 5.06. Tenant shall permit Landlord or Landlord's agents,
representatives, or employees to enter the Premises at all reasonable times
after giving Tenant twenty-four (24) hours notice for the purpose of inspecting
the Premises to determine whether Tenant is complying with the terms of this
lease, for the purpose of doing other lawful acts that may be necessary to
protect Landlord's interest in the Premises, or for the purpose of performing
Landlord's duties under this lease.
Surrender. of Premises
Section 5.07. On expiration or earlier termination of this lease,
Tenant shall promptly surrender and deliver the Premises to Landlord in as good
condition as they are now at the date of this lease, excluding reasonable wear
and tear, and repairs required to be made by Landlord under this lease.
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ARTICLE 6
INDEMNITY AND INSURANCE
Hold-Harmless Clause
Section 6.01. Tenant agrees to protect, indemnify, and save Landlord
harmless from and against any and all liability to third parties resulting from
Tenant's occupation and use of the Premises, specifically including, without
limitation, any claim, liability, loss, or damage arising by reason of:
(a) The death or injury of any person or persons, including Tenant or
any person who is an employee or agent of Tenant, or by reason of the damage to
or destruction of any property, including property owned by Tenant or any person
who is an employee or agent of Tenant, and caused or allegedly caused by either
the condition of the Premises, or some act or omission of Tenant or of some
agent, contractor, employee, servant, subtenant, or concessionaire of Tenant on
the Premises;
(b) Any work performed on the Premises or materials furnished to the
Premises at the instance or request of Tenant or any agent or employee of
Tenant; and
(c) Tenant's failure to perform any provision of this lease or to
comply with any requirement of law or any requirement imposed on Landlord or the
leased premises by any duly authorized governmental agency or political
subdivision.
Public Liability and Property Damage Insurance
Section 6.02. Tenant shall, at Tenant's expense, maintain and keep in
force during the term of this lease a policy of comprehensive public liability
insurance insuring Tenant and Landlord against any liability arising out of the
ownership, use, occupancy or maintenance of the Premises and all areas
appurtenant thereto. Such insurance shall be in an amount of not less than One
Million Dollars ($1,000,000), combined single limit. If Tenant shall fail to
procure and maintain said insurance Landlord may, but shall not be required to,
procure and maintain the same, but at the expense of Tenant. Not more frequently
than each three (3) years, if in the opinion of Landlord or its insurance broker
the amount of public liability and property damage insurance coverage of the
time is not adequate, Tenant shall increase the insurance coverage as required
by either Landlord, its lender or insurance broker.
(a) Fire Insurance. In order that the business of Tenant may continue
with as little interruption as possible, Tenant shall, during the full term of
this lease and any renewals or extensions thereof, maintain at Tenant's own cost
and expense an insurance policy issued by a reputable company authorized to
conduct insurance business in California insuring for their full insurable value
all fixtures and equipment and, to the extent possible, all merchandise that is,
at any time during the term of this lease or any renewal or extension thereof,
in or on said premises against damage or destruction by fire, theft, or the
elements.
(b) Insurance Policy Form. The bodily injury liability insurance and
property damage insurance to be maintained by Tenant shall be carried in the
joint names of Landlord
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and Tenant. Such policy shall be subject to Landlord's approval as to form and
substance and shall expressly provide that the policy shall not be canceled or
altered without thirty (30) days prior written notice to Landlord. Upon
insurance thereof, such policy or a duplicate or a certificate thereof, shall be
delivered to Landlord for retention by it. The insurance policy to be maintained
by Tenant shall be issued by good and responsible insurance companies authorized
to do business in the state of California.
ARTICLE 7
SIGNS AND TRADE FIXTURES
Installation and Removal of Trade Fixtures
Section 7.01. Tenant shall have the right at any time and from time to
time during the term of this lease, at Tenant's sole cost and expense, to
install and affix in, to, or on the Premises any items, herein called "trade
fixtures," for use in Tenant's trade or business that Tenant may, in Tenant's
sole discretion, deem advisable. Any and all trade fixtures that can be removed
without structural damage to the Premises or any building or improvements on the
Premises shall, subject to Section 7.02 of this lease, remain the property of
the Tenant and may be removed by Tenant at any time before the expiration or
earlier termination of this lease, provided Tenant repairs any damage caused by
the removal.
Unremoved Trade Fixtures
Section 7.02. Any trade fixtures described in this Article that are not
removed from the Premises by Tenant within thirty (30) days after the expiration
or earlier termination regardless of cause, of this lease shall be deemed
abandoned by Tenant and shall automatically become the property of Landlord as
owner of the real property to which they are affixed.
Signs
Section 7.03. Tenant may erect, maintain, permit, and from time to time
remove any signs at Tenant's sole cost and expense, in or about the Premises
that Tenant may deem necessary or desirable, provided that any signs erected or
maintained by Tenant and authorized by Landlord, and shall comply with all
requirements of any governmental authority with jurisdiction.
ARTICLE 8
DESTRUCTION OF PREMISES
Landlord's Election to Repair or Terminate
Section 8.01. Should the premises or the building on said premises be
destroyed in whole or in part from any cause, Landlord may at Landlord's option
either:
(a) Continue this lease in full force and effect by repairing and
restoring, at Landlord's own cost and expense, said premises to their former
condition if that can be accomplished within ninety (90) days from the date of
destruction, or
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(b) Terminate this lease by giving Tenant written notice of such
termination.
Insurance Proceeds
Section 8.02. Any insurance proceeds received by Landlord because of
the total or partial destruction of said premises of the building on said
Premises shall be the sole property of Landlord free from any claims of Tenant,
and may be used by Landlord for whatever purpose Landlord may desire.
Should Landlord elect to repair and restore the premises to their
former condition following partial or full destruction of said Premises or the
building on said premises:
(a) Tenant shall not be entitled to any damage for any loss or
inconvenience sustained by Tenant as a result of the making of such repairs and
restoration, unless caused by negligence of Landlord or Landlord's agents;
(b) Landlord shall have full right to enter said Premises and take
possession of so much of said Premises, including the whole of said Premises, as
may be reasonably necessary to enable Landlord promptly and efficiently to carry
out the work of repair and restoration; and
(c) The rent payable by Tenant to Landlord for the part destroyed shall
be abated to the extent and for the time Tenant is prevented from using that
portion of the premises.
ARTICLE 9
CONDEMNATION
Section 9.01. If title to all or any part of the Premises be taken for
any public or quasi-public use under any statute or by right of eminent domain,
or by private purchase in lieu thereof, Landlord may terminate this Lease as of
the date that possession of said premises or part thereof, be taken. All
compensation awarded or paid upon such taking, including the full fair market
value of the property taken and damage for injury, if any, to the remainder,
shall belong solely to and be the property of Landlord, whether such
compensation be awarded or paid as compensation for diminution in value of the
leasehold or to the fee; provided, however, that Landlord shall not be entitled
to any award made to Tenant for loss of good will to Tenants business or for
cost of removal of stock and fixtures.
If by reason of such taking, a reasonable amount of the premises
reasonably suitable for Tenant's continued occupancy for the uses and purposes
for which the premises are leased does not remain, Tenant may terminate this
lease as of the date possession of said premises or part thereof be taken. If
neither party terminates this lease by reason of a partial taking, the lease
shall nevertheless terminate unless the parties reach agreement as to the rent
payable hereunder for the remaining portions of the premises prior to the date
possession of the portion of the premises is taken. Each party agrees to execute
and deliver to the other all instruments that may be required to effectuate the
provisions hereof.
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ARTICLE 10
DEFAULT, ASSIGNMENT, AND TERMINATION
Restriction Against Subletting or Assignment
Section 10.01. Tenant shall not encumber, assign, otherwise transfer
this lease, any right or interest in this lease, or any right or interest in the
Premises or any of the improvements that may now or hereafter be constructed or
installed on the Premises without first obtaining the express written consent of
Landlord. Tenant shall not sublet the Premises or any part of the Premises or
allow any other person, other than Tenant's agents, servants, and employees to
occupy the Premises or any part of the Premises without the prior written
consent of Landlord. A consent by Landlord to one assignment, one subletting, or
one occupation of the Premises by another person shall not be deemed to be a
consent to any subsequent assignment, subletting, or occupation of the Premises
by another person. Any encumbrance, assignment, transfer, or subletting without
the prior written consent of Landlord, whether voluntary or involuntary, by
operation of law or otherwise, is void and shall, at the option of Landlord,
terminate this lease. The consent of Landlord to any assignment of Tenant's
interest in this lease or the subletting by Tenant of the Premises or parts of
the Premises shall not be unreasonably withheld.
Subordination
Section 10.02. Tenant agrees that this lease shall be subordinate to
any mortgages or trust deeds that are now or may hereafter be placed upon said
premises and to any and all advances made or to be made thereunder, and to the
interest thereon and all renewals, replacements and extensions thereof, provided
the mortgagee or beneficiary named in said mortgages or trust deed shall agree
to recognize the lease of the Tenant in the event of foreclosure if the Tenant
is not in default. If any mortgagee or beneficiary elects to have this lease
superior to its mortgage, or deed of trust by notice to Tenant, then this lease
shall be deemed superior to the lien of any such mortgage or trust deed, whether
this lease is dated or recorded before or after said mortgage or trust deed.
Default Defined
Section 10.03. The occurrence of any of the following shall constitute
a material default and breach of this lease by Tenant:
(a) Any failure by Tenant to pay the rent or to make any other payment
required to be made by Tenant under this lease when that failure continues for
ten (10) days after written notice of the failure is given by Landlord to
Tenant.
(b) The abandonment or vacation of the Premises by Tenant (the absence
of Tenant from or the failure by Tenant to conduct business on the Premises for
a period in excess of fourteen (14) consecutive days shall constitute an
abandonment or vacation for purposes of this lease.)
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(c) A failure by Tenant to observe and perform any other provision of
this lease to be observed or performed by Tenant, when that failure continues
for thirty (30) days after written notice of Tenant's failure is given by
Landlord to Tenant; provided, however, that if the nature of that default is
such that it cannot reasonable be cured within said thirty (30) day period,
Tenant shall not be deemed to be in default if Tenant commences that cure within
the said thirty (30) day period and thereafter diligently prosecutes it to
completion.
(d) The making by Tenant of any general assignment for the benefit of
creditors; the filing by or against Tenant of a petition to have Tenant adjudged
a bankrupt or of a petition for reorganization or arrangement under any law
relating to bankruptcy (unless, in the case of a petition filed against Tenant,
it is dismissed within sixty (60) days); the appointment of a trustee or
receiver to take possession of substantially all of Tenant's assets located at
the Premises or of Tenant's interest in this lease, when possession is not
restored to Tenant within thirty (30) days; or the attachment, execution, or
other judicial seizure of substantially all of Tenant's assets located at the
Premises or of Tenant's interest in this lease, when that seizure is not
discharged within thirty (30) days.
Termination of Lease and Recovery of Damages
Section 10.04. In the event of any default by Tenant under this lease,
in addition to any other remedies available to Landlord at law or in equity,
Landlord shall have the right to terminate this lease and all rights of Tenant
hereunder by giving written notice of the termination. No act of Landlord shall
be construed as terminating this lease except written notice given by Landlord
to Tenant advising Tenant that Landlord elects to terminate the lease. In the
event Landlord elects to terminate this lease, Landlord may recover from Tenant:
(a) The worth at the time of award of any unpaid rent that had been
earned at the time of termination of the lease;
(b) The worth at the time of award of the amount by which the unpaid
rent that would have been earned after termination of the lease until the time
of award exceeds the amount of rental loss that Tenant proves could have been
reasonably avoided;
(c) The worth at the time of award of the amount by which the unpaid
rent for the balance of the term of this lease after the time of award exceeds
the amount of rental loss that Tenant proves could be reasonably avoided; and
(d) Any other amount necessary to compensate Landlord for all detriment
proximately caused by Tenant's failure to perform its obligations under this
lease.
The term "rent" as used in this section shall mean the Minimum Rent,
the Percentage Rent, and all other sums required to be paid by Tenant pursuant
to the terms of this lease. As used in subsections (a) and (b) above, the "worth
at the time of award" is computed by allowing interest at the rate of ten
percent (10%) per year. As used in subsection (c), the "worth at the time of
award" is computed by discounting that amount at the discount rate of the
Federal Reserve Bank of San Francisco at the time of award plus one percent
(1%).
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Landlord's Right to Continue Lease in Effect
Section 10.05. (a) If Tenant breaches this lease and abandons the
Premises before the natural expiration of the term of this lease, Landlord may
continue this lease in effect by not :terminating Tenant's right to possession
of the Premises, in which event Landlord shall be entitled to enforce all its
rights and remedies under this lease, including the right to recover the rent
specified in this lease as it becomes due under this lease. For as long as
Landlord does not terminate this lease, Tenant shall have the right to assign or
sublease the Premises with the Landlord's prior written consent. Landlord shall
not unreasonably withhold consent.
(b) No act of Landlord, including but not limited to Landlord's entry
on the Premises, efforts to relet the Premises, or maintenance of the Premises,
shall be construed as an election to terminate this lease unless a written
notice of that intention is given to Tenant or unless the termination of this
lease is decreed by a court of competent jurisdiction.
Landlord's Right to Relet
Section 10.06. In the event Tenant breaches this lease, Landlord may
enter on and relet the Premises or any part of the Premises to a third party or
third parties for any term, at any rental, and on any other terms and conditions
that Landlord in its sole discretion may deem advisable, and shall have the
right to make alterations and repairs to the Premises. Tenant shall be liable
for all of Landlord's costs in reletting, including but not limited to
remodeling costs required for the reletting. In the event Landlord relets the
premises, Tenant shall pay all rent due under and at the times specified in this
lease, less any amount or amounts actually received by Landlord from the
reletting.
Landlord's Right to Cure Tenant Default
Section 10.07. If Tenant breaches or fails to perform any of the
covenants or provisions of this lease, Landlord may, but shall not be required
to, cure Tenant's breach. Any sum expended by Landlord, with the ten maximum
legal rate of interest, shall be reimbursed by Tenant to Landlord with the next
due rent payment under this lease.
Cumulative Remedies
Section 10.08. The remedies granted to Landlord in this Article shall
not be exclusive but shall be cumulative and in addition to all remedies now or
hereafter allowed by law or provided in this lease.
Waiver of Breach
Section 10.09. The waiver by Landlord of any breach by Tenant of any of
the provisions of this lease shall not constitute a continuing waiver or waiver
of any subsequent breach by Tenant either of the same or another provision of
this lease.
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ARTICLE 11
MISCELLANEOUS
Force Majeure-Unavoidable Delays
Section 11.01. If the performance of any act required by this lease to
be performed by either Landlord or Tenant is prevented or delayed by reason of
an act of God, strike, lockout, labor troubles, inability to secure materials,
restrictive governmental laws or regulations, or any other cause except
financial inability that is not the fault of the party required to perform the
act, the time for performance of the act will be extended for a period
equivalent to the period of delay, and performance of the act during the period
of delay will be excused. However, nothing contained in this section shall
excuse the prompt payment of rent by Tenant as required by this lease or the
performance of any act rendered difficult solely because of the financial
condition of the party required to perform the act.
Attorney's Fees
Section 11.02. If any litigation is commenced between the parties to
this lease concerning the Premises, this lease, or the rights and duties of
either in relation to the Premises or to this lease, the party prevailing in
that litigation shall be entitled to, in addition to any other relief that may
be granted in the litigation, a reasonable sum as and for its attorney's fees in
that litigation that are determined by the court in that litigation or in a
separate action brought for that purpose.
Notices
Section 11.03. Except as otherwise expressly provided by law, any and
all notices or other communications required or permitted by this lease or by
law to be served on or given to either party to this lease by the other party to
this lease shall be in writing and shall be deemed duly served and given when
personally delivered to the party to whom they are directed, or in lieu of
personal service, when deposited in the United States mail, first-class postage
prepaid, addressed to Tenant at 11 7 Morris Street, Sebastopol, California 95472
or to Landlord at 111 Morris Street, Sebastopol, California 95472. Either party,
Tenant or Landlord, may change its address for the purpose of this section by
giving written notice of that change to the other party in the manner provided
in this section.
Binding on Heirs and Successors
Section 11.04. This lease shall be binding on and shall inure to the
benefit of the heirs, executors, administrators, successors, and assigns of
Landlord and Tenant, but nothing in this section shall be construed as a consent
by Landlord to any assignment of ????
Partial Invalidity
Section 11.05. If any provision of this lease is held by a court of
competent jurisdiction to be either invalid, void, or unenforceable, the
remaining provisions of this lease shall remain in full force and effect
unimpaired by the holding.
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Sole and Only Agreement
Section 11.06. This instrument constitutes the sole and only agreement
between Landlord and Tenant respecting the Premises, the leasing of the Premises
to Tenant, or the lease term created under this lease, and correctly sets forth
the obligations of Landlord and-Tenant to each other as of its date. Any
agreements or representations respecting the Premises or their leasing by
Landlord to Tenant not expressly set forth in this instrument are null and void.
Time of Essence
Section 11.07. Time is expressly declared to be of the essence in this
lease.
Executed on 6/5/98, at Sebastopol, CA, California.
/s/ Daniel O. Davis
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Daniel O. Davis (Landlord)
/s/ Robbin H. Davis
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Robbin H. Davis (Landlord)
/s/ James McGreen
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ZAP POWER SYSTEMS (Tenant)
by
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