EXHIBIT 99.5
LEASE
THIS LEASE (this "Lease") is made as of the 30th day of January, 2004
(the "Effective Date"), by and between PHOENIX 7, LLC, an Arizona limited
liability company ("Landlord"), and ZILA, INC., a Delaware corporation
("Tenant").
RECITALS:
WHEREAS, Xxxx and Xxxxx Xxxxx (collectively, "Hedge"), as purchaser,
and Tenant, as seller, entered into that Purchase Agreement dated (based upon
the latest signature) as of November 7, 2003, that First Amendment to Purchase
Agreement dated as of October 22, 2003 (but delivered concurrently with the
Purchase Agreement), and that Second Amendment to Purchase Agreement dated
(based upon the latest signature) as of November 24, 2003 (collectively, the
"Purchase Agreement"), pursuant to which Tenant agreed to sell to Hedge and
Hedge agreed to purchase from Tenant the Premises, as defined below; and
WHEREAS, Hedge assigned all of Hedge's right, title and interest under
the Purchase Agreement to Landlord prior to the closing of the transaction
contemplated by the Purchase Agreement; and
WHEREAS, Landlord, as the successor to Hedge, and Tenant have closed or
are closing the transaction contemplated by the Purchase Agreement on or about
the Effective Date; and
WHEREAS, in connection with the closing of the transaction contemplated
by the Purchase Agreement, Landlord and Tenant also desire to enter into this
Lease on the terms and conditions set forth below.
AGREEMENT:
In consideration of the mutual covenants, conditions and agreements
hereinafter contained, and other good and valuable consideration, receipt of
which is hereby acknowledged and confessed, Landlord and Tenant agree as
follows:
1. PREMISES, TERM AND POSSESSION.
(a) Premises. Landlord hereby leases to Tenant and Tenant hereby
leases from Landlord, for the term and upon the conditions and agreements set
forth below in this Lease, the real property described on Exhibit A, together
with all buildings and improvements located on such real property, and all
easements, rights and appurtenances relating to such real property
(collectively, the "Premises"). The street address of the primary building on
the Premises is 0000 Xxxxx 0xx Xxxxxx, Xxxxxxx, Xxxxxxx.
(b) Initial Term. The initial term of this Lease (the "Initial
Term") shall commence on the Effective Date (the "Commencement Date"), and shall
expire at the end of the day on January 31, 2009. The term "Lease Year" as used
herein shall mean a period of twelve (12) successive months, except that, if the
Commencement Date is a day other than the first day of a
calendar month, the first Lease Year of the Initial Term shall also include the
initial fractional month, together with the next succeeding twelve (12) calendar
months, and the first Lease Year of the Term shall expire, unless otherwise
provided herein, at the close of business on the last day of the calendar month
in which occurs the first anniversary of the Commencement Date.
(c) Renewal Terms. Tenant shall have two (2) separate consecutive
options to extend the term of this Lease (hereinafter referred to individually
as a "Renewal Term", collectively as the "Renewal Terms", and together with the
Initial Term, collectively, the "Term") for a period of five (5) years each.
Tenant shall exercise its renewal options by notifying Landlord in writing of
its election to exercise each such option to renew this Lease at least six (6)
months prior to the expiration of the Initial Term or the first Renewal Term, as
the case may be. However, Tenant shall not be entitled to exercise its option as
to any of the Renewal Terms if it is in default in the payment of any sum due
under this Lease (beyond any grace, notice or cure provisions applicable
thereto) at the time of the exercise of such option. During the Renewal Terms,
Base Rent shall accrue at the rate set forth in Section 2(a) for the applicable
Renewal Term and all other terms set forth herein shall continue to apply in the
same manner as during the Initial Term.
(d) Surrender. Upon the termination or expiration of this Lease,
whether by lapse of time or otherwise, Tenant shall at once surrender possession
of the Premises to Landlord and remove all of Tenant's trade fixtures, furniture
and property, along with any alterations, additions or improvements of which
Landlord requests removal in the manner provided herein. Tenant shall surrender
the Premises to Landlord at the end of the term "broom clean" and in the same
condition as on the Commencement Date, ordinary wear and tear excepted.
(e) Holdover. If Tenant holds over after the expiration of this
Lease, Tenant shall become a tenant from month to month only, upon all of the
terms of this Lease and at the same rental rate in effect immediately prior to
the expiration.
2. RENT.
(a) Base Rent. Tenant shall pay to Landlord during the Initial
Term and, if applicable, during each Renewal Term, at the office of Landlord or
at such other place as Landlord may designate, base rent in the amount set forth
below in this Section 2(a) ("Base Rent"), plus applicable rental tax, in advance
on the first day of each calendar month. If the first and/or the last months of
the Lease term are not full months, Base Rent shall be prorated on the basis of
the actual number of days in the month.
LEASE ANNUAL BASE MONTHLY
PERIOD YEAR RENT BASE RENT
------ ---- ---- ---------
Initial Term 1 $163,740.00 $13,645.00
2 $167,014.80 $13,917.90
3 $170,355.09 $14,196.26
4 $173,762.19 $14,480.18
LEASE ANNUAL BASE MONTHLY
PERIOD YEAR RENT BASE RENT
------ ---- ---- ---------
5 $177,237.43 $14,769.79
First Renewal Term 6 $180,782.17 $15,065.18
7 $184,397.81 $15,366.48
8 $188,085.76 $15,673.81
9 $191,847.47 $15,987.29
10 $195,684.41 $16,307.03
Second Renewal Term 11 $199,598.09 $16,633.17
12 $203,590.05 $16,965.83
13 $207,661.85 $17,305.15
14 $211,815.08 $17,651.25
15 $216,051.38 $18,004.28
(b) Additional Rent. All charges and expenses in addition to Base
Rent that are required to be paid by Tenant under this Lease, whether or not so
designated, shall be deemed as "Additional Rent" and shall be payable in
addition to Base Rent.
(c) Late Charges and Interest. Any amount due from Tenant to
Landlord that is not paid within fifteen (15) calendar days of when due shall
bear interest thereafter at 10% per annum or the highest lawful rate, whichever
is less (the "Default Rate"). In addition, any rent or other payment not paid
within fifteen (15) calendar days of its due date shall be subject to a late
charge of $750 or 5% of the late payment amount, whichever is less, which amount
represents the additional costs and burdens of special handling.
3. SECURITY DEPOSIT.
There shall be no security deposit required in connection with this
Lease.
4. USE.
(a) Permitted Use. Tenant may use and occupy the Premises for
office, manufacturing and other purposes related to its business of providing
healthcare and biotechnology products for dental/medical professionals and
consumers, and for any other purpose allowed by applicable zoning laws. Except
as allowed in the previous sentence, Tenant
shall not use the Premises for any other purpose whatsoever without Landlord's
prior written consent, which Landlord shall not unreasonably withhold.
(b) Restrictions. Tenant shall not:
(i) In any manner materially deface or injure the
Premises;
(ii) Create any material nuisance upon the Premises;
(iii) Commit or suffer to be committed any material waste
upon the Premises; or
(iv) Violate in any material manner any recorded
restriction affecting the Premises.
(c) Compliance with Laws. Tenant, at Tenant's expense, shall
comply with all present and future federal, state and local laws, ordinances,
orders, rules and regulations (collectively, "Laws"), and shall procure all
permits, certificates, licenses and other authorizations required by applicable
Law relating to Tenant's business or Tenant's use or occupancy of the Premises
or Tenant's activities on the Premises. Tenant shall make all reports and
filings required by applicable Laws.
(d) Environmental Matters. Tenant at all times shall comply with
all federal, state and local laws, rules or regulations relating to
environmental matters (collectively, "Environmental Laws"), including, without
limitation, water quality, air quality, and handling, storage, treatment or
disposal of solid, special or hazardous wastes, hazardous substances, hazardous
materials, and petroleum products (collectively, "Hazardous Substances").
5. TAXES.
(a) Taxes Imposed on Tenant. Tenant shall pay, prior to
delinquency, all taxes assessed against or levied upon Tenant's fixtures,
furnishings, equipment and other personal property located in or upon the
Premises. Tenant shall cause the fixtures, furnishings, equipment and other
personal property to be assessed and billed separately from the real property of
which the Premises form a part. In the event any or all of Tenant's fixtures,
furnishings, equipment and other personal property shall be assessed and taxed
with the real property, Tenant shall pay to Landlord Tenant's share of the taxes
within thirty (30) days after delivery to Tenant by Landlord of a statement in
writing setting forth the amount of the taxes applicable to Tenant's personal
property.
(b) Excise Taxes. Tenant shall, simultaneously with the payment of
any sums required to be paid under this Lease as Base Rent, Additional Rent or
otherwise, reimburse Landlord for any sales, use, rental, transaction privilege
or other excise tax imposed or levied on, or measured by, the amount paid.
(c) Real Estate Taxes. Tenant shall pay all real estate taxes and
assessments relating to the Premises (referred to collectively in this paragraph
as "taxes") directly to the appropriate taxing authorities on or prior to the
date such taxes are due, and shall provide written evidence of
payment to Landlord within thirty (30) days after such payment. Landlord agrees
to notify Tenant of any substantial increase in taxes within fifteen (15) days
after receipt of the tax xxxx or other evidence of any increase or proposed
increase in taxes, and Tenant shall have the absolute right (unless Landlord
shall in good faith agree to contest such tax increase) to contest or resist, in
good faith and by appropriate proceedings, such increased taxes, or to contest
the validity of the amount or rate of any increase or proposed increase in the
taxes, or any factor used in the calculation or determination of any increase or
proposed increase in taxes. Landlord agrees to render to Tenant all assistance
reasonably necessary in connection therewith. Landlord further agrees to make
reasonable efforts to have the taxing authority send all tax bills for the
Premises directly to Tenant; however, if Landlord is unsuccessful, Landlord will
forward each such tax xxxx to Tenant within ten (10) days of Landlord's receipt
thereof. Without limiting the preceding sentence, Landlord also agrees to
forward to Tenant promptly all documents, correspondence, notices and other
materials received by Landlord and relating in any way to the taxes applicable
to the Premises. Any rebates, refunds or abatements of taxes received by
Landlord subsequent to payment of the taxes applicable to the Premises by Tenant
shall be refunded to Tenant within ten (10) days of receipt thereof by Landlord.
The taxes applicable to the Premises for any partial tax years at the beginning
and end of the Term shall be prorated so that Tenant, in its capacity as a
tenant, pays only that portion allocable to that portion of the tax year falling
within the Term. With respect to any taxes applicable to the Premises accruing
prior to the Commencement Date of this Lease, Tenant, in its capacity as then
owner of the Premises, shall be obligated to pay all such real estate taxes and
assessments on or before the date that any such taxes or assessments become
delinquent. With respect to any taxes applicable to the Premises accruing after
the end of the Term, all such real estate taxes and assessments shall be the
obligation of Landlord.
6. OPERATING COSTS AND UTILITIES.
(a) Operating Costs. Except as otherwise set forth herein, Tenant
shall pay all costs and expenses incurred in operating, maintaining and
repairing the Premises, including, without limitation, public liability and
property damage insurance; fees for permits and licenses; and service and
maintenance contracts.
(b) Utilities. Tenant will be responsible for maintaining, at
Tenant's expense, all utilities to or within the Premises or which serve the
Premises. Tenant shall be solely responsible for and shall promptly pay all
charges for utilities serving the Premises.
7. REPAIR AND MAINTENANCE.
Tenant, at its sole cost, shall maintain the interior and exterior of
the Premises, the improvements thereon, and the structural and non-structural
portions of the Premises, all in good condition and repair, including, but not
limited to, the foundations; the floor slab; the exterior walls and the roof
(including the roof membrane); plate glass; doors; ceilings and interior walls;
all heating, air conditioning, ventilation, electrical and plumbing systems
serving the Premises; parking lot sweeping, sealing, patching and restriping;
driveways; sidewalks; fences; skylights (if any); signs; landscaping; and all
other maintenance items relating to the Premises. With respect to all capital
expenditures, replacements, and/or improvements (to the HVAC or otherwise) paid
for by Tenant and having a useful life extending beyond the termination or
expiration of this Lease, the cost of such capital expenditures, replacements
and/or improvements shall be
amortized over their useful life, and Landlord shall reimburse Tenant promptly
upon termination or expiration of the Lease for the then remaining, unamortized
portion of all such capital expenditures, replacements and/or improvements.
8. ALTERATIONS AND PERSONAL PROPERTY.
Tenant shall have the right, without Landlord's consent, to make (i)
any alterations, additions or improvements that do not diminish the fair market
value of the Premises and are completed in compliance with all applicable
building and zoning codes and other Laws, and (ii) any non-structural
alterations, additions or improvements involving, in the aggregate, expenditures
of less than $200,000, which are completed in compliance with all applicable
building and zoning codes and other Laws. Except as set forth in the previous
sentence, Tenant shall not make or suffer to be made any alterations, additions
or improvements to the Premises without the prior written consent of Landlord,
which Landlord shall not unreasonably withhold. Any alterations, additions or
improvements to the Premises, but not including movable furniture and trade
fixtures, shall at the termination or expiration of this Lease or of Tenant's
right to possession become a part of the realty and belong to Landlord. All
alterations, additions or improvements to the Premises shall be made by Tenant
at Tenant's sole cost and expense, without any obligation of Landlord to
reimburse Tenant therefor (provided that the foregoing shall not limit
Landlord's obligation to reimburse Tenant for improvements expressly
contemplated by Section 7 in the manner set forth therein). Tenant shall not
permit any mechanic's or materialmen's lien to stand against the Premises for
any labor or materials provided to the Premises by any contractor or other
person hired or retained by Tenant. All alterations and improvements shall be
constructed in a good workmanlike manner, in accordance with applicable laws and
codes. Upon the expiration or sooner termination of the term of this Lease or of
Tenant's right to possession, Tenant shall, upon demand by Landlord, at Tenant's
sole cost and expense, forthwith remove any alterations, additions or
improvements made by Tenant, designated by Landlord to be removed, and Tenant
shall forthwith at its sole cost and expense, repair any damage to the Premises
caused by such removal and restore the Premises to their condition at the
commencement of the Lease.
9. REPRESENTATIONS, WARRANTIES AND COVENANTS.
(a) Landlord's Representations and Warranties. Landlord represents
and warrants as follows:
(i) Landlord is a limited liability company, duly
organized, validly existing and in good standing under the laws of the State of
Arizona.
(ii) Landlord has the power and authority to execute and
deliver this Lease and to consummate the transactions contemplated by this
Lease.
(iii) The execution, delivery and performance of this Lease
by Landlord have been duly authorized by all requisite limited liability company
action on behalf of Landlord. The Lease constitutes the legal, valid and binding
obligations of Landlord, enforceable in accordance with the terms hereof.
(iv) The execution, delivery and performance of this Lease
will not: (A) conflict with, be inconsistent with, or result in any breach or
default of any of the terms, covenants, conditions or provisions of any
indenture, mortgage, deed of trust, instrument, document, agreement or contract
of any kind or nature to which Landlord is a party or by which Landlord is
bound; or (B) violate any provisions of applicable law or any applicable
regulation, order, writ, injunction or decree of any court or governmental
authority applicable to Landlord; or (C) violate any provisions of Landlord's
Articles of Organization or Operating Agreement.
(v) No authorization, consent, approval, licenses,
exemption, filing, qualification or registration with any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, is or will be necessary in connection with the execution, delivery and
performance of the terms of this Lease by Landlord.
(b) Tenant's Representations and Warranties. Tenant represents and
warrants as follows:
(i) Tenant is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
(ii) Tenant has the power and authority to execute and
deliver this Lease and to consummate the transactions contemplated by this
Lease.
(iii) The execution, delivery and performance of this Lease
by Tenant have been duly authorized by all requisite corporate action on behalf
of Tenant. The Lease constitutes the legal, valid and binding obligations of
Tenant, enforceable in accordance with the terms hereof.
(iv) The execution, delivery and performance of this Lease
will not: (A) conflict with, be inconsistent with, or result in any breach or
default of any of the terms, covenants, conditions or provisions of any
indenture, mortgage, deed of trust, instrument, document, agreement or contract
of any kind or nature to which Tenant is a party or by which Tenant is bound; or
(B) violate any provisions of applicable law or any applicable regulation,
order, writ, injunction or decree of any court or governmental authority
applicable to Tenant; or (C) violate any provisions of Tenant's Certificate of
Incorporation or Bylaws.
(v) No authorization, consent, approval, licenses,
exemption, filing, qualification or registration with any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, is or will be necessary in connection with the execution, delivery and
performance of the terms of this Lease by Tenant.
10. INSURANCE.
(a) Tenant's Insurance. Throughout the term of this Lease Tenant
shall maintain "all risk" property insurance, including building and machinery
comprehensive form, in an amount equal to 100% of the replacement value of the
buildings and improvements on the Premises, along with all of Tenant's fixtures,
equipment and other personal property located on the Premises, together with
such other insurance as may be required by Landlord's lender or by any
government agency. All proceeds of Tenant's policy of property insurance on
Tenant's personal
property shall be payable to Tenant. All proceeds of policies of insurance
procured by Tenant for the buildings and improvements or otherwise for the
benefit of Landlord (as required herein) shall be payable to Landlord or, at
Landlord's written request, to a lender of Landlord with a lien upon the
Premises. During the term of this Lease, the Tenant shall, at Tenant's expense,
maintain commercial general liability insurance against claims for personal
injury, death or property damage occurring in, upon or about the Premises with a
combined single limit or equivalent not less than $3,000,000, and workers'
compensation insurance as provided by law. Tenant's policies of liability
insurance shall name Landlord as an additional insured. Tenant's coverage may be
pursuant to a single policy or multiple policies, including umbrella coverage.
Upon request by Landlord, Tenant shall provide to Landlord certificates of
insurance or copies of the applicable policies of insurance evidencing the
required coverages. Each policy shall contain an endorsement prohibiting
cancellation or non-renewal without at least 30 days prior notice to Landlord.
(b) Insurance Waiver. Tenant hereby waives any right to recovery
from Landlord and Landlord hereby waives any right of recovery from Tenant for
any loss or damage (including consequential loss) to the extent that insurance
proceeds are available to cover such loss.
11. INDEMNIFICATION. Tenant shall defend, indemnify and hold Landlord, its
affiliates and subsidiaries, and each of the foregoing's present and future
officers, directors, employees and agents (the "Indemnified Parties") harmless
from any and all claims, demands, liabilities, fines, penalties, losses, costs
and expenses (including reasonable attorneys' fees) arising from (i) Tenant's
use of the Premises or the conduct of its business or from any activity, work,
omission, or thing done, permitted or suffered by Tenant in or about the
Premises, or (ii) any breach or default in the performance of this Lease by
Tenant, or (iii) any act or negligence of Tenant, or of its agents or employees
after the date hereof, except in all cases to the extent arising from the
negligence or willful misconduct of any of the Indemnified Parties. Tenant, as a
material part of the consideration to Landlord, hereby assumes all risk of
damage to property or injury to persons, in, upon, or about the Premises from
any cause, and Tenant hereby waives all claims in respect thereof against
Landlord, except to the extent caused by the negligence or willful misconduct of
any of the Indemnified Parties.
12. DESTRUCTION OF PREMISES.
If the Premises are wholly or "substantially" destroyed or damaged by
fire or other casualty, either Landlord or Tenant shall have the option, in its
sole discretion, to terminate this Lease upon thirty (30) days notice to the
other. The term "substantially destroyed" or "substantially damaged" as used in
this Section, shall mean that the Premises have been damaged to the extent that
the cost of restoration of the Premises will exceed a sum constituting 50% of
the total replacement cost of the Premises. If the Premises are not
substantially damaged or if the Premises are substantially or wholly damaged,
but neither party terminates, Landlord shall endeavor to restore the Premises
with reasonable diligence, upon receipt of and to the extent of the proceeds
from Tenant's property insurance. Landlord shall have no obligation to restore
or to replace any of Tenant's fixtures, furnishings, equipment or personal
property. In any case where Landlord undertakes to restore the Premises, if
Landlord cannot complete such restoration within 150 days after the damage
occurs, Tenant shall have the option to terminate this Lease upon thirty (30)
days notice to Landlord given at any time prior to actual completion of all
restoration. Landlord need not commence repairs until insurance proceeds are
available. Proceeds of insurance payable with respect to a fire or other
casualty shall be received and held by Landlord. In any case where either party
elects to terminate the Lease pursuant to a casualty described in this
paragraph, Landlord shall retain all insurance proceeds with respect to the
Premises as its own property. If neither party terminates this Lease as provided
above, this Lease shall continue in full force and effect, but rent shall xxxxx
entirely (for any total destruction) or equitably (for any partial destruction,
taking into account the effect of the damage on Tenant and its use of the
Premises) until the restoration is substantially complete. The provisions of
this Lease shall govern when this Lease shall be terminable as a result of a
fire or casualty, and no other rule or statute on the subject shall apply.
13. CONDEMNATION.
In the event of any taking of all or any material portion of the
Premises, either Landlord or Tenant shall have the right to terminate this Lease
upon thirty (30) days written notice to the other party. If neither party elects
to so terminate this Lease, then Landlord shall restore the Premises to the
extent practicable to their condition prior to the taking, and if the taking has
materially affected Tenant's use of the Premises, then the Base Rent shall be
reduced on an equitable basis, taking into account the relative value of the
portion taken as compared to the portion remaining and the effect of the taking
on Tenant and its use of the Premises. All awards or compensation for any taking
of any part of the Premises shall be the sole property of Landlord.
Notwithstanding anything to the contrary contained herein, Tenant shall be
entitled to receive any portion of an award of compensation relating to damage
to or loss of trade fixtures or other personal property belonging to Tenant, and
Landlord shall be under no obligation to restore or replace Tenant's
furnishings, fixtures, equipment and personal property. For the purposes of this
Section, a voluntary sale or conveyance in lieu of condemnation shall be deemed
an appropriation or a taking under the power of eminent domain.
14. ASSIGNMENT AND SUBLETTING; SALE BY LANDLORD.
(a) Tenant Transfer. Tenant shall be entitled, without the consent
of Landlord, to assign, hypothecate or transfer this Lease, or sublet the
Premises or any part thereof, to an entity or individual that owns or controls
Tenant, is owned or controlled by Tenant, or is under common ownership or
control with Tenant. Except as set forth in the preceding sentence, Tenant shall
not, either voluntarily or by operation of law, assign, hypothecate or transfer
this Lease, or sublet the Premises or any part thereof, or permit the Premises
or any part thereof to be occupied by anyone other than Tenant or Tenant's
employees, without Landlord's prior written consent, which Landlord shall not
unreasonably withhold. It shall not be reasonable for Landlord to withhold its
consent if the proposed assignee or subtenant has sufficient financial resources
to give Landlord reasonable comfort (based upon a comparison to the financial
status of tenants, subtenants or assignees in other transactions approved by
Landlord, or in similar such transactions generally) that it will be able to (i)
make all Base Rent, Additional Rent and other payments of any nature required of
Tenant hereunder, (ii) abide by all other terms and conditions of this Lease
applicable to Tenant, and (iii) fulfill all obligations of Tenant under this
Lease arising from and after the time of the contemplated assignment. Upon the
completion of an assignment or subletting for which Landlord's consent is
required hereunder and has been obtained, Tenant automatically shall be relieved
from any liability or obligation accruing
hereunder from and after the date of the assignment or subletting, and Landlord
shall look solely to the assignee or subtenant for any such liability or
obligation.
(b) Sale of Property. In the event of a sale or conveyance by
Landlord of the Premises, Landlord shall be relieved of all future liability
upon any of the covenants or conditions, express or implied, in favor of Tenant,
and Tenant shall look solely to Landlord's successor in interest; provided,
however, that the foregoing shall not relieve Landlord of any obligation arising
prior to such sale or conveyance by Landlord. This Lease shall not be affected
by any sale, and Tenant shall attorn to the successor in interest. If any
security deposit has been made by Tenant, the successor in interest shall be
obligated to return it in accordance with the terms hereof and Landlord shall be
discharged from any further liability in reference thereto.
15. ESTOPPEL CERTIFICATES.
Landlord and Tenant agree at any time and from time to time, upon not
less than fifteen (15) days prior written request by either of them to the
other, to execute, acknowledge and deliver to the requesting party a statement
in writing certifying that this Lease is unmodified and in full force and effect
(or, if there have been modifications), and the date to which the rental and
other charges have been paid in advance, if any, and whether or not any
violations are in existence as of the date of said statement, it being intended
that any such statement may be relied upon by any prospective purchaser of the
fee, or leasehold, or mortgagee or assignee of any mortgage upon the fee or
leasehold interest in the Premises, or by any assignee.
16. COVENANT OF QUIET ENJOYMENT. Landlord covenants and agrees that Tenant
shall have complete, peaceful and quiet enjoyment of the Premises and all
appurtenances belonging thereto without hindrance, molestation or ejection by
Landlord or anyone claiming by or through Landlord throughout the Term or until
this Lease is earlier terminated as provided herein, subject only to the express
terms, covenants and conditions contained in this Lease.
17. TENANT DEFAULTS; LANDLORD'S REMEDIES.
(a) Events of Default. The following shall constitute events of
default:
(i) Tenant's failure to pay rent or any other amount due
under this Lease, if such failure continues for at least five (5) more days
after written notice from Landlord.
(ii) Tenant's failure to perform any other obligation
under this Lease within thirty (30) days after written notice from Landlord of
non-performance; provided, however, that if the breach does not involve health
or safety and is of such a nature that it cannot be cured within thirty (30)
days, the thirty (30) day deadline shall be extended to such reasonable period
of time as is necessary through the use of diligent efforts to cure.
(b) Remedies. Upon the occurrence of an event of default,
Landlord, at any time thereafter without further notice or demand may exercise
any one or more of the following remedies concurrently or in succession:
(i) Terminate Tenant's right to possession of the
Premises by legal process or otherwise, with or without terminating this Lease,
and retake exclusive possession of the Premises.
(ii) From time to time relet all or portions of the
Premises, using reasonable efforts to mitigate Landlord's damages. In connection
with any reletting, Landlord may relet for a period less than or extending
beyond the term of this Lease and may make alterations or improvements to the
Premises without releasing Tenant of any liability. Upon a reletting of all or
substantially all of the Premises, Landlord shall be entitled to recover all of
its then prospective damages for the balance of the Lease term measured by the
difference between amounts payable under this Lease and the anticipated net
proceeds of reletting. In no event shall Tenant be entitled to receive any
amount representing the excess of avails of reletting over amounts payable
hereunder.
(iii) From time to time recover accrued and unpaid rent and
damages arising from Tenant's breach of the Lease, regardless of whether the
Lease has been terminated, together with applicable late charges and interest at
the Default Rate.
(iv) Recover all reasonable attorneys' fees and other
expenses incurred by Landlord in connection with enforcing this Lease,
recovering possession and collecting amounts owed.
(v) Perform the obligation(s) on Tenant's behalf and
recover from Tenant, upon demand, the entire amount expended by Landlord plus
Default Interest.
(vi) Terminate Tenant's right to possession of the
Premises by any lawful means, in which case this Lease shall terminate and
Tenant shall immediately surrender possession of the Premises to Landlord. In
such event, Landlord shall be entitled to recover from Tenant all damages
incurred by Landlord by reason of Tenant's default, including (A) the worth at
the time of the award of the unpaid Base Rent, any Additional Rent and other
charges which Landlord had earned at the time of the termination; (B) the worth
at the time of the award of the amount by which the unpaid Base Rent, any
Additional Rent and other charges which Landlord would have earned after
termination until the time of the award exceeds the amount of such rental loss
that Tenant proves Landlord could have reasonably avoided; (C) the worth at the
time of the award of the amount by which the unpaid Base Rent, any Additional
Rent and other charges which Tenant would have paid for the balance of the Lease
term after the time of award exceeds the amount of such rental loss that Tenant
proves Landlord could have reasonably avoided; and (D) any other amount
necessary to compensate Landlord for all the detriment proximately caused by
Tenant's failure to perform its obligations under the Lease or which in the
ordinary course of things would be likely to result therefrom, including, but
not limited to, any costs or expenses Landlord incurs in maintaining or
preserving the Premises after such default, the cost of recovering possession of
the Premises, expenses in reletting, including necessary renovation or
alteration of the Premises, Landlord's reasonable attorneys' fees and costs and
expert witness fees incurred in connection therewith, and any real estate
commission paid or payable. As used above, the "worth at the time of the award"
is computed by allowing interest on unpaid amounts or by discounting amounts, as
applicable, at the rate of 10% per annum.
(vii) Pursue any other remedies available at law or in
equity.
(c) Remedies Cumulative. All of Landlord's remedies herein are
cumulative and the exercise of any one remedy shall not prevent or limit the
exercise by Landlord of any other remedy.
18. LANDLORD'S DEFAULT; TENANT'S REMEDIES.
(a) Generally. If Landlord shall violate, neglect or fail to
perform or observe any of the representations, covenants, provisions, or
conditions contained in this Lease or in the Purchase Agreement on its part to
be performed or observed, which default continues for a period of more than
thirty (30) days after receipt of written notice from Tenant specifying such
default (a "Default Notice"), or if such default is of a nature to require more
than thirty (30) days for remedy and continues beyond the time reasonably
necessary to cure through the use of diligent efforts, Tenant may, at its option
(in addition to all other rights and remedies provided Tenant at law, in equity
or hereunder), terminate this Lease upon written notice thereof given to
Landlord.
(b) Self-Help and Offset Procedures. In addition to the rights
provided in Section 18(a) above and the other rights available to Tenant at law
or in equity, Tenant shall have the rights:
(i) To correct any or all objections or deficiencies set
forth in a Default Notice, or cause such deficiencies to be corrected by an
independent contractor, and to continue to do so without further notice unless
and until Landlord resumes full performance of its obligations hereunder. Upon
demand by Tenant, Landlord shall pay Tenant an amount equal to all costs, fees
and expenses paid or incurred by Tenant for such operation, maintenance and
repairs plus 10% thereof as an administrative fee together with accrued interest
on the unpaid balance thereof at the rate of 10% per annum from the date paid or
incurred by Tenant until recovered in full.
(ii) To set off any amount expended or damages incurred by
Tenant as a result of such default against the next payments of Base Rent,
Additional Rent, or any other charges coming due under this Lease until
recovered in full.
If such costs are not fully recovered by Tenant at the expiration of the term of
this Lease, Tenant may extend the term of this Lease for such additional time as
is necessary so that it may recover by continuing set off such costs or damages
or otherwise pursue its legal remedies for recovery of any remaining amounts.
(c) Limitation on Landlord's Liability. Anything in this Lease to
the contrary notwithstanding, except as set forth below in this paragraph,
Tenant agrees that Tenant and anyone claiming by, through or under Tenant shall
look solely to the interest and estate of Landlord in the Premises for the
collection of any judgment requiring the payment of money by Landlord in the
event of any default by Landlord under this Lease, and no other assets of the
Landlord, nor Landlord's constituent partners or subpartners, employees,
directors or shareholders shall be subject to levy, execution or other judicial
process for the satisfaction of Tenant's claim. The foregoing exculpation shall
not be applicable in the event of fraud. Further,
in the event of a foreclosure or deed-in-lieu of foreclosure, the foregoing
exculpation shall not apply to and shall not limit Landlord's liability or
obligation to indemnify for any damage, loss, liability, action or cause of
action accruing prior to such foreclosure or deed-in-lieu of foreclosure.
Additionally, the foregoing shall not be deemed to limit Tenant's rights to
obtain injunctive relief or specific performance or to avail itself of any other
right or remedy against Landlord which may be available to Tenant by law or in
equity, or under the terms of this Lease.
19. NOTICES.
All notices to be given by one party to the other under this Lease
shall be in writing, mailed or delivered to each at the address set forth at the
end of this Lease or at a changed address if notice of the change is given to
the other party in writing. Mailed notices shall be sent by United States
certified or registered mail, return receipt requested, postage prepaid. Such
notices shall be deemed to have been received on the third business day
following deposit in the United States mail. Notices sent by hand-delivery or by
confirmed facsimile transmission shall be deemed received the date of delivery
or transmission, as appropriate. Notices sent by a nationally recognized
overnight courier shall be deemed received on the first business day following
mailing. Actual notice shall be no substitute for written notice under any
provision of this Lease.
20. SUBORDINATION.
Landlord expressly reserves the right at any time to place liens and
encumbrances on the Premises, superior in lien and effect to this Lease and the
estate created hereby, and Tenant shall execute upon request subordination
agreements to that effect; provided, however, that the subordination agreement
shall provide that the holder will recognize Tenant's non-disturbance rights,
notwithstanding any foreclosure of the lien or encumbrance.
21. NO EXPRESS OR IMPLIED COVENANT OF CONTINUOUS OPERATION.
Notwithstanding anything contained or set forth in this Lease to the
contrary, nothing set forth in this Lease shall be construed, in any manner
whatsoever, as a covenant of continuous operation on the part of Tenant. In the
event that Tenant elects to cease its business operations at the Premises, such
cessation shall not be deemed to be an Event of Default hereunder, nor shall
such cessation relieve Tenant of any of its liabilities or obligations under and
pursuant to this Lease. If Tenant shall have fully ceased its business
operations at the Premises for a continuous period of thirty (30) days, Landlord
shall have the option of recapturing the Premises by terminating the Lease at
least thirty (30) days advance written notice to Tenant, and upon such
termination, Tenant shall be relieved of and from any and all further liability
or obligation to Landlord under and pursuant to this Lease.
22. GENERAL PROVISIONS.
(a) Force Majeure. If either party to this Lease, as the result of
any (i) strikes, lockouts or labor disputes, (ii) inability to obtain labor or
materials or reasonable substitutes therefor, (iii) acts of God, governmental
action, condemnation, civil commotion, fire or other casualty, or (iv) other
conditions similar to those enumerated in this Section beyond the reasonable
control, other than financial, of the party obligated to perform, fails
punctually to
perform any obligation on its part to be performed under this Lease, then such
failure shall be excused and not be a breach of this Lease by the party in
question, but only to the extent occasioned by such event. If any right or
option of either party to take any action under or with respect to this Lease is
conditioned upon the same being exercised within any prescribed period of time
or at or before a named date, then such prescribed period of time and such named
date shall be deemed to be extended or delayed, as the case may be, for a period
equal to the period of the delay occasioned by any event described above.
(b) Captions. The article captions contained in this Lease are for
convenience only and shall not be considered in the construction or
interpretation of any provision.
(c) Integration. This Lease contains all of the agreements of the
parties hereto with respect to any matter covered or mentioned in this Lease,
and no prior agreement or understanding pertaining to any matter shall be
effective for any purpose. No provision of this Lease may be amended or added to
except by an agreement in writing signed by the parties hereto or their
respective successors in interest.
(d) No Waiver. No waiver by Landlord of any provision of this
Lease or any breach by Tenant hereunder shall be deemed to be a waiver of any
other provision hereof, or of any subsequent breach by Tenant of the same or any
other provision. Landlord's consent to or approval of any act by Tenant
requiring Landlord's consent or approval shall not be deemed to render
unnecessary the obtaining of Landlord's consent to or approval of any subsequent
act of Tenant, whether or not similar to the act so consented to or approved. No
act or thing done by Landlord or Landlord's agent during the term of this Lease
shall be deemed an acceptance of a surrender of the Premises, and no agreement
to accept a surrender shall be valid unless in writing and signed by Landlord.
(e) Access. After providing Tenant with reasonable advance notice,
Landlord shall have the right to enter the Premises either personally or by
designated representative at all reasonable times for the purpose of examination
or inspection, and showing the Premises to prospective purchasers or lessees,
and, during the last 120 days of the term, to post within or on the Premises
signs indicating the availability of the Premises for lease. Notwithstanding the
previous sentence, Landlord shall have the right to enter the Premises without
advance notice and consent of Tenant in case of emergency. Landlord shall not
abuse the right of access or use it to harass Tenant, and shall effect any
inspections in a manner that reduces to the maximum extent reasonably possible
any interference with Tenant's business.
(f) Deadlines. Time is of the essence of this Lease.
(g) Attorneys' Fees. The prevailing party in any dispute shall
have the right to receive its attorneys' fees and costs and expert witness fees
in connection with such dispute. Tenant shall pay all of Landlord's attorneys'
fees in considering any request that requires Landlord's consent.
(h) No Recordation; Memorandum of Lease. This Lease shall not be
recorded. At the request of either party, however, the parties shall complete
and execute a memorandum of lease in form appropriate for recording.
(i) Subordination of Landlord's Lien. Landlord agrees that any
statutory landlord's liens and any rights of distress with respect to the
personal property (trade fixtures, equipment and merchandise) of Tenant from
time to time located within the Premises ("Tenant's Property") automatically
shall be subordinated to the lien of any lender of Tenant having a security
interest in Tenant's Property ("Tenant's Lender"). Landlord further agrees to
execute and deliver such instruments reasonably requested by Tenant's Lender
from time to time to evidence or effect the aforesaid subordination. This Lease
does not grant a contractual lien or security interest to Landlord or in favor
of Landlord with respect to Tenant's Property. Subject to the subordination set
forth above, Landlord shall be entitled to retain any statutory lien that it may
have in Tenant's Property under applicable law.
(j) Severability. A determination by a court of competent
jurisdiction that any provision of this Lease or any part thereof is illegal or
unenforceable shall not cancel or invalidate the remainder of such provision or
this Lease, which shall remain in full force and effect.
(k) Binding Effect. This Lease binds any party who legally
acquires any rights or interest in this Lease from Landlord or Tenant. Landlord
may assign its rights and obligations under this Lease. Tenant may only assign
its rights and obligations under this Lease in accordance with Section 14
hereof.
(l) Third Party Beneficiaries. No party shall be deemed to be a
third party beneficiary to this Lease.
(m) Counterparts. This Lease may be executed in counterparts and,
when all counterpart documents are executed, the counterparts shall constitute a
single binding instrument.
(n) Survival. All representations and warranties of Landlord and
Tenant shall survive the termination of this Lease.
(o) No Other Brokers. Each party represents and warrants to the
other that it has not dealt with any agents, brokers, finders or other parties
who are or may be entitled to any commission or fee with respect to this Lease
or the Premises.
(p) Choice of Law. This Lease and the rights and obligations of
the parties hereto shall be interpreted and construed in accordance with and
governed by the laws of the State of Arizona.
(q) Dispute Resolution. To resolve any Dispute (defined below)
quickly and economically (and particularly, to avoid unnecessary legal fees),
and to preserve their privacy and on-going business relationships, Landlord and
Tenant intend that any Dispute not settled by direct discussions be mediated or
arbitrated in accordance with this Section, except under the extremely limited
circumstances specified below.
(i) Non-binding mediation. If any controversy, claim,
issue or dispute arising out of or relating to this Lease, or any breach
thereof, including without limitation, any claim that this Lease is invalid,
rescinded, voidable, terminable or void ("Dispute"), is not settled by direct
discussions within ten (10) days after notice of the Dispute, the parties agree
first to try in good faith to settle the Dispute by non-binding mediation
administered by the American Arbitration Association ("AAA") under its
Commercial Mediation Rules, with such mediation to be held at a location in
metropolitan Phoenix, Arizona.
(ii) Binding Arbitration. If the Parties fail to settle a
Dispute through mediation, it will be settled by binding arbitration
administered by the AAA under its Commercial Arbitration Rules. Such arbitration
proceeding shall be held at a location in metropolitan Phoenix, Arizona.
Judgment on the award rendered by the Arbitrator(s) may be entered in any court
having jurisdiction thereof.
(iii) Provisional Relief. Nothing in this Section will
prevent either party from applying for (or obtaining) a provisional judicial
remedy regarding any Dispute. Notwithstanding such application, the final
resolution of the Dispute will be mediated or arbitrated under this Section and
failure by either party to comply with any law will not be deemed to waive such
party's rights to mediate or arbitrate under this Section.
(iv) Possession. Nothing in this Section will prevent
either party from prosecuting an unlawful detainer action, to (a) recover
possession of the Premises (and determine the amount of unpaid Base Rent, to the
extent possession depends on determining the amount of unpaid Base Rent); and
(b) seek an amended judgment for damages upon obtaining a default judgment for
possession. In an unlawful detainer action, Tenant agrees not to assert any
counterclaim or cross-complaint; such matter will be mediated or arbitrated
under this Section.
(v) Third Party Action. If there is a pending court
action or special proceeding involving Landlord and/or Tenant, and a third
party, Landlord and Tenant agree that any Dispute between them will still be
mediated or arbitrated under this Section.
(vi) Nonwaiver; Survival. No act (including seeking to
compel arbitration) or omission by either party will waive either party's rights
under this Section. This Section will survive the expiration or earlier
termination of the Term.
(vii) Attorneys' Fees. In any dispute resolution or other
proceeding, including appeal, the party prevailing will receive from the other
all costs, expenses and reasonable attorneys' fees as fixed by the Arbitrator or
court.
(viii) JURY WAIVER. LANDLORD AND TENANT HEREBY WAIVE TRIAL
BY JURY IN ANY COURT ACTION, PROCEEDING OR COUNTERCLAIM, INCLUDING ANY CLAIM OF
INJURY OR DAMAGE AND ANY PROVISIONAL REMEDY. THIS WAIVER WILL EXPRESSLY SURVIVE
THE EXPIRATION OR EARLIER TERMINATION OF THE TERM.
DATED as of the day and year first above written.
LANDLORD: TENANT:
PHOENIX 7, LLC, an Arizona limited liability ZILA, INC., a Delaware corporation
company
By: /s/ Xxxx Xxxxx By: /s/ Xxxxxx X. Xxxxxxx
-------------------------- ------------------------------
Xxxx Xxxxx, its Manager Xxxxxx X. Xxxxxxx its Vice President,
Chief Financial Officer, Treasurer
and Secretary
By: /s/ Xxxxx Xxxxx
--------------------------
Xxxxx Xxxxx, its Manager
Address: Address:
Phoenix 7, LLC Zila, Inc.
0000 Xxxxxxxx Xxxx 0000 Xxxxx 0xx Xxxxxx
Xxxxxxx, XX 00000 Xxxxxxx, XX 00000-0000
Attention: Xx. Xxxx Xxxxx Attention: Xx. Xxxxx Xxxxx, Legal Affairs
Department
