EXHIBIT 10.17
EXECUTION COPY
SUBLEASE
THIS SUBLEASE, dated as of August 25, 1998, is made by and between
DISCOVERY LABORATORIES, INC., a corporation having an address at 0000 Xxxxxx
Xxxx, Xxxxxxxxxx, Xxxxxxxxxxxx 00000, as sublessor ("Sublessor") and MILAN
ENTERTAINMENT, INC., a corporation having an address at 0000 Xxxxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, ENTERTAINMENT MANAGEMENT GROUP, INC., having an address at 000
Xxxx Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000 and XXXXXX XXXXXXX P.C. having
an address at 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, as sublessees
(collectively, the "Sublessees" and each a "Sublessee").
WHEREAS, Sublessor is presently the tenant under an Agreement of Lease
dated as of May 29, 1997 (the "Master Lease," Sublessor represents that a true
copy of the Master Lease is attached hereto as Exhibit A) between 000 Xxxxxxx
Xxxxxx Associates, a California limited partnership, as landlord (the "Lessor")
and Sublessor in connection with the space located at 000 Xxxxxxx Xxxxxx, Xxxxx
0000, Xxx Xxxx, Xxx Xxxx (the "Premises").
WHEREAS, Sublessor desires to lease the Premises to Sublessees and
Sublessees desire to lease the Premises from the Sublessor in accordance with
the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and conditions set forth herein, the
parties agree as follows:
SECTION 1. LEASE OF THE PREMISES. Subject to the consent of the Lessor
and the terms and conditions set forth in this Sublease, Sublessor hereby agrees
to sublease the Premises as is to Sublessees on the terms and conditions set
forth in this Sublease and Sublessees each hereby agrees to sublease from the
Sublessor the Premises as is.
SECTION 2. TERM. The Term of this Sublease shall commence on September
1, 1998 (the "Commencement Date") and end on June 30, 2000 ("Termination Date"),
unless otherwise sooner terminated in accordance with the provisions of this
Sublease. Possession of the Premises, vacant, broom-clean and free of
Sublessor's property, shall be delivered to Sublessees on the commencement of
the Term. In the event the Term
commences on a date other than the Commencement Date, Sublessor and Sublessees
shall execute a memorandum setting forth the actual date of commencement of the
Term. Possession of the Premises ("Possession") shall be delivered to Sublessees
on the commencement of the Term. If for any reason Sublessor does not deliver
Possession to Sublessees on the commencement of the Term, Sublessor shall not be
subject to any liability for such failure, the Termination Date shall not be
extended by the delay, and the validity of this Sublease shall not be impaired,
but Rent shall xxxxx until delivery of Possession. Notwithstanding the
foregoing, if Sublessor has not delivered Possession to Sublessees within sixty
(60) days after the Commencement Date, then at any time thereafter and before
delivery of Possession, Sublessees may give written notice to Sublessor of
Sublessees' intention to cancel this Sublease. Said notice shall set forth an
effective date for such cancellation which shall be at least ten (10) days after
delivery of said notice to Sublessor. If Sublessor delivers Possession to
Sublessees on or before such effective date, this Sublease shall remain in full
force and effect. If Sublessor fails to deliver Possession to Sublessees on or
before such effective date, this Sublease shall be cancelled, in which case all
consideration previously paid by Sublessees to Sublessor on account of this
Sublease shall be returned to Sublessee, this Sublease shall thereafter be of no
further force or effect, and Sublessor shall have no further liability to
Sublessees on account of such delay or cancellation. If Sublessor permits
Sublessees to take Possession prior to the commencement of the Term, such early
Possession shall not advance the Termination Date and shall be subject to the
provisions of this Sublease, including without limitation the payment of Rent
(as such term is defined below).
SECTION 3. AGREEMENT OF SUBLESSOR. Sublessor represents, warrants,
covenants and conditions to Sublessees the following:
(a) Sublessor represents and warrants that it is a corporation
duly organized and validly existing under the laws of the State of Delaware,
with full power and authority to consummate the transactions contemplated
herein.
(b) Sublessor represents and warrants that there are no
actions, suits or proceedings pending or, to the knowledge of Sublessor,
threatened against or affecting it, before or by any governmental authority
which if adversely determined would materially and adversely affect the
Sublessor or impair the ability of Sublessor to execute, deliver and perform its
obligations under this Sublease. Sublessor further represents and warrants that
it is not in default with respect to any order, writ, injunction, decree or
demand of any court or any governmental authority.
(c) Sublessor represents and warrants that it is not a party
to, or bound by, any agreement (oral or written) that restricts or interferes
with its ability to enter into and fully perform its obligations under this
Sublease.
(d) Sublessor warrants and represents to Sublessees that the
Master Lease has not been amended or modified, that Sublessor is not now, and as
of the commencement of the Term hereof will not be, in default or breach of any
of the provisions of the Master Lease, that Sublessor has no knowledge of any
claim by Lessor that Sublessor is in default or breach of any of the
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provisions of the Master Lease; and that Sublessor is not aware of any default
by Lessor under the Master Lease.
(e) Subject to the terms and conditions of this Sublease and
the Master Lease and so long as no Sublessee shall be in default or in breach of
the Sublease beyond any applicable notice and/or cure period, neither Sublessor
nor anyone claiming by or through Sublessor shall interfere with Sublessees'
quiet enjoyment and use of the Premises during the term of this Sublease.
(f) Subject to the terms and conditions of the Master Lease
and so long as no Sublessee shall be in default or in breach of the Sublease
beyond any applicable notice and/or cure period, Sublessor shall not commit any
actions to restrict Sublessees' right to use and occupy the Premises twenty four
hours a day, seven days a week.
(g) Subject to the terms and conditions of the Master Lease
and so long as no Sublessee shall be in default or in breach of the Sublease
beyond any applicable notice and/or cure period, Sublessor shall use reasonable
efforts to cause the Lessor to provide the building directory listings to the
benefit of Sublessees in accordance with Section 66 of the Master Lease.
SECTION 4. AGREEMENT OF SUBLESSEES. Each Sublessee represents,
warrants, covenants and conditions to Sublessor as to itself the following:
(a) Each Sublessee represents and warrants as to itself that
it is a corporation duly organized and validly existing under the laws of the
jurisdiction of its incorporation, with full power and authority to consummate
the transactions contemplated herein.
(b) Each Sublessee represents and warrants as to itself that
there are no actions, suits or proceedings pending or, to the knowledge of such
Sublessee, threatened against or affecting it, before or by any governmental
authority which if adversely determined would materially and adversely affect
such Sublessee or impair the ability of such Sublessee to execute, deliver and
perform its obligations under this Sublease. Each Sublessee further represents
and warrants as to itself that it is not in default with respect to any order,
writ, injunction, decree or demand of any court or any governmental authority.
(c) Each Sublessee represents and warrants as to itself that
it is not a party to, or bound by, any agreement (oral or written) that
restricts or interferes with its ability to enter into and fully perform its
obligations under this Sublease.
(d) Each Sublessee represents and warrants as to itself that
it has reviewed the Master Lease and is familiar with all of the terms and
conditions set
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forth therein. Each Sublessee agrees and acknowledges that all applicable terms
and conditions of the Master Lease are incorporated into and made a part of this
Sublease as if the Sublessees were the lessee thereunder except for Sections 24,
37, 38, the second paragraph of Article 40, 42 (except as otherwise set forth in
this Sublease), 43, 49, 70, 73 and 74.
(e) The obligations of Sublessees to pay Rent hereunder will
be a direct and unconditional, joint and several general obligation of each
Sublessee, and will rank in right of payment at least pari passu with all
unsecured and unsubordinated debt of each Sublessee, whether now or hereafter
outstanding, subject to any bankruptcy, insolvency, reorganization or similar
law.
(f) In the event of a default under the Master Lease of all or
any portion of the Premises which results in the termination of the Master
Lease, or if the Lessor under the Master Lease shall exercise any right to
cancel or terminate such underlying lease, each Sublessee shall, at the option
of the Lessor under the Master Lease, attorn to and recognize such lessor as
"landlord" hereunder and shall, promptly upon the Lessor's request, execute and
deliver all instruments necessary or appropriate to confirm such attornment and
recognition. Each Sublessee hereunder hereby waives all rights under present or
future law to elect, by reason of the termination of the Master Lease, to
terminate this Sublease or surrender possession of the premises demised hereby.
If the Lessor does not exercise the aforesaid option, the term of this Sublease
shall terminate simultaneously with the term of the Master Lease and each
Sublessee hereby agrees to vacate the premises subleased on or before the
effective date of termination of the Master Lease.
SECTION 5. RENT.
(a) The annual base rent is as follows: (x) Eighty Nine
Thousand Two Hundred Seventy Seven and 50/100 Dollars ($89,277.50) for the
period commencing on the Commencement Date and ending twelve months following
the Commencement Date; provided that the first month's payment shall be waived
as set forth in Section 5(e) hereinbelow; (y) Seventy Six Thousand Six Hundred
Twenty Nine and 85/100 Dollars ($76,629.85) for the period commencing on the
first anniversary date of the Commencement Date and ending on the Termination
Date. The base rent shall be defined herein as the "Base Rent." Base Rent is
payable in equal monthly installments on the first day of each month.
(b) If the Commencement Date is not the first day of a
calendar month, the next monthly installment of Base Rent due hereunder shall be
prorated to the end of the calendar month next following the month in which said
Commencement Date occurred, so that subsequent monthly installments of Base Rent
will be due on the first days of calendar months throughout the term of this
Sublease, except that the last monthly installment will be similarly prorated.
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(c) For the purposes of clarification, the term "Rent" shall
mean the Base Rent and all other amounts to be paid by Sublessees to Sublessor
as set forth in the terms and provisions of this Sublease.
(d) Payment of Rent shall be sent to the Sublessor's address
as set forth in Section 10(a) herein.
(e) If and so long as no Sublessee is in default under this
Sublease on the Commencement Date, Sublessees shall be entitled to a rent credit
in the amount of Seven Thousand Four Hundred Thirty Nine and 79/100 Dollars
($7,439.79) to be applied against the September 1998 monthly installment of Base
Rent.
SECTION 6. ELECTRICITY. The annual charge for electricity shall be
Eight Thousand Two Hundred Forty One Dollars ($8,241.00) commencing on the
Commencement Date and continuing throughout the term of the Lease. The annual
charge for electricity is payable in equal, monthly installments of Six Hundred
Eighty Six and 75/100 Dollars ($686.75) on the first day of each month.
SECTION 7. RENT ESCALATIONS. Sublessee shall be responsible for any
rent escalations to be payable under Section 42 of the Master Lease; provided
that Sublessee shall only be liable for any amounts owing wherein the term "Base
Tax Year" shall mean the fiscal year ending June 30, 1999. Any difference
between the amount calculated under Section 42 of the Master Lease, and
Sublessee's responsibility under this Section 7 shall be paid by Sublessor.
SECTION 8. SECURITY DEPOSIT. Sublessees shall pay to Sublessor as a
security deposit upon execution of this Sublease an amount equal to Fourteen
Thousand Eight Hundred Seventy Nine and 58/100 Dollars ($14,879.58) as security
for Sublessees' faithful performance of Sublessees' obligations hereunder (the
"Security Deposit"). If Sublessees fail to pay Rent hereunder or to pay any
other sums due or to perform any of the other terms and provisions of this
Sublease or is otherwise in default or in breach hereunder, in each case after
expiration of applicable notice and/or cure periods, Sublessor may use, apply or
retain all or any portion of the Security Deposit in partial payment for sums it
may in its discretion advance as a result of a default or breach by any
Sublessee, or to apply toward losses or expenses Sublessor may suffer or incur
as a result of any Sublessee's default or breach hereunder. If Sublessor uses or
applies all or any portion of such Security Deposit, such application shall not
be deemed a cure of any default or breach, and Sublessees shall within five (5)
business days after written demand therefor deposit with Sublessor in cash an
amount sufficient to restore the Security Deposit to its original sum of
Fourteen Thousand Eight Hundred Seventy Nine and 58/100 Dollars ($14,879.58),
and the failure of Sublessees to do so, after any applicable notice and cure
period, shall be a material breach of this Sublease by Sublessees. Sublessor
shall not be required to keep the Security Deposit separate from general
accounts and shall have no
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obligation or liability for payment of interest on the Security Deposit. In the
event that Sublessor assigns its interest in the Sublease, Sublessor shall
deliver to its assignee so much of the Security Deposit as is then held by
Sublessor. Within ten (10) business days after the Term has expired and no
Sublessees is then in default of any of its obligations hereunder, the Security
Deposit, or so much thereof as had not theretofore been applied by Sublessor,
shall be returned to Sublessees or to the last assignee, if any, of Sublessees'
interest hereunder.
SECTION 9. NO SET-OFF, DEDUCTIONS. Each Sublessee acknowledges and
agrees that each Sublessee's obligations hereunder, including, without
limitation, its obligations to pay all Rent payable hereunder, shall be absolute
and unconditional under any and all circumstances and shall be paid without
notice or demand and without any abatement, reduction, diminution, setoff,
withholding, defense, counterclaim or recoupment whatsoever, including, without
limitation, any of the foregoing due or alleged to be due to, or by reason of,
any past, present or future claims which such Sublessee may have against
Sublessor, the Lessor, or any other person or entity for any reason whatsoever;
nor, except as otherwise expressly provided herein or in the Master Lease, shall
this Sublease terminate, or the obligations of such Sublessee be otherwise
affected, by reason of any interference with such use, operation or possession
by any person or entity, or by reason of any failure by Sublessor to perform any
of its obligations herein contained or by reason of any other indebtedness or
liability, howsoever and whenever arising, of Sublessor, or of such Sublessee to
any other Person, or by reason of any insolvency, bankruptcy or similar
proceedings by or against Sublessor, or such Sublessee, or for any other reason
whatsoever, whether similar or dissimilar to any of the foregoing, any present
or future law to the contrary notwithstanding; it being the intention of the
parties hereto that the Rent payable by Sublessee hereunder shall continue to be
payable in all events and in the manner and at the times herein provided and as
set forth in the Master Lease, without notice or demand, unless the obligation
to pay the same shall be terminated pursuant to the express provisions of this
Sublease; provided, that notwithstanding anything herein to the contrary, each
Sublessee shall be permitted to make the appropriate abatement, reduction,
diminution, setoff, withholding, defense, counterclaim or recoupment, in the
event and only to the extent that (i) Sublessor shall be in default under the
Master Lease or this Sublease and in each case after expiration of applicable
notice and/or cure periods and (ii) to the extent that Sublessor shall be
entitled to a rent abatement or offset under the Master Lease after the
Commencement Date, then Sublessees shall be entitled to a corresponding
abatement or offset to the payment of Rent.
SECTION 10. NOTICES. All notices and other communications hereunder
shall be in writing. All notices and other communication hereunder shall be
deemed to be given on the date of receipt if sent by hand delivery, or five (5)
Business Days after mailing if sent by certified mail, return receipt requested.
All such notices and other communications to a party hereto shall be addressed
to such party at the following addresses, or such other addresses as the parties
may designate in writing in a notice to the other party given in accordance with
this Section 10:
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a. Notice to Sublessor:
Discovery Laboratories, Inc.
0000 Xxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xx. Xxxx Xxxxxxxxxxxxxxx
Vice President, Finance
Telephone: 000-000-0000
b. Notice to Sublessees:
Milan Entertainment, Inc.
Entertainment Management Group, Inc.
Xxxxxx Xxxxxxx, P.C.
000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx
Attention: Xxxxxx Xxxxxxx
Telephone: [ ]
with a copy to
Xxxx Xxxxxxx, P.C.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxx, Esq.
SECTION 11. EFFECT OF THIS LEASE. This Sublease shall become binding
and effective when it shall have been executed by each of Sublessor and each
Sublessee and consented to by Lessor.
SECTION 12. GOVERNING LAW AND CONSENT TO JURISDICTION. THIS SUBLEASE
SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK, UNITED STATES OF AMERICA, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, WITHOUT GIVING EFFECT TO THE CONFLICT OF
LAWS PROVISIONS THEREOF. Each party hereby irrevocably consents that any legal
action or proceeding against it or any of its assets with respect to this
Sublease may be brought in any jurisdiction where such party or any of its
assets may be found, or in any court of the State of New York or any Federal
court of the United States of America located in New York, New York, United
States of America, or both, as the party bringing the action may elect, and by
execution and delivery of this Sublease, each party hereby irrevocably submits
to and accepts with regard to any such
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action or proceeding, for itself and in respect of its assets, generally and
unconditionally, the jurisdiction of the aforesaid courts. Each party
irrevocably consents to the service of process out of any of the aforementioned
courts in any such action or proceeding by the mailing of copies thereof by
registered or certified first class mail, postage prepaid, to such party at its
address set forth in Section 10 hereof. The foregoing, however, shall not limit
the rights of the party bringing the action to serve process in any other manner
permitted by law or to bring any legal action or proceeding or to obtain
execution of judgment in any jurisdiction. Each party further agrees that final
judgment against such party in any action or proceeding in connection with this
Sublease shall be conclusive and may be enforced in any other jurisdiction
within or outside the United States of America by suit on the judgment, a
certified or exemplified copy of which shall be conclusive evidence of the fact
and the amount of such party's indebtedness. Each party hereby irrevocably
waives, to the fullest extent permitted by law, any objection which such party
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Sublease brought in the County of
New York, State of New York, and hereby further irrevocably waives any claim
that any such suit, action or proceeding brought in the County of New York,
State of New York has been brought in an inconvenient forum.
SECTION 13. MISCELLANEOUS. Any provision of this Sublease which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating or diminishing Sublessor's rights under the remaining provisions
hereof, and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other jurisdiction.
To the extent permitted by applicable law, each Sublessee hereby waives any
provision of law which renders any provision of this Sublease prohibited or
unenforceable in any respect. No term or provision of this Sublease may be
amended, altered, waived, discharged or terminated orally, but only by an
instrument in writing signed by a duly authorized officer of the party against
which the enforcement of the amendment, alteration, waiver, discharge or
termination is sought. A waiver on any one occasion shall not be construed as a
waiver on a future occasion. All of the covenants, conditions and obligations
contained in this Sublease shall be binding upon and shall inure to the benefit
of the respective successors and permitted assigns of Sublessor and Sublessees.
The obligations of the Sublessees under this Sublease are the joint and several
obligations of each Sublessee. This Sublease, the Master Lease and each related
instrument, document, agreement and certificate collectively constitute the
entire agreement of Sublessor and Sublessees with respect to the sublease of the
Premises, and cancel and supersede any and all prior oral or written
understandings with respect thereto. This Sublease may be executed in any number
of counterparts, each of which shall be an original, with the same effect as if
the signatures thereto were upon the same instrument.
SECTION 14. SURVIVAL. The representations, warranties, covenants,
agreements and indemnities of Sublessees set forth in this Sublease, and
Sublessees' obligations hereunder, shall survive the expiration or other
termination of this Sublease to the extent required for full performance and
satisfaction thereof.
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SECTION 15. BROKERS. Each party represents that with respect to the
sublease of the Premises neither Sublessees nor Sublessor have dealt or
negotiated with any broker whatsoever except CB COMMERCIAL and COLLIERS ABR,
INC. (collectively, the "Brokers"). Each party agrees to indemnify and hold the
other party free and harmless from any expenses resulting from any claim made by
any other broker claiming to have been retained by such party in connection with
the transactions contemplated in this transaction. Sublessor shall pay the
brokerage commission earned by the Brokers pursuant to a separate agreement.
This provision shall survive the termination of this Sublease.
SECTION 16. ASSIGNMENT. This Sublease may not be assigned or the sublet
premises further sublet, in whole or in part, without the prior written consent
of the Lessor under the Master Lease.
SECTION 17. WAIVER OF JURY TRIAL. EACH SUBLESSEE AND THE SUBLESSOR
HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING TO WHICH THEY ARE BOTH
PARTIES INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT,
CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH
THIS SUBLEASE OR THE RELATIONSHIP ESTABLISHED HEREUNDER.
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IN WITNESS WHEREOF, the parties hereto have caused this Sublease to be
duly executed by their duly authorized representatives as of the date first
written above.
DISCOVERY LABORATORIES, INC.
By: /s/ Xxxx Xxxxxxxxxxxxxxx
--------------------------------
Name: Xxxx Xxxxxxxxxxxxxxx
Title: VP Finance
MILAN ENTERTAINMENT, INC.
By: /s/ Tobias Pienek
--------------------------------
Name: Tobias Peniek
Title: Secretary
ENTERTAINMENT GROUP, INC.
By: /s/ Xxxxxx Xxxxxxxx
--------------------------------
Name: Xxxxxx Xxxxxxxx
Title: President
XXXXXX XXXXXXX, P.C.
By: /s/ Tobias Peniek
--------------------------------
Name: Tobias Peniek
Title: President
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LESSOR'S CONSENT TO SUBLEASE
The undersigned ("Lessor"), lessor under the Master Lease, hereby consents to
the foregoing Sublease without waiver of any restriction in the Master Lease
concerning further assignment or subletting. Lessor certifies that, as of the
date of Lessor's execution hereof, Sublessor is not in default or breach of any
of the provisions of the Master Lease, and that the Master Lease has not been
amended or modified except as expressly set forth in the forgoing Sublease.
000 XXXXXXX XXXXXX ASSOCIATES
By:
--------------------------------
Name:
Title:
Date:
