EXHIBIT 10.2
EXECUTION COPY
SUBLEASE
This Sublease (the "Sublease"), effective as of May 1, 2006 (the "Effective
Date"), is entered into by and among Loudeye Corp., a Delaware corporation
("Loudeye"), and Loudeye Enterprise Communications, Inc., a Delaware corporation
("LEC," and together with Loudeye, "Sublessors"), and Muze, Inc., a Delaware
corporation ("Sublessee").
WHEREAS, Sublessors are parties to a Lease agreement with 1130 Rainier LLC
as landlord ("Landlord") dated December 20, 2003, as amended October 5, 2005,
and as attached hereto as Exhibit A (the "Lease"), for approximately 41,753
square feet of space located at 1130 Rainier Avenue South, Suite 200, Seattle,
Washington 98144 (the "Premises").
B. Sublessee desires to sublease from Sublessors, and Sublessors desire to
sublease to Sublessee, a portion of the Premises identified on Exhibit B hereto
on the terms and conditions set forth herein.
C. Sublessee desires to contract with Sublessor for certain additional
services (the "Sublessor Provided Services") on the terms and conditions set
forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the covenants and agreements contained
in this Sublease, Sublessor and Sublessee agree as follows:
1. Description of Subleased Premises. Subject to the terms and conditions
herein and beginning on the Effective Date, Sublessors hereby lease to
Sublessee, and Sublessee hereby leases from Sublessors a portion of the Premises
leased to Sublessor pursuant to the Assignment consisting of approximately 50%
of each of the office, server room, storage and common spaces constituting the
Premises as shown on the floor plan attached hereto as Exhibit B and made a part
hereof (the "Subleased Premises").
2. Term. Unless terminated earlier pursuant to the terms of this Sublease, the
term of this Sublease shall be for a period from the Effective Date through
December 31, 2006 (the "Sublease Term").
3. Rent.
a. Sublessee Rent. Sublessee shall pay to Loudeye gross rent in advance,
on the first day of each month of the term hereof, in an amount equal to 50% of
base rent payable by Sublessors under the Lease, or $39,143.44 per month (the
"Base Rent"). Commencing on the later to occur of the Effective Date or the date
on which Sublessee receives written notice that Landlord has consented to this
Sublease (the "Initial Payment Date"), Sublessee shall pay to Loudeye the
monthly Base Rent amount for the period from the Effective Date to June 30,
2006. To the extent Landlord requires Sublessors to prepay August 2006 rent on
July 1, 2006, Sublessee would pay to Loudeye on July 1, 2006 an amount equal to
two months Base Rent (July and August 2006.
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b. Pro Rata Portion of Security Deposit. Sublessors have deposited with
Landlord a security deposit in the amount of $473,164.34 (the "Security
Deposit"), of which $320,106.34 shall be applied by the Landlord to the last
four (4) months rent due under the Lease (assuming no default by Sublessors) and
the remaining $153,058.00 shall be applied to damages incurred by the Landlord
as a result of defaults in Sublessors' and Sublesse's performance under the
Lease, or returned if no such defaults occur. On the Initial Payment Date,
Sublessee shall pay to Loudeye an amount equal to 50% of the Security Deposit,
or $76,529.00. Upon termination of the Lease and subject to Sublessee's
compliance with the terms of this Sublease, Loudeye shall pay to Sublessee an
amount equal to 50% of the amount of the Security Deposit returned by Landlord
to Sublessors, if any (the "Security Deposit Refund"). The Security Deposit
Refund, if any, will be paid by Loudeye to Sublessee within five business days
of Sublessors' receipt of such refund. Sublessee shall have no claim against
Landlord with respect to any portion of the Security Deposit held by Landlord,
and Sublessee's sole remedy for return of any deposit made shall be against
Sublessor.
c. Pro Rata Portion of Prepaid Rent. As of the Effective Date, Landlord
and Sublessors have agreed that a portion of Sublessors' security deposit shall
be applied as prepaid rent for the period from September through December 2006
to Landlord totaling $313,147.52, assuming no default by Sublessors (the
"Prepaid Rent"). On the Initial Payment Date, Sublessee shall pay to Loudeye an
amount equal to 50% of the Prepaid Rent, or $156,573.76. Sublessee shall have no
claim against Landlord to any portion of the Prepaid Rent held by Landlord, and
Sublessee's sole remedy for return of any prepaid rent paid by Sublessee shall
be against Sublessor.
4. Additional Operating and Other Expenses.
a. Landlord Provided Services. During the term of this Sublease,
Sublessors shall pass through to Sublessee the services provided to Sublessors
by Landlord pursuant to the Lease ("Landlord Provided Services"). Sublessors are
obligated under the Lease to pay additional amounts to Landlord ("Extra
Payments") for Landlord Provided Services identified in more detail on Exhibit
C. To the extent the Landlord Provided Services are approximately equally
attributable to both Sublessors and Sublessee, Sublessee shall pay to Loudeye
50% of such Extra Payments (to the extent such Extra Payments are attributable
to events occurring during the Sublease Term). In the event a Landlord Provided
Service is substantially attributable (approximately 90% or more) to the
business or operations of Sublessee, Sublessee shall reimburse Sublessors 100%
of the Extra Payments associated with such services. Such payments shall be due
from Sublessee to Loudeye within five (5) days following the date which
Sublessors' payment of such Extra Payments are due to the Landlord. In the event
that Landlord fails to supply any Landlord Provided Services, then Sublessors
will cooperate with Sublessee in obtaining those services.
b. Sublessor Provided Services. During the term of this Sublease and in
consideration for the fees set forth in Exhibit D, Loudeye will perform the
services for Sublessee and to give Sublessee the right to use the equipment
owned by Landlord and used by Sublessor namely the equipment and resources
identified in Exhibit D (collectively, the "Sublessor Provided Services"). In
addition, to payment of such fees, Sublessee agrees to reimburse Sublessor for
all reasonable out-of-pocket expenses incurred by Sublessor on behalf of
Sublessee
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(excluding items specifically included in Sublessor Provided Services),
including, without limitation, "Direct Bill" items identified on Exhibit D that
are paid by Sublessor, if any.
c. Termination and Adjustment. Sublessee will provide Sublessors with
such assistance and information as may be reasonably requested or necessary for
Sublessor to fulfill its obligations hereunder and under the Lease. Sublessors
reserve the right to terminate any portion of Sublessor Provided Services
following ten day notice and an opportunity to cure in the event of a material
breach of this Sublease by Sublesee. In the event Sublessor Provided Services
increase or decrease, or the appropriate allocation to Sublessor of Sublessor
Provided Services increases or decreases, Sublessor and Sublessee will negotiate
in good faith an appropriate adjustment, if any, to the fees set forth in
Exhibit D.
5. Authorizations. Sublessors and Sublessee warrant to the other that all
necessary corporate actions have been duly taken to permit Sublessors and
Sublessee, as applicable, to enter into this Sublease and that each undersigned
officer has been duly authorized and instructed to execute this Sublease.
6. Use. Sublessee shall use the Subleased Premises for office purposes.
In no event shall Sublessee use the Subleased Premises for any use or purpose
prohibited by the Lease. Sublessors and Sublessee each agree that, in the use of
the portion of the Premises which they are each respectively retaining for their
own use, they will not interfere with the use and enjoyment of the Premises by
the other party.
7. Assignment and Subletting. Sublessee shall not assign this Sublease or
sublet the Subleased Premises in whole or part, and any attempted assignment or
sublease in violation of this covenant shall be null and void. Sublessee shall
not permit its interest in this Sublease to be assigned or vested in any third
party by operation of law or otherwise.
8. Tenant Improvements. The Subleased Premises are being leased by
Sublessee on an "as-is" basis. No tenant improvements will be provided.
9. Alterations or Improvements. Sublessee shall not make any alterations,
additions or improvements in or to the Subleased Premises without first
obtaining the written consent of Sublessors, as well as Landlord as required by
the Lease, which consent shall be in the discretion of Sublessors and Landlord.
All pre-approved alterations, additions and improvements shall be made shall be
at the sole cost and expense of Sublessee and shall become the property of
Landlord and be surrendered with the Subleased Premises at the expiration of the
term of this Sublease, unless the Landlord has directed, as a condition of the
approval of Sublessee's proposed work, that such alterations, additions and
improvements be removed and the Subleased Premises be restored to its condition
immediately prior to the performance of such alteration, addition or improvement
(reasonable wear and tear and damage caused by casualty excepted) upon the
conclusion of Sublessee's occupancy; in such event, the Sublessee shall promptly
restore the Subleased Premises at Sublessee's sole cost. The foregoing
notwithstanding, all non-attached, moveable (1) articles of personal property;
(2) all business, scientific research and trade fixtures; (3) machinery and
equipment; (4) cabinetwork; and (5) furniture and movable partitions installed
by Sublessee at Sublessee's expense shall remain the property of Sublessee and
may be removed by Sublessee upon the termination of this Sublease and vacation
of the Subleased Premises.
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Sublessee shall not permit any material men's or mechanic's liens to be filed
against the Premises in connection with any alterations or improvements
installed in the Subleased Premises by or on behalf of Sublessee. Sublessee
shall, within 30 days after notice, discharge any such lien of record, or, if
Sublessee elects to contest such lien, bond off the lien and contest by
appropriate proceedings.
10. Holding Over. Sublesee shall not be permitted to hold over possession of
the Subleased Premises beyond the Sublease Term; provided, that if Sublessors
elect not to terminate the Lease as of December 31, 2006, then subject at all
times to Section 22 of this Sublease, Sublessors shall provide Sublessee notice
of such election and Sublessee shall in such event be permitted to hold
possession of the Subleased Premises after the end of the Sublease Term and
Sublessee shall become a tenant from month to month upon the terms herein
specified. Sublessors or Sublessee may terminate such tenancy by delivering
thirty (30) days prior written notice to the other party. Notwithstanding any
provision contained in this Sublease, the term of the Sublease shall not extend
beyond the term of the Lease; in the event that the Lease is terminated for any
lawful reason by Landlord, whether Sublessee is in default or not, this Sublease
shall terminate as well.
11. Insurance. Sublessee shall, during the entire Sublease Term and any
holdover period, at Sublessee's own cost, keep in force bodily injury and
property damage liability insurance for the protection of Sublessee, Sublessors,
and Landlord, in accordance with the terms of the Lease. At the commencement of
the term of this Sublease, Sublessee shall deliver to Sublessors (and Sublessors
shall deliver to Landlord) a certificate of insurance evidencing such insurance
and naming Sublessors and Landlord as additional insureds and shall require 30
day notice of cancellation.
12. Incorporation of Lease.
a. Incorporation by Reference. This Sublease is subject and subordinate to the
Lease. A copy of the Lease is attached hereto and made a part hereof as Exhibit
A. Sublessee represents that it has read and is familiar with the terms of the
Lease. Except as otherwise set forth in this Sublease, all the terms, covenants
and conditions contained in the Lease shall be incorporated into and applicable
to this Sublease with the same force and effect as if Sublessor were the
"Landlord" under the Lease and Sublessee were the "Tenant" under the Lease.
Defined terms in the Lease that are otherwise defined herein with respect to
Sublessee, will have the meanings given in this Sublease in those portions of
the Lease that are incorporated by reference. Without limiting the generality of
the foregoing, by entry under this Sublease, Sublessee accepts the Subleased
Premises as being in good and sanitary order, condition and repair as of the
Effective Date, and Sublessee agrees to be bound by Section 15 of the Lease with
respect to the Subleased Premises. Notwithstanding the foregoing, Sublessors
acknowledge that Sublessee has no obligation to Sublessor to restore the
Subleased Premises at the end of the Sublease Term to any condition other than
the condition of the Subleased Premises on the Effective Date, subject to
reasonable wear and tear and damage caused by casualty, and except to pay for
the repair of any damage caused by Sublessee's move-out; provided, however, that
to the extent required by the Lease, Sublessors may be obligated to Landlord to
restore the Subleased Premises upon termination of Sublessors' right of
occupancy, if Landlord requires such restoration. Sublessee agrees that the
provisions of Paragraph 26 of the Lease, which restricts further assignment or
subletting, shall be binding upon Sublessee as if it were the original tenant
under the Lease. The
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Landlord, as a third-party beneficiary of this Sublease, is entitled to enforce
its terms but Landlord shall not be bound to any obligations other than the
obligations described in the Lease.
b. Additional Rights, Obligations and Limitations.
i. Sublessee shall not cause a default under and shall not commit or
suffer any act or omission that will violate any of the provisions of the Lease
or permit its employees, agents, contractors or invitees to cause a default
under the Lease.
ii. Upon any default of Sublessee in the full and timely payment and
performance of its obligations under the Sublease after the applicable notice
and cure period, Sublessor may exercise any and all rights and remedies granted
to Landlord by the Lease with respect to default by the "Tenant" or "Lessee"
under the Lease.
iii. Promptly upon receipt thereof, Sublessor shall deliver to
Sublessee copies of any notices received by Sublessor from Landlord which
concern the Subleased Premises.
13. Indemnity. Each of Sublessors and Sublessee shall not do or permit anything
to be done which would be a breach or default under the Lease or which would
cause the Lease to be terminated or forfeited, and each of Sublessors and
Sublessee shall indemnify, defend and hold harmless the other and Landlord from
and against any and all claims, demands, losses, damages, and reasonable costs
and expenses, including reasonable attorneys' fees, arising out of or relating
to (a) the indemnifying party's breach or default under this Sublease or the
Lease, or (b) the negligent or willful acts or omissions of the indemnifying
party's or its agents, servants, employees, customers or invitees.
14. Waiver of Subrogation Rights. Anything in this Sublease to the contrary
notwithstanding, each of Sublessors and Sublessee hereby waives any and all
rights of recovery, claim, action or cause of action against the other party,
and the other party's agents (including partners, both general and limited),
officers, directors, shareholders or employees, for any loss or damage that may
occur to the personal property of such party by reason of fire, the elements or
any other cause which could be insured against under the terms of standard fire
and extended coverage insurance policies, regardless of cause or origin,
regardless of whether actually insured against under the terms of any insurance
policy carried by the injured party. Each of Sublessors and Sublessee covenant
that no insurer shall hold any right of subrogation against Sublessors or
Sublessee.
15. Disclaimer. THE LANDLORD PROVIDED SERVICES AND SUBLESSOR PROVIDED SERVICES
ARE PROVIDED AND PERFORMED "AS IS" AND WITHOUT REPRESENTATIONS OR WARRANTIES OF
ANY KIND FROM SUBLESSOR. SUBLESSOR EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES,
WHETHER EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO WARRANTIES OF
PERFORMANCE, WARRANTIES OF SECURITY AND THE IMPLIED WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NON-INFRINGEMENT.
SUBLESSORS MAKES NO WARRANTY THAT THE SERVICES PROVIDED WILL BE ERROR FREE; NOR
DOES SUBLESSOR MAKE ANY WARRANTY
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AS TO THE RESULTS THAT MAY BE OBTAINED FROM THE SERVICES PROVIDED HEREUNDER.
16. Limitation of Liability. IN NO EVENT WILL SUBLESSORS OR SUBLESSEE OR
LANDLORD BE LIABLE FOR ANY CONSEQUENTIAL, INDIRECT, EXEMPLARY, SPECIAL OR
INCIDENTAL DAMAGES, INCLUDING ANY LOST DATA OR LOST PROFITS, ARISING OUT OF OR
RELATED TO THIS SUBLEASE, REGARDLESS OF THE FORM OF ACTION, WHETHER UNDER
CONTRACT, STRICT LIABILITY, NEGLIGENCE OR OTHER LEGAL OR EQUITABLE THEORY. EACH
OF SUBLESSORS' AND SUBLESSEE'S TOTAL AGGREGATE LIABILITY FOR ALL CLAIMS ARISING
OUT OF OR RELATED TO THIS SUBLEASE SHALL NOT EXCEED THE AMOUNTS PAID TO
SUBLESSORS HEREUNDER BY SUBLESSEE.
17. Brokers' Fee. Sublessors and Sublessee each represent and warrant to the
other that they neither consulted nor negotiated with any broker or finder with
regard to this Sublease. Sublessor and Sublessee shall each indemnify and hold
the other harmless from and against any clam or claims for brokerage or other
commission arising from such party's having employed a broker or finder contrary
to its representation in this Section.
18. Entire Agreement; Amendment. All prior understandings and agreements
between the parties respecting the Subleased Premises are merged in this
Sublease, which alone fully and completely sets forth the understanding of the
parties. This Sublease may not be changed or amended orally or in any manner
other than by written agreement signed by the parties.
19. Notices. All notices, claims and other communications required or permitted
hereunder will be in writing. Any notice, claim or other communication hereunder
shall be deemed duly given if (and then two business days after) it is sent by
registered or certified mail, return receipt requested, postage prepaid and
addressed to the intended recipient as set forth below:
If to Sublessors:
Loudeye Corp.
1130 Rainier Avenue South
Seattle, Washington 98144
Attention: Eric S. Carnell, General Counsel
Facsimile No.: (206) 832-4009
If to Sublessee:
Muze Inc.
304 Hudson Street, 8th Floor
New York, New York 10013
Attention: Thomas Goldsworthy
Facsimile No.: (212) 741-1246
Either party may send any notice, claim or other communication hereunder to the
intended recipient at the address set forth above via personal delivery,
expedited courier, messenger
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service, facsimile or ordinary mail, but no such notice, claim or other
communication shall be deemed to have been duly given unless it actually is
received (or receipt is refused) by the intended recipient. Either party may
change its address for notices by giving the other notice in the manner herein
set forth.
20. Successors and Assigns. Subject to the provisions of Section 7 of this
Sublease, the covenants and agreements contained in this Sublease, shall bind
and inure to the benefit of Sublessors, Sublessee and their respective
successors and assigns.
21. Attorneys' Fees. In any proceeding brought to enforce this Sublease or to
determine the rights of the parties under this Sublease, the prevailing party
shall be entitled to collect, in addition to any judgment awarded by a court, a
reasonable sum as attorneys' fees, and all costs and expenses incurred in
connection with such a lawsuit, including attorneys' fees, expenses of
litigation, and costs of appeal. For purposes of this Sublease, the prevailing
party shall be that party in whose favor final judgment is rendered. The term
"proceeding" shall mean and include arbitration, administrative, bankruptcy, and
judicial proceedings including appeals.
22. Termination of Lease. Subject to the provisions of Section 13 above,
Sublessee acknowledges and agrees that, notwithstanding anything to the contrary
in this Sublease, in the event the Lease is terminated for any reason, then,
simultaneous with such termination, this Sublease shall also be terminated and
shall be of no further force or effect. Sublessors agree not to voluntarily
surrender of the Lease and/or the Premises to Landlord without Sublessee's
consent. In the event of such a voluntary surrender of the Lease and/or the
Premises by Sublessors without Sublessee's consent, Sublessors and Sublessee
agree that Sublessors (but not Landlord) shall be liable to Sublessee for
damages.
23. Governing Law. This Sublease shall be governed by and construed in
accordance with the laws of the State of Washington without giving effect to any
choice or conflict of law provision or rule that would cause the application of
the laws of any jurisdiction other than the State of Washington.
24. Submission to Jurisdiction. Each of the parties submits to the jurisdiction
of any state or federal court sitting in King County, Washington, in any action
or proceeding arising out of or relating to this Agreement and agrees that all
claims in respect of the action or proceeding may be heard and determined in any
such court. Each of the parties waives any defense of inconvenient forum to the
maintenance of any action or proceeding so brought and waives any bond, surety,
or other security that might be required of any other party with respect
thereto. Each party agrees that a final judgment in any action or proceeding so
brought shall be conclusive and may be enforced by suit on the judgment or in
any other manner provided by law or in equity.
[Signature page follows]
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IN WITNESS WHEREOF, the parties have caused this Sublease to be executed by
their duly authorized representatives as of the Effective Date.
SUBLESSORS:
LOUDEYE CORP.
By: /s/ Chris J. Pollak
-------------------
Name: Chris J. Pollak
Title: Chief Financial Officer
LOUDEYE ENTERPRISE COMMUNICATIONS, INC.
By: /s/ Chris J. Pollak
-------------------
Name: Chris J. Pollak
Title: Chief Financial Officer
SUBLESSEE:
MUZE INC.
By: /s/ Thomas Goldsworthy
-----------------------
Name: Thomas Goldsworthy
Title: Chief Financial Officer
THE LANDLORD HEREBY APPROVES THE SUBLESSORS' SUBLEASE OF THE PREMISES:
1130 Rainier LLC
By: /s/ Paul E. Krug
--------------------------------
Name: Paul E. Krug
Title: Managing Partner (President)
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